Achieved record annual revenue, gross margin,
and free cash flow
onsemi (the “Company”) (Nasdaq: ON) today announced its
fourth quarter and fiscal year 2022 results with the following
highlights:
- Fourth quarter revenue of $2,103.6 million increased by 14%
year-over-year
- Fourth quarter GAAP gross margin of 48.5% increased by 343 bps
year-over-year and non-GAAP gross margin of 48.4% increased by 321
bps year-over-year
- Record fourth quarter automotive revenue of $989 million grew
54% year-over-year
- Fourth quarter GAAP and non-GAAP diluted earnings per share of
$1.35 and $1.32, respectively
- Record fiscal year 2022 revenue of $8.3 billion representing
24% year-over-year growth
- GAAP gross margin of 49.0% and non-GAAP gross margin of 49.2%
for 2022
- Free cash flow for fiscal year 2022 increased 22%
year-over-year and was 20% of revenue
“We delivered outstanding results in 2022 as we continue our
disciplined execution and transformation. Revenue for 2022 grew by
24%, non-GAAP gross margin expanded by 880 bps, and non-GAAP
operating income grew four times faster than revenue driven by our
focus on the secular megatrends of electric vehicles, ADAS,
alternative energy and industrial automation. We are focused on our
key strategic initiatives such as ramping silicon carbide in
support of our long-term supply agreements. Despite the current
macroeconomic uncertainty, the long-term outlook for our business
remains robust with a 38% year-over-year increase in our design win
funnel,” said Hassane El-Khoury, President and CEO of
onsemi.
The company also announced that its Board of Directors has
approved a new share repurchase program with authorization to
repurchase up to $3 billion of shares of the company's common stock
through December 31, 2025.
“We are committed to a balanced capital allocation strategy to
drive long-term value for our shareholders. With the confidence we
have in our strategy to invest for long-term profitable growth, the
Board of Directors and leadership team are pleased to announce a
new $3 billion share repurchase authorization. Driven by a
three-fold increase in free cash flow generation since the start of
our transformation journey, we have increased flexibility with a
repurchase authorization twice that of the previous authorization,
which expired on December 31, 2022,” said Thad Trent, Executive
Vice President and CFO of onsemi.
Under the new share repurchase program, onsemi may repurchase
shares from time to time through open market purchases, in
privately negotiated transactions or by other means, including
through the use of trading plans intended to qualify under Rule
10b5-1 under the Securities Exchange Act of 1934, as amended in
accordance with applicable securities laws and other restrictions.
The timing and total amount of share repurchases will depend upon
business, economic and market conditions, corporate and regulatory
requirements, prevailing stock prices, and other considerations.
The authorization expires on December 31, 2025, may be suspended or
discontinued at any time and does not obligate the company to
acquire any amount of common stock.
Selected financial results for the
quarter are shown below with comparable periods:
GAAP
Non-GAAP
Three Months Ended
Three Months Ended
(Revenue and Net Income in
millions)
Q4 2022
Q3 2022
Q4 2021
Q4 2022
Q3 2022
Q4 2021
Revenue
$2,103.6
$2,192.6
$1,846.1
$2,103.6
$2,192.6
$1,846.1
Gross Margin
48.5 %
48.3 %
45.1 %
48.4 %
49.3 %
45.2 %
Operating Margin
33.5 %
19.4 %
26.0 %
34.1 %
35.4 %
28.6 %
Net Income attributable to onsemi
$604.3
$311.9
$425.9
$580.4
$639.4
$478.0
Diluted Earnings Per Share
$1.35
$0.70
$0.96
$1.32
$1.45
$1.09
Selected financial results for 2022 and
2021 are shown below:
GAAP
Non-GAAP
Year Ended
Year Ended
(Revenue and Net Income in
millions)
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Revenue
$8,326.2
$6,739.8
$8,326.2
$6,739.8
Gross Margin
49.0 %
40.3 %
49.2 %
40.4 %
Operating Margin
28.3 %
19.1 %
34.5 %
21.9 %
Net Income attributable to onsemi
$1,902.2
$1,009.6
$2,347.7
$1,285.5
Diluted Earnings Per Share
$4.24
$2.27
$5.33
$2.95
Revenue Summary
($ in millions)
(Unaudited)
