STMicroelectronics N : Q2 2021 Financial Results Presentation

STMicroelectronics

Q2 2021 Financial Results

July 29, 2021

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, which may impact end-market demand for our products;
• customer demand that differs from projections;
• the ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
• changes in economic, social, public health, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macroeconomic or regional events, military conflicts, social unrest, labor actions, or terrorist activities;
• unanticipated events or circumstances, which may impact our ability to execute our plans and/or meet the objectives of our R&D and manufacturing programs, which benefit from public funding;
• legal, political and economic uncertainty surrounding Brexit may be a continued source of instability in international markets and currency exchange rate volatility and may adversely affect business activity, political stability and economic conditions and while we do not have material operations in the U.K. and have not experienced any material impact from Brexit on our underlying business to date, we cannot predict its future implications;
• financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
• the loading, product mix, and manufacturing performance of our production facilities and/or our required volume to fulfill capacity reserved with suppliers or third party manufacturing providers;
• availability and costs of equipment, raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations;
• the functionalities and performance of our IT systems, which are subject to cybersecurity threats and which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers or suppliers;
• theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of global and local privacy legislation, including the EU's General Data Protection Regulation ("GDPR");
• the impact of intellectual property ("IP") claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
• changes in our overall tax position as a result of changes in tax rules, new or revised legislation, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
• variations in the foreign exchange markets and, more particularly, the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations;
• the outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
• product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts;
• natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, the effects of climate change, health risks and epidemics such as the COVID-19 in locations where we, our customers or our suppliers operate;
• the duration and the severity of the global outbreak of COVID-19 may continue to negatively impact the global economy in a significant manner for an extended period of time, and also could materially adversely affect our business and operating results;
• industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers; and
• the ability to successfully ramp up new programs that could be impacted by factors beyond our control, including the availability of critical third party components and performance of subcontractors in line with our expectations.

Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward looking terminology, such as "believes," "expects," "may," "are expected to," "should," "would be," "seeks" or "anticipates" or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.

Some of these risk factors are set forth and are discussed in more detail in "Item 3. Key Information - Risk Factors" included in our Annual Report on Form 20-F for the year ended December 31, 2020, as filed with the SEC on February 24, 2021. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, 2 believed, or expected.We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.

Q2

2021

H1

2021

Q3

2021

FY

2021

Highlights

• Net revenues and gross margin came in at the high-end of our business outlook range, driven by continued strong demand globally
• Net revenues were $2.99B, up 43.4% Y/Y. Sequentially net revenues decreased 0.8% due to normal seasonality in Personal Electronics
• Gross margin of 40.5% and operating margin of 16.3% improved from 35.0% and 5.1%, respectively
• Net income increased to $412M
• Free cash flow was $125M, after net capital expenditure payments of $438M
• We exited the second quarter with a net cash position at $1.08B
• Net revenues increased 39.1% Y/Y to $6.01B, driven by growth in all product groups, except the RF Communications sub-group
• Operating margin was 15.5% and net income $776M
• Outlook at mid-point is for net revenues of $3.2B, representing an increase of 20.0% Y/Y and 7.0% sequentially
• Gross margin expected to be about 41.0% at the mid-point
• We will now drive the Company based on a plan for FY21 revenues of $12.5B, plus or minus $100M: a Y/Y increase of 22.3% at the mid- point. This growth is expected to be driven by strong dynamics in all the end markets we address and our engaged customer programs
• We now plan to invest about $2.1B in CAPEX to support the strong market demand and our strategic initiatives

3

							Q2 2021 Financial highlights
		Revenues = $2.99B							Operating Margin = 16.3%
3.5								20%
3.0
							15%
2.5								10%
2.0								5%
1.5								0%
	Q220	Q121	Q221				Q220	Q121	Q221

		Gross Margin = 40.5%				Net Income = $412M
42%							500
							400
40%
							300
38%
							200
36%
34%								100
32%								0
	Q220	Q121	Q221		Q220	Q121	Q221	4

Revenues = $6.01B
7.0
6.0
5.0
4.0
3.0
H120	H121

Gross Margin = 39.7%

42%
40%
38%
36%
34%
32%
H120	H121

H1 2021 Financial highlights

Operating Margin = 15.5%

20%
15%
10%
5%
0%
H120	H121

Net Income = $776M
800
600
400
200
0
H120	H121	5