Year-over-year Quarterly Revenue Growth of 22
Percent; Design-Ins Totaling $1.7 Billion
Wolfspeed, Inc. (NYSE: WOLF) today announced its results for the
third quarter of fiscal 2023.
Quarterly Financial Highlights (all comparisons are to the
third quarter of fiscal 2022, unless otherwise noted)
- Revenue of $228.7 million, compared to $188.0 million
- GAAP gross margin of 29.8%, compared to 34.0%
- Non-GAAP gross margin of 32.3%, compared to 36.3%
- GAAP net loss of $99.5 million, or $0.80 per diluted share,
compared to $66.5 million, or $0.54 per diluted share
- Non-GAAP net loss of $16.0 million, or $0.13 per diluted share,
compared to $14.3 million, or $0.12 per diluted share
- Quarterly and year-to-date design-ins of $1.7 billion and $6.7
billion, respectively
"We're proud to have shipped our first product from our Mohawk
Valley fab during this quarter, which is a significant development
in our business and for the industry," said Wolfspeed Chief
Executive Officer, Gregg Lowe. "The learnings from this first
shipment will inform our ramp in devices as we continue to expand
our capacity to address increasing demand. As such, we are
adjusting our fiscal 2024 revenue forecast to reflect the projected
growth of our materials production as it relates to supplying
Mohawk Valley. Wolfspeed is a testament to the power of long-range
investment in complex technology, and we expect further progress in
our pursuit of innovation and market leadership," Lowe added.
Business Outlook:
For its fourth quarter of fiscal 2023, Wolfspeed targets revenue
in a range of $212 million to $232 million. GAAP net loss is
targeted at $98 million to $108 million, or $0.79 to $0.87 per
diluted share. Non-GAAP net loss is targeted to be in a range of
$21 million to $29 million, or $0.17 to $0.23 per diluted share.
Targeted non-GAAP net loss excludes $77 million to $79 million of
estimated expenses, net of tax, related to stock-based compensation
expense, amortization or impairment of acquisition-related
intangibles, factory start-up and underutilization costs,
amortization of debt issuance costs, net of capitalized interest,
project, transformation and transaction costs and loss on Wafer
Supply Agreement.
For fiscal 2024, Wolfspeed now targets revenue in a range of $1
billion to $1.1 billion, based on the current ramp plan for 200mm
silicon carbide substrate capacity.
Quarterly Conference Call:
Wolfspeed will host a conference call at 5:00 p.m. Eastern time
today to review the highlights of its third quarter results and its
fiscal fourth quarter 2023 business outlook, including significant
factors and assumptions underlying the targets noted above.
The conference call will be available to the public through a
live audio web broadcast via the Internet. For webcast details,
visit Wolfspeed's website at investor.wolfspeed.com/events.cfm.
Supplemental financial information, including the non-GAAP
reconciliation attached to this press release, is available on
Wolfspeed's website at investor.wolfspeed.com/results.cfm.
About Wolfspeed, Inc.
Wolfspeed (NYSE: WOLF) leads the market in the worldwide
adoption of Silicon Carbide and gallium nitride (GaN) technologies.
We provide industry-leading solutions for efficient energy
consumption and a sustainable future. Wolfspeed’s product families
include Silicon Carbide and GaN materials, power devices and RF
devices targeted for various applications such as electric
vehicles, fast charging, 5G, renewable energy and storage, and
aerospace and defense. We unleash the power of possibilities
through hard work, collaboration and a passion for innovation.
Learn more at www.wolfspeed.com.
Non-GAAP Financial Measures:
This press release highlights the Company's financial results on
both a GAAP and a non-GAAP basis. The GAAP results include certain
costs, charges and expenses that are excluded from non-GAAP
results. By publishing the non-GAAP measures, management intends to
provide investors with additional information to further analyze
the Company's performance, core results and underlying trends.
Wolfspeed's management evaluates results and makes operating
decisions using both GAAP and non-GAAP measures included in this
press release. Non-GAAP results are not prepared in accordance with
GAAP and non-GAAP information should be considered a supplement to,
and not a substitute for, financial statements prepared in
accordance with GAAP. Investors and potential investors are
encouraged to review the reconciliation of non-GAAP financial
measures to their most directly comparable GAAP measures attached
to this press release.
