On Semiconductor Corp. Files Q2 2024 10-Q

Ticker: ON · Form: 10-Q · Filed: Jul 29, 2024 · CIK: 1097864

Sentiment: neutral

Topics: 10-Q, quarterly-report, financials

TL;DR

ON SEMI filed its Q2 10-Q. Financials look solid, check the details.

AI Summary

On Semiconductor Corp. filed its 10-Q for the period ending June 28, 2024. The filing details financial performance and operational updates for the second quarter of 2024. Key financial data and disclosures relevant to investors are presented, reflecting the company's ongoing business activities and strategic positioning in the semiconductor industry.

Why It Matters

This 10-Q filing provides crucial financial and operational insights into On Semiconductor Corp.'s performance during the second quarter of 2024, impacting investor decisions and market perception.

Risk Assessment

Risk Level: medium — The filing is a standard quarterly report, but the semiconductor industry is subject to cyclical demand and geopolitical risks.

Key Numbers

Key Players & Entities

FAQ

What is the reporting period for this 10-Q filing?

The reporting period for this 10-Q filing is the quarter ended June 28, 2024.

When was this 10-Q filed with the SEC?

This 10-Q was filed on July 29, 2024.

What is the company's IRS number as listed in the filing?

The company's IRS number is 363840979.

In which state is ON SEMICONDUCTOR CORP incorporated?

ON SEMICONDUCTOR CORP is incorporated in Delaware (DE).

What is the Standard Industrial Classification (SIC) code for ON SEMICONDUCTOR CORP?

The SIC code for ON SEMICONDUCTOR CORP is 3674, which corresponds to SEMICONDUCTORS & RELATED DEVICES.

Filing Stats: 4,875 words · 20 min read · ~16 pages · Grade level 6.3 · Accepted 2024-07-29 10:25:17

Key Financial Figures

Filing Documents

: Financial Information

Part I: Financial Information

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) 4 Consolidated Balance Sheets 4 Consolidated Statements of Operations and Comprehensive Income 5 Consolidated Statements of Stockholders' Equity 6 Consolidated Statements of Cash Flows 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 26

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 34

Controls and Procedures

Item 4. Controls and Procedures 35

: Other Information

Part II: Other Information

Legal Proceedings

Item 1. Legal Proceedings 36

Risk Factors

Item 1A. Risk Factors 36

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 37

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 37

Other Information

Item 5. Other Information 37

Exhibits

Item 6. Exhibits 38

Signatures

Signatures 39 (See the glossary of selected terms immediately following this table of contents for definitions of certain abbreviated terms.) Table of Contents ON SEMICONDUCTOR CORPORATION FORM 10-Q GLOSSARY OF SELECTED ABBREVIATED TERMS* Abbreviated Term Defined Term 0% Notes 0% Convertible Senior Notes due 2027 0.50% Notes 0.50% Convertible Senior Notes due 2029 1.625% Notes 1.625% Convertible Senior Notes due 2023 3.875% Notes 3.875% Senior Notes due 2028 ADAS Advanced driver-assistance systems Amended and Restated SIP ON Semiconductor Corporation Amended and Restated Stock Incentive Plan, as amended ASU Accounting Standards Update Commission or SEC Securities and Exchange Commission New Credit Agreement Credit agreement, dated as of June 22, 2023, by and among the Company, as borrower, the several lenders party thereto, JP Morgan Chase Bank, N.A., as administrative agent, and certain other parties, providing for the Revolving Credit Facility EFK East Fishkill, New York fabrication facility ESPP ON Semiconductor Corporation 2000 Employee Stock Purchase Plan, as amended Exchange Act Securities Exchange Act of 1934, as amended IP Intellectual property IRS United States Internal Revenue Service IT Information Technology Revolving Credit Facility A $1.5 billion senior revolving credit facility created pursuant to the New Credit Agreement ROU Right-of-use RSU Restricted stock unit SiC Silicon carbide Securities Act Securities Act of 1933, as amended U.S. or United States United States of America * Terms used, but not defined, within the body of the Form 10-Q are defined in this Glossary. Table of Contents

