ON Semiconductor Reports Record Revenue and Non-GAAP Earnings per Share for Second Quarter 2021

PHOENIX–(BUSINESS WIRE)–ON Semiconductor Corporation (Nasdaq: ON) today announced results for the second quarter of 2021 with the following highlights:

  • Record revenue of $1,669.9 million, an increase of 38 percent year-over-year
  • GAAP diluted earnings per share of $0.42 as compared to $0.00 in the quarter a year ago
  • Record non-GAAP diluted earnings per share of $0.63 as compared to $0.12 in the quarter a year ago
  • GAAP gross margin of 38.3 percent increased 310 basis points quarter-over-quarter and 750 basis points year-over-year
  • Non-GAAP gross margin of 38.4 percent increased 320 basis points quarter-over-quarter and 760 basis points year-over-year
  • Record free cash flow of $383.2 million or 22.9% of revenue

“Our strong second quarter results were driven by solid execution and ongoing structural changes, in addition to a strong demand environment. We posted yet another quarter of non-GAAP gross margin expansion with margins increasing by 320 basis points quarter-over-quarter. We expect that the ongoing structural changes in the business should enable us to report strong results on a sustainable basis. While we are encouraged by our recent results, we will continue to transform the business to realize its full potential,” said Hassane El-Khoury, president and CEO of ON Semiconductor.

“We continue to see accelerating demand for our products in our strategic automotive and industrial end-markets. As we continue to drive operational efficiencies in our manufacturing sites, we expect to see incremental supply and revenue growth in the second half of 2021.”

Selected financial results for the quarter are shown below with comparable periods:

 

 

GAAP

 

Non-GAAP

(in millions, except per share data)

 

Q2 2021

 

Q1 2021

 

Q2 2020

 

Q2 2021

 

Q1 2021

 

Q2 2020

Revenue

 

$1,669.9

 

$1,481.7

 

$1,213.5

 

$1,669.9

 

$1,481.7

 

$1,213.5

Gross Margin

 

38.3%

 

35.2%

 

30.8%

 

38.4%

 

35.2%

 

30.8%

Operating Margin

 

16.9%

 

8.5%

 

3.6%

 

19.6%

 

13.3%

 

7.4%

Net Income (Loss) Attributable to ON Semiconductor Corporation

 

$184.1

 

$89.9

 

($1.4)

 

$275.8

 

$151.3

 

$50.2

Diluted Earnings (Loss) Per Share

 

$0.42

 

$0.20

 

$0.00

 

$0.63

 

$0.35

 

$0.12

 

Revenue Summary

($ in millions)

(Unaudited)

 

 

Three Months Ended

 

 

 

 

Business Segment

 

Q2 2021

 

Q1 2021

 

Q2 2020

 

Sequential

Change

 

Year over Year

Change

PSG

 

$

846.6

 

 

$

747.0

 

 

$

618.4

 

 

13

%

 

37

%

ASG

 

607.6

 

 

531.5

 

 

426.7

 

 

14

%

 

42

%

ISG

 

215.7

 

 

203.2

 

 

168.4

 

 

6

%

 

28

%

Total

 

$

1,669.9

 

 

$

1,481.7

 

 

$

1,213.5

 

 

13

%

 

38

%

THIRD QUARTER 2021 OUTLOOK

The following table outlines ON Semiconductor’s projected third quarter of 2021 GAAP and non-GAAP outlook.

 

 

Total ON Semiconductor

GAAP

 

Special

Items ***

 

Total ON Semiconductor

Non-GAAP****

Revenue

 

$1,660 to $1,760 million

 

 

 

$1,660 to $1,760 million

Gross Margin

 

38.8% to 40.9%

 

0.1% to 0.2%

 

39.0% to 41.0%

Operating Expenses

 

$331 to $346 million

 

$26 million

 

$305 to $320 million

Other Income and Expense (including interest expense), net

 

$33 to $36 million

 

$7 million*

 

$26 to $29 million

Diluted Earnings Per Share

 

$0.53 to $ 0.63

 

$0.15 to $ 0.17

 

$0.68 to $0.80

Diluted Shares Outstanding **

 

440 million

 

4 million

 

436 million

*

 

Convertible Notes, Non-cash interest expense is calculated pursuant to FASB’s Accounting Standards Codification Topic 470: Debt.