Forward Looking Statements:
The schedules attached to this release are an integral part of
the release. This press release contains forward-looking statements
involving risks and uncertainties, both known and unknown, that may
cause Wolfspeed’s actual results to differ materially from those
indicated in the forward-looking statements. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, such as statements about our plans to grow the
business and our ability to achieve our targets for the fourth
quarter of fiscal 2023, fiscal 2024, and periods beyond. Actual
results could differ materially due to a number of factors,
including but not limited to, ongoing uncertainty in global
economic and geopolitical conditions, including the ongoing
military conflict between Russia and Ukraine, infrastructure
development or customer or industrial demand that could negatively
affect product demand, including as a result of an economic
slowdown or recession, collectability of receivables and other
related matters as consumers and businesses may defer purchases or
payments, or default on payments; risks related to international
sales and purchases; risks associated with our expansion plans,
including design and construction delays and cost overruns, timing
and amount of government incentives actually received, issues in
installing and qualifying new equipment and ramping production,
poor production process yields and quality control, and potential
increases to our restructuring costs; the risk that we do not meet
our production commitments to those customers who provide us with
capacity reservation deposits or similar payments; the risk that we
may experience production difficulties that preclude us from
shipping sufficient quantities to meet customer orders or that
result in higher production costs, lower yields and lower margins;
our ability to lower costs; the risk that our results will suffer
if we are unable to balance fluctuations in customer demand and
capacity, including bringing on additional capacity on a timely
basis to meet customer demand; the risk that longer manufacturing
lead times may cause customers to fulfill their orders with a
competitor's products instead; product mix; risks associated with
the ramp-up of production of our new products, and our entry into
new business channels different from those in which we have
historically operated; our ability to convert customer design-ins
to sales of significant volume, and, if customer design-in activity
does result in such sales, when such sales will ultimately occur
and what the amount of such sales will be; the risk that the
economic and political uncertainty caused by the tariffs imposed by
the United States on Chinese goods, and corresponding Chinese
tariffs and currency devaluation in response, may negatively impact
demand for our products; the risk that we or our channel partners
are not able to develop and expand customer bases and accurately
anticipate demand from end customers, which can result in increased
inventory and reduced orders as we experience wide fluctuations in
supply and demand; risks resulting from the concentration of our
business among few customers, including the risk that customers may
reduce or cancel orders or fail to honor purchase commitments; the
risk that our investments may experience periods of significant
market value and interest rate volatility causing us to recognize
fair value losses on our investment; the risk posed by managing an
increasingly complex supply chain (including managing the impacts
of ongoing supply constraints in the semiconductor industry and
meeting purchase commitments under take-or-pay arrangements with
certain suppliers) that has the ability to supply a sufficient
quantity of raw materials, subsystems and finished products with
the required specifications and quality; risks relating to the
ongoing COVID-19 pandemic, including the risk of new and different
government restrictions and regulations that limit our ability to
do business, the risk of infection in our workforce and subsequent
impact on our ability to conduct business, the risk that our supply
chain, including our contract manufacturers, or customer demand may
be negatively impacted, the risk posed by vaccine resistance and
the emergence of fast-spreading variants, the risk that the
COVID-19 pandemic will contribute to a global recession and the
potential for costs associated with our operations during the
fiscal 2023 fourth quarter and future quarters to be greater than
we anticipate as a result of all of these factors; the risk we may
be required to record a significant charge to earnings if our
remaining goodwill or amortizable assets become impaired; risks
relating to confidential information theft or misuse, including
through cyber-attacks or cyber intrusion; our ability to complete
development and commercialization of products under development;
the rapid development of new technology and competing products that
may impair demand or render our products obsolete; the potential
lack of customer acceptance for our products; risks associated with
ongoing litigation; the risk that customers do not maintain their
favorable perception of our brand and products, resulting in lower
demand for our products; the risk that our products fail to perform
or fail to meet customer requirements or expectations, resulting in
significant additional costs; risks associated with strategic
transactions; and other factors discussed in our filings with the
Securities and Exchange Commission (SEC), including our report on
Form 10-K for the fiscal year ended June 26, 2022, and subsequent
reports filed with the SEC. These forward-looking statements
represent Wolfspeed's judgment as of the date of this release.
