ST: STMicroelectronics Reports 2025 First Quarter Financial Results

PR No: C3332C STMicroelectronics Reports 2025 First Quarter Financial Results Q1 net revenues $2.52 billion; gross margin 33.4%; operating income $3 million; net income $56 million Business outlook at mid-point: Q2 net revenues of $ 2.71 billion and gross margin of 33.4 % Company-wide program to reshape manufacturing footprint and resize global cost base on track; annual cost savings target in the high triple-digit million-dollar range exiting 2027 confirmed. Geneva, April 24, 2025 - 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 first quarter ended March 29, 2025. This press release also contains non-U.S. GAAP measures (see Appendix for additional information). ST reported first quarter net revenues of $2.52 billion, gross margin of 33.4%, operating income of $3 million and net income of $56 million or $0.06 diluted earnings per share. Jean-Marc Chery, ST President & CEO, commented: "Q1 net revenues came in line with the midpoint of our business outlook range, driven by higher revenues in Personal Electronics offset by lower-than-expected revenues in Automotive and Industrial. Gross margin was slightly below the mid-point of our business outlook range mainly due to product mix." "On a year-over-year basis, Q1 net revenues decreased 27.3%, operating margin decreased to 0.1% from 15.9% and net income decreased 89.1% to $56 million." "In the first quarter, our book-to-bill ratio improved with both Automotive and Industrial above parity." "Our second quarter business outlook, at the mid-point, is for net revenues of $2.71 billion, decreasing year-over-year by 16.2% and increasing sequentially by 7.7%; gross margin is expected to be about 33.4%, impacted by about 420 basis points of unused capacity charges." "We plan to maintain our Net Capex (non-U.S. GAAP 1 ) plan for 2025 between $2.0 billion and $2.3 billion mainly to execute the reshaping of our manufacturing footprint." "While we see Q1 2025 as the bottom, in the current uncertain environment we are focusing on what we can control: keep on innovating to continuously improve and accelerate the competitiveness of our product and technology portfolio, focus on advanced manufacturing and tightly manage our costs. In this respect our company-wide program to reshape ST manufacturing footprint and resize our global cost base is on track and we confirm the annual cost savings target in the high triple-digit million-dollar range exiting 2027." Quarterly Financial Summary First Quarter 2025 Summary Review ST made some adjustments to its segment reporting effective starting January 1, 2025. Prior year comparative periods have been adjusted accordingly. See Appendix for more detail. Net revenues totaled $2.52 billion, representing a year-over-year decrease of 27.3%. Year-over-year net sales to OEMs and Distribution decreased 25.7% and 31.2%, respectively. On a sequential basis, net revenues decreased 24.2%, 20 basis points better than the mid-point of ST's guidance. Gross profit totaled $841 million, representing a year-over-year decrease of 41.7%. Gross margin of 33.4%, 40 basis points below the mid-point of ST's guidance, decreased 830 basis points year-over-year, mainly due to product mix and, to a lesser extent, higher unused capacity charges and lower sales price. Operating income decreased 99.5% to $3 million, compared to $551 million in the year-ago quarter. ST's operating margin decreased 1,580 basis points on a year-over-year basis to 0.1% of net revenues, compared to 15.9% in the first quarter of 2024. Excluding Impairment, restructuring charges and other related phase-out costs 3 , operating income stood at $11 million in the first quarter. By reportable segment , 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 23.9% mainly due to a decrease in Analog. Operating profit decreased by 66.7% to $82 million. Operating margin was 7.7% compared to 17.5%. Power and Discrete products (P&D) segment: Revenue decreased 37.1%. Operating profit decreased from a positive $77 million to a negative $28 million. Operating margin was -6.9% compared to 12.1%. In Microcontrollers, Digital ICs and RF products (MDRF) Product Group : Embedded Processing (EMP) segment: Revenue decreased 29.1% mainly due to a decrease in GPAM. Operating profit decreased by 71.5% to $66 million. Operating margin was 8.9% compared to 22.2%. RF & Optical Communications (RF&OC) segment: Revenue decreased 19.2%. Operating profit decreased by 59.0% to $43 million. Operating margin was 13.9% compared to 27.4%. Net income and diluted Earnings Per Share decreased to $56 million and $0.06 respectively compared to $513 million and $0.54 respectively in the year-ago quarter. Excluding Impairment, restructuring charges and other related phase-out costs net of the relevant tax impact, Net income and diluted Earnings Per Share 2 stood at $63 million and $0.07 respectively in the first quarter of 2025. Cash Flow and Balance Sheet Highlights Net cash from operating activities was $574 million in the first quarter compared to $859 million in the year-ago quarter. Net Capex (non-U.S. GAAP), was $530 million in the first quarter compared to $967 million in the year-ago quarter. Free cash flow (non-U.S. GAAP) was positive at $30 million in the first quarter, compared to negative $134 million in the year-ago quarter. Inventory at the end of the first quarter was $3.01 billion, compared to $2.79 billion in the previous quarter and $2.69 billion in the year-ago quarter. Days sales of inventory at quarter-end was 167 days, compared to 122 days for both the previous quarter and the year-ago quarter. In the first quarter, ST paid cash dividends to its stockholders totaling $72 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 4 ) remained strong at $3.08 billion as of March 29, 2025, compared to $3.23 billion as of December 31, 2024 and reflected total liquidity of $5.96 billion and total financial debt of $2.88 billion. Adjusted net financial position (non-U.S. GAAP 1 ), taking into consideration the effect on total liquidity of advances from capital grants for which capital expenditures have not been incurred yet, stood at $2.71 billion as of March 29, 2025. Corporate developments On April 10, 2025, ST detailed its company-wide program to reshape manufacturing footprint and resize global cost base and confirmed the annual cost savings target in the high triple-digit million-dollar range exiting 2027. Specifically, ST disclosed further elements of its program to reshape its global manufacturing footprint. Business Outlook ST's guidance, at the mid-point, for the 2025 second quarter is: Net revenues are expected to be $2.71 billion, an increase of 7.7% sequentially, plus or minus 350 basis points. Gross margin of 33.4%, plus or minus 200 basis points. This outlook is based on an assumed effective currency exchange rate of approximately $1.08 = €1.00 for the 2025 second quarter and includes the impact of existing hedging contracts. The second quarter will close on June 28, 2025. This business outlook does not include any impact for potential further changes to global trade tariffs compared to the current situation. Conference Call and Webcast Information ST will conduct a conference call with analysts, investors and reporters to discuss its first quarter 2025 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 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 May 9, 2025. 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. Forward-looking Information Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management's current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated by such statements due to, among other factors: changes in global trade policies, including the adoption and expansion of tariffs and trade barriers, that could affect the macro-economic environment and adversely impact the demand for our products; uncertain macro-economic and industry trends (such as inflation and fluctuations in supply chains), which may impact production capacity and end-market demand for our products; customer demand that differs from projections which may require us to undertake transformation measures that may not be successful in realizing the expected benefits in full or at all; the ability to design, manufacture and sell innovative produc