Three Months Ended
Business Segment
Q4 2022
Q3 2022
Q4 2021
Sequential Change
Year-over-Year Change
PSG
$
1,048.4
$
1,116.1
$
953.4
(6
)%
10
%
ASG
701.0
734.3
647.3
(5
)%
8
%
ISG
354.2
342.2
245.4
4
%
44
%
Total
$
2,103.6
$
2,192.6
$
1,846.1
(4
)%
14
%
Year Ended
Business Segment
December 31, 2022
December 31, 2021
Year-over-Year Change
PSG
$
4,208.2
$
3,439.1
22
%
ASG
2,841.3
2,399.9
18
%
ISG
1,276.7
900.8
42
%
Total
$
8,326.2
$
6,739.8
24
%
FIRST QUARTER 2023 OUTLOOK
The following table outlines onsemi's projected first quarter of
2023 GAAP and non-GAAP outlook.
Total onsemi
GAAP
Special
Items **
Total onsemi
Non-GAAP***
Revenue
$1,870 to $1,970 million
$1,870 to $1,970 million
Gross Margin
45.6% to 47.6%
0.1%
45.7% to 47.7%
Operating Expenses
$316 to $331 million
$18 million
$298 to $313 million
Other Income and Expense (including
interest expense), net
$21 to $25 million
-
$21 to $25 million
Diluted Earnings Per Share
$0.99 to $1.11
$0.03
$1.02 to $1.14
Diluted Shares Outstanding *
449 million
8 million
441 million
*
Diluted shares outstanding can vary as a
result of, among other things, the actual exercise of options or
vesting of restricted stock units, the incremental dilutive shares
from the Company's convertible senior subordinated notes, and the
repurchase or the issuance of stock or convertible notes or the
sale of treasury shares. In periods when the quarterly average
stock price per share exceeds $20.72 for the 1.625% Notes and
$52.97 for the 0% Notes, the non-GAAP diluted share count and
non-GAAP net income per share include the anti-dilutive impact of
the Company’s hedge transactions issued concurrently with the
1.625% Notes and the 0% Notes, respectively. At an average stock
price per share between $20.72 and $30.70 for the 1.625% Notes and
$52.97 and $74.34 for the 0% Notes, the hedging activity offsets
the potentially dilutive effect of the 1.625% Notes and 0% Notes,
respectively. In periods when the quarterly average stock price
exceeds $30.70 for the 1.625% Notes, and $74.34 for the 0% Notes,
the dilutive impact of the warrants issued concurrently with such
notes are included in the diluted shares outstanding GAAP and
non-GAAP diluted share counts and are based on either the Company's
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; purchased in-process research and
development expenses; restructuring, asset impairments and other,
net; goodwill impairment charges; gains and losses on debt
prepayment; non-cash interest expense; actuarial (gains) losses on
pension plans and other pension benefits; and certain other special
items, as necessary. These special items are out of our control and
could change significantly from period to period. As a result, we
are not able to reasonably estimate and separately present the
individual impact or probable significance of these special items,
and we are similarly unable to provide a reconciliation of the
non-GAAP measures. The reconciliation that is unavailable would
include a forward-looking income statement, balance sheet and
statement of cash flows in accordance with GAAP. For this reason,
we use a projected range of the aggregate amount of special items
in order to calculate our projected non-GAAP operating expense
outlook.
***
We believe these non-GAAP measures provide
important supplemental information to investors. We use these
measures, together with GAAP measures, for internal managerial
purposes and as a means to evaluate period-to-period comparisons.
However, we do not, and you should not, rely on non-GAAP financial
measures alone as measures of our performance. We believe that
non-GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when taken together with GAAP
results and the reconciliations to corresponding GAAP financial
measures that we also provide in our releases, provide a more
complete understanding of factors and trends affecting our
business. Because non-GAAP financial measures are not standardized,
it may not be possible to compare these financial measures with
other companies' non-GAAP financial measures, even if they have
similar names.