 

**

 

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. Both GAAP and non-GAAP diluted share counts are based on the Company’s stock price as of July 2, 2021.

 

***

 

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

ON Semiconductor will host a conference call for the financial community at 9 a.m. Eastern Daylight Time (EDT) on August 2, 2021 to discuss this announcement and ON Semiconductor’s 2021 second 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 (833) 303-2043 (U.S./Canada) or: (236) 714-3942 (International). In order to join this conference call, you will be required to provide the Conference ID Number – which is 7573025.

About ON Semiconductor

ON Semiconductor (Nasdaq: ON) is driving energy efficient electronics innovations that help make the world greener, safer, inclusive and connected. The company has transformed into our customers’ supplier of choice for power, analog, sensor and connectivity solutions. The company’s superior products help engineers solve their most unique design challenges in automotive, industrial, cloud power, and Internet of Things (IoT) applications. For more information, visit http://www.onsemi.com.

ON Semiconductor and the ON Semiconductor logo are registered 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 ON Semiconductor, including financial guidance for the year ending December 31, 2021. 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 our 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 16, 2021 (our “2020 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 2020 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

 

Six Months Ended

 

 

July 2, 2021

 

April 2, 2021

 

July 3, 2020

 

July 2, 2021

 

July 3, 2020

Revenue

 

$

1,669.9

 

 

$

1,481.7

 

 

$

1,213.5

 

 

$

3,151.6

 

 

$

2,491.4

 

Cost of revenue (exclusive of amortization shown below)

 

1,029.8

 

 

960.5

 

 

839.2

 

 

1,990.3

 

 

1,714.4

 

Gross profit

 

640.1

 

 

521.2

 

 

374.3

 

 

1,161.3

 

 

777.0

 

Gross margin

 

38.3

%

 

35.2

%

 

30.8

%

 

36.8

%

 

31.2

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

166.3

 

 

173.6

 

 

156.1

 

 

339.9

 

 

327.1

 

Selling and marketing

 

76.1

 

 

78.9

 

 

65.6

 

 

155.0

 

 

142.4

 

General and administrative

 

73.2

 

 

72.4

 

 

62.9

 

 

145.6

 

 

134.1

 

Amortization of acquisition-related intangible assets

 

24.8

 

 

25.0

 

 

29.1

 

 

49.8

 

 

61.4

 

Restructuring, asset impairments and other charges, net

 

17.5

 

 

42.5

 

 

16.2

 

 

60.0

 

 

49.0

 

Intangible asset impairment

 

 

 

2.9

 

 

1.3

 

 

2.9

 

 

1.3

 

Total operating expenses

 

357.9

 

 

395.3

 

 

331.2

 

 

753.2

 

 

715.3

 

Operating income

 

282.2

 

 

125.9

 

 

43.1

 

 

408.1

 

 

61.7

 

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(33.1)

 

 

(33.4)

 

 

(41.9)

 

 

(66.5)

 

 

(84.4)

 

Interest income

 

0.2

 

 

0.4

 

 

1.5

 

 

0.6

 

 

3.4

 

Loss on debt refinancing and prepayment

 

(26.2)

 

 

 

 

 

 

(26.2)

 

 

 

Other income (expense)

 

(1.1)

 

 

4.5

 

 

(2.8)

 

 

3.4

 

 

(2.7)

 

Other income (expense), net

 

(60.2)

 

 

(28.5)

 

 

(43.2)

 

 

(88.7)

 

 

(83.7)

 

Income (loss) before income taxes

 

222.0

 

 

97.4

 

 

(0.1)

 

 

319.4

 

 

(22.0)

 

Income tax (provision) benefit

 

(37.9)

 

 

(7.1)

 

 

(0.8)

 

 

(45.0)

 

 

7.4

 

Net income (loss)

 

184.1

 

 

90.3

 

 

(0.9)

 

 

274.4

 

 

(14.6)

 

Less: Net income attributable to non-controlling interest

 

 

 

(0.4)

 

 

(0.5)

 

 

(0.4)

 

 

(0.8)

 

Net income (loss) attributable to ON Semiconductor Corporation

 

$

184.1

 

 

$

89.9

 

 

$

(1.4)

