onsemi (the “Company”) (Nasdaq: ON) today announced results for
the first quarter of 2022 with the following highlights:
- Record revenue of $1,945.0 million, an increase of 31%
year-over-year
- GAAP diluted earnings per share of $1.18 as compared to $0.20
in the quarter a year ago
- Record non-GAAP diluted earnings per share of $1.22 as compared
to $0.35 in the quarter a year ago
- Record GAAP and non-GAAP gross margin of 49.4 percent increased
1,420 basis points year-over-year
- Record GAAP operating margin of 33.3% increased 730 basis
points quarter-over-quarter and 2,480 basis point
year-over-year
- Record non-GAAP operating margin of 33.9% increased 530 basis
points quarter-over-quarter and 2,060 basis points
year-over-year
- LTM free cash flow margin of 20.8%
“Our focused strategy has delivered sustainable results in
onsemi’s margin and growth profile with the automotive and
industrial end-markets now representing 65% of our revenue. Our
record quarterly results with year-over-year growth of 31% in our
first quarter revenue, and gross margin expansion of 1,420 bps to a
record of 49.4% highlight the strength of our business and the
value of our products as we continue our transformation. With a
highly differentiated portfolio of intelligent power and sensing
products, strong visibility driven by long-term supply agreements,
and exposure to secular megatrends of vehicle electrification,
ADAS, energy infrastructure, and factory automation, we are well
positioned to sustain our momentum,” said Hassane El-Khoury,
president and CEO of onsemi.
Selected financial results for the quarter are shown below
with comparable periods:
GAAP
Non-GAAP
(in millions, except per share
data)
Q1 2022
Q4 2021
Q1 2021
Q1 2022
Q4 2021
Q1 2021
Revenue
$1,945.0
$1,846.1
$1,481.7
$1,945.0
$1,846.1
$1,481.7
Gross Margin
49.4 %
45.1 %
35.2 %
49.4 %
45.2 %
35.2 %
Operating Margin
33.3 %
26.0 %
8.5 %
33.9 %
28.6 %
13.3 %
Net Income attributable to onsemi
$530.2
$425.9
$89.9
$538.5
$478.0
$151.3
Diluted Earnings Per Share
$1.18
$0.96
$0.20
$1.22
$1.09
$0.35
Revenue Summary
($ in millions)
(Unaudited)
Three Months Ended
Business Segment
Q1 2022
Q4 2021
Q1 2021
Sequential Change
Year over Year Change
PSG
$
986.7
$
953.4
$
747.0
3
%
32
%
ASG
689.3
647.3
531.5
6
%
30
%
ISG
269.0
245.4
203.2
10
%
32
%
Total
$
1,945.0
$
1,846.1
$
1,481.7
5
%
31
%
SECOND QUARTER 2022 OUTLOOK
The following table outlines onsemi's projected second quarter
of 2022 GAAP and non-GAAP outlook.
Total onsemi GAAP
Special Items **
Total onsemi Non-GAAP***
Revenue
$1,965 to $2,065 million
-
$1,965 to $2,065 million
Gross Margin
48.5% to 50.5%
-
48.5% to 50.5%
Operating Expenses
$330 to $345 million
$25 million
$305 to $320 million
Other Income and Expense (including
interest expense), net
$20 to $24 million
-
$20 to $24 million
Diluted Earnings Per Share
$1.13 to $1.25
$0.07
$1.20 to $1.32
Diluted Shares Outstanding *
450 million
7 million
443 million
*
Diluted shares outstanding can vary as a
result of, among other things, the actual exercise of options or
vesting of restricted stock units, the incremental dilutive shares
from the Company's convertible senior subordinated notes, and the
repurchase or the issuance of stock or convertible notes or the
sale of treasury shares. In periods when the quarterly average
stock price per share exceeds $20.72 for the 1.625% Notes and
$52.97 for the 0% Notes, the non-GAAP diluted share count and
non-GAAP net income per share include the anti-dilutive impact of
the Company’s hedge transactions issued concurrently with the
1.625% Notes and the 0% Notes, respectively. At an average stock
price per share between $20.72 and $30.70 for the 1.625% Notes and
$52.97 and $74.34 for the 0% Notes, the hedging activity offsets
the potentially dilutive effect of the 1.625% Notes and 0% Notes,
respectively. In periods when the quarterly average stock price
exceeds $30.70 for the 1.625% Notes, and $74.34 for the 0% Notes,
the dilutive impact of the warrants issued concurrently with such
notes are included in the diluted shares outstanding. GAAP and
non-GAAP diluted share counts are based on either the previous
quarter's average stock price or the stock price as of the last day
of the previous quarter, whichever is higher.
