- Q3 net revenues $4.32 billion; gross margin 47.6%; operating margin 29.4%; net income $1.10 billion
- YTD net revenues $11.70 billion; gross margin 47.3%; operating margin 26.9%; net income $2.71 billion
- Business outlook at the mid-point: Q4 net revenues of $4.40 billion and gross margin of 47.3%
STMicroelectronics reported U.S. GAAP financial results for the third quarter ended October 1, 2022.
ST reported third quarter net revenues of $4.32 billion, gross margin of 47.6%, operating margin of 29.4%, and net income of $1.10 billion or $1.16 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
· “Q3 net revenues of $4.32 billion and gross margin of 47.6% 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, Q3 net revenues increased 35.2%, operating margin increased to 29.4% from 18.9%, and net income more than doubled to $1.10 billion.
· “First nine months net revenues increased 27.2% to $11.70 billion, driven by growth in all product groups and sub-groups. Operating margin was 26.9% and net income was $2.71 billion.
· “ST’s fourth quarter outlook, at the mid-point, is for net revenues of $4.40 billion, increasing year-over-year by 23.7% and sequentially by 1.8%; gross margin is expected to be about 47.3%.
· “The midpoint of this outlook translates into full year 2022 net revenues of about $16.10 billion, representing a 26.2% year-over-year growth and gross margin of about 47.3%, in line with the plan we outlined in July.”
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) | Q3 2022 | Q2 2022 | Q3 2021 | Q/Q | Y/Y |
| Net Revenues | $4,321 | $3,837 | $3,197 | 12.6% | 35.2% |
| Gross Profit | $2,059 | $1,819 | $1,330 | 13.2% | 54.7% |
| Gross Margin | 47.6% | 47.4% | 41.6% | 20 bps | 600 bps |
| Operating Income | $1,272 | $1,004 | $605 | 26.7% | 110.1% |
| Operating Margin | 29.4% | 26.2% | 18.9% | 320 bps | 1,050 bps |
| Net Income (a) | $1,099 | $867 | $474 | 26.8% | 131.8% |
| Diluted Earnings Per Share (b) | $1.16 | $0.92 | $0.51 | 26.1% | 127.5% |
Third Quarter 2022 Summary Review
Effective July 1, 2022, the Low Power RF business unit was transferred from AMS (Analog sub-group) to MDG (Microcontrollers and Memories sub-group). Prior periods have been adjusted accordingly.
| Net Revenues By Product Group (US$ m) |
| Q3 2022Q2 2022Q3 2021Q/QY/YAutomotive and Discrete Group (ADG)1,5631,4541,0057.5%55.5%Analog, MEMS and Sensors Group (AMS)1,3801,1151,25823.7%9.7%Microcontrollers and Digital ICs Group (MDG)1,3741,2639308.8%47.7%Others454–Total Net Revenues4,3213,8373,19712.6%35.2% |
Net revenues totaled $4.32 billion, a year-over-year increase of 35.2%. On a year-over-year basis, the Company recorded higher net sales in all product groups and sub-groups. Year-over-year net sales to OEMs and Distribution increased 34.1% and 37.4%, respectively. On a sequential basis, net revenues increased 12.6%, 210 basis points better than the mid-point of the Company’s guidance. All product groups and sub-groups reported increases in net revenues on a sequential basis.
Gross profit totaled $2.06 billion, a year-over-year increase of 54.7%. Gross margin of 47.6%, 60 basis points above the mid-point of the Company’s guidance, increased 600 basis points year-over-year, principally due to favorable pricing and improved product mix, partially offset by the inflation of manufacturing input costs.
Operating income increased 110.1% to $1.27 billion, compared to $605 million in the year-ago quarter. The Company’s operating margin increased 1,050 basis points on a year-over-year basis to 29.4% of net revenues, compared to 18.9% in the 2021 third 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 273.8% to $404.1 million. Operating margin was 25.9% compared to 10.8%.
Analog, MEMS and Sensors Group (AMS):
· Revenue increased in Analog, in MEMS and in Imaging.
· Operating profit increased by 23.1% to $375.7 million. Operating margin was 27.2% compared to 24.3%.
Microcontrollers and Digital ICs Group (MDG):
· Revenue increased in both Microcontrollers and in RF Communications.
· Operating profit increased by 130.3% to $503.8 million. Operating margin was 36.7% compared to 23.5%.
Net income increased to $1.10 billion and diluted earnings per share to $1.16 compared to $474 million and $0.51, respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| Trailing 12 Months | ||||||
| (US$ m) | Q3 2022 | Q2 2022 | Q3 2021 | Q3 2022 | Q3 2021 | TTM Change |
| Net cash from operating activities | 1,651 | 1,056 | 895 | 4,533 | 3,101 | 46.2% |
| Free cash flow (non-U.S. GAAP) | 676 | 230 | 420 | 1,302 | 1,318 | -1.2% |
Capital expenditure payments, net of proceeds from sales, were $955 million in the third quarter and $2.61 billion for the year-to-date period. In the year-ago quarter, capital expenditures, net, were $437 million.
Free cash flow(non-U.S. GAAP) was $676 million in the third quarter, compared to $420 million in the year-ago quarter.
In the third quarter, the Company paid cash dividends to its stockholders totaling $55 million and executed a $86 million share buy-back as part of its current share repurchase program.
ST’s net financial position (non-U.S. GAAP) was $1.46 billion at October 1, 2022 compared to $924 million at July 2, 2022 and reflected total liquidity of $4.09 billion and total financial debt of $2.63 billion.
Business Outlook
The Company’s guidance, at the mid-point, for the 2022 fourth quarter is:
- Net revenues are expected to be $4.40 billion, an increase of 1.8% sequentially, plus or minus 350 basis points;
- Gross margin of 47.3%, plus or minus 200 basis points;
- This outlook is based on an assumed effective currency exchange rate of approximately $1.03 = €1.00 for the 2022 fourth quarter and includes the impact of existing hedging contracts; and
- The fourth quarter will close on December 31, 2022.
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its third 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 November 11, 2022.