TELECONFERENCE
onsemi will host a conference call for the financial community
at 9 a.m. Eastern Time (EST) on Feb. 6, 2023 to discuss this
announcement and onsemi’s results for the fourth quarter of 2022
and fiscal year 2022. 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 first fiscal quarter of 2023, and statements
regarding our new share repurchase program. 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 our 2021 Annual Report on Form 10-K filed with the
Securities and Exchange Commission (“SEC”) on February 14, 2022
(our “2021 Form 10-K”) and Part II, Item IA “Risk Factors” in each
of our Quarterly Reports on Form 10-Q filed with the SEC for the
quarters ended April 1, 2022, July 1, 2022, and September 30, 2022,
and from time-to-time in our other SEC reports (including in our
2022 Form 10-K). 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. 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 2021 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
and percentage data)
Quarter Ended
Year Ended
December 31, 2022
September 30, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Revenue
$
2,103.6
$
2,192.6
$
1,846.1
$
8,326.2
$
6,739.8
Cost of revenue
1,083.1
1,134.3
1,013.9
4,249.0
4,025.5
Gross profit
1,020.5
1,058.3
832.2
4,077.2
2,714.3
Gross margin
48.5
%
48.3
%
45.1
%
49.0
%
40.3
%
Operating expenses:
Research and development
136.4
145.4
160.6
600.2
655.0
Selling and marketing
74.2
69.5
70.2
287.9
293.6
General and administrative
97.2
84.9
83.5
343.2
304.8
Amortization of acquisition-related
intangible assets
16.1
21.9
24.5
81.2
99.0
Restructuring, asset impairments and other
charges, net
(7.7
)
40.3
13.1
17.9
71.4
Goodwill and intangible asset
impairment
—
271.8
—
386.8
2.9
Total operating expenses
316.2
633.8
351.9
1,717.2
1,426.7
Operating income
704.3
424.5
480.3
2,360.0
1,287.6
Other income (expense), net:
Interest expense
(27.5
)
(23.7
)
(32.0
)
(94.9
)
(130.4
)
Interest income
9.1
4.9
0.3
15.5
1.4
Gain (loss) on debt refinancing and
prepayment
0.2
—
(2.8
)
(7.1
)
(29.0
)
Gain on divestiture of business
64.9
0.2
—
67.0
10.2
Other income
12.3
0.9
20.4
21.7
18.0
Other income (expense), net
59.0
(17.7
)
(14.1
)
2.2
(129.8
)
Income before income taxes
763.3
406.8
466.2
2,362.2
1,157.8
Income tax provision
(159.0
)
(94.9
)
(39.8
)
(458.4
)
(146.6
)
Net income
604.3
311.9
426.4
1,903.8
1,011.2
Less: Net income attributable to
non-controlling interest
—
—
(0.5
)
(1.6
)
(1.6
)
Net income attributable to ON
Semiconductor Corporation
$
604.3
$
311.9
$
425.9
$
1,902.2
$
1,009.6
Net income per share of common stock
attributable to ON Semiconductor Corporation:
Basic
$
1.40
$
0.72
$
0.99
$
4.39
$
2.37
Diluted
$
1.35
$
0.70
$
0.96
$
4.24
$
2.27
Weighted average common shares
outstanding:
Basic
432.2
432.9
431.1
433.2
425.7
Diluted
447.9
448.7
445.3
448.2
443.8
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(in millions)
December 31, 2022
September 30, 2022
December 31, 2021
Assets
Cash and cash equivalents
$
2,919.0
$
2,450.2
$
1,352.6
Receivables, net
842.3
857.3
809.4
Inventories
1,616.8
1,575.4
1,379.5
Assets held-for-sale
—
135.0
—
Other current assets
351.3
291.5
240.1
Total current assets
5,729.4
5,309.4
3,781.6
Property, plant and equipment, net
3,450.7
2,762.1
2,524.3
Goodwill
