In the latest trading session, Allegro MicroSystems, Inc. (ALGM) closed at $26.89, marking a -0.33% move from the previous day. This move lagged the S&P 500's daily loss of 0.07%.The company's shares have seen a decrease of 7.86% over the last month, not keeping up with the Computer and Technology sector's gain of 2.5% and the S&P 500's gain of 3.98%.The investment community will be paying close attention to the earnings performance of Allegro MicroSystems, Inc. in its upcoming release. In that report, anal ...

MANCHESTER, N.H., Jan. 11, 2024 (GLOBE NEWSWIRE) -- Allegro MicroSystems, Inc. (Nasdaq: ALGM) today announced it plans to release financial results for its third quarter fiscal year 2024 prior to the market open on Thursday, February 1, 2024. Following the press release, Vineet Nargolwala, President and Chief Executive Officer, and Derek D’Antilio, Senior Vice President and Chief Financial Officer, will host a conference call at 8:30 a.m. Eastern Time to discuss the Company’s results and business outlook. A ...

MANCHESTER, N.H., Jan. 11, 2024 (GLOBE NEWSWIRE) -- Allegro MicroSystems, Inc. (NASDAQ:ALGM) today announced it plans to release financial results for its third quarter fiscal year 2024 prior to the market open on Thursday, February 1, 2024. Following the press release, Vineet Nargolwala, President and Chief Executive Officer, and Derek D'Antilio, Senior Vice President and Chief Financial Officer, will host a conference call at 8:30 a.m. Eastern Time to discuss the Company's results and business outlook. An ...

MANCHESTER, NH, Jan. 09, 2024 (GLOBE NEWSWIRE) -- Allegro MicroSystems, Inc. ("Allegro") (NASDAQ:ALGM), a global leader in power and sensing solutions for motion control and energy efficient systems, today announced the launch of the second product in its High Voltage Power portfolio. Allegro's AHV85111 isolated gate-driver IC adds critical safety features while simplifying the design of high-power energy conversion systems for e-Mobility and clean energy applications, including OBC/DCDC, solar inverter and ...

[FORM 10-Q](index=1&type=section&id=FORM%2010-Q) This is Allegro MicroSystems, Inc.'s Quarterly Report on Form 10-Q for the period ended September 29, 2023. - **Filing Type**: **Quarterly Report on Form 10-Q** for the period ended **September 29, 2023**[1](index=1&type=chunk) - **Registrant**: **ALLEGRO MICROSYSTEMS, INC. (ALGM)**[2](index=2&type=chunk)[3](index=3&type=chunk) - **Filer Status**: **Large accelerated filer**[3](index=3&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks, with no public update planned. - Report contains **forward-looking statements** subject to known and unknown **risks**, uncertainties, and other important factors that may cause **actual results to differ materially**[5](index=5&type=chunk)[6](index=6&type=chunk) - **Forward-looking statements** are based on management's beliefs and assumptions, which may or may not prove to be correct[6](index=6&type=chunk) - The company does not plan to publicly update or revise any **forward-looking statements**, except as required by applicable law[6](index=6&type=chunk) [PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) Part I includes unaudited condensed consolidated financial statements, management's discussion, market risk, and controls. [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This item presents Allegro MicroSystems' unaudited condensed consolidated financial statements and notes for the specified periods. [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2029,%202023%20and%20March%2031,%202023%20(Unaudited)) | Metric | Sep 29, 2023 | Mar 31, 2023 | Change | % Change | | :------------------------------------- | :----------- | :----------- | :----- | :------- | | **Total Assets** | $1,284,937 | $1,181,155 | $103,782 | **8.8%** | | **Total Liabilities** | $186,649 | $214,340 | $(27,691) | **-12.9%** | | **Total Stockholders' Equity** | $1,098,288 | $966,815 | $131,473 | **13.6%** | | **Cash and Cash Equivalents** | $370,013 | $351,576 | $18,437 | **5.2%** | | **Inventories** | $173,089 | $151,301 | $21,788 | **14.4%** | | **Property, Plant and Equipment, net** | $312,047 | $263,099 | $48,948 | **18.6%** | | **Current Liabilities** | $134,241 | $165,325 | $(31,084) | **-18.8%** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three-%20and%20six-month%20periods%20ended%20September%2029,%202023%20and%20September%2023,%202022%20(Unaudited)) | Metric | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :---------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | **Total Net Sales** | $275,509 | $237,666 | $37,843 | **15.9%** | $553,802 | $455,419 | $98,383 | **21.6%** | | **Gross Profit** | $159,503 | $132,022 | $27,481 | **20.8%** | $317,453 | $250,396 | $67,057 | **26.8%** | | **Operating Income** | $72,915 | $59,838 | $13,077 | **21.9%** | $143,661 | $74,575 | $69,086 | **92.6%** | | **Net Income attributable to Allegro MicroSystems, Inc.** | $65,617 | $50,614 | $15,003 | **29.6%** | $126,467 | $60,861 | $65,606 | **107.8%** | | **Diluted EPS** | $0.34 | $0.26 | $0.08 | **30.8%** | $0.65 | $0.32 | $0.33 | **103.1%** | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three-%20and%20six-month%20periods%20ended%20September%2029,%202023%20and%20September%2023,%202022%20(Unaudited)) | Metric | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | **Net income attributable to Allegro MicroSystems, Inc.** | $65,617 | $50,614 | $15,003 | **29.6%** | $126,467 | $60,861 | $65,606 | **107.8%** | | **Foreign currency translation adjustment, net of tax** | $(4,348) | $(7,899) | $3,551 | **-44.9%** | $(4,806) | $(14,717) | $9,911 | **-67.3%** | | **Comprehensive income attributable to Allegro MicroSystems, Inc.** | $61,306 | $42,784 | $18,522 | **43.3%** | $121,742 | $46,281 | $75,461 | **163.0%** | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three-%20and%20six-month%20periods%20ended%20September%2029,%202023%20and%20September%2023,%202022%20(Unaudited)) | Metric | Sep 29, 2023 | Mar 31, 2023 | Change | % Change | | :------------------------------------------ | :----------- | :----------- | :----- | :------- | | **Total Stockholders' Equity** | $1,098,288 | $966,815 | $131,473 | **13.6%** | | **Common Stock Shares Outstanding** | 192,469,731 | 191,754,292 | 715,439 | **0.4%** | | **Additional Paid-In Capital** | $683,891 | $674,179 | $9,712 | **1.4%** | | **Retained Earnings** | $436,782 | $310,315 | $126,467 | **40.7%** | | **Accumulated Other Comprehensive Loss** | $(25,509) | $(20,784) | $(4,725) | **22.7%** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six-month%20periods%20ended%20September%2029,%202023%20and%20September%2023,%202022%20(Unaudited)) | Metric | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :--------------------------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | **Net cash provided by operating activities** | $96,393 | $91,804 | $4,589 | **5.0%** | | **Net cash used in investing activities** | $(59,926) | $(54,948) | $(4,978) | **9.1%** | | **Net cash used in financing activities** | $(15,767) | $(14,596) | $(1,171) | **8.0%** | | **Net increase in cash and cash equivalents and restricted cash** | $19,726 | $13,483 | $6,243 | **46.3%** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the unaudited condensed consolidated financial statements. [1. Nature of the Business and Basis of Presentation](index=10&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) - **Allegro MicroSystems, Inc.