Kris Pugsley Parag Agarwal Corporate Communications / Media Relations Vice President Investor Relations and Corporate Development ON Semiconductor ON Semiconductor (312) 909-0661 (602) 244-3437 [email protected][email protected]ON Semiconductor Reports Fourth Quarter and 2016 Annual Results For the fourth quarter of 2016, highlights include: • Total revenues of $1,261.0 million • GAAP earnings per diluted share of $0.26 • GAAP gross margin of 30.5 percent, non-GAAP gross margin of 35.2 percent • GAAP operating margin of 4.4 percent, non-GAAP operating margin of 12.9 percent For 2016, highlights include: • Total revenues of $3,906.9 million • GAAP earnings per diluted share of $0.43 • GAAP gross margin of 33.2 percent, non-GAAP gross margin of 35.0 percent • GAAP operating margin of 6.0 percent, non-GAAP operating margin of 12.3 percent • Closed acquisition of Fairchild Semiconductor PHOENIX, Ariz. – Feb. 12, 2017 – ON Semiconductor Corporation (Nasdaq: ON), today announced that total revenues in the fourth quarter of 2016 were $1,261.0 million, up approximately 33 percent compared to the third quarter of 2016. Fourth quarter revenue includes contribution of approximately $358 million from our acquisition of Fairchild, which closed on Sept. 19, 2016. During the fourth quarter of 2016, the company reported GAAP net income of $110.9 million, or $0.26 per diluted share. Fourth quarter GAAP income before income taxes was $18.2 million as compared to $87.3 million in the third quarter. The fourth quarter 2016 GAAP income before income taxes was negatively impacted by approximately $113.8 million of special items, the majority of which were related to Fairchild. Fourth quarter 2016 non-GAAP income before income taxes was $132.0 million, compared to $107.3 million for the third quarter of 2016. Cash paid for taxes for the fourth quarter was approximately $8.2 million, as compared to $6.5 million in the third quarter. Fourth quarter GAAP gross margin was 30.5 percent, and non-GAAP gross margin in the fourth quarter was 35.2 percent. For the fourth quarter of 2016, GAAP operating margin was 4.4 percent, and non-GAAP operating margin was 12.9 percent. Adjusted EBITDA for the fourth quarter of 2016 was $252.0 million. Adjusted EBITDA for the third quarter of 2016 was $180.2 million. Total revenues for 2016 were $3,906.9 million, an increase of approximately 12 percent from $3,495.8 million in 2015. Total revenue for 2016 included a contribution of approximately $411 million from Fairchild. During 2016, the company reported GAAP net income of $182.1 million, or $0.43 per diluted share. The 2016 GAAP income before income taxes included charges of $231.5 million from special items, including $104.8 million of amortization of acquisition related intangible assets. The remaining charges and special items detail can be found in the attached schedules. During 2015,
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Kris Pugsley Parag Agarwal Corporate Communications / Media Relations Vice President Investor Relations and Corporate Development ON Semiconductor ON Semiconductor (312) 909-0661 (602) 244-3437 [email protected][email protected]
ON Semiconductor Reports Fourth Quarter and 2016 Annual Results
For the fourth quarter of 2016, highlights include: • Total revenues of $1,261.0 million
• GAAP earnings per diluted share of $0.26
• GAAP gross margin of 30.5 percent, non-GAAP gross margin of 35.2 percent
• GAAP operating margin of 4.4 percent, non-GAAP operating margin of 12.9 percent
For 2016, highlights include: • Total revenues of $3,906.9 million
• GAAP earnings per diluted share of $0.43
• GAAP gross margin of 33.2 percent, non-GAAP gross margin of 35.0 percent
• GAAP operating margin of 6.0 percent, non-GAAP operating margin of 12.3 percent
• Closed acquisition of Fairchild Semiconductor
PHOENIX, Ariz. – Feb. 12, 2017 – ON Semiconductor Corporation (Nasdaq: ON), today announced that total revenues
in the fourth quarter of 2016 were $1,261.0 million, up approximately 33 percent compared to the third quarter of 2016.