1,577.6
1,600.4
1,937.5
Intangible assets, net
359.7
373.8
495.7
Deferred tax assets
376.7
409.9
366.3
Right-of-use financing lease
45.8
46.4
22.3
Other assets
438.6
598.7
498.3
Total assets
$
11,978.5
$
11,100.7
$
9,626.0
Liabilities, Non-Controlling Interest
and Stockholders’ Equity
Accounts payable
$
852.1
$
791.7
$
635.1
Accrued expenses and other current
liabilities
1,047.3
755.1
734.9
Liabilities held-for-sale
—
37.3
—
Current portion of financing lease
liabilities
14.2
11.6
12.7
Current portion of long-term debt
147.8
165.3
160.7
Total current liabilities
2,061.4
1,761.0
1,543.4
Long-term debt
3,045.7
3,046.5
2,913.9
Deferred tax liabilities
34.1
30.5
43.2
Long-term financing lease liabilities
23.0
20.6
10.2
Other long-term liabilities
607.3
565.5
510.9
Total liabilities
5,771.5
5,424.1
5,021.6
ON Semiconductor Corporation stockholders’
equity:
Common stock
6.1
6.1
6.0
Additional paid-in capital
4,670.9
4,598.8
4,633.3
Accumulated other comprehensive loss
(23.2
)
(23.4
)
(40.6
)
Accumulated earnings
4,364.4
3,760.1
2,435.1
Less: Treasury stock, at cost
(2,829.7
)
(2,685.6
)
(2,448.4
)
Total ON Semiconductor Corporation
stockholders’ equity
6,188.5
5,656.0
4,585.4
Non-controlling interest
18.5
20.6
19.0
Total stockholders' equity
6,207.0
5,676.6
4,604.4
Total liabilities and stockholders'
equity
$
11,978.5
$
11,100.7
$
9,626.0
ON SEMICONDUCTOR
CORPORATION
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in millions)
Quarter Ended
Year Ended
December 31, 2022
September 30, 2022
December 31, 2021
December 31,
2022
December 31,
2021
Cash flows from operating activities:
Net income
$
604.3
$
311.9
$
426.4
$
1,903.8
$
1,011.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
133.2
139.6
140.3
551.8
596.7
(Gain) loss on sale or disposal of fixed
assets
0.5
(16.5
)
—
(32.6
)
—
Gain on divestiture of businesses
(64.9
)
(0.2
)
—
(67.0
)
(10.2
)
(Gain) loss on debt refinancing and
prepayment
(0.2
)
—
2.8
7.1
29.0
Amortization of debt discount and issuance
costs
2.4
2.6
2.7
11.0
10.7
Share-based compensation
24.3
26.9
27.2
100.8
101.3
Non-cash interest on convertible notes
—
—
7.1
—
24.7
Non-cash asset impairment charges
—
11.9
—
18.6
10.8
Goodwill and intangible asset impairment
charges
—
271.8
—
386.8
—
Change in deferred tax balances
67.7
(71.3
)
22.9
3.1
62.4
Other
(0.5
)
(0.7
)
1.8
0.1
4.3
Changes in assets and liabilities
(35.5
)
326.4
(4.6
)
(250.4
)
(58.9
)
Net cash provided by operating
activities
$
731.3
$
1,002.4
$
626.6
$
2,633.1
$
1,782.0
Cash flows from investing activities:
Purchase of Property, Plant and Equipment
("PP&E")
$
(342.0
)
$
(271.1
)
$
(169.6
)
$
(1,005.0
)
$
(444.6
)
Deposits and proceeds from sale of
PP&E
0.1
20.8
7.4
59.1
14.0
Deposits utilized (made) for purchase of
PP&E
22.7
(22.3
)
(25.9
)
(31.0
)
(47.4
)
Divestiture of business, net of cash
transferred
172.6
—
3.6
263.1
7.0
Purchase of business, net of cash
acquired
—
—
(399.4
)
(2.4
)
(399.4
)
Purchase of available-for-sale
securities
—
(1.7
)
(5.1
)
(18.0
)
(48.9
)
Proceeds from sale or maturity of
available-for-sale securities
4.8
10.2
1.4
28.8
4.2
Net cash used in investing activities
$
(141.8
)
$
(264.1
)
$
(587.6
)
$
(705.4
)
$
(915.1
)
Cash flows from financing activities:
Proceeds for the issuance of common stock
