Financial Data and Key Metrics Changes - Allegro achieved record annual revenue of $769 million in fiscal 2022, representing a 30% year-over-year increase [10] - Non-GAAP gross margin expanded by 410 basis points to 54.1%, while GAAP gross margin increased to 53% from 47.2% in fiscal 2021 [12] - Non-GAAP diluted earnings per share grew by 70% year-over-year to $0.78, more than double the revenue growth percentage [13] Business Line Data and Key Metrics Changes - Automotive revenue increased by 34% year-over-year, significantly outpacing the automotive semiconductor growth of 30% [11] - Industrial revenue surged by 40% year-over-year to $133 million, while other revenue grew by 6% to $104 million [11] - Magnetic sensors accounted for 65% of sales, up 29% year-over-year, while power products represented 35% of sales, increasing by 32% [18][19] Market Data and Key Metrics Changes - Automotive market represented 69% of total revenue, up 33% year-over-year, with xEV and ADAS contributing 36% of sales, up from 33% [20] - Industrial market accounted for 17% of revenue, also up 40% year-over-year, driven by automation and EV charging infrastructure [23] - Data center business more than doubled year-over-year and is expected to approach 7% of total sales by the end of the year [24] Company Strategy and Development Direction - Allegro's strategic focus is on vehicle electrification, autonomous vehicle control, and efficient motion control, which are expected to drive long-term growth [7] - The company is expanding its manufacturing capabilities and securing long-term commitments with foundry partners to address supply constraints [25] - The transition to a hybrid working model, Flex@Allegro, aims to enhance the company's culture and attract talent [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, supported by strong design win momentum and alignment with secular growth trends [7][27] - The company anticipates continued revenue growth in the high-teens percentage for fiscal 2023, driven by automotive and industrial sectors [27] - Management acknowledged ongoing supply-demand imbalances, particularly in 200mm wafer availability, impacting short-term operations [10][42] Other Important Information - Ravi Vig announced his retirement after 38 years, with Vineet Nargolwala set to succeed him as CEO [8] - The company ended fiscal 2022 with $290 million in cash and equivalents and $25 million in long-term debt [13] Q&A Session Summary Question: Background on Ravi Vig's retirement - Ravi Vig confirmed that discussions regarding his retirement had been ongoing for months, with the board conducting a disciplined search for a successor [32] Question: Fiscal 2023 revenue outlook and TSMC's role - Management expects revenue to accelerate quarter-over-quarter, particularly in fiscal Q3 and Q4, supported by increased capacity from TSMC [34] Question: Differences in forecast between automotive and industrial segments - Management indicated that industrial is expected to modestly outgrow automotive, driven by strong demand in ADAS and xEV areas [36] Question: Supply chain and inventory normalization - Management does not foresee significant changes in inventory levels in the near future due to ongoing supply constraints [42] Question: Future gross margin expectations - Management expects gross margins to normalize and continue to seek strategic price increases and internal efficiencies [44] Question: Vehicle production and content growth in fiscal 2023 - Management anticipates a 9% year-over-year growth in vehicle production, with a similar growth in capital content [48] Question: Wafer capacity increases from foundry partners - Management confirmed increases in wafer supply from all foundry partners, including TSMC, UMC, and Polar [50]

Allegro MicroSystems, Inc. (NASDAQ:ALGM) Q3 2022 Earnings Conference Call February 1, 2022 8:30 AM ET Company Participants Katherine Blye - Investor Relations Ravi Vig - President and Chief Executive Officer Derek D’Antilio - Senior VP & CFO Conference Call Participants Gary Mobley - Wells Fargo Securities Vijay Rakesh - Mizuho Securities Quinn Bolton - Needham & Company Srinivas Pajjuri - SMBC Nikko Securities Natalia Wendler - Jefferies John Pitzer - Credit Suisse Disclaimer*: This transcript is designed ...

FORM 10-Q Filing Information [Filing Details](index=1&type=section&id=Filing%20Details) The report provides basic filing information for Allegro MicroSystems' Q3 FY2022 Form 10-Q, confirming compliance and filer status - The registrant, Allegro MicroSystems, Inc, filed its Quarterly Report on Form 10-Q for the period ended December 24, 2021[1](index=1&type=chunk) - The company has filed all required reports during the preceding 12 months and has been subject to filing requirements for the past 90 days[1](index=1&type=chunk) - As of January 19, 2022, Allegro MicroSystems, Inc had **189,913,804 shares** of common stock outstanding[1](index=1&type=chunk) Filer Status | Filer Status | Mark | | :--- | :--- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ | Forward-Looking Statements [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements covered by safe harbor provisions, which are not guarantees of future results and are based on management's beliefs and assumptions[6](index=6&type=chunk) - Key risk factors include economic volatility, competition, cyclicality of the semiconductor industry, and supply chain disruptions[6](index=6&type=chunk) - Other risks involve reliance on third-party fabrication, manufacturing concentration in the Philippines, and regulatory changes[6](index=6&type=chunk)[8](index=8&type=chunk) PART I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements and detailed explanatory notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects growth in total assets and equity, alongside a reduction in current liabilities Condensed Consolidated Balance Sheets (in thousands) | Item | December 24, 2021 (Unaudited) | March 26, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $469,192 | $430,564 | | Property, plant and equipment, net | $207,705 | $192,393 | | Total assets | $851,417 | $747,678 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $100,841 | $116,674 | | Total liabilities | $155,578 | $160,807 | | Total stockholders' equity | $695,839 | $586,871 | - Total assets increased by **$103.7 million (13.9%)** from March 26, 2021, to December 24, 2021, driven by increases in cash and cash equivalents and property, plant and equipment[10](index=10&type=chunk) - Total current liabilities decreased by **$15.8 million (13.6%)** over the same period, while total stockholders' equity increased by **$109.0 million (18.6%)**[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company's statements of operations show significant year-over-year growth in net sales, gross profit, and net income Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Item | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $186,629 | $164,449 | $568,381 | $416,099 | | Gross profit | $101,165 | $74,425 | $297,857 | $191,896 | | Operating income (loss) | $35,605 | $(24,224) | $106,401 | $(7,290) | | Net income (loss) attributable to Allegro | $32,936 | $(5,095) | $93,791 | $9,309 | | Basic EPS | $0.17 | $(0.04) | $0.49 | $0.19 | | Diluted EPS | $0.17 | $(0.04) | $0.49 | $0.05 | - Total net sales increased by **13.5% YoY** for the three-month period and **36.6% YoY** for the nine-month period[12](index=12&type=chunk) - Gross profit increased by **35.9% YoY** for the three-month period and **55.2% YoY** for the nine-month period[12](index=12&type=chunk) - The company swung from a net loss of **$(5,095) thousand** in Q3 FY2021 to a net income of **$32,936 thousand** in Q3 FY2022, and from **$9,309 thousand** to **$93,791 thousand** for the nine-month periods[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income improved significantly, though it was negatively impacted by foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (in thousands) | Item | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Allegro MicroSystems, Inc | $32,936 | $(5,095) | $93,791 | $9,309 | | Foreign currency translation adjustment | $(1,306) | $3,972 | $(4,873) | $10,152 | | Comprehensive income (loss) attributable to Allegro MicroSystems, Inc | $31,627 | $(1,133) | $88,979 | $19,114 | - Comprehensive income attributable to Allegro MicroSystems, Inc **significantly improved** from a loss of **$(1,133) thousand** in Q3 FY2021 to an income of **$31,627 thousand** in Q3 FY2022[15](index=15&type=chunk) - Foreign currency translation adjustment shifted from a gain of **$3,972 thousand** in Q3 FY2021 to a loss of **$(1,306) thousand** in Q3 FY2022[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased substantially, driven primarily by strong net income and stock-based compensation activity Condensed Consolidated Statements of Changes in Equity (in thousands) | Item | Balance at March 26, 2021 | Balance at December 24, 2021 | | :--- | :--- | :--- | | Common Stock, Amount | $1,896 | $1,898 | | Additional Paid-In Capital | $592,170 | $612,106 | | Retained Earnings | $3,551 | $97,342 | | Accumulated Other Comprehensive Loss | $(11,865) | $(16,677) | | Non-controlling Interests | $1,119 | $1,170 | | Total Equity | $586,871 | $695,839 | - Total equity increased by **$108,968 thousand** from March 26, 2021, to December 24, 2021, primarily due to net income and stock-based compensation[26](index=26&type=chunk) - Retained earnings saw a significant increase from **$3,551 thousand** to **$97,342 thousand** during the nine-month period[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow from operations increased significantly, while cash used in financing activities decreased sharply year-over-year Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $118,558 | $63,534 | | Net cash used in investing activities | $(50,123) | $(50,401) | | Net cash used in financing activities | $(6,209) | $(72,186) | | Net increase (decrease) in Cash and cash equivalents and Restricted cash | $62,830 | $(55,703) | | Cash and cash equivalents and Restricted cash at end of period | $266,705 | $164,173 | - Net cash provided by operating activities increased by **$55,024 thousand (86.6%)** YoY for the nine-month period[29](index=29&type=chunk) - Net cash used in financing activities significantly decreased from **$(72,186) thousand** in the prior nine-month period to **$(6,209) thousand** in the current nine-month period[29](index=29&type=chunk) - The company experienced a net increase in cash and cash equivalents and restricted cash of **$62,830 thousand**, a reversal from a net decrease of **$(55,703) thousand** in the prior year[29](index=29&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies and specific financial line items in the statements [1. Nature of the Business and Basis of Presentation](index=14&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) Allegro MicroSystems is a global leader in sensing and power solutions for automotive and industrial markets - Allegro MicroSystems, Inc is a global leader in designing, developing, and manufacturing sensing and power solutions for automotive and industrial markets[34](index=34&type=chunk) - The company's third quarter of fiscal 2022 ended on December 24, 2021, and the third quarter of fiscal 2021 ended on December 25, 2020[35](index=35&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note details key accounting policies, including the early adoption of new standards and concentrations of credit risk - The company early adopted ASU 2016-02 (Leases) effective March 27, 2021, recognizing ROU assets of **$18,403 thousand** and lease liabilities of **$18,759 thousand**, with no material impact on net income or cash flows[41](index=41&type=chunk)[43](index=43&type=chunk) - ASU 2016-13 (CECL model) was adopted effective March 27, 2021, resulting in an immaterial increase in the provision for expected credit losses[43](index=43&type=chunk) - Sanken Electric Co, Ltd accounted for **27.0%** of outstanding trade accounts receivable and **21.1%** of total net sales for the three-month period ended December 24, 2021[38](index=38&type=chunk)[40](index=40&type=chunk) - Sales from customers outside the United States accounted for **85.9%** of total net sales for the three-month period ended December 24, 2021, with Greater China (**26.1%**), Japan (**21.1%**), and South Korea (**10.7%**) being the largest contributors[40](index=40&type=chunk) [3. Revenue from Contracts with Customers](index=17&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates net sales by application, product, and geography, highlighting key revenue streams Net Sales by Application (in thousands) | Application | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Automotive | $130,797 | $113,902 | $390,351 | $279,759 | | Industrial | $31,903 | $23,654 | $98,533 | $65,710 | | Other | $23,929 | $26,893 | $79,497 | $70,630 | | Total | $186,629 | $164,449 | $568,381 | $416,099 | Net Sales by Product (in thousands) | Product | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Power integrated circuits | $62,859 | $54,406 | $195,054 | $146,276 | | Magnetic sensors | $123,543 | $109,457 | $371,806 | $268,956 | | Photonics | $227 | $586 | $1,521 | $867 | | Total | $186,629 | $164,449 | $568,381 | $416,099 | Net Sales by Geography (in thousands) | Geography | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | United States | $26,228 | $23,934 | $80,854 | $57,892 | | Other Americas | $4,921 | $5,620 | $16,697 | $10,797 | | Europe | $29,891 | $28,239 | $97,108 | $70,459 | | Japan | $39,461 | $26,439 | $112,079 | $72,570 | | Greater China | $48,696 | $46,172 | $142,158 | $116,178 | | South Korea | $19,935 | $17,606 | $61,614 | $43,733 | | Other Asia | $17,497 | $16,439 | $57,871 | $44,470 | | Total | $186,629 | $164,449 | $568,381 | $416,099 | [4. Fair Value Measurements](index=18&type=section&id=4.