Allegro MicroSystems, Inc. (“Allegro” or the “Company”)
(Nasdaq:ALGM), a global leader in power and sensing
semiconductor solutions for motion control and energy efficient
systems, today announced financial results for its third quarter
ended December 29, 2023.
“We delivered third-quarter net sales of $255
million, up 2% year-over-year, driven by continued strength in
Automotive, which grew 18% year-over-year. Non-GAAP EPS was $0.32,
10% above the midpoint of guidance on in-line sales, and free cash
flow increased $27 million, or more than 170% sequentially,” said
Vineet Nargolwala, President and CEO of Allegro. "Sales into
e-Mobility applications increased by 45% year-over-year to 54% of
third-quarter Automotive sales, establishing a new milestone. While
we expect continued inventory digestion across end markets in the
short-term, our design win momentum continues at record levels and
reinforces our confidence in our ability to grow above market in
the mid to long term, consistent with our target financial
model.”
Third Quarter Financial Highlights:
In thousands, except per share
data |
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net Sales* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive |
|
$ |
194,764 |
|
|
$ |
197,321 |
|
|
$ |
164,719 |
|
|
$ |
577,515 |
|
|
$ |
467,959 |
|
Industrial |
|
|
45,949 |
|
|
|
60,962 |
|
|
|
53,737 |
|
|
|
180,021 |
|
|
|
146,797 |
|
Other |
|
|
14,271 |
|
|
|
17,226 |
|
|
|
30,333 |
|
|
|
51,250 |
|
|
|
89,452 |
|
Total net sales |
|
$ |
254,984 |
|
|
$ |
275,509 |
|
|
$ |
248,789 |
|
|
$ |
808,786 |
|
|
$ |
704,208 |
|
GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin % |
|
|
52.5 |
% |
|
|
57.9 |
% |
|
|
57.3 |
% |
|
|
55.8 |
% |
|
|
55.8 |
% |
Operating margin % |
|
|
14.4 |
% |
|
|
26.5 |
% |
|
|
26.4 |
% |
|
|
22.3 |
% |
|
|
19.9 |
% |
Diluted EPS |
|
$ |
0.17 |
|
|
$ |
0.34 |
|
|
$ |
0.33 |
|
|
$ |
0.82 |
|
|
$ |
0.65 |
|
Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin % |
|
|
54.6 |
% |
|
|
58.3 |
% |
|
|
58.0 |
% |
|
|
57.0 |
% |
|
|
56.4 |
% |
Operating margin % |
|
|
27.2 |
% |
|
|
31.3 |
% |
|
|
30.3 |
% |
|
|
29.8 |
% |
|
|
27.9 |
% |
Diluted EPS |
|
$ |
0.32 |
|
|
$ |
0.40 |
|
|
$ |
0.35 |
|
|
$ |
1.11 |
|
|
$ |
0.91 |
|
*During the preparation of the
third quarter fiscal year 2024 interim condensed consolidated
financial statements, the Company identified an immaterial error in
the classification of net sales by application within the table
above, whereby customer returns and sales allowances were
incorrectly classified by application between Automotive,
Industrial and Other in the prior periods presented above. There
was no impact to previously reported total net sales or net income
in any of the periods noted above.
Business Outlook
For the fourth quarter ending March 29, 2024,
the Company expects net sales to be in the range of $230 million to
$240 million. The Company also estimates the following results on a
non-GAAP basis:
- Gross Margin is expected to be between 53% and 54%,
- Operating Expenses are expected to be approximately 31% of
sales, and
- Diluted Earnings per Share is expected to be in the range of
$0.19 to $0.23.
“Allegro is well positioned to support the
megatrends of electrification and automation, and we are taking
appropriate actions to navigate near-term impacts from inventory
digestion,” said Derek D’Antilio, CFO of Allegro. “We are prudently
managing our costs and significantly improving cash flow while
continuing to invest strategically for growth.”
Allegro has not provided a reconciliation of its
fourth fiscal quarter outlook for non-GAAP Gross Margin, non-GAAP
Operating Expenses, and non-GAAP Diluted Earnings per Share because
estimates of all of the reconciling items cannot be provided
without unreasonable efforts. It is difficult to reasonably provide
a forward-looking estimate between such forward-looking non-GAAP
measures and the comparable forward-looking U.S. generally accepted
accounting principles (“GAAP”) measures. Certain factors that are
materially significant to Allegro’s ability to estimate these items
are out of its control and/or cannot be reasonably predicted.
Earnings Webcast
A webcast will be held on Thursday, February 1,
2024 at 8:30 a.m., Eastern Time. Vineet Nargolwala, President and
Chief Executive Officer, and Derek D’Antilio, Chief Financial
Officer, will discuss Allegro’s business and financial results.
The webcast will be available on the Investor
Relations section of the Company’s website at
investors.allegromicro.com. A recording of the webcast will be
posted in the same location shortly after the call concludes and
will be available for at least 90 days.
