STMicroelectronics a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the first quarter ended April 1, 2023. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported first quarter net revenues of $4.25 billion, gross margin of 49.7%, operating margin of 28.3%, and net income of $1.04 billion or $1.10 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
· “Q1 net revenues of $4.25 billion came in better than expected in Automotive and Industrial partially offset by lower revenues in Personal Electronics.
· “Q1 gross margin of 49.7% was 170 basis points above the mid-point of our business outlook range mainly due to product mix in a price environment that remained favorable.
· “On a year-over-year basis, Q1 net revenues increased 19.8%, operating margin increased to 28.3% from 24.7% and net income increased 39.8% to $1.04 billion.
· “Our second quarter business outlook, at the mid-point, is for net revenues of $4.28 billion, increasing year-over-year by 11.5% and increasing sequentially by 0.8%; gross margin is expected to be about 49.0%.
· “We will now drive the Company based on a plan for FY23 revenues in the range of $17.0 billion to $17.8 billion.”
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) | Q1 2023 | Q4 2022 | Q1 2022 | Q/Q | Y/Y |
| Net Revenues | $4,247 | $4,424 | $3,546 | -4.0% | 19.8% |
| Gross Profit | $2,110 | $2,102 | $1,655 | 0.4% | 27.5% |
| Gross Margin | 49.7% | 47.5% | 46.7% | 220 bps | 300 bps |
| Operating Income | $1,201 | $1,287 | $877 | -6.7% | 36.9% |
| Operating Margin | 28.3% | 29.1% | 24.7% | -80 bps | 360 bps |
| Net Income | $1,044 | $1,248 | $747 | -16.3% | 39.8% |
| Diluted Earnings Per Share | $1.10 | $1.32 | $0.79 | -16.7% | 39.2% |
First Quarter 2023 Summary Review
| Net Revenues By Product Group (US$ m) |
| Q1 2023Q4 2022Q1 2022Q/QY/YAutomotive and Discrete Group (ADG)1,8071,6961,2566.5%43.9%Analog, MEMS and Sensors Group (AMS)1,0681,3391,077-20.3%-0.9%Microcontrollers and Digital ICs Group (MDG)1,3681,3831,208-1.1%13.2%Others465–Total Net Revenues4,2474,4243,546-4.0%19.8% |
Net revenues totaled $4.25 billion, representing a year-over-year increase of 19.8%. On a year-over-year basis, ADG and MDG revenues increased 43.9% and 13.2%, respectively, while AMS slightly decreased 0.9%. Year-over-year net sales to OEMs and Distribution increased 17.5% and 24.0%, respectively. On a sequential basis, net revenues decreased 4.0%, 110 basis points better than the mid-point of the Company’s guidance. ADG reported an increase in net revenues on a sequential basis, while AMS and MDG decreased, as expected.
Gross profit totaled $2.11 billion, representing a year-over-year increase of 27.5%. Gross margin of 49.7% increased 300 basis points year-over-year, mainly due to product mix, favorable pricing, positive currency effects, net of hedging, partially offset by higher manufacturing costs.
Operating income increased 36.9% to $1.20 billion, compared to $0.88 billion in the year-ago quarter. The Company’s operating margin increased 360 basis points on a year-over-year basis to 28.3% of net revenues, compared to 24.7% in the 2022 first 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 145.3% to $577.4 million. Operating margin was 32.0% compared to 18.7%.
Analog, MEMS and Sensors Group (AMS):
· Revenue increased in Imaging, and decreased in Analog and in MEMS.
· Operating profit decreased by 11.6% to $217.9 million. Operating margin was 20.4% compared to 22.9%.
Microcontrollers and Digital ICs Group (MDG):
· Revenue increased in Microcontrollers and in RF Communications.
· Operating profit increased by 21.7% to $494.7 million. Operating margin was 36.2% compared to 33.7%.
Net income and diluted earnings per share increased to $1.04 billion and $1.10 respectively, compared to $0.75 billion and $0.79 respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| Trailing 12 Months | ||||||
| (US$ m) | Q1 2023 | Q4 2022 | Q1 2022 | Q1 2023 | Q1 2022 | TTM Change |
| Net cash from operating activities | 1,320 | 1,550 | 945 | 5,577 | 3,323 | 67.8% |
| Free cash flow (non-U.S. GAAP) | 206 | 603 | 82 | 1,715 | 941 | 82.3% |
Capital expenditure payments, net of proceeds from sales, were $1.09 billion in the first quarter. In the year-ago period, capital expenditures, net, were $0.84 billion.
Inventory at the end of the first quarter was $2.87 billion, compared to $2.15 billion in the year-ago quarter. Days sales of inventory at quarter-end was 122 days compared to 104 days in the year-ago quarter.
Net cash from operating activities was $1.32 billion in the first quarter compared to $0.95 billion in the year-ago quarter.
Free cash flow(non-U.S. GAAP) was $206 million compared to $82 million in the year-ago quarter.
In the first 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 $1.86 billion as of April 1, 2023, compared to $1.80 billion as of December 31, 2022 and reflected total liquidity of $4.52 billion and total financial debt of $2.66 billion.
Business Outlook
The Company’s guidance, at the mid-point, for the 2023 second quarter is:
- Net revenues are expected to be $4.28 billion, an increase of 0.8% sequentially, plus or minus 350 basis points.
- Gross margin of 49.0%, plus or minus 200 basis points.
- This outlook is based on an assumed effective currency exchange rate of approximately $1.08 = €1.00 for the 2023 second quarter and includes the impact of existing hedging contracts.
- The second quarter will close on July 1, 2023.
Conference Call and Webcast Information
STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its first quarter 2023 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 May 12, 2023.
