On Semiconductor Corporation · NASDAQ:ON
On Semiconductor — Investor Day (February 2015)
109 slides from On Semiconductor's investor day presentation, Feb 26, 2015
Slide 1: Financial Analyst Day
ON Semiconductor Financial Analyst Day Scottsdale, AZ February 26, 2015
Slide 2: Safe Harbor Statement and Non-GAAP and Forecast Information
Safe Harbor Statement and Non-GAAP and Forecast Information During the course of this conference call, we will make projections or other forward-looking statements regarding future events or the future financial performance of the company. The words “believe,” “estimate,” “anticipate,” “intend,” “ex
Slide 3: Agenda
ON Semiconductor Agenda Introduction—Parag Agarwal 8:00-8:05 Strategic Overview—Keith Jackson 8:05-8:35 Q&A 8:35-8:50 Standard Products Group—Bill Hall 8:50-9:10 System Solutions Group—Mamoon Rashid 9:10-9:30 Break 9:30-9:45 Image Sensor Group—Taner Ozcelik 9:45-10:05 Application Products Group—Bob
Slide 4: Keith Jackson, President & CEO
ON Semiconductor Keith Jackson President & CEO
Slide 5: Embarking on a new phase of growth and shareholder returns
ON Semiconductor Embarking on a new phase of growth and shareholder returns Analyst Day 2015
Slide 6: Key Takeaways
ON Semiconductor Key Takeaways Growth Above industry over the next 5 years Levered to high growth markets, strong product cycles Building on a Strong Leverage Significant expansion in margins strong foundation Steep acceleration in EPS Robust Cash Flow Expect ~$400m in near to mid term Potential of
Slide 7: 2014 Highlights
ON Semiconductor 2014 Highlights Stabilized System Solutions Group Robust growth in core business and target segments Built market leading imaging portfolio Expanded margins and posted strong EPS growth Announced capital return policy and $1B share repurchase Analyst Day 2015
Slide 8: Agenda
ON Semiconductor Agenda Leveraging past investments Industry leading growth Focus on cash generation and returns Analyst Day 2015
Slide 9: Where We Are Now
ON Semiconductor Where We Are Now Industry Leading Cost Structure Above Industry Revenue Growth Increasing Shareholder Returns Formidable Scale Automotive High Performance with ~$3.5B in Analog revenue1 Industrial Image Sensors ~1 B Units/Week Communications Standard Products Wide Sales Reach Scale
Slide 10: Shift in Strategic Priorities
ON Semiconductor Shift in Strategic Priorities Past Priorities Current Priorities Invest in establishing scale Leverage past investments to be competitive to drive growth and margins Acquisitions for scale and Tuck-in acquisitions for market reach technology Limited shareholder returns Robust shareh
Slide 11: Thoughts on Acquisitions
ON Semiconductor Thoughts on Acquisitions Focus on technology Aim is to acquire technologies and leverage scale to grow revenue driven deals Preference toward small tuck-in deals Large acquisitions Loss of revenue due to customer multi-source strategy No attractive assets appear challenging Steep va
Slide 12: Sustainable Competitive Advantage
ON Semiconductor Sustainable Competitive Advantage Cost Structure Industry leading cost structure Large scale and efficient operations Logistics and Sales Network Global sales and distribution presence Strong relationships with market leaders Integrated Manufacturing Leadership in packaging technolo
Slide 13: Key Growth Drivers
ON Semiconductor Key Growth Drivers Automotive Smartphones Industrial Expected 5 year revenue Expected 5 year revenue Expected revenue CAGR of CAGR of 5-9% CAGR of 7-9% 5-7% Broad engagement with Rapidly expanding Focus on growth areas such global market leaders product portfolio as motor control, l
Slide 14: Change in End-market Mix
