STMicroelectronics reported U.S. GAAP financial results for the third quarter ended October 1, 2022. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
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% |
(a) Following a change in U.S. GAAP reporting guidance effective January 1, 2022, Q3 and Q2 2022 net income does not include phantom interests associated with convertible bonds. Prior period has not been restated.
(b) Q3 and Q2 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 period has not been restated.
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 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.
Inventory at the end of the third quarter was $2.38 billion, compared to $1.97 billion in the year-ago quarter. Days sales of inventory at quarter-end and in the year-ago quarter were 96 days.
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.
