Allegro MicroSystems(ALGM)2023-08-03 16:00Financial Performance - Net sales increased to $278.3 million in Q2 2023, up from $217.8 million in Q2 2022, representing a 27.8% year-over-year growth[12] - Gross profit rose to $157.9 million in Q2 2023, compared to $118.4 million in Q2 2022, reflecting a 33.4% increase[12] - Operating income surged to $70.7 million in Q2 2023, a significant jump from $14.7 million in Q2 2022, marking a 380% increase[12] - Net income attributable to Allegro MicroSystems, Inc. reached $60.9 million in Q2 2023, up from $10.2 million in Q2 2022, a 494% increase[12] - Net income for the three months ended June 30, 2023, was $60.889 million, compared to $10.283 million for the same period in 2022[21] - Comprehensive income attributable to Allegro MicroSystems, Inc. reached $60.4 million in Q2 2023, compared to $3.5 million in Q2 2022[15] - Net income attributable to common stockholders for the three months ended June 30, 2023, was $60.889 million, compared to $10.283 million for the same period in 2022[53] - Basic net income per share for the three months ended June 30, 2023, was $0.32, compared to $0.05 for the same period in 2022[53] - Diluted net income per share for the three months ended June 30, 2023, was $0.31, compared to $0.05 for the same period in 2022[53] Cash and Assets - Cash and cash equivalents stood at $353.4 million as of June 30, 2023, slightly up from $351.6 million as of March 31, 2023[9] - Total assets increased to $1.23 billion as of June 30, 2023, compared to $1.18 billion as of March 31, 2023[9] - The company's cash and cash equivalents and restricted cash at the end of the period on June 30, 2023, were $362.321 million[21] - Total equity as of June 30, 2023, was $1,027.765 million, compared to $763.360 million as of June 24, 2022[18] - The company's total assets measured at fair value were $117,796 million as of June 30, 2023, compared to $129,077 million as of March 31, 2023, with a decrease in marketable securities from $19,929 million to $5,222 million[35] Liabilities and Equity - Total liabilities decreased to $206.3 million as of June 30, 2023, down from $214.3 million as of March 31, 2023[9] - Retained earnings increased to $371.2 million as of June 30, 2023, up from $310.3 million as of March 31, 2023[9] - Trade accounts receivable, net, increased to $121,506 million as of June 30, 2023, from $111,290 million as of March 31, 2023, with returns and sales allowances rising to $37,094 million from $26,269 million[37] Research and Development - Research and development expenses grew to $43.0 million in Q2 2023, up from $33.9 million in Q2 2022, reflecting a 26.9% increase[12] Sales Breakdown - Total net sales for the three months ended June 30, 2023, were $278.293 million, with automotive sales contributing $189.698 million and industrial sales contributing $68.184 million[31] - Power integrated circuits sales were $103.988 million, and magnetic sensors sales were $174.305 million for the three months ended June 30, 2023[32] - Net sales in the Americas increased to $57,332 million in Q2 2023, up from $34,878 million in Q2 2022, driven by strong growth in the United States ($48,824 million vs. $28,391 million) and Other Americas ($8,508 million vs. $6,487 million)[33] - EMEA net sales grew to $55,388 million in Q2 2023, compared to $35,333 million in Q2 2022, with Europe being the primary contributor[33] - Asia net sales reached $165,573 million in Q2 2023, up from $147,542 million in Q2 2022, led by Greater China ($62,216 million vs. $55,116 million) and South Korea ($29,513 million vs. $20,979 million)[33] - Total net sales for Q2 2023 were $278,293 million, a significant increase from $217,753 million in Q2 2022[33] Inventory and Property - Inventories grew to $174,170 million as of June 30, 2023, up from $151,301 million as of March 31, 2023, with work in process increasing to $119,630 million from $98,836 million[40] - Property, plant, and equipment, net, increased to $285,200 million as of June 30, 2023, from $263,099 million as of March 31, 2023, with machinery and equipment being the largest component at $641,453 million[41] Goodwill and Intangible Assets - Goodwill increased to $28,048 million as of June 30, 2023, from $27,691 million as of March 31, 2023, due to adjustments and foreign currency translation[44] - Intangible assets, net, were $51,969 million as of June 30, 2023, with patents being the largest component at $22,105 million[45] Credit and Financing - The company entered into a $224 million secured revolving credit facility with a $20 million letter of credit subfacility, maturing on June 21, 2028[47] - Interest on the 2023 Revolving Credit Agreement ranges from Term SOFR plus 1.50% to 1.75% or the highest of Federal funds rate plus 0.50%, prime lending rate, or one-month Term SOFR plus 1.0% plus 0.50% to 0.75%[48] - The company is required to maintain a Total Net Leverage Ratio of no more than 4.00 to 1.00, which can be increased to 4.50 to 1.00 for four fiscal quarters after an acquisition exceeding $500 million[48] Stock-Based Compensation - Stock-based compensation for the three months ended June 30, 2023, was $11.042 million, compared to $34.136 million for the same period in 2022[21] - Total stock-based compensation expense for the three months ended June 30, 2023, was $11.042 million, compared to $34.136 million for the same period in 2022[60] Tax and Shareholder Information - The company's effective tax rate for the three months ended June 30, 2023, was 10.6%, compared to 16.0% for the same period in 2022[61] - Sanken holds approximately 51.2% of the company's outstanding common stock as of June 30, 2023[62] Customer and Supplier Relationships - One customer accounted for 14.8% of the company's outstanding trade accounts receivable as of June 30, 2023[27] - For the three months ended June 30, 2023, one customer accounted for 12.2% of total net sales[27] - Net sales to Sanken dropped to $0 in Q2 2023 from $41,709 in Q2 2022, reflecting the termination of the distribution agreement[63] - The company made a one-time payment of $5,000 to Sanken for the cancellation of exclusive distribution rights in Japan[63] - Purchases from PSL increased to $16,102 in Q2 2023 from $14,671 in Q2 2022[63] - The outstanding balance of the PSL Promissory Notes was $11,250 as of June 30, 2023[64] - PSL made quarterly payments totaling $1,005, including $67 of interest, in Q2 2023[64] - The new Wafer Foundry Agreement with PSL has a three-year term with auto-renewal for subsequent one-year terms[63] - The company will provide a rolling annual forecast for three years, with the first two years being binding under the WFA[63] - Accounts payable to PSL totaled $5,091 as of June 30, 2023, up from $4,682 as of March 31, 2023[63] - The company allowed a one-time sales return from Sanken of resalable inventory worth $4,200[63] Market Risk - No material changes in market risk exposures since March 31, 2023[101]