STMicroelectronics N.V.

Thank you, everyone, for joining our first quarter 2025 Financial Result Call. Hosting the call today is Jean-Marc Chéry, ST President and Chief Executive Officer. Joining Jean-Marc on the call today are Lorenzo Grandi, President and CFO, and Marco Cassis, President Analog Power and Discrete MEMS and Sensor Groups, and Head of ST Microelectronics Strategy, System Research and Application and Innovation Office. This live webcast and presentation materials can be accessed on the ST Investor Relations website. A replay will be available shortly after the conclusion of this call. This call will include forward-looking statements that involve risk factors that could cause ST results to differ materially from management expectations and plans. We encourage you to review the safe harbor statement contained in the press release. That's what issued with us this morning, and also in STMOS' recent regulatory filing for a full description of these risk factors. Also, to ensure all participants have an opportunity to ask questions during the Q&A session, please limit yourself to one question and a brief follow-up. Now, I'd like to turn the call over to Jean Marchery, ST President and CEO.

Thank you, Jérôme. Good morning, everyone, and thank you for joining ST for our Q1 2025 earnings conference call. I will start with an overview of the first quarter, including business dynamics, and I will hand over to Lorenzo for the detailed financial overview. I will then comment on the hot look and conclude before answering your questions. So, starting with Q1. In a persistently uncertain environment, our first quarter net revenues were in line with the midpoint of our business outlook range, driven by higher revenues in personal electronics, offset by lower revenues in automotive and industrial, compared to expectations. Q1 gross margin was slightly below the midpoint of our business outlook range, mainly due to product mix. On a year-over-year basis, Q1 net revenues decreased 27.3% to $2.52 billion. Gross margin decreased to 33.4% from 41.7%. Operating margin decreased to 0.1% from 15.9%. and net income decreased 89.1% to $56 million. Let's now discuss our business dynamics during Q1. In automotive, we expect Q1 to be the low point of our automotive revenues. During the quarter, we saw lower revenues across all geographies. The current situation on trade and tariffs is creating uncertainty in car production levels, leading to a slight downward revision of forecasts for the year. More problems for electrical vehicle volumes. Despite this, our book-to-bill ratio was above 1. In dollar terms, bookings were also up significantly quarter on quarter. During the quarter, we continued to execute our strategy in car electrification. We had wins with both silicon carbide and silicon devices and modules for new onboard charger and traction inverter designs, as well as with our smart power and smart fuse solutions for electric vehicle power systems. We remain focused on solid execution in power and discrete for car electrification in a continuing challenging market environment. In car digitalization, we saw further traction with our portfolio of automotive microcontrollers. Automotive microcontrollers are one of our revenue growth drivers beyond the medium-term horizon. We are confirming strong progress in executing our roadmap with many new products set to launch in 2025 and in 2026 across our Stellar and STM32A product families. We also continuing to see strong designing momentum in China, EMEA and the Americas with both large-scale OEMs and TR1s. During Q1, our Stellar-P microcontroller family was selected in a dual-inverter powertrain application by a fast-growing OEM in China. And we continue to expand our business with our current high-volume automotive microcontrollers in applications like high-vacuum air-compressed systems. To support the challenges of developing software-defined vehicles, we recently announced our extensible memory offer for stellar microcontrollers. ST's proprietary PCM technology enables the smallest memory cell size for the automotive market. Thanks to this, our customers can benefit from increased headroom to continuously innovate their products over time and in the field, while also simplifying logistics. In ADAS, we saw our customer Mobileye IQ6H being adopted to improve safety and driving comfort in high volume vehicles. This enables entry driving, smart parking, and improve occupant and pedestrian detection with a single integrated system. We also introduce our newest family of global navigation satellite system receivers and an advanced driving system for ADAS and autonomous driving. They are the industries first to integrate multi-constellation and co-advanced signal processing in a single dial. With our automotive-grade sensors, we have a number of wins for head-ass vehicles, angle detection and occupancy monitoring applications. Also, this is a clear growth opportunity for us in the mid-term. In industrial, we expect Q1 to be the low point in terms of revenues. In Q1, Orders were also up versus Q4, and overall, inventory decreased, particularly for smart industrial and, to a lesser extent, power energy. By region, the improvement in inventory was driven by Asia, while we have not seen significant improvement in Europe and in Americas. Our book-to-bill ratio was above one. During the quarter, we had wins for our power and analog portfolio across a range of applications. This included motor control, industrial drives, wild goods, solar panels, air conditioning, and data switches. At the end of March, we signed a development and manufacturing agreement for gallium nitride technology with Innoscience. It includes a joint development initiative on GaN power technology as well as a reciprocal agreement allowing each company to use the other front-end manufacturing capacity. This allows ST to accelerate our roadmap in GaN power technology to complement our silicon and silicon carbide offering. For ST, this is a further step in the China-for-China operating model, coming on top of the joint venture with Sanan for front-end manufacturing of silicon carbide, and the foundry agreement with HS Grace on multiple technologies, including 14nm nodes. In embedded processing, our STM32 microcontrollers continued to gain traction with the broad developer community. Pacing the current challenging market conditions, we were able to reconfirm our number one ranking on the general purpose microcontroller market in 2024, with a market share that has consistently grown sequentially from Q2 2024 onwards. In 2024, our software ecosystem grew 30% to over 1.3 million unique users, and we continue to see a strong growth trend in the first quarter of 2025. One area of particularly strong growth is in Edge AI projects developed on our tools. Over the past 12 months, we saw over 160,000 projects, more than twice the number in the previous 12 months. We continue to reinforce our portfolio and ecosystem with new innovative products, leveraging our proprietary 14nm and 18nm process node technologies. In 2025-2026, we plan to introduce 18 new lines leveraging modern non-volatile memory technologies at and below 40nm. Between 2025 and 2027, the percentage of our STM32 revenue coming from this advanced product at 40nm and below will double, reinforcing our leadership in this market segment. Based on our design-in momentum, we are equipped to grow faster than the market, going back to well above 20% market share. In personal electronics, Q1 was slightly better than expected, while communication equipment and computer peripherals was in line with our expectations. Here, our engaged customer programs are progressing to the plan. Our high level of innovation and ability to execute with MEMS and optical sensing, as well as with our analog technology portfolio, are a key competitive advantage, enabling us to win and grow our business. And our specialized proprietary technologies also position us for growth in low Earth orbit satellites and data centers. For example, during the quarter, we introduced new technologies to enable higher performance optical interconnect in data centers and AI clusters. Our silicon photonics and next-generation by CMOS proprietary technologies bring better performance to address the ongoing evolution of optical interconnect for customers like Amazon Web Services. Finally, in terms of corporate development activities, During Q1, ST announced the detail of its three-year program to reshape the manufacturing footprint and resize the global cost base. We also confirmed the annual cost savings target in the high triple-digit million-dollar range exiting 2027. The reshaping and modernization of ST's manufacturing operations aim to achieve two main objectives. Pre-utilizing planned investments towards future read infrastructure such as 300 mm silicon and 200 mm silicon carbide wafer tabs to enable them to reach a critical scale and maximizing the productivity and efficiency of legacy 150 mm capabilities and mature 200 mm capabilities. This program is expected to see up to 2,800 people leaving the company globally on a voluntary basis over three years on top of normal attrition. This is expected to occur mainly in 26 and 27. To conclude, for sustainability, we issued our first annual integrated report during the quarter. This report integrates our sustainability statement detailing our performance in 2024. We remain on track for our commitment to becoming carbon neutral by 2027 on scope 1 and 2 and on product transportation, business travel and employee commuting for scope 3. Our carbon neutrality program includes a comprehensive strategy covering the reduction of direct and indirect greenhouse gas emissions, and the sourcing of 100% renewable electricity by 2027. Now, over to Lorenzo, who will present our key financial figures.