ON Semiconductor Change in End-market Mix Consumer 22% 26% Automotive 2012 61% 16% Communications $2,895 M 17% 19% Industrial Computing Consumer 31% Automotive 6% 2014 71% 18% Communications $3,162 M 13% 22% Industrial Computing
Slide 15: Automotive – expected revenue CAGR of 5-9%
ON Semiconductor Automotive – expected revenue CAGR of 5-9% Body & Interior Body computers & gateways Motor control Bus protection HVAC • Smart-junction box Infotainment Door Instrument clusters • Active antenna Lighting Revenue ($M) • LED exterior • Advanced front (AFS) 1,000 • LED interior • Motor
Slide 16: Industrial – expected revenue CAGR of 5-7%
ON Semiconductor Industrial – expected revenue CAGR of 5-7% Industrial Circuit Breakers Utility Metering Sensor Interfaces Human-machine Wireless Security & Alarm Factory Automation Interfaces Systems • Valve Control Smart Motor Controllers Appliance Control Revenue ($M) 650 Building Automation HVAC
Slide 17: Rapidly Expanding BoM in Mobile
ON Semiconductor Rapidly Expanding BoM in Mobile Power Management Mobile Content Os Supervisory AC-DC for Adapters Battery Charger Load Switch OVP/OCP Wireless charging BoM Opportunity of $9 DC-DC Temp Sensor Fuel Gauge (vs $3.50 in 2009) Battery Battery FETs Battery Protection IC Revenue ($M) Prote
Slide 18: Capital Return
ON Semiconductor Capital Return Generating shareholder value is a key priority for the company 80% of FCF less debt payments to be returned to shareholders Stock repurchase plan for $1 billion over a four-year period
Slide 19: Questions & Answers
Questions & Answers ON Semiconductor 4N
Slide 20: Standard Products Group – Bill Hall
Standard Products Group Bill Hall Executive Vice President
Slide 21: Robust Industry-leading Performance
Standard Products Group Robust Industry-leading Performance
Slide 22: Key Takeaways
Standard Products Group Key Takeaways Highly profitable and growing business with strong visibility Industry leading financial performance Solid share gains—outgrew the market by ~2x in 2014 Investing in high performance products to drive growth
Slide 23: The reports of my demise have been greatly exaggerated
Standard Products Group “The reports of my demise have been greatly exaggerated.” Mark Twain Units in Billions GM % 36%1 35%1 42.0 30 37.0 35.1 35.0 31.7 29.0 29.1 26.5 27.2 26.7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Units Sold GM % Linear (GM %) (1) : Non-GAAP measures. Refer to investo
Slide 24: Long product life cycles
Standard Products Group Long product life cycles Quick Facts 11,000 Part #s Ship 42BU/yr $1.2B Revenue 4th in Market Share 2015 2010 2005 2000 1990 1980 1965 $1.2 B revenue 20%1 operating margin in 2014 42 B units shipped, 11,000 core parts Driving growth in automotive, industrial and wireless (1) :
Slide 25: 2014 Highlights
Standard Products Group 2014 Highlights Grew revenue by 8% Y/Y vs. Industrial 14% competitive group at 4.3% Automotive 30% Gross margin1 of 35.6%, up Wireless 20% 80bps Y/Y Telecom 4% Industry leading operating margin1 of 20% Consumer 16% Computing 15% Solid new product introduction across multiple
Slide 26: Market Landscape
Standard Products Group Market Landscape: Uniquely positioned across standard and high performance portfolios. Standard High Performance Product Portfolio Product Portfolio High performance analog and logic Capacity Expansion 5 Ultra high power k mkt share high efficiency Die Shrink 3 6 power discre
Slide 27: Outgrowing the peers
Standard Products Group Outgrowing the peers 2014 YOY revenue growth ONNN Standard Products 14% Market Share 12% Standard Products DIOD Total Company RNECF 10% TOSBF VSH 8% FCS 6% Weighted Avg. Top Suppliers NXP Std. Products Only = 4.3% Growth 5.7% 4% Other 47.5% ONNN 2% 5.9% 0% STM 6.0% -2% IFX 6.