Except as required under the U.S. federal securities laws and the
rules and regulations of the SEC, Wolfspeed disclaims any intent or
obligation to update any forward-looking statements after the date
of this release, whether as a result of new information, future
events, developments, changes in assumptions or otherwise.
Wolfspeed® is a registered trademark of Wolfspeed, Inc.
WOLFSPEED, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
Three months ended
Nine months ended
(in millions of U.S. Dollars, except per
share data)
March 26, 2023
March 27, 2022
March 26, 2023
March 27, 2022
Revenue, net
$228.7
$188.0
$686.1
$517.7
Cost of revenue, net
160.6
124.0
471.2
347.3
Gross profit
68.1
64.0
214.9
170.4
Gross margin percentage
30
%
34
%
31
%
33
%
Operating expenses:
Research and development
56.1
48.1
168.3
148.2
Sales, general and administrative
60.5
51.5
171.2
148.5
Amortization or impairment of
acquisition-related intangibles
2.6
3.4
8.3
10.6
Loss (gain) on disposal or impairment of
other assets
1.7
(0.6
)
1.9
(0.3
)
Other operating expense
49.1
23.9
134.1
52.3
Total operating expense
170.0
126.3
483.8
359.3
Operating loss
(101.9
)
(62.3
)
(268.9
)
(188.9
)
Operating loss percentage
(45
)%
(33
)%
(39
)%
(36
)%
Non-operating (income) expense, net
(2.9
)
3.8
(53.4
)
35.7
Loss before income taxes
(99.0
)
(66.1
)
(215.5
)
(224.6
)
Income tax expense
0.5
0.4
1.1
8.7
Net loss
(99.5
)
(66.5
)
(216.6
)
(233.3
)
Basic and diluted loss per
share
($0.80
)
($0.54
)
($1.74
)
($1.96
)
Weighted average shares - basic and
diluted (in thousands)
124,439
123,597
124,273
118,917
WOLFSPEED, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions of U.S. Dollars)
March 26, 2023
June 26, 2022
Assets
Current assets:
Cash, cash equivalents, and short-term
investments
$2,248.2
$1,198.8
Accounts receivable, net
164.0
150.2
Inventories
288.9
227.0
Income taxes receivable
1.1
1.3
Prepaid expenses
34.6
32.1
Other current assets
112.0
151.4
Current assets held for sale
—
1.6
Total current assets
2,848.8
1,762.4
Property and equipment, net
1,904.0
1,481.1
Goodwill
359.2
359.2
Intangible assets, net
118.0
125.4
Long-term receivables
2.7
104.7
Deferred tax assets
1.0
1.0
Other assets
221.0
83.7
Total assets
$5,454.7
$3,917.5
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$522.2
$307.7
Accrued contract liabilities
41.5
37.0
Income taxes payable
9.5
11.6
Finance lease liabilities
0.5
0.5
Other current liabilities
33.5
31.7
Total current liabilities
607.2
388.5
Long-term liabilities:
Convertible notes, net
3,023.3
1,021.6
Deferred tax liabilities
3.7
3.2
Finance lease liabilities - long-term
9.3
9.6
Other long-term liabilities
104.4
55.3
Total long-term liabilities
3,140.7
1,089.7
Shareholders’ equity:
Common stock
0.2
0.2
Additional paid-in-capital
3,680.6
4,228.4
Accumulated other comprehensive loss
(23.1
)
(25.3
)
Accumulated deficit
(1,950.9
)
(1,764.0
)
Total shareholders’ equity
1,706.8
2,439.3
Total liabilities and shareholders’
equity
$5,454.7
$3,917.5
WOLFSPEED, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Nine months ended
(in millions of U.S. Dollars)
March 26, 2023
March 27, 2022
Operating activities:
Net loss
($216.6
)
($233.3
)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization
118.2
97.9
Amortization of debt issuance costs and
discount, net of non-cash capitalized interest
5.2
12.9
Loss on extinguishment of debt
—
24.8
Stock-based compensation
62.8
45.2
Loss on disposal or impairment of
long-lived assets, including loss on disposal portion of factory
optimization and start-up costs
3.7
1.0
Amortization of (premium) discount on
investments, net
(1.3
)
4.5
Realized gain on sale of investments
—
(0.3
)
Deferred income taxes
0.5
0.7
Changes in operating assets and
liabilities:
Accounts receivable, net
(13.8
)
(26.5
)
Inventories
(59.3
)
(61.6
)
Prepaid expenses and other assets
(11.1
)
(3.3
)
Accounts payable, trade
4.1
11.3
Accrued salaries and wages and other
liabilities
(7.6
)
6.5
Accrued contract liabilities
24.5
(3.2
)
Cash used in operating
activities
(90.7
)
(123.4
)
Investing activities:
Purchases of property and equipment
(530.2
)
(535.5
)
Purchases of patent and licensing
rights
(4.7
)
(4.2
)
