Company Overview - The company ships approximately 1.5 billion units annually to over 10,000 customers worldwide, with a portfolio of more than 1,500 products[24]. - The company’s product portfolio includes over 1,500 products, focusing on high-performance analog mixed-signal semiconductors, including magnetic sensor ICs and power ICs[65]. - The company employed approximately 4,060 full-time employees as of March 28, 2025, with 750 in research and development and 2,800 in operations and quality[100]. - Approximately 2,300 employees hold university and graduate-level degrees, with 990 located outside of factory locations, indicating a highly educated workforce[102]. - The company has a global footprint with 29 locations across four continents, with its primary internal assembly and testing facility located in Manila, Philippines, covering approximately 434,000 square feet[200]. Market Position and Strategy - The company is a leading provider of sensing and power solutions for vehicle electrification, with a focus on improving efficiency to comply with emissions regulations[31]. - The company aims to significantly expand its Served Available Market (SAM) by increasing semiconductor content per vehicle, particularly in the automotive sector, which is expected to see a meaningful increase due to technology shifts[51]. - The company plans to grow its magnetic sensor market share through the release of more products based on XtremeSense TMR technology[48]. - The company is leveraging its power IC products to increase total content within automotive and industrial applications, focusing on electrification and energy efficiency[49]. - The company is targeting adjacent growth markets by applying its intellectual property and technology, particularly in automotive applications and industrial clean energy[61]. Financial Performance - The company achieved approximately 50.7% of its net sales through distributors in fiscal year 2025, down from 52.9% in 2024 and 39.3% in 2023[76]. - The company has experienced a downturn in market demand over the past several quarters, primarily due to softening demand from customers and excess inventory digestion[98]. - The company’s net sales have historically been higher in the second half of the fiscal year compared to the first half, influenced by market conditions and product introductions[97]. - The average selling prices (ASPs) of products are generally declining, which may adversely affect gross margins and necessitate cost reductions[133]. - The company has experienced fluctuations in quarterly net sales and operating results, making accurate forecasting challenging[136]. Research and Development - As of March 28, 2025, the company had approximately 750 employees dedicated to research and development, with a nearly doubled intellectual property portfolio over the last three years[83]. - The company is investing in research and development focused on product design and automotive-grade technologies to maintain a competitive advantage in high-growth areas such as e-Mobility and clean energy[56]. - The company owns 1,942 active patents, including 966 U.S. patents, with expiration dates between 2025 and 2043, and has 487 pending patent applications[92]. Sustainability and ESG Efforts - The company is committed to sustainability efforts, focusing on energy efficiency and reducing emissions through its product portfolio while maintaining social responsibility in its operations[64]. - The company has implemented several energy, water, and waste reduction projects across its facilities as part of its ESG strategy[73]. - The company is a member of the Responsible Business Alliance, ensuring compliance with labor, human rights, and environmental standards among its suppliers[74]. Competition and Market Risks - The company faces intense competition and must continuously innovate to maintain its market position against competitors with greater resources[96]. - The company is exposed to risks from geopolitical changes, particularly in China-Taiwan relations, which could disrupt operations at wafer fabrication facilities[126]. - The cyclical nature of the semiconductor industry may limit the company's ability to maintain or improve net sales and profitability, with current downturns attributed to weak demand and excess inventory[130]. - The company faces risks from potential disruptions in the automotive market, which could negatively impact future growth and demand for products[131]. Employee Engagement and Management - The company’s engagement score for fiscal year 2025 is on par with industry benchmarks, indicating high employee satisfaction and pride in the organization[107]. - Employee turnover rates are closely monitored, with efforts to decrease voluntary turnover and increase retention through competitive compensation and development opportunities[106]. - The company has implemented key recruitment and retention strategies to attract top talent, including partnerships with colleges and universities[105]. Cybersecurity and IT Risks - The company has implemented a cybersecurity risk management program integrated into its overall enterprise risk management program, with key elements including risk assessments and a formal IT risk register[193]. - The company's cybersecurity governance includes oversight by the Audit Committee, which receives periodic reports on cybersecurity risks and incidents[195]. - The Chief Digital and Information Officer, with over 30 years of experience in information technology, is responsible for the overall cybersecurity risk management program[197]. Financial Liabilities and Capital Management - The company has $345.0 million in aggregate principal amount of debt outstanding as of March 28, 2025, with an additional $256.0 million of borrowings available under its revolving credit facility[167]. - The company may seek to sell additional equity or debt securities if capital resources are insufficient, leading to potential dilution for stockholders[166]. - The company must maintain a Total Net Leverage Ratio of no more than 4.00 to 1.00, which may limit its operational flexibility[168]. Future Outlook and Opportunities - The company anticipates growth in the automotive and industrial sectors, particularly with the increasing adoption of HEVs and EVs, which are expected to have higher sensor and power product content[146]. - The company is exploring new market opportunities in artificial intelligence, medical devices, and robotics, aiming to expand its addressable markets[149]. - End-user demand for HEVs, EVs, and green energy products is often dependent on government incentives, and any reduction or elimination of these incentives could negatively affect demand for the company's products[161].