Slide 28: Sustainable and expanding competitive advantage
Standard Products Group Sustainable and expanding competitive advantage Standard Products Comp Group SPG NXPI FCS VSH AOSL DIOD * Rev ($M) $1,210M $1,275M $1,146M $1,036M $327M $891M GPM1% 36% 33% 33% 18.3% 19% 31% EBIT1% 20% 17% 6% 1% 0% 10% * Total ONNN Standard Products revenue = $1,314M Generati
Slide 29: Growing in high margin markets
Standard Products Group Growing in high margin markets Automotive Industrial Power Wireless Conversion 30% of sales 14% of sales 20% of sales $3B SPG SAM @ 9% CAGR1 $1B SPG SAM @ 23% CAGR2 $2B SPG SAM @ 10% CAGR3 Significantly above Corp GPM Significantly above Corp GPM Significantly above Corp GPM
Slide 30: Automotive growth opportunities
Standard Products Group Automotive growth opportunities Technology Trend SPG Solutions 80 Sensors per car today Precision Op Amps, Hi PSRR Sensors going to 140 by 2020. LDOs, ESDLC Up to 20 cameras per Hi PSRR LDO, Automotive Imaging luxury car in 2020. ADAS. E2PROM, MV FET Electric Motors Up to 120
Slide 31: Industrial growth opportunities
Standard Products Group Industrial growth opportunities (High Performance Power Conversion) Technology Trend SPG Solutions HV/SJ FET, IGBTs, PIMs, High End Power 5M servers today to over 10M by GaN, High Efficiency 2020. Google > 1M. MOSFETs, eFuse, HV LDO, Supply/UPS (Cloud) Hot Swap LDO IGBTs, PIM
Slide 32: Leading in high-voltage GaN
Standard Products Group Leading in high-voltage GaN Partnership with Transphorm Have released to production the only High Voltage (600V) GaN transistor in the market, sampling since 4Q14 Developing in house substrate capability Massive reduction in system size and cost Acceleration in customer inter
Slide 33: Wireless growth opportunities
Standard Products Group Wireless growth opportunities Drivers Trend SPG Solutions 802.11ac ad (1Gbps 7Gbps) High PSRR LDO, ESDLC, Speed (accuracy) USB 3.0 3.1 (5Gbps 10Gbps) CMF, low cap analog switch Gen 4 6: (2x battery current). UL & LP LDO, Trench Schottky Power (efficiency) Screen size up 85% s
Slide 34: In Summary
Standard Products Group In Summary A growing and highly profitable business Industry leader in profitability Solid design win pipeline in automotive, industrial and mobile end-markets Strong visibility
Slide 35: System Solutions Group – Mamoon Rashid
System Solutions Group Mamoon Rashid Senior Vice President
Slide 36: Positioned for growth and improved profitability
System Solutions Group Positioned for growth and improved profitability
Slide 37: Key Takeaways
System Solutions Group Key Takeaways Restructuring Complete SSG is now at cost structure to be accretive at approximately $140m quarterly revenue Business transformed from Japan domestic market supplier to a competitive globally focused business Focused on Growth Focused on high growth end-markets—
Slide 38: 2014 Highlights – Profit growth and key market focus
System Solutions Group 2014 Highlights – Profit growth and key market focus Strong improvement in profits SSG Non-GAAP EPS ($) Trend – 2014 gross margin1 20%, up 390 bps Y/Y – 2014 operating margin1 up 990 bps Y/Y Strong design win traction in smartphones – Content per phone increased to $2.10 , com
Slide 39: Aggressive restructuring
System Solutions Group Aggressive restructuring 2011-H1 2011-H2 2012-H1 2012- H2 2013-H1 2013-H2 2014-H1 2014-H2 2015-H1 Niigata Niigata Niigata Niigata Niigata Niigata Niigata Niigata Niigata Wafer Fabs Gifu Gifu Gifu Gunma Gunma Gunma Assembly/ SSL SSL SSL SSL SSL SSL SSL SSL SSL Test SSMP SSMP SS
Slide 40: Diversifying regional exposure
System Solutions Group Diversifying regional exposure 2012 Revenue Distribution 2014 Revenue Distribution Americas 1% Americas 1% Japan 41% Japan 34% Europe 1% Europe 1% Asia 57% Asia 64%
Slide 41: Focused for profitable growth
