Q4 net revenues $3.56 billion; gross margin 45.2%; operating margin 24.9%; net income $750 million
FY net revenues $12.76 billion; gross margin 41.7%; operating margin 19.0%; net income $2.0 billion
Business outlook at mid-point: Q1 net revenues of $3.50 billion and gross margin of 45.0%
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, 2021. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported fourth quarter net revenues of $3.56 billion, gross margin of 45.2%, operating margin of 24.9%, and net income of $750 million or $0.82 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
· “As we announced on January 7, 2022, our Q421 net revenues and gross margin came in better than expected primarily due to better than anticipated operations in an ongoing dynamic market.
· “Q421 net revenues were 9.9% higher year-over-year, with a further increase in profitability: operating margin of 24.9% improved from 20.3% and net income was up 28.9%.
· “Full year 2021 net revenues increased 24.9% to $12.76 billion, reflecting a strong performance across all the end markets we address and our engaged customer programs throughout the year. Operating margin increased to 19.0% from 12.9% in FY20 and net income was up 80.8%.
· “ST’s first quarter outlook, at the mid-point, is for net revenues of $3.50 billion, increasing year-over-year by 16.1% and decreasing sequentially by 1.6%; gross margin is expected to be about 45.0%.
· “For 2022, we plan to invest about $3.4 billion to $3.6 billion in CAPEX to further increase our production capacity and to support our strategic initiatives including the first industrialization line of our new 300mm wafer fab in Agrate, Italy.
· “Based on our strong customer demand and increased capacity, we will drive the Company based on a plan for FY22 revenues in the range of $14.8 billion to $15.3 billion.”
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) | Q4 2021 | Q3 2021 | Q4 2020 | Q/Q | Y/Y |
| Net Revenues | $3,556 | $3,197 | $3,235 | 11.2% | 9.9% |
| Gross Profit | $1,609 | $1,330 | $1,254 | 20.9% | 28.3% |
| Gross Margin | 45.2% | 41.6% | 38.8% | 360 bps | 640 bps |
| Operating Income | $885 | $605 | $657 | 46.2% | 34.8% |
| Operating Margin | 24.9% | 18.9% | 20.3% | 600 bps | 460 bps |
| Net Income | $750 | $474 | $582 | 58.1% | 28.9% |
| Diluted Earnings Per Share | $0.82 | $0.51 | $0.63 | 60.8% | 30.2% |
Annual Financial Summary (U.S. GAAP)
| (US$ m, except earnings per share data) | FY2021 | FY2020 | Y/Y |
| Net Revenues | $12,761 | $10,219 | 24.9% |
| Gross Profit | $5,326 | $3,789 | 40.6% |
| Gross Margin | 41.7% | 37.1% | 460 bps |
| Operating Income | $2,419 | $1,323 | 82.8% |
| Operating Margin | 19.0% | 12.9% | 610 bps |
| Net Income | $2,000 | $1,106 | 80.8% |
| Diluted Earnings Per Share | $2.16 | $1.20 | 80.0% |
Gross profit totaled $1.61 billion, representing a year-over-year increase of 28.3%. Gross margin of 45.2% increased 640 basis points year-over-year, 20 basis points above the high-end of the Company’s guidance, principally driven by improved product mix, favorable pricing, and manufacturing efficiencies.
Operating income increased 34.8% to $885 million, compared to $657 million in the year-ago quarter. The Company’s operating margin increased 460 basis points on a year-over-year basis to 24.9% of net revenues, compared to 20.3% in the 2020 fourth quarter.
By product group, compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
· Revenue increased in both Automotive and in Power Discrete.
· Operating profit increased by 129.5% to $216 million. Operating margin was 17.6% compared to 9.9%.
Analog, MEMS and Sensors Group (AMS):
· Revenue increased in both Analog and MEMS and decreased in Imaging.
· Operating profit decreased by 16.6% to $335 million. Operating margin was 26.6% compared to 28.3%.
Microcontrollers and Digital ICs Group (MDG):
· Revenue increased in both Microcontrollers and in RF Communications.
· Operating profit increased by 82.9% to $318 million. Operating margin was 29.9% compared to 20.3%.
Net income and diluted earnings per share increased to $750 million and $0.82, respectively, compared to $582 million and $0.63, respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| Trailing 12 Months | ||||||
| (US$ m) | Q4 2021 | Q3 2021 | Q4 2020 | Q4 2021 | Q4 2020 | TTM Change |
| Net cash from operating activities | 881 | 895 | 922 | 3,060 | 2,093 | 46.2% |
| Free cash flow (non-U.S. GAAP) | 314 | 420 | 512 | 1,120 | 627 | 78.6% |
Capital expenditure payments, net of proceeds from sales, were $548 million in the fourth quarter and $1.83 billion for the full year 2021. In the year-ago quarter, capital expenditures, net, were $381 million.
Inventory at the end of the fourth quarter was $1.97 billion, up from $1.84 billion in the year-ago quarter. Day sales of inventory at quarter-end was 91 days compared to 85 days in the year-ago quarter.
Free cash flow(non-U.S. GAAP) was $314 million in the fourth quarter, compared to $512 million in the year-ago quarter.
In the fourth quarter, the Company paid cash dividends to its stockholders totaling $60 million and executed a $86 million share buy-back as part of its share repurchase program launched on July 1, 2021.
ST’s net financial position (non-U.S. GAAP) was $977 million at December 31, 2021 compared to $798 million at October 2, 2021 and reflected total liquidity of $3.52 billion and total financial debt of $2.54 billion.
Business Outlook
The Company’s guidance, at the mid-point, for the 2022 first quarter is:
- Net revenues are expected to be $3.50 billion, a decrease of 1.6% sequentially, plus or minus 350 basis points;
- Gross margin of about 45.0%, plus or minus 200 basis points;
- This outlook is based on an assumed effective currency exchange rate of approximately $1.15 = €1.00 for the 2022 first quarter and includes the impact of existing hedging contracts.
- The first quarter will close on April 2, 2022.
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its fourth quarter 2021 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 February 11, 2022.
