- Q3 net revenues $3.25 billion; gross margin 37.8%; operating margin 11.7%; net income $351 million
- YTD net revenues $9.95 billion; gross margin 39.9%; operating margin 13.1%; net income $1.22 billion
- Business outlook at mid-point: Q4 net revenues of $3.32 billion and gross margin of 38%
- Launch of a new company-wide program to reshape our manufacturing footprint accelerating our wafer fab capacity to 300mm Silicon and 200mm Silicon Carbide and resizing our global cost base
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 third quarter ended September 28, 2024. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported third quarter net revenues of $3.25 billion, gross margin of 37.8%, operating margin of 11.7%, and net income of $351 million or $0.37 diluted earnings per share.
Jean-Marc Chery, ST President & CEO, commented:
- “Q3 net revenues were in line with the midpoint of our business outlook range. Our revenues, compared to our expectations, were higher in Personal Electronics, declined less in Industrial and were lower in Automotive. Q3 gross margin of 37.8% was broadly in line with the mid-point of our business outlook range.”
- “First nine months net revenues decreased 23.5% year-over-year across all reportable segments, particularly in Microcontrollers, which is impacted by a continuing weakness in the Industrial market. Operating margin was 13.1% and net income was $1.22 billion.”
- “Our fourth quarter business outlook, at the mid-point, is for net revenues of $3.32 billion, decreasing year-over-year by 22.4% and increasing sequentially by 2.2%; gross margin is expected to be about 38%, impacted by about 400 basis points of unused capacity charges.”
- “The midpoint of this outlook translates into full year 2024 revenues of about $13.27 billion, representing a 23.2% year-over-year decrease, in the low-end of the range indicated in the previous quarter, and a gross margin slightly below that provided in such indication.”
- “Based on our current customer order backlog and demand visibility, we anticipate a revenue decline between Q4 2024 and Q1 2025 well above normal seasonality.”
- “We are launching a new company-wide program to reshape our manufacturing footprint accelerating our wafer fab capacity to 300mm Silicon (Agrate and Crolles) and 200mm Silicon Carbide (Catania) and resizing our global cost base. This program should result in strengthening our capability to grow our revenues with an improved operating efficiency resulting in annual cost savings in the high triple-digit million-dollar range exiting 2027.”
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) | Q3 2024 | Q2 2024 | Q3 2023 | Q/Q | Y/Y |
| Net Revenues | $3,251 | $3,232 | $4,431 | 0.6% | -26.6% |
| Gross Profit | $1,228 | $1,296 | $2,109 | -5.2% | -41.8% |
| Gross Margin | 37.8% | 40.1% | 47.6% | -230 bps | -980 bps |
| Operating Income | $381 | $375 | $1,241 | 1.8% | -69.3% |
| Operating Margin | 11.7% | 11.6% | 28.0% | 10 bps | -1,630 bps |
| Net Income | $351 | $353 | $1,090 | -0.6% | -67.8% |
| Diluted Earnings Per Share | $0.37 | $0.38 | $1.16 | -2.6% | -68.1% |
Third Quarter 2024 Summary Review
Reminder: On January 10, 2024, ST announced a new organization which implied a change in segment reporting starting Q1 2024. Prior year comparative periods have been adjusted accordingly. See Appendix for more detail.
| Net Revenues by Reportable Segment (US$ m) | Q3 2024 | Q2 2024 | Q3 2023 | Q/Q | Y/Y |
| Analog products, MEMS and Sensors (AM&S) segment | 1,185 | 1,165 | 1,367 | 1.7% | -13.3% |
| Power and discrete products (P&D) segment | 807 | 747 | 989 | 7.9% | -18.4% |
| Subtotal: Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group | 1,992 | 1,912 | 2,356 | 4.2% | -15.5% |
| Microcontrollers (MCU) segment | 829 | 800 | 1,466 | 3.6% | -43.4% |
| Digital ICs and RF Products (D&RF) segment | 426 | 516 | 605 | -17.4% | -29.7% |
| Subtotal: Microcontrollers, Digital ICs and RF products (MDRF) Product Group | 1,255 | 1,316 | 2,071 | -4.6% | -39.4% |
| Others | 4 | 4 | 4 | – | – |
| Total Net Revenues | 3,251 | 3,232 | 4,431 | 0.6% | -26.6% |
Net revenues totaled $3.25 billion, representing a year-over-year decrease of 26.6%. Year-over-year net sales to OEMs and Distribution decreased 17.5% and 45.4%, respectively. On a sequential basis, net revenues increased 0.6%, in line with the mid-point of ST’s guidance.
Gross profit totaled $1.23 billion, representing a year-over-year decrease of 41.8%. Gross margin of 37.8%, 20 basis points below the mid-point of ST’s guidance, decreased 980 basis points year-over-year, mainly due to product mix and, to a lesser extent, to sales price and higher unused capacity charges.
