Good day, and welcome to the NXP 4Q '23 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to turn the call over to Jeff Palmer, Senior Vice President of Investor Relations. You may begin.

Thank you, Michelle, and good morning everyone. Welcome to the NXP Semiconductors Fourth Quarter Earnings Call. With me on the call today is Kurt Sievers, NXP's President and CEO, and Bill Betz, 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 could 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 macro impact on the 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 2024. 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 2023 earnings press release, which will be furnished to the SEC on Form 8-K and available on NXP's website in the Investor Relations section. Now, I'd like to turn it over to Kurt.

Thank you, Jeff, and good morning, everyone. We really appreciate you joining our call this morning. I will review both our quarter four and our full year 2023 performance, and then discuss our guidance for quarter one. Beginning with quarter four, our revenue was $22 million better than the midpoint of our guidance with the trends in the Mobile market performing better than our expectations, with Automotive and, Industrial and IoT performance in-line with our guidance, and Communication Infrastructure slightly below our expectations. Taken together, NXP delivered quarter four revenue of $3.42 billion, an increase of 3% year-on-year. Non-GAAP operating margin in quarter four was 35.6%. 90 basis points below the year-ago period and about 20 basis points above the midpoint of our guidance. The year-on-year performance was a result of solid gross profit growth, offset by higher operating expenses as we continue to invest in new product development. From a channel perspective, we maintained distribution inventory at a tight 1.5-months level, well below our long-term target of 2.5 months. In addition, we continue to partner with our direct customers on the normalization of their on-hand inventory. For the full year, revenue was $13.28 billion, an increase of about 1% year-on-year. Passing the revenue growth, we increased our pricing by approximately 8% in 2023, offsetting our higher input cost to maintain our gross profit percentage. And at the same time, our unit volumes were down by approximately 7% through 2023. We believe this underpins our view that we have intentionally under-shipped fundamental end demand in order to limit inventory build in the channel and at our direct customers. Full year non-GAAP operating margin was 35.1%, a 120 basis-point compression versus the year-ago period as a result of the improved gross profit performance, offset by increased operating expenses primarily in products…

Thank you, Kurt, and good morning to everyone on today's call. As Kurt has already covered the drivers of the revenue during Q4 and provided our revenue outlook for Q1, I will move to the financial highlights. Overall, our Q4 financial performance was good. Revenue was slightly above the midpoint of our guidance range. And non-GAAP gross profit was above the midpoint of our guidance range, driven by a higher mix from sales into distribution channel even as months of supply in the channel remained flat at 1.5 months for about six weeks. I will first provide full-year highlights and then move to the Q4 results. Full year revenue for 2023 was $13.28 billion or up 1% year-on-year. We generated $7.76 billion in non-GAAP gross profit and reported a non-GAAP gross margin of 58.5%, up 60 basis points year-on-year. Total non-GAAP operating expenses were $3.09 billion or 23.3% of revenue, slightly above our long-term financial model as we continue to invest in our strategy, supporting long-term profitable growth. Total non-GAAP operating profit was $4.66 billion, down 3% year-on-year. This reflects a non-GAAP operating margin of 35.1%, down 120 basis points year-on-year and in line with our current long-term financial model. Non-GAAP interest expense was $283 million. Taxes related to ongoing operations were $693 million or a 15.8% non-GAAP effective tax rate. Non-controlling interests were $25 million and stock-based compensation, which is not included in our non-GAAP earnings, was $411 million. Turning to full-year cash-flow performance. We generated $3.51 billion in cash flow from operations and invested $826 million in net CapEx or 6% of revenue. Taken together, this resulted in $2.69 billion of non-GAAP free cash flow or 20% of revenue. During 2023, we repurchased 5.46 million shares for $1.05 billion and paid cash dividends of $1.01 billion or 29%…

Thank you. [Operator Instructions] Our first question comes from Ross Seymore with Deutsche Bank. Your line is open.

Hey guys, thanks for letting me ask a question. First on the inventory management in general, Kurt, it sounded a lot like you've done a great job on the channel side, but the OEM side has gotten a little bit into the excess category. Can you just talk about, I guess on the channel side, do you have any plans for that $500 million coming into the plan in 2024, if that's still the number? And on the OEM side, when do you think that normalizes throughout the year?

