- 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%
ST reported third quarter net revenues of
- “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 inPersonal 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
$9.97 billion , translating into 4.3% year-over-year growth, with a double-digit operating margin performance.”
Quarterly Financial Summary (
(US$ m, except per share data) | Q3 2020 | Q2 2020 | Q3 2019 | Q/Q | Y/Y |
Net Revenues | 27.8% | 4.4% | |||
Gross Profit | 31.5% | -0.8% | |||
Gross Margin | 36.0% | 35.0% | 37.9% | 100 bps | -190 bps |
Operating Income | 208.8% | -2.0% | |||
Operating Margin | 12.3% | 5.1% | 13.1% | 720 bps | -80 bps |
Net Income | 169.1% | -19.6% | |||
Diluted Earnings Per Share | 160.0% | -23.5% |
Third Quarter 2020 Summary Review
Q3 2020 | Q2 2020 | Q3 2019 | Q/Q | Y/Y | |
Automotive and | 851 | 727 | 894 | 17.1% | -4.9% |
Analog, | 997 | 624 | 968 | 59.8% | 3.0% |
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
Gross profit totaled
Operating income decreased 2.0% to
By product group, compared with the year-ago quarter:
Automotive and
- 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,
- 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%.
- Revenue increased in both Microcontrollers and in
RF Communications (former “Digital” sub-group). - Operating profit increased by 32.0% to
$142 million . Operating margin was 17.4% compared to 15.7%.
Unused capacity charges are included under the group “Others”.
Net income and diluted earnings per share decreased to
Cash Flow and Balance Sheet Highlights
Trailing 12 Months | ||||||
(US$ 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- | (25) | 28 | 170 | 577 | 399 | 44.6% |
Capital expenditure payments, net of proceeds from sales, were
Inventory at the end of the third quarter was
After the cash outflow of
In the third quarter, the Company paid cash dividends totaling
ST’s net financial position (non-
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
Business Outlook
The Company’s guidance, at the mid-point, for the 2020 fourth quarter is:
- Net revenues are expected to be
$2.99 billion , an increase of 12.0% 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
$1.15 = €1.00 for the 2020 fourth quarter and includes the impact of existing hedging contracts. - The fourth quarter will close on
December 31, 2020 .
Conference Call and Webcast Information
Use of Supplemental Non-
This press release contains supplemental non-
Readers are cautioned that these measures are unaudited and not prepared in accordance with
See the Appendix of this press release for a reconciliation of the Company’s non-
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:
- changes in global trade policies, including the adoption and expansion of tariffs and trade barriers, that could affect the macro-economic environment and adversely impact the demand for our products;
- uncertain macro-economic and industry trends, which may impact end-market demand for our products;
- customer demand that differs from projections;
- the ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
- changes in economic, social, public health, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macroeconomic or regional events, military conflicts, social unrest, labor actions, or terrorist activities;
- unanticipated events or circumstances, which may impact our ability to execute our plans and/or meet the objectives of our R&D and manufacturing programs, which benefit from public funding;
- the Brexit vote and the impact of the withdrawal of the
U.K. may adversely affect business activity, political stability and economic conditions in theU.K. , theEurozone , the EU and elsewhere. TheU.K. withdrawal from the EU took place onJanuary 31, 2020 and theUK majority government is expected to complete Brexit even if no formal withdrawal agreement is in place with the EU by the end of the transition period running untilDecember 31, 2020 . The specific terms of theU.K. withdrawal from the EU are still uncertain and while we do not have material operations in theU.K. and have not experienced any material impact from Brexit on our underlying business to date, we cannot predict its future implications; - financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
- the loading, product mix, and manufacturing performance of our production facilities and/or our required volume to fulfill capacity reserved with suppliers or third party manufacturing providers;
- availability and costs of equipment, raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations;
- the functionalities and performance of our IT systems, which are subject to cybersecurity threats and which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers or suppliers;
- theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of global and local privacy legislation, including the EU’s General Data Protection Regulation (“GDPR”);
- the impact of intellectual property (“IP”) claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
- changes in our overall tax position as a result of changes in tax rules, new or revised legislation, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
- variations in the foreign exchange markets and, more particularly, the
U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations; - the outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
- product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts;
- natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, the effects of climate change, health risks and epidemics such as the COVID-19 in locations where we, our customers or our suppliers operate;
- industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers; and
- the ability to successfully ramp up new programs that could be impacted by factors beyond our control, including the availability of critical third party components and performance of subcontractors in line with our expectations.
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
About
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:
Group VP, Investor Relations
Tel: +41 22 929 58 12
celine.berthier@st.com
MEDIA RELATIONS:
Head of
Tel: +33 6 59 16 79 08
alexis.breton@st.com
CONSOLIDATED STATEMENTS OF INCOME | ||
(in millions of | ||
Three months ended | ||
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 |
CONSOLIDATED STATEMENTS OF INCOME | ||
(in millions of | ||
Nine months ended | ||
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 |
CONSOLIDATED BALANCE SHEETS | |||
As at | |||
In millions of | 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 |
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: | 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 |
(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 |
SELECTED CASH FLOW DATA | |||
Cash Flow Data (in US$ millions) | Q3 2020 | Q2 2020 | Q3 2019 |
385 | 387 | 429 | |
(400) | (509) | (59) | |
928 | (117) | (129) | |
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 |
Appendix
Supplemental 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) | |||||
- Net Revenues | 851 | 727 | 753 | 924 | 894 |
- Operating Income | 49 | 16 | 23 | 113 | 76 |
- Net Revenues | 997 | 624 | 852 | 1,085 | 968 |
- Operating Income | 175 | 56 | 177 | 281 | 198 |
- 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)
Supplemental Non-
U. S. GAAP – Non-
The supplemental non-
The Company believes that these non-
Net Financial Position (non-
Net Financial Position, not a
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) | |||||
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 |
- 2022 Tranche A of the convertible bond issued in 2017 was reclassified to short-term debt in line with contractual terms.
- 2024 Tranche B of the convertible bond issued in 2017 was reclassified to short-term debt in line with contractual terms.
- Long-term debt contains standard conditions but does not impose minimum financial ratios. Also, committed credit facilities for
$1.2 billion equivalent, including a €500 million long-term line with theEuropean Investment Bank , are currently undrawn.
(Appendix – continued)
Free Cash Flow (non-
Free Cash Flow, which is a non-
We believe Free Cash Flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operations. Free Cash Flow does not represent total cash flow since it does not include the cash flows generated by or used in financing activities.
Free Cash Flow reconciles with the total cash flow and the net cash increase (decrease) by including the payment for purchases of (and proceeds from matured) marketable securities and net investment in short-term deposits, the net cash from (used in) financing activities and the effect of changes in exchange rates. In addition, our definition of Free Cash Flow may differ from definitions used by other companies.
(US$ 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
- C2972C- Q320 PR-FINAL FOR PUBLICATION
Source:
2020 GlobeNewswire, Inc., source