●
|
Q2 net revenues $2.27 billion (up 18.0% Y/Y), operating margin 12.7%, net income $261 million
|
●
|
Q2 Y/Y revenue performance balanced across product groups, regions and end markets
|
●
|
Q3 business outlook at mid-point: net revenues up about 10.0% Q/Q, gross margin about 40.0%
|
●
|
“ST had another quarter of double-digit, year-over-year revenue growth, with improved performance across key financial metrics. We are on track with the goal set at our Capital Markets Day to grow year-over-year 2018 revenues between about 14% to 17%.
|
●
|
“Revenue increased 18% year-over-year on balanced growth across all product groups, regions and end markets, with an especially strong performance in Industrial.
|
●
|
“Operating income and net income were up sharply year-over-year, increasing respectively about 60% and 73%.
|
●
|
“ST’s third quarter outlook is for revenues to grow sequentially about 10.0%, reflecting year-over-year growth of 16.8%, and gross margin to be about 40.0%. This is driven by continued healthy demand in our end markets and, as anticipated, by growth in smartphone applications.”
|
($ in millions except earnings per share)
|
Q2 2018
|
Q1 2018
|
Q2 2017
|
Y/Y
|
Q/Q
|
Net Revenues
|
$2,269
|
$2,226
|
$1,923
|
18.0%
|
1.9%
|
Gross Margin
|
40.2%
|
39.9%
|
38.3%
|
190 bps
|
30 bps
|
Operating Income
|
$289
|
$269
|
$181
|
59.7%
|
7.4%
|
Operating Margin
|
12.7%
|
12.1%
|
9.4%
|
330 bps
|
60 bps
|
Net Income
|
$261
|
$239
|
$151
|
72.8%
|
9.2%
|
Diluted Earnings Per Share
|
$0.29
|
$0.26
|
$0.17
|
70.6%
|
11.5%
|
(1)
|
Certain amounts in the prior periods have been adjusted to reflect the January 1, 2018 adoption of ASU 2017-07 related to the reclassification of certain pension costs.
|
Net Revenues By Product Group
(in US$ millions)
|
Q2 2018
|
Q1 2018
|
Q2 2017
|
Y/Y
|
Q/Q
|
Automotive and Discrete Group (ADG)
|
$870
|
$817
|
$755
|
15.2%
|
6.5%
|
Analog, MEMS and Sensors Group (AMS)
|
613
|
655
|
553
|
10.7
|
(6.4)
|
Microcontrollers and Digital ICs Group (MDG)
|
782
|
750
|
612
|
27.8
|
4.3
|
Others
|
4
|
4
|
3
|
24.1
|
5.9
|
Total Net Revenues
|
$2,269
|
$2,226
|
$1,923
|
18.0%
|
1.9%
|
●
|
Revenue grew double-digits, in both Automotive and Power Discrete.
|
●
|
Operating profit increased by 28.8% to $84 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 9.7% from 8.7%.
|
●
|
Revenue grew double-digits, in both Imaging and in Analog.
|
●
|
Operating profit increased by 24.1% to $64 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 10.5% from 9.4%.
|
●
|
Revenue grew double-digits, in both Microcontrollers and Digital ICs.
|
●
|
Operating profit increased by 121.6% to $159 million mainly due to higher revenue and associated gross profit. Operating margin increased to 20.3% from 11.7%.
|
Trailing 12 Months
|
||||||
US$ in millions
|
Q2 2018
|
Q1 2018
|
Q2 2017
|
Q2 2018
|
Q2 2017
|
TTM Change
|
Net cash from operating activities
|
$360
|
$455
|
$369
|
$1,865
|
$1,368
|
36.3%
|
Free cash flow (non-U.S. GAAP)
|
$(40)
|
$95
|
$52
|
$280
|
$351
|
(20.2)%
|
●
|
Net revenue is expected to increase about 10.0% sequentially, plus or minus 350 basis points;
|
●
|
Gross margin of about 40.0%, plus or minus 200 basis points;
|
●
|
This outlook is based on an assumed effective currency exchange rate of approximately $1.19 = €1.00 for the 2018 third quarter and includes the impact of existing hedging contracts.
|
●
|
The third quarter will close on September 29, 2018.
|
●
|
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, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macro-economic or regional events, military conflicts, social unrest, labor actions, or terrorist activities;
|
●
|
The Brexit vote and the perceptions as to the impact of the withdrawal of the U.K. may adversely affect business activity, political stability and economic conditions in the U.K., the Eurozone, the EU and elsewhere. While we do not have material operations in the U.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;
|
●
|
The functionalities and performance of our IT systems, 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;
|
●
|
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 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;
|
●
|
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, health risks and epidemics in locations where we, our customers or our suppliers operate;
|
●
|
Availability and costs of raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations;
|
●
|
Industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers;
|
●
|
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; and
|
●
|
Theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of global privacy legislation, including the EU’s General Data Protection Regulation (“GDPR”).
