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Share Name | Share Symbol | Market | Type |
---|---|---|---|
STMicroelectronics NV | NYSE:STM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.80 | 2.07% | 39.54 | 39.38 | 38.70 | 39.18 | 2,937,645 | 22:30:09 |
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 $0.26 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
Quarterly Financial Summary (U.S. GAAP)
(US$ 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 | $0.34 | 160.0% | -23.5% |
Third Quarter 2020 Summary Review
Net Revenues By Product Group (US$ m) | Q3 2020 | Q2 2020 | Q3 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):
Analog, MEMS and Sensors Group (AMS):
Microcontrollers and Digital ICs Group (MDG):
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 $0.34, respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
Trailing 12 Months | ||||||
(US$ m) | Q3 2020 | Q2 2020 | Q3 2019 | Q3 2020 | Q3 2019 | TTM 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.
Business Outlook
The Company’s guidance, at the mid-point, for the 2020 fourth quarter is:
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its third quarter 2020 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST’s website, http://investors.st.com, and will be available for replay until November 6, 2020.
Use of Supplemental Non-U.S. GAAP Financial Information
This press release contains supplemental non-U.S. GAAP financial information.
Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies.
See the Appendix of this press release for a reconciliation of the Company’s non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with U.S. GAAP.
Forward-looking Information
Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management’s current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those anticipated by such statements, due to, among other factors:
Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward looking terminology, such as “believes,” “expects,” “may,” “are expected to,” “should,” “would be,” “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.
Some of these risk factors are set forth and are discussed in more detail in “Item 3. Key Information — Risk Factors” included in our Annual Report on Form 20-F for the year ended December 31, 2019, as filed with the SEC on February 26, 2020. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed, or expected. We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.
About STMicroelectronics
At ST, we are 46,000 creators and makers of semiconductor technologies mastering the semiconductor supply chain with state-of-the-art manufacturing facilities. An independent device manufacturer, we work with our 100,000 customers and thousands of partners to design and build products, solutions, and ecosystems that address their challenges and opportunities, and the need to support a more sustainable world. Our technologies enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of the Internet of Things and 5G technology. Further information can be found at www.st.com.
For further information, please contact:
INVESTOR RELATIONS:Céline BerthierGroup VP, Investor RelationsTel: +41 22 929 58 12celine.berthier@st.com
MEDIA RELATIONS:Alexis BretonHead of Corporate External CommunicationsTel: +33 6 59 16 79 08alexis.breton@st.com
STMicroelectronics N.V. | ||
CONSOLIDATED STATEMENTS OF INCOME | ||
(in millions of U.S. dollars, except per share data ($)) | ||
Three months ended | ||
September 26, | September 28, | |
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
Net sales | 2,663 | 2,547 |
Other revenues | 3 | 6 |
NET REVENUES | 2,666 | 2,553 |
Cost of sales | (1,707) | (1,586) |
GROSS PROFIT | 959 | 967 |
Selling, general and administrative | (273) | (267) |
Research and development | (379) | (362) |
Other income and expenses, net | 24 | (2) |
Impairment, restructuring charges and other related closure costs | (2) | - |
Total operating expenses | (630) | (631) |
OPERATING INCOME | 329 | 336 |
Interest expense, net | (9) | (1) |
Other components of pension benefit costs | (2) | (5) |
Income (loss) on equity-method investments | 1 | - |
Loss on financial instruments, net | (26) | - |
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST | 293 | 330 |
Income tax expense | (50) | (28) |
NET INCOME | 243 | 302 |
Net income attributable to noncontrolling interest | (1) | - |
NET INCOME ATTRIBUTABLE TO PARENT COMPANY | 242 | 302 |
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS | 0.27 | 0.34 |
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS | 0.26 | 0.34 |
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS | 921.5 | 900.1 |
STMicroelectronics N.V. | ||
CONSOLIDATED STATEMENTS OF INCOME | ||
(in millions of U.S. dollars, except per share data ($)) | ||
Nine months ended | ||
September 26, | September 28, | |
2020 | 2019 | |
