ON Semiconductor Corporation (ON) has reported a 78.19 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $10.10 million, or $0.02 a share in the quarter, compared with $46.30 million, or $0.11 a share for the same period last year.
Revenue during the quarter grew 5.16 percent to $950.90 million from $904.20 million in the previous year period. Gross margin for the quarter expanded 48 basis points over the previous year period to 34.60 percent. Total expenses were 95.09 percent of quarterly revenues, up from 92.32 percent for the same period last year. That has resulted in a contraction of 276 basis points in operating margin to 4.91 percent.
Operating income for the quarter was $46.70 million, compared with $69.40 million in the previous year period.
However, the adjusted operating income for the quarter stood at $122.90 million compared to $106.60 million in the prior year period. At the same time, adjusted operating margin improved 114 basis points in the quarter to 12.92 percent from 11.79 percent in the last year period.
“The acquisition of Fairchild positions ON Semiconductor as a highly diversified and broad based supplier of analog and power semiconductors, and marks an inflection point in our quest to become a leader in the analog and power management semiconductor market.” said Keith Jackson, president and chief executive officer of ON Semiconductor. “Following the close of the transaction, our assessment of Fairchild fully confirms our strategic and financial rationale for the acquisition, and I am very pleased to report that as of now, we are tracking significantly ahead of our announced synergy targets.”
For the fourth-quarter, On Semiconductor Corp expects revenue to be in the range of $1,190 million to $1,240 million. For the fourth-quarter, On Semiconductor Corp expects adjusted revenue to be in the range of $1,190 million to $1,240 million.
Working capital increases sharply
ON Semiconductor Corporation has recorded an increase in the working capital over the last year. It stood at $1,304.50 million as at Sep. 30, 2016, up 112.22 percent or $689.80 million from $614.70 million on Oct. 02, 2015. Current ratio was at 1.87 as on Sep. 30, 2016, up from 1.46 on Oct. 02, 2015.
Cash conversion cycle (CCC) has decreased to 81 days for the quarter from 111 days for the last year period. Days sales outstanding went up to 56 days for the quarter compared with 50 days for the same period last year.
Days inventory outstanding has decreased to 79 days for the quarter compared with 114 days for the previous year period. At the same time, days payable outstanding went up to 54 days for the quarter from 53 for the same period last year.
Debt increases substantially
ON Semiconductor Corporation has witnessed an increase in total debt over the last one year. It stood at $3,636.30 million as on Sep. 30, 2016, up 158.31 percent or $2,228.60 million from $1,407.70 million on Oct. 02, 2015. Total debt was 53.55 percent of total assets as on Sep. 30, 2016, compared with 35.64 percent on Oct. 02, 2015. Debt to equity ratio was at 2.07 as on Sep. 30, 2016, up from 0.89 as on Oct. 02, 2015. Interest coverage ratio deteriorated to 1 for the quarter from 4.66 for the same period last year.
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