onsemi Announces Second Quarter 2024 Results

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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 third 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									Six Months Ended
	June 28, 2024			March 29, 2024			June 30, 2023			June 28, 2024			June 30, 2023
Revenue	$	1,735.2		$	1,862.7		$	2,094.4		$	3,597.9		$	4,054.1
Cost of revenue		951.2			1,009.1			1,101.0			1,960.3			2,143.2
Gross profit		784.0			853.6			993.4			1,637.6			1,910.9
Gross margin		45.2	%		45.8	%		47.4	%		45.5	%		47.1	%
Operating expenses:
Research and development		156.5			150.0			145.3			306.5			283.7
Selling and marketing		68.6			69.1			71.6			137.7			143.4
General and administrative		85.0			95.3			87.2			180.3			163.1
Amortization of acquisition-related intangible assets		12.9			12.6			12.0			25.5			27.0
Restructuring, asset impairments and other charges, net		72.5			1.4			2.6			73.9			54.1
Total operating expenses		395.5			328.4			318.7			723.9			671.3
Operating income		388.5			525.2			674.7			913.7			1,239.6
Other income (expense), net:
Interest expense		(15.7	)		(15.6	)		(16.4	)		(31.3	)		(42.8	)
Interest income		27.4			27.6			24.0			55.0			41.1
Loss on debt prepayment		—			—			—			—			(13.3	)
Gain (loss) on divestiture of business		—			—			0.5			—			(0.6	)
Other income (expense)		1.9			1.0			(1.3	)		2.9			3.4
Other income (expense), net		13.6			13.0			6.8			26.6			(12.2	)
Income before income taxes		402.1			538.2			681.5			940.3			1,227.4
Income tax provision		(63.7	)		(84.5	)		(104.4	)		(148.2	)		(188.1	)
Net income		338.4			453.7			577.1			792.1			1,039.3
Less: Net income attributable to non-controlling interest		(0.2	)		(0.7	)		(0.5	)		(0.9	)		(1.0	)
Net income attributable to ON Semiconductor Corporation	$	338.2		$	453.0		$	576.6		$	791.2		$	1,038.3

Net income for diluted earnings per share of common stock	$	338.2		$	453.0		$	577.0		$	791.2		$	1,039.1
Net income per share of common stock:
Basic	$	0.79		$	1.06		$	1.34		$	1.85		$	2.40
Diluted	$	0.78		$	1.04		$	1.29		$	1.82		$	2.32
Weighted average common shares outstanding:
Basic		429.1			428.1			431.7			428.6			431.8
Diluted		433.2			436.5			448.7			434.9			448.6

ON SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions)

	June 28, 2024			March 29, 2024			December 31, 2023
Assets
Cash and cash equivalents	$	2,231.0		$	2,614.4		$	2,483.0
Short-term investments		450.0			—			—
Receivables, net		887.2			873.3			935.4
Inventories		2,224.6			2,147.1			2,111.8
Other current assets		532.2			514.1			382.1
Total current assets		6,325.0			6,148.9			5,912.3
Property, plant and equipment, net		4,372.5			4,384.3			4,401.5
Goodwill		1,577.6			1,577.6			1,577.6
Intangible assets, net		275.0			289.4			299.3
Deferred tax assets		679.1			648.4			600.8
ROU financing lease assets		41.7			41.8			42.4
Other assets		387.9			392.5			381.3
Total assets	$	13,658.8		$	13,482.9		$	13,215.2
Liabilities and Stockholders’ Equity
Accounts payable	$	617.7		$	665.8		$	725.6
Accrued expenses and other current liabilities		684.3			678.1			663.2
Current portion of financing lease liabilities		0.4			0.3			0.8
Current portion of long-term debt		795.6			794.8			794.0
Total current liabilities		2,098.0			2,139.0			2,183.6
Long-term debt		2,545.7			2,544.1			2,542.6
Deferred tax liabilities		39.6			37.3			38.7
Long-term financing lease liabilities		21.7			21.3			22.4
Other long-term liabilities		595.4			598.6			627.3
Total liabilities		5,300.4			5,340.3			5,414.6
ON Semiconductor Corporation stockholders’ equity:
Common stock		6.2			6.2			6.2
Additional paid-in capital		5,283.3			5,243.9			5,210.9
Accumulated other comprehensive loss		(56.8	)		(52.2	)		(45.2	)
Accumulated earnings		7,339.3			7,001.1			6,548.1
Less: Treasury stock, at cost		(4,232.5	)		(4,075.1	)		(3,937.4	)
Total ON Semiconductor Corporation stockholders’ equity		8,339.5			8,123.9			7,782.6
Non-controlling interest		18.9			18.7			18.0
Total stockholders’ equity		8,358.4			8,142.6			7,800.6
Total liabilities and stockholders’ equity	$	13,658.8		$	13,482.9		$	13,215.2