(Unaudited) | (Unaudited) | |
Net sales | 6,975 | 6,779 |
Other revenues | 9 | 23 |
NET REVENUES | 6,984 | 6,802 |
Cost of sales | (4,449) | (4,187) |
GROSS PROFIT | 2,535 | 2,615 |
Selling, general and administrative | (802) | (808) |
Research and development | (1,126) | (1,111) |
Other income and expenses, net | 71 | 49 |
Impairment, restructuring charges and other related closure costs | (12) | (2) |
Total operating expenses | (1,869) | (1,872) |
OPERATING INCOME | 666 | 743 |
Interest income (expense), net | (12) | 2 |
Other components of pension benefit costs | (8) | (12) |
Income (loss) on equity-method investments | 1 | 1 |
Loss on financial instruments, net | (26) | - |
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST | 621 | 734 |
Income tax expense | (96) | (93) |
NET INCOME | 525 | 641 |
Net income attributable to noncontrolling interest | - | (1) |
NET INCOME ATTRIBUTABLE TO PARENT COMPANY | 525 | 640 |
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS | 0.59 | 0.71 |
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS | 0.57 | 0.71 |
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS | 916.4 | 901.6 |
STMicroelectronics N.V. | |||
CONSOLIDATED BALANCE SHEETS | |||
As at | September 26, | June 27, | December 31, |
In millions of U.S. dollars | 2020 | 2020 | 2019 |
(Unaudited) | (Unaudited) | (Audited) | |
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | 2,714 | 1,800 | 2,597 |
Restricted cash | - | - | 10 |
Short-term deposits | 679 | 687 | 4 |
Marketable securities | 134 | 134 | 133 |
Trade accounts receivable, net | 1,433 | 1,171 | 1,380 |
Inventories | 1,931 | 1,963 | 1,691 |
Other current assets | 504 | 448 | 442 |
Total current assets | 7,395 | 6,203 | 6,257 |
Goodwill | 321 | 197 | 162 |
Other intangible assets, net | 422 | 312 | 299 |
Property, plant and equipment, net | 4,312 | 4,194 | 4,007 |
Non-current deferred tax assets | 726 | 710 | 695 |
Long-term investments | 10 | 11 | 11 |
Other non-current assets | 580 | 535 | 437 |
6,371 | 5,959 | 5,611 | |
Total assets | 13,766 | 12,162 | 11,868 |
LIABILITIES AND EQUITY | |||
Current liabilities: | |||
Short-term debt | 983 | 879 | 173 |
Trade accounts payable | 1,091 | 1,079 | 950 |
Other payables and accrued liabilities | 865 | 829 | 831 |
Dividends payable to stockholders | 82 | 119 | 58 |
Accrued income tax | 105 | 69 | 52 |
Total current liabilities | 3,126 | 2,975 | 2,064 |
Long-term debt | 1,882 | 1,172 | 1,899 |
Post-employment benefit obligations | 464 | 447 | 445 |
Long-term deferred tax liabilities | 80 | 38 | 19 |
Other long-term liabilities | 470 | 339 | 330 |
2,896 | 1,996 | 2,693 | |
Total liabilities | 6,022 | 4,971 | 4,757 |
Commitment and contingencies | |||
Equity | |||
Parent company stockholders' equity | |||
Common stock (preferred stock: 540,000,000 shares authorized, not issued; common stock: Euro 1.04 nominal value, 1,200,000,000 shares authorized, 911,239,420 shares issued, 903,184,398 shares outstanding) | 1,157 | 1,157 | 1,157 |
Capital surplus | 3,057 | 3,061 | 2,992 |
Retained earnings | 3,019 | 2,797 | 2,747 |
Accumulated other comprehensive income | 576 | 481 | 475 |
Treasury stock | (133) | (372) | (328) |
Total parent company stockholders' equity | 7,676 | 7,124 | 7,043 |
Noncontrolling interest | 68 | 67 | 68 |
Total equity | 7,744 | 7,191 | 7,111 |
Total liabilities and equity | 13,766 | 12,162 | 11,868 |
STMicroelectronics N.V. | |||
SELECTED CASH FLOW DATA | |||
Cash Flow Data (in US$ millions) | Q3 2020 | Q2 2020 | Q3 2019 |
Net Cash from operating activities | 385 | 387 | 429 |
Net Cash used in investing activities | (400) | (509) | (59) |
Net Cash from (used in) financing activities | 928 | (117) | (129) |
Net Cash increase (decrease) | 914 | (238) | 226 |
Selected Cash Flow Data (in US$ millions) | Q3 2020 | Q2 2020 | Q3 2019 |
Depreciation & amortization | 234 | 223 | 216 |
Net payment for Capital expenditures | (319) | (312) | (244) |
Dividends paid to stockholders | (38) | (37) | (54) |
Change in inventories, net | 60 | (175) | 77 |
AppendixSTMicroelectronicsSupplemental Financial Information
Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | |
Net Revenues By Market Channel (%) | |||||
Total OEM | 74% | 66% | 75% | 72% | 72% |
Distribution | 26% | 34% | 25% | 28% | 28% |
€/$ Effective Rate | 1.13 | 1.10 | 1.11 | 1.12 | 1.14 |
Product Group Data (US$ m) | |||||
Automotive & Discrete Group (ADG) | |||||
- Net Revenues | 851 | 727 | 753 | 924 | 894 |
- Operating Income | 49 | 16 | 23 | 113 | 76 |
Analog, MEMS & Sensors Group (AMS) | |||||
- Net Revenues | 997 | 624 | 852 | 1,085 | 968 |
- Operating Income | 175 | 56 | 177 | 281 | 198 |
Microcontrollers & Digital ICs Group (MDG) | |||||
- Net Revenues | 815 | 733 | 623 | 742 | 688 |
- Operating Income | 142 | 117 | 71 | 119 | 108 |
Others (a) | |||||
- Net Revenues | 3 | 3 | 3 | 3 | 3 |
- Operating Income (Loss) | (37) | (83) | (40) | (53) | (46) |