%20Fair%20Value%20Measurements) This note details financial assets and liabilities measured at fair value, categorized by the fair value hierarchy Fair Value Measurement at December 24, 2021 (in thousands) | Item | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Cash equivalents (money market) | $16,348 | $— | $— | $16,348 | | Restricted cash (money market) | $7,497 | $— | $— | $7,497 | | Investments in marketable securities | $13,393 | $— | $— | $13,393 | | Total assets | $37,238 | $— | $— | $37,238 | | Contingent consideration | $— | $— | $2,700 | $2,700 | | Total liabilities | $— | $— | $2,700 | $2,700 | - Unrealized gains on marketable securities recognized during the nine-month period ended December 24, 2021, totaled **$4,482 thousand**[56](index=56&type=chunk) - The fair value of Level 3 contingent consideration decreased by **$2,100 thousand**, from $4,800 thousand at March 26, 2021, to $2,700 thousand at December 24, 2021[57](index=57&type=chunk) [5. Trade Accounts Receivable, net](index=20&type=section&id=5.%20Trade%20Accounts%20Receivable%2C%20net) This note details the composition of trade accounts receivable and changes in related provisions and allowances Trade Accounts Receivable, net (in thousands) | Item | December 24, 2021 | March 26, 2021 | | :--- | :--- | :--- | | Trade accounts receivable | $120,500 | $108,546 | | Less: Provision for expected credit losses / allowance for doubtful accounts | $(70) | $(138) | | Less: Returns and sales allowances | $(15,944) | $(15,274) | | Less: Related party trade accounts receivable | $(28,251) | $(23,634) | | Total | $76,235 | $69,500 | - Total trade accounts receivable, net, increased by **$6,735 thousand (9.7%)** from March 26, 2021, to December 24, 2021[61](index=61&type=chunk) - The provision for expected credit losses decreased from **$138 thousand** to **$70 thousand**, while returns and sales allowances increased from **$15,274 thousand** to **$15,944 thousand**[61](index=61&type=chunk)[62](index=62&type=chunk) [6. Inventories](index=20&type=section&id=6.%20Inventories) This note provides a breakdown of inventories by category and details inventory provisions recorded during the period Inventories (in thousands) | Item | December 24, 2021 | March 26, 2021 | | :--- | :--- | :--- | | Raw materials and supplies | $11,751 | $9,629 | | Work in process | $45,089 | $50,095 | | Finished goods | $22,018 | $27,774 | | Total | $78,858 | $87,498 | - Total inventories decreased by **$8,640 thousand (9.9%)** from March 26, 2021, to December 24, 2021[63](index=63&type=chunk) - Inventory provisions totaled **$5,389 thousand** for the nine-month period ended December 24, 2021, including **$3,106 thousand** related to the discontinuation of a Voxtel product line[63](index=63&type=chunk) [7. Assets Held for Sale](index=20&type=section&id=7.%20Assets%20Held%20for%20Sale) This note describes the completed sale of the Thailand-based AMTC Facility in August 2021 - The sale of the AMTC Facility was completed on August 3, 2021, generating cash proceeds of **$27,405 thousand** and a gain on final disposition of **$370 thousand**[66](index=66&type=chunk) - Assets held for sale, which were **$25,969 thousand** at March 26, 2021, were reduced to **$0** at December 24, 2021, following the sale[10](index=10&type=chunk) [8. Property, Plant and Equipment, net](index=21&type=section&id=8.%20Property%2C%20Plant%20and%20Equipment%2C%20net) This note provides a detailed breakdown of property, plant, and equipment by category and geographic location Property, Plant and Equipment, net (in thousands) | Item | December 24, 2021 | March 26, 2021 | | :--- | :--- | :--- | | Land | $16,257 | $16,602 | | Buildings, building improvements and leasehold improvements | $57,282 | $56,911 | | Machinery and equipment | $528,786 | $491,025 | | Office equipment | $6,252 | $6,281 | | Construction in progress | $27,971 | $29,201 | | Total gross | $636,548 | $600,020 | | Less accumulated depreciation | $(428,843) | $(407,627) | | Total net | $207,705 | $192,393 | - Total property, plant and equipment, net, increased by **$15,312 thousand (8.0%)** from March 26, 2021, to December 24, 2021[67](index=67&type=chunk) - Depreciation expense for the nine-month period ended December 24, 2021, was **$33,235 thousand**[67](index=67&type=chunk) Long-Lived Assets by Geographic Location (in thousands) | Location | December 24, 2021 | March 26, 2021 | | :--- | :--- | :--- | | United States | $34,793 | $36,529 | | Philippines | $166,087 | $148,374 | | Thailand | $— | $1,698 | | Other | $7,328 | $7,190 | | Total | $208,208 | $193,791 | [9. Goodwill and Intangible Assets](index=21&type=section&id=9.%20Goodwill%20and%20Intangible%20Assets) This note details goodwill and intangible assets, including carrying amounts, amortization, and projected future expense Goodwill (in thousands) | Item | Total | | :--- | :--- | | Balance at March 26, 2021 | $20,106 | | Currency translation | $(63) | | Balance at December 24, 2021 | $20,043 | Intangible Assets, net (in thousands) | Description | Gross | Accumulated Amortization | Net Carrying Amount (Dec 24, 2021) | Weighted-Average Lives | | :--- | :--- | :--- | :--- | :--- | | Patents | $35,558 | $14,580 | $20,978 | 10 years | | Customer relationships | $6,899 | $6,640 | $259 | 9 years | | Process technology | $13,100 | $1,470 | $11,630 | 12 years | | Indefinite-lived and legacy process technology | $4,050 | $1,650 | $2,400 | | | Trademarks | $200 | $54 | $146 | 5 years | | Legacy trademarks | $629 | $57 | $572 | | | Other | $32 | $32 | $— | | | Total | $60,468 | $24,483 | $35,985 | | - Intangible assets amortization expense was **$3,190 thousand** for the nine-month period ended December 24, 2021[72](index=72&type=chunk) Annual Amortization Expense of Intangible Assets (in thousands) | Fiscal Year | Amortization Expense | | :--- | :--- | | Remainder of 2022 | $935 | | 2023 | $3,612 | | 2024 | $3,480 | | 2025 | $3,260 | | 2026 | $3,032 | | Thereafter | $21,666 | | Total | $35,985 | [10. Other Assets, net](index=23&type=section&id=10.%20Other%20Assets%2C%20net) This note summarizes other assets, which increased significantly due to new investments in marketable securities Other Assets, net (in thousands) | Item | December 24, 2021 | March 26, 2021 | | :--- | :--- | :--- | | Prepaid expenses | $10,659 | $8,177 | | Marketable securities | $13,393 | $— | | Other long-term assets | $9,680 | $3,573 | | Total | $48,078 | $14,613 | - Total other assets, net, significantly increased by **$33,465 thousand (229.0%)** from March 26, 2021, to December 24, 2021, primarily due to new investments in marketable securities[76](index=76&type=chunk) [11. Accrued Expenses and Other Current Liabilities](index=23&type=section&id=11.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note details the composition of accrued expenses, which decreased due to acquisition-related payments Accrued Expenses and Other Current Liabilities (in thousands) | Item | December 24, 2021 | March 26, 2021 | | :--- | :--- | :--- | | Accrued management incentives | $24,927 | $21,538 | | Accrued salaries and wages | $16,639 | $15,060 | | Base acquisition purchase price due | $2,000 | $14,588 | | Deposits on AMTC Facility | $— | $14,531 | | Total | $59,262 | $78,932 | - Total accrued expenses and other current liabilities decreased by **$19,670 thousand (24.9%)** from March 26, 2021, to December 24, 2021, largely due to the payment of acquisition purchase price and release of AMTC Facility deposits[77](index=77&type=chunk) [12. Leases](index=23&type=section&id=12.%20Leases) This note outlines the company's operating lease agreements, costs, and future obligations Lease Costs and Other Information (in thousands) | Item | Three-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 24, 2021 | | :--- | :--- | :--- | | Operating lease expense | $1,075 | $3,378 | | Short term lease expense | $190 | $332 | | Operating cash flows from operating leases | $1,259 | $3,733 | | Weighted-average remaining lease term | 5.53 years | 5.53 years | | Weighted-average discount rate | 4.5% | 4.5% | Expirations of Lease Obligations (in thousands) | Fiscal Year | Amount | | :--- | :--- | | Remainder of 2022 | $1,056 | | 2023 | $3,886 | | 2024 | $3,503 | | 2025 | $3,070 | | 2026 | $2,597 | | Thereafter | $4,406 | | Total undiscounted lease payments | $18,518 | | Less: present value adjustment | $(2,272) | | Total operating lease liabilities | $16,246 | [13. Debt and Other Borrowings](index=25&type=section&id=13.%20Debt%20and%20Other%20Borrowings) This note details the company's debt obligations, including its Term Loan and Revolving Credit Facilities - As of December 24, 2021, the company had **$25,000 thousand** outstanding under the Term Loan Facility, bearing an interest rate of **4.25%**[86](index=86&type=chunk) - The Revolving Credit Facility had **no outstanding borrowings** as of December 24, 2021, with unamortized deferred financing costs of **$174 thousand**[86](index=86&type=chunk) - Two lines of credit in the Philippines, totaling approximately **$2,691 thousand** in maximum borrowing capacity, were extended to expire in August 2022 and June 2022, respectively, with no outstanding borrowings[86](index=86&type=chunk) [14. Other Long-Term Liabilities](index=25&type=section&id=14.%20Other%20Long-Term%20Liabilities) This note provides a breakdown of other long-term liabilities, which decreased due to a reduction in contingent consideration Other Long-Term Liabilities (in thousands) | Item | December 24, 2021 | March 26, 2021 | | :--- | :--- | :--- | | Accrued management incentives | $734 | $628 | | Accrued retirement | $10,655 | $10,656 | | Accrued contingent consideration | $2,700 | $4,800 | | Provision for uncertain tax positions (net) | $2,741 | $2,774 | | Other | $— | $275 | | Total | $16,830 | $19,133 | - Total other long-term liabilities decreased by **$2,303 thousand (12.0%)** from March 26, 2021, to December 24, 2021, primarily due to a reduction in accrued contingent consideration[87](index=87&type=chunk) [15. Retirement Plans](index=25&type=section&id=15.%20Retirement%20Plans) This note describes the company's defined benefit and defined contribution retirement plans and related expenses - The company operates a non-U.S defined benefit pension plan in the Philippines, covering substantially all employees of Allegro MicroSystems Philippines, Inc (AMPI)[90](index=90&type=chunk) Net Periodic Pension Expense (in thousands) | Item | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net periodic pension expense | $500 | $432 | $1,531 | $1,218 | Non-U.S. Defined Benefit Plan Assets (in thousands) | Asset Category | Fair Value at Dec 24, 2021 | Fair Value at Mar 26, 2021 | | :--- | :--- | :--- | | Government securities | $2,005 | $1,646 | | Unit investment trust fund | $1,217 | $1,221 | | Loans | $578 | $584 | | Bonds | $706 | $1,112 | | Stocks and other investments | $2,338 | $3,081 | | Total | $6,844 | $7,644 | - Company contributions to the non-U.S pension plan for the nine-month period ended December 24, 2021, were **$1,040 thousand**, with an expectation to contribute approximately **$1,425 thousand** in fiscal year 2022[95](index=95&type=chunk) - Matching contributions to the 401(k) plan for AML U.S employees totaled **$3,000 thousand** for the nine-month period ended December 24, 2021[97](index=97&type=chunk) [16. Commitments and Contingencies](index=28&type=section&id=16.