 

 

$

274.0

 

 

$

(15.4)

 

Net income (loss) per common share attributable to ON Semiconductor Corporation:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.43

 

 

$

0.22

 

 

$

 

 

$

0.65

 

 

$

(0.04)

 

Diluted

 

$

0.42

 

 

$

0.20

 

 

$

 

 

$

0.62

 

 

$

(0.04)

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

427.7

 

 

413.4

 

 

410.1

 

 

420.5

 

 

410.3

 

Diluted

 

443.6

 

 

445.4

 

 

410.1

 

 

444.5

 

 

410.3

 

ON SEMICONDUCTOR CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in millions)

 

July 2, 2021

 

April 2, 2021

 

December 31, 2020

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,091.1

 

 

$

1,042.5

 

 

$

1,080.7

 

Receivables, net

 

669.1

 

 

683.6

 

 

676.0

 

Inventories

 

1,309.3

 

 

1,295.5

 

 

1,251.4

 

Other current assets

 

160.4

 

 

166.0

 

 

176.0

 

Total current assets

 

3,229.9

 

 

3,187.6

 

 

3,184.1

 

Property, plant and equipment, net

 

2,457.8

 

 

2,489.4

 

 

2,512.3

 

Goodwill

 

1,663.4

 

 

1,663.4

 

 

1,663.4

 

Intangible assets, net

 

416.3

 

 

441.1

 

 

469.0

 

Deferred tax assets

 

429.9

 

 

447.2

 

 

429.0

 

Other assets

 

397.1

 

 

401.7

 

 

410.2

 

Total assets

 

$

8,594.4

 

 

$

8,630.4

 

 

$

8,668.0

 

Liabilities, Non-Controlling Interest and Stockholders’ Equity

 

 

 

 

 

 

Accounts payable

 

$

610.2

 

 

$

605.0

 

 

$

572.9

 

Accrued expenses and other current liabilities

 

643.6

 

 

588.3

 

 

570.0

 

Current portion of long-term debt

 

201.3

 

 

536.7

 

 

531.6

 

Total current liabilities

 

1,455.1

 

 

1,730.0

 

 

1,674.5

 

Long-term debt

 

2,907.1

 

 

2,806.9

 

 

2,959.7

 

Deferred tax liabilities

 

49.8

 

 

53.9

 

 

57.3

 

Other long-term liabilities

 

378.0

 

 

390.0

 

 

418.4

 

Total liabilities

 

4,790.0

 

 

4,980.8

 

 

5,109.9

 

ON Semiconductor Corporation stockholders’ equity:

 

 

 

 

 

 

Common stock

 

6.0

 

 

5.8

 

 

5.7

 

Additional paid-in capital

 

4,470.3

 

 

4,161.0

 

 

4,133.1

 

Accumulated other comprehensive loss

 

(52.2)

 

 

(55.9)

 

 

(57.6)

 

Accumulated earnings

 

1,699.5

 

 

1,515.4

 

 

1,425.5

 

Less: Treasury stock, at cost

 

(2,339.2)

 

 

(1,996.7)

 

 

(1,968.2)

 

Total ON Semiconductor Corporation stockholders’ equity

 

3,784.4

 

 

3,629.6

 

 

3,538.5

 

Non-controlling interest

 

20.0

 

 

$

20.0

 

 

19.6

 

Total stockholders’ equity

 

3,804.4

 

 

3,649.6

 

 

3,558.1

 

Total liabilities and stockholders’ equity

 

$

8,594.4

 

 

$

8,630.4

 

 

$

8,668.0

 

ON SEMICONDUCTOR CORPORATION

UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND

NET CASH PROVIDED BY OPERATING ACTIVITIES

(in millions) 

 

 

Quarters Ended

 

Six Months Ended

 

 

July 2, 2021

 

April 2, 2021

 

July 3, 2020

 

July 2, 2021

 

July 3, 2020

Net income (loss)

 

$

184.1

 

 

$

90.3

 

 

$

(0.9)

 

 

$

274.4

 

 

$

(14.6)

 

Adjusted for:

 

 

 

 

 

 

 

 

 

 

Restructuring, asset impairments and other charges, net

 

17.5

 

 

42.5

 

 

16.2

 

 

60.0

 

