ON Semiconductor Corp. (NASDAQ:ON)

The analysis of the financial data reveals several trends and fluctuations in the intangible assets and related components over the five-year period.

Goodwill

The goodwill value remained relatively stable between 2019 and 2020, increasing slightly from 1,659,200 thousand USD to 1,663,400 thousand USD. A significant increase occurred in 2021, reaching 1,937,500 thousand USD. However, a notable decrease followed in 2022 to 1,577,600 thousand USD, and this level was maintained through 2023.

Customer Relationships

Customer relationships showed remarkable stability with a slight decrease from 585,200 thousand USD in 2019 to 581,500 thousand USD in 2020 and no changes through 2023.

Developed Technology

Developed technology displayed steady growth, rising from 779,500 thousand USD in 2019 to 794,700 thousand USD in 2020, then increasing more significantly to 928,100 thousand USD in 2021 and slightly to 939,600 thousand USD in 2022, a level which remained the same in 2023.

IPRD (In-Process Research and Development)

IPRD values decreased sharply from 64,700 thousand USD in 2019 to 49,500 thousand USD in 2020, followed by a significant decline to 11,600 thousand USD in 2021, and the item was not reported after 2021.

Licenses

The value of licenses remained constant at 30,000 thousand USD throughout the entire period.

Other Intangibles

Other intangible assets values remained mostly steady, fluctuating slightly around approximately 79,000 to 83,000 thousand USD, with a peak at 82,700 thousand USD in 2022 before returning to 79,100 thousand USD in 2023.

Intangible Assets, Original Cost

The original cost of intangible assets showed an overall rising trend, starting at 1,538,700 thousand USD in 2019 and peaking at 1,633,800 thousand USD in 2022. A slight decrease occurred in 2023, reaching 1,630,200 thousand USD.

Accumulated Amortization

Accumulated amortization consistently increased in magnitude (negative values), indicating ongoing amortization expenses, from -886,200 thousand USD in 2019 to -1,238,700 thousand USD in 2023. This reflects systematic amortization of intangible assets over time.

Accumulated Impairment Losses

Impairment losses showed some volatility, initially decreasing from -62,000 thousand USD in 2019 to -35,400 thousand USD in 2021, then rising sharply to -92,200 thousand USD in 2022 and remaining at that level in 2023, signaling recognition of significant impairments beginning in 2022.

Intangible Assets, Carrying Value

The carrying value of intangible assets declined noticeably over the period, starting at 590,500 thousand USD in 2019, dropping to 469,000 thousand USD in 2020, slightly rising to 495,700 thousand USD in 2021, then decreasing substantially in 2022 and 2023 to 359,700 thousand USD and 299,300 thousand USD respectively.

Goodwill and Intangible Assets Combined

The aggregate of goodwill and intangible assets followed a similar pattern to goodwill alone, with an increase from 2,249,700 thousand USD in 2019 to a peak of 2,433,200 thousand USD in 2021, followed by a considerable decline in 2022 to 1,937,300 thousand USD and a slight decrease further to 1,876,900 thousand USD in 2023.

In summary, the data reflects a period of growth in intangible asset values until 2021, followed by notable reductions primarily driven by decreases in goodwill and carrying value of intangible assets in the last two years. The increases in accumulated amortization and impairment losses contribute to the decline in carrying values. Developed technology assets show positive trends, while other intangible categories like customer relationships and licenses remain stable. Overall, these patterns suggest a reassessment and potential write-down of intangible assets after 2021, indicating adjustments in valuation policies or response to changing market conditions.

The financial data reveals a consistent upward trend in both reported and adjusted total assets over the five-year period from 2019 to 2023. Reported total assets increased from approximately $8.43 billion in 2019 to $13.22 billion in 2023, while adjusted total assets rose from about $6.77 billion to $11.64 billion in the same timeframe. The difference between reported and adjusted assets suggests a significant portion of the total assets comprises goodwill or intangible assets that have been excluded in the adjusted figures.

