ON Semiconductor Reports First Quarter 2013 Results

PHOENIX — (BUSINESS WIRE) — May 2, 2013 — ON Semiconductor Corporation (Nasdaq: ONNN):

For the first quarter of 2013, highlights include:

  • Total revenues of $661.0 million
  • GAAP gross margin of 30.9 percent
  • Non-GAAP gross margin of 32.0 percent
  • GAAP net income per diluted share of $0.05
  • Non-GAAP net income per diluted share of $0.10
  • Retired $73.4 million of principal value of our 1.875% convertible senior subordinated notes
  • Exchanged $60 million of 2.625% convertible senior subordinated notes for $58.5 million of series B notes which extended first put date from December 2013 to December 2016

ON Semiconductor Corporation (Nasdaq: ONNN) today announced that total revenues in the first quarter of 2013 were $661.0 million, down approximately three percent compared to the fourth quarter of 2012. During the first quarter of 2013, the company reported GAAP net income of $22.6 million, or $0.05 per diluted share. The first quarter 2013 GAAP net income was impacted by $22.1 million of special items. The complete special items detail can be found in the attached schedules.

First quarter 2013 non-GAAP net income was $44.7 million, or $0.10 per diluted share, compared to $37.0 million, or $0.08 per diluted share, for the fourth quarter of 2012. 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.

On a mix-adjusted basis, average selling prices for ON Semiconductor in the first quarter of 2013 were down approximately two percent when compared to the fourth quarter of 2012. Total company GAAP gross margin in the first quarter was 30.9 percent. Non-GAAP gross margin in the first quarter was 32.0 percent.

Adjusted EBITDA for the first quarter of 2013 was $96.8 million. Adjusted EBITDA for the fourth quarter of 2012 was $96.3 million.

"We have seen steady improvement in order trends throughout the March quarter, and we expect this trend to continue,” said Keith Jackson, president and CEO of ON Semiconductor. “Design win momentum remains strong, specifically in our wireless communication, automotive and white goods end markets. With our current design win activity, we are well positioned to benefit from an improving demand environment.

“Revenue for our SANYO Semiconductor Products Group was negatively impacted by a weak Yen and soft business conditions for Japanese consumer electronics manufacturers. However, we believe that revenue for the SANYO Semiconductor group has bottomed in the March quarter and we should see improving trends going forward. We remain committed to achieving break-even on a non-GAAP net income basis for the SANYO Semiconductor group by this year's third quarter and have taken additional measures to reduce this break-even point to $170 million of revenue per quarter from $190 million."

SECOND QUARTER 2013 OUTLOOK

“Based upon product booking trends, backlog levels, and estimated turns levels, we anticipate that total ON Semiconductor revenues will be approximately $675 to $715 million in the second quarter of 2013,” Jackson said. “Backlog levels for the second quarter of 2013 represent approximately 80 to 85 percent of our anticipated second quarter 2013 revenues. We expect that average selling prices for the second quarter of 2013 will be down approximately one to two percent when compared to the first quarter of 2013. The outlook for the second quarter of 2013 includes stock-based compensation expense of approximately $10 to $12 million.”

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

 

ON SEMICONDUCTOR Q2 2013 BUSINESS OUTLOOK

         

Total ON Semiconductor
GAAP

 

Special
Items ***

 

Total ON Semiconductor
Non-GAAP****

Revenue $675 to $715 million $675 to $715 million
Gross Margin 32.5% to 34.5% 32.5% to 34.5%
Operating Expenses $173 to $183 million $15 million $158 to $168 million
Net Interest Expense / Other Expenses $8 to $10 million $8 to $10 million
Convertible Notes, Non-cash Interest Expense* $3 million $3 million $0 million
Tax $2 to $4 million $2 to $4 million
Diluted Share Count ** 455 million 455 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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