Increased free cash flow approximately 3x
year-over-year
onsemi (the “Company”) (Nasdaq: ON) today announced results for
the first quarter of 2024 with the following highlights:
- Revenue of $1,862.7 million
- GAAP gross margin and non-GAAP gross margin of 45.8% and 45.9%,
respectively
- GAAP operating margin and non-GAAP operating margin of 28.2%
and 29.0%, respectively
- GAAP diluted earnings per share and non-GAAP diluted earnings
per share of $1.04 and $1.08, respectively
- Returned ~100% of free cash flow over last twelve months to
shareholders through stock repurchases
“The structural changes we have made to the business over the
last three years have enabled us to sustain our gross margin
despite challenging market conditions,” said Hassane El-Khoury,
president and chief executive officer of onsemi. “In the current
environment, we remain focused on execution while investing for our
long-term growth. As power continues to play a critical role in the
world’s increasing energy demands, efficiency is paramount, and we
are positioned to continue to gain share with our portfolio of
industry-leading power and sensing technologies.”
Selected financial results for the quarter are shown below
with comparable periods (unaudited):
GAAP
Non-GAAP
(Revenue and Net Income in
millions)
Q1 2024
Q4 2023
Q1 2023
Q1 2024
Q4 2023
Q1 2023
Revenue
$
1,862.7
$
2,018.1
$
1,959.7
$
1,862.7
$
2,018.1
$
1,959.7
Gross Margin
45.8
%
46.7
%
46.8
%
45.9
%
46.7
%
46.8
%
Operating Margin
28.2
%
30.3
%
28.8
%
29.0
%
31.6
%
32.2
%
Net Income attributable to ON
Semiconductor Corporation
$
453.0
$
562.7
$
461.7
$
464.5
$
540.9
$
523.7
Diluted Earnings Per Share
$
1.04
$
1.28
$
1.03
$
1.08
$
1.25
$
1.19
Revenue Summary
(in millions)
(Unaudited)
Three Months Ended
Business Segment(1)
Q1 2024
Q4 2023
Q1 2023
Sequential Change
Year-over-Year Change
PSG
$
874.2
$
965.5
$
860.9
(9
)%
2
%
AMG
697.0
744.9
744.7
(6
)%
(6
)%
ISG
291.5
307.7
354.1
(5
)%
(18
)%
Total
$
1,862.7
$
2,018.1
$
1,959.7
(8
)%
(5
)%
(1)
During the first quarter of 2024, the
Company reorganized certain reporting units and its segment
reporting structure. As a result of the reorganization of divisions
within PSG and AMG, the prior-period amounts have been reclassified
to conform to current-period presentation.
SECOND QUARTER 2024 OUTLOOK
The following table outlines onsemi's projected second quarter
of 2024 GAAP and non-GAAP outlook.
Total onsemi
GAAP
Special
Items **
Total onsemi
Non-GAAP***
Revenue
$1,680 to $1,780 million
-
$1,680 to $1,780 million
Gross Margin
44.1% to 46.1%
0.1%
44.2% to 46.2%
Operating Expenses
$327 to $342 million
$14 million
$313 to $328 million
Other Income and Expense (including
interest), net
($12 million)
-
($12 million)
Diluted Earnings Per Share
$0.82 to $0.94
$0.04
$0.86 to $0.98
Diluted Shares Outstanding *
436 million
4 million
432 million
*
Diluted shares outstanding can vary as a
result of, among other things, the vesting of restricted stock
units, the incremental dilutive shares from the 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 $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 hedge transactions entered concurrently
with the 0% Notes, and the 0.50% Notes, respectively. At an average
stock price per share between $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 0% Notes, and the
0.50% Notes, respectively. In periods when the quarterly average
stock price exceeds $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 is 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; 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 April 29, 2024 to discuss this
announcement and onsemi’s 2024 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
https://investor.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 Nasdaq-100 Index® and 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 2024. 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 2023 Annual Report on Form 10-K filed with the
Securities and Exchange Commission (“SEC”) on February 5, 2024 (the
“2023 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
2023 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 29, 2024