System Solutions Group Focused for profitable growth End Market Growth Trends SSG Solutions Growth in # of Motors Automotive High efficiency ICs and IPMs Weight reduction Industrial / BLDC motors Energy efficiency ICs and IPMs White Goods Developing economies Longer battery life OIS/AF Mobile Pictur
Slide 42: Strengthening presence in strategic end-markets
System Solutions Group Strengthening presence in strategic end-markets 2014 Revenue by End Market Networking 3% Mobile Automotive 21% – Strong traction on OIS/AF—#1 position Consumer 37% Industrial 14% – LiB Battery protection—#1 Position – Expanded into additional functions not Wireless 14% integra
Slide 43: SSG: Comprehensive Motor Control Portfolio
SSG : Comprehensive Motor Control Portfolio Server Automotive White Goods Industrial 100 A Discrete EPS 50 A AC motor inverter Radiator Fan 30 A High Power IPM 20 A Blower Fan 2-in-1 IPM Pump 15 A IPM Fan 10 A Compact Seat Fan IPM A Air Handling Servo / Stepper A Monolithic 12 V 40 V 600 V 1200 V A
Slide 44: Increased traction in automotive
System Solutions Group Increased traction in automotive SSG Automotive SAM ($B) SSG focus CAGR 15% vs. 5% for the overall 3.3 market Significant fan and pump design wins 3.0 ramping in 2015 2.8 Programs with car makers to reduce size/weight of electronic motor controls 2.5 2014 2015 2016 #2 in the I
Slide 45: Automotive Design Wins
Automotive Design Wins Broad based wins in autos Radiator Fan Under Oil Pump Hood Coolant Pump Ignition Control Wiper Motor Driver BodyInfotainment DSP Fuel Pump Seat Fan
Slide 46: Leveraging Motor Competencies in Autos
Leveraging Motor Competencies in Autos Our solution: 50% smaller size & weight Windshield Wiper Electric Power Steering Fuel Pump Pump Unit HVAC Blower (Oil, Water Van Sliding Door Radiato
Slide 47: Winning in white goods
System Solutions Group Winning in white goods SSG focus CAGR 19% vs 6% for the overall market #2 in fan motor driver #2 in White Goods IPM Expand motor control solutions to cover 1-100A range Horizontal expansion into industrial drives with IPMs SSG White Goods SAM ($B) 3.0 2.8 2.6 2.4 2014 2015 201
Slide 48: White Goods Design Wins
White Goods Design Wins Expanding presence with global OEMs AC inverter IPM & IGBT Air Conditioning Blower Fan Control MCU AC inverter IPM Refrigerator Blower Fan Damper motor Ice dispenser Washers Water Pump Small Appliance Control MCU
Slide 49: Continuing momentum in mobile
System Solutions Group Continuing momentum in mobile SSG focus CAGR 22% vs 5% for the overall market SSG content per phone has increased to ~$2.10 #1 in LiB Battery Protection #1 in OIS—engaged with all camera module makers Expanded into additional functions not integrated into mobile chipsets Stron
Slide 50: Mobile Design Wins
Mobile Design Wins Touch Screen Interface Display Backlight Power Supply Bias Power Supply Camera Auto Focus Module Optical Image Stabilization Battery Protection Fuel Gauge
Slide 51: Leveraging IP to drive revenue
Leveraging IP to drive revenue Re-use of mixed signal & MCU capabilities providing competitive advantage Portable & Automotive Audio SSG IP Portfolio Breakout from ONNN Total 34% Dual MCU Pen controller for 8 – 14” tablets
Slide 52: In Summary
System Solutions Group In Summary SSG is now a competitive globally focused business Positioned for sustainable margin and earnings growth Robust design pipeline in strategic markets
Slide 53: ON Semiconductor
ON Semiconductor 4N
Slide 54: Image Sensor Group – Taner Ozcelik
Image Sensor Group Taner Ozcelik Senior Vice President
Slide 55: Steep growth in Automotive and Industrial
ON Semiconductor Steep growth in Automotive and Industrial
Slide 56: Key Takeaways
Image Sensor Group Key Takeaways On track to achieve non GAAP EPS accretion target for Aptina – $0.08 in 2015, $0.10 in 2016 – Aptina integration process on track, set to complete by mid 2015 Investing in automotive and industrial to drive growth and expand margins – #1 market share and expanding te
