Operating income decreased 21.6% to $211 million, compared to $269 million in the year-ago quarter. The Company's operating margin decreased 190 basis points on a year-over-year basis to 10.2% of net revenues, compared to 12.1% in the 2018 first quarter.

By product group, compared with the year-ago quarter:

Automotive and Discrete Group (ADG): 

• Revenue increased in both Automotive and Power Discrete.
• Operating profit increased by 6.2% to $95 million. Operating margin was 10.6% compared to 11.0%.

Analog, MEMS and Sensors Group (AMS):

• Revenue grew in MEMS, while both Analog and Imaging decreased double-digits.
• Operating profit decreased by 33.4% to $43 million. Operating margin was 7.8% compared to 9.8%.

      
Microcontrollers and Digital ICs Group (MDG):

• Revenue grew in Digital ICs, while Microcontrollers / Memories decreased double-digits.
• Operating profit decreased by 43.6% to $83 million. Operating margin was 13.4% compared to 19.5%.

Net income and diluted earnings per share decreased to $178 million and $0.20, respectively, compared to $239 million and $0.26, respectively, in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

					Trailing 12 Months
(US$ m)	Q1 2019	Q4 2018		Q1 2018		Q1 2019	Q1 2018(1)	TTM Change
Net cash from operating activities	341	656		455		1,730	1,844	-6.2%
Free cash flow (non-U.S. GAAP)	(67)	363		95		370	342	8.2%

⁽¹⁾   Q1 2018 trailing 12 months includes 2017 amounts that have been adjusted to reflect the reclassification as operating cash flows of the implied interest paid in the settlement of our convertible bonds.

Capital expenditure payments, net of proceeds from sales, were $322 million in the first quarter. In the year-ago quarter, capital expenditures, net, were $351 million.

Inventory at the end of the quarter was $1.77 billion, up from $1.56 billion in the prior quarter. Day sales of inventory at quarter-end was 124 days compared to 88 days in the prior quarter.

After the cash outflow of $76 million for the acquisition of 55% of Norstel's share capital, free cash flow(non-U.S. GAAP) was negative $67 million in the first quarter, compared to positive $95 million in the year-ago quarter.

In the first quarter, the Company paid cash dividends totaling $54 million and executed a $61 million share buy-back as part of its ongoing program.

ST's net financial position (non-U.S. GAAP) was $510 million at March 30, 2019 compared to $686 million at December 31, 2018 and reflected total liquidity of $2.70 billion and total financial debt of $2.19 billion.

Business Outlook

The Company's guidance for the 2019 second quarter is:

• Net revenues are expected to increase about 2.4% sequentially, plus or minus 350 basis points;
• Gross margin of about 38.5%, plus or minus 200 basis points;
• This outlook is based on an assumed effective currency exchange rate of approximately $1.14 = €1.00 for the 2019 second quarter and includes the impact of existing hedging contracts.
• The second quarter will close on June 29, 2019.

In 2019, ST's CAPEX is expected to be approximately $1.1 to $1.2 billion.

Conference Call and Webcast Information

STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its first quarter 2019 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST's website, http://investors.st.com, and will be available for replay until May 10, 2019.

Use of Supplemental Non-U.S. GAAP Financial Information

This press release contains supplemental non-U.S. GAAP financial information.

Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies.

See the Appendix of this press release for a reconciliation of the Company's non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with the Company's consolidated financial statements prepared in accordance with U.S. GAAP.

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, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macro-economic 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;
• The Brexit vote and the perceptions as to the impact of the withdrawal of the U.K. may adversely affect business activity, political stability and economic conditions in the U.K., the Eurozone, the EU and elsewhere. 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, health risks and epidemics in locations where we, our customers or our suppliers operate;
• 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.