Wolfspeed(WOLF) - 2025 Q2 - Quarterly Report

Financial Performance - Year-over-year revenue decreased by $30.6 million to$375.2 million, with a gross margin decline to -19.6% from 12.9%[119] - Operating loss increased to $553.1 million compared to$193.0 million, with diluted loss per share at $5.12 compared to$1.99[119] - Revenue for the three months ended December 29, 2024 decreased to $180.5 million, down 13$208.4 million in the same period of 2023[130] - Gross profit for the three months ended December 29, 2024 was a loss of $37.2 million, compared to a profit of$27.8 million in the same period of 2023, representing a 234% decline[132] - Underutilization costs were $55.3 million compared to$70.0 million, impacting gross profit significantly[119] Investment and Capital Expenditure - The company plans to invest approximately $1.1 billion to$1.3 billion in net capital investment for fiscal 2025[124] - The company expects to invest approximately $2.0 billion in the Mohawk Valley Fab, with$1.2 billion spent to date and $467.2 million received in reimbursements[154] - A new materials manufacturing facility in Siler City, North Carolina is projected to cost approximately$2.3 billion, with $1.9 billion spent as of December 29, 2024[155] - For fiscal 2025, the company targets capital investments of approximately$1.1 billion to $1.3 billion, primarily for capacity and infrastructure projects[156] Debt and Financing - Long-term debt increased to$6,423.8 million at December 29, 2024, compared to $6,161.1 million at June 30, 2024[119] - The company expects to need additional funding to complete its intended capacity expansions and has issued$250.0 million in senior secured notes due 2030[146] - The company is evaluating options to refinance its 1.75% convertible senior notes due May 1, 2026, including potential equity-linked securities[147] - The company issued an additional $250.0 million of 2030 Senior Notes in Q2 fiscal 2025, with the ability to issue up to$500.0 million more under certain conditions[151] Operational Changes - The company initiated a headcount reduction and facility consolidation plan to optimize its cost structure[123] - The Mohawk Valley Fab began revenue production in late fiscal 2023, supporting increased production capacity[120] - Cash used in operating activities of continuing operations increased by 11% to $327.1 million for the six months ended December 29, 2024[159] - Cash provided by financing activities decreased by 66$318.5 million, primarily due to lower proceeds from financing activities compared to the previous period[162] Research and Development - Research and development expenses were $95.3 million for the six months ended December 29, 2024, compared to$89.4 million for the same period in 2023[129] - Research and development expenses for the six months ended December 29, 2024 increased by 7% to $95.3 million from$89.4 million in the same period of 2023[133] Other Financial Metrics - Sales, general and administrative expenses for the three months ended December 29, 2024 decreased by 21% to $51.1 million from$64.9 million in the same period of 2023[134] - Factory start-up costs for the three months ended December 29, 2024 increased by 117% to $22.8 million compared to$10.5 million in the same period of 2023[135] - Loss on disposal or impairment of long-lived assets for the three months ended December 29, 2024 was $125.8 million, a significant increase from$0.3 million in the same period of 2023[136] - Interest expense for the three months ended December 29, 2024 increased by 25% to $80.5 million from$64.3 million in the same period of 2023[138] Cash and Investments - Cash, cash equivalents, and short-term investments totaled $1,404.8 million at December 29, 2024, down from$2,174.6 million at June 30, 2024[119] - As of December 29, 2024, total cash, cash equivalents, and short-term investments decreased to $1,404.8 million, down$769.8 million from June 30, 2024[149] - The market value of MACOM common stock held by the company was approximately $95.0 million as of December 29, 2024, with a potential decrease of$9.5 million if market values drop by 10%[166] - The company received a total of $2 billion in unsecured deposits from Renesas Electronics America Inc., with$1 billion received in Q1 fiscal 2024 and subsequent deposits of $500 million and$500 million in Q3 and Q4 fiscal 2024, respectively[150]