Press Release: STMicroelectronics Reports 2024 Second Quarter Financial Results
STMicroelectronics Reports 2024 Second Quarter Financial Results
-- Q2 net revenues $3.23 billion; gross margin 40.1%; operating margin 11.6%; net income $353 million -- H1 net revenues $6.70 billion; gross margin 40.9 %; operating margin 13.8%; net income $865 million -- Business outlook at mid-point: Q3 net revenues of $3.25 billion and gross margin of 38%
Geneva, July 25, 2024 -- STMicroelectronics N.V. ("ST") (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the second quarter ended June 29, 2024. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported second quarter net revenues of $3.23 billion, gross margin of 40.1%, operating margin of 11.6%, and net income of $353 million or $0.38 diluted earnings per share.
Jean-Marc Chery, ST President & CEO, commented:
-- "Q2 net revenues were above the midpoint of our business outlook range driven by higher revenues in Personal Electronics, partially offset by lower than expected revenues in Automotive. Gross margin was in line with expectations." -- "First half net revenues decreased 21.9% year-over-year, mainly driven by a decrease in Microcontrollers and Power and Discrete segments. Operating margin was 13.8% and net income was $865 million." -- "During the quarter, contrary to our prior expectations, customer orders for Industrial did not improve and Automotive demand declined." -- "Our third quarter business outlook, at the mid-point, is for net revenues of $3.25 billion, decreasing year-over-year by 26.7% and increasing sequentially by 0.6%; gross margin is expected to be about 38%, impacted by about 350 basis points of unused capacity charges." -- "We will now drive the Company based on a plan for FY24 revenues in the range of $13.2 billion to $13.7 billion. Within this plan, we expect a gross margin of about 40%."
Quarterly Financial Summary (U.S. GAAP)
(US$ m, except per share data) Q2 2024 Q1 2024 Q2 2023 Q/Q Y/Y ----------------------------- ------- ------- ------- -------- ---------- Net Revenues $3,232 $3,465 $4,326 -6.7% -25.3% ----------------------------- ------- ------- ------- -------- ---------- Gross Profit $1,296 $1,444 $2,119 -10.2% -38.9% ----------------------------- ------- ------- ------- -------- ---------- Gross Margin 40.1% 41.7% 49.0% -160 bps -890 bps ----------------------------- ------- ------- ------- -------- ---------- Operating Income $375 $551 $1,146 -32.0% -67.3% ----------------------------- ------- ------- ------- -------- ---------- Operating Margin 11.6% 15.9% 26.5% -430 bps -1,490 bps ----------------------------- ------- ------- ------- -------- ---------- Net Income $353 $513 $1,001 -31.2% -64.8% ----------------------------- ------- ------- ------- -------- ---------- Diluted Earnings Per Share $0.38 $0.54 $1.06 -29.6% -64.2% ----------------------------- ------- ------- ------- -------- ----------
Second Quarter 2024 Summary Review
Reminder: On January 10, 2024, ST announced a new organization which implied a change in segment reporting starting Q1 2024. Comparative periods have been adjusted accordingly. See Appendix for more detail.
Q2 Q1 Q2 Net Revenues by Reportable Segment (US$ m) 2024 2024 2023 Q/Q Y/Y ---------------------------------------------------------- ------- ------- ------- -------- -------- Analog products, MEMS and Sensors (AM&S) segment 1,165 1,217 1,293 -4.3% -10.0% ---------------------------------------------------------- ------- ------- ------- -------- -------- Power and discrete products (P&D) segment 747 820 989 -8.8% -24.4% ---------------------------------------------------------- ------- ------- ------- -------- -------- Subtotal: Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group 1,912 2,037 2,282 -6.1% -16.2% ---------------------------------------------------------- ------- ------- ------- -------- -------- Microcontrollers (MCU) segment 800 950 1,482 -15.7% -46.0% ---------------------------------------------------------- ------- ------- ------- -------- -------- Digital ICs and RF Products (D&RF) segment 516 475 558 8.6% -7.6% ---------------------------------------------------------- ------- ------- ------- -------- -------- Subtotal: Microcontrollers, Digital ICs and RF products (MDRF) Product Group 1,316 1,425 2,040 -7.6% -35.5% ---------------------------------------------------------- ------- ------- ------- -------- -------- Others 4 3 4 - - ---------------------------------------------------------- ------- ------- ------- -------- -------- Total Net Revenues 3,232 3,465 4,326 -6.7% -25.3% ---------------------------------------------------------- ------- ------- ------- -------- --------
Net revenues totaled $3.23 billion, representing a year-over-year decrease of 25.3%. Year-over-year net sales to OEMs and Distribution decreased 14.9% and 43.7%, respectively. On a sequential basis, net revenues decreased 6.7%, 90 basis points better than the mid-point of ST's guidance.