Operating income decreased 69.3% to $381 million, compared to $1.24 billion in the year-ago quarter. ST’s operating margin decreased 1,630 basis points on a year-over-year basis to 11.7% of net revenues, compared to 28.0% in the third quarter of 2023.
By reportable segment1, 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 13.3% mainly due to decreases in Imaging and in Analog.
- Operating profit decreased by 41.2% to $175 million. Operating margin was 14.8% compared to 21.8%.
Power and Discrete products (P&D) segment:
- Revenue decreased 18.4%.
- Operating profit decreased by 54.0% to $121 million. Operating margin was 15.0% compared to 26.5%.
In Microcontrollers, Digital ICs and RF products (MDRF) Product Group:
Microcontrollers (MCU) segment:
- Revenue decreased 43.4% mainly due to a decrease in GP MCU.
- Operating profit decreased by 78.2% to $116 million. Operating margin was 14.0% compared to 36.4%.
Digital ICs and RF products (D&RF) segment:
- Revenue decreased 29.7% mainly due to a decrease in ADAS (automotive ADAS and infotainment).
- Operating profit decreased by 49.5% to $114 million. Operating margin was 26.8% compared to 37.3%.
Net income and diluted Earnings Per Share decreased to $351 million and $0.37 respectively compared to $1.09 billion and $1.16 respectively in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| Trailing 12 Months | ||||||
| (US$ m) | Q3 2024 | Q2 2024 | Q3 2023 | Q3 2024 | Q3 2023 | TTM Change |
| Net cash from operating activities | 723 | 702 | 1,881 | 3,764 | 6,062 | -37.9% |
| Free cash flow (non-U.S. GAAP)2 | 136 | 159 | 707 | 813 | 1,725 | -52.9% |
Net cash from operating activities was $723 million in the third quarter compared to $1.88 billion in the year-ago quarter.
Net Capex (non-U.S. GAAP) was $565 million in the third quarter compared to $1.15 billion in the year-ago quarter.
Free cash flow (non-U.S. GAAP) was $136 million in the third quarter, compared to $707 million in the year-ago quarter.
Inventory at the end of the third quarter was $2.88 billion, compared to $2.81 billion in the previous quarter and $2.87 billion in the year-ago quarter. Days sales of inventory at quarter-end was 130 days, similar to the previous quarter, and compared to 114 days in the year-ago quarter.
In the third quarter, ST paid cash dividends to its stockholders totaling $80 million and executed a $92 million share buy-back, as part of its current share repurchase program.
ST’s net financial position (non-U.S. GAAP) was $3.18 billion as of September 28, 2024, compared to $3.20 billion as of June 29, 2024 and reflected total liquidity of $6.30 billion and total financial debt of $3.12 billion. Adjusted net financial position (non-U.S. GAAP), taking into consideration the effect on total liquidity of advances from capital grants for which capital expenditures have not been incurred yet, stood at $2.82 billion as of September 28, 2024.
Corporate developments
Since the beginning of 2024, ST has made significant changes in the way it is structured and operates, including the re-organization of its Product Groups. Since October 1, 2024, Lorenzo Grandi, President and CFO, has taken additional responsibilities, with a perimeter now also covering Supply Chain, Corporate Development and Integrated External Communication in addition to Finance, Global Procurement, Digital Transformation and Information Technology, Enterprise Risk Management and Resilience. ST’s Executive Committee remains unchanged and continues to report to Jean-Marc Chery, ST President and CEO.
Business Outlook
ST’s guidance, at the mid-point, for the 2024 fourth quarter is:
- Net revenues are expected to be $3.32 billion, an increase of 2.2% sequentially, plus or minus 350 basis points.
- Gross margin of 38%, plus or minus 200 basis points.
- This outlook is based on an assumed effective currency exchange rate of approximately $1.11 = €1.00 for the 2024 fourth quarter and includes the impact of existing hedging contracts.
- The fourth quarter will close on December 31, 2024.
Conference Call and Webcast Information
ST will conduct a conference call with analysts, investors and reporters to discuss its third quarter 2024 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 4:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST’s website, https://investors.st.com, and will be available for replay until November 15, 2024.
2024 Capital Markets Day
ST will conduct a live webcast of its 2024 Capital Markets Day meeting from Paris, France, on Wednesday, November 20, 2024, from 9:00 a.m. to 1:15 p.m. Central European Time (CET) / 3:00 a.m. to 7:15 a.m. U.S. Eastern Time (ET). The live webcast featuring video, audio and presentation slides will be accessible at ST’s website, https://investors.st.com. Copies of the presentations and a recording of the event will be made available at https://investors.st.com.
Use of Supplemental Non-U.S. GAAP Financial Information
This press release contains supplemental non-U.S. GAAP financial information.
Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with ST’s consolidated financial statements prepared in accordance with U.S. GAAP.
See the Appendix of this press release for a reconciliation of ST’s non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures.