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) ON SEMICONDUCTOR CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) (unaudited) June 28, 2024 December 31, 2023 Assets Cash and cash equivalents $ 2,231.0 $ 2,483.0 Short-term investments 450.0 — Receivables, net 887.2 935.4 Inventories 2,224.6 2,111.8 Other current assets 532.2 382.1 Total current assets 6,325.0 5,912.3 Property, plant and equipment, net 4,372.5 4,401.5 Goodwill 1,577.6 1,577.6 Intangible assets, net 275.0 299.3 Deferred tax assets 679.1 600.8 ROU financing lease assets 41.7 42.4 Other assets 387.9 381.3 Total assets $ 13,658.8 $ 13,215.2 Liabilities and Stockholders' Equity Accounts payable $ 617.7 $ 725.6 Accrued expenses and other current liabilities 684.3 663.2 Current portion of financing lease liabilities 0.4 0.8 Current portion of long-term debt 795.6 794.0 Total current liabilities 2,098.0 2,183.6 Long-term debt 2,545.7 2,542.6 Deferred tax liabilities 39.6 38.7 Long-term financing lease liabilities 21.7 22.4 Other long-term liabilities 595.4 627.3 Total liabilities 5,300.4 5,414.6 Commitments and contingencies (Note 9) ON Semiconductor Corporation stockholders' equity: Common stock ($ 0.01 par value, 1,250,000,000 shares authorized, 622,068,261 and 616,281,996 issued, 428,217,874 and 426,386,426 outstanding, respectively) 6.2 6.2 Additional paid-in capital 5,283.3 5,210.9 Accumulated other comprehensive loss ( 56.8 ) ( 45.2 ) Accumulated earnings 7,339.3 6,548.1 Less: Treasury stock, at cost: 193,850,387 and 189,895,570 shares, respectively ( 4,232.5 ) ( 3,937.4 ) Total ON Semiconductor Corporation stockholders' equity 8,339.5 7,782.6 Non-controlling interest 18.9 18.0 Total stockholders' equity 8,358.4 7,800.6 Total liabilities and stockholders' equity $ 13,658.8 $ 13,215.2 See accompanying notes to consolidated financial statements 4 Table of Contents ON SEMICONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF O

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1: Background and Basis of Presentation ON Semiconductor Corporation ("onsemi," "we," "us," "our," or the "Company"), with its wholly and majority-owned subsidiaries, operates under the onsemi TM brand. The Company is organized into three operating and reportable segments: the Power Solutions Group ("PSG"), the Analog and Mixed-Signal Group ("AMG"), and the Intelligent Sensing Group ("ISG"). During the first quarter of 2024, onsemi reorganized the existing divisions within certain of its operating and reportable segments and renamed the Advanced Solutions Group ("ASG") reportable segment to AMG. See Note 2: ''Revenue and Segment Information'' for additional information regarding the segment reorganization. The Company's fiscal calendar year begins on January 1 and ends on December 31, with each fiscal quarter containing a thirteen-week accounting period. The quarters ended June 28, 2024 and June 30, 2023 contained 91 days each. The six months ended June 28, 2024 and June 30, 2023 contained 180 days and 181 days, respectively. The accompanying unaudited financial statements as of and for the quarter and six months ended June 28, 2024 have been prepared following generally accepted accounting principles in the United States of America ("GAAP") for interim financial reporting and the rules and regulations of the SEC for interim reporting. Accordingly, the unaudited financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. The balance sheet as of December 31, 2023 was derived from the Company's audited financial statements but does not include all disclosures required by GAAP for annual financial statements. In management's opinion, the interim information contains all adjustments, which include normal recurring adjustments necessary for a fair statement of the results for the interim periods. The footnote disclosures related to the inte

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Note 2: Revenue and Segment Information Revenue The Company's revenue is primarily from product sales, and to a much lesser extent from manufacturing services and product development agreements. For the quarters and six months ended June 28, 2024 and June 30, 2023, revenue recognized from product sales as a percentage of total revenue was approximately 98 % and revenue recognized from manufacturing services and product development agreements was approximately 2 % of total revenue. Revenue disaggregated by end-markets and product technologies was as follows (in millions): Quarters Ended Six Months Ended June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023 End-Markets: Automotive $ 906.9 $ 1,061.8 $ 1,924.1 $ 2,047.8 Industrial 468.0 609.3 944.1 1,165.5 Other* 360.3 423.3 729.7 840.8 Total $ 1,735.2 $ 2,094.4 $ 3,597.9 $ 4,054.1 * Other primarily includes the end-markets of computing, consumer, networking and communications. Product Technologies: Intelligent Power $ 898.0 $ 1,064.2 $ 1,851.4 $ 1,991.5 Intelligent Sensing 310.8 400.3 673.7 828.5 Other 526.4 629.9 1,072.8 1,234.1 Total $ 1,735.2 $ 2,094.4 $ 3,597.9 $ 4,054.1 Remaining Performance Obligations A significant portion of the Company's orders are firm commitments that are non-cancellable, including certain orders or contracts with a duration of less than one year. Certain of the Company's customer contracts are multi-year agreements that include firmly committed amounts ("Long-term Supply Agreements" or "LTSAs") for which the remaining performance obligations as of June 28, 2024 are approximately $ 14.7 billion (excluding the remaining performance obligations for contracts having a duration of one year or less). The Company expects to recognize approximately 30 % of this amount as revenue during the next twelve months upon shipment of products under these contracts. Total revenue estimates are based on negotiated c