under the ESPP
$
4.7
$
5.7
$
5.0
$
22.9
$
23.5
Payment of tax withholding for RSUs
(10.7
)
(4.1
)
(4.7
)
(78.1
)
(38.9
)
Repurchase of common stock
(92.9
)
(77.2
)
—
(259.8
)
—
Issuance and borrowings under debt
agreements
—
—
—
500.0
787.3
Reimbursement of debt issuance costs
—
—
—
—
2.7
Payment of debt issuance costs
—
—
—
—
(3.8
)
Repayment of borrowings under debt
agreements
(20.5
)
(2.7
)
(51.7
)
(530.0
)
(1,270.5
)
Payment for purchase of bond hedges
—
—
—
—
(160.3
)
Proceeds from issuance of warrants
—
—
—
—
93.8
Payments related to prior acquisition
(9.2
)
—
(0.2
)
(9.2
)
(3.2
)
Payment of finance lease obligations
1.0
(1.6
)
—
(11.5
)
—
Dividend to non-controlling
shareholder
(2.1
)
—
—
(4.3
)
—
Net cash used in financing activities
$
(129.7
)
$
(79.9
)
$
(51.6
)
$
(370.0
)
$
(569.4
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
0.8
(0.6
)
(0.3
)
(2.4
)
(1.3
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
460.6
657.8
(12.9
)
1,555.3
296.2
Beginning cash, cash equivalents and
restricted cash
2,472.4
1,814.6
1,390.6
1,377.7
1,081.5
Ending cash, cash equivalents and
restricted cash
$
2,933.0
$
2,472.4
$
1,377.7
$
2,933.0
$
1,377.7
ON SEMICONDUCTOR
CORPORATION
RECONCILIATION OF GAAP VERSUS
NON-GAAP DISCLOSURES
(in millions, except per share
and percentage data)
Quarter Ended
Year Ended
December 31, 2022
September 30, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Reconciliation of GAAP to non-GAAP
gross profit:
GAAP gross profit
$
1,020.5
$
1,058.3
$
832.2
$
4,077.2
$
2,714.3
Special items:
a)
Non-recurring facility costs
—
—
2.3
—
5.5
b)
Impact of business wind down
(3.6
)
23.1
—
19.5
—
c)
Amortization of acquisition-related
intangible assets
1.6
—
—
1.6
—
Total special items
(2.0
)
23.1
2.3
21.1
5.5
Non-GAAP gross profit
$
1,018.5
$
1,081.4
$
834.5
$
4,098.3
$
2,719.8
Reconciliation of GAAP to non-GAAP
gross margin:
GAAP gross margin
48.5
%
48.3
%
45.1
%
49.0
%
40.3
%
Special items:
a)
Non-recurring facility costs
—
%
—
%
0.1
%
—
%
0.1
%
b)
Impact of business wind down
(0.2
)%
1.1
%
—
0.2
%
—
c)
Amortization of acquisition-related
intangible assets
0.1
%
—
%
—
%
0.1
%
—
%
Total special items
(0.1
)%
1.1
%
0.1
%
0.3
%
0.1
%
Non-GAAP gross margin
48.4
%
49.3
%
45.2
%
49.2
%
40.4
%
Reconciliation of GAAP to non-GAAP
operating expenses:
GAAP operating expenses
$
316.2
$
633.8
$
351.9
$
1,717.2
$
1,426.7
Special items:
a)
Amortization of acquisition-related
intangible assets
(16.1
)
(21.9
)
(24.5
)
(81.2
)
(99.0
)
b)
Restructuring, asset impairments and
other, net
7.7
(40.3
)
(13.1
)
(17.9
)
(71.4
)
c)
Goodwill and intangible asset
impairment
—
(271.8
)
—
(386.8
)
(2.9
)
d)
Third party acquisition and divestiture
related costs
(7.4
)
(2.3
)
(7.9
)
(12.9
)
(11.9
)
e)
Impact of business wind down
—
6.8
—
6.8
—
Total special items
(15.8
)
(329.5
)
(45.5
)
(492.0
)
(185.2
)
Non-GAAP operating expenses
$
300.4
$
304.3
$
306.4
$
1,225.2
$
1,241.5
Reconciliation of GAAP to non-GAAP
operating income:
GAAP operating income
$
704.3
$
424.5
$
480.3
$
2,360.0
$
1,287.6
Special items:
a)
Non-recurring facility costs
—
—
2.3
—
5.5
b)
Amortization of acquisition-related
intangible assets
17.7
21.9
24.5
82.8
99.0
c)
Restructuring, asset impairments and
other, net
(7.7
)
40.3
13.1
17.9
71.4
d)
