STMicroelectronics Reports 2014 Fourth Quarter and Full Year Financial Results
-- Fourth quarter in line with expectations with net revenues of $1.83 billion and gross margin of 33.8% -- Net income turnaround to positive $128 million in 2014 -- Free cash flow turnaround to positive $197 million in 2014*
GENEVA, Jan. 28, 2015 (GLOBE NEWSWIRE) -- STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported financial results for the fourth quarter and full year ended December 31, 2014.
Fourth quarter net revenues totaled $1.83 billion, gross margin was 33.8%, and net income per share was $0.05. For the full year 2014, net revenues totaled $7.40 billion, gross margin was 33.7%, and net income per share was $0.14.
"Overall, 2014 was a year in which we made significant steps forward," commented Carlo Bozotti, STMicroelectronics President and Chief Executive Officer.
"Thanks to the talent and product leadership drive of our employees, we have built a more focused, market-driven portfolio of sense, power, automotive products and embedded processing solutions. New flagship products during this past year included our 32-bit microcontrollers for general purpose and automotive applications, MEMS microphones, touch-screen controllers, ultra-HD products for set-top box and low voltage power MOSFETs and IGBTs. On a year-over-year basis, revenues in 2014 for the Microcontrollers and Automotive Groups increased by 10% and 8% respectively, with the Industrial & Power Discrete Group growing as well.
"We captured numerous key design wins for new products and functionality at existing customers. We also enlarged our customer base, through an expansion of market reach and our ability to seize opportunities for application diversification, including the Internet of Things. Our customer base expansion was demonstrated by the strong performance from distribution that grew to 31% of revenues in 2014 from 26% in 2013.
"ST is making solid progress on key performance and financial metrics. We met our operating expense target levels earlier than planned, achieved a significant turnaround in operating income, net income and cash flow, improved gross margin and operating margin and maintained our financial flexibility."
-----
(*)Free cash flow is a non-U.S. GAAP measure. Please refer to Attachment A for additional information explaining why the Company believes these measures are important and reconciliation to U.S. GAAP.
Summary Financial Highlights
U.S. GAAP (Million US$) Q4 2014 Q3 2014 Q4 2013 FY 2014 FY 2013(a) Net Revenues 1,829 1,886 2,015 7,404 8,082 Gross Margin 33.8% 34.3% 32.9% 33.7% 32.3% Operating Income (Loss), as reported 38 37 (11) 168 (465) Net Income (Loss) attributable to parent company 43 72 (36) 128 (500) 1. Net revenues include sales recorded by ST-Ericsson as consolidated by ST. ST-Ericsson was deconsolidated on September 1, 2013. Non-U.S. GAAP* Before impairment and restructuring charges (Million US$) Q4 2014 Q3 2014 Q4 2013 FY 2014 FY 2013 Operating Income (Loss) 58 75 18 258 (173) Operating Margin 3.2% 4.0% 0.9% 3.5% (2.1%)
Fourth Quarter Review
Net revenues decreased 3.0% sequentially. By region of shipment, Greater China & South Asia increased 3.2%, while the Americas, Japan & Korea, and EMEA decreased by 6.8%, 8.1%, and 8.9%, respectively, on a sequential basis. As anticipated, net revenues in the fourth quarter benefited from a one-time $13 million licensing payment.
On a year-over-year basis, net revenues decreased 9.2%, reflecting the combination of the phase-out of legacy ST-Ericsson products as well as lower DCG sales, specifically set-top box, and AMS sales on product pruning and product generation transition.
Fourth quarter gross profit was $619 million and gross margin was 33.8%. On a sequential basis, gross margin decreased 50 basis points, primarily reflecting price pressure and higher unused capacity charges in digital technology partially offset by manufacturing efficiencies and favorable currency effects. On a year-over-year basis, gross margin improved 90 basis points, reflecting the combined benefits of manufacturing efficiencies and favorable currency effects, offset in part by price pressure and unused capacity charges.
Combined R&D and SG&A in the fourth quarter increased 1.3% to $611 million from $603 million in the third quarter, principally due to a longer calendar. On a year-over-year basis, combined R&D and SG&A expenses decreased 6.9% mainly reflecting the ST-Ericsson wind-down, cost reduction initiatives and favorable currency effects.
