ON Says Fairchild Acquisition Ahead of Synergy Targets
ON Semiconductor Corporation announced that total revenues in the third quarter of 2016 were $950.9 million, up approximately eight percent compared to the second quarter of 2016. Third quarter revenue includes contribution of approximately $53 million from our acquisition of Fairchild Semiconductor, which closed on September 19, 2016. However, divestiture of the Ignition IGBT, TVS diodes and Thyristor product lines negatively impacted revenue by approximately $5 million for the third quarter.
"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 CEO 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."
During the third quarter of 2016, the company reported GAAP net income of $10.1 million, or $0.02 per diluted share. Third quarter GAAP income before income taxes was $87.3 million as compared to $33.4 million in the second quarter. Third quarter 2016 non-GAAP income before income taxes was $107.3 million, compared to $96.7 million for the second quarter of 2016. Cash paid for taxes for the third quarter was approximately $6.5 million, as compared to $7.3 million in the second quarter.
Third quarter GAAP gross margin was 34.6 percent, and non-GAAP gross margin in the third quarter was 35.9 percent. For the third quarter of 2016, GAAP operating margin was 4.9 percent, and non-GAAP operating margin was 12.9 percent.
Adjusted EBITDA for the third quarter of 2016 was $180.2 million. Adjusted EBITDA for the second quarter of 2016 was $161.7 million.
"Business conditions remain steady across most end-markets and geographies. Our momentum in key end-markets remains strong and with increased scale and an expanded product portfolio, we are well positioned to drive top-line growth, margin expansion and meaningfully higher free cash flow going forward," Jackson continued.
"Based on product booking trends, backlog levels, and estimated turns levels, we anticipate that total ON Semiconductor revenue will be approximately $1,190 to $1,240 million in the fourth quarter of 2016," Jackson said. "Backlog levels for the fourth quarter of 2016 represent approximately 80 to 85 percent of our anticipated fourth quarter 2016 revenue. The outlook for the fourth quarter of 2016 includes stock-based compensation expense of approximately $13 million to $15 million. Net cash paid for income taxes is expected to be $7 million to $11 million."