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PR No: C3154C
STMicroelectronics Reports Q4 and F Y 202 2 Financial Results
Q4 net revenues $ 4.42 billion; gross margin 4 7.5 %; operating margin 29 .1 % ; net income $ 1.25 b illion FY net revenues $1 6.13 billion; gross margin 47 .3 %; operating margin 27.5 %; net income $ 3.96 b illion Business outlook at mid-point: Q1 net revenues of $ 4.2 0 billion and gross margin of 48.0 %
Geneva, January 2 6 , 202 3 - STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the fourth quarter ended December 31, 2022. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported fourth quarter net revenues of $4.42 billion, gross margin of 47.5%, operating margin of 29.1%, and net income of $1.25 billion or $1.32 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
“ In Q4, ST delivered revenue s and gross margin above the mid-point of the guidance . “ FY22 revenue s increased 26.4% to $16.13 billion, driven by strong demand in automotive and industrial , and our engaged customer programs. Operating margin increased to 27.5% from 19.0% in FY21 and net income almost doubled to $3.96 billion. W e invested $3.52 billion in C APEX while delivering free cash flow of $1.59 billion. “ Our first quarter business outlook , at the mid-point , is for net revenues of $ 4.2 0 billion , increasing year-over-year by 1 8.5 % and decreasing sequentially by 5.1 % ; gross margin is expected to be about 48.0 %. “ For 2023, we plan to invest about $4.0 billion in CAPEX , mainly to increase our 300mm wafer fab s and silicon carbide manufacturing capacity including our substrate initiative. “ Based on our strong customer demand and increased manufacturing capacity, we will drive the Company based on a plan for FY23 revenues in the range of $ 16.8 billion to $ 17.8 billion. ”
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) || Q 4 202 2 || Q 3 20 2 2 || Q 4 20 2 1 || Q/Q || Y/Y |
| Net Revenues || $4,424 || $4,321 || $3,556 || 2.4 % || 2 4 .4 % |
| Gross Profit || $2,102 || $2,059 || $1,609 || 2.1% || 30.7% |
| Gross Margin || 47.5% || 47.6% || 45.2% || -10 bps || 230 bps |
| Operating Income || $1,287 || $1,272 || $885 || 1.2% || 45.4% |
| Operating Margin || 29.1% || 29.4% || 24.9% || -30 bps || 420 bps |
| Net Income (a) || $1,248 || $1,099 || $750 || 13.5% || 66.4% |
| Diluted Earnings Per Share (b) || $ 1. 32 || $ 1.16 || $0.82 || 13.8 % || 61.0 % |
(a) Following a change in U.S. GAAP reporting guidance effective January 1, 2022, Q4 and Q3 2022 net income does not include phantom interests associated with convertible bonds. Prior year period has not been restated.
(b) Q4 and Q3 2022 diluted earnings per share includes the full dilutive effect of our outstanding convertible debt, upon adoption on January 1, 2022 of the new U.S. GAAP reporting guidance. Prior year period has not been restated.
Annual Financial Summary (U.S. GAAP)
| (US$ m, except earnings per share data) || FY20 2 2 || FY20 2 1 || Y/Y |
| Net Revenues || $16,128 || $12,761 || 26.4 % |
| Gross Profit || $7,635 || $5,326 || 43.4% |
| Gross Margin || 47.3% || 41.7% || 560 bps |
| Operating Income || $4,439 || $2,419 || 83.5% |
| Operating Margin || 27.5% || 19.0% || 850 bps |
| Net Income (a) || $3,960 || $2,000 || +98.0% |
| Diluted Earnings Per Share (b) || $ 4.19 || $2.16 || +94.0% |
(a) Following a change in U.S. GAAP reporting guidance effective January 1, 2022, FY 2022 net income does not include phantom interests associated with convertible bonds. Prior year period has not been restated.
(b) FY 2022 diluted earnings per share includes the full dilutive effect of our outstanding convertible debt, upon adoption on January 1, 2022 of the new U.S. GAAP reporting guidance. Prior year period has not been restated.
Fourth Quarter 202 2 Summary Review
| Net Revenues By Product Group (US$ m) || Q 4 202 2 || Q 3 202 2 || Q 4 20 2 1 || Q/Q || Y/Y |
| Automotive and Discrete Group (ADG) || 1,696 || 1,563 || 1,226 || 8.5% || 38.4% |
| Analog, MEMS and Sensors Group (AMS) (a) || 1,339 || 1,380 || 1,251 || -3.0% || 7.0% |
| Microcontrollers and Digital ICs Group (MDG) (a) || 1,383 || 1,374 || 1,071 || 0.7% || 29.1% |
| Others || 6 || 4 || 8 || - || - |
| Total Net Revenues || 4,424 || 4,321 || 3,556 || 2.4 % || 24.4 % |
(a) Effective July 1, 2022, the Low Power RF business unit was transferred from AMS (within the Analog sub-group) to MDG (within the Microcontrollers and Memories sub-group). Prior year period has been adjusted accordingly.
Net revenues totaled $4.42 billion, representing a year-over-year increase of 24.4%. On a year-over-year basis, the Company recorded higher net sales in all product groups and sub-groups except the Analog and MEMS sub-groups. Year-over-year net sales to OEMs and Distribution increased 26.8% and 19.5%, respectively. On a sequential basis, net revenues increased 2.4%, 60 basis points above the mid-point of the Company's guidance. ADG and MDG reported increases in net revenues on a sequential basis, while AMS decreased.
