STMicroelectronics reported U.S. GAAP financial results for the second quarter ended June 30, 2018. In addition, this press release contains non-U.S. GAAP measures (see Appendix for additional information).
Second quarter net revenues and gross margin were above the mid-point of the Company’s outlook. ST reported second quarter net revenues of $2.27 billion, gross margin of 40.2%, operating margin of 12.7%, and net income of $261 million or $0.29 diluted earnings per share.
“ST had another quarter of double-digit, year-over-year revenue growth, with improved performance across key financial metrics. We are on track with the goal set at our Capital Markets Day to grow year-over-year 2018 revenues between about 14% to 17%,” said Jean-Marc Chery, President & CEO, STMicroelectronics.
“Revenue increased 18% year-over-year on balanced growth across all product groups, regions and end markets, with an especially strong performance in Industrial,” he added further.
Financial Summary (U.S. GAAP)(1)
| ($ in millions except earnings per share) | Q2 2018 | Q1 2018 | Q2 2017 | Y/Y | Q/Q |
| Net Revenues | $2,269 | $2,226 | $1,923 | 18.0% | 1.9% |
| Gross Margin | 40.2% | 39.9% | 38.3% | 190 bps | 30 bps |
| Operating Income | $289 | $269 | $181 | 59.7% | 7.4% |
| Operating Margin | 12.7% | 12.1% | 9.4% | 330 bps | 60 bps |
| Net Income | $261 | $239 | $151 | 72.8% | 9.2% |
| Diluted Earnings Per Share | $0.29 | $0.26 | $0.17 | 70.6% | 11.5% |
(1) Certain amounts in the prior periods have been adjusted to reflect the January 1, 2018 adoption of ASU 2017-07 related to the reclassification of certain pension costs.
Second Quarter 2018 Summary Review
Effective January 1, 2018, the Subsystems business unit was transferred from Others to Analog, MEMS and Sensors Group (AMS). Prior periods have been restated accordingly.
| Net Revenues By Product Group
(in US$ millions) |
Q2 2018 | Q1 2018 | Q2 2017 | Y/Y | Q/Q |
| Automotive and Discrete Group (ADG) | $870 | $817 | $755 | 15.2% | 6.5% |
| Analog, MEMS and Sensors Group (AMS) | 613 | 655 | 553 | 10.7 | (6.4) |
| Microcontrollers and Digital ICs Group (MDG) | 782 | 750 | 612 | 27.8 | 4.3 |
| Others | 4 | 4 | 3 | 24.1 | 5.9 |
| Total Net Revenues | $2,269 | $2,226 | $1,923 | 18.0% | 1.9% |
Net revenues increased 1.9% sequentially, 40 basis points better than the mid-point of the Company’s guidance. On a year-over-year basis, second quarter net revenues increased 18.0% with all product groups delivering double-digit revenue growth. Year-over-year sales to OEMs and Distribution were up 9.8% and 33.4%, respectively.
Gross profit totaled $911 million, representing a year-over-year increase of 23.6%. Gross margin was 40.2%, 20 basis points better than the mid-point of the Company’s guidance, and increasing 190 basis points year-over-year, largely driven by improved manufacturing efficiency and reflecting a favorable mix shift toward higher value products.
Operating income was $289 million, compared to $181 million in the year-ago quarter, with all product groups growing double-digit and delivering improved profitability. The Company’s operating margin increased 330 basis points to 12.7% of net revenues, compared to 9.4% in the 2017 second quarter.
By product group, compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
- Revenue grew double-digits, in both Automotive and Power Discrete.
- Operating profit increased by 28.8% to $84 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 9.7% from 8.7%.
Analog, MEMS and Sensors Group (AMS):
- Revenue grew double-digits, in both Imaging and in Analog.
- Operating profit increased by 24.1% to $64 million, mainly due to higher revenue and associated gross profit. Operating margin increased to 10.5% from 9.4%.
Microcontrollers and Digital ICs Group (MDG):
- Revenue grew double-digits, in both Microcontrollers and Digital ICs.
- Operating profit increased by 121.6% to $159 million mainly due to higher revenue and associated gross profit. Operating margin increased to 20.3% from 11.7%.
Net income and diluted earnings per share increased to $261 million and $0.29, respectively, compared to $151 million and $0.17, respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| Trailing 12 Months | ||||||
| US$ in millions | Q2 2018 | Q1 2018 | Q2 2017 | Q2 2018 | Q2 2017 | TTM Change |
| Net cash from operating activities | $360 | $455 | $369 | $1,865 | $1,368 | 36.3% |