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Contract Balances Contract assets and contract liabilities were as follows (in millions): As of June 28, 2024 December 31, 2023 Contract assets included in: Other current assets $ 190.0 $ 83.1 Other assets 4.0 12.0 Total $ 194.0 $ 95.1 Contract liabilities included in: Other current liabilities $ 112.0 $ 87.6 Other long-term liabilities 185.0 216.6 Total $ 297.0 $ 304.2 Segment Information The Company is organized into three operating and reportable segments consisting of PSG, AMG and ISG. These segments represent management's view of the business, and gross profit is used to evaluate its performance, the progress of major initiatives and the allocation of resources. PSG reportable segment formerly included the divisions of Advanced Power Division, and Integrated Circuits, Protection and Signal Division ("IPS"). During the first quarter of 2024, management reorganized them to the divisions of Automotive Power Division, Industrial Power Division and Multi-Market Power Division ("MPD"). Further, the IPS division was split, with portions remaining in MPD and portions moving to the new Integrated Circuits Division ("ICD") within the AMG reportable segment. Management performed a goodwill impairment analysis on the divisions (which were the reporting units) prior to and after the reorganization and did not identify an impairment. Revenue and gross profit for the operating and reportable segments were as follows (in millions): PSG (1) AMG (1) ISG Total For the quarter ended June 28, 2024: Revenue from external customers $ 835.2 $ 647.8 $ 252.2 $ 1,735.2 Gross profit $ 348.8 $ 321.9 $ 113.3 $ 784.0 For the quarter ended June 30, 2023: Revenue from external customers $ 977.4 $ 791.9 $ 325.1 $ 2,094.4 Gross profit $ 468.0 $ 370.2 $ 155.2 $ 993.4 For the six months ended June 28, 2024: Revenue from external customers $ 1,709.5 $ 1,344.8 $ 543.6 $ 3,597.9 Gross profit $ 714.2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) The Company had one customer, a distributor, whose revenue accounted for approximately 12 % and 11 % of the total revenue for the quarters ended June 28, 2024 and June 30, 2023, respectively, and approximately 11 % and 10 % of the total revenue for the six months ended June 28, 2024 and June 30, 2023, respectively. Revenue for the operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channel was as follows (in millions): Quarter Ended June 28, 2024 PSG AMG ISG Total Geographic Location: Hong Kong $ 230.3 $ 162.2 $ 61.0 $ 453.5 Singapore 206.8 160.8 22.7 390.3 United Kingdom 187.7 122.7 103.4 413.8 United States 147.7 145.7 31.5 324.9 Other 62.7 56.4 33.6 152.7 Total $ 835.2 $ 647.8 $ 252.2 $ 1,735.2 Sales Channel: Distributors $ 515.2 $ 348.4 $ 91.4 $ 955.0 Direct customers 320.0 299.4 160.8 780.2 Total $ 835.2 $ 647.8 $ 252.2 $ 1,735.2 Six Months Ended June 28, 2024 PSG AMG ISG Total Geographic Location: Hong Kong $ 433.6 $ 312.0 $ 113.3 $ 858.9 Singapore 413.5 346.9 63.1 823.5 United Kingdom 390.2 256.5 211.1 857.8 United States 353.1 305.1 85.7 743.9 Other 119.1 124.3 70.4 313.8 Total $ 1,709.5 $ 1,344.8 $ 543.6 $ 3,597.9 Sales Channel: Distributors $ 965.6 $ 692.0 $ 203.4 $ 1,861.0 Direct customers 743.9 652.8 340.2 1,736.9 Total $ 1,709.5 $ 1,344.8 $ 543.6 $ 3,597.9 12 Table of Contents ON SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Quarter Ended June 30, 2023 PSG (1) AMG (1) ISG Total Geographic Location: Hong Kong $ 282.4 $ 187.8 $ 60.0 $ 530.2 Singapore 303.5 166.1 49.7 519.3 United Kingdom 191.0 166.7 91.7 449.4 United States 133.0 171.5 76.4 380.9 Other 67.5 99.8 47.3 214.6 Total $ 977.4 $ 791.9 $ 325.1 $ 2,094.4 Sales Channel: Distributors $ 583.4 $ 391.6 $ 152.7 $ 1,127.7 Direct customers 394.0 400.3 172.4 966.7 Total $ 977.4 $ 791.9 $ 325.1 $ 2,094.4 Six Months Ended June 30, 2023 PSG (1) AMG (1) ISG Total Geographic Location: Hong Kong $ 524.3 $ 372.5 $ 123.8 $ 1,020.6 Singapore 547.7 314.4 107.9 970.0 United Kingdom 359.7 330.2 172.8 862.7 United States 268.8 323.3 177.9 770.0 Other 137.8 196.2 96.8 430.8 Total $ 1,838.3 $ 1,536.6 $ 679.2 $ 4,054.1 Sales Channel: Distributors $ 1,104.7 $ 722.4 $ 339.8 $ 2,166.9 Direct customers 733.6 814.2 339.4 1,887.2 Total $ 1,838.3 $ 1,536.6 $ 679.2 $ 4,054.1 (1) During the first quarter of 2024, the Company reorganized certain reporting units and its segment reporting structure. As a result of the reorganization of divisions within PSG and AMG, the prior-period amounts have been reclassified to conform to current-period presentation. The Company operates in various geographic locations. Sales to external customers have little correlation to where products are manufactured or the location of the end-customers. It is, therefore, not meaningful to present operating profit by geographical location. The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information. The consolidated assets used in manufacturing are generally shared and are not specifically ascribed to operating and reportable segments. In situations where the carrying amounts assigned to an asset group need to be evaluated for recoverability, judgment is used to determine the carrying amou

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Property, plant and equipment, net by geog

View Full Filing

View this 10-Q filing on SEC EDGAR

View on Read The Filing