ON Semiconductor Corp (NASDAQ:ON) stock fell 2.44% (As on February 6, 11:46:42 AM UTC-4, Source: Google Finance) after the company beat Wall Street estimates for fourth-quarter revenue and profit on Monday, helped by resilient demand for its silicon carbide chips, sending the company’s shares up around 9% in early trade. The upbeat results indicate that demand for the company’s silicon carbide chips has held up well despite subdued consumer spending caused by high interest rates. The company, however, forecast first-quarter revenue and profit below analysts’ expectations, raising concerns about the outlook of the EV market after warnings of softening growth from other automotive chipmakers and Tesla chief executive Elon Musk. The company has returned 140% of Free Cash Flow via Share Repurchases in 2023. There is significant growth in Free Cash Flow margin to 25-30%. Capital efficiency through high ROIC investments and working capital management. The company expects $3.5-4.0B in Free Cash Flow in 2027.
ON in the fourth quarter of FY 23 has reported the adjusted earnings per share of $1.25, beating the analysts’ estimates for the adjusted earnings per share of $1.21, according to Zacks Investment Research. The company had reported the adjusted revenue of $2.02 billion in the fourth quarter of FY 23, beating the analysts’ estimates for revenue of $2.00 billion. Automotive revenue of $4.3 billion, increased 29% year-over-year. Q4’23 gross margin is at high end of guidance. Tight cost management with OpEx at 14.8% of revenue for 2023. Structural changes delivering operational efficiencies despite lower utilization rates. Enabling 300mm and SiC capabilities
The company projects first-quarter revenue in a range of $1.80 billion to $1.90 billion, compared with an estimate of $1.92 billion. It expects adjusted diluted earnings per share of 98 cents to $1.10, the midpoint of which is below analysts’ expectation of $1.10 per share. Q1 Gross Margin is expected to be in the range of 44.5% to 46.5% and operating expenses is expected to be in the range of $305 to $320 million.
2024 Capex is expected to be low teen percentage. The company expects $3.5-$4.0B of Free Cash Flow in 2027.
Meanwhile, the company has announced the availability of nine new EliteSiC Power Integrated Modules (PIMs) enabling bidirectional charging capabilities for DC ultra-fast electric vehicle (EV) chargers and energy storage systems (ESS). The silicon carbide-based solutions will dramatically improve system cost with higher efficiency and simpler cooling mechanisms that can reduce size by up to 40% and weight by up to 52% compared to traditional silicon-based IGBT solutions.