ON Semiconductor Corporation reports 28.7% CAPEX decline in 2020 and 4.8% Revenue decline
02/01/2021 • About ON Semiconductor Corporation (
$ON) • By InTwits
ON Semiconductor Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ON Semiconductor Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.7%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $31m in 2020, $91m in 2019, $143m in 2018, $128m in 2017, $73m in 2016
- The company has potentially unprofitable business model: ROIC is 5.2%
- It operates with high leverage: Net Debt/EBITDA is 2.5x while industry average is 0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
ON Semiconductor Corporation's Revenue decreased on 4.8%. Annual revenue decline showed slowdown in 20Q4 - revenue increased on 3.2%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.2 pp from 15.6% to 11.4% in 2020.
Gross Margin decreased on 3.1 pp from 35.8% to 32.7% in 2020. During the last 5 years Gross Margin topped in 2018 at 38.1% and was declining since that time. SG&A as a % of Revenue showed almost no change in 2020. SG&A as a % of Revenue stuck to a declining trend at -0.37 pp per annum in the last 5 years.
Net Income margin increased slightly on 0.62 pp from 3.8% to 4.5% in 2020.
Investments (CAPEX, working capital and M&A)
ON Semiconductor Corporation's CAPEX/Revenue was 7.3% in 2020. The company's CAPEX/Revenue showed almost no change from 2017 to 2020. It's average CAPEX/Revenue for the last three years was 8.6%. During 2016-2020 CAPEX as a % of Revenue topped in 2019 at 9.7%.
Return on investment
The company operates at low ROIC (5.2%) and ROE (6.8%). ROIC decreased slightly on 1.8 pp from 7.0% to 5.2% in 2020. ROE showed almost no change in 2020. During 2016-2020 ROIC topped in 2018 at 15.1% and was declining since that time.
Leverage (Debt)
Debt level is 2.5x Net Debt / EBITDA and 3.6x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 2.7x to 2.5x in 2020. Debt decreased on 2.3% while cash surged on 20.9%.
ON Semiconductor Corporation has no short term refinancing risk: cash is higher than short term debt (191.7%).
Valuation and dividends
ON Semiconductor Corporation's trades at EV/EBITDA 18.7x and P/E 69.9x.
Management team
ON Semiconductor Corporation's CEO is Hassane El-Khoury. Hassane El-Khoury has 3 months tenure with the company.
Financial and operational results
FY ended 12/31/2020
ON Semiconductor Corporation ($ON) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 3,907 | 5,543 | 5,878 | 5,518 | 5,255 | -4.8% |
| Gross Profit | 1,301 | 2,036 | 2,239 | 1,974 | 1,716 | -13.1% |
| SG&A | 467 | 602 | 618 | 585 | 537 | -8.1% |
| EBITDA | 611 | 1,164 | 1,356 | 1,061 | 1,012 | -4.6% |
| EBIT | 247 | 682 | 847 | | | |
| Interest expence | 145 | 141 | 128 | | | |
| Tax | -4 | -266 | 125 | | | |
| Net Income | 182 | 811 | 627 | 212 | 234 | 10.6% |
| Stock Based Compensation | 56 | 70 | 78 | | | |
Balance Sheet
|
|---|
| Cash | 1,028 | 949 | 1,070 | 894 | 1,081 | 20.9% |
| Accounts Receivable | 630 | 702 | 686 | | | |
| Inventory | 1,030 | 1,090 | 1,225 | | | |
| Accounts Payable | 434 | 548 | 672 | | | |
| Short Term Debt | 554 | 248 | 139 | 762 | 564 | -26.0% |
| Long Term Debt | 3,101 | 2,704 | 2,628 | 2,964 | 3,075 | 3.7% |
Cash flow
|
|---|
| Capex | 213 | 396 | 515 | 535 | 381 | -28.7% |
| Acquisitions | 2,284 | 1 | 71 | | | |
Ratios
|
|---|
| Revenue growth | 11.8% | 41.9% | 6.0% | -6.1% | -4.8% | |
| EBITDA growth | -1.3% | 90.5% | 16.5% | -21.8% | -4.6% | |
|
|---|
| Gross Margin | 33.3% | 36.7% | 38.1% | 35.8% | 32.7% | -3.1% |
| EBITDA Margin | 15.6% | 21.0% | 23.1% | 19.2% | 19.3% | 0.0% |
| EBIT Margin | 6.3% | 12.3% | 14.4% | | |
| SG&A, % of revenue | 11.9% | 10.9% | 10.5% | 10.6% | 10.2% | -0.4% |
| SBC, % of revenue | 1.4% | 1.3% | 1.3% | | |
| Net Income Margin | 4.7% | 14.6% | 10.7% | 3.8% | 4.5% | 0.6% |
| CAPEX, % of revenue | 5.4% | 7.1% | 8.8% | 9.7% | 7.3% | -2.4% |
|
|---|
| ROIC | 5.7% | 12.3% | 15.1% | 7.0% | 5.2% | -1.8% |
| ROE | 10.6% | 35.2% | 21.1% | 6.5% | 6.8% | 0.3% |
| Net Debt/EBITDA | 4.3x | 1.7x | 1.3x | 2.7x | 2.5x | -0.1x |
| Interest coverage ratio (ICR) | 1.7x | 4.8x | 6.6x | | |
| Interest expence / Average debt | 4.0% | 4.3% | 4.5% | | | |
