PR No: C2859C

STMicroelectronics Reports Q3 2018 Financial Results

• Q3 net revenues $2.52 billion (up 18.1% Y/Y)
• Q3 operating margin 15.8% (up 270 bps Y/Y), net income $369 million (up 56.7% Y/Y)
• Business outlook at mid-point: Q4 net revenues up about 5.7% Q/Q, FY18 net revenues up about 16.0% Y/Y; Q4 gross margin about 39.8%

Geneva, October 24, 2018 - STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the third quarter ended September 29, 2018. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).

ST reported third quarter net revenues of $2.52 billion, gross margin of 39.8%, operating margin of 15.8%, and net income of $369 million or $0.41 diluted earnings per share.

Jean-Marc Chery, STMicroelectronics President & CEO, made the following comments:

• "ST had another quarter of solid performance, with sequential revenue growth of 11.2%, above our 10% midpoint outlook, and operating margin expansion to 15.8%.
• "Revenue increased 18.1% year-over-year driven by strong growth in Imaging, Power Discrete and Automotive products.
• "Operating income and net income were up sharply year-over-year and sequentially.
• "ST's fourth quarter outlook is for revenues to grow sequentially about 5.7% at the mid-point, translating into year-over-year revenue growth above 8%; gross margin is expected to be about 39.8%.
• "Based on our fourth quarter guidance, we anticipate 2018 revenues to grow about 16% year-over-year, in line with our expectations shared in May at our Capital Markets Day. This level of revenue growth will also drive strong improvements in operating margin and net earnings."

Financial Summary (U.S. GAAP)⁽¹⁾

(US$ in millions except earnings per share)	Q3 2018	Q2 2018	Q3 2017	Y/Y	Q/Q
Net Revenues	$2,522	$2,269	$2,136	18.1%	11.2%
Gross Margin	39.8%	40.2%	39.6%	20 bps	(40) bps
Operating Income	$398	$289	$281	41.8%	37.8%
Operating Margin	15.8%	12.7%	13.1%	270 bps	310 bps
Net Income	$369	$261	$236	56.7%	41.4%
Diluted Earnings Per Share	$0.41	$0.29	$0.26	57.7%	41.4%

 ⁽¹⁾ Certain amounts in the prior periods have been adjusted to reflect the January 1, 2018 adoption of ASU 2017-07 related to the reclassification of certain pension costs.

Third Quarter 2018 Summary Review

Effective January 1, 2018, the Subsystems business unit was transferred from Others to Analog, MEMS and Sensors Group (AMS). Prior periods have been restated accordingly.

Net Revenues By Product Group (in US$ millions)	Q3 2018	Q2 2018	Q3 2017	Y/Y	Q/Q
Automotive and Discrete Group (ADG)	$901	$870	$775	16.3%	3.6%
Analog, MEMS and Sensors Group (AMS)	899	613	657	36.7	46.6
Microcontrollers and Digital ICs Group (MDG)	719	782	701	2.5	(8.1)
Others	3	4	3	9.4	(2.8)
Total Net Revenues	$2,522	$2,269	$2,136	18.1%	11.2%

Net revenues increased 11.2% sequentially, 120 basis points better than the mid-point of the Company's guidance. On a year-over-year basis, third quarter net revenues increased 18.1% with all product groups delivering revenue growth. Year-over-year sales to OEMs and Distribution were up 21.6% and 11.2%, respectively.