NXP Semiconductors (NXPI) Q2 Earnings Meet, Revenues Fall Y/Y

NXP Semiconductors N.V. NXPI delivered second-quarter 2024 non-GAAP earnings of $3.20 per share, which was in line with the Zacks Consensus Estimate. The figure decreased 6.7% year over year.

Revenues of $3.13 billion beat the Zacks Consensus Estimate by 0.04%. The figure declined 5% from the year-ago level.

The company witnessed sluggishness in the Automotive, and Communication Infrastructure & Others markets.

Nevertheless, strong momentum across the Industrial & IoT, and Mobile end markets were positive.

NXPI has gained 24.5% in the year-to-date period, outperforming the industry’s growth of 11.4%.

NXP Semiconductors N.V. Price, Consensus and EPS Surprise

NXP Semiconductors N.V. price-consensus-eps-surprise-chart | NXP Semiconductors N.V. Quote

End-Market Detail

Automotive generated $1.728 billion in revenues (55.3% of the total revenues), reflecting a year-over-year decrease of 7%. The figure surpassed the Zacks Consensus Estimate of $1.72 billion.

Revenues from Industrial & IoT were $616 million (19.7% of the total revenues), up 7% from the prior-year quarter. The reported figure lagged the consensus mark of $624 million.

Revenues from Mobile were $345 million (11% of the total revenues), up 21% from the year-ago period. The figure lagged the Zacks Consensus Estimate of $350.2 million.

Communication Infrastructure & Others generated $438 million in revenues (14% of the total revenues), down 23% year over year. The reported figure beat the consensus mark of 431.2 million.

Operating Results

The non-GAAP gross margin was 58.6%, which expanded 20 basis points (bps) from the year-ago quarter’s level.

Research and development (R&D) expenses were $594 million, up 0.8% year over year. Selling, general and administrative (SG&A) expenses decreased 1.5% year over year to $270 million. As a percentage of revenues, R&D expenses expanded 110 bps year over year to 19%, while SG&A expenses expanded 30 bps year over year to 8.6%.

The non-GAAP operating margin of 34.3% for the reported quarter contracted 70 bps from the prior-year period.

Balance Sheet & Cash Flow

As of Jun 30, 2024, the cash and cash equivalent and short-term deposits balance was $3.26 billion, down from $3.3 billion as of Mar 31, 2024.

The long-term debt was $9.681 billion at the end of the quarter under review compared with $10.178 billion at the end of the last reported quarter.

NXPI generated a cash flow of $761 million in the second quarter of 2024, down from $851 million in the previous quarter.

The company’s capex investment was $184 million in the reported quarter. NXPI generated a free cash flow of $577 million in the quarter.

During the second quarter, the company made dividend payments of $260 million and repurchased shares worth $310 million.

Guidance

For third-quarter 2024, NXP Semiconductors expects revenues of $3.150-$3.350 billion, indicating a year-over-year fall of 5% at the mid-point. The Zacks Consensus Estimate for revenues is pegged at $3.35 billion.

It expects the non-GAAP gross margin between 58% and 59%. The non-GAAP operating margin is anticipated between 34.2% and 36%.

The company anticipates non-GAAP earnings to be $3.21-$3.63 per share. The consensus estimate for the same is pegged at $3.59.

Zacks Rank & Stocks to Consider

NXP Semiconductors currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Arista Networks ANET, Badger Meter BMI and Apple AAPL. Arista Networks sports a Zacks Rank #1 (Strong Buy) at present, while Badger Meter and Apple carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks shares have gained 45.3% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 16.07%.

Badger Meter shares have gained 30.9% in the year-to-date period. The long-term earnings growth rate for BMI is currently projected at 16.73%.

Apple shares have gained 16.6% in the year-to-date period. The long-term earnings growth rate for AAPL is currently projected at 12.48%.

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