Slide 57: A 40+ Year Legacy of Imaging Expertise
Image Sensor Group A 40+ Year Legacy of Imaging Expertise Image Group Sensor (ISG) 2015 2014/Aug 2000+ imaging patents Combined imaging Inventors of CMOS expertise 2014/Apr imaging Large sensor portfolio Technology innovators High-performance Strong focus on supply s Unit CCD/CIS portfolio Over 2 bi
Slide 58: Leadership in Key Technology and Systems
Image Sensor Group Leadership in Key Technology and Systems Image Processing & Systems High Dynamic Range and High-Frame Rate leadership Industry Leading Development Tools CFA, Optics & Packaging Innovative pixel optics, Clarity+, OIS system integration High-performance package configurations Pixels
Slide 59: Key Growth Drivers
Image Sensor Group Key Growth Drivers Automotive Industrial Consumer 2014-18 market IoT, security, automation Highly selective focus on CAGR of 28% key drivers profitable opportunities Safety, mandates, and Broadest portfolio in the Leverage differentiated consumer acceptance key market technology t
Slide 60: Automotive Image Sensor Market
Image Sensor Group Automotive Image Sensor Market Automotive CMOS sensor market Auto CMOS sensor market share 1,200 Gentex Others Sony Panasonic 1,000 Toshiba Omnivision millions 600 Melexis $ 400 0 ONNN 2014 2015 2016 2017 2018 2014-18 revenue CAGR of 28% #1 position with 46% market share Source: T
Slide 61: Accelerating momentum in automotive image sensors
Image Sensor Group Accelerating momentum in automotive image sensors Auto image sensors Technology and market leadership Revenue up 71%1 Y/Y in 2014 Strong technology leadership and software capabilities— pioneer in auto image sensors Safety, Government mandates Increasing use of image sensors in au
Slide 62: Potential for more than image sensors in automotive
Image Sensor Group Potential for more than 20 image sensors in automotive Rear Front Front View Bac Forward Collision Su Warning Lane Departure Warning Auto High-beam Control Traffic Sign Recognition Pedestrian Detection Adaptive Cruise Control Night Vision Side Mirror Replacement In Car Surround Vi
Slide 63: Leading in automotive technologies
Image Sensor Group Leading in automotive technologies LFM (LED flicker mitigation) Technology LFM – Leader in LFM technology LED flicker reduction – Fast becoming the top priority issue for OEMs • Flicker problem for video driven by LED adoption viewing and Machine vision Unique pixel level Stacked
Slide 64: Strong position in industrial image sensors
Image Sensor Group Strong position in industrial image sensors Industrial Image Sensors Security Revenue up 17%(1) Y/Y in 2014 sition in • Broadest product • Proliferation of traffic monitoring portfolio security cameras #1 share in IP • Software • Increased need for 320 camera market capabilities s
Slide 65: Top to Bottom Portfolio in Industrial Imaging
Image Sensor Group Top to Bottom Portfolio in Industrial Imaging High Performance CMOS/CCD High Resolution Global Shutter 1000 Machine High-End Medical and Other High • Large Pixels $ Vision Surveillance Scientific Performance • VITA/PYTHON/LUPA Factory Aerial Digital Space families automation and S
Slide 66: Investing in IoT – a Vast Opportunity
Investing in IoT – a Vast Opportunity A $400M Market by 2018 Surveillance Fire Cloud Lighting & Smoke ON Semiconductor Motion HVAC Sensors Controls Top of the line product & technology offering Adding Door Lock sight and Turnkey solutions Vacuum with wide portfolio cleaners sensing to and ecosystem
Slide 67: Imaging System & Software Solutions
Image Sensor Group Imaging System & Software Solutions Leading Imaging Development Software PDAF + OIS – “Hummingbird” Control and UI Image Misclib ? 13M CMOS Sensor Leadership INI Position Feedback ? OIS Leadership Color Pipe ON Semiconductor Python Images Sensor Image Data System Solution Control