Goodwill and intangible asset
impairment
—
271.8
—
386.8
2.9
e)
Third party acquisition and divestiture
related costs
7.4
2.3
7.9
12.9
11.9
f)
Impact of business wind down
(3.6
)
16.3
—
12.7
—
Total special items
13.8
352.6
47.8
513.1
190.7
Non-GAAP operating income
$
718.1
$
777.1
$
528.1
$
2,873.1
$
1,478.3
Reconciliation of GAAP to non-GAAP
operating margin (operating income / revenue):
GAAP operating margin
33.5
%
19.4
%
26.0
%
28.3
%
19.1
%
Special items:
a)
Non-recurring facility costs
—
%
—
%
0.1
%
—
%
0.1
%
b)
Amortization of acquisition-related
intangible assets
0.8
%
1.0
%
1.3
%
1.0
%
1.5
%
c)
Restructuring, asset impairments and
other, net
(0.4
)%
1.8
%
0.7
%
0.2
%
1.1
%
d)
Goodwill and intangible asset
impairment
—
%
12.4
%
—
%
4.6
%
—
%
e)
Third party acquisition and divestiture
related costs
0.4
%
0.1
%
0.4
%
0.2
%
0.2
%
f)
Impact of business wind down
(0.2
)%
0.7
%
—
%
0.2
%
—
%
Total special items
0.7
%
16.0
%
2.6
%
6.2
%
2.8
%
Non-GAAP operating margin
34.1
%
35.4
%
28.6
%
34.5
%
21.9
%
Reconciliation of GAAP to non-GAAP
income before income taxes:
GAAP income before income taxes
$
763.3
$
406.8
$
466.2
$
2,362.2
$
1,157.8
Special items:
a)
Non-recurring facility costs
—
—
2.3
—
5.5
b)
Amortization of acquisition-related
intangible assets
17.7
21.9
24.5
82.8
99.0
c)
Restructuring, asset impairments and
other, net
(7.7
)
40.3
13.1
17.9
71.4
d)
Goodwill and intangible asset
impairment
—
271.8
—
386.8
2.9
e)
Third party acquisition and divestiture
related costs
7.4
2.3
7.9
12.9
11.9
f)
Impact of business wind down
(3.6
)
16.3
—
12.7
—
g)
Actuarial gains on pension plans and other
pension benefits
(22.0
)
—
(22.2
)
(22.0
)
(16.7
)
h)
Loss on debt refinancing and
prepayment
(0.2
)
—
2.8
7.1
29.0
i)
Non-cash interest on convertible notes
—
—
7.1
—
24.7
j)
Gain on divestiture of businesses
(64.9
)
(0.2
)
—
(67.0
)
(10.2
)
Total special items
(73.3
)
352.4
35.5
431.2
217.5
Non-GAAP income before income taxes
$
690.0
$
759.2
$
501.7
$
2,793.4
$
1,375.3
Reconciliation of GAAP to non-GAAP net
income attributable to ON Semiconductor Corporation:
GAAP net income attributable to ON
Semiconductor Corporation
$
604.3
$
311.9
$
425.9
$
1,902.2
$
1,009.6
Special items:
a)
Non-recurring facility costs
—
—
2.3
—
5.5
b)
Amortization of acquisition-related
intangible assets
17.7
21.9
24.5
82.8
99.0
c)
Restructuring, asset impairments and
other, net
(7.7
)
40.3
13.1
17.9
71.4
d)
Goodwill and intangible asset
impairment
—
271.8
—
386.8
2.9
e)
Third party acquisition and divestiture
related costs
7.4
2.3
7.9
12.9
11.9
f)
Impact of business wind down
(3.6
)
16.3
—
12.7
—
g)
Actuarial gains on pension plans and other
pension benefits
(22.0
)
—
(22.2
)
(22.0
)
(16.7
)
h)
Loss on debt refinancing and
prepayment
(0.2
)
—
2.8
7.1
29.0
i)
Non-cash interest on convertible notes
—
—
7.1
—
24.7
j)
Gain on divestiture of businesses
(64.9
)
(0.2
)
—
(67.0
)
(10.2
)
k)
Adjustment of income taxes
49.4
(24.9
)
16.6
14.3
58.4
Total special items
(23.9
)
327.5
52.1
445.5
275.9
Non-GAAP net income attributable to ON
Semiconductor Corporation
$
580.4
$
639.4
$
478.0
$
2,347.7
$
1,285.5
Adjustment of income taxes:
Tax adjustment for special items (1)
$
15.4
$
(74.0
)
$
(7.5
)
$
(90.6
)
$
(45.7
)
Other non-GAAP tax adjustment (2)
34.0
49.1
