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ON Semiconductor (ON) Q4 Earnings & Revenues Top Estimates
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ON Semiconductor Corporation (ON - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 35 cents per share, which comfortably surpassed the Zacks Consensus Estimate by 25%. Moreover, the figure increased 16.7% from the year-ago quarter’s level.
Revenues of $1.446 billion beat the Zacks Consensus Estimate by 6.5% and increased 3.2% on a year over year basis. The top line benefited from a recovering macroeconomic environment and rebounding automotive end-markets.
ON Semiconductor intends to expand margins by streamlining its manufacturing footprint and accelerate the timeline for production with investments in the 300mm fab in east Fishkill. Moreover, the company is in talks with potential buyers to offload its six-inch fab located in Niigata, Japan and other fab facility located in Belgium.
ON Semiconductor Corporation Price, Consensus and EPS Surprise
ON Semi also announced that it divested the fab located in Rochester, NY. The company expects to realize savings of $15 million from first-quarter 2021.
Top-Line Details
Business Units Metrics:
ON Semiconductor has three business units — Power Solutions Group (revenues of $716.4 million), Advanced Solutions Group (revenues of $522.1 million) and Intelligent Sensing Group (revenues of $207.9 million).
End-Market Metrics:
Automotive (34% of revenues) end-market revenues were $491.3 million, up 6% year over year. The upside was driven by gradual recovery witnessed in the automotive sector. Management expects the recovery to continue in the near term.
Markedly, the company holds a competitive edge over its peers when it comes to delivering a comprehensive image sensor solution for autonomous driving applications and ADAS. ON semiconductor is also witnessing increasing demand for its LiDAR offerings.
Industrial/Medical/Mil-Aero (24%) end-market revenues increased 2% year over year to $384.3 million owing to rebound in worldwide industrial activity. However, certain customer-specific concerns stemming from geopolitical issues were the offsetting factors.
The company’s power modules are witnessing strong uptake along with its alternative energy related applications.
Communications (18%) end-market revenues declined 7.3% year over year to $264.4 million.
Computing (13%) end-market revenues increased 22% year over year to $187.9 million, courtesy of strong client and server business.
Consumer (11%) end-market revenues came in at $154.4 million, down 2% from the year-ago quarter’s figures.
Margins in Detail
Non-GAAP gross margin of 34.4% contracted 20 basis points (bps) on a year-over-year basis. Per management, the decline was caused by unfavorable forex headwinds.
Non-GAAP operating expenses fell 6.8% from the year-ago quarter’s figure to $292.4 million due to restructuring and cost-containment measures.
Non-GAAP operating margin expanded 190 bps on a year-over-year basis to 14.2%, owing to lower gross margin. The operating margin benefitted from decline in operating expenses.
Balance Sheet & Cash Flow
As of Dec 31, 2020, ON Semiconductor had cash and cash equivalents of $1.081 billion compared with $1.654 billion as of Oct 2, 2020.
In the fourth quarter, the company had total debt (including current portion) of $3.49 billion compared with $4.24 billion in the last reported quarter.
During the reported quarter, cash from operations amounted to $400.4 million compared with the prior-quarter’s figure of $163.4 million.
Free cash flow came in at $284 million compared with $101.8 million in the previous quarter.
A Look at 2020 Results
ON Semi reported revenues of $5.255 billion in 2020, down 4.8% from 2019 tally. The Zacks Consensus Estimate was pegged at $5.17 billion.
Non-GAAP earnings per share were 85 cents compared with $1.49 reported in 2019.
Non-GAAP gross margin contracted 340 bps to 32.7%, while non-GAAP operating margin contracted 390 bps to 10.2%.
For 2020, ON Semi generated cash flow from operations of $884.3 billion compared with $694.7 million in the previous year. Free cash flow during 2020 was $500.7 million compared with $160.1 million in 2019.
Guidance
For first-quarter 2021, ON Semiconductor projects revenues in the range of $1.41-$1.51 billion. The Zacks Consensus Estimate is currently pegged at $1.36 billion, which indicates an increase of 6.3% from the year-ago quarter’s figure.
For the first quarter, non-GAAP gross margin is projected in the range of 34.1-36.1%. Non-GAAP operating expenses are expected in the range of $313-$327 million.
For the automotive end-market, management expects robust uptake of its Silicon Carbide (SiC) and IGBT products in the electric vehicles’ (EV) domain.
Revenues from Industrial end-market are anticipated to benefit from higher demand for its alternative energy applications as well as momentum seen in the company’s machine vision factory automation applications including XGS family of image sensors.
Meanwhile, Communications end-market revenues are anticipated to witness solid growth in 2021 driven by rapid deployment of 5G.
Zacks Rank & Stocks to Consider
Currently, ON Semiconductor carries a Zacks Rank #3 (Hold).
Qorvo, is slated to report quarterly results on Feb 3, while Microchip and Synaptics are scheduled to report earnings on Feb 4.