**
Special items may include: amortization of
acquisition-related intangibles; expensing of appraised inventory
fair market value step-up; non-recurring facility costs, purchased
in-process research and development expenses; restructuring, asset
impairments and other, net; goodwill impairment charges; gains and
losses on debt prepayment; non-cash interest expense; actuarial
(gains) losses on pension plans and other pension benefits; and
certain other special items, as necessary. These special items are
out of our control and could change significantly from period to
period. As a result, we are not able to reasonably estimate and
separately present the individual impact or probable significance
of these special items, and we are similarly unable to provide a
reconciliation of the non-GAAP measures. The reconciliation that is
unavailable would include a forward-looking income statement,
balance sheet and statement of cash flows in accordance with GAAP.
For this reason, we use a projected range of the aggregate amount
of special items in order to calculate our projected non-GAAP
operating expense outlook.
***
We believe these non-GAAP measures provide
important supplemental information to investors. We use these
measures, together with GAAP measures, for internal managerial
purposes and as a means to evaluate period-to-period comparisons.
However, we do not, and you should not, rely on non-GAAP financial
measures alone as measures of our performance. We believe that
non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when taken together with GAAP
results and the reconciliations to corresponding GAAP financial
measures that we also provide in our releases, provide a more
complete understanding of factors and trends affecting our
business. Because non-GAAP financial measures are not standardized,
it may not be possible to compare these financial measures with
other companies' non-GAAP financial measures, even if they have
similar names.
TELECONFERENCE
onsemi will host a conference call for the financial community
at 9 a.m. Eastern Time (ET) on May 2, 2022 to discuss this
announcement and onsemi’s 2022 first quarter results. The Company
will also provide a real-time audio webcast of the teleconference
on the Investor Relations page of its website at http://www.onsemi.com. The webcast replay will be
available at this site approximately one hour following the live
broadcast and will continue to be available for approximately 30
days following the conference call. Investors and interested
parties can also access the conference call via telephone by
dialing (877) 356-3762 (U.S./Canada) or: (262) 558-6155
(International). In order to join this conference call, you will be
required to provide the Conference ID Number – which is
4798617.
About onsemi
onsemi (Nasdaq: ON) is driving disruptive innovations to help
build a better future. With a focus on automotive and industrial
end-markets, the company is accelerating change in megatrends such
as vehicle electrification and safety, sustainable energy grids,
industrial automation, and 5G and cloud infrastructure. With a
highly differentiated and innovative product portfolio, onsemi
creates intelligent power and sensing technologies that solve the
world’s most complex challenges and leads the way in creating a
safer, cleaner, and smarter world.
onsemi and the onsemi logo are trademarks of Semiconductor
Components Industries, LLC. All other brand and product names
appearing in this document are registered trademarks or trademarks
of their respective holders. Although the Company references its
website in this news release, information on the website is not to
be incorporated herein.