Total stockholders’ equity also exhibited strong growth. Reported equity grew from $3.30 billion in 2019 to $7.78 billion in 2023, more than doubling in five years. Adjusted equity started lower at around $1.64 billion but increased substantially to $6.21 billion by 2023, indicating a substantial increase in the company’s net worth even after removing goodwill impacts. The considerable growth in adjusted equity, particularly accelerating after 2021, reflects improved retained earnings or other capital components.

Net income attributable to the company shows marked volatility but an overall upward trajectory. Both reported and adjusted net incomes were $212 million and $234 million in 2019 and 2020, respectively. A sharp increase occurred in 2021, reaching roughly $1.01 billion, continuing to grow in 2022 to $1.90 billion reported and peaking slightly higher at $2.23 billion adjusted, before a slight decline in 2023 to $2.18 billion. The difference between reported and adjusted net income in 2022 suggests the presence of goodwill impairment or other one-time adjustments that year. The overall increase in net income over the period indicates enhanced profitability and operational performance.

Assets

Both reported and adjusted assets consistently increased, reflecting ongoing growth and investment. The widening gap between reported and adjusted assets underscores the importance of goodwill and intangible assets in the company's balance sheet.

Equity

Reported equity nearly doubled, and adjusted equity grew even more substantially, indicating strengthened financial stability and retained earnings after adjusting for goodwill.

Net Income

Net income surged significantly post-2020, peaking in 2022 with a slight adjustment decrease in 2023. The presence of adjustments in 2022 indicates extraordinary items affecting reported earnings, but the profitability trend remains positive.

Net Profit Margin

The reported net profit margin demonstrates a consistent upward trajectory, rising from 3.84% in 2019 to 26.46% in 2023. The adjusted net profit margin, which accounts for goodwill, mirrors this trend closely, except in 2022 where it peaks noticeably higher at 26.81%. This indicates improving profitability and more efficient cost management over the years, particularly after adjusting for goodwill.

Total Asset Turnover

Reported total asset turnover shows a slight decline after peaking at 0.7 in 2021 and 2022, dropping to 0.62 in 2023. The adjusted asset turnover, which generally shows higher values than the reported figures, follows a similar pattern but with a more pronounced decrease from 0.88 in 2021 to 0.71 in 2023. This trend suggests diminishing efficiency in using assets to generate sales when adjusted for goodwill.

Financial Leverage

There is a marked decrease in financial leverage over the period, both reported and adjusted. Reported leverage declined from 2.55 in 2019 to 1.7 in 2023, whereas adjusted leverage decreased from 4.12 to 1.88 in the same timeframe. The sharper decline in adjusted leverage implies that the company is reducing its reliance on debt or liabilities relative to equity more substantially once goodwill adjustments are factored into the analysis.

Return on Equity (ROE)

The reported ROE shows significant growth, increasing from 6.41% in 2019 to a peak of 30.74% in 2022 before slightly declining to 28.06% in 2023. Adjusted ROE figures are substantially higher, indicating that removing goodwill effects reveals much stronger equity returns, peaking at 48.41% in 2022 and then declining to 35.19% in 2023. This suggests the company experienced exceptional profitability improvements during these years, with the adjustment highlighting a more favorable equity performance.

Return on Assets (ROA)

Both reported and adjusted ROA reveal a consistent upward trend, reflecting enhanced asset efficiency. Reported ROA increased from 2.51% in 2019 to 16.52% in 2023; adjusted ROA ascended from 3.13% to 18.76% over the same period. The adjustment again shows higher returns, indicating that asset performance excluding goodwill is stronger and has improved steadily.

Overall Insights

The data indicates robust improvement in profitability ratios across the years, with adjusted figures emphasizing even stronger operational efficiency and returns after removing goodwill's impact. While asset turnover maintains moderate levels, its slight decline in recent years suggests attention may be needed on asset utilization. The notable reduction in financial leverage reflects a strategy towards a more conservative capital structure. Together, these trends portray a company that has significantly enhanced its profitability and financial stability, with goodwill adjustments revealing a clearer picture of underlying operational performance.