%20Commitments%20and%20Contingencies) This note addresses various commitments and contingencies, none of which are expected to have a material adverse effect - The accrued liability for self-insured employee health programs was **$863 thousand** as of December 24, 2021[100](index=100&type=chunk) - The company is not currently party to any material legal proceedings and has not incurred any costs in connection with indemnification arrangements to date[101](index=101&type=chunk)[102](index=102&type=chunk) - No significant environmental accruals were established at December 24, 2021[103](index=103&type=chunk) [17. Net Income per Share](index=28&type=section&id=17.%20Net%20Income%20per%20Share) This note provides the calculation of basic and diluted net income per share, detailing the impact of the IPO and dilutive securities Net Income per Share (in thousands, except per share amounts) | Item | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Allegro MicroSystems, Inc | $32,936 | $(5,095) | $93,791 | $9,309 | | Basic weighted average shares outstanding | 189,736,901 | 124,363,078 | 189,665,324 | 48,121,026 | | Diluted weighted average shares outstanding | 192,068,222 | 124,363,078 | 191,678,951 | 171,638,787 | | Basic net income per share | $0.17 | $(0.04) | $0.49 | $0.19 | | Diluted net income per share | $0.17 | $(0.04) | $0.49 | $0.05 | - The IPO on November 2, 2020, resulted in the conversion of all outstanding Class A and Class L common stock into **166,500,000 shares** of common stock[104](index=104&type=chunk) Dilutive Common Stock Equivalents (Weighted Average Shares) | Item | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Restricted stock units | 1,199,816 | 377,767 | 1,046,229 | 125,922 | | Performance stock units | 1,117,532 | 422,768 | 959,084 | 140,923 | | Employee stock purchase plan | 13,973 | — | 8,314 | — | | Shares related to Common Stock Conversion | — | 56,752,747 | — | 123,250,916 | | Total | 2,331,321 | 57,553,282 | 2,013,627 | 123,517,761 | [18. Common Stock and Stock-Based Compensation](index=29&type=section&id=18.%20Common%20Stock%20and%20Stock-Based%20Compensation) This note details the accounting for stock-based compensation and the related expense recognized in operations - During the nine months ended December 24, 2021, the company granted **1,030,887 RSUs** with an estimated grant date fair value of **$25.47**[109](index=109&type=chunk) - Stock-based compensation expense related to non-vested awards not yet recorded was **$25,133 thousand** for RSUs and **$13,765 thousand** for PSUs as of December 24, 2021[109](index=109&type=chunk) Total Stock-Based Compensation Expense (in thousands) | Category | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | $742 | $4,694 | $1,992 | $4,844 | | Research and development | $1,019 | $2,984 | $2,814 | $3,037 | | Selling, general and administrative | $5,859 | $38,198 | $13,841 | $39,020 | | Total | $7,620 | $45,876 | $18,647 | $46,901 | [19. Income Taxes](index=30&type=section&id=19.%20Income%20Taxes) This note presents the income tax provision and effective tax rates, explaining fluctuations due to income mix and discrete events Income Tax Provision (Benefit) (in thousands) | Item | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Provision (benefit) for income taxes | $6,281 | $(30,523) | $16,687 | $(27,913) | | Annual operating tax rate | 16.6% | 34.2% | 16.1% | 52.8% | | Effective tax rate | 16.0% | 85.8% | 15.1% | 150.9% | - The increase in income tax expense was primarily due to the tax impacts of the IPO transaction in the prior period, which resulted in excess tax deductions and a tax loss on the divestiture of PSL[113](index=113&type=chunk) [20. Related Party Transactions](index=31&type=section&id=20.%20Related%20Party%20Transactions) This note details transactions with related parties, including Sanken Electric, Polar Semiconductor, and Sanken Electric Europe - Net sales to Sanken totaled **$39,461 thousand** and **$112,079 thousand** for the three- and nine-month periods ended December 24, 2021, respectively[116](index=116&type=chunk) - Purchases of products from Polar Semiconductor, LLC (PSL) totaled **$38,346 thousand** for the nine-month period ended December 24, 2021[117](index=117&type=chunk) - On December 2, 2021, AML entered into a loan agreement with PSL for an initial promissory note of **$7,500 thousand** to procure manufacturing tools[120](index=120&type=chunk) - The company made aggregate payments of **$166 thousand** to Sanken under a sublease agreement for office space in Japan for the nine-month period ended December 24, 2021[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, growth strategies, and key business trends [Overview](index=33&type=section&id=Overview) Allegro MicroSystems is a leading global supplier of sensor and application-specific analog power ICs for key growth markets - Allegro MicroSystems, Inc is a leading global designer, developer, manufacturer, and marketer of sensor ICs and application-specific analog power ICs for automotive and industrial markets[125](index=125&type=chunk) - The company is the **number one supplier** of magnetic sensor IC solutions worldwide, with over 1,000 products and shipping over one billion units annually[125](index=125&type=chunk) Key Financial Highlights (in millions) | Metric | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $186.6 | $164.4 | $568.4 | $416.1 | | Net income (loss) | $33.0 | $(5.1) | $93.9 | $9.4 | | Adjusted EBITDA | $54.9 | $39.6 | $167.7 | $98.6 | - The company completed its IPO on November 2, 2020, raising approximately **$321.4 million** in net proceeds[125](index=125&type=chunk) [Our Growth Strategies and Outlook](index=33&type=section&id=Our%20Growth%20Strategies%20and%20Outlook) The company's growth strategy focuses on market-aligned R&D, an 'automotive first' philosophy, and selective acquisitions - The company plans to invest in market-aligned R&D, focusing on product design, automotive-grade wafer fabrication, and IC packaging for high-growth opportunities like xEVs, ADAS, Industry 4.0, data centers, and green energy[126](index=126&type=chunk)[128](index=128&type=chunk) - Emphasis on an **'automotive first' philosophy** to align product development with stringent automotive standards, leveraging this expertise for industrial customers seeking ruggedized solutions[128](index=128&type=chunk) - Strategies include expanding sales channels, enhancing customer relationships, improving gross margins through product innovation and cost optimization, and pursuing selective acquisitions (e.g, Voxtel for LiDAR technology)[128](index=128&type=chunk) - Commitment to sustainability by innovating energy-efficient products and operating in a socially responsible and environmentally sustainable manner[128](index=128&type=chunk)[130](index=130&type=chunk) [Recent Initiatives to Improve Results of Operations](index=35&type=section&id=Recent%20Initiatives%20to%20Improve%20Results%20of%20Operations) Recent initiatives include the acquisition of Voxtel and the consolidation of assembly and test facilities - Acquired Voxtel, Inc in August 2020, specializing in components for eye-safe LiDAR used in ADAS and industrial automation, bringing laser and imaging expertise[132](index=132&type=chunk) - Consolidated assembly and test facilities into a single site in the Philippines (AMPI Facility) and closed the Thailand facility (AMTC Facility) in March 2021, with the sale completed in August 2021, expecting **significant cost of goods sold reduction**[132](index=132&type=chunk) [Other Key Factors and Trends Affecting our Operating Results](index=35&type=section&id=Other%20Key%20Factors%20and%20Trends%20Affecting%20our%20Operating%20Results) Operating results are affected by design wins, customer demand fluctuations, gross margin pressures, and industry cyclicality - Future revenue is highly dependent on **successful design wins** with new and existing customers, despite expected declines in average selling prices (ASPs) over time[134](index=134&type=chunk) - Customer demand is influenced by market conditions, seasonality, cyclicality, and competitive pressures, with customers providing non-binding forecasts and having cancellation rights[135](index=135&type=chunk) - Gross margin is affected by ASPs, product mix, material costs, yields, and manufacturing efficiencies, with fixed costs making adjustments to demand changes difficult[136](index=136&type=chunk)[138](index=138&type=chunk) - The semiconductor industry's cyclical nature, rapid technological change, and competitive pricing pressures can lead to fluctuations in product supply and demand, impacting sales and margins[139](index=139&type=chunk) [Components of Our Results of Operations](index=36&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section breaks down the key components of the company's income statement, from net sales to income tax - Total net sales are derived from product sales to direct customers and distributors globally, with revenue recognized upon shipment or delivery[140](index=140&type=chunk) - Cost of goods sold includes raw materials, probe, assembly, test, shipping, personnel, depreciation, amortization, and other manufacturing-related costs, expected to decrease due to AMTC Facility closure and PSL distribution transfer[141](index=141&type=chunk)[143](index=143&type=chunk) - R&D expenses consist of personnel costs, wafer and mask development, software licenses, and testing, with expected increases due to new product offerings and headcount growth[144](index=144&type=chunk) - SG&A expenses include personnel costs, sales commissions, professional fees, advertising, and corporate marketing, anticipated to increase due to sales force expansion and public company costs[145](index=145&type=chunk) - Other income/expense items include changes in fair value of contingent consideration, interest expense/income, foreign currency transaction gains/losses, income from equity investments, and income tax provision/benefit[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) The section compares financial performance for the recent three- and nine-month periods, highlighting significant growth [Three-Month Period Ended December 24, 2021 Compared to Three-Month Period Ended December 25, 2020](index=38&type=section&id=Three-Month%20Period%20Ended%20December%2024%2C%202021%20Compared%20to%20Three-Month%20Period%20Ended%20December%2025%2C%202020) Net sales grew 13.5% YoY, driven by strong automotive and industrial demand, resulting in a significant profit increase Three-Month Period Financial Performance (in thousands) | Item | Dec 24, 2021 | Dec 25, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $186,629 | $164,449 | $22,180 | 13.5% | | Cost of goods sold | $85,464 | $90,024 | $(4,560) | (5.1)% | | Gross profit | $101,165 | $74,425 | $26,740 | 35.9% | | Operating income (loss) | $35,605 | $(24,224) | $59,829 | 247.0% | | Net income (loss) attributable to Allegro | $32,936 | $(5,095) | $38,031 | 746.4% | - Automotive net sales increased by **$16.9 million (14.8%)**, and industrial net sales increased by **$8.2 million (34.9%)**, driven by economic recovery and higher demand for ADAS, xEV, data center, and factory automation applications[158](index=158&type=chunk)[160](index=160&type=chunk) - SG&A expenses decreased by **$29.7 million (43.9%)**, primarily due to lower stock-based compensation expense and reduced facilities/personnel costs, partially offset by higher variable compensation and professional fees[167](index=167&type=chunk) - Income tax provision shifted from a benefit of **$30.5 million** to an expense of **$6.3 million**, largely due to the tax impacts of the prior year's IPO transaction[175](index=175&type=chunk) [Nine-Month Period Ended December 24, 2021 Compared to Nine-Month Period Ended December 25, 2020](index=43&type=section&id=Nine-Month%20Period%20Ended%20December%2024%2C%202021%20Compared%20to%20Nine-Month%20Period%20Ended%20December%2025%2C%202020) Net sales surged 36.6% YoY, with significant growth across all segments, driving a 907.5% increase in net income Nine-Month Period Financial Performance (in thousands) | Item | Dec 24, 2021 | Dec 25, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $568,381 | $416,099 | $152,282 | 36.6% | | Cost of goods sold | $270,524 | $224,203 | $46,321 | 20.7% | | Gross profit | $297,857 | $191,896 | $105,961 | 55.2% | | Operating income (loss) | $106,401 | $(7,290) | $113,691 | 1559.5% | | Net income attributable to Allegro | $93,791 | $9,309 | $84,482 | 907.5% | - Automotive net sales increased by **$110.6 million (39.5%)**, and industrial net sales increased by **$32.8 million (50.0%)**, driven by continued higher demand for ADAS, xEV, gaming, industrial automation, and wireless infrastructure applications[182](index=182&type=chunk)[184](index=184&type=chunk) - Magnetic sensor IC product sales increased by **$102.9 million (38.2%)**, and power IC product sales increased by **$48.8 million (33.3%)**[185](index=185&type=chunk) - SG&A expenses decreased by **$14.6 million (12.3%)**, primarily due to a **$25.2 million** decrease in stock-based compensation expense, partially offset by increases in employee-related variable compensation and professional fees[191](index=191&type=chunk) [Non-GAAP Financial Measures](index=48&type=section&id=Non-GAAP%20Financial%20Measures) This section presents non-GAAP financial measures and reconciles them to their most comparable GAAP counterparts - The company uses non-GAAP financial measures (e.g, non-GAAP Gross Profit, Adjusted EBITDA) to evaluate business performance, identify trends, and make strategic decisions, excluding non-cash or infrequent charges unrelated to core operations[201](index=201&type=chunk) - Non-GAAP adjustments include Voxtel inventory impairment, stock-based compensation, AMTC Facility consolidation costs, amortization of acquisition-related intangible assets, COVID-19 related expenses, transaction fees, severance, and unrealized gains on investments[203](index=203&type=chunk)[204](index=204&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) Non-GAAP Gross Profit and Margin (in thousands) | Metric | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | GAAP Gross Profit | $101,165 | $74,425 | $297,857 | $191,896 | | Total Non-GAAP Adjustments | $1,152 | $7,139 | $6,857 | $14,617 | | Non-GAAP Gross Profit | $102,317 | $81,564 | $304,714 | $206,513 | | Non-GAAP Gross Margin | 54.8% | 49.6% | 53.6% | 49.6% | Adjusted EBITDA and Margin (in thousands) | Metric | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income (Loss) | $32,973 | $(5,060) | $93,903 | $9,412 | | EBITDA | $51,534 | $(20,786) | $148,876 | $19,659 | | Total Non-GAAP Adjustments | $3,383 | $60,405 | $18,777 | $78,916 | | Adjusted EBITDA | $54,917 | $39,619 | $167,653 | $98,575 | | Adjusted EBITDA Margin | 29.4% | 24.1% | 29.5% | 23.7% | Non-GAAP Net Income and EPS (in thousands, except per share amounts) | Metric | Three-Month Period Ended Dec 24, 2021 | Three-Month Period Ended Dec 25, 2020 | Nine-Month Period Ended Dec 24, 2021 | Nine-Month Period Ended Dec 25, 2020 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income (Loss) | $32,973 | $(5,060) | $93,903 | $9,412 | | Non-GAAP Net Income | $36,091 | $22,980 | $109,969 | $53,410 | | Non-GAAP Basic EPS | $0.19 | $0.18 | $0.58 | $1.11 | | Non-GAAP Diluted EPS | $0.19 | $0.13 | $0.57 | $0.31 | [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with increased cash and working capital, supported by robust operating cash flow - As of December 24, 2021, the company had **$259.2 million** in cash and cash equivalents and **$368.4 million** in working capital, an increase from March 26, 2021[225](index=225&type=chunk) - Primary liquidity requirements include working capital, capital expenditures, debt payments, and general corporate needs, historically met by operating activities and existing cash[225](index=225&type=chunk) - Net cash provided by operating activities was **$118.6 million** for the nine months ended December 24, 2021, a significant increase from **$63.5 million** in the prior year[227](index=227&type=chunk) - Net cash used in investing activities was **$50.1 million**, including **$55.8 million** for property, plant and equipment, partially offset by **$27.4 million** from the sale of the AMTC Facility[230](index=230&type=chunk) - Net cash used in financing activities decreased significantly to **$6.2 million**, primarily due to a **$7.5 million** loan to PSL, compared to **$72.2 million** used in the prior year (which included **$400 million** in dividends and **$300 million** in debt repayment)[231](index=231&type=chunk) - The company had **$25.0 million** in aggregate principal amount of debt outstanding under its Senior Secured Credit Facilities as of December 24, 2021[234](index=234&type=chunk) [Recent Accounting Pronouncements](index=61&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for a full description of recent accounting pronouncements and their effects - The company refers to Note 2 for a full description of recent accounting pronouncements, including adoption dates and effects on financial statements[239](index=239&type=chunk) [Critical Accounting Policies and Estimates](index=61&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There have been no material changes to the company's critical accounting policies and estimates since the last fiscal year-end - There have been no material changes in the company's critical accounting policies and estimates since March 26, 2021[240](index=240&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states there have been no material changes to the company's market risk exposures since March 26, 2021 - No material changes in exposures to market risk (interest rate, foreign currency exchange, inflation) have occurred since March 26, 2021[241](index=241&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective and reported no material changes in internal control - Management concluded that disclosure controls and procedures were **effective** at the reasonable assurance level as of December 24, 2021[244](index=244&type=chunk) - **No material changes** in internal control over financial reporting occurred during the period covered by this Quarterly Report[245](index=245&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any material legal proceedings that could have a significant adverse effect - The company is not currently involved in any material legal proceedings[247](index=247&type=chunk) - No pending or threatened legal proceedings are believed to have a material adverse effect on the company's financial condition or results of operations[247](index=247&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) This section indicates no material changes to the risk factors previously disclosed in the 2021 Annual Report - There have been **no material changes** to the 'Risk Factors' disclosed in Item 1A of the 2021 Annual Report[248](index=248&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities and use of proceeds to report[248](index=248&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates no defaults upon senior securities to report for the period - No defaults upon senior securities to report[248](index=248&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[248](index=248&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This section reports no other information to disclose for the period - No other information to report[248](index=248&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including legal agreements and certifications - Exhibits include various legal agreements (e.g, Loan Agreement with Polar Semiconductor, LLC), offer and severance letters for executives, and certifications (e.g, Section 302 and 906 of Sarbanes-Oxley Act)[250](index=250&type=chunk) - XBRL (eXtensible Business Reporting Language) documents are also included for interactive data filing[250](index=250&type=chunk) Signatures [Signatures](index=65&type=section&id=Signatures) This section contains the certifying signatures of the company's principal executive and financial officers - The report is signed by Ravi Vig, President and Chief Executive Officer, and Derek P D'Antilio, Senior Vice President, Chief Financial Officer and Treasurer, on February 2, 2022[252](index=252&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2022 was $193.6 million, a 3% sequential increase and exceeding expectations due to favorable inventory mix [8] - GAAP gross margin improved to 53%, up 300 basis points sequentially, while non-GAAP gross margin was 53.8%, up 160 basis points [13][15] - GAAP net income for Q2 was $33.2 million, with earnings per diluted share increasing to $0.17, while non-GAAP earnings per diluted share rose 11% to $0.20 [15][16] Business Line Data and Key Metrics Changes - Automotive revenue was $126 million, representing 65% of total revenue, down 6% sequentially but outperforming global car production, which declined 16% [10] - Magnetic sensor revenue increased nearly 50% year-over-year, while power ICs revenue rose 30% year-over-year [8][19] - Industrial revenue grew double digits sequentially to $36.3 million, accounting for 19% of total revenue [11] Market Data and Key Metrics Changes - Demand continues to exceed supply, with backlog at historic levels and extended visibility [11][12] - Automotive revenue growth was driven by a shift towards higher-value, feature-rich vehicles, with xEV and ADAS representing over 35% of automotive revenue [10][21] - Industrial performance was strong across categories, particularly in data center applications, with expectations for continued growth [20] Company Strategy and Development Direction - The company is focused on high-growth markets such as xEV, ADAS, Industry 4.0, and data centers, with a strategic emphasis on structural improvements in gross margins [17][23] - The transition to feature-rich vehicles and electrification is expected to drive content increases per vehicle, enhancing revenue potential [21][22] - The company aims for low to mid-teens annual revenue growth in fiscal 2023, supported by design wins and market demand [24][25] Management's Comments on Operating Environment and Future Outlook - Management anticipates a temporary impact on Q3 revenue due to supply chain disruptions but expects a return to growth in Q4 [24] - The company has confidence in its ability to achieve approximately 28% annual growth in fiscal 2022, despite current challenges [9][24] - Management highlighted the importance of maintaining pricing power to offset rising input costs [11][12] Other Important Information - Cash and equivalents reached a historic high of $256 million, with operating cash flow of $31.4 million generated in the quarter [16] - The company has begun shipping products from TSMC, with supply recovery underway following COVID-related disruptions [12][24] Q&A Session Summary Question: Capacity support for fiscal 2023 revenue growth - Management confirmed that commitments from foundry partners support growth projections for fiscal 2023 [29] Question: Inventory accumulation concerns - Management clarified that the increase in automotive revenue is due to higher content in feature-rich vehicles, not inventory accumulation [30][31] Question: Impact of supply chain constraints on Q3 revenue - Management indicated that specific supply chain issues in Malaysia would affect Q3 revenue but expects recovery in Q4 [34][38] Question: Gross margin outlook and pricing strategies - Management expressed confidence in achieving a gross margin target of 55% and indicated ongoing price increases to mitigate rising costs [35][53] Question: Visibility on fiscal year 2023 growth - Management highlighted strong demand in automotive and data center sectors as key drivers for growth in fiscal 2023 [41][42] Question: Inventory levels and long-term targets - Management aims for on-balance sheet inventory levels of 100 to 110 days in the long term, currently at 77 days [44][45]