 

49.0

 

Intangible asset impairment

 

 

 

2.9

 

 

1.3

 

 

2.9

 

 

1.3

 

Interest expense

 

33.1

 

 

33.4

 

 

41.9

 

 

66.5

 

 

84.4

 

Interest income

 

(0.2)

 

 

(0.4)

 

 

(1.5)

 

 

(0.6)

 

 

(3.4)

 

Loss on debt refinancing and prepayment

 

26.2

 

 

 

 

 

 

26.2

 

 

 

Income tax provision (benefit)

 

37.9

 

 

7.1

 

 

0.8

 

 

45.0

 

 

(7.4)

 

Net income attributable to non-controlling interest

 

 

 

(0.4)

 

 

(0.5)

 

 

(0.4)

 

 

(0.8)

 

Depreciation and amortization

 

153.1

 

 

153.4

 

 

153.9

 

 

306.5

 

 

315.1

 

Third party acquisition and divestiture related costs

 

1.4

 

 

0.2

 

 

 

 

1.6

 

 

0.3

 

Adjusted EBITDA

 

453.1

 

 

329.0

 

 

211.2

 

 

782.1

 

 

423.9

 

Increase (decrease):

 

 

 

 

 

 

 

 

 

 

Restructuring, asset impairments and other, net

 

(17.5)

 

 

(42.5)

 

 

(16.2)

 

 

(60.0)

 

 

(49.0)

 

Interest expense

 

(33.1)

 

 

(33.4)

 

 

(41.9)

 

 

(66.5)

 

 

(84.4)

 

Interest income

 

0.2

 

 

0.4

 

 

1.5

 

 

0.6

 

 

3.4

 

Income tax (provision) benefit

 

(37.9)

 

 

(7.1)

 

 

(0.8)

 

 

(45.0)

 

 

7.4

 

Net income attributable to non-controlling interest

 

 

 

0.4

 

 

0.5

 

 

0.4

 

 

0.8

 

Third party acquisition and divestiture related costs

 

(1.4)

 

 

(0.2)

 

 

 

 

(1.6)

 

 

(0.3)

 

Loss (gain) on sale or disposal of fixed assets

 

 

 

0.3

 

 

(3.1)

 

 

0.3

 

 

(2.9)

 

Amortization of debt discount and issuance costs

 

2.7

 

 

2.4

 

 

3.0

 

 

5.1

 

 

6.0

 

Share-based compensation

 

29.1

 

 

22.3

 

 

18.0

 

 

51.4

 

 

33.7

 

Non-cash interest on convertible notes

 

6.0

 

 

4.6

 

 

9.8

 

 

10.6

 

 

19.3

 

Non-cash asset impairment charges

 

1.4

 

 

3.2

 

 

5.8

 

 

4.6

 

 

7.2

 

Change in deferred tax balances

 

18.5

 

 

(23.2)

 

 

6.7

 

 

(4.7)

 

 

(12.3)

 

Other

 

2.0

 

 

(2.0)

 

 

1.8

 

 

 

 

1.8

 

Changes in assets and liabilities

 

64.9

 

 

(35.7)

 

 

(41.8)

 

 

29.2

 

 

(34.1)

 

Net cash provided by operating activities

 

$

488.0

 

 

$

218.5

 

 

$

154.5

 

 

$

706.5

 

 

$

320.5

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

$

(104.8)

 

 

$

(77.0)

 

 

$

(73.3)

 

 

$

(181.8)

 

 

$

(205.6)

 

Deposits and proceeds from sale of property, plant and equipment

 

6.4

 

 

0.2

 

 

0.9

 

 

6.6

 

 

0.9

 

Deposits utilized (made) for purchase of property, plant and equipment

 

(2.4)

 

 

(0.4)

 

 

(1.7)

 

 

(2.8)

 

 

0.5

 

Purchase of business, net of cash acquired

 

 

 

 

 

 

 

 

 

(4.5)

 

Settlement of purchase price from previous acquisition

 

 

 

 

 

 

 

 

 

26.0

 

Net cash used in investing activities

 

$

(100.8)

 

 

$

(77.2)

 

 

$

(74.1)

 

 

$

(178.0)

 

 

$

(182.7)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

Proceeds for the issuance of common stock under the ESPP

 

