Press Release: STMicroelectronics Reports 2023 First Quarter Financial Results
PR No: C3177C
STMicroelectronics Reports 2023 First Quarter Financial Results
-- Q1 net revenues $4.25 billion; gross margin 49.7%; operating margin 28.3%; net income $1.04 billion -- Q1 free cash flow1 $206 million after net capital expenditure payments of $1.09 billion -- Business outlook at mid-point: Q2 net revenues of $4.28 billion and gross margin of 49.0%
Geneva, April 27, 2023 - STMicroelectronics (NYSE: STM), 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 $0.79 -16.7% 39.2% ------------------------------- ------- ------- ------- ------- -------
First Quarter 2023 Summary Review
Net Revenues By Product Group (US$ Q1 Q4 Q1 m) 2023 2022 2022 Q/Q Y/Y ----------------------------------------- ------- ------- ------- -------- ------- Automotive and Discrete Group (ADG) 1,807 1,696 1,256 6.5% 43.9% ----------------------------------------- ------- ------- ------- -------- ------- Analog, MEMS and Sensors Group (AMS) 1,068 1,339 1,077 -20.3% -0.9% ----------------------------------------- ------- ------- ------- -------- ------- Microcontrollers and Digital ICs Group (MDG) 1,368 1,383 1,208 -1.1% 13.2% ----------------------------------------- ------- ------- ------- -------- ------- Others 4 6 5 - - ----------------------------------------- ------- ------- ------- -------- ------- Total Net Revenues 4,247 4,424 3,546 -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 $0.79 respectively, in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
Trailing 12 Months
------------- -------- -------- --------- --------------------------------
Q1 Q4 TTM
(US$ m) 2023 2022 Q1 2022 Q1 2023 Q1 2022 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 = EUR1.00 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.
Use of Supplemental Non-U.S. GAAP Financial Information
This press release contains supplemental non-U.S. GAAP financial information.
Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with the Company's consolidated financial statements prepared in accordance with U.S. GAAP.
See the Appendix of this press release for a reconciliation of the Company's non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures.
Forward-looking Information
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