The financial data reveals a consistent upward trend in the net income figures over the five-year period. Reported net income attributable to ON Semiconductor Corporation increased from $211.7 million in 2019 to $2.18 billion in 2023. The adjusted net income followed a similar trajectory, with a slight divergence in 2022 where the adjusted figure ($2.23 billion) exceeded the reported net income ($1.90 billion), indicating some favorable adjustments during that year.

Regarding profitability, the reported net profit margin showed a significant improvement from 3.84% in 2019 to 26.46% in 2023. The margin exhibited a sharp increase particularly between 2020 and 2021, rising from 4.46% to 14.98%, and continued strong growth through 2022 and 2023. The adjusted net profit margin aligns closely with the reported margin, maintaining the same starting point and ultimate percentage in 2023. Notably, the adjusted margin in 2022 (26.81%) was higher than the reported margin (22.85%), again reflecting beneficial adjustments impacting profitability that year.

Overall, the data demonstrates substantial growth in both income and profitability, with adjusted results in 2022 suggesting some one-time or non-operational factors contributed positively to the company’s financial performance that year. The narrowing gap between reported and adjusted figures by 2023 implies a stabilization of earnings quality or fewer significant adjustments as the company matured through this period.

Total Assets

The reported total assets show a consistent upward trend over the five-year period, increasing from approximately 8.43 billion USD at the end of 2019 to about 13.22 billion USD by the end of 2023. This represents a substantial growth in the asset base. Similarly, the adjusted total assets, which exclude goodwill, also exhibit steady growth from around 6.77 billion USD in 2019 to approximately 11.64 billion USD in 2023, indicating expansion in the company's tangible and other non-goodwill assets.

Total Asset Turnover

The reported total asset turnover ratio exhibits fluctuations over the period. It started at 0.65 in 2019, dipped slightly to 0.61 in 2020, rebounded to 0.7 in 2021 and 2022, but then declined again to 0.62 in 2023. This suggests some volatility in how efficiently the company uses its assets to generate revenue when considering the total asset base, including goodwill.

Conversely, the adjusted total asset turnover, which considers assets net of goodwill, shows a generally higher and more variable trend. It began at 0.82 in 2019, declined to 0.75 in 2020, peaked at 0.88 in 2021, then decreased to 0.8 in 2022 and further to 0.71 in 2023. This pattern indicates that the company’s core asset base without goodwill has been employed with varying degrees of efficiency, with a notable peak in 2021 followed by a gradual reduction in turnover efficiency in the latter years.

Overall Insights

While the company has significantly expanded its asset base over the period analyzed, the efficiency of asset utilization, particularly when excluding goodwill, has experienced volatility with an overall downward trend in the most recent years. The divergence between reported and adjusted asset turnover ratios underscores the impact of goodwill on asset efficiency metrics, highlighting the importance of analyzing both perspectives for a comprehensive understanding of asset productivity.

The financial data reveals several notable trends over the five-year period from 2019 to 2023. Total assets, both reported and goodwill adjusted, exhibit a consistent and significant upward trajectory. Reported total assets increased from approximately 8.43 billion USD in 2019 to 13.22 billion USD in 2023, representing steady growth. Similarly, adjusted total assets also rose substantially, growing from about 6.77 billion USD in 2019 to 11.64 billion USD in 2023, reflecting an expanding asset base after adjustments.

Stockholders' equity shows a marked increase across the years for both reported and adjusted figures. Reported stockholders’ equity advanced from roughly 3.30 billion USD in 2019 to 7.78 billion USD in 2023, indicating strengthening equity financing and retention of earnings. Adjusted equity, which accounts for goodwill adjustments, also expanded significantly from 1.64 billion USD to 6.21 billion USD over the same period. The disparity between reported and adjusted equity figures suggests the presence of substantial goodwill on the balance sheet, with the adjustment bringing a more conservative equity valuation.