$

5.7

 

 

$

6.6

 

 

$

3.9

 

 

$

12.3

 

 

$

11.4

 

Payment of tax withholding for restricted stock units

 

(3.5)

 

 

(28.5)

 

 

(0.6)

 

 

(32.0)

 

 

(16.6)

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

(65.4)

 

Issuance and borrowings under debt agreements

 

787.3

 

 

 

 

 

 

787.3

 

 

1,165.0

 

Reimbursement of debt issuance costs

 

2.7

 

 

 

 

 

 

2.7

 

 

 

Payment of debt issuance costs

 

(3.5)

 

 

 

 

 

 

(3.5)

 

 

 

Repayment of borrowings under debt agreements

 

(1,060.6)

 

 

(154.1)

 

 

(4.3)

 

 

(1,214.7)

 

 

(60.3)

 

Payments related to prior acquisition

 

(0.2)

 

 

(2.1)

 

 

(0.6)

 

 

(2.3)

 

 

(5.5)

 

Payment for purchase of bond hedges

 

(160.3)

 

 

 

 

 

 

(160.3)

 

 

 

Proceeds from issuance of warrants

 

93.8

 

 

 

 

 

 

93.8

 

 

 

Net cash provided by (used in) financing activities

 

$

(338.6)

 

 

$

(178.1)

 

 

$

(1.6)

 

 

$

(516.7)

 

 

$

1,028.6

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

 

(0.8)

 

 

(0.1)

 

 

(0.8)

 

 

0.1

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

$

48.6

 

 

$

(37.6)

 

 

$

78.7

 

 

$

11.0

 

 

$

1,166.5

 

Beginning cash, cash equivalents and restricted cash

 

1,043.9

 

 

1,081.5

 

 

1,982.0

 

 

1,081.5

 

 

894.2

 

Ending cash, cash equivalents and restricted cash

 

$

1,092.5

 

 

$

1,043.9

 

 

$

2,060.7

 

 

$

1,092.5

 

 

$

2,060.7

 

ON SEMICONDUCTOR CORPORATION

RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES

(in millions, except per share and percentage data)

 

 

 

 

Quarters Ended

 

Six Months Ended

 

 

 

 

July 2, 2021

 

April 2, 2021

 

July 3, 2020

 

July 2, 2021

 

July 3, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP to non-GAAP gross profit:

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

640.1

 

 

$

521.2

 

 

$

374.3

 

 

$

1,161.3

 

 

$

777.0

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Non-recurring facility costs

 

0.7

 

 

 

 

 

 

0.7

 

 

 

 

 

Total special items

 

0.7

 

 

 

 

 

 

0.7

 

 

 

Non-GAAP gross profit

 

$

640.8

 

 

$

521.2

 

 

$

374.3

 

 

$

1,162.0

 

 

$

777.0

 

Reconciliation of GAAP to non-GAAP gross margin:

 

 

 

 

 

 

 

 

 

 

GAAP gross margin

 

38.3

%

 

35.2

%

 

30.8

%

 

36.8

%

 

31.2

%

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Non-recurring facility costs

 

%

 

%

 

%

 

%

 

%

 

 

Total special items

 

0.1

%

 

%

 

%

 

0.1

%

 

%

Non-GAAP gross margin

 

38.4

%

 

35.2

%

 

30.8

%

 

36.9

%

 

31.2

%

Reconciliation of GAAP to non-GAAP operating expenses:

 

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

$

357.9

 

 

$

395.3

 

 

$

331.2

 

 

$

753.2

 

 

$

715.3

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Amortization of acquisition-related intangible assets

 

(24.8)

 

 

(25.0)

 

 

(29.1)

 

 

(49.8)

 

 

(61.4)

 

 

b)

Restructuring, asset impairments and other, net

 

(17.5)

 

 

(42.5)

 

 

(16.2)

 

 

(60.0)

 

 

(49.0)

 

 

c)

Intangible asset impairment

 

 

 

(2.9)

 

 

(1.3)

 

 

(2.9)

 

 

(1.3)

 

 

d)

Third party acquisition and divestiture related costs

 

(1.4)

 

 

(0.2)

 

 

 

 

(1.6)

 

 

(0.3)

 

 

 