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
(in millions of U.S. dollars, except per share data ($))
|
||||||||
Three months ended
|
||||||||
June 30,
|
July 1,
|
|||||||
2018
|
2017
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Net sales
|
2,250
|
1,911
|
||||||
Other revenues
|
19
|
12
|
||||||
NET REVENUES
|
2,269
|
1,923
|
||||||
Cost of sales
|
(1,358
|
)
|
(1,186
|
)
|
||||
GROSS PROFIT
|
911
|
737
|
||||||
Selling, general and administrative
|
(277
|
)
|
(239
|
)
|
||||
Research and development
|
(356
|
)
|
(326
|
)
|
||||
Other income and expenses, net
|
11
|
15
|
||||||
Impairment, restructuring charges and other related closure costs
|
-
|
(6
|
)
|
|||||
Total operating expenses
|
(622
|
)
|
(556
|
)
|
||||
OPERATING INCOME
|
289
|
181
|
||||||
Interest expense, net
|
(2
|
)
|
(4
|
)
|
||||
Other components of pension benefit costs
|
(3
|
)
|
(3
|
)
|
||||
Income (loss) on equity-method investments
|
-
|
(2
|
)
|
|||||
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST
|
284
|
172
|
||||||
Income tax expense
|
(21
|
)
|
(19
|
)
|
||||
NET INCOME
|
263
|
153
|
||||||
Net income attributable to noncontrolling interest
|
(2
|
)
|
(2
|
)
|
||||
NET INCOME ATTRIBUTABLE TO PARENT COMPANY
|
261
|
151
|
||||||
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
|
0.29
|
0.17
|
||||||
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
|
0.29
|
0.17
|
||||||
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EARNINGS PER SHARE
|
915.6
|
911.1
|
STMicroelectronics N.V.
|
||||||||
CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
(in millions of U.S. dollars, except per share data ($))
|
||||||||
Six months ended
|
||||||||
June 30,
|
July 1,
|
|||||||
2018
|
2017
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Net sales
|
4,463
|
3,728
|
||||||
Other revenues
|
31
|
16
|
||||||
NET REVENUES
|
4,494
|
3,744
|
||||||
Cost of sales
|
(2,695
|
)
|
(2,320
|
)
|
||||
GROSS PROFIT
|
1,799
|
1,424
|
||||||
Selling, general and administrative
|
(542
|
)
|
(473
|
)
|
||||
Research and development
|
(705
|
)
|
(659
|
)
|
||||
Other income and expenses, net
|
26
|
32
|
||||||
Impairment, restructuring charges and other related closure costs
|
(20
|
)
|
(11
|
)
|
||||
Total operating expenses
|
(1,241
|
)
|
(1,111
|
)
|
||||
OPERATING INCOME
|
558
|
313
|
||||||
Interest expense, net
|
(5
|
)
|
(9
|
)
|
||||
Other components of pension benefit costs
|
(5
|
)
|
(6
|
)
|
||||
Income (loss) on equity-method investments
|
-
|
(2
|
)
|
|||||
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST
|
548
|
296
|
||||||
Income tax expense
|
(44
|
)
|
(34
|
)
|
||||
NET INCOME
|
504
|
262
|
||||||
Net income attributable to noncontrolling interest
|
(4
|
)
|
(4
|
)
|
||||
NET INCOME ATTRIBUTABLE TO PARENT COMPANY
|
500
|
258
|
||||||
EARNINGS PER SHARE (BASIC) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
|
0.56
|
0.29
|
||||||
EARNINGS PER SHARE (DILUTED) ATTRIBUTABLE TO PARENT COMPANY STOCKHOLDERS
|
0.55
|
0.28
|
||||||
NUMBER OF WEIGHTED AVERAGE SHARES USED IN CALCULATING DILUTED EARNINGS PER SHARE
|
915.1
|
906.5
|
STMicroelectronics N.V.