December 31, 2023
March 31, 2023
Revenue
$
1,862.7
$
2,018.1
$
1,959.7
Cost of revenue
1,009.1
1,076.2
1,042.2
Gross profit
853.6
941.9
917.5
Gross margin
45.8
%
46.7
%
46.8
%
Operating expenses:
Research and development
150.0
150.2
138.4
Selling and marketing
69.1
67.5
71.8
General and administrative
95.3
88.6
75.9
Amortization of acquisition-related
intangible assets
12.6
12.1
15.0
Restructuring, asset impairments and other
charges, net
1.4
11.4
51.5
Total operating expenses
328.4
329.8
352.6
Operating income
525.2
612.1
564.9
Other income (expense), net:
Interest expense
(15.6
)
(15.8
)
(26.4
)
Interest income
27.6
26.3
17.1
Loss on debt prepayment
—
—
(13.3
)
Loss on divestiture of business
—
—
(1.1
)
Other income (expense)
1.0
(11.7
)
4.7
Other income (expense), net
13.0
(1.2
)
(19.0
)
Income before income taxes
538.2
610.9
545.9
Income tax provision
(84.5
)
(47.5
)
(83.7
)
Net income
453.7
563.4
462.2
Less: Net income attributable to
non-controlling interest
(0.7
)
(0.7
)
(0.5
)
Net income attributable to ON
Semiconductor Corporation
$
453.0
$
562.7
$
461.7
Net income for diluted earnings per share
of common stock
$
453.0
$
562.8
$
462.1
Net income per share of common stock:
Basic
$
1.06
$
1.31
$
1.07
Diluted
$
1.04
$
1.28
$
1.03
Weighted average common shares
outstanding:
Basic
428.1
428.1
431.9
Diluted
436.5
439.5
448.5
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(in millions)
March 29, 2024
December 31, 2023
March 31, 2023
Assets
Cash and cash equivalents
$
2,614.4
$
2,483.0
$
2,702.4
Receivables, net
873.3
935.4
880.9
Inventories
2,147.1
2,111.8
1,814.9
Other current assets
514.1
382.1
318.1
Total current assets
6,148.9
5,912.3
5,716.3
Property, plant and equipment, net
4,384.3
4,401.5
3,692.9
Goodwill
1,577.6
1,577.6
1,577.6
Intangible assets, net
289.4
299.3
339.8
Deferred tax assets
648.4
600.8
473.1
ROU financing lease assets
41.8
42.4
45.2
Other assets
392.5
381.3
429.4
Total assets
$
13,482.9
$
13,215.2
$
12,274.3
Liabilities and Stockholders’
Equity
Accounts payable
$
665.8
$
725.6
$
976.2
Accrued expenses and other current
liabilities
678.1
663.2
666.0
Current portion of financing lease
liabilities
0.3
0.8
11.6
Current portion of long-term debt
794.8
794.0
926.2
Total current liabilities
2,139.0
2,183.6
2,580.0
Long-term debt
2,544.1
2,542.6
2,538.0
Deferred tax liabilities
37.3
38.7
36.6
Long-term financing lease liabilities
21.3
22.4
24.0
Other long-term liabilities
598.6
627.3
628.7
Total liabilities
5,340.3
5,414.6
5,807.3
ON Semiconductor Corporation stockholders’
equity:
Common stock
6.2
6.2
6.1
Additional paid-in capital
5,243.9
5,210.9
4,633.6
Accumulated other comprehensive loss
(52.2
)
(45.2
)
(29.6
)
Accumulated earnings
7,001.1
6,548.1
4,826.1
Less: Treasury stock, at cost
(4,075.1
)
(3,937.4
)
(2,988.2
)
Total ON Semiconductor Corporation
stockholders’ equity
8,123.9
7,782.6
6,448.0
Non-controlling interest
18.7
18.0
19.0
Total stockholders’ equity
8,142.6
7,800.6
6,467.0
Total liabilities and stockholders’
equity
$
13,482.9
$
13,215.2
$
12,274.3
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in millions)
Quarters Ended
March 29, 2024
December 31, 2023
March 31, 2023
Cash flows from operating activities:
Net income
$
453.7
$
563.4
$
462.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
154.9
160.3
145.0
Loss on sale and disposal of fixed
assets
0.1
4.3
1.2
Loss on divestiture of businesses
—
—
1.1
Loss on debt prepayment
—
—
13.3
Amortization of debt discount and issuance
costs
2.7
2.6
2.9
Share-based compensation
33.0
30.7
27.7
Non-cash asset impairment charges
—
6.8
12.7
Change in deferred tax balances
(48.6
)
(18.7
)
(1.5
)
Other
1.8
(6.2
)
(7.0
)
Changes in assets and liabilities
(98.9
)
(132.0
)
(248.7
)
Net cash provided by operating
activities
498.7
611.2
408.9
Cash flows from investing activities:
Purchase of Property, Plant and Equipment
(“PP&E”)
(222.4
)
(390.5
)
(321.5
)
Deposits and proceeds from sale of
PP&E
0.1
1.2
1.7
Deposits utilized (made) for purchase of
PP&E
(11.5
)
4.1
(16.7
)
Proceeds from sale or maturity of
available-for-sale securities
—
—
10.8
Payments related to acquisition of
business
—
—
(236.3
)