Total special items

 

(43.7)

 

 

(70.6)

 

 

(46.6)

 

 

(114.3)

 

 

(112.0)

 

Non-GAAP operating expenses

 

$

314.2

 

 

$

324.7

 

 

$

284.6

 

 

$

638.9

 

 

$

603.3

 

Reconciliation of GAAP to non-GAAP operating income:

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

282.2

 

 

$

125.9

 

 

$

43.1

 

 

$

408.1

 

 

$

61.7

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Non-recurring facility costs

 

0.7

 

 

 

 

 

 

0.7

 

 

 

 

b)

Amortization of acquisition-related intangible assets

 

24.8

 

 

25.0

 

 

29.1

 

 

49.8

 

 

61.4

 

 

c)

Restructuring, asset impairments and other, net

 

17.5

 

 

42.5

 

 

16.2

 

 

60.0

 

 

49.0

 

 

d)

Intangible asset impairment

 

 

 

2.9

 

 

1.3

 

 

2.9

 

 

1.3

 

 

e)

Third party acquisition and divestiture related costs

 

1.4

 

 

0.2

 

 

 

 

1.6

 

 

0.3

 

 

 

Total special items

 

44.4

 

 

70.6

 

 

46.6

 

 

115.0

 

 

112.0

 

Non-GAAP operating income

 

$

326.6

 

 

$

196.5

 

 

$

89.7

 

 

$

523.1

 

 

$

173.7

 

Reconciliation of GAAP to non-GAAP operating margin (operating income / revenue):

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

16.9

%

 

8.5

%

 

3.6

%

 

12.9

%

 

2.5

%

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Non-recurring facility costs

 

%

 

%

 

%

 

%

 

%

 

b)

Amortization of acquisition-related intangible assets

 

1.5

%

 

1.7

%

 

2.4

%

 

1.6

%

 

2.5

%

 

c)

Restructuring, asset impairments and other, net

 

1.0

%

 

2.9

%

 

1.3

%

 

1.9

%

 

2.0

%

 

d)

Intangible asset impairment

 

%

 

0.2

%

 

0.1

%

 

0.1

%

 

0.1

%

 

e)

Third party acquisition and divestiture related costs

 

0.1

%

 

%

 

%

 

0.1

%

 

%

 

 

Total special items

 

2.7

%

 

4.8

%

 

3.8

%

 

3.7

%

 

4.5

%

Non-GAAP operating margin

 

19.6

%

 

13.3

%

 

7.4

%

 

16.6

%

 

7.0

%

Reconciliation of GAAP to non-GAAP income before income taxes:

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) before income taxes

 

$

222.0

 

 

$

97.4

 

 

$

(0.1)

 

 

$

319.4

 

 

$

(22.0)

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Non-recurring facility costs

 

0.7

 

 

 

 

 

 

0.7

 

 

 

 

b)

Amortization of acquisition-related intangible assets

 

24.8

 

 

25.0

 

 

29.1

 

 

49.8

 

 

61.4

 

 

c)

Restructuring, asset impairments and other, net

 

17.5

 

 

42.5

 

 

16.2

 

 

60.0

 

 

49.0

 

 

d)

Intangible asset impairment

 

 

 

2.9

 

 

1.3

 

 

2.9

 

 

1.3

 

 

e)

Third party acquisition and divestiture related costs

 

1.4

 

 

0.2

 

 

 

 

1.6

 

 

0.3

 

 

f)

Loss on debt refinancing and repayment

 

26.2

 

 

 

 

 

 

26.2

 

 

 

 

g)

Non-cash interest on convertible notes

 

6.0

 

 

4.6

 

 

9.8

 

 

10.6

 

 

19.3

 

 

 

Total special items

 

76.6

 

 

75.2

 

 

56.4

 

 

151.8

 

 

131.3

 

Non-GAAP income before income taxes

 

$

298.6

 

 

$

172.6

 

 

$

56.3

 

 

$

471.2

 

 

$

109.3

 

Reconciliation of GAAP to non-GAAP net income attributable to ON Semiconductor Corporation:

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss) attributable to ON Semiconductor Corporation

 

$

184.1

 

 

$

89.9

 

 

$

(1.4)

 

 

$

274.0

 

 

$

(15.4)

