Ladies and gentlemen, thank you for standing by, and welcome to the NXP Semiconductors Third Quarter 2019 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the call over to your speaker today, Jeff Palmer. Thank you. Please go ahead, sir.

Thank you, Daniel, and good morning, everyone. Welcome to the NXP Semiconductors 2019 earnings call. With me on the call today is Rick Clemmer, NXP's CEO; Kurt Sievers, NXP's President; Peter Kelly, our CFO. If you've not obtained a copy of our earnings press release, it can be found at our company website under the Investor Relations section. This call is being recorded and will be available for a replay from our corporate website. Our call today will include forward-looking statements that involve risks and uncertainties that could cause NXP's results to differ materially than management's current expectations. These risks and uncertainties include but are not limited to statements regarding the macroeconomic impacts on specific end markets in which we operate, the sale of new and existing products and our expectations for the financial results for the fourth quarter 2019. 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, during our call today, we will make reference to certain non-GAAP financial measures, which exclude the impact of purchase price accounting, restructuring, stock-based compensation, impairment, merger-related costs and other charges that 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 third quarter 2019 press release, which will be furnished to the SEC on Form 8-K and is available on NXP's website at the Investor Relations section. I'd now like to now turn the call over to Rick.

Thanks, Jeff, for those informative details. And welcome everyone to our conference call today. NXP delivered revenue of $2.3 billion for the third quarter. Our sales were near the high end of our guidance. We demonstrate good expense control, and we successfully delivered improved operating profitability, above the high end of our guidance range. Taken together, this resulted in $631 million of free cash flow generation. Kurt and Peter will provide specific detail later. Looking forward, we continue to be optimistic that our product portfolio investments are addressing our customers' long-term requirements. We see initial signs of the demand environment from our customers appear to have somewhat stabilized. We believe the worst of the year-on-year declines in our strategic automotive and industrial markets are behind us. Specifically, our Q4 guidance for automotive points to low single-digit decline year-on-year versus the high single-digit decline we've experienced year to date. Additionally, our guidance for industrial business points to a mid-single digit decline versus the mid-teens decline seen year to date. While we are encouraged by the recent stabilization, and in some cases, improved demand, the shape and timing of any significant market reacceleration is clearly uncertain. What we continue to do is manage our cost and expenses and believe as a company, we are well positioned for a resumption in consistent demand. Regardless of the current demand environment, our focus is on delivering unique and differentiated solutions, while enabling our customers to be successful in their target markets. We measure our success by attaining high RMS, or relative market share positions, in our target markets to drive true leadership, which should result in defensible long-term franchises based on truly innovative and competitive solutions. As we were successful in this regard, we are rewarded with lasting customer relationships, and we gain valuable insight…

Thanks very much, Rick, and good morning, everyone. We really appreciate you joining our call this morning. Overall, our Q3 results were above the midpoint of our guidance. With the contribution from the mobile and the industrial IoT markets stronger than planned, while demand in the communication infrastructure markets was slightly weaker and our automotive business performed just as anticipated. Taken together, NXP delivered revenue of $2.3 billion, which combined with gross margin improvements and good expense control, enabled us to successfully deliver operating profitability above the higher end of our guidance range. Let me turn to the specific trends in Q3 in our focus end markets. Starting with automotive. Revenue was $1.05 billion, down 7% year-on-year, in line with our guidance. During the quarter, our automotive revenue declined 7% versus the year ago period, as anticipated, at a lesser rate of decline than in the previous quarter and showing 2% sequential growth. Our core automotive product lines declined year-on-year, a reflection of lower auto production and the appreciated supply chain rationalization. However, revenue from the subset of our automotive growth product lines grew in the high single-digit range year-on-year during the quarter. Moving to industrial and IoT. Revenue was $426 million, down 14% year-on-year and up 9% sequentially, slightly better than our expectations. During the quarter, the primary source of weakness in industrial and IoT continued to be our general purpose microcontroller products. Remember, our industrial and IoT business is primarily serviced through our global distribution partners and it is heavily indexed to customers in the Asian markets, which appear to be particularly affected by the continued U.S.-China trade tensions. Turning to mobile. Revenue was $321 million, up 2% year-on-year, and up 8% sequentially above the high end of our guidance. During Q3, despite reduced order rates at the…