|
||||||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||||||
As at
|
June 30,
|
March 31,
|
December 31,
|
|||||||||
In millions of U.S. dollars
|
2018
|
2018
|
2017
|
|||||||||
(Unaudited)
|
(Unaudited)
|
(Audited)
|
||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
1,683
|
1,791
|
1,759
|
|||||||||
Short-term deposits
|
15
|
14
|
-
|
|||||||||
Marketable securities
|
429
|
429
|
431
|
|||||||||
Trade accounts receivable, net
|
1,106
|
1,042
|
1,149
|
|||||||||
Inventories
|
1,559
|
1,435
|
1,335
|
|||||||||
Other current assets
|
405
|
449
|
425
|
|||||||||
Total current assets
|
5,197
|
5,160
|
5,099
|
|||||||||
Goodwill
|
121
|
125
|
123
|
|||||||||
Other intangible assets, net
|
198
|
205
|
209
|
|||||||||
Property, plant and equipment, net
|
3,410
|
3,371
|
3,094
|
|||||||||
Non-current deferred tax assets
|
674
|
632
|
624
|
|||||||||
Long-term investments
|
58
|
58
|
57
|
|||||||||
Other non-current assets
|
391
|
517
|
475
|
|||||||||
4,852
|
4,908
|
4,582
|
||||||||||
Total assets
|
10,049
|
10,068
|
9,681
|
|||||||||
LIABILITIES AND EQUITY
|
||||||||||||
Current liabilities:
|
||||||||||||
Short-term debt
|
118
|
119
|
118
|
|||||||||
Trade accounts payable
|
991
|
979
|
893
|
|||||||||
Other payables and accrued liabilities
|
887
|
940
|
897
|
|||||||||
Dividends payable to stockholders
|
168
|
6
|
60
|
|||||||||
Accrued income tax
|
40
|
41
|
52
|
|||||||||
Total current liabilities
|
2,204
|
2,085
|
2,020
|
|||||||||
Long-term debt
|
1,598
|
1,593
|
1,583
|
|||||||||
Post-employment benefit obligations
|
374
|
393
|
385
|
|||||||||
Long-term deferred tax liabilities
|
11
|
12
|
11
|
|||||||||
Other long-term liabilities
|
208
|
216
|
215
|
|||||||||
2,191
|
2,214
|
2,194
|
||||||||||
Total liabilities
|
4,395
|
4,299
|
4,214
|
|||||||||
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, 911,141,920 shares issued, 901,354,389 shares outstanding)
|
1,157
|
1,157
|
1,157
|
|||||||||
Capital surplus
|
2,766
|
2,743
|
2,718
|
|||||||||
Retained earnings
|
1,215
|
1,212
|
973
|
|||||||||
Accumulated other comprehensive income
|
538
|
724
|
688
|
|||||||||
Treasury stock
|
(89
|
)
|
(132
|
)
|
(132
|
)
|
||||||
Total parent company stockholders’ equity
|
5,587
|
5,704
|
5,404
|
|||||||||
Noncontrolling interest
|
67
|
65
|
63
|
|||||||||
Total equity
|
5,654
|
5,769
|
5,467
|
|||||||||
Total liabilities and equity
|
10,049
|
10,068
|
9,681
|
STMicroelectronics N.V.
|
|||
SELECTED CASH FLOW DATA
|
|||
Cash Flow Data (in US$ millions)
|
Q2 2018
|
Q1 2018
|
Q2 2017
|
Net Cash from operating activities
|
360
|
455
|
369
|
Net Cash used in investing activities
|
(401)
|
(374)
|
(317)
|
Net Cash used in financing activities
|
(60)
|
(54)
|
(53)
|
Net Cash increase (decrease)
|
(108)
|
32
|
13
|
Selected Cash Flow Data (in US$ millions)
|
Q2 2018
|
Q1 2018
|
Q2 2017
|
Depreciation & amortization
|
193
|
185
|
152
|
Net payment for Capital expenditures
|
(390)
|
(351)
|
(307)
|
Dividends paid to stockholders
|
(54)
|
(54)
|
(48)
|
Change in inventories, net
|
(157)
|
(84)
|
(26)
|
Q2 2018
|
Q1 2018
|
Q4 2017
|
Q3 2017
|
Q2 2017
|
|
Net Revenues By Market Channel (%)
|
|||||
Total OEM
|
61%
|
63%
|
68%
|
66%
|
66%
|
Distribution
|
39%
|
37%
|
32%
|
34%
|
34%
|
€/$ Effective Rate
|
1.19
|
1.18
|
1.15
|
1.13
|
1.09
|
Product Group Data (a) (US$ Million)
|
|||||
Automotive & Discrete Group (ADG)
|
|||||
- Net Revenues
|
$870
|
$817
|
$821
|
$775
|
$755
|
- Operating Income
|
$84
|
$90
|
$102
|
$85
|
$65
|
Analog, MEMS & Sensors Group (AMS) (b)
|
|||||
- Net Revenues
|
613
|
655
|
902
|
657
|
553
|
- Operating Income
|
64
|
64
|
187
|
86
|
52
|
Microcontrollers & Digital ICs Group (MDG)
|
|||||
- Net Revenues
|
782
|
750
|
740
|
701
|
612
|
- Operating Income
|
159
|
146
|
146
|
126
|
72
|
Others (c)
|
|||||
- Net Revenues
|
4
|
4
|
3
|
3
|
3
|
- Operating Income (Loss)
|
(18)
|
(31)
|
(24)
|
(16)
|
(8)
|
Total
|
|||||
- Net Revenues
|
$2,269
|
$2,226
|
$2,466
|
$2,136
|
$1,923
|
- Operating Income
|
$289
|
$269
|
$411
|
$281
|
$181
|
(a)
|
Certain amounts in the prior periods have been adjusted to reflect the January 1, 2018 adoption of ASU 2017-07 related to the reclassification of certain pension costs.