ON SEMICONDUCTOR CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

	Quarters Ended						Six Months Ended
	June 28, 2024		March 29, 2024		June 30, 2023		June 28, 2024		June 30, 2023
Cash flows from operating activities:
Net income	$	338.4	$	453.7	$	577.1	$	792.1	$	1,039.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		159.6		154.9		148.8		314.5		293.8
Loss on sale and disposal of fixed assets		0.9		0.1		3.6		1.0		4.8
(Gain) loss on divestiture of businesses		—		—		(0.5)		—		0.6
Loss on debt prepayment		—		—		—		—		13.3
Amortization of debt discount and issuance costs		2.9		2.7		2.9		5.6		5.8
Share-based compensation		32.3		33.0		31.6		65.3		59.3
Non-cash asset impairment charges		15.7		—		—		15.7		12.7
Change in deferred tax balances		(27.9)		(48.6)		(28.1)		(76.5)		(29.6)
Other		3.5		1.8		(2.3)		5.3		(9.3)
Changes in assets and liabilities		(163.2)		(98.9)		(342.3)		(262.1)		(591.0)
Net cash provided by operating activities		362.2		498.7		390.8		860.9		799.7
Cash flows from investing activities:
Purchase of Property, Plant and Equipment (“PP&E”)		(154.5)		(222.4)		(430.6)		(376.9)		(752.1)
Deposits and proceeds from sale of PP&E		0.2		0.1		0.9		0.3		2.6
Deposits utilized (made) for purchase of PP&E		13.4		(11.5)		36.2		1.9		19.5
Proceeds from sale or maturity of available-for-sale securities		—		—		10.0		—		20.8
Purchase of short-term investments		(450.0)		—		—		(450.0)		—
Payments related to acquisition of business		—		—		—		—		(236.3)
Other		—		(1.5)		—		(1.5)		—
Net cash used in investing activities		(590.9)		(235.3)		(383.5)		(826.2)		(945.5)
Cash flows from financing activities:
Proceeds for the issuance of common stock under the ESPP		5.5		7.6		5.9		13.1		13.2
Payment of tax withholding for RSUs		(7.7)		(37.5)		(8.9)		(45.2)		(56.5)
Repurchase of common stock		(150.0)		(100.0)		(60.1)		(250.0)		(164.1)
Issuance and borrowings under debt agreements		—		—		375.0		—		1,845.0
Reimbursement of debt issuance costs		—		—		—		—		4.5
Payment of debt issuance and other financing costs		—		—		(6.5)		—		(11.3)
Repayment of borrowings under debt agreements		—		—		(390.0)		—		(1,603.7)
Payment for purchase of bond hedges		—		—		—		—		(414.0)
Proceeds from issuance of warrants		—		—		—		—		242.5
Payment of finance lease obligations		(0.5)		(0.9)		(5.0)		(1.4)		(8.6)
Net cash used in financing activities		(152.7)		(130.8)		(89.6)		(283.5)		(153.0)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2.2)		(0.9)		(1.1)		(3.1)		(1.0)
Net increase (decrease) in cash, cash equivalents and restricted cash		(383.6)		131.7		(83.4)		(251.9)		(299.8)
Beginning cash, cash equivalents and restricted cash		2,616.7		2,485.0		2,716.6		2,485.0		2,933.0
Ending cash, cash equivalents and restricted cash	$	2,233.1	$	2,616.7	$	2,633.2	$	2,233.1	$	2,633.2

