ON Semiconductor Reports First Quarter 2014 Results

PHOENIX — (BUSINESS WIRE) — May 1, 2014 — ON Semiconductor Corporation (Nasdaq: ONNN)

For the first quarter of 2014, highlights include:

  • Total revenues of $706.5 million
  • GAAP gross margin of 35.5 percent
  • Non-GAAP gross margin of 35.5 percent
  • GAAP net income per diluted share of $0.13
  • Non-GAAP net income per diluted share of $0.17

ON Semiconductor Corporation (Nasdaq: ONNN), driving energy efficient innovation, today announced that total revenues in the first quarter of 2014 were $706.5 million, down approximately 1.6 percent compared to the fourth quarter of 2013. During the first quarter of 2014, the company reported GAAP net income of $58.4 million, or $0.13 per diluted share. The first quarter 2014 GAAP net income was impacted by approximately $16.8 million of special items. The complete special items detail can be found in the attached schedules.

First quarter 2014 non-GAAP net income was $75.2 million, or $0.17 per diluted share, compared to $74.3 million, or $0.17 per diluted share, for the fourth quarter of 2013. A reconciliation of these non-GAAP financial measures (and other non-GAAP measures used elsewhere in this release) 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 first quarter of 2014 were down approximately one percent when compared to the fourth quarter of 2013. Total company GAAP and non-GAAP gross margin in the first quarter was 35.5 percent. For the first quarter of 2014, GAAP operating margin was 10.4 percent, where as non-GAAP operating margin was 12.4 percent.

Adjusted EBITDA for the first quarter of 2014 was $131.0 million. Adjusted EBITDA for the fourth quarter of 2013 was $131.3 million.

“Our bookings momentum continued in the first quarter and our current bookings rate is at the highest level it has been during last two years," said Keith Jackson, President and CEO of ON Semiconductor. "Orders from the distribution channel increased by approximately 20 percent quarter-over-quarter and commentary from our customers has been increasingly positive. At the same time, improving operating performance and a richer product mix enabled us to deliver a strong expansion in our gross and operating margins in the first quarter.

"With our design win pipeline and a favorable global macro-economic environment, we should be able to sustain our current momentum in target growth areas of automobiles, smartphones and select segments of the industrial end-market. We remain confident that strong operating performance, coupled with our robust design win pipeline, should enable us to deliver strong results in 2014."

SECOND QUARTER 2014 OUTLOOK

“Based upon product booking trends, backlog levels and estimated turns levels, we anticipate that total ON Semiconductor revenue will be approximately $738 to $768 million in the second quarter of 2014,” Jackson said. “Backlog level for the second quarter of 2014 represents approximately 80 to 85 percent of our anticipated second quarter 2014 revenue. Average selling prices for the second quarter of 2014 are expected to be down approximately one percent when compared to the first quarter of 2014. The outlook for the second quarter of 2014 includes stock-based compensation expense of approximately $11 to $14 million. Our guidance for the second quarter of 2014 includes contribution from our acquisition of Truesense Imaging, Inc., which closed on April 30, 2014.”

The following table outlines ON Semiconductor's projected second quarter of 2014 GAAP and non-GAAP outlook.

ON SEMICONDUCTOR Q2 2014 BUSINESS OUTLOOK

     
Total ON Semiconductor

GAAP

Special

Items***

Total ON Semiconductor

Non-GAAP****

Revenue $738 to $768 million $738 to $768 million
Gross Margin 34.7% to 36.6% $3 to $4 million 35.1% to 37.1%
Operating Expenses $179 to $192 million $11 to $14 million $168 to $178 million
Net Interest Expense / Other Expenses $7 to $9 million $7 to $9 million
Convertible Notes, Non-cash Interest Expense* $2 million $2 million $0 million
Tax $9 to $11 million $3 million $6 to $8 million

Diluted Share Count**

444 million 444 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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