** is a **leading global designer**, developer, fabless manufacturer, and marketer of sensing and power solutions for the automotive and industrial markets[29](index=29&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with **U.S. GAAP** and include all necessary adjustments for fair presentation[29](index=29&type=chunk) - The second quarter of **fiscal 2024** ended **September 29, 2023** (**13-week period**), and the second quarter of **fiscal 2023** ended **September 23, 2022** (**13-week period**)[30](index=30&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - Financial statements require management to make estimates and assumptions that affect reported amounts, and **actual results could differ materially**[31](index=31&type=chunk) - As of **September 29, 2023**, two customers accounted for **26.2%** of the Company's outstanding trade accounts receivable, net[33](index=33&type=chunk) - The adoption of **ASU No. 2022-06, Reference Rate Reform**, did not have a **material impact** on the Company's financial position, results of operations, cash flows, or related disclosures[36](index=36&type=chunk) [3. Revenue from Contracts with Customers](index=11&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) | Application | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :---------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | **Automotive** | $205,936 | $157,398 | $48,538 | **30.8%** | $395,634 | $307,047 | $88,587 | **28.9%** | | **Industrial** | $51,114 | $48,176 | $2,938 | **6.1%** | $119,298 | $88,316 | $30,982 | **35.1%** | | **Other** | $18,459 | $32,092 | $(13,633) | **-42.5%** | $38,870 | $60,056 | $(21,186) | **-35.3%** | | **Total Net Sales** | $275,509 | $237,666 | $37,843 | **15.9%** | $553,802 | $455,419 | $98,383 | **21.6%** | | Product | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :------------------------ | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | **Power integrated circuits** | $99,737 | $97,327 | $2,410 | **2.5%** | $203,725 | $177,987 | $25,738 | **14.5%** | | **Magnetic sensors** | $175,772 | $140,339 | $35,433 | **25.2%** | $350,077 | $277,432 | $72,645 | **26.2%** | | **Total Net Sales** | $275,509 | $237,666 | $37,843 | **15.9%** | $553,802 | $455,419 | $98,383 | **21.6%** | | Geography | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :---------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | United States | $47,724 | $25,131 | $22,593 | **89.9%** | $96,548 | $53,522 | $43,026 | **80.4%** | | Other Americas | $9,539 | $7,244 | $2,295 | **31.7%** | $18,047 | $13,731 | $4,316 | **31.4%** | | Europe | $46,951 | $40,710 | $6,241 | **15.3%** | $102,339 | $76,043 | $26,296 | **34.6%** | | Japan | $47,275 | $45,026 | $2,249 | **5.0%** | $88,855 | $86,735 | $2,120 | **2.4%** | | Greater China | $69,463 | $63,203 | $6,260 | **9.9%** | $131,679 | $118,319 | $13,360 | **11.3%** | | South Korea | $29,054 | $20,931 | $8,123 | **38.8%** | $58,567 | $41,910 | $16,657 | **39.7%** | | **Other Asia** | $25,503 | $35,421 | $(9,918) | **-28.0%** | $57,767 | $65,159 | $(7,392) | **-11.3%** | [4. Fair Value Measurements](index=12&type=section&id=4.%20Fair%20Value%20Measurements) | Asset Type | Sep 29, 2023 (Level 1) | Mar 31, 2023 (Level 1) | | :------------------------- | :--------------------- | :--------------------- | | Money market fund deposits (Cash equivalents) | $105,012 | $102,019 | | Money market fund deposits (Restricted cash) | $8,418 | $7,129 | | Investments in marketable securities (Other assets) | — | $19,929 | | Total Assets | $113,430 | $129,077 | - **No transfers** among **Level 1, Level 2, and Level 3 assets or liabilities** occurred during the six-month periods ended **September 29, 2023**, and **September 23, 2022**[46](index=46&type=chunk) [5. Trade Accounts Receivable, net](index=12&type=section&id=5.%20Trade%20Accounts%20Receivable,%20net) | Metric | Sep 29, 2023 | Mar 31, 2023 | Change | % Change | | :------------------------------------------------ | :----------- | :----------- | :----- | :------- | | Gross trade accounts receivable | $154,867 | $150,914 | $3,953 | **2.6%** | | Less: Provision for expected credit losses | $(88) | $(102) | $14 | **-13.7%** | | Less: Provision for returns and sales allowances | $(35,257) | $(26,269) | $(8,988) | **34.2%** | | Less: Related party trade accounts receivable allowances | $(575) | $(13,253) | $12,678 | **-95.7%** | | Total Trade Accounts Receivable, net | $118,947 | $111,290 | $7,657 | **6.9%** | | Description | Expected Credit Losses (Sep 29, 2023) | Returns and Sales Allowances (Sep 29, 2023) | Total (Sep 29, 2023) | Expected Credit Losses (Sep 23, 2022) | Returns and Sales Allowances (Sep 23, 2022) | Total (Sep 23, 2022) | | :------------------------------ | :------------------------------------ | :------------------------------------------ | :------------------- | :------------------------------------ | :------------------------------------------ | :------------------- | | Balance at March 31, 2023 / March 25, 2022 | $102 | $26,269 | $26,371 | $105 | $14,819 | $14,924 | | Provisions | $(14) | $90,373 | $90,359 | $84 | $52,630 | $52,714 | | Deductions | — | $(81,385) | $(81,385) | — | $(47,884) | $(47,884) | | Balance at September 29, 2023 / September 23, 2022 | $88 | $35,257 | $35,345 | $189 | $19,565 | $19,754 | [6. Inventories](index=13&type=section&id=6.%20Inventories) | Category | Sep 29, 2023 | Mar 31, 2023 | Change | % Change | | :----------------------- | :----------- | :----------- | :----- | :------- | | Raw materials and supplies | $12,276 | $15,049 | $(2,773) | **-18.4%** | | Work in process | $114,766 | $98,836 | $15,930 | **16.1%** | | Finished goods | $46,047 | $37,416 | $8,631 | **23.1%** | | **Total Inventories** | $173,089 | $151,301 | $21,788 | **14.4%** | - **Inventory provisions** totaled **$4.36 million** for the three-month period and **$9.44 million** for the six-month period ended **September 29, 2023**, compared to **$2.95 million** and **$5.06 million** for the respective prior-year periods[53](index=53&type=chunk) [7. Property, Plant and Equipment, net](index=13&type=section&id=7.