NXP Semiconductors NV at Raymond James Institutional Investors Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Melissa Fairbanks - Raymond James - Analyst : Sure. Okay. That's a great intro. And actually, I'd like to start with some of the longer-term overview. You recently hosted an analyst meeting or an investor meeting late last year, laid out some pretty impressive growth targets, margin targets as well. And I think the portfolio really is what is behind that and what supports those targets. So we know you're an industry leader in systems for automotive, industrial, some of the legacy area like comms and mobile solutions. But your primary focus more recently has been on accelerated growth drivers in intelligent systems to the end -- to the edge. And I think that's an important distinction in understanding how NXP is maybe a little bit more differentiated than 20 years ago than pre-NXP days.

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. So I think if anyone is new to the story, I highly recommend checking out their Investor Day presentation. My favorite slide is slide 17, where you --

Question: Melissa Fairbanks - Raymond James - Analyst : You probably -- I'm sure you made it, but -- so it's the one where we have these top line CAGRs for each individual reportable business unit. But then you drill down into that and give us very specific details. So even within some of these areas that are growing overall 6% to 10%, 8% to 12% for automotive and industrial, there are a couple of end markets that are targeted to grow 20% to 30% CAGR. Can we maybe talk about some of those specific?

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. Bringing intelligence to the edge.

Question: Melissa Fairbanks - Raymond James - Analyst : Part of that secure.

Question: Melissa Fairbanks - Raymond James - Analyst : Yes. That's -- we're going to get more into M&A later, but I do want to address -- I know it's just M&A strategy. But -- so at the high end, your new '27 gross margin -- 2027 gross margin target is about 600 basis points above the prior 2024 target. Now we did see some outperformance above that, the market, the environment was not exactly normal over the past several years. But discuss how this focus on the highly integrated advanced systems has impacted the margin and returns profile and where your investment has been directed over the past 10 years and how that's driving that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 1:05PM, NXPI.OQ - NXP Semiconductors NV at Raymond James Institutional Investors Conference

Question: Melissa Fairbanks - Raymond James - Analyst : I'm glad you brought that up.

Question: Melissa Fairbanks - Raymond James - Analyst : Not many -- and I imagine the focus on and having a greater percentage of industrial and automotive that tend to be longer life cycle programs for you. It gives you the visibility and the confidence in order to make these investments longer term and plan for that capacity.

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. Okay. I would like to -- not only is your manufacturing approach a little bit different than peers, I'd like to talk about your method for managing inventory and what we did during the supply chain crisis and how NXP has kind of, in my view, emerged a little bit more -- in a more healthy position than maybe some of your peers, but you did take a very different approach to managing that inventory.

Question: Melissa Fairbanks - Raymond James - Analyst : 2022.

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. All right. I want to stop now and just ask if there are any questions in the audience, just in case before we move on. All right. So that is actually going to lead us to some discussion about the near-term trends, where you have seen a little bit different curve through the downturn and stabilization. And maybe talk about -- we have seen some signs of stabilization heading into the back half of last year, and it seemed to be a little bit of a head fake for the industry. So we've started to see some further correction. So if you can talk about maybe what you saw in the December quarter, what your March quarter outlook, I know this is very near term, and there is still a lot of uncertainty. But based on what you're seeing either by geography or end market.

Question: Melissa Fairbanks - Raymond James - Analyst : This is a quick question off script, but I am curious about your automotive business, where your exposure is. We know that some of the EV platforms, they don't work on a traditional model year, like what we've seen with the traditional OEMs. How much of your business is tied to this non-model year, maybe we get intra-year upgrades or new platform launches versus the traditional OEMs that we generally see this back half build.

Question: Melissa Fairbanks - Raymond James - Analyst : The platforms stay the same.

Question: Melissa Fairbanks - Raymond James - Analyst : So amazingly, we only have a few minutes left. I do want to get to the capital return strategy because I think that this is an area where NXP has really excelled, and we've seen a little bit at times, some multiple expansion, which is always what we like to see. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 1:05PM, NXPI.OQ - NXP Semiconductors NV at Raymond James Institutional Investors Conference But maybe talk about -- you did mention the Kinara acquisition. You have done a number of smaller tuck-in, maybe it's technology or capability acquisitions. But talk about your shareholder return policy beyond internal investment.

Question: Melissa Fairbanks - Raymond James - Analyst : Definitely sets NXP apart for sure. So we only have 1 minute left. Do you have closing remarks?

Question: Melissa Fairbanks - Raymond James - Analyst : Maybe I think that, that was a really good point to --

Question: Melissa Fairbanks - Raymond James - Analyst : Excellent. All right. We are at time right now. Thank you so much for joining us, Jeff. I really appreciate it.