Financial Data and Key Metrics Changes - Q1 revenue reached $188.1 million, up 64% year-over-year and exceeding guidance, driven by strong automotive demand and industrial strength [10][9] - GAAP gross margin hit 50%, while non-GAAP gross margin improved to over 52%, both reflecting strong revenue and manufacturing improvements [9][11] - GAAP diluted EPS rose to $0.14, and non-GAAP diluted EPS increased by 24% to $0.18, surpassing expectations [15][9] Business Line Data and Key Metrics Changes - Automotive revenue represented 71% of total revenue, reaching a record $133.5 million, up 75% year-over-year [10][11] - Industrial revenue accounted for 16% of total revenue, reaching $30.3 million, up 49% year-over-year [11] - Other business revenue declined 13% sequentially to $23.8 million, reflecting supply challenges [11][24] Market Data and Key Metrics Changes - Automotive growth outperformed global car production, indicating increased content per vehicle and a trend towards feature-rich vehicles [10][19] - Demand visibility remains strong across diverse blue-chip customers, with low inventory levels in the distribution channel [10][16] Company Strategy and Development Direction - The company is focused on expanding its R&D pipeline and leveraging design wins to drive long-term growth [17][24] - Strategic product lines, particularly in automotive and industrial sectors, are expected to continue outperforming the market [17][19] - The company is committed to enhancing its manufacturing capabilities and addressing supply constraints through partnerships with wafer suppliers [8][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory due to strong demand for differentiated technology [8][24] - Supply constraints are expected to ease in the second half of the fiscal year as additional wafer capacity comes online [9][25] - The outlook for Q2 anticipates revenue in the range of $185 million to $191 million, with automotive revenue expected to be flat [25] Other Important Information - The company reported a historic high in cash and equivalents, ending Q1 with $230 million [16] - Backlog levels are at historic highs, providing visibility into future demand [9][53] Q&A Session Summary Question: Supply constraints and wafer manufacturing partners - Management noted that the relationship with Polar has been beneficial, allowing for more wafers to service market demand [28] Question: Outlook for automotive market demand - Management sees continued strength in xEV and ADAS segments, with significant design win momentum [30] Question: Gross margin outlook with new wafer suppliers - Management indicated that TSMC's ramp-up is expected to enhance gross margins, despite some cost increases from Polar [35][38] Question: Inventory practices and supply-demand balance - Management believes that current shipments are meeting end demand, with no signs of inventory build-up among customers [45][60] Question: Design win pipeline for EVs and ADAS - Management reported strong growth in design wins for inverters and onboard chargers in the EV sector [51] Question: Backlog growth and market visibility - Management confirmed that backlog continues to grow healthily across all end markets, providing strong visibility into demand [53]

[FORWARD-LOOKING STATEMENTS](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements and the various known and unknown risks and uncertainties that could cause actual results to differ materially - This report contains forward-looking statements covered by safe harbor provisions, and actual results may differ materially due to known and unknown risks and uncertainties[7](index=7&type=chunk) - Key risks include downturns or volatility in general economic conditions (especially automotive), ability to compete effectively, manage average selling price decreases, cyclical nature of the semiconductor industry, shifts in product/customer mix, supply chain disruptions, reliance on third-party facilities/suppliers, dependence on manufacturing operations in the Philippines, reliance on distributors, indebtedness, loss of significant customers, ability to develop new products, meet quality requirements, uncertainties in design win process, changes in government trade policies, warranty/product liability claims, intellectual property protection, IT system disruptions, governmental regulation, international operations, currency exchange rate volatility, risks related to acquisitions, ability to raise capital, manage growth and retain personnel, changes in tax rates, litigation, and market opportunity estimation[7](index=7&type=chunk)[9](index=9&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements, including the Balance Sheets, Statements of Operations, Comprehensive Income, Changes in Equity, and Cash Flows, along with detailed notes, for the specified interim periods [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets, highlighting key asset, liability, and equity figures Consolidated Balance Sheet Highlights (in thousands) | Metric | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------- | :--------- | :--------- | | Total Assets | $796,887 | $747,678 | $49,209 | 6.58% | | Cash and Cash Equivalents | $221,934 | $197,214 | $24,720 | 12.53% | | Total Current Assets | $452,527 | $430,564 | $21,963 | 5.10% | | Total Liabilities | $177,508 | $160,807 | $16,701 | 10.39% | | Total Stockholders' Equity | $619,379 | $586,871 | $32,508 | 5.54% | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's unaudited condensed consolidated statements of operations, including net sales, gross profit, operating income, and net income Consolidated Statements of Operations Highlights (in thousands) | Metric | Three-Month Period Ended June 25, 2021 | Three-Month Period Ended June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------------------- | :------------------------------------- | :--------- | :--------- | | Total Net Sales | $188,142 | $115,001 | $73,141 | 63.6% | | Gross Profit | $94,160 | $55,701 | $38,459 | 69.0% | | Operating Income | $32,242 | $4,532 | $27,710 | 611.4% | | Net Income attributable to Allegro MicroSystems, Inc. | $27,669 | $4,820 | $22,849 | 474.0% | | Diluted EPS | $0.14 | $0.48 | $(0.34) | -70.8% | | Weighted Average Diluted Shares Outstanding | 191,163,074 | 10,000,000 | 181,163,074 | 1811.63% | - Diluted EPS decreased despite higher net income due to a significant increase in weighted average diluted shares outstanding following the IPO[13](index=13&type=chunk)[88](index=88&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's unaudited condensed consolidated statements of comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three-Month Period Ended June 25, 2021 | Three-Month Period Ended June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------------------- | :------------------------------------- | :--------- | :--------- | | Comprehensive Income attributable to Allegro MicroSystems, Inc. | $27,669 | $8,794 | $18,875 | 214.6% | | Foreign currency translation adjustment | $(30) | $4,280 | $(4,310) | -100.7% | [Consolidated Statements of Changes in Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) This section outlines the changes in the company's unaudited condensed consolidated equity, reflecting net income, stock-based compensation, and foreign currency adjustments Consolidated Statements of Changes in Equity Highlights (in thousands) | Metric | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------- | :--------- | :--------- | | Total Equity | $619,379 | $586,871 | $32,508 | 5.54% | | Net income | $27,669 | N/A | N/A | N/A | | Stock-based compensation, net of forfeitures | $4,831 | N/A | N/A | N/A | | Foreign currency translation adjustment | $(30) | N/A | N/A | N/A | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows, detailing cash generated from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three-Month Period Ended June 25, 2021 | Three-Month Period Ended June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------------------- | :------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $38,495 | $25,666 | $12,829 | 50.0% | | Net cash used in investing activities | $(15,346) | $(24,309) | $8,963 | -36.9% | | Net cash provided by financing activities | $0 | $0 | $0 | 0.0% | | Net increase in Cash and cash equivalents and Restricted cash | $25,757 | $88 | $25,669 | 29169.3% | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the significant accounting policies, estimates, and specific financial statement line items [1. Nature of the Business and Basis of Presentation](index=10&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) This note describes the company's core business, global operations, and the basis for preparing its consolidated financial statements - Allegro MicroSystems, Inc. is a global leader in designing, developing, and manufacturing sensing and power solutions for motion control and energy-efficient systems in automotive and industrial markets[23](index=23&type=chunk) - The company is headquartered in Manchester, New Hampshire, with a global footprint of 16 locations across four continents[23](index=23&type=chunk) - The company completed its initial public offering (IPO) on November 2, 2020[23](index=23&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies and estimates used in the preparation of the consolidated financial statements - The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported amounts[25](index=25&type=chunk) Concentrations of Credit Risk and Significant Customers (Sanken Electric Co., Ltd.) | Metric | June 25, 2021 | March 26, 2021 | | :-------------------------------- | :------------ | :------------- | | % of outstanding trade accounts receivable, net | 23.2% | 22.7% | | % of total net sales (3 months ended) | 18.8% | 20.5% | Sales from customers located outside of the United States accounted for **85.7%** of total net sales for the three months ended June 25, 2021, and **88.7%** for the three months ended June 26, 2020 - The company early adopted ASU 2016-02 (Leases) and ASU 2016-13 (Credit Losses) effective March 27, 2021, with no material impact on financial position, results of operations, or cash flows[30](index=30&type=chunk)[32](index=32&type=chunk) [3. Revenue from Contracts with Customers](index=12&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) This note details the company's revenue recognition policies and disaggregates net sales by application, product, and geographic location - Revenue is generated from the sale of magnetic sensor integrated circuits (ICs) and application-specific analog power semiconductors[34](index=34&type=chunk) Net Sales by Application (in thousands) | Application | Three-Month June 25, 2021 | Three-Month June 26, 2020 | | :---------- | :------------------------ | :------------------------ | | Automotive | $133,523 | $76,378 | | Industrial | $30,309 | $20,406 | | Other | $24,310 | $18,217 | | **Total Net Sales** | **$188,142** | **$115,001** | Net Sales by Product (in thousands) | Product | June 25, 2021 | June 26, 2020 | | :------------------------ | :------------ | :------------ | | Power integrated circuits | $66,672 | $41,599 | | Magnetic sensors | $120,642 | $73,402 | | Photonics | $828 | $0 | | **Total Net Sales** | **$188,142** | **$115,001** | Net Sales by Geographic Location (in thousands) | Region | Three-Month June 25, 2021 | Three-Month June 26, 2020 | | :---------------- | :------------------------ | :------------------------ | | Americas: United States | $26,841 | $12,996 | | Americas: Other | $6,349 | $1,928 | | EMEA: Europe | $34,751 | $17,846 | | Asia: Japan | $35,453 | $23,620 | | Asia: Greater China | $42,779 | $32,071 | | Asia: South Korea | $21,933 | $13,612 | | Asia: Other | $20,036 | $12,928 | | **Total Net Sales** | **$188,142** | **$115,001** | [4. Fair Value Measurements](index=14&type=section&id=4.%20Fair%20Value%20Measurements) This note provides information on assets and liabilities measured at fair value, categorized by valuation input levels Fair Value Measurements (in thousands) | Item | June 25, 2021 (Level 1) | June 25, 2021 (Level 3) | Total June 25, 2021 | | :-------------------------------- | :---------------------- | :---------------------- | :------------------ | | Cash equivalents: Money market fund deposits | $16,334 | $0 | $16,334 | | Restricted cash: Money market fund deposits | $7,698 | $0 | $7,698 | | Liabilities: Contingent consideration | $0 | $5,100 | $5,100 | Contingent consideration increased by **$300 thousand** from March 26, 2021 (**$4,800 thousand**) to June 25, 2021 (**$5,100 thousand**) [5. Trade Accounts Receivable, net](index=15&type=section&id=5.%20Trade%20Accounts%20Receivable%2C%20net) This note details the composition of trade accounts receivable, including provisions for credit losses and sales allowances Trade Accounts Receivable, net (in thousands) | Metric | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :------------- | :--------- | :--------- | | Trade accounts receivable, net | $77,843 | $69,500 | $8,343 | 12.0% | | Provision for expected credit losses and allowance for doubtful accounts | $(773) | $(138) | $(635) | 460.1% | | Returns and sales allowances | $(13,026) | $(15,274) | $2,248 | -14.7% | - For the three months ended June 25, 2021, **$635 thousand** was charged to costs and expenses for doubtful accounts, and **$40,582 thousand** for returns and sales allowances[47](index=47&type=chunk) [6. Inventories](index=15&type=section&id=6.