• Q2 net income $3.84 billion; gross margin 47.4%; operating margin 26.2%; net profit $867 million
  • First-half net income $7.38 billion; gross margin 47.1%; operating margin 25.5%; net profit $1.61 billion
  • Medium business outlook: Q3 net revenue of $4.24 billion and gross margin of 47.0%

July 28, 2022Geneva, July 28, 2022 – STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported US GAAP financial results for the second quarter ended July 2, 2022. This press release also contains non-US GAAP measures (see Appendix for additional information ).

ST reported second-quarter net revenue of $3.84 billion, a gross margin of 47.4%, an operating margin of 26.2% and net income of $867 million, or $0.92 diluted earnings per share.

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Jean-Marc Chery, President and CEO of STMicroelectronics, commented:

· “Second quarter net revenue and gross margin exceeded the midpoint of our business outlook range, driven by continued strong demand for our product portfolio.

· “On a year-over-year basis, second-quarter net revenue increased 28.3%, operating margin increased to 26.2% from 16.3%, and net income doubled to $867 million.

· “H1 net revenue increased 22.9% year-on-year, driven by growth across all product groups and sub-groups. Operating margin was 25.5% and net income was $1.61 billion.

· “ST’s third-quarter midpoint forecast is for net revenue of $4.24 billion, up 32.6% year-over-year and up 10.5% sequentially; gross margin is expected to be around 47.0%.

· “We will now operate the Company based on a FY22 revenue plan in the range of $15.9 billion to $16.2 billion and a gross margin of approximately 47.0%.”

Quarterly Financial Summary (US GAAP)

(USD million, excluding per share data) Second quarter of 2022 First quarter of 2022 Second quarter of 2021 Q/Q Y/Y
Net income 3837 dollars 3546 dollars 2992 dollars 8.2% 28.3%
Gross profit 1819 dollars 1655 dollars 1212 dollars 10.0% 50.2%
Gross profit 47.4% 46.7% 40.5% 70 bps 690 bps
Operating income 1004 dollars $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%

(a) Following a change in US GAAP reporting guidance effective January 1, 2022, net income in the first and second quarters of 2022 does not include phantom interest related to convertible notes. Prior periods have not been restated.

b) Diluted earnings per share for Q1 and Q2 2022 include the full dilutive effect of our outstanding convertible debt following the adoption on January 1, 2022 of new US GAAP reporting guidance. Prior periods have not been restated.

  1. Q2 2022 Summary
Net revenue by product group (million USD) Second quarter of 2022 First quarter of 2022 Second quarter of 2021 Q/Q Y/Y
Automotive and Discrete Group (ADG) 1454 1,256 1,077 15.8% 35.1%
Analog, MEMS and Sensor (AMS) Group 1,127 1,087 1,013 3.7% 11.3%
Microcontrollers and Digital Integrated Circuits Group (MDG) 1,251 1,198 897 4.4% 39.5%
others 5 5 5
Total net income 3,837 3,546 2,992 8.2% 28.3%

Net income totaled $3.84 billion, up 28.3% year-on-year. On an annual basis, the Company recorded higher net sales in its product groups and all subgroups. Annual net sales to OEMs and distribution increased by 31.7% and 22.2%, respectively. On a sequential basis, net income increased 8.2%, 240 basis points above the midpoint of the Company’s guidance. All product groups reported increases in net revenue on a consistent basis.

Gross profit totaled $1.82 billion, an increase of 50.2% year-on-year. Gross profit of 47.4% increased 690 basis points year-over-year, primarily due to favorable pricing and improved product mix, partially offset by input cost inflation, and was 140 basis points above the company’s management midpoint.

Operating income increased 105.4% to $1.0 billion, compared to $489 million in the year-ago quarter. The company operating margin increased 990 basis points year-over-year to 26.2% of net revenue, compared to 16.3% in 2Q21.

from product groupcompared to the previous quarter:

Automotive and Discrete Group (ADG):

· Revenues increased in both automotive and energy.

· Operating profit increased 251.1% to $359.2 million. Operating margin was 24.7% compared to 9.5%.

Analog, MEMS and Array Sensors (AMS):

· Revenue increased in analog, MEMS and imaging.

· Operating profit increased 42.1% to $268.4 million. Operating margin was 23.8% compared to 18.6%.

Microcontrollers and Digital Integrated Circuits Group (MDG):

· Revenues are increasing in both microcontrollers and RF communications.

· Operating profit increased 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

12 months have passed
(million USD) Second quarter of 2022 First quarter of 2022 Second quarter of 2021 Second quarter of 2022 Second quarter of 2021 TTM change
Net cash provided by operating activities 1,056 945 602 3,777 2,591 45.8%
Free Cash Flow (Non-US GAAP) 230 82 125 1,046 873 19.8%

Capital expenditure payments, net of sales revenue, were $809 million in the second quarter. In the prior-year 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 prior quarter. Days inventory sold at the end of the quarter was 104 days compared to 101 days in the prior quarter.

Free cash flow (non-US GAAP) was $230 million in the second quarter, compared to $125 million in the prior quarter.

During the second quarter, the Company paid cash dividends to its stockholders totaling $54 million and repurchased $87 million of shares as part of its current share repurchase program.

ST’s net financial position (non-US GAAP) was $924 million as of July 2, 2022, compared to $840 million as of April 2, 2022, and reflects total liquidity of $3.44 billion and total financial debt of 2.52 billion dollars.

Business perspective

The company’s mid-term guidance for the third quarter of 2022 is:

  • Net income is expected to be $4.24 billion, up 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 exchange rate of approximately $1.09 = €1.00 for the third quarter of 2022 and includes the impact of existing hedging contracts; and
  • The third quarter will end on October 1, 2022.

Conference call and webcast information

STMicroelectronics will hold a conference call with analysts, investors and reporters to discuss its Q2 2022 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. US Eastern Time ( ET). A live webcast (listen-only mode) of the conference call will be available on the ST website and will be available for replay until August 12, 2022.

Use of additional non-US GAAP financial information

This press release contains additional non-US GAAP financial information.

Readers are cautioned that these measures have not been audited and are not prepared in accordance with US GAAP and should not be considered a substitute for US GAAP financial measures. In addition, such non-US GAAP financial measures may not be comparable to similarly titled information from other companies. To compensate for these limitations, the supplemental non-US GAAP financial information should not be read in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with US GAAP.

See the Appendix to this press release for a reconciliation of the Company’s non-US GAAP financial measures to the corresponding US GAAP financial measures.

STMicroelectronics Reports 2022 Second Quarter Financial Results

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