%20Property,%20Plant%20and%20Equipment,%20net) | Category | Sep 29, 2023 | Mar 31, 2023 | Change | % Change | | :------------------------------------ | :----------- | :----------- | :----- | :------- | | Land | $20,137 | $15,384 | $4,753 | **30.9%** | | Buildings, building improvements and leasehold improvements | $61,028 | $61,500 | $(472) | **-0.8%** | | Machinery and equipment | $657,734 | $611,459 | $46,275 | **7.6%** | | Office equipment | $6,463 | $6,119 | $344 | **5.6%** | | Construction in progress | $55,242 | $48,378 | $6,864 | **14.2%** | | Total Gross | $800,604 | $742,840 | $57,764 | **7.8%** | | Less accumulated depreciation | $(488,557) | $(479,741) | $(8,816) | **1.8%** | | **Total Net** | $312,047 | $263,099 | $48,948 | **18.6%** | - Total depreciation expense amounted to **$13.59 million** for the three-month period and **$26.35 million** for the six-month period ended **September 29, 2023**, an increase from **$10.98 million** and **$21.83 million** in the prior-year periods, respectively[55](index=55&type=chunk) [8. Goodwill and Intangible Assets](index=13&type=section&id=8.%20Goodwill%20and%20Intangible%20Assets) | Metric | Sep 29, 2023 | Mar 31, 2023 | Change | % Change | | :-------------------------- | :----------- | :----------- | :----- | :------- | | Balance at Period End | $27,707 | $27,691 | $16 | **0.1%** | | Description | Sep 29, 2023 Net Carrying Amount | Mar 31, 2023 Net Carrying Amount | Change | % Change | Weighted-Average Lives (Sep 29, 2023) | | :------------------------------------- | :------------------------------- | :------------------------------- | :----- | :------- | :------------------------------------ | | Patents | $22,444 | $21,878 | $566 | **2.6%** | 4 years | | Customer relationships | $141 | $166 | $(25) | **-15.1%** | 3 years | | Process technology | $24,329 | $25,545 | $(1,216) | **-4.8%** | 10 years | | Indefinite-lived and legacy process technology | $4,689 | $4,696 | $(7) | **-0.1%** | N/A | | Trademarks and other | $74 | $93 | $(19) | **-20.4%** | 2 years | | Total | $51,677 | $52,378 | $(701) | **-1.3%** | | - Intangible assets amortization expense was **$1.51 million** for the three-month period and **$3.01 million** for the six-month period ended **September 29, 2023**, an increase from **$1.19 million** and **$2.23 million** for the respective prior-year periods[60](index=60&type=chunk) [9. Debt and Other Borrowings](index=14&type=section&id=9.%20Debt%20and%20Other%20Borrowings) - On **October 31, 2023**, the Company entered into a new **$250.00 million Term Loan** maturing in **2030**, which refinanced the outstanding balance of the previous **Term Loan Facility** and partially financed the **Crocus acquisition**[64](index=64&type=chunk) - The new **Term Loan** amortizes at **1.00% per annum**, with an initial margin of **2.75%** for SOFR-based loans and **1.75%** for base rate loans[64](index=64&type=chunk) - A new **$224.00 million 2023 Revolving Credit Facility** was established on **June 21, 2023**, replacing the **2020 facility**, with no outstanding borrowings as of **September 29, 2023**[62](index=62&type=chunk)[65](index=65&type=chunk) [10. Commitments and Contingencies](index=15&type=section&id=10.%20Commitments%20and%20Contingencies) - The Company is subject to various legal proceedings but does not believe any current matters could have a **material adverse effect** on its financial position, results of operations, or cash flows[66](index=66&type=chunk) - Accruals for legal contingencies are recorded when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated[66](index=66&type=chunk) [11. Net Income per Share](index=15&type=section&id=11.%20Net%20Income%20per%20Share) | Metric | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :------------------------------------ | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | **Basic EPS** | $0.34 | $0.26 | $0.08 | **30.8%** | $0.66 | $0.32 | $0.34 | **106.3%** | | **Diluted EPS** | $0.34 | $0.26 | $0.08 | **30.8%** | $0.65 | $0.32 | $0.33 | **103.1%** | | **Basic Weighted Average Shares Outstanding** | 192,431,094 | 191,284,631 | 1,146,463 | **0.6%** | 192,214,210 | 190,959,616 | 1,254,594 | **0.7%** | | **Diluted Weighted Average Shares Outstanding** | 195,100,855 | 192,639,576 | 2,461,279 | **1.3%** | 195,055,495 | 192,654,097 | 2,401,398 | **1.2%** | - Certain contingently issuable shares under RSUs (**22,706**) and PSUs (**3,695**) were excluded from the three-month **diluted EPS** computation due to their antidilutive effect[70](index=70&type=chunk) [12. Common Stock and Stock-Based Compensation](index=16&type=section&id=12.%20Common%20Stock%20and%20Stock-Based%20Compensation) | Metric | Shares | Weighted-Average Grant Date Fair Value | | :-------------------------- | :------- | :------------------------------------- | | Outstanding at March 31, 2023 | 2,251,224 | $23.85 | | Granted | 907,364 | $38.32 | | Issued | (782,561) | $24.11 | | Forfeited | (60,452) | $25.65 | | Outstanding at September 29, 2023 | 2,315,575 | $29.41 | | Metric | Shares | Weighted-Average Grant Date Fair Value | | :-------------------------- | :------- | :------------------------------------- | | Outstanding at March 31, 2023 | 2,748,347 | $23.47 | | Granted | 298,783 | $40.56 | | Excess shares issued due to achievement of performance condition | 462,739 | $24.99 | | Issued | (215,883) | $24.79 | | Forfeited | (47,414) | $23.28 | | Outstanding at September 29, 2023 | 3,246,572 | $24.32 | | Category | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :---------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | Cost of sales | $946 | $1,124 | $(178) | **-15.8%** | $3,552 | $1,956 | $1,596 | **81.6%** | | Research and development | $3,602 | $1,711 | $1,891 | **110.5%** | $6,470 | $2,839 | $3,631 | **127.9%** | | Selling, general and administrative | $6,329 | $5,369 | $960 | **17.9%** | $11,897 | $37,545 | $(25,648) | **-68.3%** | | Total stock-based compensation | $10,877 | $8,204 | $2,673 | **32.6%** | $21,919 | $42,340 | $(20,421) | **-48.2%** | [13. Income Taxes](index=17&type=section&id=13.%20Income%20Taxes) | Metric | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :----------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | **Provision for income taxes** | $7,400 | $8,438 | $(1,038) | **-12.3%** | $14,615 | $10,403 | $4,212 | **40.5%** | | **Effective tax rate** | **10.1%** | **14.3%** | **-4.2%** | **-29.4%** | **10.4%** | **14.6%** | **-4.2%** | **-28.8%** | - The **effective tax rate (ETR)** year-over-year was primarily impacted by reductions in **global intangible low-tax income (GILTI)**, **Subpart F**, and non-deductible stock-based compensation charges, offset by a decrease in **FDII benefits**[79](index=79&type=chunk) - The **ETR** was also reduced by discrete tax benefits related to stock-based compensation windfalls realized in the period ended **September 29, 2023**[79](index=79&type=chunk) [14. Related Party Transactions](index=17&type=section&id=14.