Other income and expenses, net in the fourth quarter, increased to $50 million from $32 million in the third quarter, with the $18 million increase mainly reflecting the catch-up of R&D funding.
Impairment, restructuring and other related closure costs for the fourth quarter were $20 million, compared to $38 million and $29 million in the prior and year-ago quarter.
Earnings on equity investments in the fourth quarter were $17 million and mostly related to the sale of certain patents by ST-Ericsson SA, in liquidation.
-----
(*)Operating income (loss) before impairment and restructuring charges and operating margin before impairment and restructuring charges are non-U.S. GAAP measures. For additional information and reconciliation to U.S. GAAP, please refer to Attachment A.
Fourth quarter net income was $43 million or $0.05 per share, compared to a net income of $0.08 and a net loss of $(0.04) per share in the prior and year-ago quarter, respectively. On an adjusted basis, net of related taxes, ST reported non-U.S. GAAP net income per share of $0.07 in the fourth quarter excluding impairment and restructuring charges, compared to a net income per share of $0.13 and a net loss of $(0.01) per share in the prior and year-ago quarter, respectively.*
For the fourth quarter of 2014, the effective average exchange rate for the Company was approximately $1.29 to EUR1.00, compared to $1.34 to EUR1.00 for the third quarter of 2014 and $1.34 to EUR1.00 for the fourth quarter of 2013.
Also, during the fourth quarter of 2014, ST notified IBM of its intention to end participation in the IBM Technology Development Alliance.
Quarterly Net Revenues Summary
As previously announced, in the fourth quarter of 2014 the Digital Convergence Group (DCG) and Imaging, Bi-CMOS and Silicon Photonics (IBP) Group have been combined under one single organization, called Digital Product Group (DPG). DPG's focus is on ASSPs addressing home gateway and set-top box, as well as FD-SOI ASICs for consumer applications; FD-SOI and mixed process ASICs, including silicon photonics, addressing communication infrastructure; and differentiated imaging products. Effective in the first quarter of 2015, DPG will be reported as a standalone product group.
Net Revenues By Product Line and Segment (Million US$) Q4 2014 Q3 2014 Q4 2013 Analog & MEMS (AMS) 266 268 337 Automotive (APG) 436 464 449 Industrial & Power Discrete (IPD) 462 486 447 Sense & Power and Automotive Products (SP&A) 1,164 1,218 1,233 Digital Convergence Group (DCG) (a) 166 202 307 Imaging, Bi-CMOS ASIC and Silicon Photonics (IBP) (a) 93 84 112 Microcontroller, Memory & Secure MCU (MMS) 388 377 357 Other EPS 13 - - Embedded Processing Solutions (EPS) 660 663 776 Others 5 5 6 Total 1,829 1,886 2,015
(a) Reflecting the transfer of Wireless (legacy ST-Ericsson products) and the Image Signal Processor business unit from IBP to DCG as of January 1, 2014, the Company has reclassified prior period revenues.
Net Revenues By Market Channel (%) Q4 2014 Q3 2014 Q4 2013 Total OEM 68% 68% 73% Distribution 32% 32% 27%
-----
(*) Adjusted net earnings per share is a non-U.S. GAAP measure. For additional information and reconciliation to U.S. GAAP, please refer to Attachment A.
Quarterly Revenues and Operating Results by ST Product Segment
Q4 2014 Q3 2014 Q4 2013 Operating Q4 2014 Operating Q3 2014 Operating Q4 2013 Operating Segment Net Income Net Income Net Income (Million US$) Revenues (Loss) Revenues (Loss) Revenues (Loss) Sense & Power andAutomotive Products (SP&A) 1,164 102 1,218 114 1,233 96 Embedded Processing Solutions (EPS) 660 (10) 663 (27) 776 (66) Others (a)(b) 5 (54) 5 (50) 6 (41) TOTAL 1,829 38 1,886 37 2,015 (11)
(a) Net revenues of "Others" include revenues from sales of Subsystems, assembly services, and other revenues. |
