- Q4 net revenues $4.28 billion; gross margin 45.5%; operating margin 23.9%; net income $1.08 billion
- FY net revenues $17.29 billion; gross margin 47.9%; operating margin 26.7%; net income $4.21 billion
- Business outlook at mid-point: Q1 net revenues of $3.6 billion and gross margin of 42.3%
Geneva, January 25, 2024 – STMicroelectronics N.V. (“ST”) (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the fourth quarter ended December 31, 2023. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported fourth quarter net revenues of $4.28 billion, gross margin of 45.5%, operating margin of 23.9%, and net income of $1.08 billion or $1.14 diluted earnings per share.
Jean-Marc Chery, ST President & CEO, commented:
· “FY23 revenues increased 7.2% to $17.29 billion. Operating margin was 26.7% compared to 27.5% in FY22 and net income increased 6.3% to $4.21 billion. We invested $4.11 billion in net CAPEX while delivering free cash flow of $1.77 billion.”
· “In Q4, ST delivered revenues and gross margin slightly below the mid-point of the guidance, with higher revenues in Personal Electronics offset by a softer growth rate in Automotive.”
· “In Q4, our customer order bookings decreased compared to Q3. We continued to see stable end-demand in Automotive, no significant increase in Personal Electronics, and further deterioration in Industrial.”
· “Our first quarter business outlook, at the mid-point, is for net revenues of $3.6 billion, decreasing year-over-year by 15.2% and decreasing sequentially by 15.9%; gross margin is expected to be about 42.3%.”
· “For 2024, we plan to invest about $2.5 billion in net CAPEX.”
· “We will drive the Company based on a plan for FY24 revenues in the range of $15.9 billion to $16.9 billion. Within this plan, we expect a gross margin in the low to mid-40’s.”
·
Quarterly Financial Summary (U.S. GAAP)
| (US$ m, except per share data) | Q4 2023 | Q3 2023 | Q4 2022 | Q/Q | Y/Y |
| Net Revenues | $4,282 | $4,431 | $4,424 | -3.4% | -3.2% |
| Gross Profit | $1,949 | $2,109 | $2,102 | -7.6% | -7.3% |
| Gross Margin | 45.5% | 47.6% | 47.5% | -210 bps | -200 bps |
| Operating Income | $1,023 | $1,241 | $1,287 | -17.5% | -20.5% |
| Operating Margin | 23.9% | 28.0% | 29.1% | -410 bps | -520 bps |
| Net Income | $1,076 | $1,090 | $1,248 | -1.3% | -13.8% |
| Diluted Earnings Per Share | $1.14 | $1.16 | $1.32 | -1.7% | -13.6% |
Annual Financial Summary (U.S. GAAP)
| (US$ m, except earnings per share data) | FY2023 | FY2022 | Y/Y |
| Net Revenues | $17,286 | $16,128 | 7.2% |
| Gross Profit | $8,287 | $7,635 | 8.5% |
| Gross Margin | 47.9% | 47.3% | 60 bps |
| Operating Income | $4,611 | $4,439 | 3.9% |
| Operating Margin | 26.7% | 27.5% | -80 bps |
| Net Income | $4,211 | $3,960 | 6.3% |
| Diluted Earnings Per Share | $4.46 | $4.19 | 6.4% |
Fourth Quarter 2023 Summary Review
| Net Revenues By Product Group (US$ m) |
| Q4 2023 Q3 2023 Q4 2022 Q/Q Y/Y Automotive and Discrete Group (ADG) 2,060 2,025 1,696 1.7% 21.5% Analog, MEMS and Sensors Group (AMS) 993 990 1,339 0.4% -25.8% Microcontrollers and Digital ICs Group (MDG) 1,225 1,412 1,383 -13.3% -11.5% Others 4 4 6 – – Total Net Revenues $4,282 4,431 4,424 -3.4% -3.2% |
Net revenues totaled $4.28 billion, representing a year-over-year decrease of 3.2%. On a year-over-year basis, ADG revenues increased 21.5%, while AMS and MDG decreased 25.8% and 11.5% respectively. Year-over-year net sales to OEMs and Distribution decreased 0.4% and 9.2%, respectively. On a sequential basis, net revenues decreased 3.4%, 40 basis points lower than the mid-point of ST’s guidance. On a sequential basis, ADG reported an increase in net revenues, AMS was stable and MDG decreased.
