Automotive and Industrial end-markets
contribute record 79% of revenue
onsemi (the “Company”) (Nasdaq: ON) today announced results for
the first quarter of 2023 with the following highlights:
- Revenue of $1,959.7 million, an increase of 1 percent
year-over-year
- GAAP and non-GAAP gross margin of 46.8 percent
- GAAP operating margin and non-GAAP operating margin of 28.8
percent and 32.2 percent respectively
- GAAP diluted earnings per share of $1.03, Non-GAAP diluted
earnings per share of $1.19 as compared to $1.22 in the quarter a
year ago
- Automotive revenue grew 38% year-over-year to record 50% of
total revenue
- Automotive and industrial end-markets together represented
record 79% of revenue
“We continued our momentum with first quarter results exceeding
expectations despite macroeconomic uncertainties. Our accelerating
Silicon Carbide manufacturing output exceeded our internal plans
and enabled us to nearly double our silicon carbide revenue
quarter-over-quarter, and we grew both ADAS and energy
infrastructure revenue by approximately 50% year-over-year. As
secular tailwinds propel our business, we are prudently managing
our operations to deliver consistent and predictable results in the
current market environment,” said Hassane El-Khoury, President and
CEO of onsemi.
Selected financial results for the
quarter are shown below with comparable periods
(unaudited):
GAAP
Non-GAAP
(Revenue and Net Income in
millions)
Q1 2023
Q4 2022
Q1 2022
Q1 2023
Q4 2022
Q1 2022
Revenue
$
1,959.7
$
2,103.6
$
1,945.0
$
1,959.7
$
2,103.6
$
1,945.0
Gross Margin
46.8
%
48.5
%
49.4
%
46.8
%
48.4
%
49.4
%
Operating Margin
28.8
%
33.5
%
33.3
%
32.2
%
34.1
%
33.9
%
Net Income attributable to ON
Semiconductor
$
461.7
$
604.3
$
530.2
$
523.7
$
580.4
$
538.5
Diluted Earnings Per Share
$
1.03
$
1.35
$
1.18
$
1.19
$
1.32
$
1.22
Revenue Summary
(in millions)
(Unaudited)
Three Months Ended
Business Segment
Q1 2023
Q4 2022
Q1 2022
Sequential Change
Year-over-Year Change
PSG
$
1,012.8
$
1,048.4
$
986.7
(3
) %
3
%
ASG
592.8
701.0
689.3
(15
) %
(14
) %
ISG
354.1
354.2
269.0
—
%
32
%
Total
$
1,959.7
$
2,103.6
$
1,945.0
(7
) %
1
%
SECOND QUARTER 2023 OUTLOOK
The following table outlines onsemi's projected second quarter
of 2023 GAAP and non-GAAP outlook.
Total onsemi
GAAP
Special
Items **
Total onsemi
Non-GAAP***
Revenue
$1,975 to $2,075 million
-
$1,975 to $2,075 million
Gross Margin
45.4% to 47.4%
0.1%
45.5% to 47.5%
Operating Expenses
$314 to $329 million
$17 million
$297 to $312 million
Other Income and Expense (including
interest expense), net
$3 to $5 million
-
$3 to $5 million
Diluted Earnings Per Share
$1.08 to $1.22
$0.06
$1.14 to $1.28
Diluted Shares Outstanding *
449 million
9 million
440 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, $52.97
for the 0% Notes, and $103.87 for the 0.50% 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, the 0% Notes, and the 0.50%
Notes, respectively. At an average stock price per share between
$20.72 and $30.70 for the 1.625% Notes, $52.97 and $74.34 for the
0% Notes, and $103.87 and $156.78 for the 0.50% Notes, the hedging
activity offsets the potentially dilutive effect of the 1.625%
Notes, the 0% Notes, and the 0.50% Notes, respectively. In periods
when the quarterly average stock price exceeds $30.70 for the
1.625% Notes, $74.34 for the 0% Notes, and $156.78 for the 0.50%
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; 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 1, 2023 to discuss this
announcement and onsemi’s 2023 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 by pre-registering here.