24.1
104.9
104.1
Total adjustment of income taxes
$
49.4
$
(24.9
)
$
16.6
$
14.3
$
58.4
GAAP net income for diluted earnings per
share
$
604.7
$
312.4
$
425.9
$
1,904.1
$
1,009.6
Non-GAAP net income for diluted earnings
per share
$
580.8
$
639.9
$
478.0
$
2,349.6
$
1,285.5
Reconciliation of GAAP to non-GAAP
diluted shares outstanding:
GAAP diluted shares outstanding
447.9
448.7
445.3
448.2
443.8
Special items:
a)
Less: dilutive shares attributable to
convertible notes
(8.0
)
(7.9
)
(6.9
)
(7.0
)
(8.6
)
Total special items
(8.0
)
(7.9
)
(6.9
)
(7.0
)
(8.6
)
Non-GAAP diluted shares outstanding
439.9
440.8
438.4
441.2
435.2
Non-GAAP diluted earnings per
share:
Non-GAAP net income attributable to ON
Semiconductor Corporation
$
580.8
$
639.9
$
478.0
$
2,349.6
$
1,285.5
Non-GAAP diluted shares outstanding
439.9
440.8
438.4
441.2
435.2
Non-GAAP diluted earnings per share
$
1.32
$
1.45
$
1.09
$
5.33
$
2.95
Reconciliation of net cash provided by
operating activities to free cash flow:
Net cash provided by operating
activities
$
731.3
$
1,002.4
$
626.6
$
2,633.1
$
1,782.0
Special items:
a)
Purchase of property, plant and
equipment
(342.0
)
(271.1
)
(169.6
)
(1,005.0
)
(444.6
)
Total special items
(342.0
)
(271.1
)
(169.6
)
(1,005.0
)
(444.6
)
Free cash flow
$
389.3
$
731.3
$
457.0
$
1,628.1
$
1,337.4
(1)
Tax impact of non-GAAP special items (a-j)
is calculated using the federal statutory rate of 21% for all
periods presented.
(2)
The income tax adjustment primarily
represents the use of the net operating loss, non-cash impact of
not asserting indefinite reinvestment on earnings of our foreign
subsidiaries, deferred tax expense not affecting taxes payable, and
non-cash expense (benefit) related to uncertain tax positions.
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.
(in millions)
Quarter Ended
Year Ended
December 31, 2022
September 30, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Cost of revenue
$
3.1
$
3.2
$
3.8
$
12.0
$
15.6
Research and development
3.1
4.9
5.8
17.6
24.2
Selling and marketing
4.2
4.1
4.1
16.4
16.6
General and administrative
13.9
14.7
13.5
54.8
44.9
Total share-based compensation
$
24.3
$
26.9
$
27.2
$
100.8
$
101.3
SUPPLEMENTAL FINANCIAL DATA
(in millions)
Quarter Ended
Year Ended
December 31, 2022
September 30, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Net cash provided by operating
activities
$
731.3
$
1,002.4
$
626.6
$
2,633.1
$
1,782.0
Free cash flow
389.3
731.3
457.0
1,628.1
1,337.4
Cash paid for income taxes
113.7
126.7
23.2
443.2
88.2
Depreciation and amortization
$
133.2
$
139.6
$
140.3
$
551.8
$
596.7
Less: Amortization of acquisition-related
intangible assets
17.7
21.9
24.5
82.8
99.0
Depreciation and amortization (excl.
amortization of acquisition-related intangible assets)
$
115.5
$
117.7
$
115.8
$
469.0
$
497.7
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, purchased in-process
research and development expenses, restructuring, asset impairments
and other, net, goodwill impairment charges, gains and losses on
debt prepayment, non-cash interest expense, actuarial (gains)
losses on pension plans and other pension benefits, third party
acquisition and divestiture-related costs, tax impact of these
items, and certain other non-recurring items, as necessary.