|
(b)
|
Effective January 1, 2018, the Subsystems business unit was transferred from Others to Analog, MEMS and Sensors (AMS). Prior periods have been restated accordingly.
|
(c)
|
Net revenues of Others includes revenues from sales assembly services and other revenue. Operating income (loss) of Others includes items such as unused capacity charges, impairment, restructuring charges and other related closure costs, management reorganization costs, phase out and start-up costs, and other unallocated expenses such as: strategic or special research and development programs, certain corporate-level operating expenses, patent claims and litigations, and other costs that are not allocated to product groups, as well as operating earnings of other products. Others includes:
|
(US$ Million)
|
Q2 2018
|
Q1 2018
|
Q4 2017
|
Q3 2017
|
Q2 2017
|
Unused Capacity Charges
|
-
|
1
|
1
|
1
|
1
|
Impairment & Restructuring Charges
|
-
|
21
|
20
|
14
|
6
|
(US$ Million, except earnings per share in $)
|
Q2 2018
|
Q1 2018
|
Q4 2017
|
Q3 2017
|
Q2 2017
|
U.S. GAAP Net Earnings
|
261
|
239
|
308
|
236
|
151
|
U.S. GAAP Earnings Per Share
|
0.29
|
0.26
|
0.34
|
0.26
|
0.17
|
Impairment & Restructuring
|
-
|
21
|
20
|
14
|
6
|
Estimated Income Tax Effect
|
-
|
(3)
|
(1)
|
(1)
|
(1)
|
Non-U.S. GAAP Net Earnings
|
261
|
257
|
327
|
249
|
156
|
Non-U.S. GAAP Earnings Per Share
|
0.29
|
0.28
|
0.36
|
0.28
|
0.17
|
(US$ Million)
|
Jun 30
2018
|
Mar 31 2018
|
Dec 31 2017
|
Sep 30 2017
|
Jul 1 2017
|
Cash and cash equivalents
|
1,683
|
1,791
|
1,759
|
2,188
|
1,654
|
Short term deposits
|
15
|
14
|
-
|
-
|
-
|
Marketable securities
|
429
|
429
|
431
|
433
|
335
|
Total financial resources
|
2,127
|
2,234
|
2,190
|
2,621
|
1,989
|
Short-term debt
|
(118)
|
(119)
|
(118)
|
(486)
|
(117)
|
Long-term debt
|
(1,598)
|
(1,593)
|
(1,583)
|
(1,689)
|
(1,348)
|
Total financial debt
|
(1,716)
|
(1,712)
|
(1,701)
|
(2,175)
|
(1,465)
|
Net financial position
|
411
|
522
|
489
|
446
|
524
|
(US$ Million)
|
Q2 2018
|
Q1 2018
|
Q4 2017
|
Q3 2017
|
Q2 2017
|
Net cash from operating activities
|
360
|
455
|
587
|
463
|
369
|
Net cash used in investing activities
|
(401)
|
(374)
|
(442)
|
(482)
|
(317)
|
Payment for purchase and proceeds from sale of marketable securities, investment in short-term deposits, restricted cash
|
1
|
14
|
-
|
99
|
-
|
Free cash flow
|
(40)
|
95
|
145
|
80
|
52
|
|
|
|
STMicroelectronics N.V.
|
|
|
|
|
Date:
|
July 25, 2018
|
By:
|
/s/ Lorenzo Grandi
|
|
|
|
|
|
|
Name:
|
Lorenzo Grandi
|
|
|
Title:
|
Chief Financial Officer
President, Finance, Infrastructure and Services
|