%20Related%20Party%20Transactions) - **Sanken Electric Co., Ltd.**, a related party, held approximately **51.2%** of the Company's outstanding common stock as of **September 29, 2023**[80](index=80&type=chunk) | Metric | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | Net sales to Sanken | $3,579 | $45,026 | $(41,447) | **-92.0%** | $3,579 | $86,735 | $(83,156) | **-95.9%** | - The distribution agreement with Sanken was terminated effective **March 31, 2023**, involving a one-time payment of **$5.00 million** to Sanken and a **$4.20 million** sales return[80](index=80&type=chunk) | Metric | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | Change | % Change | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | Purchases from PSL | $14,630 | $14,479 | $151 | **1.0%** | $30,732 | $29,150 | $1,582 | **5.4%** | - As of **September 29, 2023**, the outstanding balance of PSL Promissory Notes was **$10.31 million**[81](index=81&type=chunk) [15. Acquisition Related](index=19&type=section&id=15.%20Acquisition%20Related) - On **October 31, 2023**, the Company completed the **acquisition** of **Crocus Technology International Corp.** for an aggregate purchase price of **$420.00 million** in cash[84](index=84&type=chunk) - Prior to the **acquisition**, **Allegro MicroSystems, LLC** provided Crocus with **$7.00 million** in subordinated promissory notes (**Crocus Loans**), which were repaid in full upon the closing of the transaction[85](index=85&type=chunk) - The purchase accounting for the **acquisition** has not yet been completed and will be finalized within the measurement period[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operations, cash flows, business updates, performance, and liquidity. [Overview](index=20&type=section&id=Overview) - **Allegro MicroSystems** is a **leading global designer**, developer, fabless manufacturer, and marketer of sensor ICs and application-specific analog power ICs for the automotive and industrial markets[88](index=88&type=chunk) - The company is a **leading supplier** of magnetic sensor IC solutions worldwide, based on market share, particularly in the automotive market[88](index=88&type=chunk) | Metric | 3 Months Ended Sep 29, 2023 | 3 Months Ended Sep 23, 2022 | 6 Months Ended Sep 29, 2023 | 6 Months Ended Sep 23, 2022 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | **Total Net Sales** | $275,509 | $237,666 | $553,802 | $455,419 | | **Net Income** | $65,671 | $50,648 | $126,560 | $60,931 | [Business Updates](index=20&type=section&id=Business%20Updates) - On **October 31, 2023**, the Company completed the **acquisition** of **Crocus Technology International Corp.** for **$420.00 million** in cash[89](index=89&type=chunk) - A new **$250.00 million Term Loan** maturing in **2030** was entered into on **October 31, 2023**, to refinance existing term loans and partially finance the **Crocus acquisition**[91](index=91&type=chunk) - Prior to the **acquisition**, the company provided Crocus with **$7.00 million** in subordinated promissory notes, which were repaid upon closing[89](index=89&type=chunk) [Other Key Factors and Trends Affecting our Operating Results](index=21&type=section&id=Other%20Key%20Factors%20and%20Trends%20Affecting%20our%20Operating%20Results) Operating results are influenced by inflation, design wins, demand seasonality, product mix, and tax law changes. [Inflation](index=21&type=section&id=Inflation) - Inflation has led to higher costs, including labor, wafer, materials, transportation, and energy costs[93](index=93&type=chunk) - The company has generally offset cost increases through productivity, cost reduction initiatives, price adjustments, and new products with improved gross margins[93](index=93&type=chunk) - Sustained high inflation could **materially adversely affect** business if price increases cannot fully recover costs[93](index=93&type=chunk) [Design Wins with New and Existing Customers](index=21&type=section&id=Design%20Wins%20with%20New%20and%20Existing%20Customers) - Future sales are **highly dependent** on continued success in winning design mandates from customers[94](index=94&type=chunk) - The time from design initiation to sales can be lengthy (typically 2-4 years), requiring significant design and development expenditures without assurance of selection[94](index=94&type=chunk) - Average selling prices (ASPs) are expected to decline over time, making new design wins **critical for future success**[94](index=94&type=chunk) [Customer Demand, Orders and Forecasts](index=21&type=section&id=Customer%20Demand,%20Orders%20and%20Forecasts) - Demand for products is **highly dependent** on market conditions in end markets, which are generally subject to seasonality, cyclicality, and competitive conditions[95](index=95&type=chunk) - Customer forecasts do not commit to minimum purchases and can be revised or canceled, posing **risks** of lost sales or excess inventory[95](index=95&type=chunk) - Most of the current customer order backlog is noncancellable, which helps mitigate exposure to unforeseen order cancellations[95](index=95&type=chunk) [Manufacturing Costs and Product Mix](index=21&type=section&id=Manufacturing%20Costs%20and%20Product%20Mix) - **Gross margin** is affected by ASPs, product mix, material costs, yields, and manufacturing efficiencies[96](index=96&type=chunk) - Long-term ASP declines are expected to coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, offsetting margin reduction[97](index=97&type=chunk) - **Gross margin** fluctuates quarterly, generally decreasing with lower production volumes and increasing with higher volumes[97](index=97&type=chunk) [Cyclical Nature of the Semiconductor Industry](index=22&type=section&id=Cyclical%20Nature%20of%20the%20Semiconductor%20Industry) - The **semiconductor industry** is **highly cyclical**, characterized by rapid technological change, product obsolescence, competitive pricing pressures, and fluctuations in supply and demand[98](index=98&type=chunk) - Periods of rapid growth and capacity expansion are often followed by **significant market corrections**, leading to sales declines, inventory accumulation, and underutilized facilities[98](index=98&type=chunk) - Margins generally improve during expansion cycles and decline during periods of slower growth or industry contractions[98](index=98&type=chunk) [2017 Tax Cuts and Jobs Act](index=22&type=section&id=2017%20Tax%20Cuts%20and%20Jobs%20Act) - The **2017 Tax Cuts and Jobs Act** requires