NXP Semiconductors N.V.

Good day, and thank you for standing by. Welcome to the NXP 4th Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Late after the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jeff Palmer, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Catherine, and good morning, everyone. Welcome to the NXP Semiconductor's fourth quarter 2021 earnings call. With me on the call today is Kurt Sievers, NXP's president and CEO, and Bill Betts, our CFO. The call today is being recorded and will be available for replay from our corporate website. Today's call will include forward-looking statements that involve risks and uncertainties that can cause NXP's results to differ materially from management's current expectations. These risks and uncertainties include but are not limited to statements regarding the continued impact of the COVID-19 pandemic on our business, the macroeconomic impact on specific end markets in which we operate, the sale of new and existing products, and our expectations for financial results for the first quarter of 2022. Please be reminded that NXP undertakes no obligation to revise or update publicly any forward-looking statements. For a full disclosure on forward-looking statements, please refer to our press release. Additionally, we will refer to certain non-GAAP financial measures which are driven primarily by discrete events that management does not consider to be directly related to NXP's underlying core operating performance. Pursuant to Regulation G, NXP has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in our fourth quarter 2021 earnings press release, which will be furnished to the SEC on Form 8K and available on NXP's website website in the Investor Relations section at NXP.com. Before we start the call today, I'd like to highlight NXP will be attending the Morgan Stanley TMT Conference in San Francisco on March 7th and 8th. Now, I'd like to turn the call over to Kurt.

Thank you very much, Jeff, and good morning, everyone. We really appreciate you all joining our call today. I will review both our quarter four and our full year 2021 performance and then i will discuss our guidance for quarter one beginning with quarter four our revenue was 39 million better than the midpoint of our guidance with most end markets stronger than planned and with the trends in the communication infrastructure markets more in line with our expectations taken together nxp delivered quarter four revenue of 3.04 billion, an increase of 21 percent year over year. Non-GAAP operating margin in quarter four was a strong 34.9 percent, 440 basis points better than the year-ago period, and about 110 basis points above the midpoint of our guidance. Year-on-year outperformance was largely due to the impact of improved factory utilization and higher revenues. For the full year, revenue was a record 11.06 billion, an increase of 28% year over year. And as 2021 progressed, our customers continued to accelerate orders on NXP. We consistently found ourselves in a situation where robust demand outstripped available supply even as production levels both internally and from our supply partners improved across the year. We do anticipate a continuation of strong demand throughout 2022, likely better than we originally contemplated at our recent investor day in November. The full-year non-GAAP operating margin was solid 32.9%, a 700 basis point improvement as a result of improved factory loadings, higher revenue, and positive leverage on our operating expenses. Now let me turn to the specific trends in our focus end markets. In automotive, full-year revenue was $5.49 billion, up 44% year-on-year, a reflection of the strong company-specific product drivers we noted at our investor day, the step up in content per vehicle as OEMs prioritized premium vehicles in a limited supply environment, and the accelerated transition towards electric vehicles, which have fundamentally higher semiconductor content. For quarter four, automotive revenue was $1.55 billion, up 30% versus the year-ago period, and slightly better than our guidance. Moving to industrial and IoT. Full-year revenue was 2.41 billion, up 31% year-on-year, driven by our solutions offering with a combination of industrial and crossover processes, wireless connectivity, and our analog-attached products, all driving the year-on-year growth. For quarter four, industrial and IOT revenue was 661 million, up 29% versus the year-ago period, and better than our guidance. In mobile, full-year revenue was 1.41 billion, up 13% year-on-year. During the year, we experienced continued strong adoption of our secure mobile wallet and early ramps of secure ultra-wideband solutions, and a good traction for our mobile embedded power solutions. These positive trends were modestly offset by a discontinuation of certain custom analog products. For quarter four, mobile revenue was $374 million, down 9% versus the year-ago period, and better than our guidance. Lastly, I will move to communication infrastructure and other. Full-year revenue was 1.75 billion, up 3% year-over-year. The year-on-year growth was due to a rebound in demand for secure transit, tagging, and access solutions, as well as solid demand for RF power products for the cellular base station market, somewhat tempered by the anticipated moderation in demand for network processing solutions. For quarter four, revenue was 457 million, up 16% year on year, and in line with our guidance. In review, 2021 was an excellent year for NXP. We experienced significant design win traction across the entire portfolio, and especially within the areas of our strategic growth drivers. Our priority has been to assure the health and safety of all our employees. And it is their engagement and performance, which has been truly outstanding. We are extremely proud of their adaptability, dedication, and hard work in the face of adversity. Now, before I will turn to our expectations for quarter one, I'd like to offer you some perspective on the coming year. For those who were able to join us at our recent investor day in November, you will remember we offered a positive view of 2022, expecting revenue growth near the high end of our 8% to 12% long-term growth target. Now, as we enter into early 2022, we are more optimistic about the opportunities in front of us, both in the short term as well as over the intermediate horizons. The demand signals from our customers continue to be very strong. Inventories across all end markets appear very lean, and our ability to supply continues to improve. Hence, we anticipate 2022 will be another year of demand-supply imbalance, with lead times extending out across almost the entire portfolio, and the level and intensity of supply-related escalation conversations with our customers remains elevated. Against this backdrop, we are guiding quarter one revenue at $3.1 billion, up about 21% versus the first quarter of 2021, within a range of up 18% to up 24% year on year. And from a sequential perspective, this represents growth of about 2% at the midpoint versus the prior quarter. At the midpoint, we anticipate the following trends in our business. Automotive is expected to be up in the mid 20% range versus quarter 121 and flat versus quarter 421. Industrial and IoT is expected to be up mid teens year on year and flat versus quarter 421. Mobile is expected to be up about 10% year on year and up in the low single-digit range versus quarter 421. And finally, communication infrastructure and other is expected to be up in the low 20% range versus the same period a year ago and up in the low double-digit range on a sequential basis. In summary, we do continue to see growing customer demand outstripping our improving supply, as inventory across all end markets remains very lean. Customer engagement levels and design win momentum in our strategic focus areas continues to be very positive. This underpins our continued confidence of robust growth throughout 2022, and we do continue to be very optimistic about the long-term potential of NXP. Now, at this point, I would like to pass the call over to you, Bill, for a review of our financial performance.