People
|
|---|
| Insider ownership | 1.8% | 1.8% | 1.8% | | | |
| Employees | 32,000 | 34,000 | 35,700 | | | |
| Revenue/Employee, th. $ | 122 | 163 | 165 | | | |
ON Semiconductor Corporation ($ON) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,278 | 1,214 | 1,317 | 1,446 | | -7.8% | -10.0% | -4.7% | 3.2% |
| EBITDA | 189 | 206 | 285 | 332 | | -41.6% | -33.6% | 144.5% | 7.0% |
| Net Income | -14 | -1 | 161 | 89 | | -112.3% | -101.4% | - | 57.5% |
Balance Sheet
|
|---|
| Cash | 1,982 | 2,060 | 1,654 | 1,081 | | 110.9% | 132.8% | 78.1% | 20.9% |
| Short Term Debt | 717 | 723 | 733 | 564 | | 355.9% | 434.9% | -4.1% | -26.0% |
| Long Term Debt | 4,131 | 4,165 | 3,655 | 3,075 | | 51.5% | 14.4% | 23.1% | 3.7% |
Ratios
|
|---|
| Gross Margin | 31.5% | 30.8% | 33.5% | 34.4% | | -5.5% | -6.2% | -0.9% | -0.2% |
| EBITDA Margin | 14.8% | 17.0% | 21.6% | 22.9% | | -8.5% | -6.1% | 13.2% | 0.8% |
| Net Income Margin | -1.1% | -0.1% | 12.2% | 6.2% | | -9.3% | -7.7% | 16.6% | 2.1% |
Peers in Semiconductors
Below we provide ON Semiconductor Corporation benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inphi Corporation ($IPHI) | - | 30.8% | -15.4% | 24.2% | 86.8% |
| Sequans Communications S.A. ($SQNS) | - | 5.9% | -16.6% | -23.3% | 65.0% |
| MaxLinear, Inc ($MXL) | - | 8.4% | -8.4% | -17.6% | 50.9% |
| Advanced Micro Devices, Inc. ($AMD) | - | 21.6% | 23.3% | 4.0% | 45.0% |
| Kopin Corporation ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 10.9% | 4.4% | -3.0% | 2.8% |
|---|
| ON Semiconductor Corporation ($ON) | - | 41.9% | 6.0% | -6.1% | -4.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CEVA, Inc. ($CEVA) | 91.6% | 92.1% | 89.8% | 88.4% | 89.3% |
| Universal Display Corporation ($OLED) | 83.9% | 80.8% | 75.5% | 78.5% | 80.1% |
| Rambus, Inc. ($RMBS) | 80.1% | 79.9% | 76.8% | 77.1% | 75.0% |
| Analog Devices, Inc. ($ADI) | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% |
| MoSys, Inc. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| |
|---|
| Median (43 companies) | 48.0% | 49.1% | 50.4% | 50.7% | 49.4% |
|---|
| ON Semiconductor Corporation ($ON) | 33.3% | 36.7% | 38.1% | 35.8% | 32.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 43.5% | 46.7% | 48.6% | 47.5% | 47.6% |
| Intel Corp ($INTC) | 35.2% | 41.7% | 45.7% | 45.9% | 46.7% |
| Broadcom Inc. ($AVGO) | 19.9% | 40.4% | 44.2% | 40.9% | 46.2% |
| Universal Display Corporation ($OLED) | 44.8% | 51.6% | 35.3% | 48.0% | 45.9% |
| Analog Devices, Inc. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 12.9% | 17.3% |
|---|
| ON Semiconductor Corporation ($ON) | 15.6% | 21.0% | 23.1% | 19.2% | 19.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
| Sequans Communications S.A. ($SQNS) | 11.8% | 13.3% | 22.9% | 29.6% | 27.1% |
| Intel Corp ($INTC) | 16.2% | 18.8% | 21.4% | 22.5% | 18.6% |
| First Solar, Inc. ($FSLR) | 7.9% | 17.5% | 33.0% | 21.8% | 15.4% |
| Power Integrations, Inc. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
| |
|---|
| Median (40 companies) | 3.6% | 4.7% | 4.2% | 3.7% | 3.6% |
|---|
| ON Semiconductor Corporation ($ON) | 5.4% | 7.1% | 8.8% | 9.7% | 7.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 34.9% | 43.1% | 47.5% | 39.7% | 38.2% |
| Applied Materials Inc ($AMAT) | 19.0% | 31.2% | 36.4% | 27.7% | 32.1% |
| Advanced Micro Devices, Inc. ($AMD) | -21.7% | 7.3% | 21.6% | 21.5% | 31.8% |
| QUALCOMM Incorporated ($QCOM) | 15.8% | 5.7% | 2.2% | 38.0% | 28.1% |
| NVIDIA Corporation ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| |
|---|
| Median (45 companies) | 1.4% | 3.2% | 2.2% | 2.2% | 5.5% |
|---|
| ON Semiconductor Corporation ($ON) | 5.7% | 12.3% | 15.1% | 7.0% | 5.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SunPower Corporation ($SPWR) | - | - | - | - | 8.2x |
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.0x | 7.2x | 98.6x | - | 6.6x |
| Rambus, Inc. ($RMBS) | -0.1x | -0.1x | - | - | 5.9x |
| Inphi Corporation ($IPHI) | 4.5x | 33.7x | 32.2x | 4.5x | 3.4x |
| Canadian Solar Inc. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
| |
|---|
| Median (31 companies) | -0.0x | 0.4x | 0.3x | 0.5x | 0.1x |
|---|
| ON Semiconductor Corporation ($ON) | 4.3x | 1.7x | 1.3x | 2.7x | 2.5x |