Total | |||||
- Net Revenues | 2,666 | 2,087 | 2,231 | 2,754 | 2,553 |
- Operating Income | 329 | 106 | 231 | 460 | 336 |
|
(US$ m) | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 |
Unused Capacity Charges | 38 | 64 | 34 | 29 | 28 |
Impairment & Restructuring Charges | 2 | 4 | 5 | 3 | - |
(Appendix – continued)STMicroelectronicsSupplemental Non-U.S. GAAP Financial InformationU. S. GAAP – Non-U.S. GAAP Reconciliation
The supplemental non-U.S. GAAP information presented in this press release is unaudited and subject to inherent limitations. Such non-U.S. GAAP information is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for U.S. GAAP measurements. Also, our supplemental non-U.S. GAAP financial information may not be comparable to similarly titled non-U.S. GAAP measures used by other companies. Further, specific limitations for individual non-U.S. GAAP measures, and the reasons for presenting non-U.S. GAAP financial information, are set forth in the paragraphs below. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.
The Company believes that these non-U.S. GAAP financial measures provide useful information for investors and management because they offer, when read in conjunction with the Company’s U.S. GAAP financials, (i) the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results, (ii) the ability to better identify trends in the Company’s business and perform related trend analysis, and (iii) to facilitate a comparison of the Company’s results of operations against investor and analyst financial models and valuations, which may exclude these items.
Net Financial Position (non-U.S. GAAP measure)
Net Financial Position, not a U.S. GAAP measure, represents the difference between our total liquidity and our total financial debt. Our total financial resources include cash and cash equivalents, marketable securities, restricted cash and short-term deposits, and our total financial debt includes short-term debt, including bank overdrafts, and long-term debt, as represented in our Consolidated Balance Sheets.
We believe our Net Financial Position provides useful information for investors and management because it gives evidence of our global position either in terms of net indebtedness or net cash by measuring our capital resources based on cash and cash equivalents, restricted cash, short-term deposits and marketable securities and the total level of our financial indebtedness. In addition, our definition of Net Financial Position may differ from definitions used by other companies and therefore comparability may be limited.
(US$ m) | Sep 26 2020 | Jun 27 2020 | Mar 28 2020 | Dec 31 2019 | Sep 28 2019 |
Cash and cash equivalents | 2,714 | 1,800 | 2,028 | 2,597 | 2,345 |
Restricted cash | - | - | 10 | 10 | 60 |
Short term deposits | 679 | 687 | 537 | 4 | - |
Marketable securities | 134 | 134 | 135 | 133 | 133 |
Total liquidity | 3,527 | 2,621 | 2,710 | 2,744 | 2,538 |
Short-term debt | (983)(2) | (879)(1) | (171) | (173) | (171) |
Long-term debt(3) | (1,882) | (1,172) | (1,871) | (1,899) | (2,019) |
Total financial debt | (2,865) | (2,051) | (2,042) | (2,072) | (2,190) |
Net Financial Position | 662 | 570 | 668 | 672 | 348 |
(Appendix – continued)STMicroelectronics
Free Cash Flow (non-U.S. GAAP measure)
Free Cash Flow, which is a non-U.S. GAAP measure, is defined as (i) net cash from operating activities plus (ii) net cash used in investing activities, excluding payment for purchases of (and proceeds from matured) marketable securities and net investment in short-term deposits, which are considered as temporary financial investments. The result of this definition is ultimately net cash from operating activities plus payment for purchase and proceeds from sale of tangible, intangible and financial assets, proceeds received in the sale of businesses and cash paid for business acquisitions.
We believe Free Cash Flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operations. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities.
Free Cash Flow reconciles with the total cash flow and the net cash increase (decrease) by including the payment for purchases of (and proceeds from matured) marketable securities and net investment in short-term deposits, the net cash from (used in) financing activities and the effect of changes in exchange rates. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.
(US$ m) | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 |
Net cash from operating activities | 385 | 387 | 399 | 775 | 429 |
Net cash used in investing activities | (400) | (509) | (821) | (314) | (59) |
Payment for purchase of (and proceeds from matured) marketable securities and net investment in short-term deposits | (10) | 150 | 535 | - | (200) |
Free Cash Flow | (25) | 28 | 113 | 461 | 170 |
Attachment
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