Fourth quarter revenue includes contribution of approximately $358 million from our acquisition of Fairchild, which
closed on Sept. 19, 2016.
During the fourth quarter of 2016, the company reported GAAP net income of $110.9 million, or $0.26 per diluted share.
Fourth quarter GAAP income before income taxes was $18.2 million as compared to $87.3 million in the third quarter.
The fourth quarter 2016 GAAP income before income taxes was negatively impacted by approximately $113.8 million of
special items, the majority of which were related to Fairchild. Fourth quarter 2016 non-GAAP income before income
taxes was $132.0 million, compared to $107.3 million for the third quarter of 2016. Cash paid for taxes for the fourth
quarter was approximately $8.2 million, as compared to $6.5 million in the third quarter.
Fourth quarter GAAP gross margin was 30.5 percent, and non-GAAP gross margin in the fourth quarter was 35.2
percent. For the fourth quarter of 2016, GAAP operating margin was 4.4 percent, and non-GAAP operating margin was
12.9 percent.
Adjusted EBITDA for the fourth quarter of 2016 was $252.0 million. Adjusted EBITDA for the third quarter of 2016 was
$180.2 million.
Total revenues for 2016 were $3,906.9 million, an increase of approximately 12 percent from $3,495.8 million in 2015.
Total revenue for 2016 included a contribution of approximately $411 million from Fairchild. During 2016, the company
reported GAAP net income of $182.1 million, or $0.43 per diluted share. The 2016 GAAP income before income taxes
included charges of $231.5 million from special items, including $104.8 million of amortization of acquisition related
intangible assets. The remaining charges and special items detail can be found in the attached schedules. During 2015,
ON Semiconductor Reports Fourth Quarter and 2016 Annual Results - 2 -
the company reported GAAP net income of $206.2 million, or $0.48 per diluted share. The 2015 GAAP income before
income taxes included net charges of $159.8 million from special items.
The company’s GAAP gross margin in 2016 was 33.2 percent. GAAP gross margin in 2016 included a net charge of
approximately $70.7 million from special items. Non-GAAP gross margin in 2016 was 35.0 percent. The company’s
GAAP gross margin in 2015 was 34.1 percent. GAAP gross margin in 2015 included a net benefit of approximately
$(0.8) million from special items. Non-GAAP gross margin in 2015 was 34.1 percent.
A reconciliation of non-GAAP financial measures used 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. Additional information on revenue by end market, region, distribution channel, business units
and share count can be found on the "Investor Relations" section of our website.
"Our results in the fourth quarter provide clear evidence of our strong execution on the integration of Fairchild, and the
results also validate our strategic and financial rationale for the acquisition," said Keith Jackson, president and CEO of
ON Semiconductor. "We continue to make rapid progress in the integration, and we are currently tracking significantly
ahead of schedule in realizing synergies from the combination of Fairchild and ON Semiconductor."
"I am very optimistic about our prospects in 2017 as our momentum in our strategic markets, which include automotive,
industrial and communications, continues to grow and our design win pipeline continues to expand driven by our
innovative products. With synergies from Fairchild and strong execution and cost control, we are well positioned to drive
meaningful growth in our free cash flow in the current year and in following years."
FIRST QUARTER 2017 OUTLOOK
"Based upon product booking trends, backlog levels, and estimated turns levels, we anticipate that total ON
Semiconductor revenue will be approximately $1,215 million to $1,265 million in the first quarter of 2017," Jackson said.
"Backlog levels for the first quarter of 2017 represent approximately 80 to 85 percent of our anticipated first quarter 2017
revenue. The outlook for the first quarter of 2017 includes stock-based compensation expense of approximately $15
million to $17 million. Net cash paid for income taxes is expected to be $16 million to $20 million."
The following table outlines ON Semiconductor's projected first quarter of 2017 GAAP and non-GAAP outlook.
