Analysis Brief
Last updated: Apr 10, 2025 15:11:40
ON Semiconductor Corporation is currently navigating a period of significant strategic activity, including a proposed acquisition, restructuring efforts, and adjustments to its workforce. The company has proposed to acquire Allegro Microsystems in an all-cash transaction. Simultaneously, ON Semiconductor is undertaking a restructuring plan that involves laying off approximately 2,400 employees across its global business divisions throughout 2025, aimed at reducing operational costs. These actions occur amidst market turbulence and concerns about a potential slowdown in the analog and power semiconductor sectors.
ON Semiconductor's latest earnings report, released on February 10, 2025, provides insights into its financial performance through the end of 2024. The next scheduled earnings report is on May 05, 2025. A review of the company's financials across the four quarters of 2024 reveals the following trends:
**Revenue:** Revenue has fluctuated, starting at $1.86 billion in Q1 2024, dipping to $1.73 billion in Q2, then slightly recovering to $1.76 billion in Q3, before settling at $1.72 billion in Q4.
**Gross Profit:** Gross profit has generally followed the revenue trend, beginning at $841.0 million in Q1 2024 and ending at $779.1 million in Q4.
**Gross Profit Ratio:** The gross profit ratio has remained relatively stable, ranging from 44.49% in Q2 2024 to 45.37% in Q3 2024.
**Operating Income:** Operating income has decreased over the year, from $526.6 million in Q1 2024 to $408.6 million in Q4 2024.
**Operating Income Ratio:** The operating income ratio has also seen a decline, from 28.27% in Q1 2024 to 23.72% in Q4 2024.
**Net Income:** Net income has shown a decreasing trend, starting at $453.0 million in Q1 2024 and decreasing to $379.9 million in Q4 2024.
**Net Income Ratio:** The net income ratio has decreased from 24.32% in Q1 2024 to 22.06% in Q4 2024.
**Earnings Per Share (EPS) Diluted:** Diluted EPS has decreased from $1.04 in Q1 2024 to $0.88 in Q4 2024.
**EBITDA:** EBITDA has decreased from $681.5 million in Q1 2024 to $624.4 million in Q4 2024.
**EBITDA Ratio:** The EBITDA ratio has remained relatively consistent, ranging from 35.77% to 36.59% throughout the year.
**Cash and Cash Equivalents:** Cash and cash equivalents have remained strong, ending the year at $2.69 billion.
**Inventory:** Inventory levels have remained relatively stable, fluctuating around $2.2$ billion throughout the year.
**Total Debt:** Total debt has remained relatively stable, fluctuating around $3.3$ billion throughout the year.
**Net Cash Provided by Operating Activities:** Net cash from operating activities has fluctuated, with a high of $579.7 million in Q4 2024 and a low of $362.2 million in Q2 2024.
**Capital Expenditure:** Capital expenditure has remained relatively stable, fluctuating around $150 million throughout the year.
**Free Cash Flow:** Free cash flow has fluctuated, with a high of $434.8 million in Q4 2024 and a low of $219.2 million in Q2 2024.
ON Semiconductor's strategic moves, including the proposed acquisition of Allegro Microsystems and the restructuring plan involving workforce reductions, are unfolding against a backdrop of fluctuating financial performance. The company's revenue, profitability, and cash flow generation have shown variability throughout 2024. The analyst ratings compiled on April 1, 2025, indicate a generally positive outlook, with a majority of analysts recommending a "buy" or "strong buy" rating. Investors will be closely watching the next earnings report on May 5, 2025, for further insights into the company's performance and the impact of its strategic initiatives.