Yeah. Hey, thanks, Ross. Good morning. Indeed, I think the color you put on this is what I would concur with. On the channel side, we feel safe and very much under control relative to the inventory. Let me put it that way, for quarter one, we have absolutely no intention to go beyond the 1.6 range. It will hover between 1.5 and 1.6. I think we had 1.5 the past two quarters. So consider for Q1 maybe a 1.6, but that's not an increase, it's more the precision we can hold that. So no intention to increase general inventory really in the first quarter. For the rest of the year, Ross, it isn't much different to how we've put this the past couple of quarters. We will only start to replenish when we see sufficient momentum in the market to justify that. So that means there is neither a guarantee that by the end of the year we hit the 2.5 inventory, which is our long-term target, nor will we do any fast or hectic steps here. So we will possibly start, because I do assume, when we come back to this later in the call, we do expect that there is some market recovery in the second half of the year, so that makes it more likely that we will start to replenish the channel by then. But again, it's really something which is a function of the market environment. The size of it is indeed the $500 million which we have discussed before, but again, that is not necessarily a part of our considerations for the annual revenue movement. Now, the inventory or the excess inventory at direct customers, indeed, I think we started to try and correct that one back in the second quarter of last…

Thanks for that color. And I guess as my second question, focusing on the auto side, it was helpful to hear about the six growth drivers overall. But in automotive, the radar below plan, EV above, and S32 above. Can you just talk about what your expectations are for those growth drivers in fiscal ‘24?

Well, in principle, I would say if there was no excess inventory and we would be in a normal world, Ross, we stick to our 9% to 14% long-term growth, which includes then the set performance of those growth drivers, which we specified back in the Analyst Day in November ‘21. So they are just moving around a little, and that's why we transparently gave the color for this past year, pending on the speed of inventory control. And I think you might have noticed that I did say that radar was actually not performing to target. The reason here is really that radar has a relatively concentrated customer base. It's almost -- it's just direct customers where the inventory control was much easier to exercise because it's a very specified product range with a very non-fragmented customer base where it was easier to get a handle on the inventory control. So I dare to say inventory control in radar is already completely behind us, which will make ‘24 obviously a much better year. But on the longer term, on the three-year horizon, Ross, just assume they all come to the targets which we specified back in November ‘21.

Thank you.

Thank you. Our next question comes from Vivek Arya with Bank of America. Your line is open.

Thanks for taking my question. Kurt, last quarter you were good enough to kind of give us a little bit of color one quarter ahead and I was hoping you could share your thoughts on how you see Q2 just generically shaping up, flat up down sequentially. And then when I take your commentary about the full year, I think you mentioned sort of flattish growth overall, that still suggests, kind of double-digit growth in the back half. So I realize visibility is limited and so forth, but any other market color that you can share that gives you the confidence about that sort of double digit growth in the backup would be very useful?

So good morning, Vivek. Yeah, apparently I was a good man last time relative to the next [quarter] (ph). I think you just reiterated the pieces which we gave you, but I'm happy to give you a bit more color around those. So we really see the different parts of our revenue being dependent on the cycle they are exposed to. So all the consumer-oriented businesses, and that's the IoT part of Industrial and IoT and Mobile, we think we left the trough way behind us in the first quarter of last year, and other than some seasonal fluctuations, they will continue to grow throughout the calendar year 2024, which has to do that a large part of that is anyway supplied through the channel, so we are not suffering from excess inventory digestion. So we are pretty positive that that part of the company will grow. At the same time, I reiterate what I said last time, the Comms Infra & Other business will decline from a year-on-year perspective. So ‘24 revenue for Comms Infra & Other will be down versus the calendar year ‘23. I think we discussed at length the bits and pieces in there why that is. And then you come to the [blog] (ph) of Automotive and core Industrial where indeed there is something between first half and second half which has to do with the inventory digestion at the direct customers in automotive which I just discussed with the question of Ross a minute ago, where we do believe the turning point is somewhere around the middle of the year, where that over-inventory which is still sitting there is being digested. If you put all of these pieces together, Vivek, then obviously, half two is going to be bigger than half one. Obviously, half one of this year, of 2024, is going to be down against the half one of last year. And that puts it somewhere in this flat plus/minus range for the full year, indeed. So the confidence really comes from the view which we have on the inventory digestion on the Automotive and core Industrial side. At the end, at this very same time, the continued gradual improvement in the consumer-oriented businesses where given our tight channel management, we have no excess inventory. This is really where it comes from.

