- Q4 net revenues $4.42 billion; gross margin 47.5%; operating margin 29.1%; net income $1.25 billion
- FY net revenues $16.13 billion; gross margin 47.3%; operating margin 27.5%; net income $3.96 billion
- Business outlook at mid-point: Q1 net revenues of $4.20 billion and gross margin of 48.0%
STMicroelectronics reported U.S. GAAP financial results for the fourth quarter ended December 31, 2022.
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 revenues and gross margin above the mid-point of the guidance.
- “FY22 revenues 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. We invested $3.52 billion in CAPEX while delivering free cash flow of $1.59 billion.
- “Our first quarter business outlook, at the mid-point, is for net revenues of $4.20 billion, increasing year-over-year by 18.5% 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 fabs 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) | Q4 2022 | Q3 2022 | Q4 2021 | Q/Q | Y/Y |
| Net Revenues | $4,424 | $4,321 | $3,556 | 2.4% | 24.4% |
| 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) | FY2022 | FY2021 | 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 | $2.16 | +94.0% |
(a) Following a change in U.S. GAAP reporting guidance effective January 1, 2022, FY 2022 net income does not include phantom interests associated with convertible bonds. Prior year period has not been restated.
(b) FY 2022 diluted earnings per share includes the full dilutive effect of our outstanding convertible debt, upon adoption on January 1, 2022 of the new U.S. GAAP reporting guidance. Prior year period has not been restated.
Fourth Quarter 2022 Summary Review
| Net Revenues By Product Group (US$ m) | Q4 2022 | Q3 2022 | Q4 2021 | 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) | Q4 2022 | Q3 2022 | Q4 2021 | Q4 2022 | Q4 2021 | 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.
Business Outlook
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, http://investors.st.com, and will be available for replay until February 10, 2023.
