PR No: C2954C
-- Q1 net revenues $2.23 billion; gross margin 37.9%; operating margin
10.4%; net income $192 million
-- Q1 net financial position(1) $668 million
-- Business outlook at mid-point: Q2 net revenues $2.0 billion and gross
margin of 34.6%
Geneva, April 22, 2020 - STMicroelectronics (NYSE: STM), a global
semiconductor leader serving customers across the spectrum of
electronics applications, reported U.S. GAAP financial results for the
first quarter ended March 28, 2020. This press release also contains
non-U.S. GAAP measures (see Appendix for additional information).
ST reported first quarter net revenues of $2.23 billion, gross margin of
37.9%, operating margin of 10.4%, and net income of $192 million or
$0.21 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
-- "In the first quarter of 2020, net revenues increased 7.5% year-over-year,
led by higher sales of our Imaging products and growth in Analog and
Microcontrollers, partially offset by lower sales in Automotive, Power
Discrete and Digital. Operating margin improved to 10.4% and net income
increased 7.9% to $192 million.
-- "Our revenues came in about 5% below the mid-point of our outlook when
entering the quarter. The COVID-19 outbreak and subsequent containment
measures by governments around the world brought challenges in our
manufacturing operations and, especially in the last few days of the
quarter, logistics. Our Q1 gross margin of 37.9% was largely in line with
our mid-point target.
-- "We exited the first quarter with a stable net financial position of $668
million, available liquidity of $2.7 billion and available credit
facilities of $1.1 billion.
-- "Our second quarter outlook is taking into account the declining demand
environment, especially in Automotive, as well as the ongoing operational
and logistics challenges due to current governmental regulations. We
anticipate that all of our manufacturing sites will be operational. Some
of them will run at reduced capacity, with unsaturation charges currently
estimated to be about 400 basis points.
-- "We will drive the Company based on a plan for FY20 revenues between $8.8
billion and $9.5 billion. We plan for growth in the second half over the
first half to be in the range of $340 million to $1.04 billion. Growth
will be driven by already engaged customer programs and the removal of
supply constraints. The growth range is linked to the evolution of the
market.
-- "We have reduced our CAPEX plan for 2020 from $1.5 billion to a range
between $1.0 billion to $1.2 billion.
-- "In response to the global COVID-19 pandemic, we will continue to ensure
the health and safety of all our employees and to execute our business
continuity plans, working with our customers, partners and the
communities where we operate."
Quarterly Financial Summary (U.S. GAAP)
(US$ m, except per share data) Q1 2020 Q4 2019 Q1 2019 Q/Q Y/Y
------------------------------- ------- ------- ------- -------- --------
Net Revenues $2,231 $2,754 $2,076 -19.0% 7.5%
------------------------------- ------- ------- ------- -------- --------
Gross Profit $846 $1,081 $818 -21.8% 3.5%
------------------------------- ------- ------- ------- -------- --------
Gross Margin 37.9% 39.3% 39.4% -140 bps -150 bps
------------------------------- ------- ------- ------- -------- --------
Operating Income $231 $460 $211 -49.8% 9.4%
------------------------------- ------- ------- ------- -------- --------
Operating Margin 10.4% 16.7% 10.2% -630 bps 20 bps
------------------------------- ------- ------- ------- -------- --------
Net Income $192 $392 $178 -51.0% 7.9%
------------------------------- ------- ------- ------- -------- --------
Diluted Earnings Per Share $0.21 $0.43 $0.20 -51.2% 5.0%
------------------------------- ------- ------- ------- -------- --------
(1) Non-U.S. GAAP. See Appendix for reconciliation to U.S. GAAP and
information explaining why the Company believes these measures are
important.