Thank you, Kurt, and good morning to everyone on today's call. As Kurt has already covered the drivers of the revenue during the quarter and provided our revenue outlook for the fourth quarter, I'll move to the financial highlights. In summary, our third quarter revenue performance was near the high end of our guidance range, which combined with good expense control, resulted in very strong non-GAAP operating profit. But focusing on the details of the third quarter, total revenue was $2.27 billion, down 7% year-on-year, of which 120 basis points was the elimination of the MSA versus the year ago period. We generated $1.2 billion in non-GAAP gross profit and reported a non-GAAP gross margin of 53.7%, up 70 basis points year-on-year and in line with the midpoint of our guidance. Total non-GAAP operating expenses were $531 million, down $32 million year-on-year and down $10 million from Q2. This was $5 million better than the midpoint of our guidance. From a total operating profit perspective, non-GAAP operating profit was $687 million and non-GAAP operating margin was 30.3%, up 30 basis points year-on-year, despite a $180 million drop in revenue over the same period. Non-GAAP interest expense was $66 million, cash tax for ongoing operations were $39 million and noncontrolling interest was $10 million, with cash tax and interest expense modestly better than the midpoint of guidance. Stock-based compensation, which is not included in our non-GAAP earnings, was $84 million. Now I'd like to turn to the changes in our cash and debt. Our total debt at the end of Q3 was $8.51 billion, down $33 million sequentially as we retired the remaining [ stood ] portion of our June 2021 debt. Cash was $3.54 billion, a net debt of $4.97 billion, a decline sequentially because of solid cash generation during…

[Operator Instructions] Our first question comes from Ross Seymore with Deutsche Bank.

I wanted to focus on the automotive side first. It's is good to see that, that's up subsequently in the quarter. So can you just talk about what's driving that up in the fourth quarter? And then for the full year, you did very well getting closer to SAAR. How are you thinking about what NXP's growth rate in auto can be relative to SAAR conceptually in 2020 as you have inventory versus share gains and a bunch of potentially offsetting vectors?

This is Kurt. Let me take that question. Let me maybe start with saying what our latest market insights are. So IHS just published their latest SAAR numbers for this year and the forecast for next year, where they are saying they see a 6% decline for the SAAR for 2019 annually over '18. And they estimate about flat for next year. That's the latest impact we have. So unfortunately, that indeed indicates that it has further deteriorated this year. So we had earlier in the year, minus 4%, minus 5%, and now they end up at minus 6% decline for '19. We have always said that on a quarterly basis, you cannot really benchmark our revenue performance against the SAAR, given all the supply chain effects in-between. At the same time, we do continue to clearly say that we have all reason to believe that our business is outgrowing the SAAR synced to the electronic content increase per car. And I think we are now at a point going into Q4 where it appears that the supply chain should become more or less clean. So our growth, which you see in our business, it becomes more reflective of the true automotive demand from the OEMs. And that is indeed then leading to a annual, and that's how we look at it, annual growth rate in Q4, which is only minus 2% verses much higher declines in the earlier quarters, like minus 7% and minus 10% in Q3 and Q2. We don't really guide for next year, Ross. And yet, I would say that once the supply chain is clear, we should expect that our growth by content should be reflected again in our numbers, against the SAAR. So there is some optimism here that with a more clean supply chain going forward, we should return to growth based on a flat SAAR.

And then from my follow-up question, just wanted to hit on margins, one for Peter. I think overall, people understand the gross margin side, you guys are doing a good job in a tough revenue comp. I was a little surprised the OpEx is going up as much as it is in the fourth quarter, given the discretionary tightness you guys have done so well to control throughout the year. Can you just talk about a little bit about why that's going up, and does the increase in the fourth quarter diminish the size of the increase that we otherwise would have seen in the first quarter sequentially?

Yes. The single biggest item is actually a positive thing. We have a really significant number, I think it's actually just a bit over $10 million of tape-outs in excess of what we saw in the third quarter. And that's the single biggest item, Ross. So we have...

So it's a good thing.

It's a good thing, but...

We're getting some of our MPIs out and shipping those to customers. And so there's a cost, obviously, as we take those and put those -- move those towards engagement with customers, Ross.

Our next question comes from William Stein with SunTrust.