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. onsemi offers a highly differentiated and
innovative product portfolio, delivering intelligent power and
sensing technologies that solve the world’s most complex challenges
and leads the way to creating a safer, cleaner, and smarter world.
onsemi is recognized as a Fortune 500® company and included
in the S&P 500® index. Learn more about onsemi at
www.onsemi.com.
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 second quarter of 2023. Forward-looking statements
are often characterized by the use of words such as “believes,”
“estimates,” “expects,” “projects,” “may,” “will,” “intends,”
“plans,” “anticipates,” “should” or similar expressions 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 2022 Annual Report on Form 10-K filed with the
Securities and Exchange Commission (“SEC”) on February 6, 2023 (the
“2022 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, which speaks only as of the date made, except as may
be required by law. Investing in our securities involves a high
degree of risk and uncertainty, and you should carefully consider
the trends, risks and uncertainties described in this document, our
2022 Form 10-K and other 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
March 31, 2023
December 31, 2022
April 1, 2022
Revenue
$
1,959.7
$
2,103.6
$
1,945.0
Cost of revenue
1,042.2
1,083.1
983.7
Gross profit
917.5
1,020.5
961.3
Gross margin
46.8
%
48.5
%
49.4
%
Operating expenses:
Research and development
138.4
136.4
156.8
Selling and marketing
71.8
74.2
71.1
General and administrative
75.9
97.2
77.9
Amortization of acquisition-related
intangible assets
15.0
16.1
21.3
Restructuring, asset impairments and other
charges, net
51.5
(7.7
)
(13.0
)
Total operating expenses
352.6
316.2
314.1
Operating income
564.9
704.3
647.2
Other income (expense), net:
Interest expense
(26.4
)
(27.5
)
(21.6
)
Interest income
17.1
9.1
0.4
(Loss) gain on debt prepayment
(13.3
)
0.2
—
(Loss) gain on divestiture of business
(1.1
)
64.9
—
Other income
4.7
12.3
2.1
Other income (expense), net
(19.0
)
59.0
(19.1
)
Income before income taxes
545.9
763.3
628.1
Income tax provision
(83.7
)
(159.0
)
(97.1
)
Net income
462.2
604.3
531.0
Less: Net income attributable to
non-controlling interest
(0.5
)
—
(0.8
)
Net income attributable to ON
Semiconductor Corporation
$
461.7
$
604.3
$
530.2
Net income for diluted earnings per share
of common stock
$
462.1
$
604.7
$
530.7
Net income per share of common stock:
Basic
$
1.07
$
1.40
$
1.22
Diluted
$
1.03
$
1.35
$
1.18
Weighted average common shares
outstanding:
Basic
431.9
432.2
433.3
Diluted
448.5
447.9
448.9
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(in millions)
March 31, 2023
December 31, 2022
April 1, 2022
Assets
Cash and cash equivalents
$
2,702.4
$
2,919.0
$
1,645.1
Receivables, net
880.9
842.3
910.7
Inventories
1,814.9
1,616.8
1,496.0
Other current assets
318.1
351.3
315.6
Total current assets
5,716.3
5,729.4
4,367.4
Property, plant and equipment, net
3,692.9
3,450.7
2,559.4
Goodwill
1,577.6
1,577.6
1,936.7
Intangible assets, net
339.8
359.7
474.5
Deferred tax assets
473.1
376.7
349.3
Right-of-use financing lease
45.2
45.8
21.9
Other assets
429.4
438.6
503.2
Total assets
$
12,274.3
$
11,978.5
$
10,212.4
Liabilities and Stockholders’
Equity
Accounts payable
$
976.2
$
852.1
$
725.3
Accrued expenses and other current
liabilities
666.0
1,047.3
657.7
Current portion of financing lease
liabilities
11.6
14.2
12.7
Current portion of long-term debt
926.2
147.8
170.4
Total current liabilities
2,580.0
2,061.4
1,566.1
Long-term debt