All right. Thank you, Kurt. And for my follow-up, your industrial trends are in -- Industrial & IoT trends are in big contrast to your peers. So I get what you did, right? You were early to spot it. You were undergrowing in the first half of last year and now you're doing much better now. But how long can you maintain such a contrast with your peers, right, who are seeing these kind of 20%, 30%, 40% declines in their Industrial & IoT business? Is it not apples-to-apples comparison? When do you think that there is somewhat of a convergence between what your peers are reporting in terms of their industrial correction versus the strength that NXP is seeing right now?

Look, Vivek, I, of course, don't know and cannot judge what exactly they do. But conceptually, the contrast will be alive as long as they need to digest their over-inventory in the channel. That's very simple. We don't have that because we never build it. We actually back in the second quarter of 2022, mind you second quarter of 2022, that's almost two years ago, we started to control the channel and keep it at the 1.6 and 1.5 months level. We -- even with that, we troughed them in the first quarter of '23. So we even went down from this. And since then, we kept it very steady. In the meantime, some of our peers kept shipping hard and they just need to correct this. And that contract will disappear at the moment that over-shipment they have done there is actually behind them. I mean, maybe another number, Vivek, which puts this in perspective, and we gave you that transparency very intentionally. Last year, NXP as a company, did grow 1% in revenue. I also told you that our pricing last year was up by 8%. So that gives you a feel that we had a pretty significant volume decline last year from a supply perspective. So plus 1% revenue, plus 8% price gives you a 7% volume decline, which is clearly under-shipping, we think against end demand, but certainly against peers. I mean if you just take the same numbers from peers, then many of them who are now having a bit more of a hard time, they just shipped harder through the first -- at least the first three quarters of last year. So under the curve in the end, it's going to be the same thing. It's a matter of when did you ship and when do you need to reduce shipments. So that's my answer. I don't think other than that, there is a fundamental difference, Vivek. So I don't want to claim we have a much better industrial business. I think we just had a more disciplined handle on it earlier.

Thank you, Kurt.

Thank you. Our next question comes from Stacy Rasgon with Bernstein Research. Your line is open.

Stacy, are you there?

Stacy, your line is open.

Operator, why don't we go to the next caller, and we'll circle around with Stacy?

Hello?

I can hear you, Stacy. Good morning.

Yeah, that was -- I don't know what was going on there. Thanks for taking my questions. I had a question on the IoT trend. So it obviously bottomed in Q1 last year. I was wondering if you could parse out the recovery trends between the Consumer piece and the core Industrial. So we all know Consumer is getting a little better. Has the increase off the trough from a year ago been all Consumer or has the general purpose IoT started to recover as well? Like what are those trends across those two pieces?

Yeah. Thanks, Stacy. That's a fair question because, indeed, the two are trending differently. I'd say the IoT piece, which, by the way, is about 40% of that segment, has indeed gradually improved since the trough in the quarter one of last calendar year. Gradual means it's getting better and better and better, but it's still below the levels it had before the peak. So it's way not there where it used to be while it is gradually improving. In our case, and I think we revealed that before, a very good portion of that is in China. So think about it as a largely distribution and largely China-oriented IoT business. But yes, so the trend starting from the bottom of Q1 last year, gradually improving and that's what we continue -- what we see to continue through the rest of this calendar year. The core Industrial part indeed has taken a somewhat different shape. Think about it more like Automotive, which is now suffering a bit more from over-inventory, not much, and end market weakness. So I would say core Industrial relatively speaking, is a somewhat less good shape still, which has just face shifted to the IoT portion. So think about core Industrial a bit more similar to what we see in Automotive.

Got it. Thank you. My follow-up, I wanted to ask about lead times. Have they normalized to pre-COVID levels? And is that part of what's enabling you to keep pricing flat? Do you have just like better control of pricing because you have a better controlled lead times? You've got a lot of competitors that are talking about pricing starting to come down now.