Great. Just following up on that a little bit. Peter, can you help us understand, I think we know -- or we're expecting margins to deteriorate a little bit in Q1 as you give price to customers in automotive and you have to incur some incremental accruals on the OpEx side. Any quantification that will help us modeling sequentially as we think out to Q1? And then how that might abate as we -- that effect might abate as we go through the year?

I -- I mean, clearly, I don't want to guide Q1 at this stage. I think you're right, Will, in the sense that from a gross margin perspective, you have the single biggest item is the annual price increases. And from OpEx, you have a reset on bonus. So as an example, this year, we didn't hit our targets, so the bonus accrual is relatively small and you're probably talking about maybe an average of $10 million a quarter. Whereas in 2020, if we were to assume our full bonus, we haven't kind of set all of our targets yet for 2020, you'd be talking more like $35 million a quarter. You'd see an $8 million increase roughly for fringe benefits. But we should -- I don't think [ MATs ] cost will be as high as Q1 as they were in Q4. So I'm not sure I'd forecast OpEx lower in Q1 than Q4. But I'm not ready yet to give you an absolute number.

It's still really helpful. One follow up if I can. The mobile strength in Q3, it sounds like that was more of a unit's thing than a content thing, relative to your expectations at the start of the quarter. Is that fair? And is the demand -- it sounds like it's a bit more dispersed than concentrated. Maybe you could just provide a little color.

I guess the units comes from the content, so they're directly linked. So you can't really separate the 2. I think the good point was, if you recall in Q2, we had our largest Chinese OEM that had a strong uptake as they broaden the deployment of the mobile wallet into more of their portfolio. And in Q3, clearly, we had a broader base as well as the -- our Tier 1 customer increased volumes as well. But all the other Chinese customers showed strength in Q3 also. So yes, we had a really strong quarter in Q3. And I think it does continue to bode well for the continued deployment associated with the mobile wallet and the uptake associated with it as we project it going into the next couple of years where we think it can be 50% of all the smartphones.

Our next question comes from John Pitzer with Crédit Suisse.

Rick, I wanted to ask you a little bit -- given you have sort of a unique vantage point on the whole China-U.S. trade issues. I'm kind of curious how you think that, that is impacting your business. There has been some concern in the investment community that perhaps Chinese customers are pulling forward inventory; there's been other sort of checks that would suggest they're trying to keep inventory lean. Clearly, you're not suffering from any bans, but it'd be -- I'd be kind of curious to think whether or not there's a second derivative effect on bans on your revenue as well and how you might think business will trend, if there is a trade resolution?

Well, I think if there's trade resolution, it would be very positive. So I don't think is there is any doubt about that. I think though that, we don't see a lot of inventory being put in place. In Q2, as we talked about it, the largest Chinese handset, they clearly were ramping their supply chain as they broaden the portfolio associated with it. But we didn't see a lot of inventory, it was really associated with their supply chain. There has been comments that I've heard about other technologies like FPGAs where some of the Chinese guys were concerned about having adequate supply and put inventory in place. But we don't see really a lot of that in the areas that we serve at all, John. And we think it continues to bode well. Clearly, I think our relationship with the Chinese customers has been positive and will continue to be positive for us going forward.

That's helpful. And then Rick, just to follow up on some of your prepared comments about 5G and the comm infrastructure space. You guys have kind of put out a 3-year CAGR target for revenue in that space of somewhere between 0% to up 2%. Is it fair to say that what you talked about today on the RF Power side and sub-6 is contemplated in that? But as we go to millimeter wave, it's not? And if that's the case, how might millimeter wave and your opportunity there impact that kind of CAGR that you have out there as a target?

Well, so John, when we set those targets, we were coming out of a period of several years of declines in both the RF Power and Digital Networking business. Clearly, with the Digital Networking business going from around $800 million at the time we did the merger with Freescale down to in more like the $500 million range. So we did set those conservatively. I think what we're talking about, clearly, with the 5G opportunity should increase that growth rate. But it -- we don't think it'll change the total because it really just gives us room to cover the downturn that we've been through in automotive and industrial and still have the confidence in achieving our 5% to 7% compounded growth rate going forward. I do think that there is a real opportunity, as we talked about, for low teens growth rate in RF Power business with 5G deployment over the next few years, and with our leadership position, puts in a good position. And we're just making some early investments in the last mile with some of the customer engagements that could bode very well as well and end up with a couple hundred million dollars a year of revenue in the not too distant future. So all of that's positive, but we're just kind of leaving our growth rates that we set a year and a half or so ago intact and not really changing those by piece at this point, John.

