STMicroelectronics reported U.S. GAAP financial results for the first quarter ended April 3, 2021. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported first quarter net revenues of $3.02 billion, gross margin of 39.0%, operating margin of 14.6%, and net income of $364 million or $0.39 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
· “In the first quarter of 2021, net revenues increased 35.2% year-over-year. All product groups contributed to this growth, on continued acceleration of demand globally. Operating margin improved 420 basis points to 14.6% and net income increased 89.6% to $364 million.
· “On a sequential basis, net revenues decreased 6.8%, 270 basis points above the mid-point of our outlook. Automotive and Power Discrete products and Microcontrollers increased sequentially, partially offset by Personal Electronics products.
· “ST’s second quarter outlook, at the mid-point, is for net revenues of $2.9 billion, increasing year-over-year by 39%, and decreasing sequentially by 3.8% due to usual seasonality in Personal Electronics; gross margin is expected to be about 39.5%.
· “We will drive the Company based on a plan for FY21 revenues of $12.1 billion, plus or minus $150 million, a year-over-year increase of 18.4% at the mid-point. This growth is expected to be driven by strong dynamics in all end markets we address and our engaged customer programs.
· “For 2021, we now plan to invest about $2.0 billion in CAPEX to support the strong market demand and our strategic initiatives.”
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) | Q1 2021 | Q4 2020 | Q1 2020 | Q/Q | Y/Y |
| Net Revenues | $3,016 | $3,235 | $2,231 | -6.8% | 35.2% |
| Gross Profit | $1,175 | $1,254 | $846 | -6.3% | 38.9% |
| Gross Margin | 39.0% | 38.8% | 37.9% | 20 bps | 110 bps |
| Operating Income | $440 | $657 | $231 | -33.0% | 90.3% |
| Operating Margin | 14.6% | 20.3% | 10.4% | – 570 bps | 420 bps |
| Net Income | $364 | $582 | $192 | -37.4% | 89.6% |
| Diluted Earnings Per Share | $0.39 | $0.63 | $0.21 | -38.1% | 85.7% |
- Non-U.S. GAAP. See Appendix for reconciliation to U.S. GAAP and information explaining why the Company believes these measures are important.
Net revenues totaled $3.02 billion, a year-over-year increase of 35.2%. 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 21.4% and 76.2%, respectively. On a sequential basis, net revenues decreased 6.8%, 270 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 $1.18 billion, a year-over-year increase of 38.9%. Gross margin of 39.0% increased 110 basis points year-over-year, mainly due to lower unloading charges, manufacturing efficiencies and improved mix partially offset by negative currency effects, net of hedging. First quarter gross margin was 50 basis points above the mid-point of the Company’s guidance mainly due to better product mix.
Operating income increased 90.3% to $440 million, compared to $231 million in the year-ago quarter. The Company’s operating margin increased 420 basis points on a year-over-year basis to 14.6% of net revenues, compared to 10.4% in the 2020 first quarter.
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 increased by 280.4% to $85 million. Operating margin was 8.2% compared to 3.0%.
Analog, MEMS and Sensors Group (AMS):
· Revenue increased in Analog, MEMS and Imaging.
· Operating profit increased by 5.4% to $187 million. Operating margin was 17.2% compared to 20.8%.
Microcontrollers and Digital ICs Group (MDG):
· Revenue increased in Microcontrollers and decreased in RF Communications.
· Operating profit increased by 140.5% to $172 million. Operating margin was 19.4% compared to 11.5%.
Net income and diluted earnings per share increased to $364 million and $0.39, respectively, compared to $192 million and $0.21, respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| Trailing 12 Months | ||||||
| (US$ m) | Q1 2021 | Q4 2020 | Q1 2020 | Q1 2021 | Q1 2020 | TTM Change |
| Net cash from operating activities | 682 | 922 | 399 | 2,376 | 1,927 | 23.3% |
| Free cash flow (non-U.S. GAAP) | 261 | 512 | 113 | 776 | 677 | 14.6% |
Capital expenditure payments, net of proceeds from sales, were $405 million in the first quarter. In the year-ago quarter, capital expenditures, net, were $266 million.
Inventory at the end of the first quarter was $1.84 billion, compared to $1.77 billion in the year-ago quarter. Day sales of inventory at quarter-end was 91 days compared to 118 days in the year-ago quarter.
Free cash flow(non-U.S. GAAP) was $261 million in the first quarter, up from $113 million in the year-ago quarter.
In the first quarter, the Company paid cash dividends to its shareholders totaling $38 million and executed a $156 million share buy-back as part of its previously announced share repurchase program.
ST’s net financial position (non-U.S. GAAP) was $1.19 billion at April 3, 2021 compared to $1.10 billion at December 31, 2020 and reflected total liquidity of $4.16 billion and total financial debt of $2.97 billion.
Business Outlook
The Company’s guidance, at the mid-point, for the 2021 second quarter is:
- Net revenues are expected to be $2.9 billion, a decrease of 3.8% sequentially, plus or minus 350 basis points;
- Gross margin of about 39.5%, plus or minus 200 basis points;
- This outlook is based on an assumed effective currency exchange rate of approximately $1.18 = €1.00 for the 2021 second quarter and includes the impact of existing hedging contracts.
- The second quarter will close on July 3, 2021.
The Company expects its 2021 CAPEX to be about $2 billion.
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its first 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 May 14, 2021.
