STMicroelectronics Reports 3Q 2017 ResultsThird Quarter and Nine Months Financial Results

STMicroelectronics reported financial results for the third quarter and nine months ended Sept. 30, 2017.
 
Third quarter net revenues totaled $2.14 billion, gross margin was 39.5%, and net income was $236 million, or $0.26 per share.
 
“In the third quarter, we achieved a number of important milestones: quarterly revenues exceeded $2.1 billion, up almost 19% year-over-year; gross margin was 39.5% and operating margin before impairment and restructuring was 13.7%,” said Carlo Bozotti, STMicroelectronics president and CEO. “All product groups recorded double-digit year-over-year revenue growth, driven by strong demand across all geographies in our focus application areas of Internet of Things, Smartphones, Industrial and Smart Driving.”
 
Third quarter net revenues increased 11.1% sequentially, a better than seasonal performance and 210 basis points higher than the mid-point of the company’s guidance. On a sequential basis, Microcontrollers and Digital ICs Group (MDG) revenues were up 14.6%, led by general purpose microcontrollers which again posted record quarterly sales.
 
Analog and MEMS Group (AMG) and Automotive and Discrete Group (ADG) also grew on a sequential basis, up 4.2% and 2.6%, respectively. Imaging Product Division revenues, reported in Others, registered a triple-digit sequential revenue growth reflecting the initial ramp in wireless applications of ST’s new program, including the Company’s Time-of-Flight and new specialized imaging technologies.
 
On a year-over-year basis, third quarter net revenues increased by 18.9% on double-digit growth across all product groups and strong traction with new products. Analog and MEMS Group (AMG) third quarter revenues grew 24.8% year-over-year due to a sharp recovery in Analog and strong growth in MEMS. Microcontrollers and Digital ICs Group (MDG) revenues increased 19.4% on very strong growth for general purpose microcontrollers, in part offset by lower sales of businesses undergoing phase-out. Automotive and Discrete Group (ADG) third quarter revenues increased 10.0% compared to the year-ago quarter on strong results for both Automotive and Power Discrete.
 
Third quarter gross profit was $845 million and gross margin was 39.5%, 50 basis points above the mid- point of the Company’s guidance. On a sequential basis, gross margin increased 120 basis points, mainly due to improved manufacturing efficiency and better product mix, partially offset by normal price pressure and negative currency effects, net of hedging.
 
Operating income of $278 million in the third quarter increased by $100 million and $188 million compared to the prior and year-ago quarter, respectively. Third quarter operating income before impairment and restructuring charges was $292 million, equivalent to 13.7% of net revenues compared to $184 million, equivalent to 9.6% of net revenues in the prior quarter driven by a higher level of revenues and improved gross margin. On a year-over-year basis, operating income before impairment and restructuring charges increased by $173 million reflecting higher revenues, manufacturing efficiencies, improved product mix and better fab loading.
 
Third quarter net income was $236 million, equivalent to $0.26 per share, compared to net income of $151 million, equivalent to $0.17 per share, in the prior quarter. On a year-over-year basis, net income increased by $165 million, equivalent to $0.18 per share, from net income of $71 million, equivalent to $0.08 per share, in the year-ago quarter.
 
 
Nine Months 2017 Review
Net revenues in the first nine months 2017 increased 15.0% to $5.88 billion from $5.11 billion in the first nine months 2016, or 16.4% excluding businesses undergoing a phase-out (mobile legacy products and set-top box).
 
By product group, first nine months 2017 Analog and MEMS Group (AMG) revenues were up 24.3%, on strong growth in both Analog and MEMS. Microcontrollers and Digital ICs Group (MDG) revenues increased 13.7% compared to the prior period on strong growth in general purpose microcontrollers partially offset by lower revenues for products undergoing phase-out. Automotive and Discrete Group (ADG) revenues increased 6.8% in the first nine months 2017 compared to the first nine months 2016 on growth in both Automotive and Discrete. Imaging Product Division revenues, included in Others, increased very significantly in the first nine months 2017 compared to the prior year period.
 
Year-to-date gross profit was $2.27 billion. Gross margin in the first nine months 2017 improved by 410 basis points to 38.5% from 34.4% in the year-ago period. Specifically, the first nine-months 2017 gross margin benefited from manufacturing efficiencies, better product mix, and improved fab loading partially offset by normal price pressure.
 
Operating income in the first nine months of 2017 improved significantly by $500 million to $585 million compared to the prior year period. First nine months 2017 net income was $494 million, equivalent to $0.55 per share, compared to net income of $53 million, or $0.06 per share in the year-ago period.
 
ST’s net financial position was $446 million at September 30, 2017 compared to $524 million at July 1, 2017. At September 30, 2017, ST’s total financial resources were $2.62 billion; total financial debt was $2.18 billion; and total equity, including non-controlling interest, was $5.15 billion.