About Allegro MicroSystems
Allegro MicroSystems is a leading global
designer, developer, fabless manufacturer and marketer of sensor
integrated circuits (“ICs”) and application-specific analog power
ICs enabling emerging technologies in the automotive and industrial
markets. Allegro’s diverse product portfolio provides efficient and
reliable solutions for the electrification of vehicles, automotive
ADAS safety features, automation for Industry 4.0 and power saving
technologies for data centers and clean energy applications.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. We intend such forward-looking statements to be
covered by the safe harbor provisions for forward-looking
statements contained in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements other than statements of historical
facts contained in this press release including statements
regarding our future results of operations and financial position,
business strategy, prospective products and the plans and
objectives of management for future operations, including, among
others, statements regarding the liquidity, growth and
profitability strategies and factors affecting our business are
forward-looking statements. These statements involve known and
unknown risks, uncertainties and other important factors that may
cause our actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements.
Without limiting the foregoing, in some cases,
you can identify forward-looking statements by terms such as “aim,”
“may,” “will,” “should,” “expect,” “exploring,” “plan,”
“anticipate,” “could,” “intend,” “target,” “project,” “would,”
“contemplate,” “believe,” “estimate,” “predict,” “potential,”
“seek,” or “continue” or the negative of these terms or other
similar expressions, although not all forward-looking statements
contain these words. No forward-looking statement is a guarantee of
future results, performance, or achievements, and one should avoid
placing undue reliance on such statements.
Forward-looking statements are based on our
management’s current expectations, beliefs and assumptions and on
information currently available to us. Such beliefs and assumptions
may or may not prove to be correct. Additionally, such
forward-looking statements are subject to a number of known and
unknown risks, uncertainties and assumptions, and actual results
may differ materially from those expressed or implied in the
forward-looking statements due to various factors, including, but
not limited to, those identified in Part II, Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” and Part I, Item 1A. “Risk Factors” in our Annual
Report on Form 10-K for the year ended March 31, 2023, as updated
in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form
10-Q for the quarterly period ended September 29, 2023, filed with
the SEC on November 6, 2023. These risks and uncertainties include,
but are not limited to: downturns or volatility in general economic
conditions; our ability to compete effectively, expand our market
share and increase our net sales and profitability; our reliance on
a limited number of third-party semiconductor wafer fabrication
facilities and suppliers of other materials; our failure to adjust
purchase commitments and inventory management based on changing
market conditions or customer demand; shifts in our product mix or
customer mix, which could negatively impact our gross margin; the
risk that the expected benefits of acquisitions may not be realized
or that integration of acquired businesses may not continue as
rapidly as we anticipate; the cyclical nature of the analog
semiconductor industry; any downturn or disruption in the
automotive market; our ability to compensate for decreases in
average selling prices of our products and increases in input
costs; our ability to manage any sustained yield problems or other
delays at our third-party wafer fabrication facilities or in the
final assembly and test of our products; our ability to accurately
predict our quarterly net sales and operating results; our ability
to adjust our supply chain volume to account for changing market
conditions and customer demand; our dependence on manufacturing
operations in the Philippines; our reliance on distributors to
generate sales; the effects of COVID-19 on our supply chain and
customer demand; our ability to develop new product features or new
products in a timely and cost-effective manner; our ability to
manage growth; any slowdown in the growth of our end markets; the
loss of one or more significant customers; our ability to meet
customers’ quality requirements; uncertainties related to the
design win process and our ability to recover design and
development expenses and to generate timely or sufficient net sales
or margins; changes in government trade policies, including the
imposition of export restrictions and tariffs; our exposures to
warranty claims, product liability claims and product recalls; our
dependence on international customers and operations; the
availability of rebates, tax credits and other financial incentives
on end-user demands for certain products; risks, liabilities, costs
and obligations related to governmental regulation and other legal
obligations, including export control, privacy, data protection,
information security, consumer protection, environmental and
occupational health and safety, anti-corruption and anti-bribery,
and trade controls; the volatility of currency exchange rates; our
ability to raise capital to support our growth strategy; our
indebtedness may limit our flexibility to operate our business; our
ability to effectively manage our growth and to retain key and
highly skilled personnel; our ability to protect our proprietary
technology and inventions through patents or trade secrets; our
ability to commercialize our products without infringing
third-party intellectual property rights; disruptions or breaches
of our information technology systems or those of our third-party
service providers; our principal stockholders have substantial
control over us; the inapplicability of the “corporate opportunity”
doctrine to any director or stockholder who is not employed by us;
anti-takeover provisions in our organizational documents and under
the General Corporation Law of the State of Delaware; our inability
to design, implement or maintain effective internal control over
financial reporting; changes in tax rates or the adoption of new
tax legislation; the negative impacts of sustained inflation on our
business; disruptions in the banking and financial sector that
limit our or our partners’ ability to access capital and
borrowings; the physical, transition and litigation risks presented
by climate change; and other events beyond our control. Moreover,
we operate in an evolving environment. New risk factors and
uncertainties may emerge from time to time, and it is not possible
for management to predict all risk factors and uncertainties.
