STMicroelectronics announces first quarter 2021 financial results

• First quarter net revenue of $3.02 billion; gross margin of 39.0%; operating margin of 14.6%; net profit of $364 million

• Free cash flow(1) was $261 million in the first quarter, excluding $405 million of net capital expenditures

• Business Outlook (median): Q2 net revenue of $2.9 billion; gross margin of 39.5%

STMicroelectronics (ST), a global semiconductor leader serving multiple electronics applications, announced financial results for the first quarter ended April 3, 2021, prepared in accordance with US GAAP. This press release also includes non-GAAP financial measures (see the Appendix for details).

STMicroelectronics achieved net revenue of US$3.02 billion in the first quarter, a gross profit margin of 39.0%, an operating profit margin of 14.6%, a net profit of US$364 million, and diluted earnings per share of US$0.39.

Commenting on the first quarter results, Jean-Marc Chery, President and CEO of STMicroelectronics, said:

• In the first quarter of 2021, net revenue increased by 35.2% year-on-year, and all product divisions achieved revenue growth as global semiconductor demand continued to improve. Operating profit margin increased to 14.6%, an increase of 420 basis points, and net profit increased by 89.6% to US$364 million.

• On a sequential basis, first quarter net revenue decreased 6.8%, 270 basis points above the midpoint of the company's business guidance. Automotive products, power discrete devices and microcontrollers grew sequentially, but personal electronics products partially offset the growth.

• Due to seasonal factors in the personal electronics market, STMicroelectronics' second-quarter net revenue is expected to be $2.9 billion, up 39% year-on-year and down 3.8% quarter-on-quarter. Gross margin is expected to be about 39.5%.

• We are advancing our full-year 2021 revenue guidance to achieve mid-range revenue of $12.1 billion, plus or minus $150 million, representing year-over-year growth of 18.4%, driven by strong demand growth and established customer programs across all of the end markets we serve.

• For 2021 capital expenditures, we currently plan to invest approximately $2 billion to support strong growth in market demand and our strategic initiatives.

Quarterly Financial Summary (U.S. GAAP)

(1) Non-GAAP*Please refer to Appendix A for the conversion into U.S. GAAP and the reasons why the Company considers these measures to be material.

Summary and review of the first quarter of 2021

Net revenues totaled $3.02 billion, up 35.2% year-over-year. All of the Company's product divisions achieved year-over-year net sales revenue growth, except for the RF Communications (formerly "Digital") sub-business unit. Net sales revenues in the OEM and agency channels increased 21.4% and 76.2% year-over-year, respectively. On a sequential basis, net revenues in the first quarter decreased 6.8%, 270 basis points higher than the midpoint of the Company's performance guidance. Both ADG and MDG product divisions achieved sequential net revenue growth, while AMS product division revenue decreased sequentially.

Gross profit totaled $1.18 billion, up 38.9% year-over-year. Gross margin was 39.0%, up 110 basis points year-over-year, primarily due to lower idle capacity costs, improved manufacturing efficiency, and improved product mix, although the unfavorable impact of foreign exchange after deducting currency hedging offset some of the growth. Thanks to the improved product mix, gross margin in the first quarter was 50 basis points higher than the midpoint of the company's performance guidance.

Operating profit totaled $440 million, up 90.3% from $231 million in the same period last year. Operating profit margin was 14.6% of net revenue, up 420 basis points from 10.4% in the first quarter of 2020.

Year-on-year financial performance of each product division:

Automotive and Discrete Products Group (ADG)

• Sales revenue from automotive and power discrete devices both increased.

• Operating profit was US$85 million, up 280.4%. Operating profit margin was 8.2%, compared to 3.0% in the same period last year. 

Analog, MEMS and Sensors (AMS)

• Sales revenue from analog, MEMS and imaging products increased.

• Operating profit was $187 million, up 5.4%. Operating profit margin was 17.2%, compared to 20.8% in the same period last year.

Microcontroller and Digital IC Group (MDG)

• Microcontroller revenue increased, while RF Communications revenue decreased.

• Operating profit was $172 million, up 140.5%. Operating profit margin was 19.4%, compared to 11.5% in the same period last year.

Net income and diluted earnings per share were $364 million and $0.39, respectively, compared with $192 million and $0.21, respectively, in the same period last year.

Cash Flow and Balance Sheet Summary

Capital expenditures (net of proceeds from asset sales) were $450 million in the first quarter. In the same period last year, net capital expenditures were $266 million.

Inventory at the end of the first quarter was $1.84 billion, up from $1.77 billion a year ago. Inventory turnover days at the end of the quarter were 91 days, down from 118 days a year ago.

Free cash flow (non-GAAP) was $261 million in the first quarter, compared to $113 million in the same period last year.

During the first quarter, the Company paid cash dividends of $38 million and repurchased $156 million of its stock under its previously announced share repurchase program.

As of April 3, 2021, STMicroelectronics' net financial position (non-GAAP) was $1.19 billion, compared to $1.1 billion as of December 31, 2020; total current assets were $4.16 billion and total liabilities were $2.97 billion.

Business Outlook

The median company performance guidance for the second quarter of 2021 is:

• Net revenue is expected to be $2.9 billion, down approximately 3.8% from the previous quarter, plus or minus 350 basis points;

• Gross profit margin is approximately 39.5%, plus or minus 200 basis points;

• This business outlook assumes a U.S. dollar to euro exchange rate of approximately $1.18 = EUR 1.00 in the second quarter of 2021, including the impact of current hedging contracts.

• The second quarter billing date is July 3, 2021.

The company expects capital expenditures to be approximately $2 billion in 2021.