10:45 AM EDT, 07/29/2024 (MT Newswires) -- ON Semiconductor (ON) fiscal second-quarter results decreased year over year but topped market estimates, while the chipmaker issued an earnings outlook for the ongoing three-month period that matched analyst expectations at the midpoint.

Per-share adjusted earnings declined to $0.96 for the quarter ended June 28 from $1.33 the year before, but came in ahead of the Capital IQ-polled consensus of $0.92. Revenue dropped to $1.74 billion from $2.09 billion, but was just ahead of the Street's view for $1.73 billion. The stock jumped 13% in Monday's trading session.

An "ongoing inventory correction" in the automotive and industrial end markets, which made up 79% of overall revenue, drove the topline decline, Chief Financial Officer Thad Trent said during an earnings call, according to a Capital IQ transcript. "We expect to resume our growth trajectory as end customer inventory levels normalize."

Automotive revenue moved down 15% to $907 million while industrial revenue tumbled 23% to $468 million, Trent said on the call.

Business wise, power solutions revenue fell 15% to $835.2 million, while the analog and mixed signal segment fell 18% to $647.8 million. Revenue in the intelligent sensing group division slumped 22% to $252.2 million, according to the chipmaker.

The company's gross margin was 45.2% versus 47.4% in the 2023 quarter. ON Semiconductor carried out additional restructuring initiatives to improve its cost structure and support margins, Trent told analysts. In June, the company announced plans to consolidate nine sites and reduce its global workforce by about 1,000 employees.

For the ongoing three-month period, ON Semiconductor expects adjusted EPS to be in a range of $0.91 to $1.03, with the midpoint of $0.97 in line with the Street's current forecast. Revenue is pegged at between $1.7 billion and $1.8 billion, while the market is looking for $1.78 billion.

The chipmaker anticipates its gross margins to "benefit once demand begins to recover," according to Trent. "This, coupled with ramping of new products at accretive margins will allow us to achieve our long-term target of 53%," the CFO said.

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