Our next question comes from Blayne Curtis with Barclays.

I just wanted to go back on the auto segment. You mentioned, I think, the growth rate is growing teens. Just kind of curious with the -- you also mentioned the stabilization. And with improving SAAR next year, the growth that you're seeing or the better than seasonal, I guess, in December you're seeing -- are you seeing any restocking of kind of the core components? Or is the outperformance led by the growth areas?

Blayne, this is Kurt. I -- first of all, let me slightly correct what you just said. I think I didn't say that IHS talked about an improvement in SAAR next year; they see a flat SAAR on the low level which was achieved at the end of this year. I think it's a minor but maybe important detail. When you think about us, indeed, I'd say that the improvements you are seeing is probably not restocking, but it's just that the consumption reflects more the end demand. Where earlier, at least in our business with smaller accounts and through distribution, it was marked by building down inventories. And that appears to possibly be over now, which means we just see the real demand coming back again. I would be careful to say that's already restocking, probably not.

Yes. If I could just add something, I think one of the things if you look at it, Blayne, and look at IHS projections, first half of '20 will be slightly up from second half of '19. So that says we've kind of gotten to a minimum run rate based on their projections now. And then they'll see a resumption of growth in the second half of '20. So -- but I do think that when you look at some of our customers in China and other places that we serve through distribution, we are beginning to see a little more of an uptick, which I think means that they've kind of worked their way through their inventory basis and we're beginning to see a little more of a positive perspective associated with it.

And I just want to ask on the WiFi transition -- or transaction. You had targeted Q1 close, but thought might you could do a little earlier. It sounds like you're waiting for Taiwan. Just curious if you expect to close that in December, and if anything is in the guidance from that.

Nothing is in the guidance.

Nothing is in the guidance.

Nothing is in the guidance, and we would anticipate closing it sooner than first quarter. But given the fact that there is a process in Taiwan that we really don't have clear insight into how long it will take, it would be inappropriate for us to really second-guess the actual timing.

Our next question comes from Stacy Rasgon with Bernstein Research.

I wanted to talk about, first, just the language in the release, it is a little bit improved. This is the first time I heard you talk about short-term demand environment stabilizing...

Stacy, you're kind of cutting out. We can't really hear you.

I'm sorry, can you hear me now?

Yes, perfect.

Let's try that again. So the language in the release has obviously a little bit improved this time. I haven't heard you talk about short-term demand environment stabilizing for a while. At the same time, we're hearing a fair amount about sort of the distie challenges bottoming. Is this statement just purely a channel statement that things have sort of bottomed in terms of the inventory flush, and we're just more representative now of end-to-end? Or are you actually seeing, to the extent that you have any visibility, actual improvement in customer end demand at this point?

So I think, Stacy, what we're seeing is, we've seen things stabilize, and we've seen some pockets of improvement or increased orders. But really what we're trying to point to is the fact that if you look at it in our industrial and IoT segment, we were mid-teens year-over-year decline through the first 3 quarters of this year. And if you look at the midpoint of our projection, we'll be kind of mid-single digit. So that's definitely a significant improvement. And if you look at automotive, it's been kind of high single-digit decline year-over-year through the first 3 quarters. And what we're -- at the midpoint, we're kind of at a 2% decline. So I think that's really what we're trying to talk about. That's the basic indicator that we have that things are improving is based on the run rates that we have from our customers and their demands, we see that improving. Now you also have to look at our mobile and communications and infrastructure to get to the total. And in total, we've been -- if you adjust for the MSA that we changed in the accounting, we've been kind of mid-single digit with the exception of Q2 where we were a little less than that. And we'll be kind of -- we'll have a couple points improvement in the total even with a little bit of down take in the communications and mobile in Q4. But -- so I think we clearly have seen a stabilization in some pockets of improved demand, in increased demand, but not anything that would lead us to really talk about a robust recovery underway at this point.

And maybe to follow up on that on the longer term. Are you still holding to your longer-term growth, what was it, 5% to 7% [indiscernible]...

We lost you again, Stacy.

Okay. Can you hear me now? This is very strange.

Yes.

