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STMicroelectronics Reports 2021 Second Quarter Financial Results

STMicroelectronics Reports 2021 Second Quarter Financial Results

Geneva, July 29, 2021 - STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the second quarter ended July 3, 2021. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).

ST reported second quarter net revenues of $2.99 billion, gross margin of 40.5%, operating margin of 16.3%, and net income of $412 million or $0.44 diluted earnings per share.

Jean-Marc Chery, STMicroelectronics President & CEO, commented:

Quarterly Financial Summary (U.S. GAAP)

(US$ m, except per share data) Q2 2021 Q1 2021 Q2 2020 Q/Q Y/Y
Net Revenues $2,992 $3,016 $2,087 -0.8% 43.4%
Gross Profit $1,212 $1,175 $730 3.1% 66.1%
Gross Margin 40.5% 39.0% 35.0% 150 bps 550 bps
Operating Income $489 $440 $106 11.1% 358.8%
Operating Margin 16.3% 14.6% 5.1% 170 bps 1,120 bps
Net Income $412 $364 $90 13.1% 357.2%
Diluted Earnings Per Share $0.44 $0.39 $0.10 12.8% 340.0%

Second Quarter 2021 Summary Review

Net Revenues By Product Group (US$ m) Q2 2021 Q1 2021 Q2 2020 Q/Q Y/Y
Automotive and Discrete Group (ADG) 1,077 1,043 727 3.3% 48.2%
Analog, MEMS and Sensors Group (AMS) 1,013 1,083 624 -6.5% 62.3%
Microcontrollers and Digital ICs Group (MDG) 897 886 733 1.2% 22.3%
Others 5 4 3 - -
Total Net Revenues 2,992 3,016 2,087 -0.8% 43.4%


Net revenues
totaled $2.99 billion, a year-over-year increase of 43.4%. On a year-over-year basis, the Company recorded higher net sales in all product groups except the RF Communications sub-group. Year-over-year net sales to OEMs and Distribution increased 38.4% and 53.1%, respectively. On a sequential basis, net revenues decreased 0.8% but were 300 basis points above the mid-point of the Company’s guidance. ADG and MDG reported increases in net revenues on a sequential basis while AMS decreased.

Gross profit totaled $1.21 billion, a year-over-year increase of 66.1%. Gross margin of 40.5% increased 550 basis points year-over-year, mainly driven by lower unloading charges, manufacturing efficiencies, favorable pricing and improved product mix partially offset by negative currency effects, net of hedging. Second quarter gross margin was 100 basis points above the mid-point of the Company’s guidance mainly due to more favorable pricing and improved product mix.

Operating income increased 358.8% to $489 million, compared to $106 million in the year-ago quarter. The Company’s operating margin increased 1,120 basis points on a year-over-year basis to 16.3% of net revenues, compared to 5.1% in the 2020 second 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):

Net income and diluted earnings per share increased to $412 million and $0.44, respectively, compared to $90 million and $0.10, respectively, in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

        Trailing 12 Months
(US$ m) Q2 2021 Q1 2021 Q2 2020 Q2 2021 Q2 2020 TTM Change
Net cash from operating activities 602 682 387 2,591 1,990 30.2%
Free cash flow (non-U.S. GAAP) 125 261 28 873 772 13.1%

Capital expenditure payments, net of proceeds from sales, were $438 million in the second quarter. In the year-ago quarter, capital expenditures, net, were $312 million.

Inventory at the end of the second quarter was $1.97 billion, compared to $1.96 billion in the year-ago quarter. Day sales of inventory at quarter-end was 101 days compared to 130 days in the year-ago quarter.

Free cash flow (non-U.S. GAAP) was $125 million in the second quarter, up from $28 million in the year-ago quarter.

In the second quarter, the Company paid cash dividends to its shareholders totaling $52 million and executed a $156 million share buy-back, completing its $750 million share repurchase program launched on November 5, 2018. On July 1, 2021, the Company announced the launch of a new share buy-back program of up to $1,040 million to be executed within a 3-year period. 

ST’s net financial position (non-U.S. GAAP) was $1.08 billion at July 3, 2021 compared to $1.19 billion at April 3, 2021 and reflected total liquidity of $4.25 billion and total financial debt of $3.17 billion.

During the second quarter, ST exercised the call option for the early redemption of its 2024 Tranche B of the convertible bond issued in 2017. The settlement of the $750 million principal amount bond is expected to be completed in the third quarter.

Business Outlook

The Company’s guidance, at the mid-point, for the 2021 third quarter is:

Conference Call and Webcast Information

STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its second quarter 2021 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 August 13, 2021.

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. 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.

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.