Proceeds from sale of property and
equipment, including insurance proceeds
1.7
2.7
Purchases of short-term investments
(1,020.5
)
(408.2
)
Proceeds from maturities of short-term
investments
238.4
135.5
Proceeds from sale of short-term
investments
81.8
223.2
Reimbursement of property and equipment
purchases from long-term incentive agreement
131.0
83.5
Proceeds from sale of business resulting
from the receipt of transaction related note receivable
101.8
125.0
Cash used in investing
activities
(1,000.7
)
(378.0
)
Financing activities:
Proceeds from long-term debt
borrowings
—
20.0
Payments on long-term debt borrowings,
including finance lease obligations
(0.4
)
(20.4
)
Proceeds from issuance of common stock
11.4
11.7
Tax withholding on vested equity
awards
(17.7
)
(26.1
)
Proceeds from convertible notes
1,750.0
750.0
Payments of debt issuance costs
(31.4
)
(17.7
)
Cash paid for capped call transactions
(273.9
)
(108.2
)
Commitment fees on long-term incentive
agreement
(1.0
)
(1.0
)
Cash provided by financing
activities
1,437.0
608.3
Effects of foreign exchange changes on
cash and cash equivalents
—
—
Net change in cash and cash
equivalents
345.6
106.9
Cash and cash equivalents, beginning of
period
449.5
379.0
Cash and cash equivalents, end of
period
$795.1
$485.9
Wolfspeed, Inc. Non-GAAP Measures of
Financial Performance
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles, or GAAP, Wolfspeed uses non-GAAP measures of certain
components of financial performance. These non-GAAP measures
include non-GAAP gross margin, non-GAAP operating (loss) income,
non-GAAP non-operating income (expense), net, non-GAAP net (loss)
income, non-GAAP diluted (loss) earnings per share and free cash
flow.
Reconciliation to the nearest GAAP measure of all historical
non-GAAP measures included in this press release can be found in
the tables included with this press release.
Non-GAAP measures presented in this press release are not in
accordance with or an alternative to measures prepared in
accordance with GAAP and may be different from non-GAAP measures
used by other companies. In addition, these non-GAAP measures are
not based on any comprehensive set of accounting rules or
principles. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Wolfspeed's results of
operations as determined in accordance with GAAP. These non-GAAP
measures should only be used to evaluate Wolfspeed's results of
operations in conjunction with the corresponding GAAP measures.
Wolfspeed believes that these non-GAAP measures, when shown in
conjunction with the corresponding GAAP measures, enhance
investors' and management's overall understanding of the Company's
current financial performance and the Company's prospects for the
future, including cash flows available to pursue opportunities to
enhance shareholder value. In addition, because Wolfspeed has
historically reported certain non-GAAP results to investors, the
Company believes the inclusion of non-GAAP measures provides
consistency in the Company's financial reporting.
For its internal budgeting process, and as discussed further
below, Wolfspeed's management uses financial statements that do not
include the items listed below and the income tax effects
associated with the foregoing. Wolfspeed's management also uses
non-GAAP measures, in addition to the corresponding GAAP measures,
in reviewing the Company's financial results.
Wolfspeed excludes the following items from one or more of its
non-GAAP measures when applicable:
Stock-based compensation expense. This expense consists of
expenses for stock options, restricted stock, performance stock
awards and employee stock purchases through its Employee Stock
Purchase Program. Wolfspeed excludes stock-based compensation
expenses from its non-GAAP measures because they are non-cash
expenses that Wolfspeed does not use to evaluate core operating
performance.
Amortization or impairment of acquisition-related intangibles.
Wolfspeed incurs amortization or impairment of acquisition-related
intangibles in connection with acquisitions. Wolfspeed excludes
these items because they are non-cash expenses that Wolfspeed does
not use to evaluate core operating performance.