capitalization and amortization of domestic and foreign R&D expenditures, increasing annual cash taxes by approximately **$20.00 million** for **fiscal 2024**[99](index=99&type=chunk) - This tax impact is partially offset by an **FDII benefit** of **$9.00 million**[99](index=99&type=chunk) - There is no assurance that Congress will modify or reverse this provision, despite potential retroactive effects[99](index=99&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section analyzes financial performance for three- and six-month periods, detailing sales, costs, and income drivers. [Three-Month Period Ended September 29, 2023 Compared to Three-Month Period Ended September 23, 2022](index=22&type=section&id=Three-Month%20Period%20Ended%20September%2029,%202023%20Compared%20to%20Three-Month%20Period%20Ended%20September%2023,%202022) For the three months, net sales and income increased significantly, driven by e-Mobility products and improved margins. [Total net sales](index=23&type=section&id=Total%20net%20sales) - **Total Net Sales increased by $37.84 million** (**15.9%**) to **$275.51 million** for the three-month period[101](index=101&type=chunk)[103](index=103&type=chunk) - The **increase was primarily attributable to higher shipments of e-Mobility products** (**ADAS**, **EV**, and **safety, comfort, and convenience applications**)[103](index=103&type=chunk) - **Growth** was partially offset by **declines in consumer and smart home markets**[103](index=103&type=chunk) [Sales Trends by Market](index=23&type=section&id=Sales%20Trends%20by%20Market) | Market | Sep 29, 2023 | Sep 23, 2022 | Change | % Change | | :--------- | :----------- | :----------- | :----- | :------- | | **Automotive** | $205,936 | $157,398 | $48,538 | **30.8%** | | **Industrial** | $51,114 | $48,176 | $2,938 | **6.1%** | | **Other** | $18,459 | $32,092 | $(13,633) | **-42.5%** | - **Automotive net sales increased primarily due to higher demand for ADAS**, **EV**, and **safety, comfort, and convenience applications**[105](index=105&type=chunk) - **Industrial net sales increased due to demand for clean energy and automation applications**, partially offset by **declines in data center applications**[105](index=105&type=chunk

Financial Data and Key Metrics Changes - Sales for Q2 2024 were $276 million, representing a 16% year-over-year increase, with non-GAAP earnings per share reaching a record $0.40, up 29% year-over-year [7][17] - Gross margin was 58.3%, operating income was 31.3%, and adjusted EBITDA was 37.1% of sales [17][19] - Automotive sales accounted for $206 million, or 75% of total sales, increasing 31% year-over-year [17] Business Line Data and Key Metrics Changes - E-Mobility sales increased by 60% year-over-year, now representing 50% of automotive sales, up from 41% a year ago [8][17] - Industrial sales were $51 million, declining 25% sequentially but increasing 6% year-over-year [12][17] - Other sales, including consumer applications, were down 42% year-over-year, reflecting inventory destocking [17] Market Data and Key Metrics Changes - Sales by geography were balanced, with 25% in China, 21% in the Americas, 20% in the rest of Asia, and 17% each in Europe and Japan [18] - Japan saw a 14% sequential growth, while China experienced a 12% sequential growth [18] Company Strategy and Development Direction - The company continues to focus on growth in e-mobility and select industrial markets, including clean energy and automation [7][10] - The recent acquisition of Crocus is expected to enhance Allegro's magnetic sensing capabilities and accelerate the deployment of TMR technology [15][21] - The company aims for low double-digit sales growth and above 32% operating margin in the long term [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about opportunities in e-mobility and clean energy despite macroeconomic challenges in China [9][10] - The company anticipates a sequential decline in industrial sales due to cautious behavior from OEMs and inventory management [12][13] - Management remains confident in the long-term growth model established in March 2023 [12][14] Other Important Information - The company expects Q3 sales to be in the range of $250 million to $260 million, reflecting normal seasonality and impacts from the UAW strike [22][23] - Gross margin for Q3 is projected to be approximately 54%, with operating expenses expected to decline by 4% sequentially [23] Q&A Session Summary Question: Trends in bookings in China and impact of UAW strike - Management noted a strong return in bookings in China and acknowledged some order movement due to the UAW strike, but the overall impact is not material [28][30] Question: Distribution inventory levels - Current distribution inventory is at the higher end of the target range of 10 to 12 weeks, with stabilization observed [33][34] Question: Industrial inventory correction - Management indicated that industrial sales are expected to be muted in Q3 due to inventory levels and cautious demand [36][37] Question: Gross margin guidance - Gross margin is expected to be around 54% in Q3, with impacts from product mix and channel inventory management [42][43] Question: Auto segment outlook - Management expects e-Mobility to remain strong, while ICE shipments may see a decline, but overall auto sales are projected to grow year-over-year [46][50] Question: Crocus acquisition rationale - The acquisition is aimed at accelerating the roadmap for TMR technology and enhancing the product portfolio for automotive applications [60][62]

Financial Performance - Net sales increased to $278.3 million in Q2 2023, up from $217.8 million in Q2 2022, representing a 27.8% year-over-year growth[12] - Gross profit rose to $157.9 million in Q2 2023, compared to $118.4 million in Q2 2022, reflecting a 33.4% increase[12] - Operating income surged to $70.7 million in Q2 2023, a significant jump from $14.7 million in Q2 2022, marking a 380% increase[12] - Net income attributable to Allegro MicroSystems, Inc. reached $60.9 million in Q2 2023, up from $10.2 million in Q2 2022, a 494% increase[12] - Net income for the three months ended June 30, 2023, was $60.889 million, compared to $10.283 million for the same period in 2022[21] - Comprehensive income attributable to Allegro MicroSystems, Inc. reached $60.4 million in Q2 2023, compared to $3.5 million in Q2 2022[15] - Net income attributable to common stockholders for the three months ended June 30, 2023, was $60.889 million, compared to $10.283 million for the same period in 2022[53] - Basic net income per share for the three months ended June 30, 2023, was $0.32, compared to $0.05 for the same period in 2022[53] - Diluted net income per share for the three months ended June 30, 2023, was $0.31, compared to $0.05 