%20Inventories) This note provides a breakdown of inventory components and discusses inventory provisions Inventories (in thousands) | Category | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :--------------------- | :------------ | :------------- | :--------- | :--------- | | Raw materials and supplies | $9,295 | $9,629 | $(334) | -3.5% | | Work in process | $44,739 | $50,095 | $(5,356) | -10.7% | | Finished goods | $28,322 | $27,774 | $548 | 2.0% | | **Total** | **$82,356** | **$87,498** | **$(5,142)** | **-5.9%** | - Inventory provisions totaled **$3,189 thousand** for the three months ended June 25, 2021, primarily due to impairment charges for inventory related to a discontinued Voxtel product line[48](index=48&type=chunk) [7. Assets Held for Sale](index=15&type=section&id=7.%20Assets%20Held%20for%20Sale) This note describes assets classified as held for sale, primarily related to the Thailand-based facility - Assets held for sale amounted to **$25,309 thousand** as of June 25, 2021, related to the Thailand-based facility (AMTC Facility) after production was transferred to the Manila, Philippines facility[12](index=12&type=chunk)[49](index=49&type=chunk) - The sale of the AMTC Facility is expected to close within the calendar year, subject to government approvals[49](index=49&type=chunk) [8. Property, Plant and Equipment, net](index=16&type=section&id=8.%20Property%2C%20Plant%20and%20Equipment%2C%20net) This note provides a breakdown of property, plant, and equipment, net, and associated depreciation expense, categorized by physical location Property, Plant and Equipment, net (in thousands) | Category | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :------------- | :--------- | :--------- | | Total Property, Plant and Equipment, net | $196,993 | $192,393 | $4,600 | 2.4% | | Total Depreciation Expense (3 months ended) | $11,120 | N/A | N/A | N/A | Long-Lived Assets by Physical Location (in thousands) | Location | June 25, 2021 | March 26, 2021 | | :------------- | :------------ | :------------- | | Philippines | $153,282 | $148,374 | | United States | $36,726 | $36,529 | | Thailand | $0 | $1,698 | | Other | $7,331 | $7,190 | | **Total** | **$197,339** | **$193,791** | [9. Goodwill and Intangible Assets](index=16&type=section&id=9.%20Goodwill%20and%20Intangible%20Assets) This note details the company's goodwill and intangible assets, including their carrying amounts and amortization expense Goodwill (in thousands) | Metric | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :--------------------- | :------------ | :------------- | :--------- | :--------- | | Total Goodwill | $20,118 | $20,106 | $12 | 0.1% | Goodwill increased by **$12 thousand** due to currency translation Intangible Assets, net (June 25, 2021, in thousands) | Description | Net Carrying Amount | Weighted-Average Lives | | :------------------------------------------ | :------------------ | :--------------------- | | Patents | $20,690 | 10 years | | Process technology | $12,176 | 12 years | | Indefinite-lived and legacy process technology | $2,400 | N/A | | **Total** | **$36,301** | | Intangible assets amortization expense was **$1,019 thousand** for the three months ended June 25, 2021, up from **$713 thousand** in the prior year period [10. Accrued Expenses and Other Current Liabilities](index=17&type=section&id=10.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note provides a detailed breakdown of accrued expenses and other current liabilities, including management incentives, salaries, and income taxes Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :------------- | :--------- | :--------- | | Total Accrued Expenses and Other Current Liabilities | $76,771 | $78,932 | $(2,161) | -2.7% | | Accrued management incentives | $8,013 | $21,538 | $(13,525) | -62.8% | | Accrued salaries and wages | $22,282 | $15,060 | $7,222 | 47.9% | | Accrued income taxes | $3,711 | $514 | $3,197 | 622.0% | [11. Leases](index=18&type=section&id=11.%20Leases) This note describes the company's operating lease agreements for real estate, equipment, and vehicles, and related liabilities - The company leases real estate, equipment, and vehicles under operating lease agreements with initial terms ranging from 1 to 11 years, and has no finance leases[63](index=63&type=chunk) Operating Lease Liabilities (June 25, 2021, in thousands) | Metric | Amount | | :------------------------------------------ | :----- | | Total undiscounted lease payments | $20,295 | | Total operating lease liabilities (present value) | $17,694 | Weighted-average remaining lease term is **5.97 years**, and the weighted-average discount rate is **4.6%** [12. Debt and Other Borrowings](index=19&type=section&id=12.%20Debt%20and%20Other%20Borrowings) This note outlines the company's debt obligations, including its senior secured Term Loan Facility and Revolving Credit Facility - The company has a **$325 million** senior secured Term Loan Facility due in 2027 and a **$50 million** senior secured Revolving Credit Facility expiring in 2023[69](index=69&type=chunk) - As of June 25, 2021, **$25 million** was outstanding under the Term Loan Facility, bearing an interest rate of **4.25%**, and no borrowings were outstanding on the Revolving Credit Facility[69](index=69&type=chunk) - Two Philippine peso lines of credit (approximately **$1.2 million** and **$1.5 million**) had no outstanding borrowings as of June 25, 2021[69](index=69&type=chunk) [13. Other Long-Term Liabilities](index=19&type=section&id=13.%20Other%20Long-Term%20Liabilities) This note details other long-term liabilities, including accrued retirement, contingent consideration, and uncertain tax positions Other Long-Term Liabilities (in thousands) | Category | June 25, 2021 | March 26, 2021 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :------------- | :--------- | :--------- | | Total Other Long-Term Liabilities | $19,244 | $19,133 | $111 | 0.6% | | Accrued retirement | $10,810 | $10,656 | $154 | 1.4% | | Accrued contingent consideration | $5,100 | $4,800 | $300 | 6.3% | | Provision for uncertain tax positions (net) | $2,791 | $2,774 | $17 | 0.6% | [14. Retirement Plans](index=19&type=section&id=14.%20Retirement%20Plans) This note provides information on the company's retirement plans, including net periodic pension expense and plan assets Net Periodic Pension Expense (Non-U.S. Defined Benefit Plan, in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Net periodic pension expense | $523 | $380 | $143 | 37.6% | Plan Assets of Non-U.S. Defined Benefit Plan (June 25, 2021, in thousands) | Category | Total | | :-------------------------- | :---- | | Government securities | $1,832 | | Unit investment trust fund | $1,079 | | Loans | $633 | | Bonds | $983 | | Stocks and other investments | $2,568 | | **Total** | **$7,095** | - The company contributed **$353 thousand** to its non-U.S. pension plan for the three months ended June 25, 2021, and expects to contribute **$943 thousand** in fiscal year 2021[79](index=79&type=chunk) - Matching contributions to the 401(k) plan totaled **$1,256 thousand** for the three months ended June 25, 2021, and contributions to the AME Plan totaled **$218 thousand** for the same period[81](index=81&type=chunk) [15. Commitments and Contingencies](index=21&type=section&id=15.%20Commitments%20and%20Contingencies) This note discloses the company's commitments and contingencies, including self-insurance liabilities and potential intellectual property indemnifications - The accrued liability related to self-insurance for employee health programs was **$1,585 thousand** as of June 25, 2021[84](index=84&type=chunk) - The company is not currently party to any material legal proceedings and has no environmental accruals established[85](index=85&type=chunk)[87](index=87&type=chunk) - The company indemnifies certain customers for potential intellectual property infringement, but has not incurred any costs to date[86](index=86&type=chunk) [16. Net Income per Share](index=22&type=section&id=16.%20Net%20Income%20per%20Share) This note presents the basic and diluted net income per share, along with the weighted average shares outstanding Net Income per Share (Attributable to Allegro MicroSystems, Inc.) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | | :------------------------------------------ | :------------------------ | :------------------------ | | Basic EPS | $0.15 | $0.48 | | Diluted EPS | $0.14 | $0.48 | | Basic Weighted Average Shares Outstanding | 189,585,381 | 10,000,000 | | Diluted Weighted Average Shares Outstanding | 191,163,074 | 10,000,000 | - The significant increase in weighted average shares outstanding following the IPO on November 2, 2020, led to a decrease in EPS despite higher net income[88](index=88&type=chunk)[91](index=91&type=chunk) [17. Common Stock and Stock-Based Compensation](index=23&type=section&id=17.%20Common%20Stock%20and%20Stock-Based%20Compensation) This note details common stock activity and the accounting for stock-based compensation expense - The company granted **894,876** Restricted Share Units (RSUs) to employees with an estimated grant date fair value of **$24.79** during the three months ended June 25, 2021[93](index=93&type=chunk) - Stock-based compensation expense related to non-vested awards not yet recorded was **$31,320 thousand**, expected to be recognized over a weighted-average of **1.78 years**[93](index=93&type=chunk) Total Stock-Based Compensation Expense (in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Total stock-based compensation | $4,831 | $445 | $4,386 | 985.6% | [18. Income Taxes](index=24&type=section&id=18.%20Income%20Taxes) This note provides information on the company's income tax provision and effective tax rate, explaining the factors influencing fluctuations Income Tax Provision (in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Income tax provision | $4,263 | $528 | $3,735 | 707.4% | | Effective tax rate | 13.3% | 9.8% | 3.5% | 35.7% | - The fluctuation in the effective income tax rate is primarily due to differences in U.S. taxable income, estimated FDII benefits, research credits, non-deductible stock-based compensation charges, and discrete tax items[97](index=97&type=chunk) [19. Related Party Transactions](index=24&type=section&id=19.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including sales to Sanken and purchases from PSL Related Party Transactions (in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Net sales to Sanken | $35,453 | $23,620 | $11,833 | 50.1% | | Purchases of various products from PSL | $13,380 | $11,923 | $1,457 | 12.2% | Trade accounts receivables from Sanken totaled **$23,545 thousand** as of June 25, 2021 - The company has a sublease agreement with Sanken for office space in Japan, with payments of approximately **$56 thousand** for the three months ended June 25, 2021[101](index=101&type=chunk) - Payments to Reza Kazerounian (board executive advisor) under a consulting agreement totaled **$56 thousand** for the three months ended June 25, 2021[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, including a detailed analysis of operating results, growth strategies, recent initiatives, and key factors affecting the business, along with non-GAAP financial measures and liquidity assessment [Overview](index=27&type=section&id=Overview) This overview introduces Allegro MicroSystems as a global leader in sensor and power ICs for automotive and industrial markets, highlighting key financial performance and recent IPO - Allegro MicroSystems is a leading global designer, developer, manufacturer, and marketer of sensor ICs and application-specific analog power ICs for automotive and industrial markets, holding the number one market share position in magnetic sensor IC solutions worldwide[107](index=107&type=chunk) Key Financial Highlights (in millions) | Metric | Three Months Ended June 25, 2021 | Three Months Ended June 26, 2020 | | :---------------- | :------------------------------- | :------------------------------- | | Total Net Sales | $188.1 | $115.0 | | Net Income | $27.7 | $4.9 | | Adjusted EBITDA | $53.8 | $26.2 | - The company completed its initial public offering (IPO) on November 2, 2020, raising approximately **$321.4 million** in net proceeds[107](index=107&type=chunk) [Our Growth Strategies and Outlook](index=27&type=section&id=Our%20Growth%20Strategies%20and%20Outlook) This section outlines the company's strategic initiatives focused on R&D investment, automotive-first product development, gross margin improvement, and selective acquisitions for growth - Invest in market-aligned research and development (R&D) focused on targeted portfolio expansion in areas like electrified vehicles (xEVs), advanced driver assistance systems (ADAS), Industry 4.0, data centers, and green energy