ON SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP VERSUS NON-GAAP DISCLOSURES (Continued)
(in millions, except per share and percentage data)

		Quarters Ended									Six Months Ended
		June 28, 2024			March 29, 2024			June 30, 2023			June 28, 2024			June 30, 2023
Reconciliation of GAAP to non-GAAP gross profit:
GAAP gross profit		$	784.0		$	853.6		$	993.4		$	1,637.6		$	1,910.9
Special items:
a)	Impact of business wind down		—			—			(1.8	)		—			(3.9	)
b)	Amortization of acquisition-related intangible assets		1.6			1.5			1.4			3.1			2.8
	Total special items		1.6			1.5			(0.4	)		3.1			(1.1	)
Non-GAAP gross profit		$	785.6		$	855.1		$	993.0		$	1,640.7		$	1,909.8
Reconciliation of GAAP to non-GAAP gross margin:
GAAP gross margin			45.2	%		45.8	%		47.4	%		45.5	%		47.1	%
Special items:
a)	Impact of business wind down		—	%		—	%		(0.1	)%		—	%		(0.1	)%
b)	Amortization of acquisition-related intangible assets		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%
	Total special items		0.1	%		0.1	%		—	%		0.1	%		—	%
Non-GAAP gross margin			45.3	%		45.9	%		47.4	%		45.6	%		47.1	%
Reconciliation of GAAP to non-GAAP operating expenses:
GAAP operating expenses		$	395.5		$	328.4		$	318.7		$	723.9		$	671.3
Special items:
a)	Amortization of acquisition-related intangible assets		(12.9	)		(12.6	)		(12.0	)		(25.5	)		(27.0	)
b)	Restructuring, asset impairments and other, net		(72.5	)		(1.4	)		(2.6	)		(73.9	)		(54.1	)
c)	Third party acquisition and divestiture-related costs		(1.7	)		(0.1	)		1.4			(1.8	)		1.3
	Total special items		(87.1	)		(14.1	)		(13.2	)		(101.2	)		(79.8	)
Non-GAAP operating expenses		$	308.4		$	314.3		$	305.5		$	622.7		$	591.5
Reconciliation of GAAP to non-GAAP operating income:
GAAP operating income		$	388.5		$	525.2		$	674.7		$	913.7		$	1,239.6
Special items:
a)	Impact of business wind down		—			—			(1.8	)		—			(3.9	)
b)	Amortization of acquisition-related intangible assets		14.5			14.1			13.4			28.6			29.8
c)	Restructuring, asset impairments and other, net		72.5			1.4			2.6			73.9			54.1
d)	Third party acquisition and divestiture-related costs		1.7			0.1			(1.4	)		1.8			(1.3	)
	Total special items		88.7			15.6			12.8			104.3			78.7
Non-GAAP operating income		$	477.2		$	540.8		$	687.5		$	1,018.0		$	1,318.3
*Reconciliation of GAAP to non-GAAP operating margin (operating income / revenue)* :**
GAAP operating margin			22.4	%		28.2	%		32.2	%		25.4	%		30.6	%
Special items:
a)	Impact of business wind down		—	%		—	%		(0.1	)%		—	%		(0.1	)%
b)	Amortization of acquisition-related intangible assets		0.8	%		0.8	%		0.6	%		0.8	%		0.7	%
c)	Restructuring, asset impairments and other, net		4.2	%		0.1	%		0.1	%		2.1	%		1.3	%
d)	Third party acquisition and divestiture-related costs		0.1	%		—	%		(0.1	)%		0.1	%		—	%
	Total special items		5.1	%		0.8	%		0.6	%		2.9	%		1.9	%
Non-GAAP operating margin			27.5	%		29.0	%		32.8	%		28.3	%		32.5	%
Reconciliation of GAAP to non-GAAP income before income taxes:
GAAP income before income taxes		$	402.1		$	538.2		$	681.5		$	940.3		$	1,227.4
Special items:
a)	Impact of business wind down		—			—			(1.8	)		—			(3.9	)
b)	Amortization of acquisition-related intangible assets		14.5			14.1			13.4			28.6			29.8
c)	Restructuring, asset impairments and other, net		72.5			1.4			2.6			73.9			54.1
d)	Third party acquisition and divestiture-related costs		1.7			0.1			(1.4	)		1.8			(1.3	)
e)	Loss on debt prepayment		—			—			—			—			13.3
f)	Loss on divestiture of business		—			—			(0.5	)		—			0.6
	Total special items		88.7			15.6			12.3			104.3			92.6
Non-GAAP income before income taxes		$	490.8		$	553.8		$	693.8		$	1,044.6		$	1,320.0
Reconciliation of GAAP to non-GAAP net income attributable to ON Semiconductor Corporation:
GAAP net income attributable to ON Semiconductor Corporation		$	338.2		$	453.0		$	576.6		$	791.2		$	1,038.3
Special items:
a)	Impact of business wind down		—			—			(1.8	)		—			(3.9	)
b)	Amortization of acquisition-related intangible assets		14.5			14.1			13.4			28.6			29.8
c)	Restructuring, asset impairments and other, net		72.5			1.4			2.6			73.9			54.1
d)	Third party acquisition and divestiture-related costs		1.7			0.1			(1.4	)		1.8			(1.3	)
e)	Loss on debt prepayment		—			—			—			—			13.3
f)	Loss on divestiture of a business		—			—			(0.5	)		—			0.6
g)	Income taxes		(14.8	)		(4.1	)		(5.6	)		(18.9	)		(23.9	)
	Total special items		73.9			11.5			6.7			85.4			68.7
Non-GAAP net income attributable to ON Semiconductor Corporation		$	412.1		$	464.5		$	583.3		$	876.6		$	1,107.0