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, 2020, as filed with the SEC on February 24, 2021. 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 more than 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 Berthier
Group VP, Investor Relations
Tel: +41 22 929 58 12
celine.berthier@st.com

MEDIA RELATIONS:
Alexis Breton
Corporate External Communications
Tel: + 33 6 59 16 79 08
alexis.breton@st.com

STMicroelectronics N.V.      
CONSOLIDATED STATEMENTS OF INCOME      
(in millions of U.S. dollars, except per share data ($))      
       
  Three months ended  
  July 3, June 27,  
  2021 2020  
  (Unaudited) (Unaudited)  
       
Net sales 2,985 2,084  
Other revenues 7 3  
NET REVENUES 2,992 2,087  
Cost of sales (1,780) (1,357)  
GROSS PROFIT 1,212 730  
Selling, general and administrative (323) (259)  
Research and development (444) (373)  
Other income and expenses, net 42 12  
Impairment, restructuring charges and other related closure costs 2 (4)  
Total operating expenses (723) (624)  
OPERATING INCOME 489 106  
Interest expense, net (8) (4)  
Other components of pension benefit costs (3) (3)  
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST 478 99  
Income tax expense (65) (8)  
NET INCOME 413 91  
Net income attributable to noncontrolling interest (1) (1)  
NET INCOME ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS 412 90  
       
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS                      0.46                      0.10  
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS                      0.44                      0.10  
       
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS 927.4 911.1  
       


STMicroelectronics N.V.      
CONSOLIDATED STATEMENTS OF INCOME      
(in millions of U.S. dollars, except per share data ($))      
       
  Six months ended  
  July 3, June 27,  
  2021 2020  
  (Unaudited) (Unaudited)  
       
Net sales                     5,995                    4,312  
Other revenues                          13                           6  
NET REVENUES                     6,008                    4,318  
Cost of sales                   (3,621)                  (2,743)  
GROSS PROFIT                     2,387                    1,575  
Selling, general and administrative                      (648)                     (529)  
Research and development                      (888)                     (748)  
Other income and expenses, net                          76                         48  
Impairment, restructuring charges and other related closure costs                            2                         (9)  
Total operating expenses                   (1,458)                  (1,238)  
OPERATING INCOME                        929                       337  
Interest expense, net                        (16)                         (3)  
Other components of pension benefit costs                          (5)                         (6)  
Gain (loss) on financial instruments, net                            2                            -  
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST                        910                       328  
Income tax expense                      (131)                       (47)  
NET INCOME                        779                       281  
Net (income) loss attributable to noncontrolling interest                          (3)                           1  
NET INCOME ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS                        776                       282  
       
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS                       0.86                      0.32  
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS                       0.84                      0.31  
       
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EPS 929.5 913.9  
       


       
STMicroelectronics N.V.      
CONSOLIDATED BALANCE SHEETS      
As at July 3, April 3, December 31,
In millions of U.S. dollars 2021 2021 2020
  (Unaudited) (Unaudited) (Audited)
ASSETS      
Current assets:      
Cash and cash equivalents 3,749 3,454 3,006 
Short-term deposits 500 573 581 
Marketable securities - 132 133 
Trade accounts receivable, net 1,571 1,418 1,465 
Inventories 1,970 1,843 1,841 
Other current assets 650 550 584 
Total current assets 8,440 7,970 7,610 
Goodwill 322 320 330 
Other intangible assets, net 442 434 445 
Property, plant and equipment, net 5,037 4,743 4,596 
Non-current deferred tax assets 688 717 739 
Long-term investments 10 10 10 
Other non-current assets 576 784 724 
  7,075 7,008 6,844 
Total assets 15,515 14,978 14,454 
       
LIABILITIES AND EQUITY      
Current liabilities:      
Short-term debt 872 837 795 
Trade accounts payable 1,366 1,281 1,166 
Other payables and accrued liabilities 975 1,003 966 
Dividends payable to stockholders 168 4 42 
Accrued income tax 95 75 84 
Total current liabilities 3,476 3,200 3,053 
Long-term debt 2,296 2,137 1,826 
Post-employment benefit obligations 497 490 506 
Long-term deferred tax liabilities 57 74 75 
Other long-term liabilities 473 461 488 
  3,323 3,162 2,895 
Total liabilities 6,799 6,362 5,948 
Commitment and contingencies      
Equity      
Parent company stockholders' equity       
Common stock (preferred stock: 540,000,000 shares authorized, not issued; common stock: Euro 1.04 par value, 1,200,000,000 shares authorized, 911,264,420 shares issued, 903,271,713 shares outstanding) 1,157 1,157 1,157 
Additional Paid-in Capital 3,174 3,127 3,062 
Retained earnings 4,053 3,963 3,599 
Accumulated other comprehensive income 571 559 723 
Treasury stock (300) (249) (93) 
Total parent company stockholders' equity 8,655 8,557 8,448 
Noncontrolling interest 61 59 58 
Total equity 8,716 8,616 8,506 
Total liabilities and equity 15,515 14,978 14,454 
       

   

       
STMicroelectronics N.V.      
       
