- 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%
STMicroelectronics , 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
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 $17.8 billion.”
First Quarter 2023 Summary Review
Net Revenues By Product Group (US$ m)
Q1 2023
Q4 2022
Q1 2022
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.
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 = €1.00 for the 2023 second quarter and includes the impact of existing hedging contracts.
- The second quarter will close on July 1, 2023.