applications[108](index=108&type=chunk) - Emphasize an 'automotive first' philosophy for product development to meet stringent automotive operating voltages, temperature ranges, and safety/reliability standards, which also benefits industrial customers[110](index=110&type=chunk) - Improve gross margins through product innovation (new products with value-added features, higher ASPs) and cost optimization (fabless manufacturing model, strategic foundry suppliers, cost-effective packaging)[110](index=110&type=chunk) - Pursue selective acquisitions and other strategic transactions to enter new applications, add intellectual property, and accelerate growth, such as the acquisition of Voxtel for LiDAR technology[110](index=110&type=chunk) [Recent Initiatives to Improve Results of Operations](index=29&type=section&id=Recent%20Initiatives%20to%20Improve%20Results%20of%20Operations) This section highlights recent strategic actions, including the acquisition of Voxtel and the consolidation of manufacturing facilities, aimed at enhancing operational results - Acquired Voxtel, Inc. on August 28, 2020, a technology company specializing in components for eye-safe LiDAR used in ADAS, autonomous vehicles, and industrial automation[113](index=113&type=chunk) - Completed the consolidation of assembly and test facilities into the Philippines (AMPI Facility) by closing the Thailand manufacturing facility (AMTC Facility) in March 2021, expecting a significant reduction in cost of goods sold[113](index=113&type=chunk) [Other Key Factors and Trends Affecting our Operating Results](index=29&type=section&id=Other%20Key%20Factors%20and%20Trends%20Affecting%20our%20Operating%20Results) This section discusses critical external and internal factors influencing the company's operating results, including design wins, market conditions, gross margin drivers, and industry cyclicality - Future revenue is highly dependent on continued success in winning design mandates from customers, with a typical lead time of two to four years from design initiation to revenue generation[115](index=115&type=chunk) - Demand for products is highly dependent on market conditions in end markets, which are generally subject to seasonality, cyclicality, and competitive conditions[116](index=116&type=chunk) - Gross margin is affected by average selling prices (ASPs), product mix, material costs, yields, and manufacturing costs; ASPs are expected to decline over time[117](index=117&type=chunk)[119](index=119&type=chunk) - The semiconductor industry is highly cyclical, characterized by rapid technological change, product obsolescence, competitive pricing pressures, and fluctuations in product supply and demand[120](index=120&type=chunk) [Components of Our Results of Operations](index=30&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section defines and explains the key components of the company's statements of operations, including net sales, cost of goods sold, R&D, SG&A, and income tax provision - Total net sales are derived from product sales to direct customers and distributors globally, recognized when control of products is transferred[121](index=121&type=chunk) - Cost of goods sold includes raw materials, manufacturing, personnel, depreciation, and logistics costs; expected to decrease due to AMTC closure and PSL distribution business transfer[122](index=122&type=chunk) - Research and development (R&D) expenses are primarily for personnel, wafer/mask development, and testing, and are expected to increase with new product offerings[125](index=125&type=chunk) - Selling, General and Administrative (SG&A) expenses include personnel, sales commissions, and professional fees; anticipated to increase due to sales force expansion and public company costs[126](index=126&type=chunk) - Income tax provision fluctuates based on the mix of U.S. and foreign income, discrete transactions, foreign derived intangible income deduction (FDII) benefits, research credits, and global intangible low-tax income (GILTI)[130](index=130&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance for the period, examining changes in sales, costs, and profitability metrics [Total net sales](index=33&type=section&id=Total%20net%20sales) Total net sales increased significantly due to economic recovery and heightened demand across various applications - Total net sales increased by **$73.1 million**, or **63.6%**, to **$188.1 million** for the three months ended June 25, 2021, from **$115.0 million** in the prior year period[137](index=137&type=chunk) - This increase was primarily due to continued economic recovery and increased demand for advanced driver assistance systems, data center, industrial automation, gaming, and other consumer applications[137](index=137&type=chunk) [Sales Trends by Market](index=33&type=section&id=Sales%20Trends%20by%20Market) This section analyzes net sales performance across automotive, industrial, and other market segments Net Sales by Market (in thousands) | Market | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :--------- | :------------------------ | :------------------------ | :--------- | :--------- | | Automotive | $133,523 | $76,378 | $57,145 | 74.8% | | Industrial | $30,309 | $20,406 | $9,903 | 48.5% | | Other | $24,310 | $18,217 | $6,093 | 33.4% | | **Total** | **$188,142** | **$115,001** | **$73,141** | **63.6%** | - Automotive net sales increased due to customers' increased vehicle production, higher content in xEV, and strong recoveries in ADAS, comfort and convenience, and internal combustion engine (ICE) applications[140](index=140&type=chunk) - Industrial and other net sales improved due to continued demand in data center applications, gaming, grid infrastructure (including renewable energy and EV charging), and COVID-related demand for printers and peripherals[140](index=140&type=chunk) [Sales Trends by Product](index=34&type=section&id=Sales%20Trends%20by%20Product) This section examines net sales performance categorized by product type, including power integrated circuits, magnetic sensors, and photonics Net Sales by Product (in thousands) | Product | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Power integrated circuits | $66,672 | $41,599 | $25,073 | 60.3% | | Magnetic sensors | $120,642 | $73,402 | $47,240 | 64.4% | | Photonics | $828 | $0 | $828 | N/A | | **Total** | **$188,142** | **$115,001** | **$73,141** | **63.6%** | [Sales Trends by Geographic Location](index=34&type=section&id=Sales%20Trends%20by%20Geographic%20Location) This section analyzes net sales performance across various geographic regions, highlighting growth drivers Net Sales by Geographic Location (in thousands) | Region | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :---------------- | :------------------------ | :------------------------ | :--------- | :--------- | | Americas: United States | $26,841 | $12,996 | $13,845 | 106.5% | | EMEA: Europe | $34,751 | $17,846 | $16,905 | 94.7% | | Asia: Japan | $35,453 | $23,620 | $11,833 | 50.1% | | Asia: Greater China | $42,779 | $32,071 | $10,708 | 33.4% | | **Total** | **$188,142** | **$115,001** | **$73,141** | **63.6%** | - Net sales increased across all geographic locations due to economic expansion and market share gains, with Europe and the United States showing the highest percentage growth[142](index=142&type=chunk)[143](index=143&type=chunk) [Cost of goods sold, gross profit and gross margin](index=35&type=section&id=Cost%20of%20goods%20sold%2C%20gross%20profit%20and%20gross%20margin) This section analyzes changes in cost of goods sold, gross profit, and gross margin, identifying key drivers - Cost of goods sold increased by **$34.7 million**, or **58.5%**, to **$94.0 million**, primarily due to higher production volume and **$2.8 million** in expenses related to the discontinuation of a Voxtel product line[146](index=146&type=chunk) - Gross profit increased by **$38.5 million**, or **69.0%**, to **$94.2 million**, driven by the operational increase in net sales[146](index=146&type=chunk) Gross Margin | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | | :---------------- | :------------------------ | :------------------------ | | Gross Margin | 50.0% | 48.4% | [R&D expenses](index=35&type=section&id=R%26D%20expenses) This section analyzes changes in research and development expenses, highlighting key drivers such as personnel costs - R&D expenses increased by **$5.2 million**, or **21.2%**, to **$29.6 million**, primarily due to a **$4.4 million** increase in personnel costs and general operating expenses, and **$0.2 million** in stock-based compensation[147](index=147&type=chunk) R&D Expenses as % of Total Net Sales | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | | :---------------- | :------------------------ | :------------------------ | | R&D Expenses as % of Total Net Sales | 15.7% | 21.1% | [SG&A expenses](index=35&type=section&id=SG%26A%20expenses) This section analyzes changes in selling, general, and administrative expenses, identifying key drivers such as stock-based compensation and personnel costs - SG&A expenses increased by **$5.3 million**, or **19.7%**, to **$32.1 million**, driven by increases in stock-based compensation (**$3.2 million**), contract labor (**$3.2 million**), and personnel costs (**$2.5 million**), partially offset by lower facilities costs and professional fees[148](index=148&type=chunk) SG&A Expenses as % of Total Net Sales | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | | :---------------- | :------------------------ | :------------------------ | | SG&A Expenses as % of Total Net Sales | 17.0% | 23.3% | [Interest (expense) income, net](index=35&type=section&id=Interest%20%28expense%29%20income%2C%20net) This section analyzes the company's net interest expense or income, primarily influenced by debt obligations - The company recorded net interest expense of **$0.3 million** for the three months ended June 25, 2021, compared to net interest income of **$0.3 million** in the prior year, primarily due to mandatory interest payments on the Term Loan Facility[149](index=149&type=chunk) [Foreign currency transaction (loss) gain](index=35&type=section&id=Foreign%20currency%20transaction%20%28loss%29%20gain) This section analyzes the company's foreign currency transaction gains or losses, primarily from international operations - A foreign currency transaction loss of **$0.3 million** was recorded for the three months ended June 25, 2021, primarily due to losses from the UK location, a reversal from a gain of **$0.1 million** in the prior year[150](index=150&type=chunk) [Income in earnings of equity investment](index=36&type=section&id=Income%20in%20earnings%20of%20equity%20investment) This section reports the income recognized from the company's equity investment in PSL - Income in earnings of equity investment reflected a **$0.3 million** gain for the three months ended June 25, 2021, representing earnings on the **30%** investment in PSL[152](index=152&type=chunk) [Other, net](index=36&type=section&id=Other%2C%20net) This section reports miscellaneous gains or losses not categorized elsewhere - Other, net, decreased by **$0.2 million** to less than **$0.1 million** in miscellaneous gains for the three months ended June 25, 2021, from **$0.2 million** in the prior year period[153](index=153&type=chunk) [Income tax provision](index=36&type=section&id=Income%20tax%20provision) This section analyzes the income tax expense and effective tax rate, explaining the factors influencing their fluctuations - Income tax expense was **$4.3 million**, with an effective income tax rate of **13.3%**, for the three months ended June 25, 2021, compared to **$0.5 million** and **9.8%** in the prior year period[154](index=154&type=chunk) - The fluctuation in the effective income tax rate is primarily due to differences in U.S. taxable income, estimated FDII benefits, research credits, non-deductible stock-based compensation charges, and discrete tax items[154](index=154&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures used by management to assess performance [Non-GAAP Gross Profit and Non-GAAP Gross Margin](index=37&type=section&id=Non-GAAP%20Gross%20Profit%20and%20Non-GAAP%20Gross%20Margin) This section presents non-GAAP gross profit and gross margin, adjusted for specific non-recurring or non-cash items - Non-GAAP Gross Profit and Gross Margin exclude items such as Voxtel inventory impairment, PSL and Sanken distribution agreement costs, stock-based compensation, AMTC Facility consolidation costs, acquisition-related intangible asset amortization, and COVID-19 related