On Semiconductor Corp Q3 2024 10-Q Filing

Ticker: ON · Form: 10-Q · Filed: Oct 28, 2024 · CIK: 1097864

Sentiment: neutral

Topics: 10-Q, quarterly-report, semiconductors

TL;DR

**ON SEMI files Q3 10-Q. Financials and ops details out.**

AI Summary

On Semiconductor Corporation filed its 10-Q for the period ending September 27, 2024. The filing details financial performance and operational updates for the third quarter of 2024. Key financial data and disclosures relevant to investors are presented.

Why It Matters

This filing provides investors with the latest financial performance and operational details for On Semiconductor Corp, crucial for understanding the company's current standing and future prospects.

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 Players & Entities

FAQ

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

The reporting period for this 10-Q filing is September 27, 2024.

When was this 10-Q filed with the SEC?

This 10-Q was filed on October 28, 2024.

What is the company's Central Index Key (CIK)?

The company's Central Index Key is 0001097864.

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.

What is the company's fiscal year end?

The company's fiscal year ends on December 31.

Filing Stats: 4,904 words · 20 min read · ~16 pages · Grade level 6.3 · Accepted 2024-10-28 10:30:35

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 27

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 36

Controls and Procedures

Item 4. Controls and Procedures 36

: Other Information

Part II: Other Information

Legal Proceedings

Item 1. Legal Proceedings 37

Risk Factors

Item 1A. Risk Factors 37

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 38

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 38

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 38

Other Information

Item 5. Other Information 38

Exhibits

Item 6. Exhibits 39

Signatures

Signatures 40 (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) September 27, 2024 December 31, 2023 Assets Cash and cash equivalents $ 2,470.2 $ 2,483.0 Short-term investments 300.0 — Receivables, net 1,070.6 935.4 Inventories 2,242.8 2,111.8 Other current assets 461.1 382.1 Total current assets 6,544.7 5,912.3 Property, plant and equipment, net 4,383.7 4,401.5 Goodwill 1,587.9 1,577.6 Intangible assets, net 273.1 299.3 Deferred tax assets 725.8 600.8 ROU financing lease assets 41.1 42.4 Other assets 367.3 381.3 Total assets $ 13,923.6 $ 13,215.2 Liabilities and Stockholders' Equity Accounts payable $ 597.5 $ 725.6 Accrued expenses and other current liabilities 734.3 663.2 Current portion of financing lease liabilities 0.4 0.8 Current portion of long-term debt 796.4 794.0 Total current liabilities 2,128.6 2,183.6 Long-term debt 2,547.2 2,542.6 Deferred tax liabilities 42.8 38.7 Long-term financing lease liabilities 22.4 22.4 Other long-term liabilities 578.6 627.3 Total liabilities 5,319.6 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, 622,306,537 and 616,281,996 issued, 425,645,765 and 426,386,426 outstanding, respectively) 6.2 6.2 Additional paid-in capital 5,321.9 5,210.9 Accumulated other comprehensive loss ( 49.1 ) ( 45.2 ) Accumulated earnings 7,741.0 6,548.1 Less: Treasury stock, at cost: 196,660,772 and 189,895,570 shares, respectively ( 4,435.9 ) ( 3,937.4 ) Total ON Semiconductor Corporation stockholders' equity 8,584.1 7,782.6 Non-controlling interest 19.9 18.0 Total stockholders' equity 8,604.0 7,800.6 Total liabilities and stockholders' equity $ 13,923.6 $ 13,215.2 See accompanying notes to consolidated financial statements 4 Table of Contents ON SEMICONDUCTOR CORPORATION CONSOLIDATED STATEMEN

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: ''Segments and Revenue'' 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 September 27, 2024 and September 29, 2023 contained 91 days each. The nine months ended September 27, 2024 and September 29, 2023 contained 271 days and 272 days, respectively. The accompanying unaudited financial statements as of and for the quarter and nine months ended September 27, 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 rel

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Note 2: Segments and Revenue Segments 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 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, IPS was split, with portions remaining in MPD and portions moving to the new Integrated Circuits Division within AMG. 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 September 27, 2024: Revenue from external customers $ 829.4 $ 653.7 $ 278.8 $ 1,761.9 Gross profit $ 344.9 $ 325.3 $ 129.2 $ 799.4 For the quarter ended September 29, 2023: Revenue from external customers $ 1,076.5 $ 775.7 $ 328.6 $ 2,180.8 Gross profit $ 513.5 $ 361.1 $ 156.1 $ 1,030.7 For the nine months ended September 27, 2024: Revenue from external customers $ 2,538.8 $ 1,998.5 $ 822.5 $ 5,359.8 Gross profit $ 1,059.1 $ 986.0 $ 391.9 $ 2,437.0 For the nine months ended September 29, 2023: Revenue from external customers $ 2,914.8 $ 2,312.3 $ 1,007.8 $ 6,234.9 Gross profit $ 1,377.9 $ 1,075.3 $ 488.4 $ 2,941.6 (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 am

