- Q4 net revenues $3.24 billion; gross margin 38.8%; operating margin 20.3%; net income $582 million
- FY net revenues $10.22 billion; gross margin 37.1%; operating margin 12.9%; net income $1.11 billion
- Business outlook at mid-point: Q1 net revenues of $2.93 billion and gross margin of 38.5%
STMicroelectronics reported U.S. GAAP financial results for the fourth quarter ended December 31, 2020. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported fourth quarter net revenues of $3.24 billion, gross margin of 38.8%, operating margin of 20.3%, and net income of $582 million or $0.63 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
“As we announced on January 8, 2021, our Q420 net revenues increased 21.3% sequentially, 580 basis points above the high end of our outlook range. Our engaged customer programs in Personal Electronics, as well as continuous acceleration in demand, especially of Automotive products and Microcontrollers, were the main factors that contributed to this result. Fourth quarter gross margin was 30 basis points above the mid-point of our outlook range. On a sequential basis, our operating margin was up 800 basis points to 20.3% and free cash flow increased to $512 million.
· “Based upon a stronger than expected second half of 2020, full year revenues increased 6.9% to $10.22 billion, with an operating margin of 12.9%.
· “ST’s first quarter outlook, at the mid-point, is for net revenues of $2.93 billion, increasing year-over-year by 31.2% and decreasing sequentially by 9.5%; gross margin is expected to be about 38.5%.
· “For 2021, we plan to invest about $1.8 billion to $2.0 billion in CAPEX to support the strong market demand and our strategic initiatives.”
Quarterly Financial Summary (U.S. GAAP)
|(US$ m, except per share data)||Q4 2020||Q3 2020||Q4 2019||Q/Q||Y/Y|
|Gross Margin||38.8%||36.0%||39.3%||280 bps||-50 bps|
|Operating Margin||20.3%||12.3%||16.7%||800 bps||360 bps|
|Diluted Earnings Per Share||$0.63||$0.26||$0.43||142.3%||46.5%|
Annual Financial Summary (U.S. GAAP)
|(US$ m, except earnings per share data)||FY2020||FY2019||Y/Y|
|Gross Margin||37.1%||38.7%||-160 bps|
|Operating Margin||12.9%||12.6%||30 bps|
|Diluted Earnings Per Share||$1.20||$1.14||5.3%|
Fourth Quarter 2020 Summary Review
|Net Revenues By Product Group (US$ m)||Q4 2020||Q3 2020||Q4 2019||Q/Q||Y/Y|
|Automotive and Discrete Group (ADG)||953||851||924||12.1%||3.2%|
|Analog, MEMS and Sensors Group (AMS)||1,419||997||1,085||42.4%||30.8%|
|Microcontrollers and Digital ICs Group (MDG)||859||815||742||5.3%||15.7%|
|Total Net Revenues||3,235||2,666||2,754||21.3%||17.5%|
Net revenues totaled $3.24 billion, representing a year-over-year increase of 17.5%. On a year-over-year basis, the Company recorded higher net sales in all product groups except the RF Communications (former “Digital”) sub-group. Year-over-year net sales to OEMs and Distribution increased 19.8% and 11.4%, respectively. On a sequential basis, net revenues increased 21.3%, 580 basis points above the high end of the Company’s guidance. All product groups except the RF Communications sub-group reported increases in net revenues on a sequential basis.
Gross profit totaled $1.25 billion, representing a year-over-year increase of 16.0%. Gross margin of 38.8% decreased 50 basis points year-over-year, mainly due to usual price pressure and negative currency effects, net of hedging, partially offset by improved mix and lower unloading charges. Fourth quarter gross margin was 30 basis points above the mid-point of the Company’s guidance.
Operating income increased 42.7% to $657 million, compared to $460 million in the year-ago quarter. The Company’s operating margin increased 360 basis points on a year-over-year basis to 20.3% of net revenues, compared to 16.7% in the 2019 fourth quarter. Fourth quarter other income and expenses, net, was $131 million compared to $54 million to the year-ago quarter mainly due to a non-recurrent favorable impact mainly associated with the Important Projects of Common European Interest (IPCEI) R&D grants catch-up.
By product group, compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
- Revenue increased in both Automotive and in Power Discrete.
- Operating profit decreased by 16.4% to $94 million. Operating margin was 9.9% compared to 12.2%.
Analog, MEMS and Sensors Group (AMS):
- Revenue increased in Imaging, Analog and MEMS.
- Operating profit increased by 42.9% to $402 million. Operating margin was 28.3% compared to 25.9%.
Microcontrollers and Digital ICs Group (MDG):
- Revenue increased in Microcontrollers and decreased in RF Communications.
- Operating profit increased by 46.4% to $174 million. Operating margin was 20.3% compared to 16.0%.
Unused capacity charges are included under the group “Others”.
Net income and diluted earnings per share increased to $582 million and $0.63, respectively, compared to $392 million and $0.43, respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
|Trailing 12 Months|
|(US$ m)||Q4 2020||Q3 2020||Q4 2019||Q4 2020||Q4 2019||TTM Change|
|Net cash from operating activities||922||385||775||2,093||1,869||12.0%|
|Free cash flow (non-U.S. GAAP)||512||(25)||461||627||497||26.2%|
Capital expenditure payments, net of proceeds from sales, were $381 million in the fourth quarter and $1.28 billion for the full year 2020. In the year-ago quarter, capital expenditures, net, were $236 million.
Inventory at the end of the fourth quarter was $1.84 billion, up from $1.69 billion in the year-ago quarter. Day sales of inventory at quarter-end was 84 days compared to 90 days in the year-ago quarter.
Free cash flow (non-U.S. GAAP) was $512 million in the fourth quarter, compared to $461 million in the year-ago quarter.
In the fourth quarter, the Company paid cash dividends to its stockholders totaling $40 million.
ST’s net financial position (non-U.S. GAAP) was $1.1 billion at December 31, 2020 compared to $662 million at September 26, 2020 and reflected total liquidity of $3.72 billion and total financial debt of $2.62 billion.
The Company’s guidance, at the mid-point, for the 2021 first quarter is:
- Net revenues are expected to be $2.93 billion, a decrease of 9.5% sequentially, plus or minus 350 basis points;
- Gross margin of about 38.5%, plus or minus 200 basis points;
- This outlook is based on an assumed effective currency exchange rate of approximately $1.20 = €1.00 for the 2021 first quarter and includes the impact of existing hedging contracts.
- The first quarter will close on April 3, 2021.
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its fourth 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 February 12, 2021