ON Semiconductor Corp. (NASDAQ:ON)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrates a significant upward trend over the five-year period. Starting at approximately $340.6 million in 2019, it decreases slightly in 2020 to around $262.8 million. However, from 2020 onwards, there is a sharp increase, with NOPAT rising to about $1.21 billion in 2021, followed by a further increase to roughly $1.99 billion in 2022, and reaching $2.07 billion in 2023. This pattern indicates strong profitability growth after the initial decline.

Invested Capital

Invested capital shows a steadily rising trend throughout the period. It starts at about $6.86 billion in 2019 and experiences moderate growth to approximately $6.89 billion in 2020. There is a more pronounced increase from 2020 to 2021, reaching around $7.56 billion. This growth continues more sharply to approximately $9.37 billion in 2022, and further to about $10.93 billion in 2023. The data suggests continuous expansion or increased resource allocation by the company over these years.

Return on Invested Capital (ROIC)

The return on invested capital exhibits notable variability with overall improvement followed by a slight decline in the final year. The ROIC starts at 4.97% in 2019 and declines to 3.81% in 2020. Thereafter, a significant improvement occurs, with ROIC rising sharply to 16.06% in 2021 and peaking at 21.26% in 2022. However, in 2023, the ROIC decreases slightly to 18.98%. This pattern reflects enhanced efficiency or profitability of invested capital after 2020, with a minor easing in returns during the last observed period.

The financial data reveals distinct trends in operational efficiency, capital turnover, tax effectiveness, and overall investment returns over the analyzed periods.

Operating Profit Margin (OPM)

The operating profit margin shows a marked upward trajectory from 7.62% in 2019 to 30.82% in 2023. This represents a significant improvement in operational profitability, particularly pronounced after 2020, with a steep increase in 2021 and continuing growth through 2023. Such an increase indicates better cost management or revenue enhancement strategies yielding higher profit per revenue unit.

Turnover of Capital (TO)

The turnover of capital ratio remains relatively stable with slight fluctuations, starting from 0.8 in 2019, dipping to 0.76 in 2020, peaking at 0.89 in 2021 and 2022, before decreasing again to 0.76 in 2023. This pattern suggests moderate variations in the efficiency with which capital is utilized to generate sales, without a clear sustained trend upward or downward.

1 – Effective Cash Tax Rate (CTR)

The effective cash tax rate, expressed here as the complement to 1, starts at 80.98% in 2019, improves to 74.37% in 2020, spikes sharply to 93.47% in 2021, and then stabilizes around 81.5% for 2022 and 2023. The spike in 2021 signifies a substantial change in the tax environment or tax planning effectiveness, followed by a return to levels closer to those observed initially.

Return on Invested Capital (ROIC)

The return on invested capital exhibits a strong growth trend, moving from 4.97% in 2019 to 18.98% in 2023. The most notable improvements occurred between 2020 and 2022, with an increase from 3.81% to a peak of 21.26%, followed by a slight decline in 2023. This indicates enhanced profitability from the company’s capital investments, reflecting improved capital allocation and operational performance.

Overall, the company demonstrates significant advances in profitability and capital returns, while maintaining relatively stable capital turnover. The fluctuations in the effective cash tax rate hint at changes in tax strategy or external tax factors affecting cash tax outflows. The substantial increase in operating profit margin and ROIC underscores strengthened operational and financial efficiency across recent years.

The financial data over the five-year period reveals notable trends in the company's profitability and revenue generation metrics.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT experienced a decrease from 420,556 thousand US$ in 2019 to 353,347 thousand US$ in 2020, indicating a dip in operating profitability during that year. However, from 2020 onward, there is a significant upward trend, with NOPBT rising sharply to 1,298,921 thousand US$ in 2021, then nearly doubling to 2,449,003 thousand US$ in 2022, and continuing to grow slightly to 2,543,672 thousand US$ in 2023. This pattern suggests a strong recovery followed by substantial improvement in operating profitability over the later years.

Revenue

Revenue displays a somewhat fluctuating trend. It started at 5,517,900 thousand US$ in 2019, declined to 5,255,000 thousand US$ in 2020, likely influenced by external challenges. Subsequently, the revenue increased considerably to 6,739,800 thousand US$ in 2021 and further to 8,326,200 thousand US$ in 2022, marking strong growth. However, in 2023, the revenue slightly declined to 8,253,000 thousand US$, possibly indicating market saturation or other limiting factors after prior strong growth.