Slide 68: Profitability key driver in consumer market
Image Sensor Group Profitability key driver in consumer market Focus on driving profitability Align resources and product portfolio to ensure margin expansion Selectively participate in performance categories Sports Camera, Highly differentiated high-end mobile devices Differentiation through image
Slide 69: Aptina Integration update
Image Sensor Group Aptina Integration update On track with non GAAP EPS accretion of 8c in 2015 & 10c in 2016 – Synergies and mix to drive profitability Integration on track – CFA production ramp in 2Q on target – IT integration set to complete in 2Q On track to meet back office and operational syne
Slide 70: In Summary
Image Sensor Group In Summary On track to achieve financial targets Investing in automotive and industrial markets to drive growth and profitability Market & technology leader in auto image sensors, the fastest growing image sensor market—2014-18 revenue CAGR of 28%
Slide 71: Application Products Group – Bob Klosterboer
Application Products Group Bob Klosterboer Executive Vice President
Slide 72: Driving growth in Industrial, Automotive, and Smartphones
Application Products Group Driving growth in Industrial, Automotive, and Smartphones
Slide 73: Key Takeaways
Application Products Group Key Takeaways APG is targeting to grow at twice the market rate – Strategic resources aligned to ensure success of critical projects in strategic growth markets – Early engagement with strategic customers to drive steep product ramp Strong margin expansion going forward –
Slide 74: Overview and 2014 highlights
Application Products Group Overview and 2014 highlights Applications Products Group Mil/Aero & Industrial Power Solutions Power Conversion Automotive Foundry & Timing Medical DC/DC AC/DC ASICs Digital ASIC Audio /Audiology PC Power Industrial ASIC DSP AC/DC Smart FETs RAD hard by Wireless design Ind
Slide 75: Growth opportunities in established markets
Application Products Group Growth opportunities in established markets Automotive Industrial Wireless 37% of sales 28% of sales 10% of sales Significantly above corporate Significantly above corporate Above corporate gross margin gross margin gross margin ~20% revenue growth 13% YoY revenue growth i
Slide 76: Automotive growth opportunities
Application Products Group Automotive growth opportunities Lighting—Advanced front, rear & interior lighting Automotive revenue ($M) with leading global tier-1s & OEMs Body & Powertrain: SmartFETs, motor actuation, smart junction boxes Vehicle electrification: Transition from LDOs to high efficiency
Slide 77: Automotive: Expanding content and capabilities
Automotive Expanding content and capabilities Active Safety Instrument Clusters ASIC LED Backlight Current Sense LDO Power Supplies Smart FETs ADAS Basis Chips Power Supplies System Basis Chips Motor Control Lighting Smart FETs Full LED AFS Ultrasonic Sensor I/F LIN RGB Image Sensor support SMPS SBC
Slide 78: OEM Cooperation
OEM Cooperation For Lighting OEM Tier-1 Tier-1 IC Network approach (vs. sequential) Each party contributes with own core competency and system know-how Parallel processes ? short TTM Early witnessing or co-defining emerging leading edge technologies Optimal system solution
Slide 79: Gaining momentum in industrial
Application Products Group Gaining momentum in industrial Industrial Revenue ($M) Ultra low power ZigBee wireless solutions for home automation, smart energy and smart lighting Intelligent, networked sensor and LED lighting 300 solutions for smart building controls 250 Patient diagnostics and drug d
Slide 80: Market Macro Trend Industrial IoT