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) 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 September 27, 2024 PSG AMG ISG Total Geographic Location: Hong Kong $ 215.6 $ 186.6 $ 64.7 $ 466.9 Singapore 276.3 146.0 27.2 449.5 United Kingdom 178.8 117.3 99.7 395.8 United States 89.5 147.3 45.1 281.9 Other 69.2 56.5 42.1 167.8 Total $ 829.4 $ 653.7 $ 278.8 $ 1,761.9 Sales Channel: Distributors $ 539.3 $ 370.3 $ 86.5 $ 996.1 Direct customers 290.1 283.4 192.3 765.8 Total $ 829.4 $ 653.7 $ 278.8 $ 1,761.9 Nine Months Ended September 27, 2024 PSG AMG ISG Total Geographic Location: Hong Kong $ 649.2 $ 498.5 $ 178.1 $ 1,325.8 Singapore 689.7 493.0 90.3 1,273.0 United Kingdom 569.1 373.8 310.7 1,253.6 United States 442.5 452.4 130.8 1,025.7 Other 188.3 180.8 112.6 481.7 Total $ 2,538.8 $ 1,998.5 $ 822.5 $ 5,359.8 Sales Channel: Distributors $ 1,504.9 $ 1,062.3 $ 289.9 $ 2,857.1 Direct customers 1,033.9 936.2 532.6 2,502.7 Total $ 2,538.8 $ 1,998.5 $ 822.5 $ 5,359.8 11 Table of Contents ON SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Quarter Ended September 29, 2023 PSG (1) AMG (1) ISG Total Geographic Location: Hong Kong $ 311.8 $ 197.8 $ 72.3 $ 581.9 Singapore 304.0 153.6 49.2 506.8 United Kingdom 211.8 157.1 95.3 464.2 United States 182.8 178.3 63.4 424.5 Other 66.1 88.9 48.4 203.4 Total $ 1,076.5 $ 775.7 $ 328.6 $ 2,180.8 Sales Channel: Distributors $ 605.5 $ 394.4 $ 138.0 $ 1,137.9 Direct customers 471.0 381.3 190.6 1,042.9 Total $ 1,076.5 $ 775.7 $ 328.6 $ 2,180.8 Nine Months Ended September 29, 2023 PSG (1) AMG (1) ISG Total Geographic Location: Hong Kong $ 836.2 $ 570.3 $ 196.0 $ 1,602.5 Singapore 851.7 468.0 157.1 1,476.8 United Kingdom 571.4 487.3 268.1 1,326.8 United States 451.6 501.6 241.3 1,194.5 Other 203.9 285.1 145.3 634.3 Total $ 2,914.8 $ 2,312.3 $ 1,007.8 $ 6,234.9 Sales Channel: Distributors $ 1,710.3 $ 1,116.7 $ 477.8 $ 3,304.8 Direct customers 1,204.5 1,195.6 530.0 2,930.1 Total $ 2,914.8 $ 2,312.3 $ 1,007.8 $ 6,234.9 (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 u

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (unaudited) Property, plant and equipment, net by geographic location, is summarized below (in millions): As of September 27, 2024 December 31, 2023 South Korea $ 1,433.6 $ 1,360.8 United States 1,407.2 1,456.5 Czech Republic 587.7 559.7 China 237.6 252.2 Philippines 226.0 252.9 Malaysia 187.9 199.3 Vietnam 153.6 164.3 Other 150.1 155.8 Total $ 4,383.7 $ 4,401.5 Revenue The Company's revenue derives primarily from product sales and to a much lesser extent from manufacturing services and product development agreements. For the quarters ended September 27, 2024 and September 29, 2023, revenue recognized from product sales as a percentage of total revenue was approximately 99 % in each period and revenue recognized from manufacturing services and product development agreements was approximately 1 % of total revenue in each period. For the nine months ended September 27, 2024 and September 29, 2023, revenue recognized from product sales as a percentage of total revenue was approximately 98 % in each period and revenue recognized from manufacturing services and product development agreements was approximately 2 % of total revenue in each period. Revenue disaggregated by end-markets and product technologies was as follows (in millions): Quarters Ended Nine Months Ended September 27, 2024 September 29, 2023 September 27, 2024 September 29, 2023 End-Markets: Automotive $ 951.2 $ 1,157.8 $ 2,875.3 $ 3,205.6 Industrial 439.9 615.8 1,384.0 1,781.3 Other* 370.8 407.2 1,100.5 1,248.0 Total $ 1,761.9 $ 2,180.8 $ 5,359.8 $ 6,234.9 * Other primarily includes the end-markets of computing, consumer, networking and communications. Product Technologies: Intelligent Power $ 914.5 $ 1,154.8 $ 2,765.9 $ 3,146.3 Intelligent Sensing 344.0 406.3 1,017.7 1,234.8 Other 503.4 619.7 1,576.2 1,853.8 Total $ 1,761.9 $ 2,180.8 $ 5,359.8 $ 6,234.9 Remaining Performance Obligations A portion of the Company's

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