You should read this press release and the
documents that we reference completely and with the understanding
that our actual future results may be materially different from
what we expect. We qualify all of our forward-looking statements by
these cautionary statements. All forward-looking statements speak
only as of the date of this press release, and except as required
by applicable law, we do not plan to publicly update or revise any
forward-looking statements, whether as a result of any new
information, future events, changed circumstances or otherwise.
This press release includes certain non-GAAP
financial measures as defined by the Securities and Exchange
Commission (“SEC”) rules. These non-GAAP financial measures are
provided in addition to, and not as a substitute for or superior to
measures of, financial performance prepared in accordance with
GAAP. There are a number of limitations related to the use of these
non-GAAP financial measures versus their nearest GAAP equivalents.
For example, other companies may calculate non-GAAP financial
measures differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of the
presented non-GAAP financial measures as tools for comparison.
This press release may not be reproduced,
forwarded to any person or published, in whole or in part.
ALLEGRO MICROSYSTEMS,
INC.CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS(in thousands, except share and per
share amounts)(Unaudited)
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
Net sales |
$ |
254,984 |
|
|
$ |
248,789 |
|
|
$ |
808,786 |
|
|
$ |
704,208 |
|
Cost of goods sold |
|
121,156 |
|
|
|
106,195 |
|
|
|
357,505 |
|
|
|
311,218 |
|
Gross profit |
|
133,828 |
|
|
|
142,594 |
|
|
|
451,281 |
|
|
|
392,990 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
44,396 |
|
|
|
39,593 |
|
|
|
130,799 |
|
|
|
109,017 |
|
Selling, general and administrative |
|
52,746 |
|
|
|
37,373 |
|
|
|
140,135 |
|
|
|
143,770 |
|
Total operating expenses |
|
97,142 |
|
|
|
76,966 |
|
|
|
270,934 |
|
|
|
252,787 |
|
Operating income |
|
36,686 |
|
|
|
65,628 |
|
|
|
180,347 |
|
|
|
140,203 |
|
Interest and other income
(expense) |
|
(315 |
) |
|
|
6,463 |
|
|
|
(2,801 |
) |
|
|
3,222 |
|
Income before income taxes |
|
36,371 |
|
|
|
72,091 |
|
|
|
177,546 |
|
|
|
143,425 |
|
Income tax provision |
|
2,969 |
|
|
|
7,540 |
|
|
|
17,584 |
|
|
|
17,943 |
|
Net income |
|
33,402 |
|
|
|
64,551 |
|
|
|
159,962 |
|
|
|
125,482 |
|
Net income attributable to
non-controlling interests |
|
57 |
|
|
|
32 |
|
|
|
150 |
|
|
|
102 |
|
Net income attributable to
Allegro MicroSystems, Inc. |
$ |
33,345 |
|
|
$ |
64,519 |
|
|
$ |
159,812 |
|
|
$ |
125,380 |
|
Net income per common share attributable to Allegro
MicroSystems, Inc.: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
0.34 |
|
|
$ |
0.83 |
|
|
$ |
0.66 |
|
Diluted |
$ |
0.17 |
|
|
$ |
0.33 |
|
|
$ |
0.82 |
|
|
$ |
0.65 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
192,724,541 |
|
|
|
191,328,538 |
|
|
|
192,384,315 |
|
|
|
191,082,141 |
|
Diluted |
|
194,570,380 |
|
|
|
193,935,908 |
|
|
|
194,925,040 |
|
|
|
193,100,762 |
|
Supplemental Schedule of Total Net
Sales
The following table summarizes total net sales
by market within the Company’s unaudited consolidated statements of
operations:
|
|
Three-Month Period Ended |
|
|
Change |
|
|
Nine-Month Period Ended |
|
|
Change |
|
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
Amount |
|
|
% |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
Amount |
|
|
% |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
Automotive |
|
$ |
194,764 |
|
|
$ |
164,719 |
|
|
$ |
30,045 |
|
|
|
18 |
% |
|
$ |
577,515 |
|
|
$ |
467,959 |
|
|
$ |
109,556 |
|
|
|
23 |
% |
Industrial |
|
|
45,949 |
|
|
|
53,737 |
|
|
|
(7,788 |
) |
|
|
(14 |
)% |
|
|
180,021 |
|
|
|
146,797 |
|
|
|
33,224 |
|
|
|
23 |
% |
Other |
|
|
14,271 |
|
|
|
30,333 |
|
|
|
(16,062 |
) |
|
|
(53 |
)% |
|
|
51,250 |
|
|
|
89,452 |
|
|
|
(38,202 |
) |
|
|
(43 |
)% |
Total net sales |
|
$ |
254,984 |
|
|
$ |
248,789 |
|
|
$ |
6,195 |
|
|
|
2 |
% |
|
$ |
808,786 |
|
|
$ |
704,208 |
|
|
$ |
104,578 |
|
|
|
15 |
% |
ALLEGRO MICROSYSTEMS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except share and per share
amounts)
|
December 29, |
|
|
March 31, |
|