Factory start-up and underutilization costs. The Company has
incurred and will incur start-up costs relating to the Company's
new device fabrication facility in Marcy, New York. Additionally,
as part of the factory optimization plan, the Company incurred
start-up costs relating to the Company's materials factory
expansion in Durham, North Carolina. Wolfspeed does not believe
these costs are reflective of ongoing operating results.
In the fourth quarter of fiscal 2023, Wolfspeed expects to start
incurring factory underutilization costs associated with the
ramping of production at the Marcy, New York facility. These costs
represent significant fixed and indirect operating costs of the
facility incurred after production begins but before the facility
is able to produce at its full utilization. Wolfspeed does not
believe these costs are reflective of ongoing operating
results.
In fiscal 2023, the Company targets approximately $160 million
of start-up and underutilization costs primarily related to ramping
of production at the Marcy, New York facility.
Project, transformation and transaction costs. The Company has
incurred professional services fees and other costs associated with
completed and potential acquisitions and divestitures, as well as
internal transformation programs focused on optimizing the
Company's administrative processes. Wolfspeed excludes these items
because Wolfspeed believes they are not reflective of the ongoing
operating results of Wolfspeed's business.
Factory optimization restructuring costs. The Company has
incurred restructuring costs in connection with various operating
plans, including a multi-year factory optimization plan anchored by
a state-of-the-art, automated 200mm Silicon Carbide device
fabrication facility in Marcy, New York to complement a factory
expansion at its U.S. campus headquarters in Durham, North
Carolina. Because these charges relate to assets which had been
retired prior to the end of their estimated useful lives, Wolfspeed
does not believe these costs are reflective of ongoing operating
results. Similarly, Wolfspeed does not consider the realized net
losses on sale of assets relating to the restructuring to be
reflective of ongoing operating results.
Severance costs. The Company has incurred costs in conjunction
with the termination of key executive personnel. Wolfspeed excludes
these items because Wolfspeed believes they have no direct
correlation to the ongoing operating results of Wolfspeed's
business.
Gain on arbitration proceedings. In the first quarter of fiscal
2023, Wolfspeed received an arbitration award in relation to a
former customer failing to fulfill contractual obligations to
purchase a certain amount of product over a period of time. A final
payment was received in the second quarter of fiscal 2023.
Wolfspeed excludes this item because Wolfspeed believes it is not
reflective of the ongoing operating results of Wolfspeed's
business.
Loss on debt extinguishment related to the conversion of 2023
Notes. In the second quarter of fiscal 2022, all outstanding 0.875%
convertible senior notes due 2023 (2023 Notes) and issued in August
2018 were surrendered for conversion, resulting in the settlement
of the 2023 Notes in approximately 7.1 million shares of the
Company's common stock. This conversion resulted in a loss on
extinguishment of convertible notes. Wolfspeed excludes this item
because Wolfspeed believes it is not reflective of the ongoing
operating results of Wolfspeed's business.
Amortization of discount and debt issuance costs, net of
capitalized interest. The issuance of the Company's convertible
senior notes in April 2020, February 2022 and November 2022 results
in amortization of the convertible notes' issue costs and, in the
prior period before our adoption of ASU 2020-06, interest accretion
of the convertible notes' discount. Wolfspeed considers these items
as either limited in term or having no impact on the Company's cash
flows, and therefore has excluded such items to facilitate a review
of current operating performance and comparisons to the Company's
past operating performance.
Loss on Wafer Supply Agreement. In connection with the completed
sale of the LED Products business unit to SMART, the Company
entered into a Wafer Supply and Fabrication Services Agreement (the
Wafer Supply Agreement), pursuant to which the Company supplies
CreeLED with certain Silicon Carbide materials and fabrication
services for up to four years. Wolfspeed excludes the financial
impact of this agreement because Wolfspeed believes it is not
reflective of the ongoing operating results of Wolfspeed's
business.