Core Insights - Allegro MicroSystems, Inc. (ALGM) shows potential as a strong investment due to significant revisions in earnings estimates, indicating an improving earnings outlook [1][9] - Analysts exhibit growing optimism regarding Allegro's earnings prospects, which is expected to positively influence its stock price [2] - The Zacks Rank system, which evaluates stocks based on earnings estimate revisions, indicates that Allegro MicroSystems has a favorable ranking, suggesting strong future performance [3][8] Current-Quarter Estimate Revisions - The earnings estimate for the current quarter is $0.08 per share, reflecting a substantial increase of +166.67% compared to the previous year [5] - The Zacks Consensus Estimate for the current quarter has risen by 100% over the last 30 days, with no negative revisions reported [5] Current-Year Estimate Revisions - For the full year, the earnings estimate stands at $0.50 per share, representing an increase of +108.33% from the prior year [6] - The consensus estimate has seen a boost of 10.26% over the past month, with two estimates moving higher and only one negative revision [6][7] Zacks Rank and Performance - Allegro MicroSystems has achieved a Zacks Rank 2 (Buy), indicating strong potential for outperformance based on earnings estimate revisions [8] - Historical data shows that stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500 [8] Stock Performance - The stock has experienced a notable gain of 52.3% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [9]

Group 1 - Automatic Data Processing (ADP) is part of the Computer and Technology sector, which includes 607 stocks and has a Zacks Sector Rank of 7, indicating its relative strength among sectors [2] - ADP currently holds a Zacks Rank of 2 (Buy), suggesting a favorable outlook based on earnings estimate revisions and improving earnings outlooks [3] - The Zacks Consensus Estimate for ADP's full-year earnings has increased by 0.5% in the past quarter, reflecting stronger analyst sentiment and an improving earnings outlook [4] Group 2 - Year-to-date, ADP has increased by approximately 9.1%, while the average performance of stocks in the Computer and Technology group has declined by about 1.2%, indicating ADP's outperformance [4] - ADP is categorized under the Internet - Software industry, which consists of 167 companies and has an average gain of 8.9% this year, further highlighting ADP's strong performance within its industry [6] - In comparison, Allegro MicroSystems, Inc. (ALGM), another outperforming stock in the Computer and Technology sector, has risen by 25.9% year-to-date, with a Zacks Rank of 2 (Buy) [5]

Group 1 - Allegro MicroSystems, Inc. is highlighted as an automotive chipmaker with a positive outlook, suggesting a Buy rating for long-term investors [1] - The article emphasizes the importance of using market pullbacks as an opportunity to invest in Allegro MicroSystems [1] - The author has a background in technology analysis and is now also covering commodities and energy sectors, indicating a broad investment perspective [1]

Core Viewpoint - Allegro MicroSystems, Inc. will present at TD Cowen's 53rd Annual Technology, Media & Telecom Conference on May 29, 2025, highlighting its role in power and sensing semiconductor solutions for motion control and energy-efficient systems [1] Company Overview - Allegro MicroSystems, Inc. has over three decades of expertise in magnetic sensing and power integrated circuits (ICs), focusing on automotive, clean energy, and industrial automation [3] - The company emphasizes enhancing efficiency, performance, and sustainability through its solutions, reinforcing its status as a pioneer in "automotive grade" technology [3]

MAY 8, 2025 4QFY25 Investor Presentation This presentation may not be reproduced, forwarded to any person or published, in whole or in part. 2 4Q Financial & Business Update Company Overview Appendix ALLEGRO'S VALUES Introduction to our New CEO Forward-looking statements This presentation and the accompanying oral remarks contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor pr ...

