MBA ACCOUNTING FINAL REPORT

Transcription

1 MBA ACCOUNTING FINAL REPORT 學生 : 蘇柏霖學號 : Date : Aug 2015

2 Subject and Agenda Subject Financial Analysis for ON Semiconductor Agenda Purpose ON Semiconductor Company Outlook Business Update Conclusion and Q&A 2 8/26/2015

3 Purpose 1. To know ON Semiconductor in financial view. 2. In order to well understand the financial structure for ON Semiconductor. 3. Still feel struggling that how come Aptina can be sold so cheap (total 400M but the quarterly revenue for Aptina is ~13M). 4. In the past, I always read the financial report in the all hands meeting but even no sense for all, but now standing from the accounting point of view, I can understand more about what they would like to present by top management and feedback to them with more sense. 3 8/26/2015

4 ON Semiconductor Today Headquarters: Phoenix, AZ Employees: ~24,500 globally Revenue: ~$3.2Bn (1) Market Capitalization: ~$5.5Bn (2) Ticker: ONNN Founded: Spun-off from Motorola 1999, IPO 2000 (1) 2014 Revenue (2) According to NASDAQ - based on closing stock price on March 6, 2015 (3) Sector % based on 2014 results 4 8/26/2015

5 2Q 15 Revenues: $880.5 Million Image Sensor Group $173 Application Products Group $264 System Solutions Group $136 Standard Products Group $ /26/2015

6 2Q 15 Diverse Segment and Regional Profile Industrial, Mil, Aero, Medical 24% Consumer 15% End Market Split Communications 18% Automotive 32% Computing 11% Asia Pacific (excludes Japan) 61% Channel Split Regional Split Japan 9% Europe 14% North America 16% Distribution 53% OEM 39% EMSI 8% 6 8/26/2015

7 Adjusted EBITDA Position (Includes stock-based compensation expense) $154.3 $143.2 $155.9 $ Q14 4Q14 1Q15 2Q15 TTM EBITDA $616.9 M 7 8/26/2015

8 Current GAAP Debt Amortization Schedule Convertible Notes Net of Discount (FSP APB 14-1) /26/2015

9 Financial Overview Revenue Adjusted EBITDA (1) ($M) Y-o-Y Growth (%): ($M) Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q EBITDA Margin (%): Cash, Equivalents & ST Investments Balance Net Debt Balance (2) ($M) ($M) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2015 (1) See Appendix for GAAP Net Income to Adjusted EBITDA reconciliation. Adjusted EBITDA includes the impact of stock-based compensation. (2) See Appendix for Reconciliation of Non-GAAP Net Debt. 9 8/26/2015

10 ON Semiconductor 2014 Highlights Operating margin 1 up by 210 bps Y/Y to 12.2% Gross margin 1 up by 180 bps Y/Y to 35.3% EPS 1 growth of 42% Y/Y to $0.75 Stabilized System Solutions Group Announced capital return policy & $1B share repurchase Acquired Truesense & Aptina to boost imaging portfolio (1) : Non-GAAP measures. Refer to investor section of our website for definitions and adjustments 10 8/26/2015

11 ON Semiconductor Change in End-market Mix Consumer 22% 26% Automotive 2012 $2,895 M Computing 17% 61% 16% 19% Communications Industrial 2014 $3,162 M Consumer Computing 16% 13% 71% 31% 18% 22% Automotive Communications Industrial 11 8/26/2015

12 ON Semiconductor Key Takeaways Margin expansion Mix & operating leverage to drive significant margin expansion Acceleration in EPS growth Leverage past investments Investments in place to drive margin expansion, growth Robust cash flow Expect $400m annual Free Cash Flow 1 in near to mid term Efficient deployment of capital Sizable part of free cash flow to be returned to shareholders (1): Free Cash Flow (FCF) is defined as operating cash flow less capital expenditures 12 8/26/2015

13 ON Semiconductor 2017 Target Model Revenue - $4 Billion Gross Margin 1 40% Operating expenses % Operating Margin % EPS 1 $1.40-$1.60 Free cash flow 13-16% of revenue Cash return to shareholders 80% of FCF 2 (1) : Non-GAAP measures (2) : 80% of free cash flow after debt servicing will likely be returned to shareholders 13 8/26/2015

14 Revenue ($B) ON Semiconductor Path to 2017 target model - Revenue Annual revenue growth of 5% 1 Automotive CAGR 7% Communications CAGR 7.5% Industrial CAGR 5% Computing CAGR 3% Consumer GAGR 2% (1) : Organic growth from 4Q14 annualized revenue base 14 8/26/2015

15 ON Semiconductor Change in mix 2014 to Computing Computing 11% 13% Auto Auto 31% 33% Consumer Consumer 14% 16% Comm 18% Industrial 22% Comm 19% Industrial 23% 15 8/26/2015

16 ON Semiconductor Steady gross margin improvement Non-GAAP Gross Margin¹ Trend Key Gross Margin Drivers 38% 36% Improving mix of industrial, automotive and smartphones 34% Higher operating leverage 32% 30% 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Stabilization of SSG (1) : Non-GAAP measures. Refer to investor section of our website for definitions and adjustments 16 8/26/2015

17 ON Semiconductor Bridge to target gross margin 1 40% Mix 160 bps Ongoing mix shift towards auto, industrial, and smartphones Utilization 250 bps Expect 50% fall through on incremental revenue 35% Manufacturing efficiencies 120 bps Continued migration from 6 inch to 8 inch wafers Better capital efficiency 30% Aptina related synergies Synergies 60 bps (1) : Non-GAAP measures. Refer to investor section of our website for definitions and adjustments (2) ASP decline offset by operational improvements 17 8/26/2015

18 FCF in $ million FCF Margin ON Semiconductor On track to generate $400m in annual free cash flow Key Cash Flow Contributors % 8% Improved operating results 200 6% % Disciplined capital spending 50 2% % Stabilization of SSG 18 8/26/2015

19 ON Semiconductor Cash flow drivers for the target model Operating Cash flow % of revenue Net cash interest - ~$26-$30m Cash taxes - ~8-10% of pretax income Depreciation and amortization - 6-7% of revenue Capex - 6-7% of revenue FCF % of revenue 19 8/26/2015

20 Conclusion and Q&A 1. ON Semiconductor keeps growth by continuous acquired the other company and all the acquisitions counted in Operating Expenses and amortized monthly that keeps the cash and cash equivalents on hand to well prepare for next investment. 2. For my understanding, the revenue increases around 130M for 1Q/2Q 2015 after acquired Aptina equivalent average quarterly revenue in Aptina. Hence, here comes out a question from myself that how come Aptina s top management sold Aptina for only 400M to ON? 3. In TW, if A company announced to merge B company by cash, is the expense can be amortized? Looks like the case for ON to merge Aptina like that. 20 8/26/2015