Other
(1.5
)
—
—
Net cash used in investing activities
(235.3
)
(385.2
)
(562.0
)
Cash flows from financing activities:
Proceeds for the issuance of common stock
under the ESPP
7.6
5.9
7.3
Payment of tax withholding for RSUs
(37.5
)
(4.4
)
(47.6
)
Repurchase of common stock
(100.0
)
(300.2
)
(104.0
)
Issuance and borrowings under debt
agreements
—
—
1,470.0
Reimbursement of debt issuance costs
—
—
4.5
Payment of debt issuance and other
financing costs
—
(0.7
)
(4.8
)
Repayment of borrowings under debt
agreements
—
(119.6
)
(1,213.7
)
Payment for purchase of bond hedges
—
—
(414.0
)
Proceeds from issuance of warrants
—
—
242.5
Payments related to prior acquisition
—
(5.8
)
—
Payment of finance lease obligations
(0.9
)
(5.0
)
(3.6
)
Dividend to non-controlling
shareholder
—
(2.4
)
—
Net cash used in financing activities
(130.8
)
(432.2
)
(63.4
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(0.9
)
0.4
0.1
Net increase (decrease) in cash, cash
equivalents and restricted cash
131.7
(205.8
)
(216.4
)
Beginning cash, cash equivalents and
restricted cash
2,485.0
2,690.8
2,933.0
Ending cash, cash equivalents and
restricted cash
$
2,616.7
$
2,485.0
$
2,716.6
ON SEMICONDUCTOR
CORPORATION
RECONCILIATION OF GAAP VERSUS
NON-GAAP DISCLOSURES
(in millions, except per share
and percentage data)
Quarters Ended
March 29, 2024
December 31, 2023
March 31, 2023
Reconciliation of GAAP to non-GAAP
gross profit:
GAAP gross profit
$
853.6
$
941.9
$
917.5
Special items:
a)
Impact of business wind down
—
—
(2.1
)
b)
Amortization of acquisition-related
intangible assets
1.5
1.5
1.4
Total special items
1.5
1.5
(0.7
)
Non-GAAP gross profit
$
855.1
$
943.4
$
916.8
Reconciliation of GAAP to non-GAAP
gross margin:
GAAP gross margin
45.8
%
46.7
%
46.8
%
Special items:
a)
Impact of business wind down
—
%
—
%
(0.1
)%
b)
Amortization of acquisition-related
intangible assets
0.1
%
0.1
%
0.1
%
Total special items
0.1
%
0.1
%
—
%
Non-GAAP gross margin
45.9
%
46.7
%
46.8
%
Reconciliation of GAAP to non-GAAP
operating expenses:
GAAP operating expenses
$
328.4
$
329.8
$
352.6
Special items:
a)
Amortization of acquisition-related
intangible assets
(12.6
)
(12.1
)
(15.0
)
b)
Restructuring, asset impairments and
other, net
(1.4
)
(11.4
)
(51.5
)
c)
Third party acquisition and
divestiture-related costs
(0.1
)
0.1
(0.1
)
Total special items
(14.1
)
(23.4
)
(66.6
)
Non-GAAP operating expenses
$
314.3
$
306.4
$
286.0
Reconciliation of GAAP to non-GAAP
operating income:
GAAP operating income
$
525.2
$
612.1
$
564.9
Special items:
a)
Impact of business wind down
—
—
(2.1
)
b)
Amortization of acquisition-related
intangible assets
14.1
13.6
16.4
c)
Restructuring, asset impairments and
other, net
1.4
11.4
51.5
d)
Third party acquisition and
divestiture-related costs
0.1
(0.1
)
0.1
Total special items
15.6
24.9
65.9
Non-GAAP operating income
$
540.8
$
637.0
$
630.8
Reconciliation of GAAP to non-GAAP
operating margin (operating income / revenue):
GAAP operating margin
28.2
%
30.3
%
28.8
%
Special items:
a)
Impact of business wind down
—
%
—
%
(0.1
)%
b)
Amortization of acquisition-related
intangible assets
0.8
%
0.7
%
0.8
%
c)
Restructuring, asset impairments and
other, net
0.1
%
0.6
%
2.6
%
Total special items
0.8
%
1.2
%
3.4
%
Non-GAAP operating margin
29.0
%
31.6
%
32.2
%
Reconciliation of GAAP to non-GAAP
income before income taxes:
GAAP income before income taxes
$
538.2
$
610.9
$
545.9
Special items:
a)
Impact of business wind down
—
—
(2.1
)
b)
Amortization of acquisition-related
intangible assets
14.1
13.6
16.4
c)
Restructuring, asset impairments and
other, net
1.4
11.4
51.5
d)
Third party acquisition and
divestiture-related costs
0.1
(0.1
)
0.1
e)
Loss on debt prepayment
—
—
13.3
f)
Actuarial gains on pension plans and other
pension benefits
—
4.0
—
g)
Loss on divestiture of business
—
—
1.1
Total special items
15.6
28.9
80.3
Non-GAAP income before income taxes
$
553.8
$
639.8
$
626.2
Reconciliation of GAAP to non-GAAP net
income attributable to ON Semiconductor Corporation:
GAAP net income attributable to ON
Semiconductor Corporation
$
453.0
$
562.7
$
461.7
Special items:
a)
Impact of business wind down
—
—
(2.1
)
b)
