ON Semiconductor Reports Third Quarter 2013 Results

PHOENIX — (BUSINESS WIRE) — October 31, 2013 — ON Semiconductor Corporation (Nasdaq: ONNN)

For the third quarter of 2013, highlights include:

  • Total revenues of $715.4 million
  • GAAP gross margin of 34.8 percent
  • Non-GAAP gross margin of 34.8 percent
  • GAAP net income per diluted share of $0.11
  • Non-GAAP net income per diluted share of $0.17
  • Repurchased approximately 4.1 million shares of common stock

ON Semiconductor Corporation (Nasdaq: ONNN) today announced that total revenues in the third quarter of 2013 were $715.4 million, up approximately four percent compared to the second quarter of 2013. During the third quarter of 2013, the company reported GAAP net income of $51.8 million, or $0.11 per diluted share. The third quarter 2013 GAAP net income was impacted by approximately $23.6 million of special items. The complete special items detail can be found in the attached schedules.

Third quarter 2013 non-GAAP net income was $75.4 million, or $0.17 per diluted share, compared to $57.2 million, or $0.13 per diluted share, for the second quarter of 2013. A reconciliation of these non-GAAP financial measures (and other non-GAAP measures used elsewhere in this release, such as non-GAAP gross margin and adjusted EBITDA) to the company's most directly comparable measures prepared in accordance with U.S. GAAP are set forth in the attached schedules and on our website at http://www.onsemi.com. Additionally, revenue by end market, region, distribution channel and business unit can be found on the "Investors" section of our website.

On a mix-adjusted basis, average selling prices for ON Semiconductor in the third quarter of 2013 were down approximately one percent when compared to the second quarter of 2013. Total company GAAP gross margin in the third quarter was 34.8 percent. Non-GAAP gross margin in the third quarter was 34.8 percent.

Adjusted EBITDA for the third quarter of 2013 was $128.8 million. Adjusted EBITDA for the second quarter of 2013 was $112.4 million.

"The demand environment has been choppy and demand trends have lagged the typical seasonality in our industry,” said Keith Jackson, president and CEO of ON Semiconductor. “Despite a sub-optimal demand environment, our core business remains strong with a robust design win pipeline in our target growth areas of automobiles, smartphones, white goods and select segments of the industrial market.

"At the same time, the headwind to our results from the SANYO Semiconductor Products Group continues to abate as our efforts in stabilizing revenue and optimizing cost structure of the business are beginning to show definitive results. With the measures we recently announced, we believe that we now have a clear line of sight to sustained profitability for our SANYO Semiconductor business from 2014 onwards."


“Based upon product booking trends, backlog levels and estimated turns levels, we anticipate that total ON Semiconductor revenues will be approximately $675 to $705 million in the fourth quarter of 2013,” Jackson said. “Backlog levels for the fourth quarter of 2013 represent approximately 80 to 85 percent of our anticipated fourth quarter 2013 revenues. Average selling prices for the fourth quarter of 2013 are expected to be down approximately one percent when compared to the third quarter of 2013. The outlook for the fourth quarter of 2013 includes stock-based compensation expense of approximately $7 to $9 million.”

The following table outlines ON Semiconductor's projected fourth quarter of 2013 GAAP and non-GAAP outlook.




Total ON Semiconductor

Items ***

Total ON Semiconductor

Revenue $675 to $705 million $675 to $705 million
Gross Margin 33.8% to 34.8% 33.8% to 34.8%
Operating Expenses $198 to $218 million $40 to $50 million $158 to $168 million
Net Interest Expense / Other Expenses $7 to $9 million $7 to $9 million
Convertible Notes, Non-cash Interest Expense* $3 million $3 million $0 million
Tax $6 to $8 million $4 million $2 to $4 million
Diluted Share Count ** 450 million 450 million


Convertible Notes, Non-cash Interest Expense is calculated pursuant to FASB's Accounting Standards Codification (“ASC”) Topic 470: Debt.


Diluted share count can vary for, among other things, the actual exercise of options or vesting of restricted stock units, the incremental dilutive shares from all of the company's convertible senior subordinated notes, and the repurchase or the issuance of stock or convertible notes or the sale of treasury shares.


Special items may include: amortization of intangible assets, 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, income tax adjustments to approximate cash taxes, actuarial (gains) losses on pension plans and other pension benefits, and certain other special items, as necessary.


Regulation G and other provisions of the securities laws regulate the use of financial measures that are not prepared in accordance with GAAP. 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.


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