|
2023 (Unaudited) |
|
|
2023 |
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
214,308 |
|
|
$ |
351,576 |
|
Restricted cash |
|
9,427 |
|
|
|
7,129 |
|
Trade accounts receivable, net |
|
114,324 |
|
|
|
111,290 |
|
Trade and other accounts receivable due from related party |
|
154 |
|
|
|
13,494 |
|
Inventories |
|
165,553 |
|
|
|
151,301 |
|
Prepaid expenses and other current assets |
|
41,980 |
|
|
|
27,289 |
|
Current portion of related party note receivable |
|
3,750 |
|
|
|
3,750 |
|
Total current assets |
|
549,496 |
|
|
|
665,829 |
|
Property, plant and equipment, net |
|
325,822 |
|
|
|
263,099 |
|
Deferred income tax assets |
|
79,420 |
|
|
|
50,359 |
|
Goodwill |
|
214,709 |
|
|
|
27,691 |
|
Intangible assets, net |
|
293,699 |
|
|
|
52,378 |
|
Related party note receivable, less current portion |
|
5,625 |
|
|
|
8,438 |
|
Equity investment in related party |
|
25,974 |
|
|
|
27,265 |
|
Other assets |
|
70,556 |
|
|
|
86,096 |
|
Total assets |
$ |
1,565,301 |
|
|
$ |
1,181,155 |
|
Liabilities,
Non-Controlling Interests and Stockholders' Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Trade accounts payable |
$ |
37,633 |
|
|
$ |
56,256 |
|
Amount due to related party |
|
3,158 |
|
|
|
9,682 |
|
Accrued expenses and other current liabilities |
|
75,437 |
|
|
|
99,387 |
|
Current portion of long-term debt |
|
3,959 |
|
|
|
— |
|
Total current liabilities |
|
120,187 |
|
|
|
165,325 |
|
Long-term debt |
|
250,464 |
|
|
|
25,000 |
|
Other long-term liabilities |
|
59,164 |
|
|
|
24,015 |
|
Total liabilities |
|
429,815 |
|
|
|
214,340 |
|
Commitments and
contingencies |
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
Preferred stock |
|
— |
|
|
|
— |
|
Common stock |
|
1,931 |
|
|
|
1,918 |
|
Additional paid-in capital |
|
684,063 |
|
|
|
674,179 |
|
Retained earnings |
|
470,127 |
|
|
|
310,315 |
|
Accumulated other comprehensive loss |
|
(21,889 |
) |
|
|
(20,784 |
) |
Equity attributable to Allegro MicroSystems, Inc. |
|
1,134,232 |
|
|
|
965,628 |
|
Non-controlling interests |
|
1,254 |
|
|
|
1,187 |
|
Total stockholders' equity |
|
1,135,486 |
|
|
|
966,815 |
|
Total liabilities, non-controlling interests and stockholders'
equity |
$ |
1,565,301 |
|
|
$ |
1,181,155 |
|
ALLEGRO MICROSYSTEMS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(in
thousands)(Unaudited)
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
Cash flows from operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
33,402 |
|
|
$ |
64,551 |
|
|
$ |
159,962 |
|
|
$ |
125,482 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
20,195 |
|
|
|
12,580 |
|
|
|
49,548 |
|
|
|
36,705 |
|
Amortization of deferred financing costs |
|
185 |
|
|
|
25 |
|
|
|
292 |
|
|
|
74 |
|
Deferred income taxes |
|
(10,119 |
) |
|
|
(11,956 |
) |
|
|
(28,253 |
) |
|
|
(28,387 |
) |
Stock-based compensation |
|
10,920 |
|
|
|
8,902 |
|
|
|
32,839 |
|
|
|
51,242 |
|
Loss on disposal of assets |
|
(25 |
) |
|
|
37 |
|
|
|
18 |
|
|
|
287 |
|
Change in fair value of contingent consideration |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,700 |
) |
Provisions for inventory and receivables reserves |
|
429 |
|
|
|
1,512 |
|
|
|
9,851 |
|
|
|
1,744 |
|
Change in fair value of marketable securities |
|
— |
|
|
|
(3,453 |
) |
|
|
3,579 |
|
|
|
5 |
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
5,081 |
|
|
|
(11,414 |
) |
|
|
(2,564 |
) |
|
|
(5,894 |
) |
Accounts receivable - other |
|
(93 |
) |
|
|
(546 |
) |
|
|
(462 |
) |
|
|
2,000 |
|
Inventories |
|
11,312 |
|
|
|
(21,808 |
) |
|
|
(19,909 |
) |
|
|
(39,136 |
) |
Prepaid expenses and other assets |
|
7,461 |
|
|
|
(8,291 |
) |
|
|
(12,623 |
) |
|
|
(17,761 |
) |
Trade accounts payable |
|
(12,299 |
) |
|
|
10,625 |
|
|
|
(9,604 |
) |
|
|
19,553 |
|
Due to (from) related party |
|
705 |
|
|
|
2,408 |
|
|
|
6,817 |
|
|
|
(3,273 |
) |
Accrued expenses and other current and long-term liabilities |
|
9,404 |
|
|
|
10,682 |
|
|
|
(20,540 |
) |
|
|
5,717 |
|
Net cash provided by operating
activities |
|
76,558 |
|
|
|
53,854 |
|
|
|
168,951 |
|
|
|
145,658 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
(34,399 |
) |
|
|
(14,343 |
) |
|
|
(110,500 |
) |
|
|
(49,563 |
) |
Acquisition of business, net of cash acquired |
|
(408,119 |
) |
|
|
— |
|
|
|
(408,119 |