Amortization of acquisition-related
intangible assets
14.1
13.6
16.4
c)
Restructuring, asset impairments and
other, net
1.4
11.4
51.5
d)
Third party acquisition and
divestiture-related costs
0.1
(0.1
)
0.1
e)
Actuarial gains on pension plans and other
pension benefits
—
4.0
—
f)
Loss on debt prepayment
—
—
13.3
g)
Loss on divestiture of a business
—
—
1.1
h)
Income taxes
(4.1
)
(50.7
)
(18.3
)
Total special items
11.5
(21.8
)
62.0
Non-GAAP net income attributable to ON
Semiconductor Corporation
$
464.5
$
540.9
$
523.7
GAAP net income for diluted earnings per
share
$
453.0
$
562.8
$
462.1
Non-GAAP net income for diluted earnings
per share
$
464.5
$
541.0
$
524.1
Reconciliation of GAAP to non-GAAP
diluted shares outstanding:
GAAP diluted shares outstanding
436.5
439.5
448.5
Special items:
a)
Less: dilutive shares attributable to
convertible notes
(4.7
)
(5.6
)
(9.4
)
Total special items
(4.7
)
(5.6
)
(9.4
)
Non-GAAP diluted shares outstanding
431.8
433.9
439.1
Non-GAAP diluted earnings per
share:
Non-GAAP net income for diluted earnings
per share
$
464.5
$
541.0
$
524.1
Non-GAAP diluted shares outstanding
431.8
433.9
439.1
Non-GAAP diluted earnings per share
$
1.08
$
1.25
$
1.19
Reconciliation of net cash provided by
operating activities to free cash flow:
Net cash provided by operating
activities
$
498.7
$
611.2
$
408.9
Special items:
a)
Purchase of property, plant and
equipment
(222.4
)
(390.5
)
(321.5
)
Total special items
(222.4
)
(390.5
)
(321.5
)
Free cash flow
$
276.3
$
220.7
$
87.4
Quarters Ended
June 30, 2023
September 29, 2023
December 31, 2023
March 29, 2024
Last Twelve Months
Net cash provided by operating
activities
$
390.8
$
566.6
$
611.2
$
498.7
$
2,067.3
Purchase of property, plant and
equipment
(430.6
)
(433.0
)
(390.5
)
(222.4
)
(1,476.5
)
Free cash flow
$
(39.8
)
$
133.6
$
220.7
$
276.3
$
590.8
Revenue
$
2,094.4
$
2,180.8
$
2,018.1
$
1,862.7
$
8,156.0
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
March 29, 2024
December 31, 2023
March 31, 2023
Cost of revenue
$
5.4
$
4.7
$
3.7
Research and development
5.7
5.5
4.5
Selling and marketing
5.2
4.8
4.1
General and administrative
16.7
15.7
15.4
Total share-based compensation
$
33.0
$
30.7
$
27.7
SUPPLEMENTAL FINANCIAL DATA
Quarters Ended
March 29, 2024
December 31, 2023
March 31, 2023
Net cash provided by operating
activities
$
498.7
$
611.2
$
408.9
Free cash flow
276.3
220.7
87.4
Cash paid for income taxes
23.6
100.8
35.2
Depreciation and amortization
$
154.9
$
160.3
$
145.0
Less: Amortization of acquisition-related
intangible assets
14.1
13.6
16.4
Depreciation and amortization (excl.
amortization of acquisition-related intangible assets)
$
140.8
$
146.7
$
128.6
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 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 ON Semiconductor Corporation
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, 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.
For our non-GAAP reporting, we are utilizing a projected and
normalized non-GAAP effective tax rate of 16%. We calculate this
non-GAAP effective tax rate on an annual basis. We expect to use
this normalized non-GAAP effective tax rate of 16% through 2025,
however, we may update this non-GAAP effective tax rate at any time
for a variety of reasons, including, but not limited to, the
rapidly evolving global tax environment, significant changes in our
geographic earnings mix or changes to our strategy or business
operations. 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 $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 0% Notes and the 0.50% Notes, respectively.
At an average stock price per share between $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 0%
Notes and the 0.50% Notes, respectively. In periods when the
quarterly average stock price exceeds $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/20240429770716/en/
Krystal Heaton Director, Head of Public Relations onsemi
(480) 242-6943 Krystal.Heaton@onsemi.com
Parag Agarwal Vice President - Investor Relations &
Corporate Development onsemi (602) 244-3437
investor@onsemi.com
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