Market Macro Trend Industrial IoT Trend: The internet of “things” will grow agressively during 2015 – 2020 Product Positioning Develop low power, standards based, wired and Develop system in package solutions that enable wireless network solutions that can be marketed wearable and unobtrusive form f
Slide 81: Medical – Digital Medicine for Connected People
Application Products Group Medical – Digital Medicine for Connected People Medical Revenue ($M) 100 Ezairo 7100 Quad-core Hearing Aid SoC 80 Qualified Discretes ASICs & Medical Imaging Foundry Medical ASSP 3D SiP
Slide 82: Communications growth opportunities
Application Products Group Communications growth opportunities Wireless Revenue ($M) A4WP wireless charging Rx/Tx power solutions DC-DC PMICs for the AP/graphics processors, baseband chipsets and camera modules Scalable RF tuning solutions for multimode, multiband 4G LTE-A smartphones
Slide 83: Wireless Charging: First mover in an accelerating market
Wireless Charging First mover in an accelerating market SAM for loosely coupled wireless charging ($M) 800 600 400 200 0 Source: ON Semiconductor estimates 83 Analyst Day 2015
Slide 84: Wireless Charging: Ecosystem in place to drive steep adoption
Wireless Charging Ecosystem in place to drive steep adoption Compelling consumer advantage - Ubiquitous charging :charging of multiple devices on a single universal charging station - Convenience of built-in solution vs. aftermarket accessories - Pricing: A4WP brings down pricing to drive adoption b
Slide 85: Wireless Charging Solutions
Wireless Charging Solutions Dynamic RF Tuning Control Control 4V-20V Front-end RF Full Single Chip PA Divider & 4V-15V Tuning Bridge Monitor Power Dual Input SCY1751 Management Switching SCY6992 Battery Smart 4V-28V 100V Surge 4V-15V Battery Charger OVP with ICs 100 V Reverse Surge A4WP Transmitter
Slide 86: Transforming Charging Solutions
Transforming Charging Solutions Enabling Smaller Sized Adapters Smarter Chargers Shrink 12 W Size to Existing 5 W Size 20 V 12 V Increase Power in 9 V Existing 5 W to 12 W V WLLC Digital PFC Sync Rec GaN Switches 86 Analyst Day 2015
Slide 87: Computing Content Returns – ON is well positioned
Computing Content Returns – ON is well positioned (~ 392%) (-17%) Content (70%) Desktop (-14%) (-15%) (-10%) (~ -45%) (~ -10%) Notebook Sandybridge Ivybridge Haswell Broadwell Sky Lake Cannon Lake
Slide 88: In Summary
Application Products Group In Summary APG is positioned to outgrow the market Key wins at market leaders are helping define next generation products Targeting significant margin expansion 88 Analyst Day 2015
Slide 89: Business Units Questions & Answers
Business Units Questions & Answers
Slide 90: Bernard Gutmann, CFO and EVP
ON Semiconductor Bernard Gutmann CFO and EVP
Slide 91: Driving operating leverage and shareholder returns
ON Semiconductor Driving operating leverage and shareholder returns
Slide 92: Key Takeaways
ON Semiconductor Key Takeaways Margin expansion – Mix & operating leverage to drive significant margin expansion Acceleration Leverage past investments – Investments in place to drive margin in EPS growth expansion, growth Robust cash flow – Expect $400m annual Free Cash Flow1 in near to mid term Ef
Slide 93: 2014 Highlights
ON Semiconductor 2014 Highlights Operating margin1 up by 210 bps Y/Y to 12.2% Gross margin1 up by 180 bps Y/Y to 35.3% EPS1 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) :
Slide 94: Agenda
ON Semiconductor Agenda Target Financial Model Path to achieving the target model Free Cash Flow model Capital allocation policy
Slide 95: 2017 Target Model
ON Semiconductor 2017 Target Model Revenue—$4 Billion Gross Margin1 40% Operating expenses1 21-23% Operating Margin1 17-19% EPS1 $1.40-$1.60 Free cash flow – 13-16% of revenue Cash return to shareholders – 80% of FCF2 (1) : Non-GAAP measures (2) : 80% of free cash flow after debt servicing will like
Slide 96: Path to 2017 target model—Revenue