expenses[158](index=158&type=chunk) Non-GAAP Gross Profit and Gross Margin (in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Non-GAAP Gross Profit | $98,276 | $59,725 | $38,551 | 64.5% | | Non-GAAP Gross Margin | 52.2% | 51.9% | 0.3% | 0.6% | [Non-GAAP Operating Expenses, non-GAAP Operating Income and non-GAAP Operating Margin](index=37&type=section&id=Non-GAAP%20Operating%20Expenses%2C%20non-GAAP%20Operating%20Income%20and%20non-GAAP%20Operating%20Margin) This section presents non-GAAP operating expenses, income, and margin, adjusted for specific non-recurring or non-cash items - Non-GAAP Operating Expenses and Income exclude items like stock-based compensation, AMTC facility costs, acquisition-related amortization, COVID-19 expenses, transaction fees, severance, impairment of long-lived assets, and changes in contingent consideration[159](index=159&type=chunk)[160](index=160&type=chunk) Non-GAAP Operating Income and Margin (in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Non-GAAP Operating Income | $41,894 | $14,519 | $27,375 | 188.5% | | Non-GAAP Operating Margin | 22.3% | 12.6% | 9.7% | 77.0% | [EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin](index=38&type=section&id=EBITDA%2C%20Adjusted%20EBITDA%2C%20and%20Adjusted%20EBITDA%20Margin) This section defines and reconciles EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, excluding specific non-core items - Adjusted EBITDA is calculated by excluding non-core loss/gain on sale of equipment, foreign currency translation loss/gain, income in earnings of equity investment, and other non-GAAP adjustments from EBITDA[161](index=161&type=chunk) Adjusted EBITDA (in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Adjusted EBITDA | $53,777 | $26,213 | $27,564 | 105.2% | [Non-GAAP Profit before Tax, Non-GAAP Net Income, and Non-GAAP Basic and Diluted Earnings Per Share](index=38&type=section&id=Non-GAAP%20Profit%20before%20Tax%2C%20Non-GAAP%20Net%20Income%2C%20and%20Non-GAAP%20Basic%20and%20Diluted%20Earnings%20Per%20Share) This section presents non-GAAP profit before tax, net income, and basic and diluted EPS, adjusted for various non-GAAP items and their tax effects - Non-GAAP Net Income and EPS are calculated by adjusting GAAP Net Income for various non-GAAP items and their tax effects[161](index=161&type=chunk) Non-GAAP Net Income and EPS | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Non-GAAP Net Income (in thousands) | $35,208 | $12,651 | $22,557 | 178.3% | | Non-GAAP Basic EPS | $0.19 | $1.27 | $(1.08) | -85.0% | | Non-GAAP Diluted EPS | $0.18 | $1.27 | $(1.09) | -85.8% | Non-GAAP EPS decreased despite higher non-GAAP net income due to the significant increase in weighted average common shares outstanding post-IPO [Non-GAAP Provision for Income Tax](index=38&type=section&id=Non-GAAP%20Provision%20for%20Income%20Tax) This section details the non-GAAP provision for income tax, adjusted for the tax effects of non-GAAP items and discrete tax adjustments - Non-GAAP Provision for Income Tax is calculated by adding back the tax effect of adjustments to GAAP results and eliminating discrete tax adjustments from GAAP Income Tax Provision[162](index=162&type=chunk) Non-GAAP Provision for Income Taxes | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | Change ($) | Change (%) | | :------------------------------------------ | :------------------------ | :------------------------ | :--------- | :--------- | | Non-GAAP Provision for Income Taxes (in thousands) | $6,354 | $2,336 | $4,018 | 172.0% | | Non-GAAP effective tax rate | 15.3% | 15.6% | -0.3% | -1.9% | [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity position, cash flow activities, and debt obligations, outlining how it plans to meet its financial commitments - As of June 25, 2021, the company had **$221.9 million** in cash and cash equivalents and **$333.5 million** in working capital, indicating a strong liquidity position[177](index=177&type=chunk) - Primary liquidity requirements include working capital, capital expenditures, principal and interest payments on debt, and general corporate needs, which are expected to be met by existing cash, IPO proceeds, and access to capital markets for at least the next twelve months[177](index=177&type=chunk)[179](index=179&type=chunk) [Cash Flows from Operating, Investing and Financing Activities](index=46&type=section&id=Cash%20Flows%20from%20Operating%2C%20Investing%20and%20Financing%20Activities) This section summarizes the company's cash flows from operating, investing, and financing activities for the period Summary of Cash Flows (in thousands) | Metric | Three-Month June 25, 2021 | Three-Month June 26, 2020 | | :------------------------------------------ | :------------------------ | :------------------------ | | Net cash provided by operating activities | $38,495 | $25,666 | | Net cash used in investing activities | $(15,346) | $(24,309) | | Net cash provided by financing activities | $0 | $0 | | Effect of exchange rate changes on cash and cash equivalents | $2,608 | $(1,269) | | Net increase in Cash and cash equivalents and restricted cash | $25,757 | $88 | [Operating Activities](index=46&type=section&id=Operating%20Activities) This section details the net cash provided by operating activities, driven by net income and noncash charges, offset by changes in operating assets and liabilities - Net cash provided by operating activities was **$38.5 million** for the three months ended June 25, 2021, driven by net income of **$27.7 million** and noncash charges of **$17.5 million**, partially offset by a net decrease in operating assets and liabilities of **$6.7 million**[181](index=181&type=chunk) - Changes in operating assets and liabilities included a **$10.0 million** increase in trade accounts receivable, a **$2.4 million** decrease in accrued expenses, and a **$3.0 million** decrease in trade accounts payable, partially offset by a **$5.1 million** decrease in inventories[181](index=181&type=chunk) [Investing Activities](index=47&type=section&id=Investing%20Activities) This section details the net cash used in investing activities, primarily for purchases of property, plant, and equipment - Net cash used in investing activities was **$15.3 million** for the three months ended June 25, 2021, consisting of purchases of property, plant, and equipment[184](index=184&type=chunk) - In the prior year period, net cash used was **$24.3 million**, which included **$8.0 million** of property, plant, and equipment purchases and **$16.3 million** of cash removed due to the PSL Divestiture[184](index=184&type=chunk) [Financing Activities](index=47&type=section&id=Financing%20Activities) This section reports the net cash provided by or used in financing activities for the period - Net cash provided by financing activities was **$0** for both the three months ended June 25, 2021, and June 26, 2020[185](index=185&type=chunk) [Debt Obligations](index=47&type=section&id=Debt%20Obligations) This section outlines the company's outstanding debt under its Senior Secured Credit Facilities - As of June 25, 2021, the company had **$25.0 million** in aggregate principal amount of debt outstanding under its Senior Secured Credit Facilities, which include a **$325.0 million** Term Loan Facility and a **$50.0 million** Revolving Credit Facility[186](index=186&type=chunk) [Description of Credit Facilities](index=47&type=section&id=Description%20of%20Credit%20Facilities) This section describes the terms and conditions of the company's Term Loan Facility and Revolving Credit Facility - The Term Loan Facility bears interest at LIBOR plus **3.75% to 4.00%** (**4.25%** at June 25, 2021) and is secured by **100%** of the stock of domestic subsidiaries and portions of foreign subsidiaries, and substantially all other property and assets[187](index=187&type=chunk)[189](index=189&type=chunk) - The Revolving Credit Facility bears interest at various rates (e.g., Base Rate plus **1.5%**) and includes a non-refundable commitment fee of **0.50%** per year on unused commitments[190](index=190&type=chunk) [AMPI Credit Facilities](index=48&type=section&id=AMPI%20Credit%20Facilities) This section details the credit facilities available to Allegro MicroSystems Philippines, Inc. (AMPI) - Allegro MicroSystems Philippines, Inc. (AMPI) has two lines of credit with maximum borrowing capacities of **60.0 million Philippine pesos** (approx. **$1.2 million**) and **75.0 million Philippine pesos** (approx. **$1.5 million**), with no outstanding borrowings as of June 25, 2021[190](index=190&type=chunk) [Recent Accounting Pronouncements](index=48&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the company's evaluation of recently issued accounting pronouncements and their potential impact - The company is currently evaluating the impact of ASU No. 2021-04 (Earnings Per Share, Debt Modifications, Stock Compensation, and Derivatives) on its consolidated financial statements and related disclosures[33](index=33&type=chunk)[191](index=191&type=chunk) [Critical Accounting Policies and Estimates](index=48&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no material changes to the company's critical accounting policies and estimates - There have been no material changes in the company's critical accounting policies and estimates since March 26, 2021[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's exposures to market risk, including interest rate, foreign currency exchange, and inflation risks, since March 26, 2021 - No material changes in exposures to market risk (interest rate, foreign currency exchange, and inflation risks) since March 26, 2021[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 25, 2021, with no material changes in internal control over financial reporting during the period - The company's disclosure controls and procedures were effective at the reasonable assurance level as of June 25, 2021[196](index=196&type=chunk) - There was no change in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting during the period[197](index=197&type=chunk) [PART II. OTHER INFORMATION](index=50&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings and is unaware of any pending or threatened legal actions that could have a material adverse effect on its business, operating results, cash flows, or financial condition - The company is not currently party to any material legal proceedings[199](index=199&type=chunk) - There are no pending or threatened legal proceedings against the company that are believed to have a material adverse effect on its business, operating results, cash flows, or financial condition[199](index=199&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2021 Annual Report - No material changes to the 'Risk Factors' disclosed in Item 1A of the 2021 Annual Report[200](index=200&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[200](index=200&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - None[200](index=200&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[200](index=200&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - None[200](index=200&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report, including certifications from principal officers, an addendum to a stockholders agreement, and various Inline XBRL documents - Includes certifications of Principal Executive Officer and Principal Financial Officer (Exhibits **31.1**, **31.2**, **32.1**, **32.2**)[202](index=202&type=chunk) - Includes an Addendum to Stockholders Agreement (Exhibit **10.1**)[202](index=202&type=chunk) - Includes Inline XBRL Instance Document and Taxonomy Extension Documents (Exhibits **101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**, **104**)[202](index=202&type=chunk) [SIGNATURES](index=52&type=section&id=SIGNATURES) This section provides the official signatures of the company's principal executive and financial officers, certifying the report - The report was signed by Ravi Vig, President and Chief Executive Officer, and Paul V. Walsh, Jr., Senior Vice President, Chief Financial Officer and Treasurer, on July 30, 2021[204](index=204&type=chunk)

Allegro MicroSystems, Inc. (NASDAQ:ALGM) Q4 2021 Earnings Conference Call May 5, 2021 8:30 AM ET Company Participants Katie Blye - Senior Director of Investor Relations Ravi Vig - President and Chief Executive Officer Paul Walsh - Chief Financial Officer Conference Call Participants Gary Mobley - Wells Fargo Securities Michelle Waller - Needham & Company Blayne Curtis - Barclays John Pitzer - Credit Suisse Srini Pajjuri - SMBC Nikko Securities Mark Lipacis - Jefferies Vijay Rakesh - Mizuho Securities ...