Core Viewpoint - Allegro MicroSystems, Inc. reported better-than-expected fourth-quarter financial results and provided first-quarter sales guidance above market estimates [1][2]. Financial Performance - The company posted adjusted earnings of $0.06 per share, surpassing market expectations of $0.05 per share [1][2]. - Quarterly sales reached $192.82 million, exceeding expectations of $185.28 million, representing an 8% sequential increase [1][2]. Future Guidance - For the first quarter, Allegro expects adjusted earnings between $0.06 and $0.10 per share, with sales projected between $192 million and $202 million [2]. Market Reaction - Following the earnings announcement, Allegro MicroSystems shares increased by 12.7%, closing at $21.07 [3]. Analyst Ratings - Needham analyst Quinn Bolton maintained a Buy rating on Allegro, lowering the price target from $30 to $25 [8]. - Barclays analyst Blayne Curtis maintained an Overweight rating, raising the price target from $22 to $23 [8].

Company Performance - Allegro MicroSystems reported quarterly earnings of $0.06 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, but down from $0.25 per share a year ago, representing an earnings surprise of 20% [1] - The company achieved revenues of $192.82 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.44%, but down from $240.58 million year-over-year [2] - Over the last four quarters, Allegro MicroSystems has consistently surpassed consensus EPS and revenue estimates [2] Stock Performance - Allegro MicroSystems shares have declined approximately 14.5% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The current Zacks Rank for Allegro MicroSystems is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $192.27 million, and for the current fiscal year, it is $0.45 on revenues of $827.58 million [7] - The outlook for the Electronics - Semiconductors industry, where Allegro MicroSystems operates, is currently in the bottom 43% of Zacks industries, which may impact stock performance [8]

Financial Data and Key Metrics Changes - In Q4, the company reported sales of $193 million, exceeding the high end of guidance, with non-GAAP EPS of $0.06, above the midpoint of guidance [18] - Gross margin was 45.6%, operating margin was 9%, and adjusted EBITDA was 14.8% of sales [26] - For the full fiscal year 2025, total sales were $725 million, a decline of 31% year-over-year, with a gross margin of 48% [31] Business Line Data and Key Metrics Changes - Automotive sales increased by 8% sequentially in Q4, led by e-mobility sales which rose 16% sequentially, but declined 23% year-over-year [26] - Industrial and other sales increased by 9% sequentially, driven by growth in data center and robotics, but declined 11% year-over-year [26] - Magnetic sensor sales accounted for 61% of total sales, increasing by 3% sequentially, while power product sales increased by 19% sequentially [27] Market Data and Key Metrics Changes - Sales by geography were well balanced: 27% in China, 24% in the rest of Asia, 20% in Japan, 16% in the Americas, and 13% in Europe [28] - The company noted a 25% decline in distributor inventory levels exiting Q4 compared to the beginning of FY 2025, indicating a positive trend [25] Company Strategy and Development Direction - The company aims to accelerate new product development and expand its serviceable addressable market (SAM) to target a $12 billion market opportunity [10] - Focus areas include automotive and industrial markets, with a commitment to double-digit sales growth and maintaining gross margins of 58% or greater [17] - The company is implementing operational efficiency initiatives to enhance gross margins and profitability, including a restructuring program expected to yield annualized cost savings of at least $15 million [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering an upcycle, with positive indicators such as declining customer inventories and increasing bookings [24] - The CEO emphasized the importance of innovation and operational efficiency to drive growth and shareholder value [17][65] - Management noted that there are no abnormal pricing pressures from automotive customers related to tariffs, maintaining a normal annual cadence in negotiations [92][95] Other Important Information - The company received proposals from Onsemi for potential acquisition, which were ultimately withdrawn after the board considered them [20] - The effective tax rate for Q4 was 4%, with a full-year effective tax rate of 3%, primarily due to research and development credits [31] Q&A Session Summary Question: Update on China for China strategy - The company is making significant progress on its China for China supply chain initiative, with expectations for meaningful revenues to start shipping later in the year [41][42] Question: Gross margin outlook - The company expects to see benefits from cost reductions and restructuring initiatives impacting gross margins in Q1, with a long-term target of 58% [44][60] Question: Backlog growth and design wins - The company is seeing strong design wins in e-mobility and industrial sectors, contributing to backlog growth [50][51] Question: Inventory levels and distribution channel - Distribution channel inventories declined by 25% year-over-year, indicating a healthy inventory situation [57] Question: Competition in China - The company continues to see positive growth in China despite competition, with strong customer momentum and design wins [86][87]