2,538.0
3,045.7
3,035.4
Deferred tax liabilities
36.6
34.1
40.9
Long-term financing lease liabilities
24.0
23.0
10.2
Other long-term liabilities
628.7
607.3
541.8
Total liabilities
5,807.3
5,771.5
5,194.4
ON Semiconductor Corporation stockholders’
equity:
Common stock
6.1
6.1
6.1
Additional paid-in capital
4,633.6
4,670.9
4,533.3
Accumulated other comprehensive loss
(29.6
)
(23.2
)
(26.4
)
Accumulated earnings
4,826.1
4,364.4
2,992.4
Less: Treasury stock, at cost
(2,988.2
)
(2,829.7
)
(2,507.2
)
Total ON Semiconductor Corporation
stockholders’ equity
6,448.0
6,188.5
4,998.2
Non-controlling interest
19.0
18.5
19.8
Total stockholders’ equity
6,467.0
6,207.0
5,018.0
Total liabilities and stockholders’
equity
$
12,274.3
$
11,978.5
$
10,212.4
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in millions)
Quarters Ended
March 31, 2023
December 31, 2022
April 1, 2022
Cash flows from operating activities:
Net income
$
462.2
$
604.3
$
531.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
145.0
133.2
140.6
Loss (Gain) on sale and disposal of fixed
assets
1.2
0.5
(16.6
)
Loss (gain) on divestiture of
businesses
1.1
(64.9
)
—
Loss (gain) on debt prepayment
13.3
(0.2
)
—
Amortization of debt discount and issuance
costs
2.9
2.4
3.2
Share-based compensation
27.7
24.3
22.5
Non-cash asset impairment charges
12.7
—
6.7
Change in deferred tax balances
(1.5
)
67.7
38.3
Other
(7.0
)
(0.5
)
0.5
Changes in assets and liabilities
(248.7
)
(35.5
)
(247.6
)
Net cash provided by operating
activities
$
408.9
$
731.3
$
478.6
Cash flows from investing activities:
Purchase of Property, Plant and Equipment
(“PP&E”)
$
(321.5
)
$
(342.0
)
$
(173.8
)
Deposits and proceeds from sale of
PP&E
1.7
0.1
36.7
Deposits utilized (made) for purchase of
PP&E
(16.7
)
22.7
1.6
Divestiture of business, net of cash
transferred
—
172.6
12.9
Purchase of available-for-sale
securities
—
—
(7.8
)
Proceeds from sale or maturity of
available-for-sale securities
10.8
4.8
3.4
Payments related to acquisition of
business, net of cash acquired
(236.3
)
—
(2.4
)
Net cash used in investing activities
$
(562.0
)
$
(141.8
)
$
(129.4
)
Cash flows from financing activities:
Proceeds for the issuance of common stock
under the ESPP
$
7.3
$
4.7
$
7.8
Payment of tax withholding for RSUs
(47.6
)
(10.7
)
(58.8
)
Repurchase of common stock
(104.0
)
(92.9
)
—
Issuance and borrowings under debt
agreements
1,470.0
—
—
Reimbursement of debt issuance costs
4.5
—
—
Payment of debt issuance and other
financing costs
(4.8
)
—
—
Repayment of borrowings under debt
agreements
(1,213.7
)
(20.5
)
(4.1
)
Payment for purchase of bond hedges
(414.0
)
—
—
Proceeds from issuance of warrants
242.5
—
—
Payments related to prior acquisition
—
(9.2
)
—
Payment of finance lease obligations
(3.6
)
1.0
—
Dividend to non-controlling
shareholder
—
(2.1
)
(2.2
)
Net cash used in financing activities
$
(63.4
)
$
(129.7
)
$
(57.3
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
0.1
0.8
(0.7
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(216.4
)
460.6
291.2
Beginning cash, cash equivalents and
restricted cash
2,933.0
2,472.4
1,377.7
Ending cash, cash equivalents and
restricted cash
$
2,716.6
$
2,933.0
$
1,668.9
ON SEMICONDUCTOR
CORPORATION
RECONCILIATION OF GAAP VERSUS
NON-GAAP DISCLOSURES
(in millions, except per share
and percentage data)
Quarters Ended
March 31, 2023
December 31, 2022
April 1, 2022
Reconciliation of GAAP to non-GAAP
gross profit:
GAAP gross profit
$
917.5
$
1,020.5
$
961.3
Special items:
a)
Impact of business wind down
(2.1
)
(3.6
)
—
b)
Amortization of acquisition-related
intangible assets
