ON Semiconductor Corporation (Nasdaq: ON) today announced that 2019 second quarter revenue was $1,347.7 million, down approximately 7 percent compared to 2018 second quarter revenue. 2019 second quarter revenue was down approximately 3 percent as compared to 2019 first quarter revenue.
During the second quarter, ON Semiconductor announced that it has signed a definitive agreement to acquire, in a phased transaction, a 300mm fab located at East Fishkill, NY and related assets from GLOBALFOUNDRIES. ON Semiconductor also announced the close of its previously announced acquisition of Quantenna Communications, a leader in high performance Wi-Fi semiconductors.
“Business conditions continue to be soft, and we expect to see sub-seasonal demand trends in the near-term, as geopolitical factors will likely continue to weigh on demand. Despite near-term weakness in demand, key secular trends driving our business remain intact,” said Keith Jackson, President and CEO of ON Semiconductor. “Against a backdrop of soft demand and limited visibility, we continue to focus on execution to mitigate the impact of current softness in demand. We remain confident in our strategy of focusing on secular megatrends in automotive, industrial, and cloud-power end-markets, and we are prudently investing to further strengthen our position in these markets.”
THIRD QUARTER 2019 OUTLOOK
Based on product booking trends, backlog levels, and estimated turns levels, the Company anticipates 2019 third quarter revenue to be approximately $1,355 to $1,405 million. GAAP gross margin for third quarter of 2019 is expected to be between 35.2 percent and 36.2 percent. Non-GAAP gross margin for third quarter of 2019 is expected to be between 36.7 percent and 37.7 percent. The 2019 third quarter outlook also includes anticipated stock-based compensation expense of approximately $21 million to $23 million. Net cash paid for income taxes is expected to be $11 million to $15 million. The following table outlines ON Semiconductor’s projected third quarter of 2019 GAAP and non-GAAP outlook. 
* Convertible Notes, Non-cash Interest Expense is calculated pursuant to FASB’s Accounting Standards Codification Topic 470: Debt.
** Diluted share count can vary as a result of, 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 in which the quarterly average stock price per share exceeds $18.50, the non-GAAP diluted share count and non-GAAP net income per share include the impact of the Company’s hedge transactions issued concurrently with our 1.00% convertible notes. As such, 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% convertible notes. In periods when the quarterly average stock price per share exceeds $20.72, the non-GAAP diluted share count and non-GAAP net income per share include the anti-dilutive impact of the Company’s hedge transactions issued concurrently with the 1.625% convertible notes. At an average stock price per share between $20.72 and $30.70, the hedging activity offsets the potentially dilutive effect of the 1.625% convertible notes. Both GAAP and non-GAAP diluted share counts are based on the Company’s stock price as of June 28, 2019.
*** 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 are out of our control and could change significantly from period to period. As a result, we are not able to reasonably estimate and separately present the individual impact or probable significance of these special items, and we are similarly unable to provide a reconciliation of the non-GAAP measures. The reconciliation that is unavailable would include a forward-looking income statement, balance sheet and statement of cash flows in accordance with GAAP. 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.
**** 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.
SOURCE: ON Semiconductor