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Non-recurring facility costs

 

0.7

 

 

 

 

 

 

0.7

 

 

 

 

b)

Amortization of acquisition-related intangible assets

 

24.8

 

 

25.0

 

 

29.1

 

 

49.8

 

 

61.4

 

 

c)

Restructuring, asset impairments and other, net

 

17.5

 

 

42.5

 

 

16.2

 

 

60.0

 

 

49.0

 

 

d)

Intangible asset impairment

 

 

 

2.9

 

 

1.3

 

 

2.9

 

 

1.3

 

 

e)

Third party acquisition and divestiture related costs

 

1.4

 

 

0.2

 

 

 

 

1.6

 

 

0.3

 

 

f)

Loss on debt refinancing and prepayment

 

26.2

 

 

 

 

 

 

26.2

 

 

 

 

g)

Non-cash interest on convertible notes

 

6.0

 

 

4.6

 

 

9.8

 

 

10.6

 

 

19.3

 

 

h)

Adjustment of income taxes

 

15.1

 

 

(13.8)

 

 

(4.8)

 

 

1.3

 

 

(22.9)

 

 

 

Total special items

 

91.7

 

 

61.4

 

 

51.6

 

 

153.1

 

 

108.4

 

Non-GAAP net income attributable to ON Semiconductor Corporation

 

$

275.8

 

 

$

151.3

 

 

$

50.2

 

 

$

427.1

 

 

$

93.0

 

Adjustment of income taxes:

 

 

 

 

 

 

 

 

 

 

Tax adjustment for special items (1)

 

$

(16.1)

 

 

$

(15.8)

 

 

$

(11.8)

 

 

$

(31.9)

 

 

$

(27.6)

 

Other non-GAAP tax adjustment (2)

 

31.2

 

 

2.0

 

 

7.0

 

 

33.2

 

 

4.7

 

 

 

Total adjustment of income taxes

 

$

15.1

 

 

$

(13.8)

 

 

$

(4.8)

 

 

$

1.3

 

 

$

(22.9)

 

Reconciliation of GAAP to non-GAAP diluted shares outstanding:

 

 

 

 

 

 

 

 

 

 

GAAP diluted shares outstanding

 

443.6

 

 

445.4

 

 

410.1

 

 

444.5

 

 

410.3

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Less: dilutive shares attributable to convertible notes

 

(8.6)

 

 

(12.8)

 

 

 

 

(10.7)

 

 

 

 

b)

Add: dilutive shares attributable to share-based awards

 

 

 

 

 

0.9

 

 

 

 

1.6

 

 

 

Total special items

 

(8.6)

 

 

(12.8)

 

 

0.9

 

 

(10.7)

 

 

1.6

 

Non-GAAP diluted shares outstanding

 

435.0

 

 

432.6

 

 

411.0

 

 

433.8

 

 

411.9

 

Non-GAAP diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income attributable to ON Semiconductor Corporation

 

$

275.8

 

 

$

151.3

 

 

$

50.2

 

 

$

427.1

 

 

$

93.0

 

Non-GAAP diluted shares outstanding

 

435.0

 

 

432.6

 

 

411.0

 

 

433.8

 

 

411.9

 

Non-GAAP diluted earnings per share

 

$

0.63

 

 

$

0.35

 

 

$

0.12

 

 

$

0.98

 

 

$

0.23

 

Reconciliation of net cash provided by operating activities to free cash flow:

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

488.0

 

 

$

218.5

 

 

$

154.5

 

 

$

706.5

 

 

$

320.5

 

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

a)

Purchase of property, plant and equipment

 

(104.8)

 

 

(77.0)

 

 

(73.3)

 

 

(181.8)

 

 

(205.6)

 

 

 

Total special items

 

(104.8)

 

 

(77.0)

 

 

(73.3)

 

 

(181.8)

 

 

(205.6)

 

Free cash flow

 

$

383.2

 

 

$

141.5

 

 

$

81.2

 

 

$

524.7

 

 

$

114.9

 

Contacts

Sarah Rockey

Corporate/Media Communications

ON Semiconductor

(602) 244-5190

[email protected]

Parag Agarwal

Vice President – Investor Relations & Corporate Development

ON Semiconductor

(602) 244-3437

[email protected]

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