1.4
1.6
—
Total special items
(0.7
)
(2.0
)
—
Non-GAAP gross profit
$
916.8
$
1,018.5
$
961.3
Reconciliation of GAAP to non-GAAP
gross margin:
GAAP gross margin
46.8
%
48.5
%
49.4
%
Special items:
a)
Impact of business wind down
(0.1
) %
(0.2
) %
—
%
b)
Amortization of acquisition-related
intangible assets
0.1
%
0.1
%
—
%
Total special items
—
%
(0.1
) %
—
%
Non-GAAP gross margin
46.8
%
48.4
%
49.4
%
Reconciliation of GAAP to non-GAAP
operating expenses:
GAAP operating expenses
$
352.6
$
316.2
$
314.1
Special items:
a)
Amortization of acquisition-related
intangible assets
(15.0
)
(16.1
)
(21.3
)
b)
Restructuring, asset impairments and
other, net
(51.5
)
7.7
13.0
c)
Third party acquisition and
divestiture-related costs
(0.1
)
(7.4
)
(3.0
)
Total special items
(66.6
)
(15.8
)
(11.3
)
Non-GAAP operating expenses
$
286.0
$
300.4
$
302.8
Reconciliation of GAAP to non-GAAP
operating income:
GAAP operating income
$
564.9
$
704.3
$
647.2
Special items:
a)
Impact of business wind down
(2.1
)
(3.6
)
—
b)
Amortization of acquisition-related
intangible assets
16.4
17.7
21.3
c)
Restructuring, asset impairments and
other, net
51.5
(7.7
)
(13.0
)
d)
Third party acquisition and
divestiture-related costs
0.1
7.4
3.0
Total special items
65.9
13.8
11.3
Non-GAAP operating income
$
630.8
$
718.1
$
658.5
Reconciliation of GAAP to non-GAAP
operating margin (operating income / revenue):
GAAP operating margin
28.8
%
33.5
%
33.3
%
Special items:
a)
Impact of business wind down
(0.1
) %
(0.2
) %
—
%
b)
Amortization of acquisition-related
intangible assets
0.8
%
0.8
%
1.1
%
c)
Restructuring, asset impairments and
other, net
2.6
%
(0.4
) %
(0.7
) %
d)
Third party acquisition and
divestiture-related costs
—
%
0.4
%
0.2
%
Total special items
3.4
%
0.7
%
0.6
%
Non-GAAP operating margin
32.2
%
34.1
%
33.9
%
Reconciliation of GAAP to non-GAAP
income before income taxes:
GAAP income before income taxes
$
545.9
$
763.3
$
628.1
Special items:
a)
Impact of business wind down
(2.1
)
(3.6
)
—
b)
Amortization of acquisition-related
intangible assets
16.4
17.7
21.3
c)
Restructuring, asset impairments and
other, net
51.5
(7.7
)
(13.0
)
d)
Third party acquisition and
divestiture-related costs
0.1
7.4
3.0
e)
Loss (gain) on debt repurchase or
exchange
13.3
(0.2
)
—
f)
Actuarial gains on pension plans and other
pension benefits
—
(22.0
)
—
g)
Loss (gain) on divestiture of business
1.1
(64.9
)
—
Total special items
80.3
(73.3
)
11.3
Non-GAAP income before income taxes
$
626.2
$
690.0
$
639.4
Reconciliation of GAAP to non-GAAP net
income attributable to ON Semiconductor Corporation:
GAAP net income attributable to ON
Semiconductor Corporation
$
461.7
$
604.3
$
530.2
Special items:
a)
Impact of business wind down
(2.1
)
(3.6
)
—
b)
Amortization of acquisition-related
intangible assets
16.4
17.7
21.3
c)
Restructuring, asset impairments and
other, net
51.5
(7.7
)
(13.0
)
d)
Third party acquisition and
divestiture-related costs
0.1
7.4
3.0
e)
Actuarial gains on pension plans and other
pension benefits
—
(22.0
)
—
f)
Loss (gain) on debt repurchase or
exchange
13.3
(0.2
)
—
g)
Loss (gain) on divestiture of a
business
1.1
(64.9
)
—
h)
Income taxes
(18.3
)
49.4
(3.0
)
Total special items
62.0
(23.9
)
8.3
Non-GAAP net income attributable to ON
Semiconductor Corporation
$
523.7
$
580.4
$
538.5
GAAP net income for diluted earnings per
share
$
462.1
$
604.7
$
530.7
Non-GAAP net income for diluted earnings
per share
$
524.1
$
580.8
$
539.0
Reconciliation of GAAP to non-GAAP
diluted shares outstanding:
GAAP diluted shares outstanding
448.5
447.9
448.9
Special items:
a)
