STMicroelectronics (STM) Q2 2024 earnings summary

Executive summary

• Q2 2024 net revenues were $3.23 billion, above the midpoint of guidance, driven by Personal Electronics but offset by weaker Automotive and Industrial demand; gross margin was 40.1%, operating margin 11.6%, and net income $353 million.

• H1 2024 net revenues reached $6.70 billion, down 21.9% year-over-year, with gross margin at 40.9% and net income at $865 million.

• Year-over-year, Q2 net revenues declined 25.3%, gross margin fell to 40.1% from 49%, and net income dropped 64.8% to $353 million.

• Customer order bookings in Q2 did not materialize as expected, leading to a delayed recovery in Industrial and lower than anticipated Automotive demand.

• First half 2024 revenues were $6,697 million, down 21.9% year-over-year, driven by lower sales across all segments, a 13% drop in average selling prices, and a 9% decrease in volumes.

Financial highlights

• Q2 gross profit was $1.3 billion, down 38.9% year-over-year; operating margin dropped to 11.6% from 26.5% a year ago.

• Earnings per diluted share fell 64.2% to $0.38; free cash flow was $159 million, down from $209 million a year ago.

• Operating profit was $941 million in H1 2024, down from $2,304 million year-over-year.

• Inventory at quarter-end was $2.81 billion, with days sales of inventory at 130 days.

• Net financial position improved to $3.2 billion as of June 29, 2024; total liquidity $6.29 billion, total debt $3.09 billion.

Outlook and guidance

• Q3 2024 net revenues expected at $3.25 billion, down 26.7% year-over-year but up 0.6% sequentially; gross margin expected at 38%, impacted by 350 bps of unused capacity charges.

• Full-year 2024 revenue guidance revised to $13.2–$13.7 billion, with gross margin around 40%.

• Industrial recovery delayed, automotive growth lower than expected in H2; continued investment in capacity, R&D, and carbon neutrality initiatives.

• 2024 net Capex planned at about $2.5 billion, focused on strategic manufacturing initiatives, including silicon carbide and 300mm wafer fabs.