So first part of the question, Stacy, absolute yes, lead times are just normal. I mean, forget about supply constraints, we have normal lead times back to the pre-COVID times, which helps a lot also relative to visibility because all of the double ordering and all of the need for NCNRs and all of these things, just consider them behind us more back to normal from that perspective. There is no real correlation of that to pricing, Stacy. The pricing, which I quoted to be about flat for this year, from our end is mainly a function of the input cost. We've been living in that world of sharply rising input costs over the past three years. And now it looks more normal. So any view and handle which we have on the input cost for this year is around zero, I would say. And that's also why we put that forward as the pricing for '24 and we found acceptance and buy-in for that with our customers, Stacy, that's not -- it's not really correlated with lead times. I understand your question if we had more of a commodity portfolio. Since we don't have that, that correlation doesn't really exist.

Got it. That’s helpful. Thank you guys.

Thank you. Our next question comes from Gary Mobley with Wells Fargo Securities. Your line is open.

Hey guys. Thanks for taking my question. Kurt, you called out some better-than-expected revenue on the Mobile side, and you appear to be poised for some pretty significant year-over-year growth in Mobile in the first half of fiscal year '24. Is that a function of the Android market being last bad? Is it largely a function of maybe some traction in ultra-wideband or is it a function of content gains at your largest Mobile customer?

So, Gary, in full transparency, most of all, it's a function of the weak compares of last year. I just have to pull it out. I mean if you look at our Q1 of last year, it was horrendously low as a function of everything I explained in the last 10 minutes. So very, very clearly, mainly a function of weak compares. However, you mentioned at least one other thing, which is certainly the case. We clearly see that the Android inventory digestion is completely behind us. I would almost claim already in Q4, it was largely behind us. So in Android, we are shipping to end demand and you could also be somewhat hopeful about the Android market development going forward. So that is certainly a case. And our premium handset customer is also in, I would say, in a decent shape relative to volume development. But that's it. So again, it is very much a function of us trying to get as quickly as possible to true end demand and not suffering from excess inventory. I mean, that's a good example of where that also helps you then on the other side of the equation to quickly come back into growth.

Thank you for that, Kurt. And Bill, you seem to be calling out 58% gross margin for fiscal year '24, which is down only 50 basis points from the prior year. And that's quite commendable considering what's going on in the industry and whatnot. And it seems like you have a lot of gross margin headwinds from utilization to mix headwinds and whatnot. Maybe if you can give us some additional color in terms of the offsets to those headwinds and what's allowing for this gross margin resiliency?

Sure. Let me just use Q4 as an example in Q1 and then talk about some more of those levers, both tailwinds and headwinds. So in Q4, we did slightly better, as you know, 20 basis points. And really, that was driven by that distribution mix. It represented 61% of our sales, up from 57% in Q3. Now in Q1, we're guiding down 70 basis points, primarily driven again by this lower distribution mix and lower -- slightly lower fall-through on the sales. And because what we're doing there is we're seasonally adjusting distribution sales. So that will be down, but still probably better than a year ago from a mix standpoint. If you remember, distribution sales was about 49% in Q1, and I think we'll be a bit better than that, which is then offsetting the underutilization. If you recall, Q1 from a year ago, we were running in the low 80s and now we're running in the low 70s. So you got some moving parts from a year-over-year compare, but from a quarter-over-quarter compare, it's really driven by the mix. Now talking about tailwinds and headwinds, you're right. Clearly, if we go below our current utilization levels of the low 70s, that becomes a headwind for us. We know that. We're managing it to this level. And you can see for the last three quarters, we've been running our internal factories, which represent 40% of our internal source wafers. Another, obviously, headwind is obviously you have lower revenues, you have lower fall-through over your fixed cost structure. If we do see lower pricing, again, we're -- so far, we see that we're able to keep this stable and flat from a year-over-year comparison standpoint. But again, if we do have lower pricing, it's our job to offset that…

Helpful. Thanks, Bill.

Thank you.

Thank you. Our next question comes from Francois Bouvignies with UBS. Your line is open.

Thank you very much. I have two, maybe a follow-up to the previous question. The first one is on Automotive. I mean you mentioned that you are basically managing the channel and under-shipping at the moment with a more clear picture in the second half of the year, if I have to summarize. Can you quantify maybe how much do you under-ship the demand maybe in the last two quarters? Because when I look at your Auto revenues, it was up 1% year-over-year. The production was -- of cars was obviously much higher. I was wondering if you had any intelligence of how much you are under-shipping the Automotive right now, which basically would go into your way of a soft down cycle? But I was wondering if you have any quantification on that would be very helpful.