ON SEMICONDUCTOR Q1 2017 BUSINESS OUTLOOK
Total ON Semiconductor
GAAP Special
Items *** Total ON Semiconductor
Non-GAAP****
Revenue $1,215 to $1,265
million $1,215 to $1,265
million
Gross Margin 33.4% to 34.8% 0.6% to 1.2% 34% to 36%
Operating Expenses $302 to $330 million $31 to $45 million $271 to $285 million
Other Income and Expense (including interest expense), net $37 to $41 million $4 to $6 million* $33 to $35 million
Diluted Share Count ** 424 million 424 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 the company’s convertible senior subordinated notes, and the repurchase or the issuance of stock or convertible notes or the sale of treasury shares. In periods when the quarterly average stock price per share exceeds $18.50, the non-GAAP diluted share count and non-GAAP net income per share includes the anti-dilutive impact of the company’s hedge transactions, issued concurrently with the 1.00% Notes. At an average stock price per share between $18.50 and $25.96, the hedging activity offsets the potentially dilutive effect of the 1.00% Notes and warrants.
*** Special items may include: amortization of acquisition-related intangibles; expensing of appraised inventory fair market
value step-up; 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; actuarial (gains) losses on pension plans and other pension benefits; and certain other special items, as necessary. These special items
ON Semiconductor Reports Fourth Quarter and 2016 Annual Results - 3 -
could change significantly and are subject to swings from period to period. As a result, we are not able to reasonably estimate and separately present the individual impact of these special items. For this reason, we use a projected range of the aggregate amount of special items in order to calculate our projected non-GAAP operating expense outlook.
**** 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.
The company has provided the following forward-looking non-GAAP financial measures: Operating Expenses and
Other Income and Expense (including interest expense), net. The company does not provide reconciliations of these
forward-looking non-GAAP financial measures, including the special items detailed above, to the most directly
comparable GAAP financial measures because, due to variability and difficulty in making accurate forecasts and
projections and/or certain information not being ascertainable or accessible, not all of the information necessary for
quantitative reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable
GAAP financial measures are available to the company without unreasonable efforts. Consequently, any attempt to
disclose such reconciliations would imply a degree of precision that could be confusing or misleading to investors. It is
probable that the forward-looking non-GAAP financial measures may be materially different from the corresponding
GAAP financial measures.
TELECONFERENCE
ON Semiconductor will host a conference call for the financial community at 9 a.m. Eastern Time (EST) on Feb. 13,
2017, to discuss this announcement and ON Semiconductor’s results for the fourth quarter of 2016. The company will
also provide a real-time audio webcast of the teleconference on the Investors page of its website at
http://www.onsemi.com. The webcast replay will be available at this site approximately one hour following the live
broadcast and will continue to be available for approximately 30 days following the conference call. Investors and
interested parties can also access the conference call through a telephone call by dialing (877) 356-3762 (U.S./Canada)
or (262) 558-6155 (International). In order to join this conference call, you will be required to provide the Conference ID
Number - which is 25291906.
About ON Semiconductor
ON Semiconductor (Nasdaq: ON) is driving energy efficient innovations, empowering customers to reduce global
energy use. The company is a leading supplier of semiconductor-based solutions, offering a comprehensive
portfolio of energy efficient power management, analog, sensors, logic, timing, connectivity, discrete, SoC and
custom devices. The company’s products help engineers solve their unique design challenges in automotive,
communications, computing, consumer, industrial, medical, aerospace and defense applications. ON
Semiconductor operates a responsive, reliable, world-class supply chain and quality program, a robust compliance
and ethics program, and a network of manufacturing facilities, sales offices and design centers in key markets
throughout North America, Europe and the Asia Pacific regions. For more information, visit http://www.onsemi.com.
Follow @onsemi on Twitter.
# # #
ON Semiconductor and the ON Semiconductor logo are registered trademarks of Semiconductor Components
Industries, LLC. All other brand and product names appearing in this document are registered trademarks or
trademarks of their respective holders. Although the company references its website in this news release, information
on the website is not to be incorporated herein.
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical facts, included or incorporated in this document could be
deemed forward-looking statements, particularly statements about the future financial performance of ON