) |
|
|
(19,728 |
) |
Proceeds from sale of marketable securities |
|
— |
|
|
|
— |
|
|
|
16,175 |
|
|
|
— |
|
Net cash used in investing
activities |
|
(442,518 |
) |
|
|
(14,343 |
) |
|
|
(502,444 |
) |
|
|
(69,291 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
Loans made to related party |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,500 |
) |
Repayment Borrowings of senior secured debt, net of deferred
financing costs |
|
(25,000 |
) |
|
|
— |
|
|
|
(25,000 |
) |
|
|
— |
|
Repayment of term loan facility |
|
245,452 |
|
|
|
— |
|
|
|
245,452 |
|
|
|
— |
|
Repayment of senior secured debt |
|
(743 |
) |
|
|
— |
|
|
|
(743 |
) |
|
|
— |
|
Receipts on related party note receivable |
|
938 |
|
|
|
938 |
|
|
|
2,813 |
|
|
|
1,875 |
|
Payments for taxes related to net share settlement of equity
awards |
|
(10,732 |
) |
|
|
(3,036 |
) |
|
|
(24,823 |
) |
|
|
(12,642 |
) |
Proceeds from issuance of common stock under employee stock
purchase plan |
|
— |
|
|
|
— |
|
|
|
1,899 |
|
|
|
1,573 |
|
Payment for debt issuance costs |
|
— |
|
|
|
— |
|
|
|
(1,450 |
) |
|
|
— |
|
Net cash provided by (used in)
financing activities |
|
209,915 |
|
|
|
(2,098 |
) |
|
|
198,148 |
|
|
|
(16,694 |
) |
Effect of exchange rate changes
on cash and cash equivalents and restricted cash |
|
1,349 |
|
|
|
3,433 |
|
|
|
375 |
|
|
|
(5,344 |
) |
Net (decrease) increase in cash
and cash equivalents and restricted cash |
|
(154,696 |
) |
|
|
40,846 |
|
|
|
(134,970 |
) |
|
|
54,329 |
|
Cash and cash equivalents and
restricted cash at beginning of period |
|
378,431 |
|
|
|
303,282 |
|
|
|
358,705 |
|
|
|
289,799 |
|
Cash and cash equivalents
and restricted cash at end of period: |
$ |
223,735 |
|
|
$ |
344,128 |
|
|
$ |
223,735 |
|
|
$ |
344,128 |
|
Non-GAAP Financial Measures
In addition to the measures presented in our
consolidated financial statements, we regularly review other
measures, defined as non-GAAP financial measures by the SEC, to
evaluate our business, measure our performance, identify trends,
prepare financial forecasts and make strategic decisions. The key
measures we consider are non-GAAP Gross Profit, non-GAAP Gross
Margin, non-GAAP Operating Expenses, non-GAAP Operating Income,
non-GAAP Operating Margin, non-GAAP Profit before Tax, non-GAAP
Provision for Income Tax, non-GAAP Net Income and non-GAAP Basic
and Diluted Earnings per Share, EBITDA, Adjusted EBITDA and
Adjusted EBITDA margin (collectively, the “Non-GAAP Financial
Measures”). These Non-GAAP Financial Measures provide supplemental
information regarding our operating performance on a non-GAAP basis
that excludes certain gains, losses and charges of a non-cash
nature or that occur relatively infrequently and/or that management
considers to be unrelated to our core operations, and in the case
of non-GAAP Provision for Income Tax, management believes that this
non-GAAP measure of income taxes provides it with the ability to
evaluate the non-GAAP Provision for Income Taxes across different
reporting periods on a consistent basis, independent of special
items and discrete items, which may vary in size and frequency.
These Non-GAAP Financial Measures are used by both management and
our board of directors, together with the comparable GAAP
information, in evaluating our current performance and planning our
future business activities.
The Non-GAAP Financial Measures are supplemental
measures of our performance that are neither required by, nor
presented in accordance with, GAAP. These Non-GAAP Financial
Measures should not be considered as substitutes for GAAP financial
measures such as gross profit, gross margin, net income or any
other performance measures derived in accordance with GAAP. Also,
in the future we may incur expenses or charges such as those being
adjusted in the calculation of these Non-GAAP Financial Measures.
Our presentation of these Non-GAAP Financial Measures should not be
construed as an inference that future results will be unaffected by
unusual or nonrecurring items. These Non-GAAP Financial Measures
exclude costs related to acquisition and related integration
expenses, amortization of acquired intangible assets, stock-based
compensation, restructuring actions, related party activities and
other non-operational costs.