for the same period in 2022[53] Cash and Assets - Cash and cash equivalents stood at $353.4 million as of June 30, 2023, slightly up from $351.6 million as of March 31, 2023[9] - Total assets increased to $1.23 billion as of June 30, 2023, compared to $1.18 billion as of March 31, 2023[9] - The company's cash and cash equivalents and restricted cash at the end of the period on June 30, 2023, were $362.321 million[21] - Total equity as of June 30, 2023, was $1,027.765 million, compared to $763.360 million as of June 24, 2022[18] - The company's total assets measured at fair value were $117,796 million as of June 30, 2023, compared to $129,077 million as of March 31, 2023, with a decrease in marketable securities from $19,929 million to $5,222 million[35] Liabilities and Equity - Total liabilities decreased to $206.3 million as of June 30, 2023, down from $214.3 million as of March 31, 2023[9] - Retained earnings increased to $371.2 million as of June 30, 2023, up from $310.3 million as of March 31, 2023[9] - Trade accounts receivable, net, increased to $121,506 million as of June 30, 2023, from $111,290 million as of March 31, 2023, with returns and sales allowances rising to $37,094 million from $26,269 million[37] Research and Development - Research and development expenses grew to $43.0 million in Q2 2023, up from $33.9 million in Q2 2022, reflecting a 26.9% increase[12] Sales Breakdown - Total net sales for the three months ended June 30, 2023, were $278.293 million, with automotive sales contributing $189.698 million and industrial sales contributing $68.184 million[31] - Power integrated circuits sales were $103.988 million, and magnetic sensors sales were $174.305 million for the three months ended June 30, 2023[32] - Net sales in the Americas increased to $57,332 million in Q2 2023, up from $34,878 million in Q2 2022, driven by strong growth in the United States ($48,824 million vs. $28,391 million) and Other Americas ($8,508 million vs. $6,487 million)[33] - EMEA net sales grew to $55,388 million in Q2 2023, compared to $35,333 million in Q2 2022, with Europe being the primary contributor[33] - Asia net sales reached $165,573 million in Q2 2023, up from $147,542 million in Q2 2022, led by Greater China ($62,216 million vs. $55,116 million) and South Korea ($29,513 million vs. $20,979 million)[33] - Total net sales for Q2 2023 were $278,293 million, a significant increase from $217,753 million in Q2 2022[33] Inventory and Property - Inventories grew to $174,170 million as of June 30, 2023, up from $151,301 million as of March 31, 2023, with work in process increasing to $119,630 million from $98,836 million[40] - Property, plant, and equipment, net, increased to $285,200 million as of June 30, 2023, from $263,099 million as of March 31, 2023, with machinery and equipment being the largest component at $641,453 million[41] Goodwill and Intangible Assets - Goodwill increased to $28,048 million as of June 30, 2023, from $27,691 million as of March 31, 2023, due to adjustments and foreign currency translation[44] - Intangible assets, net, were $51,969 million as of June 30, 2023, with patents being the largest component at $22,105 million[45] Credit and Financing - The company entered into a $224 million secured revolving credit facility with a $20 million letter of credit subfacility, maturing on June 21, 2028[47] - Interest on the 2023 Revolving Credit Agreement ranges from Term SOFR plus 1.50% to 1.75% or the highest of Federal funds rate plus 0.50%, prime lending rate, or one-month Term SOFR plus 1.0% plus 0.50% to 0.75%[48] - The company is required to maintain a Total Net Leverage Ratio of no more than 4.00 to 1.00, which can be increased to 4.50 to 1.00 for four fiscal quarters after an acquisition exceeding $500 million[48] Stock-Based Compensation - Stock-based compensation for the three months ended June 30, 2023, was $11.042 million, compared to $34.136 million for the same period in 2022[21] - Total stock-based compensation expense for the three months ended June 30, 2023, was $11.042 million, compared to $34.136 million for the same period in 2022[60] Tax and Shareholder Information - The company's effective tax rate for the three months ended June 30, 2023, was 10.6%, compared to 16.0% for the same period in 2022[61] - Sanken holds approximately 51.2% of the company's outstanding common stock as of June 30, 2023[62] Customer and Supplier Relationships - One customer accounted for 14.8% of the company's outstanding trade accounts receivable as of June 30, 2023[27] - For the three months ended June 30, 2023, one customer accounted for 12.2% of total net sales[27] - Net sales to Sanken dropped to $0 in Q2 2023 from $41,709 in Q2 2022, reflecting the termination of the distribution agreement[63] - The company made a one-time payment of $5,000 to Sanken for the cancellation of exclusive distribution rights in Japan[63] - Purchases from PSL increased to $16,102 in Q2 2023 from $14,671 in Q2 2022[63] - The outstanding balance of the PSL Promissory Notes was $11,250 as of June 30, 2023[64] - PSL made quarterly payments totaling $1,005, including $67 of interest, in Q2 2023[64] - The new Wafer Foundry Agreement with PSL has a three-year term with auto-renewal for subsequent one-year terms[63] - The company will provide a rolling annual forecast for three years, with the first two years being binding under the WFA[63] - Accounts payable to PSL totaled $5,091 as of June 30, 2023, up from $4,682 as of March 31, 2023[63] - The company allowed a one-time sales return from Sanken of resalable inventory worth $4,200[63] Market Risk - No material changes in market risk exposures since March 31, 2023[101]

Financial Data and Key Metrics - Q1 2024 sales reached a record $278 million, up 28% YoY, with trailing 12-month sales hitting $1 billion [6] - Non-GAAP earnings per share were $0.39, a 63% YoY increase [6] - Gross margin was 57.8%, operating expenses were 27% of sales, and operating income was 30.8% [12] - Adjusted EBITDA was 36.3% of sales [12] - Automotive revenue grew 27% YoY, outpacing auto production growth of approximately 6% [7] - Industrial sales increased 70% YoY, driven by Clean Energy and Automation [8] - Magnetic sensor sales were $174 million, up 27% YoY, while power product sales were $104 million, up 29% YoY [13] Business Line Performance - Automotive sales accounted for 68% of total Q1 sales, with e-Mobility applications representing 48% of automotive sales, up from 39% in Q1 2023 [7][12] - Industrial sales reached a record $68 million, driven by Clean Energy and Automation [8][13] - Sales in Consumer and Computer Applications declined 30% sequentially and 27% YoY to $20 million [13] Market Performance - Sales in China declined 13% sequentially