This document includes “forward-looking statements,” as that
term is defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts,
included or incorporated in this document could be deemed
forward-looking statements, particularly statements about the
future financial performance of onsemi, including financial
guidance for the year ending December 31, 2022. Forward-looking
statements are often characterized by the use of words such as
“believes,” “estimates,” “expects,” “projects,” “may,” “will,”
“intends,” “plans” or “anticipates” or by discussions of strategy,
plans or intentions. All forward-looking statements in this
document are made based on our current expectations, forecasts,
estimates and assumptions and involve risks, uncertainties and
other factors that could cause results or events to differ
materially from those expressed in the forward-looking statements.
Certain factors that could affect our future results or events are
described under Part I, Item 1A “Risk Factors” in the 2021 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission (“SEC”) on February 14, 2022 (the “2021 Form 10-K”) and
from time to time in our other SEC reports. Readers are cautioned
not to place undue reliance on forward-looking statements. We
assume no obligation to update such information, except as may be
required by law. You should carefully consider the trends, risks
and uncertainties described in this document, our 2021 Form 10-K
and subsequent reports filed with or furnished to the SEC before
making any investment decision with respect to our securities. If
any of these trends, risks or uncertainties actually occurs or
continues, our business, financial condition or operating results
could be materially adversely affected, the trading prices of our
securities could decline, and you could lose all or part of your
investment. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by this cautionary statement.
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in millions, except per share
data)
Quarters Ended
April 1, 2022
December 31, 2021
April 2, 2021
Revenue
$
1,945.0
$
1,846.1
$
1,481.7
Cost of revenue (exclusive of amortization
shown below)
983.7
1,013.9
960.5
Gross profit
961.3
832.2
521.2
Gross margin
49.4
%
45.1
%
35.2
%
Operating expenses:
Research and development
156.8
160.6
173.6
Selling and marketing
71.1
70.2
78.9
General and administrative
77.9
83.5
72.4
Amortization of acquisition-related
intangible assets
21.3
24.5
25.0
Restructuring, asset impairments and other
charges, net
(13.0
)
13.1
42.5
Intangible asset impairment
—
—
2.9
Total operating expenses
314.1
351.9
395.3
Operating income
647.2
480.3
125.9
Other income (expense), net:
Interest expense
(21.6
)
(32.0
)
(33.4
)
Interest income
0.4
0.3
0.4
Loss on debt refinancing and
prepayment
—
(2.8
)
—
Other income
2.1
20.4
4.5
Other income (expense), net
(19.1
)
(14.1
)
(28.5
)
Income before income taxes
628.1
466.2
97.4
Income tax provision
(97.1
)
(39.8
)
(7.1
)
Net income
531.0
426.4
90.3
Less: Net income attributable to
non-controlling interest
(0.8
)
(0.5
)
(0.4
)
Net income attributable to ON
Semiconductor Corporation
$
530.2
$
425.9
$
89.9
Net income for diluted earnings per share
of common stock
$
530.7
$
425.9
$
89.9
Net income per share of common stock:
Basic
$
1.22