Gross profit totaled $1.30 billion, representing a year-over-year decrease of 38.9%. Gross margin of 40.1%, in line with the mid-point of ST's guidance, decreased 890 basis points year-over-year, mainly due to the combination of product mix and sales price and higher unused capacity charges.
Operating income decreased 67.3% to $375 million, compared to $1.15 billion in the year-ago quarter. ST's operating margin decreased 1,490 basis points on a year-over-year basis to 11.6% of net revenues, compared to 26.5% in the second quarter of 2023.
By reportable segment(1) , compared with the year-ago quarter:
In Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group:
Analog products, MEMS and Sensors (AM&S) segment:
-- Revenue decreased 10.0% mainly due to a decrease in Imaging. -- Operating profit decreased by 44.5% to $144 million. Operating margin was 12.4% compared to 20.0%.
Power and Discrete products (P&D) segment:
-- Revenue decreased 24.4%. -- Operating profit decreased by 57.9% to $110 million. Operating margin was 14.7% compared to 26.4%.
In Microcontrollers, Digital ICs and RF products (MDRF) Product Group:
Microcontrollers (MCU) segment:
-- Revenue decreased 46.0% mainly due to a decrease in GP MCU. -- Operating profit decreased by 87.1% to $72 million. Operating margin was 8.9% compared to 37.2%.
Digital ICs and RF products (D&RF) segment:
-- Revenue decreased 7.6% due to a decrease in ADAS which more than offset the increase in RF Communications. -- Operating profit decreased by 23.8% to $150 million. Operating margin was 29.1% compared to 35.2%.
Net income and diluted Earnings Per Share decreased to $353 million and $0.38 respectively compared to $1.00 billion and $1.06 respectively in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
Trailing 12 Months
------------- -------- -------- --------- --------------------------------
Q2 Q1 TTM
(US$ m) 2024 2024 Q2 2023 Q2 2024 Q2 2023 Change
------------- -------- -------- --------- --------- --------- ----------
Net cash
from
operating
activities 702 859 1,311 4,922 5,832 -15.6%
------------- -------- -------- --------- --------- --------- ----------
Free cash
flow
(non-U.S.
GAAP)(2) 159 (134) 209 1,384 1,694 -18.3%
------------- -------- -------- --------- --------- --------- ----------
Net cash from operating activities was $702 million in the second quarter compared to $1.31 billion in the year-ago quarter.
Net Capex (non-U.S. GAAP)(1) was $528 million in the second quarter compared to $1.07 billion in the year-ago quarter.
Free cash flow (non-U.S. GAAP)(1) was $159 million in the second quarter, compared to $209 million in the year-ago quarter.
Inventory at the end of the second quarter was $2.81 billion, compared to $2.69 billion in the previous quarter and $3.05 billion in the year-ago quarter. Days sales of inventory at quarter-end was 130 days compared to 122 days in the previous quarter and 126 days in the year-ago quarter.
In the second quarter, ST paid cash dividends to its stockholders totaling $73 million and executed a $88 million share buy-back, completing its $1,040 million share repurchase program launched on July 1, 2021. On June 21, 2024, ST announced the launch of a new share buy-back plan comprising two programs totalling up to $1,100 million to be executed within a 3-year period.
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