ON Semiconductor’s first-quarter earning results revealed the company’s revenue and profits slipped from the same timeframe in 2019. The corporation explained the coronavirus pandemic hurt its manufacturing operations and demand for its products.
While the firm expects its underperformance to continue into the second quarter, it has a bright long-term outlook.
ON Semiconductor’s Q1 Outcomes
In the March quarter, the Phoenix-based company brought in $1.277 billion, off 7.86 percent from its Q1 2019 sales. The firm’s adjusted net income of $42.8 million and $.10 per share fell short of the $177.1 million and $.43 per share it made last year.
ON Semiconductor CEO Keith D. Jackson noted his firm’s business suffered due to the COVID-19 outbreak, subsequent government-mandated lockdowns, and the economic contraction that followed. The executive said demand for the company’s core business, automotive components, fell because of plant closures in China, Europe, and the U.S.
The Arizona semiconductor company did improve two areas of its business from the first quarter of 2019. The firm enhanced its free cash flow to $33.7 million, a year-over-year increase of 279 percent. The corporation also exited Q1 with $1.982 billion in cash and equivalents, up $1.087 billion from the holiday period. Moreover, the chipmaker initiated a range of cost-cutting measures that should save it around $50 million this year.
ON Semiconductor’s Q2 Outlook
The manufacturer expects the coronavirus pandemic’s adverse effect on its business to continue through the second quarter. The firm’s June quarter outlook estimates revenue of $1.1 billion to $1.2 billion, which represents an 18.5 or 11.1 percent drop from the year prior. The company also noted that while its Chinese production capacity has recovered from regional production shutdowns, its Malaysian and Philippine facilities are lagging.
Despite its production woes, the firm’s chief executive stated automotive components demand from China and Japan had increased recently. Jackson expects the company’s 5G infrastructure sales to grow from the first quarter.
The executive also said ON Semiconductor is well-positioned to take advantage of the inevitable revitalization of the automotive industry. Since the company’s catalog contains a range of vehicle electrification, advanced driver assistance, and fuel efficiency components, it will benefit from the ascendance of battery-powered cars.
Given the company’s robust balance sheet and forward-looking portfolio, On Semiconductor’s long-term success is a good bet.