Slide 1: STMicroelectronics Q4 & FY14 Earnings
STMicroelectronics Q4 & FY14 Earnings January 28, 2015
Slide 2: Forward Looking Statements
Forward Looking Statements 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 2 Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 193
Slide 3: Agenda
Agenda 2 Agenda Speakers 9:30 am Welcome Carlo Bozotti Q4 & FY14 Business President & CEO and Financial Performance Supported by Embedded Processing Solutions Sense, Power & Automotive Jean-Marc Chery Chief Operating Officer Closing remarks Carlo Ferro 10:30 am Questions & Answers Chief Financial Of
Slide 4: Who We Are
Who We Are 4 • A global semiconductor leader • The largest European semiconductor company • 2014 revenues of $7.40B • Approximately 43,600 employees worldwide • Approximately 8,700 people working in R&D • 11 manufacturing sites • Listed on New York Stock Exchange, Euronext Paris and Borsa Italiana,
Slide 5: Product & Technology Leadership, Customers, Operational and Financial Performance
5 Product & Technology Leadership Customers Operational and Financial Performance
Slide 6: Where you find Us
Where you find Us 6 Our MEMS & Sensors are augmenting the consumer experience Our digital consumer products are powering the augmented digital lifestyle Our automotive products are making driving safer, greener and more entertaining Our Microcontrollers are everywhere making everything Our smart pow
Slide 7: Product & Technology Leadership, Customers, Operational and Financial Performance
7 Product & Technology Leadership Customers Operational and Financial Performance
Slide 8: Agenda
Agenda 8 Q4 & FY14 Business and Financial Performance Embedded Processing Solutions Sense, Power & Automotive
Slide 9: Financial Performance
Financial Performance 9 In US$M, except EPS 4Q13 1Q14 2Q14 3Q14 4Q14 FY13 FY14 Net Revenues 2,015 1,825 1,864 1,886 1,829 8,082 7,404 Gross Margin 32.9% 32.8% 34.0% 34.3% 33.8% 32.3% 33.7% Operating Income (Loss) before impairment, restructuring* 18 8 118 75 58 (173) 258 Operating Margin before impa
Slide 10: A Year of Progress
A Year of Progress 10 10 Revenues = $7.40B Operating Margin = 3.5% 150 9% 8000 100 6% US$M 50 3% 6000 0 0% -50 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 -3% -100 -6% 4000 -150 -9% FY13 FY14 -200 -12% ST-Ericsson legacy products ST excluding ST-Ericsson legacy products Operating Income (loss) befo
Slide 11: Well Balanced Product Portfolio
Well Balanced Product Portfolio 11 Revenues by Product Group FY 2014 (*) Effective 4Q14, ST Digital Convergence discontinued its commodity Analog, MEMS Group (DCG)* camera module products and DCG and IBP product & Sensors (AMS) Imaging, BiCMOS ASIC & Digital Product groups merged to form 10% Silicon
Slide 12: ST Revenues
ST Revenues 12 12 FY14 Revenues = $7.40B 8000 Americas 14% 15% US$M 6000 EMEA 4000 45% 26% Greater China & South Asia FY12 FY13 FY14 ST-Ericsson legacy products Japan & Korea ST excluding ST-Ericsson legacy products 2200 4Q14 down 3.0% sequentially 2000 • Met guidance 1800 1600 FY14 reported decline
Slide 13: Expanding the Customer Base
Expanding the Customer Base 13 FY14 FY14 Top 10 OEMs*: Apple Bosch Top 10 Cisco OEMs Conti Delta Mass Market** HP Microsoft Samsung Seagate Distribution Western Digital (as % of total revenues) 32% Top 4 Distributors*: 30% Arrow Electronics 28% Avnet 26% Wintech 24% Yosun 22% FY13 FY14 *Listed alpha
Slide 14: ST Gross Margin
ST Gross Margin 14 4Q14 Gross Margin = 33.8% Met guidance 35% Gross Margin - Reported • Primarily reflecting price pressure and higher unused capacity charges Guidance (at Midpoint) in digital technology, partially offset by manufacturing efficiencies and favorable currency effects 34% • About 160 b
Slide 15: ST Operating Expenses
ST Operating Expenses 15 Net Operating Expenses* 900 4Q14 combined SG&A and R&D at $611M 800 • Up $8M sequentially, principally due to a longer calendar • Down $46M y-o-y, mainly reflecting the ST-Ericsson wind-down, 700 cost reduction initiatives and favorable currency effect • $576M net of R&D gra
Slide 16: Financial Flexibility
Financial Flexibility 16 Dec 31 Sept 27 Dec 31 300 Free Cash Flow* (US$M) End of period (US$M) 2014 2014 2013 2014 200 Total Liquidity 2,351 2,460 1,894 100 Short term debt (202) (223) (225) 2012 Long-term debt (1,603) (1,743) (928) 0 Total Financial Debt (1,805) (1,966) (1,153) -100 Net Financial P
Slide 17: Currency Exposure
Other 1% Currency Exposure 17 €* • Quarterly effect of ±1% change (€ / $), before short term impact on revenues 14% • ±$4M to $5M on gross profit Revenues • Further ±$3M to $3.5M on net operating expenses $ 85% • Total EBIT quarterly impact ~ ±$7M to $8.5M 1Q15 ~ 74% at 1.24 Percent of € exposure 2Q
Slide 18: Agenda
Agenda 18 Q4 & FY14 Business and Financial Performance Embedded Processing Solutions Sense, Power & Automotive
Slide 19: EPS – Embedded Processing Solutions