ON Semiconductor Path to 2017 target model—Revenue Annual revenue Automotive CAGR 7% growth of 5% 4.5 Communications CAGR 7.5% B) 4.0 ( $ 3.5 Revenue Industrial CAGR 5% 3.0 2.5 Computing CAGR 3% 2.0 Consumer GAGR 2% (1) : Organic growth from 4Q14 annualized revenue base
Slide 97: Steady gross margin improvement
ON Semiconductor Steady gross margin improvement Key Gross Margin Drivers Non-GAAP Gross Margin1 Trend 38% Improving mix of industrial, automotive and smartphones 36% 34% Higher operating leverage 32% 30% Stabilization of SSG (1) : Non-GAAP measures. Refer to investor section of our website – www.on
Slide 98: Bridge to target gross margin
ON Semiconductor Bridge to target gross margin1 M 160 bp smartphones 40% Utilization 250 bp 35% Manufacturing efficiencies 120 bp Better capital efficiency 30% Synergies 60 bp (1) : Non-GAAP measures. Refer to investor section of our website – www.onsemi.com for definitions and adjustments (2) ASP d
Slide 99: Change in mix 2014 to 2017
ON Semiconductor Change in mix 2014 to 2017 2014 2017 Computing Computing 11% 13% Auto Auto 31% 33% Consumer Consumer 14% 16% Comm Comm 19% Industrial 18% Industrial 22% 23%
Slide 100: Strong execution driving operating margin expansion
ON Semiconductor Strong execution driving operating margin1 expansion Key Operating Margin Drivers Non-GAAP Operating Margin1 Trend Fall-through from gross margin 14% 12% Leverage from operating expenses 10% 8% 6% Stabilization of SSG 4% Targeted R&D spending (1) : Non-GAAP measures. Refer to invest
Slide 101: Operating Margin – Opex discipline, fall-through to drive expansion
ON Semiconductor Operating Margin – Opex.1 discipline, fall-through to drive expansion Sizeable part of incremental gross profit to transition to operating income 740 25% 720 700 24% revenue million 680 $ of Revenue growth to outpace in % 660 operating expense growth as 23% Opex 640 Opex 620 600 22%
Slide 102: Historic EPS trend
ON Semiconductor Historic EPS trend Key EPS Drivers Historic EPS1 Trend $0.25 Improved operating results $0.20 $0.15 $0.10 Flat cash taxes $0.05 $- Low interest and other expenses (1) : Non-GAAP measures. Refer to investor section of our website – www.onsemi.com for definitions and adjustments
Slide 103: On track to generate $400m in annual free cash flow
ON Semiconductor On track to generate $400m in annual free cash flow Key Cash Flow Contributors 300 10% Improved operating results 8% 200 million 6% $ 150 in Margin Disciplined capital spending 4% FCF FCF 100 2% 50 0 0% Stabilization of SSG 2012 2013 2014
Slide 104: Cash flow drivers for the target model
ON Semiconductor Cash flow drivers for the target model Operating Cash flow—20-22% 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—13-16% of revenue
Slide 105: Capital expenditure and manufacturing strategy
ON Semiconductor Capital expenditure and manufacturing strategy No step function rise likely in capital expenditure Capacity expansion will be inline with forecasted demand Will continue to invest in our integrated manufacturing model Expand capacity through innovative partnerships, e.g. Fujitsu Ind
Slide 106: Capital deployment
ON Semiconductor Capital deployment 80% of FCF1 cash return to shareholders Acquisition focus on expanding technology portfolio Scale not a strategic priority – Industry leading cost structure Sufficient access to domestic cash (1) : 80% of free cash flow remaining after debt servicing will likely b
Slide 107: Group Questions & Answers
Group Questions & Answers 107 Analyst Day 2015
Slide 108: Financial Analyst Day 2015
ON Semiconductor Financial Analyst Day 2015
Slide 109: Additional Information
ON Semiconductor Additional Information For additional information visit the ON Semiconductor corporate website www.onsemi.com or for official filings visit The SEC website www.sec.gov