STMicroelectronics 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 |
| Net Revenues | $3,837 | $3,546 | $2,992 | 8.2% | 28.3% |
| Gross Profit | $1,819 | $1,655 | $1,212 | 10.0% | 50.2% |
| Gross Margin | 47.4% | 46.7% | 40.5% | 70 bps | 690 bps |
| Operating Income | $1,004 | $877 | $489 | 14.4% | 105.4% |
| 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 | $0.44 | 16.5% | 109.1% |
- Second Quarter 2022 Summary Review
| Net Revenues By Product Group (US$ 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% |
| Others | 5 | 5 | 5 | – | – |
| Total Net Revenues | 3,837 | 3,546 | 2,992 | 8.2% | 28.3% |
Net revenues totalled $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 totalled $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.
Business Outlook
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.