EPS – Embedded Processing Solutions 19 EPS 2 Product Groups DPG MMS DCG Digital Product Group Microcontroller, 29% Memory & Secure (combining former DCG and IBP MCU 58% groups effective 4Q14) DPG 13% IBP 2 Front-End Manufacturing Sites Focus on digital CMOS (12”) & derivative technologies (8”/12”) M
Slide 20: MMS – Microcontroller, Memory & Secure MCU
MMS – Microcontroller, Memory & Secure MCU 20 Highlights 2014 Products Product Customers Customer • Expanded STM32 portfolio with new low power • Confirmed 32-bit leadership across a broad customer and high performance families including the base with the STM32 family industry-first Cortex-M7 based
Slide 21: DPG – Digital Product Group
DPG – Digital Product Group 21 Highlights 2014 Products Product Customers Customer 10% • Ramped Liege family in 40nm for set -top box • Continued traction of new set-top box families - Cannes, 5% applications and expanded the capabilities with full Monaco, Liege, Liege2, Alicante HD HEVC in the ARM-
Slide 22: Embedded Processing Solutions
Embedded Processing Solutions 22 FY14 Operating Loss = $103M Operating Margin Improvement Drivers in 2015 US$M 4000 0 3000 -100 • Expansion of several key new products both in MMS -200 and DPG -300 2000 -400 • Cost reduction driven by the 2014 Digital business plan 1000 -500 • Discontinuation of com
Slide 23: Agenda
Agenda 23 Q4 & FY14 Business and Financial Performance Embedded Processing Solutions Sense, Power & Automotive
Slide 24: SP&A – Sense & Power and Automotive
SP&A – Sense & Power and Automotive 24 SP&A 3 Product Groups IPD AMS IPD APG AMS 23% 23% Analog, MEMS Industrial & Power Automotive and Sensors Discrete Product Group 39% 38% 4 Front-End Manufacturing Sites APG Focus on analog, power and MEMS technologies Agrate Tours Singapore Catania Total revenue
Slide 25: AMS – Analog, MEMS & Sensors
AMS – Analog, MEMS & Sensors 25 Highlights 2014 Products Product Customers Customer • Set new benchmarks with latest 6-axis ultra-low- • Strong growth in microphone & touch-screen controller 15% power motion MEMS for the consumer market sales • Open.MEMS: easy licensing of sensor fusion SW • Ramp in
Slide 26: IPD – Industrial & Power Discrete
IPD – Industrial & Power Discrete 26 Highlights 2014 Products Product Customers Customer • Best-in-class, very high efficiency power • Solid growth in LED lighting (digital and analog management chipset for servers solutions) with market leaders • Added industry-leading galvanic isolation • Strong g
Slide 27: APG – Automotive Product Group
APG – Automotive Product Group 27 Highlights 2014 Products Product Customers Customer • Leveraged our technology leadership to achieve • Strong growth across all customers and applications double digit growth in VIPower including distribution • Expanded portfolio of 32-bit microcontrollers doubling
Slide 28: Sense & Power and Automotive
Sense & Power and Automotive 28 FY14 Operating Margin = 9.4% Operating Margin Improvement Drivers in 2015 US$M 5000 15% • Product mix improvement 10% 4000 • New product and technology introduction 5% • Product portfolio optimization 3000 0% • Continue expansion in Mass Market and Distribution FY13 F
Slide 29: Mass Market
Mass Market 29 Product2014 Highlights • Significant revenue growth with the Core Key Accounts Distribution Expand our (as % of total revenues) customer base • Grew number of channel accounts 32% Promote leading • Launched the STM32 Open Development Environment 30% applications & 28% products • Over
Slide 30: ST in the Internet of Things
ST in the Internet of Things 30 Sensors ULP Microcontrollers & Memories Ultra-low power connectivity Analog and mixed signal components Power and energy management
Slide 31: Closing Remarks
Closing Remarks Carlo Bozotti President and CEO
Slide 32: ST Financial Model
ST Financial Model 32 ST’s mid-term quarterly operating margin goal is about 10% Quarterly revenues of about $2 billion Gross margin in the range of 36% to 38% Quarterly net operating expenses in the range of $550 million to $600 million* *Including SG&A and R&D expenses net of R&D grants
Slide 33: Questions & Answers
Questions & Answers life,augmented
Slide 34: Appendix
Appendix Lk Ti life. augmented
Slide 35: Pre-Tax Items to Adjusted Earnings
Pre-Tax Items to Adjusted Earnings* 35 OPERATING RESULT In US$M 4Q13 3Q14 4Q14 U.S. GAAP Net Earnings (36) 72 43 NET EARNINGS Impairment & Restructuring Charges 29 38 20 Estimated Income Tax effect of Adjustment (6) 7 (2) Adjusted Net Earnings* (13) 117 61 * See appendix .
Slide 36: Appendix
Appendix 36 36 • Free cash flow is defined as net cash from operating activities minus net cash from (used in) investing activities, excluding payment for purchases (proceeds from the sale of) marketable securities and net cash variation for joint ventures deconsolidation. We believe free cash flow