01—Abstract
Summary
Summary of the 10-Q filed May 5, 2025. Cited figures are marked; the original filing is the authoritative source.
ON Semiconductor Corporation's first-quarter 2025 Form 10-Q (quarter ended April 4, 2025) shows a sharp deterioration in profitability.
Revenue was $1,445.7 milliona, down $417.0 million, or approximately 22%, from $1,862.7 million in the prior-year quarter. The company reported a net loss attributable to ON Semiconductor Corporation of $486.1 million, or $(1.15) per share, compared with net income of $453.0 million, or $1.04 per diluted share, a year earlier. The decline was driven by $539.3 million of restructuring, asset impairment and other charges tied to the 2025 Manufacturing Realignment Program, including a $431.5 million non-cash impairment on manufacturing equipment, plus $237.7 million of excess and obsolete inventory charges recorded in cost of revenue.
Gross margin fell to 20.3% from 45.8%, and the ISG segment posted a gross loss of $130.3 millionb. Cash generation remained relatively resilient. Operating cash flow was $602.3 million, up from $498.7 million, helped by working capital timing, with receivables and inventories releasing cash.
Cash, cash equivalents and short-term investments totaled approximately $3.0 billionc, and the Revolving Credit Facility had approximately $1.1 billion available. Capital expenditures were $147.6 million, and management expects capex to be about 5% of revenue for the remainder of 2025. The company repurchased 6.1 million shares for $302.6 million in the quarter and had $1,486.0 million remaining under its Share Repurchase Program, which runs through December 31, 2025.
The filing also highlights a $10.6 billiond remaining performance obligation under long-term supply agreements, of which approximately 31% is expected to be recognized over the next 12 months. The company is restructuring its global workforce by approximately 2,400 employees, with expected severance of about $63 million, and it acquired the SiC JFET technology business from Qorvo for $118.8 million in cash.
02—Key points
Key Highlights
- Revenue declined to $1,445.7 million from $1,862.7 million, a decrease of $417.0 million, or approximately 22%, year over year.
- Gross profit fell to $293.8 million from $853.6 million, with gross margin of 20.3% versus 45.8%, driven by $237.7 million of excess and obsolete inventory charges and a $45.7 million write-off recorded in cost of revenue.
- Restructuring, asset impairments and other charges were $539.3 million, including a $431.5 million non-cash impairment on manufacturing equipment under the 2025 Manufacturing Realignment Program.
- The company posted a net loss attributable to ON Semiconductor Corporation of $486.1 million, or $(1.15) per share, compared with net income of $453.0 million, or $1.04 per diluted share, in the prior-year quarter.
- Operating cash flow rose to $602.3 million from $498.7 million, while the company ended the quarter with approximately $3.0 billion in cash, cash equivalents and short-term investments.
- The company repurchased 6.1 million shares for $302.6 million and had approximately $1,486.0 million remaining under its Share Repurchase Program at quarter end.
- Remaining performance obligations under long-term supply agreements were approximately $10.6 billion, with about 31% expected to be recognized as revenue over the next 12 months.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2025, On Semiconductor lost $0.34.
- Revenue$1.45B100.0%
- Cost of revenue−$1.15B79.7%
- Gross profit$293.8M20.3%
- Operating costs−$867.5M60.0%
- Operating income−$573.7M39.7%
- Interest, other & tax$87.6M6.1%
- Net income−$486.1M33.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed May 5, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $1.45B$1.74B | −16.7% |
| Cost of Revenue | $1.15B$951.20M | +21.1% |
| Gross Profit | $293.80M$784.00M | −62.5% |
| Operating Expenses | $867.50M$395.50M | +119.3% |
| Operating Income | -$573.70M$388.50M | −247.7% |
| Net Income | -$486.10M$338.20M | −243.7% |
| EPS (Basic) | $-1.15$0.79 | −245.6% |
| EPS (Diluted) | $-1.15$0.78 | −247.4% |
| Shares Outstanding (Basic) | 421.30M429.10M | −1.8% |
| Shares Outstanding (Diluted) | 421.30M433.20M | −2.7% |
05—Questions
Frequently Asked Questions
Why did ON Semiconductor report a net loss this quarter after a profit a year ago?
The net loss of $486.1 million attributable to the company reflected $539.3 million of restructuring, asset impairment and other charges, including a $431.5 million non-cash impairment on manufacturing equipment, along with $237.7 million of excess and obsolete inventory charges. Revenue also fell about 22% year over year, which compressed gross profit.
How much of the quarter's charges were non-cash?
The filing identifies the $431.5 million asset impairment as a non-cash charge, and the cash flow statement lists non-cash asset impairment charges of $431.5 million. Other charges of $44.9 million include estimated equipment selling costs of $28.3 million that had not yet been paid and were recorded in accrued expenses.
Is the company's liquidity position sufficient to fund operations and buybacks?
Management stated that cash on hand, operating cash flow and the Revolving Credit Facility are adequate to meet working capital and other business needs for at least the next 12 months. Cash, cash equivalents and short-term investments were approximately $3.0 billion, with about $1.1 billion available under the revolver, and the company stated it does not have meaningful debt maturing in the next 12 months.
What is the outlook for capital spending and the workforce restructuring?
The company expects capital expenditures to be approximately 5% of revenue for the remainder of 2025, compared with about 10% of revenue in the quarter. The restructuring plan involves reducing the global workforce by approximately 2,400 employees, with total expected severance and related benefits of about $63 million, of which $60.2 million was recognized this quarter, and substantially all remaining charges expected in 2025.
What is the status of the securities class action related to the SiC business?
The Hubacek securities class action, alleging misleading statements about the SiC business, is pending in the U.S. District Court for the District of Arizona. A motion to dismiss the second amended complaint is fully briefed, with oral argument scheduled for June 26, 2025. The company believes it has strong legal defenses, and related derivative suits are stayed pending the Hubacek outcome.
06—Continue