or 7% on a comparable 13-week basis, impacted by higher OEM finished goods inventory and emission standard transitions [17][18] - Sales by geography were balanced: 22% in China, 22% in the rest of Asia, 21% in the Americas, 20% in Europe, and 15% in Japan [14] Strategic Direction and Industry Competition - The company is focusing on e-Mobility, Clean Energy, and Automation, with sales in these areas increasing 63% YoY to $159 million, representing 57% of total sales [6] - The launch of the Power-Thru isolated gate driver, with a 50% smaller footprint and 40% efficiency improvement, highlights the company's commitment to innovation [9] - The company released its inaugural ESG report, aligning its corporate strategy with sustainability goals [10] Management Commentary on Business Environment and Outlook - Management expressed confidence in long-term growth targets, citing double-digit market growth projections for strategic areas and strong design win momentum [16] - Near-term caution was noted due to macroeconomic uncertainty, including rising interest rates, inflation, and geopolitical concerns, particularly in China [17][18] - Q2 2024 sales are expected to be between $270 million and $280 million, with gross margins projected between 56% and 57% [19] Other Key Information - The company closed a new $224 million revolving credit facility, enhancing liquidity [15] - Lead times declined by approximately 30% in Q1, with inventory levels expected to stabilize [15][34] - The effective tax rate for Q1 was 12.6%, slightly higher than guidance due to geographical income mix [15] Q&A Session Summary Question: Customer order lead times and backlog status [21] - Lead times have normalized to industry standards, with backlog now at normal levels [22] - Q2 guidance is largely covered by the existing backlog, with auto sales expected to increase marginally and Industrial/Other sales to remain flat or decline slightly [24] Question: Gross margin drivers and FX impact [25] - Q1 gross margin beat was primarily driven by favorable product mix and the transition in Japan's distribution channel, with FX impact expected to normalize in Q2 [26] Question: Industrial and Other segment performance [27] - Industrial segment growth is expected to moderate after strong quarters, with distribution channel inventory at target levels [28] Question: China market dynamics [29] - China's auto production declined 15% in H1 2023, with near-term choppiness expected due to emission standard transitions and elevated inventory levels [30][31] Question: Lead times and inventory levels [33] - Lead times have improved significantly, with further reductions planned, particularly for Industrial customers [34] - Inventory levels are expected to stabilize, with sufficient die bank to support customer needs [35] Question: Pricing and foundry costs [36] - Pricing in the automotive segment is value-based, with long-term agreements providing stability [37] - Input cost inflation has moderated, but ongoing discussions with suppliers are in place to manage future cost changes [38] Question: China inventory levels and EV market [42] - Dealer inventory in China is elevated due to the transition to stricter emission standards, but EV market growth remains strong [43] Question: Wafer allocation and margin impact [44] - Wafer allocation among suppliers (Polar, UMC, TSMC) is stable, with no significant impact expected on gross margins [45]

Automotive and Industrial Markets - The company's portfolio includes more than 1,000 products, focusing on sensor and power ICs for automotive and industrial markets[10] - The company's devices are critical for ADAS applications, enabling features like collision avoidance and automatic emergency braking[15] - The company's solutions are already used in vehicles with Level 1 ADAS features, with significant annual shipments[15] - The company's products are foundational to automotive and industrial electronic systems, enabling precise measurement of motion, speed, position, and current[10] - The company's innovations in Hall-effect and xMR magnetic sensors and BCD power ICs support increased driving range for EVs and improved energy efficiency[10] - The company's net sales in new areas such as automotive ADAS and data center markets have grown approximately 50% faster than the overall growth of the BLDC motor market over the last five years[21] - The company's content per vehicle increased by over 50% in a popular mid-sized 2022 model sedan as it transitioned from ICE to a battery EV[21] - The company's opportunity for content per vehicle in a standard ICE model is approximately $39, increasing to approximately $100 in an EV[21] - The company's current sensors, motor drivers, and position sensors are uniquely capable of delivering energy efficiency and motion control in clean energy and automation markets[21] - The company's ADAS-related content opportunity is expected to nearly double as systems transition to electromechanical braking and steer-by-wire[21] - Magnetic sensor ICs are used in automotive applications to improve safety and fuel efficiency, with current sensor ICs improving energy efficiency in EV powertrains[34][39] - Position sensor ICs are used in ADAS systems, HEV powertrains, and ICE powertrains for precise position measurement[34] - Speed sensor ICs reduce CO2 emissions and improve fuel economy in combustion engines[35] - Power ICs include motor driver ICs, regulator and LED driver ICs, and isolated gate drivers, used in automotive, industrial, and other markets[36] Electric Vehicle (EV) Market - The company's September 2022 acquisition of Heyday Integrated Circuits provides additional content opportunities in every fully electric vehicle[14] - The company expects its content per vehicle to increase due to research and development innovation in the EV market[14] - The company's 100V BCD wafer process technology and galvanically isolated current sensors are suited for higher voltage operation in solar and EV applications[16] Manufacturing and Operations - The company's strategic transition includes a fabless and asset-lite manufacturing model, reducing fixed costs[12] - The company's proprietary wafer fabrication processes are employed through subcontractor manufacturers, balancing flexibility and scale[12] - The company's gross margins have improved from a 40% range to the 56% range over the last several years due to its fabless strategy[26] - The company's manufacturing footprint has been reduced by approximately half over the last three years, with an additional 45% reduction from the closure of the AMTC Facility[26] - Gross margin improved from a historical range of 40% to 56%[30] - The company targets higher ASPs and gross margins by developing new products for