01—Abstract
Summary
Summary of the 10-Q filed April 29, 2024. Cited figures are marked; the original filing is the authoritative source.
ON Semiconductor Corporation reported revenue of $1,862.7 milliona for the quarter ended March 29, 2024, down $97.0 million, or approximately 5%, from $1,959.7 million a year earlier.
Gross profit fell to $853.6 millionb from $917.5 million, and gross margin was 45.8% compared with 46.8%. Operating income declined to $525.2 million from $564.9 million. Net income attributable to the company was $453.0 million, and diluted earnings per share were $1.04 versus $1.03.
Interest income rose to $27.6 million, and interest expense fell to $15.6 millionc from $26.4 million. Segment results were mixed: Power Solutions Group revenue increased approximately 2%, driven by its Automotive Power Division, while Analog & Mixed-Signal Group revenue fell approximately 6% and Intelligent Sensing Group revenue fell approximately 18%. The company reorganized its segments during the quarter and renamed the Advanced Solutions Group segment to Analog & Mixed-Signal Group.
Cash flow and liquidity were stronger than the earnings decline suggests. Net cash provided by operating activities was $498.7 milliond, up from $408.9 million, which the company attributed primarily to improved working capital management. Capital expenditures were approximately 12% of revenue, and the company expects 10% to 12% of revenue for the rest of 2024.
Cash and cash equivalents totaled approximately $2.6 billion, and about $1.1 billion was available under the Revolving Credit Facility. The company repurchased approximately 1.3 million shares for $100.0 million and had approximately $2.3 billion remaining under its share repurchase program. Its 0% Notes due 2027, with $794.8 million outstanding, are classified as a current liability because the share price trigger was met.
The filing also discloses a securities class action and related derivative suits concerning the company's SiC business. The company states it believes it has strong legal defenses and will vigorously defend the claims. Long-term supply agreements carry remaining performance obligations of approximately $15.6 billion, and the company expects to recognize approximately 30% of that amount as revenue over the next twelve months.
02—Key points
Key Highlights
- Revenue declined $97.0 million, or approximately 5%, to $1,862.7 million, with Industrial and Intelligent Sensing demand weaker and Automotive Power Division revenue up $82.6 million.
- Gross margin was 45.8% versus 46.8% a year earlier; gross profit fell $63.9 million to $853.6 million, with the filing citing a roughly $142 million gross profit hit from declining existing product revenue.
- Operating income fell $39.7 million to $525.2 million, while general and administrative expenses rose $19.4 million, mainly from a variable compensation adjustment in the prior-year quarter.
- Net cash provided by operating activities rose to $498.7 million from $408.9 million, primarily due to improved working capital management.
- Cash and cash equivalents were approximately $2.6 billion, with about $1.1 billion available under the Revolving Credit Facility.
- The company repurchased 1.3 million shares for $100.0 million, leaving approximately $2.3 billion under its $3.0 billion Share Repurchase Program.
- The 0% Notes due 2027 ($794.8 million) are classified as current because the share price trigger was met, giving holders conversion rights in the quarter ending June 30, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, On Semiconductor kept $0.24.
- Revenue$1.86B100.0%
- Cost of revenue−$1.01B54.2%
- Gross profit$853.6M45.8%
- Operating costs−$328.4M17.6%
- Operating income$525.2M28.2%
- Interest, other & tax−$72.2M3.9%
- Net income$453.0M24.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 29, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.86B$1.96B | −4.9% |
| Cost of Revenue | $1.01B$1.04B | −3.2% |
| Gross Profit | $853.60M$917.50M | −7.0% |
| Operating Expenses | $328.40M$352.60M | −6.9% |
| Operating Income | $525.20M$564.90M | −7.0% |
| Interest Expense | $15.60M$26.40M | −40.9% |
| Net Income | $453.00M$461.70M | −1.9% |
| EPS (Basic) | $1.06$1.07 | −0.9% |
| EPS (Diluted) | $1.04$1.03 | +1.0% |
| Shares Outstanding (Basic) | 428.10M431.90M | −0.9% |
| Shares Outstanding (Diluted) | 436.50M448.50M | −2.7% |
05—Questions
Frequently Asked Questions
How did revenue and profitability change compared with the prior-year quarter?
Revenue was $1,862.7 million, down $97.0 million, or approximately 5%, from $1,959.7 million. Gross profit decreased to $853.6 million and gross margin was 45.8% versus 46.8%. Operating income was $525.2 million compared with $564.9 million, and net income attributable to the company was $453.0 million versus $461.7 million. Diluted EPS was $1.04 compared with $1.03.
Which segments drove the revenue change?
Power Solutions Group revenue increased approximately 2% to $874.2 million, supported by a $82.6 million increase in the Automotive Power Division from SiC and other automotive power solutions, partly offset by declines in the Multi-Market and Industrial Power Divisions. Analog & Mixed-Signal Group revenue fell approximately 6% to $697.0 million, and Intelligent Sensing Group revenue fell approximately 18% to $291.5 million, mainly due to lower industrial and automotive demand.
How strong is the company's cash position and cash generation?
Operating cash flow was $498.7 million, compared with $408.9 million a year earlier, which the company attributed mainly to improved working capital management. Cash and cash equivalents were approximately $2.6 billion at March 29, 2024. Capital expenditures were approximately 12% of revenue, and the company expects 10% to 12% for the remainder of 2024.
What should investors know about the 0% Notes and debt maturities?
The $794.8 million 0% Notes due 2027 are classified as a current liability because the last reported sale price of the common stock met the conversion trigger of $68.86 per share (130% of the conversion price) over the required period. Holders may convert those notes only during the quarter ending June 30, 2024. The company states it does not have any meaningful debt maturing in the next 12 months and was in compliance with its covenants.
What legal matters are disclosed?
A putative securities class action (Hubacek v. On Semiconductor Corp.) alleges misleading statements about the company's SiC business and claims violations of Sections 10(b) and 20(a) of the Exchange Act. Several derivative actions were also filed; two were voluntarily dismissed without prejudice on April 15, 2024, and two remain in early stages. The company believes it has strong legal defenses and will vigorously defend the claims.
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