Yeah. Hi, Francois. No exact quantification, but I guess a few pointers. It isn't useful in my view, to look at one individual quarter. But I think now since the full calendar year '23 is behind us, you can look at the full year where I think our Auto business did grow by 9%. I also said that the company has increased pricing by 8%. So let's just assume for a minute that in Auto, we did also increase price in that order of magnitude, which basically puts you almost on a zero supply increase line last year in Automotive. So say zero growth in Automotive last year in supply and units. And that goes against what I would call super bullish Automotive fuel last year with, I think, in the end, the 9% SAAR increase to 90 million units, a rocking increase in electric cars. I think the xEV cars last year, we're growing by 45% year-over-year. So I mean all the good arguments, which we've discussed so often for a lot of content increase on top of the 9% SAAR. And we shipped zero. I mean that gives you a feel why we have a very strong view that we already significantly under-shipped through all of last year. But at the same time, I mean, it's obvious we have over-shipped in the time before. It's just that I believe we started very early with taking a handle on that and controlling that over-shipment and throttling it back. I think through all of last year, we have under-shipped in the distribution side of Automotive, which is 40% of the revenue. And I'd say we've take -- we started to take more stringent action in the second quarter of last year to also control the over shipments in the direct side. But that's the one which is not completely done yet. So it's very hard to qualify that Francois because you don't know what size of inventory individual Tier 1 customers want to keep on the long run. And it's also not a -- it's not a steady target. I mean we discussed with them very often. And these targets in terms of how many weeks of semiconductor inventory they want to keep. First of all, they are ranging widely between different Tier 1s. I could quote a range here between two weeks and 18 weeks. It's really all over the place. And it also changes over time. As soon as they see reason to believe that their business is going to grow again, which means the OEM call offs they are getting, then they want to grow their inventory again. So that's why it's a bit of a moving target. But I think for us, the synthesis is that we believe by the middle of calendar year '24, we have that behind us.

That's great answer. Thank you. And the second follow-up is on the pricing. I mean you said flattish pricing in '24 and obviously, it seems to be like better than peers, and I understand the commodity part and also the input cost. If we look at the input cost, the electricity is coming down, I mean, obviously, from the peak you have the silicon wafers coming down. You have the mature nodes at the foundry level that is coming under pressure for many, many Tier 2, Tier 3 foundries. I was just wondering if the input cost is the main tracker of your pricing, how should we think about 2025 or through the year as we see input cost is also coming under pressure, if you see what I mean?

Look, a couple of things, Francois. First of all, I'm glad we get well through '24. I can't get my head around '25, that's a little early, to be honest. Now at the same time, I think you put good pieces together relative to input costs, the one which you didn't put up is the fact that the Tier 1 foundries are still a bit tight lipped when it is to cost decreases. And the biggest part of our input is Tier 1 foundries, not Tier 2 and Tier 3 foundries because we need these Tier 1 foundries for our Automotive and Core Industrial business. And there, unfortunately, the trends are not quite as ambitious as you mentioned them. Over time, Francois, I do believe, say, mid to longer term, that the industry will return to low single-digit ASP erosion year-over-year. That is what we had in the pre-COVID period in the application-specific business like ours. And I think it is reasonable to assume that, that is also going to happen in the mid to longer-term future. However, this year is a transition year because the input is not yet the input cost and the inflationary environment is just not yet at that level as it used to be in the past. And very important, and I know it's probably very clear, but I just want to reiterate that very clearly. This does not mean falling back to the levels which we had pre-COVID. What I'm saying is, from the levels which we have achieved now, we possibly have that in the mid to longer-term future, this very low single-digit ASP erosion per year, but we absolutely see no scenario that falls back to the levels of pre-COVID.

Great. Thank you very much.

Thank you. Our next question comes from Chris Danely with Citi. Your line is open.

Hey, thanks guys. Just in terms of the things getting a little bit tougher over the last months, Kurt, is there any way to tell how much of this is, I guess, worsening demand versus a little more inventory than we thought? Any which way or the other on either side of that?