Financial Data and Key Metrics Changes - In Q4, the company reported sales of $193 million, which was above the high end of guidance, and non-GAAP EPS of $0.06, also above guidance midpoint [17][24] - Gross margin for Q4 was 45.6%, which was below expectations due to a combination of product mix and lower absorption [27] - For the full fiscal year 2025, total sales were $725 million, reflecting a decline of 31% year over year, with a gross margin of 48% [30] Business Line Data and Key Metrics Changes - Automotive sales increased by 8% sequentially in Q4, led by e-mobility sales which rose 16% sequentially, but declined 23% year over year [24][31] - Industrial and other sales increased by 9% sequentially, driven by growth in data center and robotics, but declined 11% year over year [25][31] - Magnetic sensor sales increased by 3% sequentially, accounting for 61% of total sales, while power product sales increased by 19% sequentially [26] Market Data and Key Metrics Changes - Sales by geography were well balanced, with 27% in China, 24% in the rest of Asia, 20% in Japan, 16% in the Americas, and 13% in Europe [27] - The company noted a decline in distributor inventory levels by 25% exiting Q4 compared to the beginning of FY 2025, indicating a positive trend [22] Company Strategy and Development Direction - The company aims to accelerate new product development and expand its serviceable addressable market (SAM), targeting a $12 billion market opportunity [8] - Focus on relentless innovation to drive leadership in existing and new markets, particularly in automotive and industrial sectors [8][10] - Plans to execute operational efficiency initiatives to enhance gross margins and profitability, including a restructuring program expected to yield annualized cost savings of at least $15 million [29][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering an upcycle, with positive indicators such as declining customer inventories and increasing bookings [22] - The company anticipates first-quarter sales in the range of $192 million to $200 million, representing an 18% year-over-year increase [33] - Management remains optimistic about achieving double-digit sales growth and maintaining gross margins of 58% or greater in the long term [16] Other Important Information - The company received proposals from Onsemi for potential acquisition, but Onsemi ultimately withdrew its interest [19] - The effective tax rate for Q4 was 4%, with a full-year effective tax rate of 3%, primarily due to R&D credits [30] Q&A Session Summary Question: Update on China for China strategy - The company is making significant progress on its China for China supply chain initiative, with expectations for meaningful revenues to ship later in the year [39][40] Question: Gross margin outlook - The company expects to see benefits from cost reductions and restructuring initiatives impacting gross margins in Q1, with a target to return to 50% gross margin in the near term [41][44] Question: Backlog growth and design wins - The company reported strong design wins, with over 70% in strategic focus areas, indicating a positive trend in backlog growth [47] Question: Inventory levels and distribution channel - Distribution channel inventories declined by 25% year over year, and the company is optimistic about inventory levels normalizing [55] Question: Pricing pressures and tariff impacts - The company has not seen abnormal pricing pressures or requests for additional price declines from automotive customers due to tariffs [92][93] Question: Signs of potential shortages - The company is observing potential shortages in longer lead raw materials, particularly for data center products, as demand increases [96]