$
0.99
$
0.22
Diluted
$
1.18
$
0.96
$
0.20
Weighted average common shares
outstanding:
Basic
433.3
431.1
413.4
Diluted
448.9
445.3
445.4
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(in millions)
April 1, 2022
December 31, 2021
April 2, 2021
Assets
Cash and cash equivalents
$
1,645.1
$
1,352.6
$
1,042.5
Receivables, net
910.7
809.4
683.6
Inventories
1,496.0
1,379.5
1,295.5
Other current assets
315.6
240.1
166.0
Total current assets
4,367.4
3,781.6
3,187.6
Property, plant and equipment, net
2,559.4
2,524.3
2,489.4
Goodwill
1,936.7
1,937.5
1,663.4
Intangible assets, net
474.5
495.7
441.1
Deferred tax assets
349.3
366.3
447.2
Other assets
525.1
520.6
401.7
Total assets
$
10,212.4
$
9,626.0
$
8,630.4
Liabilities, Non-Controlling Interest
and Stockholders’ Equity
Accounts payable
$
725.3
$
635.1
$
605.0
Accrued expenses and other current
liabilities
670.4
747.6
588.3
Current portion of long-term debt
170.4
160.7
536.7
Total current liabilities
1,566.1
1,543.4
1,730.0
Long-term debt
3,035.4
2,913.9
2,806.9
Deferred tax liabilities
40.9
43.2
53.9
Other long-term liabilities
552.0
521.1
390.0
Total liabilities
5,194.4
5,021.6
4,980.8
ON Semiconductor Corporation stockholders’
equity:
Common stock
6.1
6.0
5.8
Additional paid-in capital
4,533.3
4,633.3
4,161.0
Accumulated other comprehensive loss
(26.4
)
(40.6
)
(55.9
)
Accumulated earnings
2,992.4
2,435.1
1,515.4
Less: Treasury stock, at cost
(2,507.2
)
(2,448.4
)
(1,996.7
)
Total ON Semiconductor Corporation
stockholders’ equity
4,998.2
4,585.4
3,629.6
Non-controlling interest
19.8
19.0
20.0
Total stockholders' equity
5,018.0
4,604.4
3,649.6
Total liabilities and stockholders'
equity
$
10,212.4
$
9,626.0
$
8,630.4
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED
STATEMENT OF CASH FLOWS
(in millions)
Quarters Ended
April 1, 2022
December 31, 2021
April 2, 2021
Cash flows from operating activities:
Net income
$
531.0
$
426.4
$
90.3
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
140.6
140.3
153.4
(Gain) loss on sale and disposal of fixed
assets
(16.6
)
2.8
0.3
Amortization of debt discount and issuance
costs
3.2
2.7
2.4
Share-based compensation
22.5
27.2
22.3
Non-cash interest on convertible notes
—
7.1
4.6
Non-cash asset impairment charges
6.7
—
6.1
Change in deferred tax balances
38.3
22.9
(23.2
)
Other
0.5
1.8
(2.0
)
Changes in assets and liabilities
(247.6
)
(4.6
)
(35.7
)
Net cash provided by operating
activities
$
478.6
$
626.6
$
218.5
Cash flows from investing activities:
Purchase of Property, Plant and Equipment
("PP&E")
$
(173.8
)
$
(169.6
)
$
(77.0
)
Deposits and proceeds from sale of
PP&E
36.7
7.4
0.2
Deposits utilized (made) for purchase of
PP&E
1.6
(25.9
)
(0.4
)
Divestiture of business, net of cash
transferred and deposits received
12.9
3.6
—
Purchase of business, net of cash
acquired
(2.4
)
(399.4
)
—
Purchase of available-for-sale
securities
(7.8
)
(5.1
)
—
Proceeds from sale or maturity of
available-for-sale securities
3.4
1.4
—
Net cash used in investing activities
$
(129.4
)
$
(587.6
)
$
(77.2
)
Cash flows from financing activities:
Proceeds for the issuance of common stock
under the ESPP
$
7.8
$
5.0
$
6.6
Payment of tax withholding for RSUs
(58.8
)
(4.7
)
(28.5
)
Repayment of borrowings under debt
agreements
(4.1
)
(51.7
)
(154.1
)
Payments related to prior acquisition
