STMicroelectronics Reports Q4 and FY 2021 Financial Results

STMicroelectronics, 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, 2021. This press release also contains non-U.S. GAAP measures.

ST reported fourth-quarter net revenues of $3.56 billion, gross margin of 45.2%, operating margin of 24.9%, and net income of $750 million or $0.82 diluted earnings per share.

Jean-Marc Chery, STMicroelectronics President & CEO, commented:

•  “As we announced on January 7, 2022, our Q421 net revenues and gross margin came in better than expected primarily due to better than anticipated operations in an ongoing dynamic market.
• “Q421 net revenues were 9.9% higher year-over-year, with a further increase in profitability: operating margin of 24.9% improved from 20.3% and net income was up 9%.
• “Full-year 2021 net revenues increased 9% to $12.76 billion, reflecting a strong performance across all the end markets we address and our engaged customer programs throughout the year. Operating margin increased to 19.0% from 12.9% in FY20 and net income was up 80.8%.
• “ST’s first-quarter outlook, at the mid-point, is for net revenues of $3.50 billion, increasing year-over-year by 16.1% and decreasing sequentially by 1.6%; gross margin is expected to be about 0%.
• “For 2022, we plan to invest about $3.4 billion to $3.6 billion in CAPEX to further increase our production capacity and to support our strategic initiatives including the first industrialization line of our new 300mm wafer fab in Agrate,
• “Based on our strong customer demand and increased capacity, we will drive the Company based on a plan for FY22 revenues in the range of $14.8 billion to $15.3 ”

Quarterly Financial Summary (U.S. GAAP)

Annual Financial Summary (U.S. GAAP)

Fourth Quarter 2021 Summary Review

Net revenues totaled $3.56 billion, representing a year-over-year increase of 9.9%. On a year-over-year basis, the Company recorded higher net sales in all product groups except the Imaging sub-group, as expected. Year-over-year net sales to OEMs were substantially unchanged in total while Distribution increased 38.7%. On a sequential basis, net revenues increased 11.2%, 140 basis points above the high-end of the Company’s guidance. ADG and MDG reported increases in net revenues on a sequential basis, with AMS essentially flat.

Gross profit totaled $1.61 billion, representing a year-over-year increase of 28.3%. Gross margin of 45.2% increased 640 basis points year-over-year, 20 basis points above the high-end of the Company’s guidance, principally driven by improved product mix, favorable pricing, and manufacturing efficiencies.

Operating income increased 34.8% to $885 million, compared to $657 million in the year-ago quarter. The Company’s operating margin increased 460 basis points on a year-over-year basis to 24.9% of net revenues, compared to 20.3% in the 2020 fourth quarter.

By product group, compared with the year-ago quarter:

Automotive and Discrete Group (ADG):

• Revenue increased in both Automotive and in Power
• Operating profit increased by 129.5% to $216 million. Operating margin was 17.6% compared to 9%.

Analog, MEMS and Sensors Group (AMS):

• Revenue increased in both Analog and MEMS and decreased in
• Operating profit decreased by 16.6% to $335 million. Operating margin was 26.6% compared to 3%.

Microcontrollers and Digital ICs Group (MDG):

• Revenue increased in both Microcontrollers and in RF
• Operating profit increased by 82.9% to $318 million. Operating margin was 29.9% compared to 3%.

Net income and diluted earnings per share increased to $750 million and $0.82, respectively, compared to $582 million and $0.63, respectively, in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

Capital expenditure payments, net of proceeds from sales, were $548 million in the fourth quarter and $1.83 billion for the full year 2021. In the year-ago quarter, capital expenditures, net, were $381 million.

Inventory at the end of the fourth quarter was $1.97 billion, up from $1.84 billion in the year-ago quarter. Day sales of inventory at quarter-end was 91 days compared to 85 days in the year-ago quarter.

Free cash flow (non-U.S. GAAP) was $314 million in the fourth quarter, compared to $512 million in the year-ago quarter.

In the fourth quarter, the Company paid cash dividends to its stockholders totaling $60 million and executed a $86 million share buy-back as part of its share repurchase program launched on July 1, 2021.

ST’s net financial position (non-U.S. GAAP) was $977 million at December 31, 2021 compared to $798 million at October 2, 2021 and reflected total liquidity of $3.52 billion and total financial debt of $2.54 billion.

Business Outlook

The Company’s guidance, at the mid-point, for the 2022 first quarter is:

• Net revenues are expected to be $3.50 billion, a decrease of 1.6% sequentially, plus or minus 350 basis points;
• Gross margin of about 45.0%, plus or minus 200 basis points;
• This outlook is based on an assumed effective currency exchange rate of approximately $1.15 = €1.00 for the 2022 first quarter and includes the impact of existing hedging
• The first quarter will close on April 2, 2022.

Conference Call and Webcast Information

STMicroelectronics will conduct a conference call with analysts, investors and reporters to discuss its fourth quarter 2021 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, investors.st.com, and will be available for replay until February 11, 2022.

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

Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management’s current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those anticipated by such statements, due to, among other factors:

• changes in global trade policies, including the adoption and expansion of tariffs and trade barriers, that could affect the macro-economic environment and adversely impact the demand for our products;
• uncertain macro-economic and industry trends (such as inflation and fluctuations in supply chains), which may impact end-market demand for our products;
• customer demand that differs from projections;
• the ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
• changes in economic, social, public health, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macroeconomic or regional events, military conflicts, social unrest, labor actions, or terrorist activities;
• unanticipated events or circumstances, which may impact our ability to execute our plans and/or meet the objectives of our R&D and manufacturing programs, which benefit from public funding;
• legal, political and economic uncertainty surrounding Brexit may be a continued source of instability in international markets and currency exchange rate volatility and may adversely affect business activity, political stability and economic conditions and while we do not have material operations in the K. and have not experienced any material impact from Brexit on our underlying business to date, we cannot predict its future implications;
• financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
• the loading, product mix, and manufacturing performance of our production facilities and/or our required volume to fulfill capacity reserved with suppliers or third party manufacturing providers;
• availability and costs of equipment, raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations (including increasing costs resulting from inflation);
• the functionalities and performance of our IT systems, which are subject to cybersecurity threats and which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers or suppliers;
• theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of global and local privacy legislation, including the EU’s General Data Protection Regulation (“GDPR”);
• the impact of intellectual property (“IP”) claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
• changes in our overall tax position as a result of changes in tax rules, new or revised legislation, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
• variations in the foreign exchange markets and, more particularly, the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations;
• the outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
• product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts;
• natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, the effects of climate change, health risks and epidemics such as the COVID-19 in locations where we, our customers or our suppliers operate;
• the duration and the severity of the global outbreak of COVID-19 may continue to negatively impact the global economy in a significant manner for an extended period of time, and also could materially adversely affect our business and operating results;
• industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers; and
• the ability to successfully ramp up new programs that could be impacted by factors beyond our control, including the availability of critical third party components and performance of subcontractors in line with our

Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “are expected to,” “should,” “would be,” “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions.

Some of these risk factors are set forth and are discussed in more detail in “Item 3. Key Information — Risk Factors” included in our Annual Report on Form 20-F for the year ended December 31, 2020, as filed with the SEC on February 24, 2021. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed, or expected. We do not intend and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.

For more information, visit www.st.com