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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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ON Semiconductor (ON) Q4 Earnings & Revenues Top Estimates
ON Semiconductor Corporation (ON - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 35 cents per share, which comfortably surpassed the Zacks Consensus Estimate by 25%. Moreover, the figure increased 16.7% from the year-ago quarter’s level.
Revenues of $1.446 billion beat the Zacks Consensus Estimate by 6.5% and increased 3.2% on a year over year basis. The top line benefited from a recovering macroeconomic environment and rebounding automotive end-markets.
ON Semiconductor intends to expand margins by streamlining its manufacturing footprint and accelerate the timeline for production with investments in the 300mm fab in east Fishkill. Moreover, the company is in talks with potential buyers to offload its six-inch fab located in Niigata, Japan and other fab facility located in Belgium.
ON Semiconductor Corporation Price, Consensus and EPS Surprise
ON Semiconductor Corporation price-consensus-eps-surprise-chart | ON Semiconductor Corporation Quote
ON Semi also announced that it divested the fab located in Rochester, NY. The company expects to realize savings of $15 million from first-quarter 2021.
Top-Line Details
Business Units Metrics:
ON Semiconductor has three business units — Power Solutions Group (revenues of $716.4 million), Advanced Solutions Group (revenues of $522.1 million) and Intelligent Sensing Group (revenues of $207.9 million).
End-Market Metrics:
Automotive (34% of revenues) end-market revenues were $491.3 million, up 6% year over year. The upside was driven by gradual recovery witnessed in the automotive sector. Management expects the recovery to continue in the near term.
Markedly, the company holds a competitive edge over its peers when it comes to delivering a comprehensive image sensor solution for autonomous driving applications and ADAS. ON semiconductor is also witnessing increasing demand for its LiDAR offerings.
Industrial/Medical/Mil-Aero (24%) end-market revenues increased 2% year over year to $384.3 million owing to rebound in worldwide industrial activity. However, certain customer-specific concerns stemming from geopolitical issues were the offsetting factors.
The company’s power modules are witnessing strong uptake along with its alternative energy related applications.
Communications (18%) end-market revenues declined 7.3% year over year to $264.4 million.
Computing (13%) end-market revenues increased 22% year over year to $187.9 million, courtesy of strong client and server business.
Consumer (11%) end-market revenues came in at $154.4 million, down 2% from the year-ago quarter’s figures.
Margins in Detail
Non-GAAP gross margin of 34.4% contracted 20 basis points (bps) on a year-over-year basis. Per management, the decline was caused by unfavorable forex headwinds.
Non-GAAP operating expenses fell 6.8% from the year-ago quarter’s figure to $292.4 million due to restructuring and cost-containment measures.
Non-GAAP operating margin expanded 190 bps on a year-over-year basis to 14.2%, owing to lower gross margin. The operating margin benefitted from decline in operating expenses.
Balance Sheet & Cash Flow
As of Dec 31, 2020, ON Semiconductor had cash and cash equivalents of $1.081 billion compared with $1.654 billion as of Oct 2, 2020.
In the fourth quarter, the company had total debt (including current portion) of $3.49 billion compared with $4.24 billion in the last reported quarter.
During the reported quarter, cash from operations amounted to $400.4 million compared with the prior-quarter’s figure of $163.4 million.
Free cash flow came in at $284 million compared with $101.8 million in the previous quarter.
A Look at 2020 Results
ON Semi reported revenues of $5.255 billion in 2020, down 4.8% from 2019 tally. The Zacks Consensus Estimate was pegged at $5.17 billion.
Non-GAAP earnings per share were 85 cents compared with $1.49 reported in 2019.
Non-GAAP gross margin contracted 340 bps to 32.7%, while non-GAAP operating margin contracted 390 bps to 10.2%.
For 2020, ON Semi generated cash flow from operations of $884.3 billion compared with $694.7 million in the previous year. Free cash flow during 2020 was $500.7 million compared with $160.1 million in 2019.
Guidance
For first-quarter 2021, ON Semiconductor projects revenues in the range of $1.41-$1.51 billion. The Zacks Consensus Estimate is currently pegged at $1.36 billion, which indicates an increase of 6.3% from the year-ago quarter’s figure.
For the first quarter, non-GAAP gross margin is projected in the range of 34.1-36.1%. Non-GAAP operating expenses are expected in the range of $313-$327 million.
For the automotive end-market, management expects robust uptake of its Silicon Carbide (SiC) and IGBT products in the electric vehicles’ (EV) domain.
Revenues from Industrial end-market are anticipated to benefit from higher demand for its alternative energy applications as well as momentum seen in the company’s machine vision factory automation applications including XGS family of image sensors.
Meanwhile, Communications end-market revenues are anticipated to witness solid growth in 2021 driven by rapid deployment of 5G.
Zacks Rank & Stocks to Consider
Currently, ON Semiconductor carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Qorvo (QRVO - Free Report) , Microchip (MCHP - Free Report) and Synaptics Incorporated (SYNA - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
Qorvo, is slated to report quarterly results on Feb 3, while Microchip and Synaptics are scheduled to report earnings on Feb 4.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>