—
(0.2
)
(2.1
)
Dividend to non-controlling
shareholder
(2.2
)
—
—
Net cash used in financing activities
$
(57.3
)
$
(51.6
)
$
(178.1
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(0.7
)
(0.3
)
(0.8
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
291.2
(12.9
)
(37.6
)
Beginning cash, cash equivalents and
restricted cash
1,377.7
1,390.6
1,081.5
Ending cash, cash equivalents and
restricted cash
$
1,668.9
$
1,377.7
$
1,043.9
ON SEMICONDUCTOR
CORPORATION
RECONCILIATION OF GAAP VERSUS
NON-GAAP DISCLOSURES
(in millions, except per share
and percentage data)
Quarters Ended
April 1, 2022
December 31, 2021
April 2, 2021
Reconciliation of GAAP to non-GAAP
gross profit:
GAAP gross profit
$
961.3
$
832.2
$
521.2
Special items:
a)
Non-recurring facility costs
—
2.3
—
Total special items
—
2.3
—
Non-GAAP gross profit
$
961.3
$
834.5
$
521.2
Reconciliation of GAAP to non-GAAP
gross margin:
GAAP gross margin
49.4
%
45.1
%
35.2
%
Special items:
a)
Non-recurring facility costs
—
%
0.1
%
—
%
Total special items
—
%
0.1
%
—
%
Non-GAAP gross margin
49.4
%
45.2
%
35.2
%
Reconciliation of GAAP to non-GAAP
operating expenses:
GAAP operating expenses
$
314.1
$
351.9
$
395.3
Special items:
a)
Amortization of acquisition-related
intangible assets
(21.3
)
(24.5
)
(25.0
)
b)
Restructuring, asset impairments and
other, net
13.0
(13.1
)
(42.5
)
c)
Intangible asset impairment
—
—
(2.9
)
d)
Third party acquisition and divestiture
related costs
(3.0
)
(7.9
)
(0.2
)
Total special items
(11.3
)
(45.5
)
(70.6
)
Non-GAAP operating expenses
$
302.8
$
306.4
$
324.7
Reconciliation of GAAP to non-GAAP
operating income:
GAAP operating income
$
647.2
$
480.3
$
125.9
Special items:
a)
Non-recurring facility costs
—
2.3
—
b)
Amortization of acquisition-related
intangible assets
21.3
24.5
25.0
c)
Restructuring, asset impairments and
other, net
(13.0
)
13.1
42.5
d)
Intangible asset impairment
—
—
2.9
e)
Third party acquisition and divestiture
related costs
3.0
7.9
0.2
Total special items
11.3
47.8
70.6
Non-GAAP operating income
$
658.5
$
528.1
$
196.5
Reconciliation of GAAP to non-GAAP
operating margin (operating income / revenue):
GAAP operating margin
33.3
%
26.0
%
8.5
%
Special items:
a)
Non-recurring facility costs
—
%
0.1
%
—
%
b)
Amortization of acquisition-related
intangible assets
1.1
%
1.3
%
1.7
%
c)
Restructuring, asset impairments and
other, net
(0.7
) %
0.7
%
2.9
%
d)
Intangible asset impairment
—
%
—
%
—
%
e)
Third party acquisition and divestiture
related costs
0.2
%
0.4
%
—
%
Total special items
0.6
%
2.6
%
4.8
%
Non-GAAP operating margin
33.9
%
28.6
%
13.3
%
Reconciliation of GAAP to non-GAAP
income before income taxes:
GAAP income before income taxes
$
628.1
$
466.2
$
97.4
Special items:
a)
Non-recurring facility costs
—
2.3
—
b)
Amortization of acquisition-related
intangible assets
21.3
24.5
25.0
c)
Restructuring, asset impairments and
other, net
(13.0
)
13.1
42.5
d)
Intangible asset impairment
—
—
2.9
e)
Third party acquisition and divestiture
related costs
3.0
7.9
0.2
f)
Actuarial (gains) losses on pension plans
and other pension benefits
—
(22.2
)
—
g)
Loss on debt refinancing and
prepayment
—
2.8
—
h)
Non-cash interest on convertible notes
—
7.1
4.6
Total special items
11.3
35.5
75.2
Non-GAAP income before income taxes
$
639.4