Gross profit totaled $2.10 billion, representing a year-over-year increase of 30.7%. Gross margin of 47.5%, 20 basis points above the mid-point of the Company's guidance, increased 230 basis points year-over-year, principally due to favorable pricing, improved product mix, positive currency effects, net of hedging, partially offset by the inflation of manufacturing input costs.
Operating income increased 45.4% to $1.29 billion, compared to $885 million in the year-ago quarter. The Company's operating margin increased 420 basis points on a year-over-year basis to 29.1% of net revenues, compared to 24.9% in the 2021 fourth quarter.
By product group , compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
Revenue increased in Automotive and in Power Discrete. Operating profit increased by 117.9% to $470.2 million. Operating margin was 27.7% compared to 17.6%.
Analog, MEMS and Sensors Group (AMS):
Revenue increased in Imaging and decreased in Analog and MEMS. Operating profit increased by 2.4% to $345.6 million. Operating margin was 25.8% compared to 27.0%.
Microcontrollers and Digital ICs Group (MDG):
Revenue increased in Microcontrollers and in RF Communications. Operating profit increased by 56.6% to $495.3 million. Operating margin was 35.8% compared to 29.5%.
Net income increased to $1.25 billion, including a one-time non-cash income tax benefit of $141 million, compared to $750 million in the year-ago quarter, and diluted earnings per share increased to $1.32 compared to $0.82 in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| || || || || Trailing 12 Months |
| (US$ m) || Q 4 202 2 || Q 3 20 2 2 || Q 4 20 2 1 || Q 4 202 2 || Q 4 20 2 1 || TTM Change |
| Net cash from operating activities || 1,550 || 1,651 || 881 || 5,202 || 3,060 || +70.0% |
| Free cash flow (non-U.S. GAAP) || 603 || 676 || 314 || 1,591 || 1,120 || +42.1% |
Capital expenditure payments, net of proceeds from sales, were $920 million in the fourth quarter and $3.52 billion for the full year 2022. In the respective year-ago periods, capital expenditures, net, were $548 million and $1.83 billion.
Inventory at the end of the fourth quarter was $2.58 billion, compared to $1.97 billion in the year-ago quarter. Days sales of inventory at quarter-end was 101 days compared to 91 days in the year-ago quarter.
Net cash from operating activities was $1.55 billion in the fourth quarter. For the full year 2022, net cash from operating activities increased 70.0% to $5.20 billion, representing 32.3% of total revenues.
Free cash flow (non-U.S. GAAP) was $603 million and $1.59 billion in the fourth quarter and full year, respectively, compared to $314 million and $1.12 billion in the year-ago respective periods.
In the fourth quarter, the Company paid cash dividends to its stockholders totaling $54 million and executed a $87 million share buy-back as part of its current share repurchase program.
ST's net financial position (non-U.S. GAAP) was $1.80 billion at December 31, 2022 compared to $1.46 billion at October 1, 2022 and reflected total liquidity of $4.52 billion and total financial debt of $2.72 billion.
The Company's guidance, at the mid-point, for the 2023 first quarter is:
Net revenues are expected to be $4.20 billion, a decrease of 5.1% sequentially, plus or minus 350 basis points; Gross margin of 48.0%, plus or minus 200 basis points; This outlook is based on an assumed effective currency exchange rate of approximately $1.06 = €1.00 for the 2023 first quarter and includes the impact of existing hedging contracts. The first quarter will close on April 1, 2023.
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its fourth quarter and full year 2022 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, , and will be available for replay until February 10, 2023.
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. 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.
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.
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 (such as inflation and fluctuations in supply chains), which may impact production capacity and 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, public health, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macroeconomic or regional events, military conflicts, (including the military conflict between Russia and the Ukraine), 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; legal, political and economic uncertainty surrounding Brexit may be a continued source of instability in international markets and currency exchange rate volatility and may adversely affect business activity, political stability and economic conditions and 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 (including increasing costs resulting from inflation); 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 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, the effects of climate change, health risks and epidemics or pandemics such as the COVID-19 pandemic in locations where we, our customers or our suppliers operate; increased regulation and initiatives in our industry, including those concerning climate change and sustainability matters and our commitment to be carbon neutral by 2027; potential loss of key employees and potential inability to recruit and retain qualified employees as a result of epidemics or pandemics such as the COVID-19 pandemic, remote-working arrangements and the corresponding limitation on social and professional interaction; the duration and the severity of the global outbreak of COVID-19 may continue to negatively impact the global economy in a significant manner for an extended period of time, and could also materially adversely affect our business and operating results; 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.
Some of these risks are set forth and are discussed in more detail in“Item 3. Key Information - Risk Factors” included in our Annual Report on Form 20-F for the year ended December 31, 2021 as filed with the SEC on February 24, 2022. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this press release as anticipated, believed, or expected. We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.
Unfavorable changes in the above or other risks or uncertainties listed under“Item 3. Key Information - Risk Factors”
from time to time in our Securities and Exchange Commission filings, could have a material adverse effect on our business
and/or financial condition.
At ST, we are more than 50,000 creators and makers of semiconductor technologies mastering the semiconductor supply chain with state-of-the-art manufacturing facilities. An integrated device manufacturer, we work with more than 200,000 customers and thousands of partners to design and build products, solutions, and ecosystems that address their challenges and opportunities, and the need to support a more sustainable world. Our technologies enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of the Internet of Things and connectivity. ST is committed to becoming carbon neutral by 2027. Further information can be found at .