SELECTED CASH FLOW DATA      
       
Cash Flow Data (in US$ millions) Q2 2021  Q1 2021  Q2 2020 
       
Net Cash from operating activities 602  682  387 
Net Cash used in investing activities (272)  (413)  (509) 
Net Cash from (used in) financing activities (35)  182  (117) 
Net Cash increase (decrease) 295  448  (238) 
        
Selected Cash Flow Data (in US$ millions) Q2 2021  Q1 2021  Q2 2020 
         
Depreciation & amortization 258  256  223 
Net payment for Capital expenditures (438)  (405)  (312) 
Dividends paid to stockholders (52)  (38)  (37) 
Change in inventories, net (122)  (32)  (175) 
       

Appendix
STMicroelectronics
Supplemental Financial Information

  Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020
Net Revenues By Market Channel (%)          
Total OEM 64% 67% 74% 74% 66%
Distribution 36% 33% 26% 26% 34%
           
€/$ Effective Rate 1.19 1.19 1.16 1.13 1.10
           
Product Group Data (US$ m)          
Automotive & Discrete Group (ADG)          
 - Net Revenues 1,077 1,043 953 851 727
 - Operating Income 102 85 94 49 16
Analog, MEMS & Sensors Group (AMS)          
 - Net Revenues 1,013 1,083 1,419 997 624
 - Operating Income 189 187 402 175 56
Microcontrollers & Digital ICs Group (MDG)          
 - Net Revenues 897 886 859 815 733
 - Operating Income 206 172 174 142 117
Others (a)          
 - Net Revenues 5 4 4 3 3
 - Operating Income (Loss) (8) (4) (13) (37) (83)
Total          
 - Net Revenues 2,992 3,016 3,235 2,666 2,087
 - Operating Income 489 440 657 329 106


  1. Net revenues of Others include revenues from sales assembly services and other revenues. Operating income (loss) of Others includes items such as unused capacity charges, including reduced manufacturing activity due to COVID-19, impairment, restructuring charges and other related closure costs, management reorganization costs, phase out and start-up costs of certain manufacturing facilities, and other unallocated expenses such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and other costs that are not allocated to product groups, as well as operating earnings of other products. Others includes:


(US$ m) Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020
Unused Capacity Charges - 2 17 38 64
Impairment & Restructuring Charges (2) - (1) 2 4

(Appendix – continued)
STMicroelectronics
Supplemental Non-U.S. GAAP Financial Information
U. 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, a non-U.S. GAAP measure, represents the difference between our total liquidity and our total financial debt. Our total liquidity includes cash and cash equivalents, restricted cash, short-term deposits, and marketable securities, and our total financial debt includes short-term debt 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. Our definition of Net Financial Position may differ from definitions used by other companies and therefore comparability may be limited.

(US$ m) Jul 3 2021 Apr 3 2021 Dec 31 2020 Sep 26 2020 Jun 27 2020
Cash and cash equivalents 3,749 3,454 3,006 2,714 1,800
Short term deposits 500 573 581 679 687
Marketable securities - 132 133 134 134
Total liquidity 4,249 4,159 3,720 3,527 2,621
Short-term debt (872) (837) (795) (983)(2) (879)(1)
Long-term debt(3) (2,296) (2,137) (1,826) (1,882) (1,172)
Total financial debt (3,168) (2,974) (2,621) (2,865) (2,051)
Net Financial Position 1,081 1,185 1,099 662 570

(1) 2022 Tranche A of the convertible bond issued in 2017 was reclassified to short-term debt in line with contractual terms.
(2) 2024 Tranche B of the convertible bond issued in 2017 was reclassified to short-term debt in line with contractual terms.
(3) Long-term debt contains standard conditions but does not impose minimum financial ratios. Also, committed credit facilities for $0.8 billion equivalent, are currently undrawn.

(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 and net 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. Our definition of Free Cash Flow may differ from definitions used by other companies.

(US$ m) Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020
Net cash from operating activities 602 682 922 385 387
Net cash used in investing activities (272) (413) (312) (400) (509)
Payment for purchase of (and proceeds from matured) marketable securities and net investment in short-term deposits (205) (8) (98) (10) 150
Free Cash Flow 125 261 512 (25) 28

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