Non-GAAP Provision for Income
Tax
In calculating non-GAAP Provision for Income
Tax, we have added back the following to GAAP Income Tax
Provision:
- Tax effect of adjustments to GAAP
results—Represents the estimated income tax effect of the
adjustments to non-GAAP Profit before Tax described below and
elimination of discrete tax adjustments.
Reconciliation of Non-GAAP Gross
Profit |
|
|
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
GAAP Gross Profit |
|
$ |
133,828 |
|
|
$ |
159,503 |
|
|
$ |
142,594 |
|
|
$ |
451,281 |
|
|
$ |
392,990 |
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction-related costs |
|
|
523 |
|
|
|
— |
|
|
|
— |
|
|
|
523 |
|
|
|
— |
|
Purchased intangible amortization |
|
|
3,648 |
|
|
|
273 |
|
|
|
589 |
|
|
|
4,323 |
|
|
|
1,240 |
|
Restructuring costs |
|
|
166 |
|
|
|
— |
|
|
|
— |
|
|
|
166 |
|
|
|
— |
|
Stock-based compensation* |
|
|
1,073 |
|
|
|
946 |
|
|
|
1,156 |
|
|
|
4,625 |
|
|
|
3,112 |
|
Total Non-GAAP
Adjustments |
|
$ |
5,410 |
|
|
$ |
1,219 |
|
|
$ |
1,745 |
|
|
$ |
9,637 |
|
|
$ |
4,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Profit |
|
$ |
139,238 |
|
|
$ |
160,722 |
|
|
$ |
144,339 |
|
|
$ |
460,918 |
|
|
$ |
397,342 |
|
Non-GAAP Gross Margin (%
of net sales) |
|
|
54.6 |
% |
|
|
58.3 |
% |
|
|
58.0 |
% |
|
|
57.0 |
% |
|
|
56.4 |
% |
*Included in
Stock-based compensation is $142 of restructuring costs. |
|
|
|
Reconciliation of Non-GAAP Operating
Expenses |
|
|
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
GAAP Operating Expenses |
|
$ |
97,142 |
|
|
$ |
86,588 |
|
|
$ |
76,966 |
|
|
$ |
270,934 |
|
|
$ |
252,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Research and Development
Expenses |
|
|
44,396 |
|
|
|
43,428 |
|
|
|
39,593 |
|
|
|
130,799 |
|
|
|
109,017 |
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction-related costs |
|
|
343 |
|
|
|
2 |
|
|
|
1 |
|
|
|
352 |
|
|
|
404 |
|
Restructuring costs |
|
|
908 |
|
|
|
— |
|
|
|
— |
|
|
|
908 |
|
|
|
— |
|
Stock-based compensation* |
|
|
3,870 |
|
|
|
3,602 |
|
|
|
3,174 |
|
|
|
10,340 |
|
|
|
6,013 |
|
Non-GAAP Research and Development
Expenses |
|
|
39,275 |
|
|
|
39,824 |
|
|
|
36,418 |
|
|
|
119,199 |
|
|
|
102,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and
Administrative Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Selling, General and
Administrative Expenses |
|
|
52,746 |
|
|
|
43,160 |
|
|
|
37,373 |
|
|
|
140,135 |
|
|
|
146,470 |
|
Non-GAAP adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction-related costs |
|
|
9,543 |
|
|
|
1,804 |
|
|
|
35 |
|
|
|
14,419 |
|
|
|
1,695 |
|
Purchased intangible amortization |
|
|
495 |
|
|
|
357 |
|
|
|
23 |
|
|
|
1,210 |
|
|
|
68 |
|
Restructuring costs |
|
|
5,795 |
|
|
|
— |
|
|
|
291 |
|
|
|
5,795 |
|
|
|
4,663 |
|
Stock-based compensation* |
|
|
5,977 |
|
|
|
6,329 |
|
|
|
4,572 |
|
|
|
17,874 |
|
|
|
42,117 |
|
Other costs |
|
|
283 |
|
|
|
100 |
|
|
|
— |
|
|
|
383 |
|
|
|
— |
|
Non-GAAP Selling, General and
Administrative Expenses |
|
|
30,653 |
|
|
|
34,570 |
|
|
|
32,452 |
|
|
|
100,454 |
|
|
|
97,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of
contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,700 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-GAAP
Adjustments |
|
|
27,214 |
|
|
|
12,194 |
|
|
|
8,096 |
|
|
|
51,281 |
|
|
|
52,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Expenses |
|
$ |
69,928 |
|
|
$ |
74,394 |
|
|
$ |
68,870 |
|
|
$ |
219,653 |
|
|
$ |
200,527 |
|