Very strange. To follow up on that. Your long-term growth target is still being articulated, 5% to 7%, you're holding to it. Now that was originally put forth as a CAGR, it was 2018 to 2021 and obviously we've got a -- it's -- we've got a decline in 2019. So what is the right way to think about this growth model given the new starting point? is it 5% to 7% off of the base we've seen in 2019? Or do you still think that we can get something closer to that 3-year CAGR off the 2018, which would imply more growth in 2020 and 2021? And I guess if that's the case, what would be the drivers of that? Like how do we think about that long-term growth model in the context of where we're starting from?

So, Stacy, I think what we're committed to is the 5% to 7% growth rate. We said the categories may be different than what we talked about 1.5 years ago, as we look at that. We may not be able to quite achieve what we had laid out at the high end of automotive or the high end of industrial based on the fact that we've gone through this downturn. The positive thing is, mobile is growing quite nicely with the increased mobile wallet deployment as well as now ultra-wideband beginning to be shipping next year and in 2021. And clearly, the 5G deployment gives us some upside. I mean that could drive that 0% to 2% to kind of high single-digit growth potentially. But in total, we still are committed to the 5% to 7% growth rate. And I think the key is, is that we have different knobs to turn to be sure that we can achieve that and accomplish that.

Our next question comes from Craig Hettenbach with Morgan Stanley.

Just a question, Kurt. Any update on BMS and in particular, things that you would highlight versus some of the incumbents that you think you're doing just from a future set perspective?

Yes. Thanks, Craig. Well, the update is that we are on track, which is definitely good news. And I think we have all seen in Q3 a very large European OEM making a major announcement about their commitments, relative to new electric vehicles coming out. And as we have kind of signposted earlier, we are quite a bit involved in this, not in one model, but actually across the board. So if you will, this is a very clear evidence on our success over incumbents with one of the most, I would say, bullish commitments from a car company into building electric vehicles. And that starts shipping as we speak. So I mean this is not just somewhere in the future, but actually the first models out of that whole fleet across the couple of brands of that OEM are shipping as we speak. So what that means below the line is, we are on track to our BMS rollout, as we have discussed earlier, with pretty high growth rate into the next few years. Let me just highlight, Craig, that we -- while we speak a lot about this one OEM and since the public announcement, that's very convenient for us to speak about it, we have a significantly broader base of design wins, too. Differentiators against incumbents remain to be ASIL-D functional safety performance on a system level as well as the scalability, given our approach with microcontrollers and analog high-precision front ends.

And I guess the only thing I would add to that, Craig, is we follow -- I follow, personally, the announcement by some of the incumbents and always track that. And every time we go back and look at it, we still think that we have a superior performance and a better product than some of the announcements that they're making.

Got it. And just a follow-up for Peter. Understanding there's still some headwinds from the revenue on the gross margin line. Can you talk about just some of the levers you've been pulling to improve gross margin, and also maybe some benefits of mix over the next 12 to 18 months?

Yes. I think they're the same things. I think in the long term, so over the next few years, our mix definitely helps us. As we look at kind of the MPIs that are coming out, you're not going to suddenly see us jump, but you'll see gradual improvements in gross margin in the long term. In the short term, it's all about blocking and tackling, making sure our partners give us the right pricing, making sure we're managing yields, test times, all that good stuff. To be honest, the issue I have at the moment is, we have a long-term model of 55% to 57%. I'd really like to get to 55% for full year 2020. But with the current market environment and the -- I'd say, the lack of visibility rather than visibility we have, it's hard to see how we do that really. And you saw that in Q4. So I do need -- I hate to admit it, but I do need a pickup in volume to be able to get to the 55% level. And I'm surprised you didn't ask the question, one of the questions we were anticipating from you guys is, given revenue was towards the higher end of the guidance in Q3, why didn't gross margin improve a little bit above the guidance of 53.7%? And the answer to that is our assembly and test -- internal assembly and test utilization was weaker than we thought in Q3. Now to be honest, 30 basis points is $6 million. So it's not that big a number anyway. But on the current environment, running the levels of revenue we have, it makes it really, really tough to get the revenue up, but I believe after-market does come back, we'll be able to get there.

Craig, just to be specific, I think our long-term target is 53% to 57%. We talked about 55% in the near term, but...

Oh, did I say 55%?

You said 55%. Just a point to clarify.

