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NXP (NXPI) Q2 Earnings Meet, Dip Y/Y on Automotive Weakness
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NXP Semiconductors (NXPI - Free Report) reported unimpressive second-quarter 2024 results primarily due to its weak momentum in the automotive end market.
The company logged net income (on a non-GAAP basis) of $829 million or $3.20 per share in second-quarter 2024, which met the Zacks Consensus Estimate. The figure decreased from the net income of $896 million or $3.43 per share in the year-ago quarter.
NXPI recorded revenues of $3.13 billion, which surpassed the Zacks Consensus Estimate by 0.04%. The figure declined 5% from the year-ago level.
Along with weak automotive, sluggish communications infrastructure market was a concern.
Nevertheless, the company enjoyed strong momentum across the industrial & IoT, and mobile end markets in the reported quarter.
NXP Semiconductors N.V. Price, Consensus and EPS Surprise
Sluggishness in Automotive & Communication Market Ails NXPI
Automotive: The company generated $1.73 billion in revenues (55.3% of the total revenues) from this market, reflecting a year-over-year decrease of 7%. The figure surpassed the Zacks Consensus Estimate of $1.72 billion. Although NXP’s growing focus on innovation of system solutions was a positive, inventory correction by direct Tier 1 customers led to a year-over-year decline in revenues within the automotive market.
Communication Infrastructure & Others: NXPI generated $438 million in revenues (14% of the total revenues) from this market, down 23% year over year. The reported figure beat the consensus mark of 431.2 million. The company’s performance benefited from new cellular standards, offset by broad-based inventory corrections.
Financial Position
As of Jun 30, 2024, NXP’s’ cash and cash equivalent, and short-term deposit 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.
NXP 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.
In the second quarter, NXPI made dividend payments of $260 million and repurchased shares worth $310 million.
3Q24 Outlook
For third-quarter 2024, NXP expects revenues of $3.150-$3.350 billion, indicating a year-over-year fall of 5% at the mid-point.
In the automotive end market, NXPI expects to resume sequential growth in the third quarter. However, softness in the market is likely to persist on a year-over-year basis as the inventory digestion process at select direct Tier 1 auto customers will continue in the second half of 2024.
In third-quarter 2024, automotive market is expected to move down year over year in the low-single-digit percent range but is anticipated to rise in the mid-single-digit percent range sequentially.
The communication infrastructure market is also expected to be weak in the third quarter. It is likely to be down year over year in the mid-20% range and the mid-single-digit percent range sequentially.
Nevertheless, the industrial and IoT market is anticipated to rise in the low-single-digit percent range on both year-over-year and sequential basis.
Meanwhile, mobile revenues are expected to grow year over year in the mid-single-digit percent range and in the mid-teens percent range sequentially.
Zacks Rank & Stocks to Consider
NXP Semiconductors currently carries a Zacks Rank #3 (Hold).
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NXP (NXPI) Q2 Earnings Meet, Dip Y/Y on Automotive Weakness
NXP Semiconductors (NXPI - Free Report) reported unimpressive second-quarter 2024 results primarily due to its weak momentum in the automotive end market.
The company logged net income (on a non-GAAP basis) of $829 million or $3.20 per share in second-quarter 2024, which met the Zacks Consensus Estimate. The figure decreased from the net income of $896 million or $3.43 per share in the year-ago quarter.
NXPI recorded revenues of $3.13 billion, which surpassed the Zacks Consensus Estimate by 0.04%. The figure declined 5% from the year-ago level.
Along with weak automotive, sluggish communications infrastructure market was a concern.
Nevertheless, the company enjoyed strong momentum across the industrial & IoT, and mobile end markets in the reported quarter.
NXP Semiconductors N.V. Price, Consensus and EPS Surprise
NXP Semiconductors N.V. price-consensus-eps-surprise-chart | NXP Semiconductors N.V. Quote
Sluggishness in Automotive & Communication Market Ails NXPI
Automotive: The company generated $1.73 billion in revenues (55.3% of the total revenues) from this market, reflecting a year-over-year decrease of 7%. The figure surpassed the Zacks Consensus Estimate of $1.72 billion. Although NXP’s growing focus on innovation of system solutions was a positive, inventory correction by direct Tier 1 customers led to a year-over-year decline in revenues within the automotive market.
Communication Infrastructure & Others: NXPI generated $438 million in revenues (14% of the total revenues) from this market, down 23% year over year. The reported figure beat the consensus mark of 431.2 million. The company’s performance benefited from new cellular standards, offset by broad-based inventory corrections.
Financial Position
As of Jun 30, 2024, NXP’s’ cash and cash equivalent, and short-term deposit 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.
NXP 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.
In the second quarter, NXPI made dividend payments of $260 million and repurchased shares worth $310 million.
3Q24 Outlook
For third-quarter 2024, NXP expects revenues of $3.150-$3.350 billion, indicating a year-over-year fall of 5% at the mid-point.
In the automotive end market, NXPI expects to resume sequential growth in the third quarter. However, softness in the market is likely to persist on a year-over-year basis as the inventory digestion process at select direct Tier 1 auto customers will continue in the second half of 2024.
In third-quarter 2024, automotive market is expected to move down year over year in the low-single-digit percent range but is anticipated to rise in the mid-single-digit percent range sequentially.
The communication infrastructure market is also expected to be weak in the third quarter. It is likely to be down year over year in the mid-20% range and the mid-single-digit percent range sequentially.
Nevertheless, the industrial and IoT market is anticipated to rise in the low-single-digit percent range on both year-over-year and sequential basis.
Meanwhile, mobile revenues are expected to grow year over year in the mid-single-digit percent range and in the mid-teens percent range sequentially.
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 - Free Report) , Badger Meter (BMI - Free Report) and Semtech (SMTC - Free Report) . Arista Networks and Badger Meter sport a Zacks Rank #1 (Strong Buy) at present, Semtech carries a Zacks Rank #2 (Buy). 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 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 anticipated to be 17.92%.
Semtech shares have gained 43.5% in the year-to-date period. The long-term earnings growth rate for SMTC is expected to be 20%.