growth markets[30] - The company's AMPI Facility is certified to ISO 45001 for environmental management and occupational health and safety[61] Research and Development - The company had 655 employees dedicated to research and development as of March 31, 2023[44] - The company owned 1,371 patents, including 742 active U.S. patents, as of March 31, 2023[53] - The company's intellectual property portfolio nearly doubled over the last three years[44] Sales and Distribution - Net sales to distributors accounted for 39.3%, 36.8%, and 37.3% of total net sales in fiscal years 2023, 2022, and 2021, respectively[40] - Sales to the largest non-affiliated distributor represented 10.8%, 11.0%, and 11.4% of net sales in fiscal years 2023, 2022, and 2021, respectively[40] - The company sold products to over 10,000 end customers annually in fiscal years 2023, 2022, and 2021[42] - Approximately half of net sales in fiscal years 2023, 2022, and 2021 were derived from the top 20 customers[42] - The company transitioned distribution in Japan from Sanken to third-party distributors and direct sales as of April 1, 2023[40] Environmental, Social, and Governance (ESG) - The company's ESG strategy includes reducing vehicle emissions, improving energy efficiency in EVs, and supporting renewable energy applications[39] - The company is a member of the Responsible Business Alliance (RBA) and requires suppliers to meet ISO 14001 and ISO 45001 standards[39] - The company has implemented energy, water, and waste reduction projects across facilities and participates in the CDP for climate change and water security[39] - The company faces increasing complexity in product design and procurement due to evolving environmental laws, regulations, and standards, such as the EU's RoHS Directive and China's RoHS equivalent[61][62] - Compliance with environmental and occupational health and safety laws could restrict the company's ability to expand or require modifications to processes, potentially incurring substantial expenses[61] Financial Performance and Risk Management - The company maintains a portfolio of cash and cash equivalents primarily in money market funds, with no investments exceeding a one-year maturity, limiting exposure to interest rate risk[166] - A 10% change in market interest rates is not expected to materially impact the company's financial position or results of operations[167] - The company reported foreign exchange gains of $1.0 million in fiscal 2023 and losses of $0.6 million in fiscal 2022[168] - A hypothetical 10% appreciation (decline) in the Euro against the U.S. dollar would have an immaterial impact on operating income[168] - A hypothetical 10% appreciation (decline) in the Philippine peso against the U.S. dollar would negatively (favorably) impact operating income by immaterial amounts[168] - The company has no foreign currency derivative instrument hedges as of March 31, 2023[168] - Inflationary factors, such as increases in overhead costs, may adversely affect the company's operating results, though historical impacts have not been material[169] Human Resources - The company employed 4,687 full-time employees as of March 31, 2023, with 3,578 in manufacturing and 655 in R&D[57] - In fiscal 2023, the company hired approximately 1,103 new employees[57]

Financial Data and Key Metrics Changes - Allegro MicroSystems reported record sales of $269 million in Q4 2023, representing a 35% year-over-year increase [7] - Non-GAAP earnings per share reached $0.37, an increase of over 75% year-over-year [7] - Full fiscal year 2023 sales totaled $974 million, up 27% year-over-year [17] Business Line Data and Key Metrics Changes - Automotive sales were $182 million in Q4, accounting for 68% of total sales, with a 29% year-over-year increase [14] - E-mobility sales within automotive increased to 47% of Q4 automotive sales, up from 36% in 2022 [8] - Industrial sales reached $58 million in Q4, a 67% year-over-year increase [15] Market Data and Key Metrics Changes - Sales in strategic growth areas, including e-mobility, clean energy, and automation, grew 46% year-over-year to $477 million, representing 49% of total sales [7] - Sales by geography were well balanced, with 26% in China, 24% in the rest of Asia, 17% in both Japan and Europe, and 16% in the Americas [18] Company Strategy and Development Direction - The company is focusing R&D investments on strategic growth areas, which now account for nearly half of total sales [10] - Allegro aims to benefit from megatrends in electrification and automation within automotive and industrial markets [12] - The company is committed to innovation, particularly in magnetic sensors, which represented approximately 60% of Q4 sales [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and ability to execute, highlighting strong momentum in e-mobility and clean energy [13] - The company anticipates continued strength in automotive and industrial markets, with auto production growth projected at 4% and EV growth at approximately 30% for fiscal 2024 [19] - Management noted that they have largely overcome wafer capacity constraints and are aligning backend capacity with projected demand [19] Other Important Information - The effective tax rate for Q4 was 11.6%, and diluted share count was 195 million shares [16] - Cash flow from operations for the full year was $193 million, with free cash flow of $113 million [18] Q&A Session Summary Question: Can you provide more details on the increase in e-mobility? - Management noted that e-mobility is a strong focus, with significant design wins and customer investments in electrifying fleets and adding safety features [24] Question: What are the current lead times and delinquent backlog status? - The delinquent backlog peaked at about 30% but has been significantly reduced, with ongoing efforts to manage scheduling and cancellations [26] Question: Can you clarify the revenue guidance for Q1 and the factors driving it? - The sequential increase in Q1 is driven by strength in automotive and industrial markets, with inventory replenishment not being a primary driver [30] Question: How is the company performing in the China market? - The China market remains important, with consistent ordering patterns and strong design win performance, particularly in the EV segment [32] Question: What is the outlook for EV market share and design pipeline? - The company is pivoting R&D investments towards e-mobility, with over two-thirds of investment focused in this area, indicating strong growth potential [35] Question: Are there any indications of changing order patterns in China? - Management indicated that while normalization of order patterns is expected, high demand for products continues, particularly in the EV sector [48]