*Included in Stock-based compensation is $341 of restructuring
costs in Research and Development and $172 of restructuring costs
in Selling, General and Administrative. |
|
Reconciliation of Non-GAAP Operating
Income |
|
|
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
GAAP Operating Income |
|
$ |
36,686 |
|
|
$ |
72,915 |
|
|
$ |
65,628 |
|
|
$ |
180,347 |
|
|
$ |
140,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction-related costs |
|
|
10,409 |
|
|
|
1,806 |
|
|
|
36 |
|
|
|
15,294 |
|
|
|
(601 |
) |
Purchased intangible amortization |
|
|
4,143 |
|
|
|
630 |
|
|
|
612 |
|
|
|
5,533 |
|
|
|
1,308 |
|
Restructuring costs |
|
|
6,869 |
|
|
|
— |
|
|
|
291 |
|
|
|
6,869 |
|
|
|
4,663 |
|
Stock-based compensation* |
|
|
10,920 |
|
|
|
10,877 |
|
|
|
8,902 |
|
|
|
32,839 |
|
|
|
51,242 |
|
Other costs |
|
|
283 |
|
|
|
100 |
|
|
|
— |
|
|
|
383 |
|
|
|
— |
|
Total Non-GAAP
Adjustments |
|
$ |
32,624 |
|
|
$ |
13,413 |
|
|
$ |
9,841 |
|
|
$ |
60,918 |
|
|
$ |
56,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Income |
|
$ |
69,310 |
|
|
$ |
86,328 |
|
|
$ |
75,469 |
|
|
$ |
241,265 |
|
|
$ |
196,815 |
|
Non-GAAP Operating Margin
(% of net sales) |
|
|
27.2 |
% |
|
|
31.3 |
% |
|
|
30.3 |
% |
|
|
29.8 |
% |
|
|
27.9 |
% |
*Included in
Stock-based compensation is $655 of restructuring costs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDA and Adjusted
EBITDA |
|
|
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
GAAP Net Income |
|
$ |
33,402 |
|
|
$ |
65,671 |
|
|
$ |
64,551 |
|
|
$ |
159,962 |
|
|
$ |
125,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
3,854 |
|
|
|
758 |
|
|
|
613 |
|
|
|
5,381 |
|
|
|
1,581 |
|
Interest income |
|
|
(857 |
) |
|
|
(850 |
) |
|
|
(360 |
) |
|
|
(2,550 |
) |
|
|
(1,144 |
) |
Income tax provision |
|
|
2,969 |
|
|
|
7,400 |
|
|
|
7,540 |
|
|
|
17,584 |
|
|
|
17,943 |
|
Depreciation & amortization |
|
|
20,227 |
|
|
|
15,145 |
|
|
|
12,580 |
|
|
|
49,645 |
|
|
|
36,705 |
|
EBITDA |
|
$ |
59,595 |
|
|
$ |
88,124 |
|
|
$ |
84,924 |
|
|
$ |
230,022 |
|
|
$ |
180,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction-related costs |
|
|
10,409 |
|
|
|
1,806 |
|
|
|
36 |
|
|
|
15,294 |
|
|
|
(601 |
) |
Restructuring costs |
|
|
6,869 |
|
|
|
— |
|
|
|
291 |
|
|
|
6,869 |
|
|
|
4,663 |
|
Stock-based compensation* |
|
|
10,920 |
|
|
|
10,877 |
|
|
|
8,902 |
|
|
|
32,839 |
|
|
|
51,242 |
|
Other costs |
|
|
(551 |
) |
|
|
1,301 |
|
|
|
(6,013 |
) |
|
|
5,339 |
|
|
|
(2,602 |
) |
Adjusted EBITDA |
|
$ |
87,242 |
|
|
$ |
102,108 |
|
|
$ |
88,140 |
|
|
$ |
290,363 |
|
|
$ |
233,269 |
|
Adjusted EBITDA Margin (%
of net sales) |
|
|
34.2 |
% |
|
|
37.1 |
% |
|
|
35.4 |
% |
|
|
35.9 |
% |
|
|
33.1 |
% |
*Included in
Stock-based compensation is $655 of restructuring costs. |
|
Reconciliation of Non-GAAP Profit before
Tax |
|
|
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
GAAP Income before Income
Taxes |
|
$ |
36,371 |
|
|
$ |
73,071 |
|
|
$ |
72,091 |
|
|
$ |
177,546 |
|
|
$ |
143,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction-related costs |
|
|
10,409 |
|
|
|
1,806 |
|
|
|
36 |
|
|
|
15,294 |
|
|
|
(601 |
) |
Transaction-related interest |
|
|
162 |
|
|
|
— |
|
|
|
— |
|
|
|
162 |
|
|
|
— |
|
Purchased intangible amortization |
|
|
4,143 |
|
|
|
630 |
|
|
|
612 |
|
|
|
5,533 |
|
|
|
1,308 |
|
Restructuring costs |
|
|
6,869 |
|
|
|
— |
|
|
|
291 |
|
|
|
6,869 |
|
|
|
4,663 |
|
Stock-based compensation* |
|
|
10,920 |
|
|
|
10,877 |
|
|
|
8,902 |
|
|
|
32,839 |