The financial leverage ratios, both reported and adjusted, demonstrate a declining trend, implying a progressive reduction in reliance on debt relative to equity. The reported financial leverage ratio decreased from 2.55 in 2019 to 1.70 in 2023, showing improved capitalization and potentially lower financial risk. The adjusted financial leverage ratio, which incorporates goodwill considerations, declined more sharply from 4.12 down to 1.88, indicating a notable strengthening in the company’s adjusted equity base compared to its liabilities.

Overall, these trends suggest a company experiencing growth in asset size and equity levels while simultaneously improving its capital structure by reducing leverage. The consistent increase in adjusted equity alongside declining adjusted leverage highlights improved financial health when excluding intangible asset impacts. The financial profile appears to be strengthening over time, which may enhance the company’s resilience and flexibility in funding operations and investments.

The financial data reveals several notable trends related to net income, equity, and return on equity (ROE) metrics over the five-year period.

Net Income

Reported net income increased substantially from 2019 through 2023, with a notable surge between 2020 and 2021, more than quadrupling in value. This positive trend continued with further growth in 2022 and a moderate increase in 2023. Adjusted net income closely mirrors the reported figures except in 2022, where it is reported higher, indicating adjustments that increased income recognition for that year.

Total Stockholders’ Equity

Reported equity values show a steady and strong upward trajectory across the entire period, more than doubling from 2019 to 2023. Adjusted equity follows a similar pattern but at consistently lower absolute values. The gap between reported and adjusted equity widens significantly over time, particularly evident by 2022 and 2023, suggesting that goodwill and other intangibles constitute an increasing portion of reported equity.

Return on Equity (ROE)

Reported ROE demonstrates a marked increase, moving from single-digit percentages in 2019 and 2020 to over 30% in 2022, followed by a slight decline in 2023. Adjusted ROE figures are consistently higher than the reported ones, reflecting the effect of excluding goodwill or other adjustments from equity. The adjusted ROE also follows a similar pattern, peaking in 2022 at over 48% before declining in 2023, but remaining considerably elevated compared to earlier years.

Overall, the company experienced significant growth in profitability and equity, with adjustments for goodwill resulting in markedly different equity bases and ROE calculations. The trends suggest improving operational performance and effective capital management, especially highlighted by the substantial rise in adjusted ROE. However, the divergence between reported and adjusted equity underscores the impact of intangible assets on the financial structure.

The financial data reveals significant growth and improvements in profitability and asset management over the five-year period.

Net Income

The reported net income attributable to the corporation increased steadily from 211.7 million USD in 2019 to 2.1837 billion USD in 2023. A notable surge occurred between 2020 and 2021, where net income more than quadrupled from 234.2 million to over 1 billion USD. Adjusted net income closely follows the same pattern, with a slight variation in 2022 where adjusted net income exceeds reported figures, indicating adjustments that increased earnings in that year.

Total Assets

Reported total assets showed consistent growth each year, expanding from approximately 8.43 billion USD in 2019 to 13.22 billion USD in 2023. Adjusted total assets, which exclude goodwill and other adjustments, also increased substantially but remain lower than reported figures each year. The difference between reported and adjusted asset values grew over time, suggesting either an accumulation of goodwill or other intangible assets.

Return on Assets (ROA)

Both reported and adjusted ROA displayed strong upward trends, reflecting improved profitability relative to asset bases. Reported ROA increased from 2.51% in 2019 to 16.52% in 2023, with a particularly steep rise between 2020 and 2021. Adjusted ROA was consistently higher than reported ROA, ranging from 3.13% to 21.46%, peaking in 2022 before slightly declining in 2023. This suggests that excluding goodwill and related adjustments provides a clearer view of asset efficiency, revealing even stronger returns on the core asset base.

Overall Insights

The company has demonstrated robust growth in net income and asset size over the analyzed period. Profitability relative to assets has improved markedly, especially when adjusted figures are considered, indicating operational enhancements and effective asset utilization. The divergence between reported and adjusted assets and returns highlights the importance of considering goodwill and intangible assets in assessing financial performance. The data suggests that the company’s underlying operations have become significantly more profitable over these years.