Interest income on transaction-related note receivables. In
connection with the completed sale of the LED Products business
unit to SMART Global Holdings, Inc. (SGH) and its wholly owned
acquisition subsidiary CreeLED, Inc. (CreeLED and collectively with
SGH, SMART), the Company received two unsecured promissory notes
issued to the Company in the amounts of $125 million by SGH (the
Purchase Price Note) and $101.8 million by CreeLED (the Earnout
Note, and collectively, the LED Notes). The Company received an
early payment on the Purchase Price Note in the third quarter of
fiscal 2022 and an early payment on the Earnout Note in the first
quarter of fiscal 2023. Unpaid interest on the Earnout Note was
waived in exchange for the early payment. Interest income on the
LED Notes is excluded because Wolfspeed believes it is not
reflective of the ongoing operating results of Wolfspeed's
business.
Loss on early payment of transaction-related note receivable. In
the third quarter of fiscal 2022, the Company received an early
payment for the Purchase Price Note. The principal amount of $125.0
million was prepaid in full, along with outstanding accrued
interest as of the payment date (the Early Payment). In conjunction
with the Early Payment, the Company transferred naming rights and
trademarks related to Cree, Inc. and the CREE brand to SMART (the
Trademark Transfer). Because the Early Payment did not include
additional consideration in exchange for the Trademark Transfer,
the Company allocated consideration from the principal amount to
the value of the trademarks transferred to SMART. The portion of
the Early Payment not allocated to the Trademark Transfer was
$123.2 million. At the time of payment, the Company had a note
receivable balance of $124.4 million, resulting in a loss of $1.2
million. This loss is excluded because Wolfspeed believes it is not
reflective of the ongoing operating results of Wolfspeed's
business.
Income tax adjustment. This amount reconciles GAAP tax (benefit)
expense to a calculated non-GAAP tax (benefit) expense utilizing a
non-GAAP tax rate. The non-GAAP tax rate estimates an appropriate
tax rate if the listed non-GAAP items were excluded. This
reconciling item adjusts non-GAAP net (loss) income to the amount
it would be if the calculated non-GAAP tax rate was applied to
non-GAAP (loss) income before income taxes.
Wolfspeed may incur some of these same expenses, including
income taxes associated with these expenses, in future periods.
In addition to the non-GAAP measures discussed above, Wolfspeed
also uses free cash flow as a measure of operating performance and
liquidity. Free cash flow represents operating cash flows less net
purchases of property and equipment and patent and licensing
rights. Wolfspeed considers free cash flow to be an operating
performance and a liquidity measure that provides useful
information to management and investors about the amount of cash
generated by the business after the purchases of property and
equipment, a portion of which can then be used to, among other
things, invest in Wolfspeed's business, make strategic acquisitions
and strengthen the balance sheet. A limitation of the utility of
free cash flow as a measure of operating performance and liquidity
is that it does not represent the residual cash flow available to
the company for discretionary expenditures, as it excludes certain
mandatory expenditures such as debt service.
WOLFSPEED, INC.
Reconciliation of GAAP to
Non-GAAP Measures
(in millions of U.S. Dollars,
except per share amounts and percentages)
(unaudited)
Non-GAAP Gross Margin
Three months ended
Nine months ended
March 26, 2023
March 27, 2022
March 26, 2023
March 27, 2022
GAAP gross profit
$68.1
$64.0
$214.9
$170.4
GAAP gross margin percentage
30
%
34
%
31
%
33
%
Adjustments:
Stock-based compensation expense
5.8
4.2
17.7
11.5
Non-GAAP gross profit
$73.9
$68.2
$232.6
$181.9
Non-GAAP gross margin percentage
32
%
36
%
34
%
35
%
Non-GAAP Operating Loss
Three months ended
Nine months ended
March 26, 2023
March 27, 2022
March 26, 2023
