Press Release: STMicroelectronics Reports 2020 Third Quarter Financial Results
-- Q3 net revenues $2.67 billion; gross margin 36.0%; operating margin
12.3%; net income $242 million
-- YTD net revenues $6.98 billion; gross margin 36.3%; operating margin
9.5%; net income $525 million
-- Business outlook at mid-point: Q4 net revenues $2.99 billion and gross
margin of 38.5%
Geneva, October 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
third quarter ended September 26, 2020. This press release also contains
non-U.S. GAAP measures (see Appendix for additional information).
ST reported third quarter net revenues of $2.67 billion, gross margin of
36.0%, operating margin of 12.3%, and net income of $242 million or
$0.26 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
-- "As we announced on October 1, 2020, our Q320 net revenues increased
27.8% sequentially, coming in 690 basis points above the high end of our
outlook range. This revenue performance was due to significantly better
than expected market conditions throughout the quarter. Demand for
Automotive products, our engaged customer programs in Personal
Electronics, as well as Microcontrollers, were the main factors that
contributed to this result. Third quarter gross margin came in at the
mid-point of our range, and includes about 140 basis points of
unsaturation charges.
-- "Looking at the fourth quarter, we expect sequential revenue growth of
about 12.0% at the mid-point. All product groups are expected to grow,
except the RF Communications sub-group. Our gross margin is expected to
be about 38.5%, including about 70 basis points of unsaturation charges.
-- "For the full year 2020, we now expect net revenues at the mid-point to
be about $9.97 billion, translating into 4.3% year-over-year growth, with
a double-digit operating margin performance."
Quarterly Financial Summary (U.S. GAAP)
(US$ m, except per share data) Q3 2020 Q2 2020 Q3 2019 Q/Q Y/Y
------------------------------- ------- ------- ------- ------- --------
Net Revenues $2,666 $2,087 $2,553 27.8% 4.4%
------------------------------- ------- ------- ------- ------- --------
Gross Profit $959 $730 $967 31.5% -0.8%
------------------------------- ------- ------- ------- ------- --------
Gross Margin 36.0% 35.0% 37.9% 100 bps -190 bps
------------------------------- ------- ------- ------- ------- --------
Operating Income $329 $106 $336 208.8% -2.0%
------------------------------- ------- ------- ------- ------- --------
Operating Margin 12.3% 5.1% 13.1% 720 bps -80 bps
------------------------------- ------- ------- ------- ------- --------
Net Income $242 $90 $302 169.1% -19.6%
------------------------------- ------- ------- ------- ------- --------
Diluted Earnings Per Share $0.26 $0.10 $0.34 160.0% -23.5%
------------------------------- ------- ------- ------- ------- --------
Third Quarter 2020 Summary Review
Net Revenues By Product Group (US$ Q3 Q2 Q3
m) 2020 2020 2019 Q/Q Y/Y
----------------------------------------- ------- ------- ------- ------- -------
Automotive and Discrete Group (ADG) 851 727 894 17.1% -4.9%
----------------------------------------- ------- ------- ------- ------- -------
Analog, MEMS and Sensors Group (AMS) 997 624 968 59.8% 3.0%
----------------------------------------- ------- ------- ------- ------- -------
Microcontrollers and Digital ICs Group
(MDG) 815 733 688 11.2% 18.6%
----------------------------------------- ------- ------- ------- ------- -------
Others 3 3 3 - -
----------------------------------------- ------- ------- ------- ------- -------
Total Net Revenues 2,666 2,087 2,553 27.8% 4.4%
----------------------------------------- ------- ------- ------- ------- -------
Net revenues totaled $2.67 billion, representing a year-over-year
increase of 4.4%. On a year-over-year basis, the Company recorded higher
sales in Microcontrollers, RF Communications, MEMS and Analog, partially
offset by lower sales in Automotive, Imaging and Power Discrete.
Year-over-year sales to OEMs increased 7.5%, offset in part by a
decrease of 3.4% to Distribution. On a sequential basis, net revenues
increased 27.8%, 690 basis points above the high-end of the Company's
guidance. All product groups reported double-digit increases in revenues
on a sequential basis.
Gross profit totaled $959 million, representing a year-over-year
decrease of 0.8%. Gross margin of 36.0% decreased 190 basis points
year-over-year, mainly due to price pressure and unsaturation charges.
Third quarter gross margin was aligned with the mid-point of the
Company's guidance.
Operating income decreased 2.0% to $329 million, compared to $336
million in the year-ago quarter. The Company's operating margin
decreased 80 basis points on a year-over-year basis to 12.3% of net
revenues, compared to 13.1% in the 2019 third quarter.
By product group, compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
-- Revenue decreased in both Automotive and in Power Discrete.
-- Operating profit decreased by 35.7% to $49 million. Operating margin was
5.8% compared to 8.5%.
Analog, MEMS and Sensors Group (AMS):
-- Revenue increased in MEMS and Analog and decreased in Imaging.
-- Operating profit decreased by 11.8% to $175 million. Operating margin was
17.5% compared to 20.5%.
Microcontrollers and Digital ICs Group (MDG):
-- Revenue increased in both Microcontrollers and in RF Communications
(former "Digital" sub-group).
-- Operating profit increased by 32.0% to $142 million. Operating margin was
17.4% compared to 15.7%.
Unused capacity charges are included under the group "Others".
Net income and diluted earnings per share decreased to $242 million and
$0.26, respectively, compared to $302 million and $0.34, respectively,
in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
Trailing 12 Months
------------- -------- -------- --------- --------------------------------
Q3 Q2 TTM
(US$ m) 2020 2020 Q3 2019 Q3 2020 Q3 2019 Change
------------- -------- -------- --------- --------- --------- ----------
Net cash
from
operating
activities 385 387 429 1,946 1,749 11.3%
------------- -------- -------- --------- --------- --------- ----------
Free cash
flow
(non-U.S.
GAAP) (25) 28 170 577 399 44.6%
------------- -------- -------- --------- --------- --------- ----------
Capital expenditure payments, net of proceeds from sales, were $319
million in the third quarter and $897 million for the year-to-date
period. In the year-ago quarter, capital expenditures, net, were $244
million.
Inventory at the end of the third quarter was $1.93 billion, up from
$1.79 billion in the prior year quarter. Day sales of inventory at
quarter-end was 103 days compared to 100 days in the prior year quarter.
After the cash outflow of $76 million for acquisitions to further
strengthen the Company's wireless connectivity capabilities, and $33
million of accreted interest paid to settle the 2022 Tranche A of the
convertible bond issued in 2017, free cash flow (non-U.S. GAAP) was
negative $25 million in the third quarter, compared to positive $170
million in the year-ago quarter.
In the third quarter, the Company paid cash dividends totaling $38
million.
ST's net financial position (non-U.S. GAAP) was $662 million at
September 26, 2020 compared to $570 million at June 27, 2020 and
reflected total liquidity of $3.53 billion and total financial debt of
$2.87 billion.
During the quarter, ST exercised the call option for the early
redemption of its 2022 Tranche A of the convertible bond issued in 2017.
As a consequence, bondholders exercised their conversion rights on the
total of $750 million of the Tranche A bond. ST net settled the bond,
mostly in the third quarter with the remaining small portion at the
beginning of Q4, by delivering $750 million in cash and about 11 million
shares from treasury shares. Simultaneously with the exercise of the
call option, ST issued a new $1.5 billion dual-tranche senior unsecured
convertible bond (Tranche A and Tranche B for $750 million each) due
2025 and 2027.
October 22, 2020 01:00 ET (05:00 GMT)