|
|
|
51,242 |
|
Other costs |
|
|
(551 |
) |
|
|
1,301 |
|
|
|
(6,013 |
) |
|
|
5,339 |
|
|
|
(2,602 |
) |
Total Non-GAAP
Adjustments |
|
$ |
31,952 |
|
|
$ |
14,614 |
|
|
$ |
3,828 |
|
|
$ |
66,036 |
|
|
$ |
54,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Profit before Tax |
|
$ |
68,323 |
|
|
$ |
87,685 |
|
|
$ |
75,919 |
|
|
$ |
243,582 |
|
|
$ |
197,435 |
|
*Included in
Stock-based compensation is $655 of restructuring costs. |
|
Reconciliation of Non-GAAP Provision for Income
Taxes |
|
|
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
GAAP Income Tax Provision |
|
$ |
2,969 |
|
|
$ |
7,400 |
|
|
$ |
7,540 |
|
|
$ |
17,584 |
|
|
$ |
17,943 |
|
GAAP effective tax rate |
|
|
8.2 |
% |
|
|
10.1 |
% |
|
|
10.5 |
% |
|
|
9.9 |
% |
|
|
12.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of adjustments to GAAP results |
|
|
3,748 |
|
|
|
2,554 |
|
|
|
(461 |
) |
|
|
10,128 |
|
|
|
3,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Provision for Income Taxes |
|
$ |
6,717 |
|
|
$ |
9,954 |
|
|
$ |
7,079 |
|
|
$ |
27,712 |
|
|
$ |
21,719 |
|
Non-GAAP effective tax rate |
|
|
9.8 |
% |
|
|
11.4 |
% |
|
|
9.3 |
% |
|
|
11.4 |
% |
|
|
11.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Net
Income |
|
|
|
Three-Month Period Ended |
|
|
Nine-Month Period Ended |
|
|
|
December 29, 2023 |
|
|
September 29, 2023 |
|
|
December 23, 2022 |
|
|
December 29, 2023 |
|
|
December 23, 2022 |
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
GAAP Net Income |
|
$ |
33,402 |
|
|
$ |
65,671 |
|
|
$ |
64,551 |
|
|
$ |
159,962 |
|
|
$ |
125,482 |
|
GAAP Basic Earnings per
Share |
|
$ |
0.17 |
|
|
$ |
0.34 |
|
|
$ |
0.34 |
|
|
$ |
0.83 |
|
|
$ |
0.66 |
|
GAAP Diluted Earnings per Share |
|
$ |
0.17 |
|
|
$ |
0.34 |
|
|
$ |
0.33 |
|
|
$ |
0.82 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction-related costs |
|
|
10,409 |
|
|
|
1,806 |
|
|
|
36 |
|
|
|
15,294 |
|
|
|
(601 |
) |
Transaction-related interest |
|
|
162 |
|
|
|
— |
|
|
|
— |
|
|
|
162 |
|
|
|
— |
|
Purchased intangible amortization |
|
|
4,143 |
|
|
|
630 |
|
|
|
612 |
|
|
|
5,533 |
|
|
|
1,308 |
|
Restructuring costs |
|
|
6,869 |
|
|
|
— |
|
|
|
291 |
|
|
|
6,869 |
|
|
|
4,663 |
|
Stock-based compensation* |
|
|
10,920 |
|
|
|
10,877 |
|
|
|
8,902 |
|
|
|
32,839 |
|
|
|
51,242 |
|
Other costs |
|
|
(551 |
) |
|
|
1,301 |
|
|
|
(6,013 |
) |
|
|
5,339 |
|
|
|
(2,602 |
) |
Total Non-GAAP Adjustments |
|
|
31,952 |
|
|
|
14,614 |
|
|
|
3,828 |
|
|
|
66,036 |
|
|
|
54,010 |
|
Tax effect of adjustments to GAAP results |
|
$ |
(3,748 |
) |
|
$ |
(2,554 |
) |
|
$ |
461 |
|
|
$ |
(10,128 |
) |
|
$ |
(3,776 |
) |
Non-GAAP Net Income |
|
$ |
61,606 |
|
|
$ |
77,731 |
|
|
$ |
68,840 |
|
|
$ |
215,870 |
|
|
$ |
175,716 |
|
Basic weighted average common
shares |
|
|
192,724,541 |
|
|
|
192,431,094 |
|
|
|
191,328,538 |
|
|
|
192,384,315 |
|
|
|
191,082,141 |
|
Diluted weighted average common shares |
|
|
194,570,380 |
|
|
|
195,100,855 |
|
|
|
193,935,908 |
|
|
|
194,925,040 |
|
|
|
193,100,762 |
|
Non-GAAP Basic Earnings
per Share |
|
$ |
0.32 |
|
|
$ |
0.40 |
|
|
$ |
0.36 |
|
|
$ |
1.12 |
|
|
$ |
0.92 |
|
Non-GAAP Diluted Earnings per Share |
|
$ |
0.32 |
|
|
$ |
0.40 |
|
|
$ |
0.35 |
|
|
$ |
1.11 |
|
|
$ |
0.91 |
|
*Included in
Stock-based compensation is $655 of restructuring costs. |
|
Investor Contact:Jalene
HooverVP of Investor Relations & Corporate Communications+1
(512) 751-6526jhoover@allegromicro.com
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