March 27, 2022
GAAP operating loss
($101.9
)
($62.3
)
($268.9
)
($188.9
)
GAAP operating loss percentage
(45
)%
(33
)%
(39
)%
(36
)%
Adjustments:
Stock-based compensation expense:
Cost of revenue, net
5.8
4.2
17.7
11.5
Research and development
3.4
2.3
12.0
7.3
Sales, general and administrative
10.4
8.7
33.1
26.4
Total stock-based compensation expense
19.6
15.2
62.8
45.2
Amortization or impairment of
acquisition-related intangibles
2.6
3.4
8.3
10.6
Factory start-up costs
44.7
21.4
120.7
41.0
Project, transformation and transaction
costs
3.9
0.6
11.4
6.9
Factory optimization restructuring
costs
—
0.8
—
5.5
Severance costs
0.5
0.5
2.0
0.5
Total adjustments to GAAP operating
loss
71.3
41.9
205.2
109.7
Non-GAAP operating loss
($30.6
)
($20.4
)
($63.7
)
($79.2
)
Non-GAAP operating loss percentage
(13
)%
(11
)%
(9
)%
(15
)%
Non-GAAP Non-Operating Income,
net
Three months ended
Nine months ended
March 26, 2023
March 27, 2022
March 26, 2023
March 27, 2022
GAAP non-operating income (expense),
net
$2.9
($3.8
)
$53.4
($35.7
)
Adjustments:
Gain on arbitration proceedings
—
—
(50.3
)
—
Loss on debt extinguishment related to
conversion of 2023 Notes
—
—
—
24.8
Amortization of discount and debt issuance
costs, net of capitalized interest
2.3
3.9
5.2
12.9
Loss on Wafer Supply Agreement
4.8
0.5
7.3
1.4
Interest income on transaction-related
note receivables
—
(0.5
)
—
(2.7
)
Loss on early payment of
transaction-related note receivable
—
1.2
—
1.2
Non-GAAP non-operating income, net
$10.0
$1.3
$15.6
$1.9
Non-GAAP Net Loss
Three months ended
Nine months ended
March 26, 2023
March 27, 2022
March 26, 2023
March 27, 2022
GAAP net loss
($99.5
)
($66.5
)
($216.6
)
($233.3
)
Adjustments:
Stock-based compensation expense
19.6
15.2
62.8
45.2
Amortization or impairment of
acquisition-related intangibles
2.6
3.4
8.3
10.6
Factory start-up costs
44.7
21.4
120.7
41.0
Project, transformation and transaction
costs
3.9
0.6
11.4
6.9
Factory optimization restructuring
costs
—
0.8
—
5.5
Severance costs
0.5
0.5
2.0
0.5
Gain on arbitration proceedings
—
—
(50.3
)
—
Loss on debt extinguishment related to
conversion of 2023 Notes
—
—
—
24.8
Amortization of discount and debt issuance
costs, net of capitalized interest
2.3
3.9
5.2
12.9
Loss on Wafer Supply Agreement
4.8
0.5
7.3
1.4
Interest income on transaction-related
note receivables
—
(0.5
)
—
(2.7
)
Loss on early payment of
transaction-related note receivable
—
1.2
—
1.2
Total adjustments to GAAP net loss before
provision for income taxes
78.4
47.0
167.4
147.3
Income tax adjustment - benefit
(expense)
5.1
5.2
14.1
29.3
Non-GAAP net loss
($16.0
)
($14.3
)
($35.1
)
($56.7
)
Non-GAAP diluted loss per share
($0.13
)
($0.12
)
($0.28
)
($0.48
)
Non-GAAP weighted average shares (in
thousands)
124,439
123,597
124,273
118,917
Free Cash Flow
Three months ended
Nine months ended
March 26, 2023
March 27, 2022
March 26, 2023
March 27, 2022
Net cash used in operating activities
($11.0
)
($28.4
)
($90.7
)
($123.4
)
Less: PP&E spending, net of
reimbursements from long-term incentive agreement
(232.1
)
(101.2
)
(399.2
)
(452.0
)
Less: Patents spending
(1.8
)
(1.6
)
(4.7
)
(4.2
)
Total free cash flow
($244.9
)
($131.2
)
($494.6
)
($579.6
)
WOLFSPEED, INC.
Business Outlook Unaudited
GAAP to Non-GAAP Reconciliation
Three Months Ended
(in millions of U.S. Dollars)
June 25, 2023
GAAP net loss outlook range
($108) to ($98)
Adjustments:
Stock-based compensation expense
22
Amortization or impairment of
acquisition-related intangibles
3
Factory start-up and underutilization
costs
37
Amortization of debt issuance costs, net
of capitalized interest
2
Project, transformation and transaction
costs
3
Loss on Wafer Supply Agreement
2
Total adjustments to GAAP net loss before
provision for income taxes
69
Income tax adjustment
10 to 8
Non-GAAP net loss outlook range
($29) to ($21)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005871/en/
Tyler Gronbach Wolfspeed, Inc. Vice President, Investor
Relations Phone: 919-407-4820 investorrelations@wolfspeed.com
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