Hey, good morning, Chris. Yeah, clearly, first of all, I confirm what you say. It got worse over the last 90 days or at least our view on what we are exposed to got worse. I would say the end demand in Auto has weakened. I mean the latest S&P data is now almost a percentage point down year-on-year in terms of SAAR, so that's a little less than it was before. The xEV penetration is a little slowing. Again, it is still up, but it is a little slowing. So these are just gradual movements to the less positive side than what it was 90 days ago. But I think what is probably the somewhat bigger part in here is that we just got a better handle now, what is the remaining size of the excess inventory with our Tier 1 Automotive customers, which we are working down through the first half. So I cannot pass in percentage, which one of the two is contributing how much. But I'd say it is in that, say, combination of Automotive, core Industrial over-inventory and at the same time a weakening macro.

Great. And for my follow-up, I think -- so Bill talked about disty being 49% of sales in Q1 of last year and then 61% of sales in Q4. Did I hear that right? Or is that wrong?

That's correct, Chris.

So -- yeah, okay. So my question is, your sales grew about, I guess, 10% from Q1 to Q4. And so that would mean your sales into disty grew a lot more than that. Why would that happen if the environment, like overall, at least outside [US] (ph) was a little more difficult?

Basically it is matching to the sell-through.

Chris, I think the background here is mainly that the exposure to distribution is larger in our Industrial and IoT business. And that is the one where we have seen the trough already in the first quarter of last year. So that gradual improvement throughout the quarters I discussed earlier, that shows up more on the distribution side because those are the segments which had that improvement. Where, in Automotive, distribution is only 40%, as I described, we have now the direct customer excess inventory digestion and distribution is a smaller part. So I think it is just a reflection of our exposure to the different end market segments.

Got it. Thanks for all the color guys.

Thanks, Chris.

Thank you. Our next question comes from Joshua Buchalter with TD Cowen. Your line is open.

Hey, guys. Good morning or good afternoon depending on where you are sitting. Thanks for squeezing me in. In Autos, you've heard from a few in the supply chain, that there's a bit of a push pull going on between OEMs and Tier 1s, where the OEMs want the Tier 1s to keep carrying more inventory, Tier 1s are trying to manage their working capital and carry less. I'd be curious, are you seeing that going on? Is that some -- the Tier 1s wanting to lower their levels. Is that playing into what's going on with some of the digestion you're seeing now? Thank you.

Joshua, absolutely. That's a horrendous fight and that's why I said earlier, it is really hard to call the final exact landing place for the size of inventory for Tier 1 because it is a matter of their negotiation with the -- with their OEM customers. The midterm trend is that every piece of new business they are winning, OEMs are now often enforcing for the new business to hold a certain amount of inventory for specific semiconductor components. So that becomes very explicit, but it's only for new business. So think about it as something which will be layering in over the next couple of years as those new design wins are materializing. That's the way how the OEMs want to get a firm handle on the size of inventory at Tier 1s. At the moment, it's still Wild West because none of this is really contractually anchored because it's old contracts, which didn't have these articulations, which is why it is indeed all over the place, and that makes it also a bit harder to be precise.

I think -- you have one more, Josh?

Yeah, that's okay. I would just, maybe, Bill -- I was going to ask about the policy of repurchases. I know you mentioned it's still return 100% of free cash flow but have been running a little bit below that in the last several quarters. Should we expect after you pay down the debt in March that repurchases pick up? Or is it something more tied to the business environment? Thank you.

Yeah. I mean, again, our capital allocation, as I stated, hasn't changed. If I just look over the last three years, we returned $8.8 billion or 113% over those three years. And you're right, the trailing 12 months, 77%, current quarter was 72%. And again, we are -- we set aside some cash, as you all know, that we're going to retire some of our debt and deleverage the company here, and we think that's a good use of our cash and we're going to continue being flexible on our balance sheet and doing all of the above, dividends, buybacks, debt as well as small M&A, no changes and we are going to continue to do what we do.

Thank you.

Thanks, Josh.

Thank you.

Yeah, I guess that gets us to the end of the call. So, thanks everybody for joining the call this morning. Clearly continues to be a tough environment where NXP takes any control possible, and I dare to say we have started to take that control, especially relative to inventory builds externally and inventory management internally. We started to take that control in a very disciplined manner early, in the mid of 2022 for the distribution site, and starting in the second quarter of last year on the direct customer side, which we believe allows us to continue to drive a safe landing and soft landing in this tough environment. Mid and longer term, we continue to be fully focused on the Automotive and Industrial markets to innovate and drive profitable growth. Thank you all.

Thank you for your participation. This does conclude the program and you may now disconnect. Everyone, have a great day.