STMicroelectronics a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the second quarter ended July 2, 2022. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported second quarter net revenues of $3.84 billion, gross margin of 47.4%, operating margin of 26.2%, and net income of $867 million or $0.92 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
- “Q2 net revenues and gross margin came in above the mid-point of our business outlook range driven by continued strong demand for our product portfolio.
- “On a year-over-year basis, Q2 net revenues increased 28.3%, operating margin increased to 26.2% from 16.3% and net income doubled to $867 million.
- “First half net revenues increased 22.9% year-over-year, driven by growth in all product groups and sub-groups. Operating margin was 25.5% and net income was $1.61 billion.
- “ST’s third quarter outlook, at the mid-point, is for net revenues of $4.24 billion, increasing year-over-year by 32.6% and sequentially by 10.5%; gross margin is expected to be about 47.0%.
- “We will now drive the Company based on a plan for FY22 revenues in the range of $15.9 billion to $16.2 billion and gross margin to be about 47.0%.”
Quarterly Financial Summary (U.S. GAAP)
|(US$ m, except per share data)||Q2 2022||Q1 2022||Q2 2021||Q/Q||Y/Y|
|Gross Margin||47.4%||46.7%||40.5%||70 bps||690 bps|
|Operating Margin||26.2%||24.7%||16.3%||150 bps||990 bps|
|Net Income (a)||$867||$747||$412||16.1%||110.4%|
|Diluted Earnings Per Share (b)||$0.92||$0.79||$0.44||16.5%||109.1%|
(a) Following a change in U.S. GAAP reporting guidance effective January 1, 2022, Q1 and Q2 2022 net income does not include phantom interests associated with convertible bonds. Prior periods have not been restated.
(b) Q1 and Q2 2022 diluted earnings per share includes the full dilutive effect of our outstanding convertible debt upon adoption on January 1, 2022 of the new U.S. GAAP reporting guidance. Prior periods have not been restated.
- Second Quarter 2022 Summary Review
|Net Revenues By Product Group (US$ m)||Q2 2022||Q1 2022||Q2 2021||Q/Q||Y/Y|
|Automotive and Discrete Group (ADG)||1,454||1,256||1,077||15.8%||35.1%|
|Analog, MEMS and Sensors Group (AMS)||1,127||1,087||1,013||3.7%||11.3%|
|Microcontrollers and Digital ICs Group (MDG)||1,251||1,198||897||4.4%||39.5%|
|Total Net Revenues||3,837||3,546||2,992||8.2%||28.3%|
Net revenues totaled $3.84 billion, a year-over-year increase of 28.3%. On a year-over-year basis, the Company recorded higher net sales in its product groups and all sub-groups. Year-over-year net sales to OEMs and Distribution increased 31.7% and 22.2%, respectively. On a sequential basis, net revenues increased 8.2%, 240 basis points above the mid-point of the Company’s guidance. All product groups reported increases in net revenues on a sequential basis.
Gross profit totaled $1.82 billion, a year-over-year increase of 50.2%. Gross margin of 47.4% increased 690 basis points year-over-year, principally due to favorable pricing and improved product mix partially offset by inflation of manufacturing input costs and was 140 basis points above the mid-point of the Company’s guidance.
Operating income increased 105.4% to $1.0 billion, compared to $489 million in the year-ago quarter. The Company’s operating margin increased 990 basis points on a year-over-year basis to 26.2% of net revenues, compared to 16.3% in the 2021 second 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 251.1% to $359.2 million. Operating margin was 24.7% compared to 9.5%.
Analog, MEMS and Sensors Group (AMS):
· Revenue increased in Analog, in MEMS and in Imaging.
· Operating profit increased by 42.1% to $268.4 million. Operating margin was 23.8% compared to 18.6%.
Microcontrollers and Digital ICs Group (MDG):
· Revenue increased in both Microcontrollers and in RF Communications.
· Operating profit increased by 106.6% to $424.7 million. Operating margin was 34.0% compared to 22.9%.
Net income increased to $867 million and diluted earnings per share to $0.92 compared to $412 million and $0.44, respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
|Trailing 12 Months|
|(US$ m)||Q2 2022||Q1 2022||Q2 2021||Q2 2022||Q2 2021||TTM Change|
|Net cash from operating activities||1,056||945||602||3,777||2,591||45.8%|
|Free cash flow (non-U.S. GAAP)||230||82||125||1,046||873||19.8%|
Capital expenditure payments, net of proceeds from sales, were $809 million in the second quarter. In the year-ago quarter, capital expenditures, net, were $438 million.
Inventory at the end of the second quarter was $2.31 billion, compared to $1.97 billion in the year-ago quarter. Day sales of inventory at quarter-end was 104 days compared to 101 days in the year-ago quarter.
Free cash flow(non-U.S. GAAP) was $230 million in the second quarter, compared to $125 million in the year-ago quarter.
In the second 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 $924 million at July 2, 2022 compared to $840 million at April 2, 2022 and reflected total liquidity of $3.44 billion and total financial debt of $2.52 billion.
The Company’s guidance, at the mid-point, for the 2022 third quarter is:
- Net revenues are expected to be $4.24 billion, an increase of 10.5% sequentially, plus or minus 350 basis points;
- Gross margin of 47.0%, plus or minus 200 basis points;
- This outlook is based on an assumed effective currency exchange rate of approximately $1.09 = €1.00 for the 2022 third quarter and includes the impact of existing hedging contracts; and
- The third quarter will close on October 1, 2022.
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its second quarter 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, http://investors.st.com, and will be available for replay until August 12, 2022.
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.