Thank you, Jean-Marc. Good morning, everyone. Before commenting the Q1 results, Let me remind you that following this reorganization into two product groups and four reportable segments announced in January 2024, we have made further progress in reorganizing our global product portfolio. This results in some adjustment to our reportable segments effective starting January 1st, 2025. without modifying subtotals at product group level. Therefore, from Q1 2025, we report revenues and operating income according to those four adjusted reportable segments. For more details, please refer to the appendix of the Earnings Press Release we published today. And now let's start with a detailed review of the first quarter, starting with the revenues on a year-over-year basis. By reportable segments, analog products, MEMS and SENSO, AMS, was down 23.9%, mainly due to a decrease in analog. Power and discrete products decreased 37.1%. Embedded processing, AMP, revenues declined 29.1%, mainly due to general purpose and automotive MCU. RF and optical communication declined 19.2%. Buying market, automotive declined by about 39%. Industrial by about 32%. personal electronics by about 11% and communication equipment and computer peripherals increased by about 1%. On a year over year, sales to OEMs decreased 25.7% and 31.2% to distribution. On a sequential basis, revenue decreased 20.7% in AMS 34.1% in power discrete, 26% in AMD, and 16.5% in RF and OC. By end market, automotive declined by about 34%, industrial by about 18%, personal electronics by about 17%, and communication equipment and computer peripherals by about 40%. Turning now to profitability, gross profit in the first quarter was $841 million, decreasing 41.7% on a year-over-year basis. Gross margin was 33.4%, decreasing 830 basis points year-over-year. mainly due to product mix and to a lesser extent to higher unused capacity charges and lower sales price. Total net operating expenses, excluding restructuring, amounted to $830 million in the first quarter. This was better than anticipated, reflecting the continued strict monitoring of our expenses in the current market environment. In the second quarter of 2025, we expect net OPEX to stand between $860 and $870 million, a 6% year-over-year decline. As a reminder, these amounts are net of other income and expenses and exclude restructuring. First quarter operating income was $3 million. Q1 operating margin was 0.1%, with AMS at 7.7%, P&D at minus 6.9%, E&P at 8.9%, and RF and OC at 13.9%. Q1 2025 net income was $56 million, compared to the $530 million in the year-ago quarter. Earnings per diluted share were $0.06 compared to the $0.54. Net cash from operating activity decreased 33.2% in Q1 to $574 million. First quarter net capex was $530 million compared to the $967 million in Q1 2024. Free crash flow was positive $30 million in the first quarter compared to a negative $134 million in the year-ago quarter. Inventory at the end of this quarter was $3.01 billion, compared to the $2.69 billion in Q1-24. Days of sales of inventory at the quarter end was 167 days, in line with our expectation, compared to 122 days for both the previous quarter and the year-ago quarter. Cash dividend paid to stakeholders in Q125 totaled $72 million. In addition, ST executed a share buyback of $92 million. ST maintained its financial strength with a net financial position that remained solid at $3.08 billion as of March 29, 2025, reflecting total liquidity of $5.96 billion and total financial debt of $2.88 billion. Now, back to Jean-Marc, who will comment on our outlook.