Yes. Sorry, 53% to 57%, 55% the midpoint. Yes.

But utilization will be key to that as well. And I think that's an important element of our continued gross margin improvement.

And that's an impact of just revenue and managing our inventory and all that good stuff.

Our next question comes from C.J Muse with Evercore.

I guess first question, one of the more encouraging, I guess, data points coming out of your 10-Q, is that your OEM sales were flat year-on-year, while distie sales down 10%. So I guess 2-part question there. One, are you comfortable with where we are from a distie inventory perspective? And then two, as you see a recovery at least standing here today, do you think it'll be distie or OEM-led?

Well, I think your point is -- it's a great observation, that most of the weakness that we have comes out of distribution. If you look at what we've done on the distribution inventory, we've significantly reduced the inventory over the last few quarters to be able to maintain that 2.4 months and actually down at 2.3 months in the Q3 time frame, which we would anticipate would go back to the 2.4 months in Q4. We actually had some late shipments out on POS, late in the quarter that actually allowed our inventory to go down to the 2.3 months. I think that we'll see a -- we will see an uptick in distribution. I think it has tended, as you pointed out, to be more volatile than the OEM side. And I think it will be more relevant towards the uptick associated with it. But as far as inventories, I think we're in good shape. And I don't think there is any issue associated with that, but I would anticipate that, that will be one of the early points where we'll see a real improvement in the total revenue.

Very helpful. As my follow-up, and I know -- don't want to guide to Q1, so not asking near term. But as you think about just, generally, for 2020 and you look at your mobile business and the increased attach rate of secure mobile wallet, how are you thinking about and what does your visibility look like today into the growth vector into 2020?

Kurt, you want to take that?

I would say we are confident that the attach rate increase -- which is actually what is driving our mobile growth, attach rate increase of mobile wallets and [ other shaded ] applications does continue. I mean, there could always be quarterly fluctuations, mobile has a lot of seasonality. But from a year-over-year perspective, we are very well on track with what we said in our Analyst Day last year that we see the attach rate growing from, I think we said 30% to 50% over the next 3 years. And we actually did a check earlier, how are we on that journey. And it looks like we can be confident that we are very well on track on the journey, and that would indicate that the growth should reasonably continue.

I think, C.J., one of the things that will be really interesting in the second half next year is -- as we begin to ship ultra-wideband, it just solidifies that position in mobile and solidifies our position with the mobile wallet. So I think that will be a significant contributing factor for us and continue to demonstrate our leadership as well as solidifying our overall position.

Our final question comes from Chris Caso with Raymond James.

Just a follow-up question on the gross margin. And Peter, last quarter, you talked about getting to -- the potential of getting to a 55% quarterly run rate on about flat year-on-year revenue, would suggest around the $2.4 billion level. Is that still the right way to think about it going forward kind of once we kind of get to that revenue level, that's when we get that on a quarterly basis and obviously, the full year falls [indiscernible]?

Yes, yes. [indiscernible]. Okay. Sorry, I said, yes.

That's all right. Quick answer. Just...

It was kind of a rhetorical question, really. Yes.

Right. Okay. The follow on from that is, there's been some talk with some of the trade tensions that some of the Chinese customers perhaps are tending to favor some of the non-U.S. solutions, given some of the trade situations and security of supply and such. Is that something you're tending to see in your business now? And going forward, do you think that provides you with somewhat of an advantage being domiciled outside the U.S.?

Yes. No, seriously, I think in -- with discussions with our customers, I think they appreciate the complexities of dealing with different-sourced technology. And I think they have a lot of discussions about trying to move some of their production to us as well as other non-U.S. sourced IP providers. So we think that could be positive. Obviously, that doesn't happen overnight or immediately, but it takes a period of time associated with it.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I will now like to turn the call back over to Rick Clemmer for any closing remarks.

Thank you very much, operator. So thanks for joining us today. Obviously, we feel better than we did in previous quarters with the stability we see and are encouraged about the fact that year-over-year decline is significantly reduced with our guidance in Q4 and puts us in a solid position to get ready to move into 2020 with a ramp up of new products that will continue to differentiate NXP and show our leadership in deploying technology to be able to drive solutions for our customers. So thank you very much for your support, and have a good day.

Great. Thank you, everyone. Thank you, Daniel.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.