$
501.7
$
172.6
Reconciliation of GAAP to non-GAAP net
income attributable to ON Semiconductor Corporation:
GAAP net income attributable to ON
Semiconductor Corporation
$
530.2
$
425.9
$
89.9
Special items:
a)
Non-recurring facility costs
—
2.3
—
b)
Amortization of acquisition-related
intangible assets
21.3
24.5
25.0
c)
Restructuring, asset impairments and
other, net
(13.0
)
13.1
42.5
d)
Intangible asset impairment
—
—
2.9
e)
Third party acquisition and divestiture
related costs
3.0
7.9
0.2
f)
Actuarial (gains) losses on pension plans
and other pension benefits
—
(22.2
)
—
g)
Loss on debt refinancing and
prepayment
—
2.8
—
h)
Non-cash interest on convertible notes
—
7.1
4.6
i)
Adjustment of income taxes
(3.0
)
16.6
(13.8
)
Total special items
8.3
52.1
61.4
Non-GAAP net income attributable to ON
Semiconductor Corporation
$
538.5
$
478.0
$
151.3
Adjustment of income taxes:
Tax adjustment for special items (1)
$
(2.4
)
$
(7.5
)
$
(15.8
)
Other non-GAAP tax adjustment (2)
(0.6
)
24.1
2.0
Total adjustment of income taxes
$
(3.0
)
$
16.6
$
(13.8
)
GAAP net income for diluted earnings per
share
$
530.7
$
425.9
$
89.9
Non-GAAP net income for diluted earnings
per share
$
539.0
$
478.0
$
151.3
Reconciliation of GAAP to non-GAAP
diluted shares outstanding:
GAAP diluted shares outstanding
448.9
445.3
445.4
Special items:
a)
Less: dilutive shares attributable to
convertible notes
(6.9
)
(6.9
)
(12.8
)
Total special items
(6.9
)
(6.9
)
(12.8
)
Non-GAAP diluted shares outstanding
442.0
438.4
432.6
Non-GAAP diluted earnings per
share:
Non-GAAP net income for diluted earnings
per share
$
539.0
$
478.0
$
151.3
Non-GAAP diluted shares outstanding
442.0
438.4
432.6
Non-GAAP diluted earnings per share
$
1.22
$
1.09
$
0.35
Reconciliation of net cash provided by
operating activities to free cash flow:
Net cash provided by operating
activities
$
478.6
$
626.6
$
218.5
Special items:
a)
Purchase of property, plant and
equipment
(173.8
)
(169.6
)
(77.0
)
Total special items
(173.8
)
(169.6
)
(77.0
)
Free cash flow
$
304.8
$
457.0
$
141.5
ON SEMICONDUCTOR
CORPORATION
RECONCILIATION OF GAAP VERSUS
NON-GAAP DISCLOSURES (Continued)
(in millions, except per share
and percentage data)
Quarters Ended
July 2, 2021
October 1, 2021
December 31, 2021
April 1, 2022
LTM
Net cash provided by operating
activities
$
488.0
$
448.9
$
626.6
478.6
$
2,042.1
Purchase of property, plant and
equipment
(104.8
)
(93.2
)
(169.6
)
(173.8
)
(541.4
)
Free cash flow
$
383.2
$
355.7
$
457.0
$
304.8
$
1,500.7
Revenue
$
1,669.9
$
1,742.1
$
1,846.1
$
1,945.0
$
7,203.1
(1)
Tax impact of non-GAAP special items (a-h)
is calculated using the federal statutory rate of 21% for all
periods presented.
(2)
For the periods related to the year ended
December 31, 2021, the income tax adjustment primarily represents
the use of the net operating loss, non-cash impact of not asserting
indefinite reinvestment on earnings of our foreign subsidiaries,
deferred tax expense not affecting taxes payable, and non-cash
expense (benefit) related to uncertain tax positions. For the
periods related to the year ended December 31, 2022, the income tax
adjustment primarily relates to discrete tax and other non-GAAP
adjustments.
Certain of the amounts in the above tables may not total due to
rounding of individual amounts.