Less: dilutive shares attributable to
convertible notes
(9.4
)
(8.0
)
(6.9
)
Total special items
(9.4
)
(8.0
)
(6.9
)
Non-GAAP diluted shares outstanding
439.1
439.9
442.0
Non-GAAP diluted earnings per
share:
Non-GAAP net income for diluted earnings
per share
$
524.1
$
580.8
$
539.0
Non-GAAP diluted shares outstanding
439.1
439.9
442.0
Non-GAAP diluted earnings per share
$
1.19
$
1.32
$
1.22
Reconciliation of net cash provided by
operating activities to free cash flow:
Net cash provided by operating
activities
$
408.9
$
731.3
$
478.6
Special items:
a)
Purchase of property, plant and
equipment
(321.5
)
(342.0
)
(173.8
)
Total special items
(321.5
)
(342.0
)
(173.8
)
Free cash flow
$
87.4
$
389.3
$
304.8
Quarters Ended
July 1, 2022
September 30, 2022
December 31, 2022
March 31, 2023
LTM
Net cash provided by operating
activities
$
420.8
$
1,002.4
$
731.3
$
408.9
$
2,563.4
Purchase of property, plant and
equipment
(218.1
)
(271.1
)
(342.0
)
(321.5
)
(1,152.7
)
Free cash flow
$
202.7
$
731.3
$
389.3
$
87.4
$
1,410.7
Revenue
$
2,085.0
$
2,192.6
$
2,103.6
$
1,959.7
$
8,340.9
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:
ON SEMICONDUCTOR
CORPORATION
RECONCILIATION OF GAAP VERSUS
NON-GAAP DISCLOSURES (Continued)
(in millions, except per share
and percentage data)
Quarters Ended
March 31, 2023
December 31, 2022
April 1, 2022
Cost of revenue
$
3.7
$
3.1
$
2.6
Research and development
4.5
3.1
4.4
Selling and marketing
4.1
4.2
3.8
General and administrative
15.4
13.9
11.7
Total share-based compensation
$
27.7
$
24.3
$
22.5
SUPPLEMENTAL FINANCIAL DATA
Quarters Ended
March 31, 2023
December 31, 2022
April 1, 2022
Net cash provided by operating
activities
$
408.9
$
731.3
$
478.6
Free cash flow
87.4
389.3
304.8
Cash paid for income taxes
35.2
113.7
15.7
Depreciation and amortization
$
145.0
$
133.2
140.6
Less: Amortization of acquisition-related
intangible assets
16.4
17.7
21.3
Depreciation and amortization (excl.
amortization of acquisition-related intangible assets)
$
128.6
$
115.5
$
119.3
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 acquisition-related
intangibles, expensing of appraised inventory fair market value
step-up, inventory valuation adjustments, 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 parties' 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, impact of business
wind down 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, impact
of business wind down, 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, impact of business wind down,
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
alternative 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 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, $52.97 for the
0% Notes, and $103.87 for the 0.50% 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, the
0% Notes, and the 0.50% Notes respectively. At an average stock
price per share between $20.72 and $30.70 for the 1.625% Notes,
$52.97 and $74.34 for the 0% Notes, and $103.87 and $156.78 for the
0.50% Notes, the hedging activity offsets the potentially dilutive
effect of the 1.625% Notes, the 0% Notes, and the 0.50% Notes,
respectively. In periods when the quarterly average stock price
exceeds $30.70 for the 1.625% Notes, $74.34 for the 0% Notes, and
$156.78 for the 0.50% 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/20230501005217/en/
Stefanie Cuene Head of Public Relations onsemi (602)
315-3778 stefanie.cuene@onsemi.com
Parag Agarwal Vice President - Investor Relations &
Corporate Development onsemi (602) 244-3437
investor@onsemi.com
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