STMicroelectronics announces second quarter 2021 financial results

STMicroelectronics announces second quarter 2021 financial results

• Second quarter net revenue of $2.99 ​​billion; gross margin of 40.5%; operating margin of 16.3%; net profit of $412 million

• Net revenue in the first half of the year was $6.01 billion; gross profit margin was 39.7%; operating profit margin was 15.5% and net profit was $776 million

• Business Outlook (median): Q3 net revenue of $3.20 billion; gross margin of 41.0%

STMicroelectronics (NYSE: STM), a global semiconductor leader serving a wide range of electronics applications, announces financial results for the second quarter ended July 3, 2021, prepared in accordance with US GAAP. In addition, this press release also contains non-GAAP measures (see the Appendix for details).

STMicroelectronics achieved net revenue of US$2.99 ​​billion in the second quarter, gross profit margin of 40.5%, operating profit margin of 16.3%, net profit of US$412 million, and diluted earnings per share of US$0.44.

Jean-Marc Chery, President and CEO of STMicroelectronics, commented:

• “Second quarter net revenue and gross margin were both at the high end of our business outlook range as global semiconductor demand continued to strengthen.

• “On a year-over-year basis, net revenue increased by 43.4% in the second quarter. Gross margin was 40.5% and operating margin was 16.3%, an increase of 550 basis points and 1,120 basis points respectively in the second quarter. Net income increased by 357.2% to $412 million.

• “Net revenue increased 39.1% year-on-year in the first half of the year, with all product segments achieving net revenue growth except the RF Communications sub-segment. Operating profit margin was 15.5% and net profit was US$776 million.

• “ST’s third quarter business outlook (median) is for net revenue of $3.20 billion, up 20.0% year-over-year and 7.0% quarter-over-quarter, respectively; gross margin is expected to be approximately 41.0%.

• “We are advancing our full-year 2021 revenue guidance to achieve mid-range revenue of $12.5 billion, plus or minus $100 million, up 22.3% year-over-year. This growth is expected to be driven by strong demand growth and established customer programs across all end markets we serve. We plan to spend approximately $2.1 billion in 2021.”

Quarterly Financial Summary (U.S. GAAP)

Summary and review of the second quarter of 2021

Net revenue totaled $2.99 ​​billion, up 43.4% year-over-year. Year-over-year, all product divisions achieved net revenue growth, except for the RF communications sub-division. In the OEM and agency markets, sales revenue increased by 38.4% and 53.1%, respectively. Month-over-month, net revenue decreased by 0.8%, but was 300 basis points higher than the median of the company's guidance. Both ADG and MDG product divisions achieved net revenue growth month-over-month, while the AMS product division's net revenue decreased month-over-month.

Gross profit totaled $1.21 billion, up 66.1% year-over-year. Gross margin was 40.5%, up 550 basis points year-over-year, mainly 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 price and product mix optimization, the second quarter gross margin was 100 basis points higher than the midpoint of the company's guidance.

Operating profit increased 358.8% year-over-year to $489 million, compared with $106 million in the same period last year. The company's operating profit margin increased 1,120 basis points year-over-year to 16.3% of net revenue, compared with 5.1% in the second quarter of 2020.

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

Automotive and Discrete Products Group (ADG)

• Both automotive and power discrete revenues increased.

• Operating profit increased 523.8% to $102 million. Operating margin was 9.5%, compared to 2.3% in the same period last year. 

Analog, MEMS and Sensors (AMS)

• Analog, MEMS and imaging product revenue growth.

• Operating profit increased 234.2% to $189 million. Operating margin was 18.6%, compared to 9.0% in the same period last year.

Microcontroller and Digital IC Group (MDG)

• Microcontroller revenue increased and RF Communications revenue decreased.

• Operating profit increased 76.5% to $206 million. Operating margin was 22.9%, compared with 15.9% in the same period last year.

Net income and diluted earnings per share increased to $412 million and $0.44, respectively, compared with $90 million and $0.10 in the same period last year.

Cash Flow and Balance Sheet Summary

Capital expenditures (excluding proceeds from asset sales) were $438 million in the second quarter, compared to $312 million in the same period last year.

Inventory at the end of the second quarter was $1.97 billion, up from $1.96 billion in the same period last year. Inventory turnover days at the end of the quarter were 101 days, up from 130 days in the same period last year.

Second quarter free cash flow (non-GAAP) was $125 million, compared to $28 million in the same period last year.

In the second quarter, the company paid cash dividends of $52 million and repurchased $156 million of the company's outstanding shares, completing the $750 million stock repurchase plan announced on November 5, 2018. On July 1, 2021, the company announced the launch of a new stock repurchase plan of up to $1.04 billion, which is expected to be completed within 3 years. 

STMicroelectronics' net financial position (non-GAAP) was $1.08 billion as of July 3, 2021, and $1.19 billion as of April 3, 2021. Current assets totaled $4.25 billion and liabilities totaled $3.17 billion.

In the second quarter, ST exercised its option to early redeem the 2024B convertible bonds issued in 2017, and it is expected that the bond settlement with a principal amount of US$750 million will be completed in the third quarter.

Business Outlook

The company's third quarter 2021 guidance midpoint:

• Net revenue is expected to be $3.20 billion, an increase of approximately 7.0% from the previous quarter, plus or minus 350 basis points;

• Gross profit margin is approximately 41.0%, with a fluctuation of 200 basis points

• This business outlook assumes a U.S. dollar to euro exchange rate of approximately $1.19 = EUR 1.00 in the third quarter of 2021, including the impact of current hedging contracts.

• The third quarter closing date is October 2, 2021.

About STMicroelectronics

STMicroelectronics has 46,000 creators and innovators of semiconductor technology, and controls the semiconductor supply chain and advanced manufacturing equipment. As an independent semiconductor equipment manufacturer, STMicroelectronics develops products and solutions with more than 100,000 customers and thousands of partners, and jointly builds an ecosystem to help them better cope with various challenges and new opportunities and meet the world's higher demand for sustainable development. STMicroelectronics' technology makes people's travel smarter, power and energy management more efficient, and the Internet of Things and 5G technology are more widely used.