Operating Profit Margin (OPM)

The operating profit margin remained relatively modest in 2019 at 7.62% and slightly decreased to 6.72% in 2020. This margin then improved significantly from 2021 onwards, rising to 19.27% and further to 29.41% in 2022, reaching 30.82% in 2023. This demonstrates a marked enhancement in operational efficiency or cost management, contributing to higher profitability relative to revenue over the period.

Overall, the data indicates that despite a downturn in 2020 affecting both revenue and profit, the company achieved a strong recovery with substantial increases in operating profit and margins from 2021 onward, accompanied by robust revenue growth until 2022 and slight stabilization in 2023. The continuous improvement in operating profit margin suggests enhanced control over expenses and improved operational performance contributing to the increased profitability.

The financial data over the five-year period reveals several notable trends in revenue, invested capital, and capital turnover for the company.

Revenue

Revenue experienced a decline from 2019 to 2020, decreasing from approximately $5.52 billion to $5.26 billion. Following this decline, there was a significant recovery and growth in revenue for the subsequent years. In 2021, revenue increased sharply to about $6.74 billion, continuing upward to reach a peak of $8.33 billion in 2022. However, in 2023, revenue slightly decreased to $8.25 billion, indicating a marginal contraction after the peak year.

Invested Capital

Invested capital showed a consistent increasing trend throughout the period. Starting at approximately $6.86 billion in 2019, invested capital increased gradually to around $6.89 billion in 2020 and further to $7.56 billion in 2021. The growth accelerated in 2022, reaching about $9.37 billion, and continued strongly into 2023, rising to approximately $10.93 billion. This steady increase suggests ongoing capital investments or asset accumulation by the company.

Turnover of Capital (TO)

The turnover of capital ratio, which measures the efficiency of capital utilization, generally trends downward over the period. In 2019, the ratio was 0.80, and it slightly decreased to 0.76 in 2020. It improved in 2021 and 2022 to 0.89, signifying better capital efficiency during these years. However, by 2023, the ratio returned to 0.76, its lowest point in the observed period. This decline indicates that despite increased invested capital, the company generated less revenue per unit of capital in the latest year compared to prior years.

Overall, while revenue and invested capital both increased substantially from 2020 onwards, the turnover of capital ratio suggests a decrease in capital efficiency in the most recent year, possibly reflecting challenges in optimizing asset use or changes in operational factors. The slight dip in revenue alongside the highest level of invested capital in 2023 indicates a potential need to assess capital allocation strategies and operational effectiveness going forward.

The financial data over the five-year period indicates significant fluctuations and notable trends in the company's tax payments, profitability before taxes, and effective cash tax rate.

Cash Operating Taxes

The cash operating taxes rose gradually from 79,994 thousand USD in 2019 to 90,557 thousand USD in 2020, followed by a slight decline to 84,769 thousand USD in 2021. A substantial increase occurred in 2022 when cash operating taxes surged to 457,073 thousand USD and then marginally increased further to 470,018 thousand USD in 2023. This sharp increase in the last two years suggests a significant change in taxable income or tax regulations impacting the company's tax payments.

Net Operating Profit Before Taxes (NOPBT)

There was a decrease in NOPBT from 420,556 thousand USD in 2019 to 353,347 thousand USD in 2020. However, this was followed by a sharp increase to 1,298,921 thousand USD in 2021, and the upward trend continued strongly, reaching 2,449,003 thousand USD in 2022 and slightly higher at 2,543,672 thousand USD in 2023. This pattern highlights significant growth in operational profitability, especially from 2021 onwards.

Effective Cash Tax Rate (CTR)

The effective cash tax rate shows variability throughout the period. Starting at 19.02% in 2019, it rose to 25.63% in 2020 before dropping sharply to 6.53% in 2021. Then, it increased again to 18.66% in 2022 and slightly decreased to 18.48% in 2023. The low tax rate in 2021 corresponds with the spike in profitability, suggesting possible tax benefits or deferred tax strategies employed during that year. The subsequent rise towards the historical average rates indicates normalization of tax expenses in relation to operating profits.

Overall, the data reflects a period of strong growth in profitability starting in 2021, accompanied by substantial increases in cash operating taxes in the last two years. The effective cash tax rate fluctuates but trends toward a normalized range after a notable dip in 2021. These trends suggest evolving operational performance and tax planning strategies impacting the company's financial outcomes.