Gross profit totaled $1.95 billion, representing a year-over-year decrease of 7.3%. Gross margin of 45.5%, 50 basis points below the mid-point of ST’s guidance, decreased 200 basis points year-over-year, due to higher input manufacturing costs, unused capacity charges, and negative currency effect net of hedging, partially offset by the combination of sales price and product mix.
Operating income decreased 20.5% to $1.02 billion, compared to $1.29 billion in the year-ago quarter. ST’s operating margin decreased 520 basis points on a year-over-year basis to 23.9% of net revenues, compared to 29.1% in the fourth quarter of 2022.
By product group, compared with the year-ago quarter:
Automotive and Discrete Group (ADG):
· Revenue increased for both Automotive and Power Discrete.
· Operating profit increased by 39.7% to $657 million. Operating margin was 31.9% compared to 27.7%.
Analog, MEMS and Sensors Group (AMS):
· Revenue increased in Analog and decreased in Imaging and in MEMS.
· Operating profit decreased by 57.4% to $147 million. Operating margin was 14.8% compared to 25.8%.
Microcontrollers and Digital ICs Group (MDG):
· Revenue decreased for Microcontrollers and increased for RF Communications.
· Operating profit decreased by 30.9% to $342 million. Operating margin was 28.0% compared to 35.8%.
Net income decreased to $1.08 billion compared to $1.25 billion in the year-ago quarter. Both the fourth quarter 2023 and the fourth quarter 2022 financial results included one-time non-cash income tax benefits of $191 million and $141 million respectively. Diluted earnings per share decreased to $1.14 compared to $1.32 in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
| Trailing 12 Months | ||||||
| (US$ m) | Q4 2023 | Q3 2023 | Q4 2022 | Q4 2023 | Q4 2022 | TTM Change |
| Net cash from operating activities | 1,480 | 1,881 | 1,550 | 5,992 | 5,202 | 15.2% |
| Free cash flow (non-U.S. GAAP)[1] | 652 | 707 | 603 | 1,774 | 1,591 | 11.5% |
Net cash from operating activities was $1.48 billion in the fourth quarter compared to $1.55 billion in the year-ago quarter. For the full-year 2023, net cash from operating activities increased 15.2% to $5.99 billion, representing 34.7% of total revenues.
Capital expenditure payments, net of proceeds from sales, capital grants and other contributions, were $798 million in the fourth quarter and $4.11 billion for the full year 2023. In the respective year-ago periods, net capital expenditures were $920 million and $3.52 billion.
Free cash flow(non-U.S. GAAP) was $652 million and $1.77 billion in the fourth quarter and full year, respectively, compared to $603 million and $1.59 billion in the year-ago respective periods.
Inventory at the end of the fourth quarter was $2.70 billion, compared to $2.87 billion in the previous quarter and $2.58 billion in the year-ago quarter. Days sales of inventory at quarter-end was 104 days compared to 114 days in the previous quarter and 101 days in the year-ago quarter.
In the fourth quarter, ST paid cash dividends to its stockholders totaling $60 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 $3.16 billion as of December 31, 2023, compared to $2.46 billion as of September 30, 2023 and reflected total liquidity of $6.08 billion and total financial debt of $2.93 billion. Adjusted net financial position, taking into consideration the effect on total liquidity of advances from capital grants for which capital expenditures have not been incurred yet, stood at $3.00 billion as of December 31, 2023.
Corporate developments
On January 10, 2024, ST announced a new organization to deliver enhanced product development innovation and efficiency, time-to-market as well as customer focus by end market. ST will be re-organized into two Product Groups, split into four Reportable Segments and the existing sales and marketing organization will be complemented by a new application marketing organization focused by end markets across all Regions.
The new organization implies a change in reporting which will apply from January 1, 2024.
Business Outlook
ST’s guidance, at the mid-point, for the 2024 first quarter is:
- Net revenues are expected to be $3.6 billion, a decrease of 15.9% sequentially, plus or minus 350 basis points.
- Gross margin of 42.3%, 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 2024 first quarter and includes the impact of existing hedging contracts.
- The first quarter will close on March 30, 2024.
Conference Call and Webcast Information
ST will conduct a conference call with analysts, investors and reporters to discuss its fourth quarter and full year 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, https://investors.st.com, and will be available for replay until February 9, 2024.
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 ST’s consolidated financial statements prepared in accordance with U.S. GAAP.
See the Appendix of this press release for a reconciliation of ST’s non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures.