GAAP net income for diluted earnings per share		$	338.2		$	453.0		$	577.0		$	791.2		$	1,039.1
Non-GAAP net income for diluted earnings per share		$	412.1		$	464.5		$	583.7		$	876.6		$	1,107.8

Reconciliation of GAAP to non-GAAP diluted shares outstanding:
GAAP diluted shares outstanding			433.2			436.5			448.7			434.9			448.6
Special items:
a)	Less: dilutive shares attributable to convertible notes		(3.7	)		(4.7	)		(10.0	)		(4.2	)		(9.7	)
	Total special items		(3.7	)		(4.7	)		(10.0	)		(4.2	)		(9.7	)
Non-GAAP diluted shares outstanding			429.5			431.8			438.7			430.7			438.9
Non-GAAP diluted earnings per share:
Non-GAAP net income for diluted earnings per share		$	412.1		$	464.5		$	583.7		$	876.6		$	1,107.8
Non-GAAP diluted shares outstanding			429.5			431.8			438.7			430.7			438.9
Non-GAAP diluted earnings per share		$	0.96		$	1.08		$	1.33		$	2.04		$	2.52
Reconciliation of net cash provided by operating activities to free cash flow:
Net cash provided by operating activities		$	362.2		$	498.7		$	390.8		$	860.9		$	799.7
Special items:
a)	Purchase of property, plant and equipment		(154.5	)		(222.4	)		(430.6	)		(376.9	)		(752.1	)
	Total special items		(154.5	)		(222.4	)		(430.6	)		(376.9	)		(752.1	)
Free cash flow		$	207.7		$	276.3		$	(39.8	)	$	484.0		$	47.6

Certain of the amounts in the above tables may not total due to rounding of individual amounts.

	Quarters Ended
	September 29, 2023		December 31, 2023		March 29, 2024		June 28, 2024		Last Twelve Months
Net cash provided by operating activities	$	566.6	$	611.2	$	498.7	$	362.2	$	2,038.7
Purchase of property, plant and equipment		(433.0)		(390.5)		(222.4)		(154.5)		(1,200.4)
Free cash flow	$	133.6	$	220.7	$	276.3	$	207.7	$	838.3

Revenue	$	2,180.8	$	2,018.1	$	1,862.7	$	1,735.2	$	7,796.8

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