Management does not consider the effects of these items in
evaluating the core operational activities of onsemi. Management
uses these non-GAAP measures internally to make strategic
decisions, forecast future results, and evaluate onsemi’s current
performance. In addition, the Company believes that most analysts
covering onsemi use the non-GAAP measures to evaluate onsemi’s
performance. Given management’s and other relevant use of these
non-GAAP measures, management 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, amortization of
acquisition-related intangibles, expensing of appraised inventory
fair market value step-up and non-recurring facility costs. In
addition, it is an important component of management’s internal
performance measurement and incentive and reward process as it is
used to assess the current and historical financial results of the
business and for strategic decision making, preparing budgets,
obtaining targets, and forecasting future results. Management
presents this non-GAAP financial measure to enable investors and
analysts to evaluate our revenue generation performance relative to
the direct costs of revenue of onsemi’s core businesses.
Non-GAAP Operating Income and Operating Margin
The use of non-GAAP operating income and operating margin allows
management to evaluate, among other things, the operating margin
and operating income of the Company’s core businesses and trends
across different reporting periods on a consistent basis,
independent of non-cash items including, generally speaking,
expensing of appraised inventory fair market value step-up,
non-recurring facility costs, amortization and impairments of
intangible assets, goodwill and intangible asset impairment
charges, 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, goodwill and intangible asset
impairment charges, expensing of appraised inventory fair market
value step-up, non-recurring facility costs, restructuring, gains
and losses on debt prepayment, non-cash interest expense, actuarial
(gains) losses on pension plans and other pension benefits, third
party acquisition and divestiture related costs, tax impact of
these items and other non-GAAP adjustments, and certain other
special items, as necessary. In addition, these items are important
components of management’s internal performance measurement and
incentive and reward process, as they are used to assess the
current and historical financial results of the business and for
strategic decision making, preparing budgets, setting targets, and
forecasting future results. Management presents these non-GAAP
financial measures to enable investors and analysts to understand
the results of operations of onsemi’s core businesses and, to the
extent comparable, to compare our results of operations on a more
consistent basis against those of other companies in our
industry.
Free Cash Flow
The use of free cash flow allows management to evaluate, among
other things, the ability of the Company to make interest or
principal payments on its debt. Free cash flow is defined as the
difference between cash flow from operating activities and capital
expenditures disclosed under investing activities in the
consolidated statement of cash flows. Free cash flow is not an
alternate to cash flow from operating activities as a measure of
liquidity. It is an important component of management’s internal
performance measurement and incentive and reward process as it is
used to assess the current and historical financial results of the
business and for strategic decision making, preparing budgets,
obtaining targets, and forecasting future results. Management
presents this non-GAAP financial measure to enable investors and
analysts to evaluate our revenue generation performance relative to
the direct costs of operations of onsemi’s core businesses.
Non-GAAP Diluted Share Count
The use of non-GAAP diluted share count allows management to
evaluate, among other things, the potential dilution due to the
outstanding stock options and restricted stock units excluding the
dilution from the convertible notes that is covered by hedging
activity up to a certain threshold. In periods when the quarterly
average stock price per share exceeds $20.72, the non-GAAP diluted
share count includes the anti-dilutive impact of the Company’s
hedge transactions issued concurrently with the 1.625% convertible
notes. As such, at an average stock price per share between $20.72
and $30.70, the hedging activity offsets the potentially dilutive
effect of the 1.625% convertible notes. In periods when the
quarterly average stock price per share exceeds $52.97, the
non-GAAP diluted share count includes the anti-dilutive impact of
the Company’s hedge transactions issued concurrently with the 0%
convertible notes. As such, at an average stock price per share
between $52.97 and $74.34, the hedging activity offsets the
potentially dilutive effect of the 0% convertible notes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230206005242/en/
Stefanie Cuene Head of Public Relations onsemi (602)
244-3402 stefanie.cuene@onsemi.com
Parag Agarwal Vice President - Investor Relations &
Corporate Development onsemi (602) 244-3437
investor@onsemi.com
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