- Q2 net revenues $4.33 billion; gross margin 49.0%; operating margin 26.5%; net income $1.00 billion
- H1 net revenues $8.57 billion; gross margin 49.3%; operating margin 27.4%; net income $2.05 billion
- Business outlook at mid-point: Q3 net revenues of $4.38 billion and gross margin of 47.5%
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 1, 2023. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported second quarter net revenues of $4.33 billion, gross margin of 49.0%, operating margin of 26.5%, and net income of $1.00 billion or $1.06 diluted earnings per share.
Jean-Marc Chery, STMicroelectronics President & CEO, commented:
“Q2 net revenues of $4.33 billion came in above the midpoint of our business outlook range, and Q2 gross margin of 49.0% was in line with guidance.”
“Q2 net revenues increased 12.7% year-over-year. The revenue performance continued to be driven by growth in Automotive and Industrial, partially offset by lower revenues in Personal Electronics.”
“On a year-over-year basis, gross margin increased to 49.0% from 47.4%, operating margin increased to 26.5% from 26.2% and net income increased 15.5% to $1.00 billion.”
“First half net revenues increased 16.1% year-over-year, driven by growth in all product sub-groups except the Analog and MEMS sub-groups. Operating margin was 27.4% and net income was $2.05 billion.”
·”Our third quarter business outlook, at the mid-point, is for net revenues of $4.38 billion, increasing year-over-year by 1.2% and increasing sequentially by 1.1%; gross margin is expected to be about 47.5%.”
“We will drive the Company based on a plan for FY23 revenues of $17.4 billion, plus or minus $150 million, and a gross margin exceeding 48.0%.”
Quarterly Financial Summary (U.S. GAAP)
|(US$ m, except per share data)||Q2 2023||Q1 2023||Q2 2022||Q/Q||Y/Y|
|Gross Margin||49.0%||49.7%||47.4%||-70 bps||160 bps|
|Operating Margin||26.5%||28.3%||26.2%||-180 bps||30 bps|
|Diluted Earnings Per Share||$1.06||$1.10||$0.92||-3.6%||15.2%|
|Q2 2023Q1 2023Q2 2022Q/QY/Y |
Automotive and Discrete Group (ADG)1,9551,8071,4548.2%34.4%
Analog, MEMS and Sensors Group (AMS)9401,0681,115-11.9%-15.7%
Microcontrollers and Digital ICs Group (MDG)1,4271,3681,2634.3%13.0%
Total Net Revenues4,3264,2473,8371.9%12.7%
Net revenues totaled $4.33 billion, representing a year-over-year increase of 12.7%. On a year-over-year basis, ADG and MDG revenues increased 34.4% and 13.0%, respectively, while AMS decreased 15.7%. Year-over-year net sales to OEMs and Distribution increased 9.8% and 18.3%, respectively. On a sequential basis, net revenues increased 1.9%, 110 basis points better than the mid-point of the Company’s guidance. ADG and MDG both reported an increase in net revenues on a sequential basis, while AMS decreased, as expected.
Gross profit totaled $2.12 billion, representing a year-over-year increase of 16.5%. Gross margin of 49.0% increased 160 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 14.2% to $1.15 billion, compared to $1.00 billion in the year-ago quarter. In the second quarter 2023, net operating expenses included negative non-recurring non-cash items amounting to $34 million. The Company’s operating margin increased 30 basis points on a year-over-year basis to 26.5% of net revenues, compared to 26.2% in the 2022 second quarter.
By product group, compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
· Revenue increased for both Automotive and Power Discrete.
· Operating profit increased by 73.8% to $624 million. Operating margin was 31.9% compared to 24.7%.
Analog, MEMS and Sensors Group (AMS):
· Revenue decreased in Analog, in Imaging and in MEMS.
· Operating profit decreased by 48.3% to $139 million. Operating margin was 14.8% compared to 24.1%.
Microcontrollers and Digital ICs Group (MDG):
· Revenue increased for both Microcontrollers and RF Communications.
· Operating profit increased by 19.0% to $505 million. Operating margin was 35.4% compared to 33.6%.
Net income and diluted earnings per share increased to $1.00 billion and $1.06 respectively, compared to $0.87 billion and $0.92 respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
|Trailing 12 Months|
|(US$ m)||Q2 2023||Q1 2023||Q2 2022||Q2 2023||Q2 2022||TTM Change|
|Net cash from operating activities||1,311||1,320||1,056||5,832||3,777||54.4%|
|Free cash flow (non-U.S. GAAP)||209||206||230||1,694||1,046||62.0%|
Net cash from operating activities was $1.31 billion in the second quarter compared to $1.06 billion in the year-ago quarter.
Capital expenditure payments, net of proceeds from sales, capital grants and other contributions, were $1.07 billion in the second quarter. In the year-ago period, capital expenditures, net, were $0.81 billion.
Free cash flow(non-U.S. GAAP) was $209 million compared to $230 million in the year-ago quarter.
Inventory at the end of the second quarter was $3.05 billion, compared to $2.31 billion in the year-ago quarter. Days sales of inventory at quarter-end was 126 days compared to 104 days in the year-ago quarter.
In the second quarter, the Company paid cash dividends to its stockholders totaling $50 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 $1.91 billion as of July 1, 2023, compared to $1.86 billion as of April 1, 2023 and reflected total liquidity of $4.56 billion and total financial debt of $2.65 billion
Further information can be found at www.st.com.