Despite market volatility, onsemi showed resilience as it reported fourth-quarter 2023 non-GAAP earnings of $1.25 per share, exceeding the Zacks Consensus Estimate by 3.3%. However, this marked a 5.3% decline from the previous year.
Revenues stood at $2.02 billion, surpassing the Zacks Consensus Estimate by 0.7% but reflecting a 4.1% drop on a year-over-year basis. Pre-market trading saw onsemi shares rise by approximately 6%, though the company’s shares have declined 15.2% year to date, underperforming the Zacks Computer & Technology sector, which experienced a 5.6% increase.
Top-Line Details
Within the Power Solutions Group, revenues reached $1.09 billion, constituting 53.8% of the total revenue and marking a 3.6% annual increase. The Advanced Solutions Group reported revenues of $624.6 million, accounting for 30.9% of revenues and declining by 10.9% year over year.
ON Semiconductor Corporation Price
Intelligent Sensing Group revenues amounted to $307.7 million, representing 15.2% of revenues and declining by 13.2% year over year. The automotive segment, comprising 55.2% of revenues, reported a 12.7% annual increase. Industrial end-market revenues, constituting 24.6% of the total, decreased by 10% year over year to $497.1 million. Other end-market revenues declined by 27.7% year over year to $406.8 million.
Operating Details
Non-GAAP gross margin contracted by 170 basis points (bps) year over year to 46.7%, while non-GAAP operating expenses increased by 2% to $306.4 million. Non-GAAP operating margin was 31.6%, reflecting a 260 bps decline year over year.
Balance Sheet & Cash Flow
As of December 31, 2023, onsemi had $2.48 billion in cash and cash equivalents, in comparison to $2.68 billion as of September 29, 2023. The total debt, including the current portion, was reported at $3.34 billion, down from $3.45 billion as of September 29. The fourth-quarter 2023 cash flow from operations amounted to $611.2 million, and free cash flow stood at $220.7 million.
Guidance
For the first quarter of 2024, onsemi anticipates revenues between $1.80 billion and $1.90 billion, with non-GAAP gross margin in the range of 44.5-46.5% and non-GAAP operating expenses expected in the range of $305-$320 million. Non-GAAP earnings are projected to be between 98 cents per share and $1.10 per share.
Zacks Rank & Stocks to Consider
onsemi currently maintains a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader sector, each carrying a Zacks Rank #1 (Strong Buy) at present, are Shopify (SHOP), Pinterest (PINS), and AvidXchange (AVDX).
Shopify shares have recorded a 6.5% increase year to date, with its fourth-quarter 2023 results scheduled for February 13. Year to date, Pinterest shares have risen by 7.3%, and it is set to report its fourth-quarter 2023 results on February 8. However, AvidXchange shares have experienced an 8.6% decline year to date, and its fourth-quarter 2023 results are expected on February 28.
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