Total share-based compensation related to restricted stock
units, stock grant awards and the employee stock purchase plan is
included below:
Quarters Ended
April 1, 2022
December 31, 2021
April 2, 2021
Cost of revenue
$
2.6
$
3.8
$
3.3
Research and development
4.4
5.8
5.7
Selling and marketing
3.8
4.1
4.3
General and administrative
11.7
13.5
9.0
Total share-based compensation
$
22.5
$
27.2
$
22.3
SUPPLEMENTAL FINANCIAL DATA
Quarters Ended
April 1, 2022
December 31, 2021
April 2, 2021
Net cash provided by operating
activities
$
478.6
$
626.6
$
218.5
Free cash flow
304.8
457.0
141.5
Cash paid for income taxes
15.7
23.2
20.9
Depreciation and amortization
$
140.6
$
140.3
$
153.4
Less: Amortization of acquisition-related
intangible assets
21.3
24.5
25.0
Depreciation and amortization (excl.
amortization of acquisition-related intangible assets)
$
119.3
$
115.8
$
128.4
NON-GAAP MEASURES
To supplement the consolidated financial results prepared in
accordance with GAAP, onsemi uses certain non-GAAP measures, which
are adjusted from the most directly comparable GAAP measures to
exclude items related to the amortization of intangible assets,
amortization of acquisition-related intangibles, expensing of
appraised inventory fair market value step-up, inventory valuation
adjustments, purchased in-process research and development
expenses, restructuring, asset impairments and other, net, goodwill
impairment charges, gains and losses on debt prepayment, non-cash
interest expense, actuarial (gains) losses on pension plans and
other pension benefits, third party acquisition and
divestiture-related costs, tax impact of these items and certain
other non-recurring items, as necessary. Management does not
consider the effects of these items in evaluating the core
operational activities of onsemi. Management uses these non-GAAP
measures internally to make strategic decisions, forecast future
results and evaluate onsemi’s current performance. In addition, the
Company believes that most analysts covering onsemi use the
non-GAAP measures to evaluate onsemi's performance. Given
management’s and other relevant use of these non-GAAP measures,
onsemi believes these measures are important to investors in
understanding onsemi's current and future operating results as seen
through the eyes of management. In addition, management believes
these non-GAAP measures are useful to investors in enabling them to
better assess changes in onsemi's core business across different
time periods. These non-GAAP measures are not prepared in
accordance with, and should not be considered alternatives or
necessarily superior to, GAAP financial data and may be different
from non-GAAP measures used by other companies. Because non-GAAP
financial measures are not standardized, it may not be possible to
compare these financial measures with other companies’ non-GAAP
financial measures, even if they have similar names.
Non-GAAP Revenue
The use of non-GAAP revenue allows management to evaluate, among
other things, the revenue from the Company’s core businesses and
trends across different reporting periods on a consistent basis,
independent of special items. In addition, non-GAAP revenue is an
important component of management’s internal performance
measurement and incentive and reward process as it is used to
assess the current and historical financial results of the business
and for strategic decision making, preparing budgets, obtaining
targets and forecasting future results. Management presents this
non-GAAP financial measure to enable investors and analysts to
evaluate the Company's revenue generation performance relative to
the direct costs of operations of onsemi’s core businesses.
Non-GAAP Gross Profit and Gross Margin
The use of non-GAAP gross profit and gross margin allows
management to evaluate, among other things, the gross margin and
gross profit of the Company’s core businesses and trends across
different reporting periods on a consistent basis, independent of
non-cash items including, generally speaking, expensing of
appraised inventory fair market value step-up and non-recurring
facility costs. In addition, it is an important component of
management’s internal performance measurement and incentive and
reward process as it is used to assess the current and historical
financial results of the business and for strategic decision
making, preparing budgets, obtaining targets and forecasting future
results. Management presents this non-GAAP financial measure to
enable investors and analysts to evaluate our revenue generation
performance relative to the direct costs of revenue of onsemi’s
core businesses.