First Quarter 2020 Summary Review
Net Revenues By Product Group (US$ Q1 Q4 Q1
m) 2020 2019 2019 Q/Q Y/Y
----------------------------------------- ------- ------- ------- -------- --------
Automotive and Discrete Group (ADG) 753 924 903 -18.4% -16.6%
----------------------------------------- ------- ------- ------- -------- --------
Analog, MEMS and Sensors Group (AMS) 852 1,085 552 -21.5% 54.3%
----------------------------------------- ------- ------- ------- -------- --------
Microcontrollers and Digital ICs Group
(MDG) 623 742 617 -16.0% 1.0%
----------------------------------------- ------- ------- ------- -------- --------
Others 3 3 4 - -
----------------------------------------- ------- ------- ------- -------- --------
Total Net Revenues 2,231 2,754 2,076 -19.0% 7.5%
----------------------------------------- ------- ------- ------- -------- --------
Net revenues totaled $2.23 billion, representing a year-over-year
increase of 7.5%. On a year-over-year basis, the Company recorded higher
sales of Imaging, Analog and Microcontrollers, partially offset by lower
sales in Automotive, Power Discrete and Digital. Year-over-year sales to
OEMs increased 22.5% and to Distribution decreased 21.4%. On a
sequential basis, net revenues decreased 19.0%, about 5% below the
mid-point of our outlook when entering the quarter as the COVID-19
outbreak and subsequent containment measures by governments around the
world brought challenges in our manufacturing operations and, especially
in the last few days of the quarter, logistics. All product group
revenues declined on a sequential basis.
Gross profit totaled $846 million, representing a year-over-year
increase of 3.5%. Gross margin of 37.9% decreased 150 basis points
year-over-year, mainly impacted by price pressure and unsaturation
charges, including COVID-19 workforce related restrictions. First
quarter gross margin was 10 basis points lower than the mid-point of the
Company's guidance.
Operating income increased 9.4% to $231 million, compared to $211
million in the year-ago quarter. The Company's operating margin
increased 20 basis points on a year-over-year basis to 10.4% of net
revenues, compared to 10.2% in the 2019 first quarter.
By product group, compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
-- Revenue decreased in both Automotive and Power Discrete.
-- Operating profit decreased by 76.4% to $23 million. Operating margin was
3.0% compared to 10.6%.
Analog, MEMS and Sensors Group (AMS):
-- Revenue increased in Imaging and Analog and was substantially flat in
MEMS.
-- Operating profit increased by 313.1% to $177 million. Operating margin
was 20.8% compared to 7.8%.
Microcontrollers and Digital ICs Group (MDG):
-- Revenue increased in Microcontrollers and decreased in Digital ICs.
-- Operating profit decreased by 13.5% to $71 million. Operating margin was
11.5% compared to 13.4%.
Net income and diluted earnings per share increased to $192 million and
$0.21, respectively, compared to $178 million and $0.20, respectively,
in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
Trailing 12 Months
------------- -------- -------- --------- --------------------------------
Q1 Q4 TTM
(US$ m) 2020 2019 Q1 2019 Q1 2020 Q1 2019 Change
------------- -------- -------- --------- --------- --------- ----------
Net cash
from
operating
activities 399 775 341 1,927 1,730 11.4%
------------- -------- -------- --------- --------- --------- ----------
Free cash
flow
(non-U.S.
GAAP) 113 461 (67) 677 370 83.0%
------------- -------- -------- --------- --------- --------- ----------
Capital expenditure payments, net of proceeds from sales, were $266
million in the first quarter. In the year-ago quarter, capital
expenditures, net, were $322 million.
Inventory at the end of the quarter was $1.77 billion, at the same level
as the prior year quarter. Day sales of inventory at quarter-end was 116
days compared to 124 days in the prior year quarter.
Free cash flow (non-U.S. GAAP) was positive $113 million in the first
quarter, compared to negative $67 million in the year-ago quarter.
In the first quarter, the Company paid cash dividends totaling $53
million and executed a $62 million share buy-back as part of its
previously announced share repurchase program.
ST's net financial position (non-U.S. GAAP) was $668 million at March
28, 2020 compared to $672 million at December 31, 2019 and reflected
total liquidity of $2.71 billion and total financial debt of $2.04
billion.
April 22, 2020 01:00 ET (05:00 GMT)
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