Non-GAAP Operating Income and Operating Margin
The use of non-GAAP operating income and operating margin allows
management to evaluate, among other things, the operating margin
and operating income of the Company’s core businesses and trends
across different reporting periods on a consistent basis,
independent of non-cash items including, generally speaking,
expensing of appraised inventory fair market value step-up,
non-recurring facility costs, amortization and impairments of
intangible assets, third party acquisition and divestiture related
costs, restructuring charges and certain other special items as
necessary. In addition, it is an important component of
management’s internal performance measurement and incentive and
reward process as it is used to assess the current and historical
financial results of the business and for strategic decision
making, preparing budgets, obtaining targets and forecasting future
results. Management presents this non-GAAP financial measure to
enable investors and analysts to evaluate the Company's revenue
generation performance relative to the direct costs of operations
of onsemi’s core businesses.
Non-GAAP Net Income Attributable to onsemi and Non-GAAP Diluted
Earnings Per Share
The use of non-GAAP net income attributable to onsemi and
non-GAAP diluted earnings per share allows management to evaluate
the operating results of onsemi’s core businesses and trends across
different reporting periods on a consistent basis, independent of
non-cash items including, generally, the amortization and
impairments of intangible assets, expensing of appraised inventory
fair market value step-up, non-recurring facility costs,
restructuring, gains and losses on debt prepayment, non-cash
interest expense, actuarial (gains) losses on pension plans and
other pension benefits, third party acquisition and
divestiture-related costs, discrete tax items and other non-GAAP
tax adjustments and certain other special items, as necessary. In
addition, these items are important components of management’s
internal performance measurement and incentive and reward process,
as they are used to assess the current and historical financial
results of the business and for strategic decision making,
preparing budgets, setting targets and forecasting future results.
Management presents these non-GAAP financial measures to enable
investors and analysts to understand the results of operations of
onsemi’s core businesses and, to the extent comparable, to compare
our results of operations on a more consistent basis against those
of other companies in our industry.
Free Cash Flow
The use of free cash flow allows management to evaluate, among
other things, the ability of the Company to make interest or
principal payments on its debt. Free cash flow is defined as the
difference between cash flow from operating activities and capital
expenditures disclosed under investing activities in the
consolidated statement of cash flows. Free cash flow is not an
alternate to cash flow from operating activities as a measure of
liquidity. It is an important component of management’s internal
performance measurement and incentive and reward process as it is
used to assess the current and historical financial results of the
business and for strategic decision making, preparing budgets,
obtaining targets and forecasting future results. Management
presents this non-GAAP financial measure to enable investors and
analysts to evaluate our revenue generation performance relative to
the direct costs of operations of onsemi’s core businesses.
Non-GAAP Diluted Share Count
The use of non-GAAP diluted share count allows management to
evaluate, among other things, the potential dilution due to the
outstanding stock options and restricted stock units excluding the
dilution from the convertible notes that is covered by hedging
activity up to a certain threshold. In periods when the quarterly
average stock price per share exceeds $20.72 for the 1.625% Notes
and $52.97 for the 0% Notes, the non-GAAP diluted share count
includes the anti-dilutive impact of the Company’s hedge
transactions issued concurrently with the 1.625% Notes and the 0%
Notes, respectively. At an average stock price per share between
$20.72 and $30.70 for the 1.625% Notes and $52.97 and $74.34 for
the 0% Notes, the hedging activity offsets the potentially dilutive
effect of the 1.625% Notes and 0% Notes, respectively. In periods
when the quarterly average stock price exceeds $30.70 for the
1.625% Notes, and $74.34 for the 0% Notes, the dilutive impact of
the warrants issued concurrently with such notes are included in
the diluted shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220502005249/en/
Stefanie Cuene Head of Public Relations onsemi (602)
244-3402 stefanie.cuene@onsemi.com
Parag Agarwal Vice President - Investor Relations &
Corporate Development onsemi (602) 244-3437
investor@onsemi.com
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