Allegro MicroSystems(ALGM) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents Allegro MicroSystems' unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents Allegro MicroSystems' unaudited condensed consolidated financial statements and related notes Condensed Consolidated Balance Sheets | Metric | June 28, 2024 (in millions) | March 29, 2024 (in millions) | | :-------------------------- | :-------------------------- | :--------------------------- | | Total Assets | $1,448.9 | $1,530.6 | | Total Liabilities | $339.0 | $398.9 | | Total Stockholders' Equity | $1,109.8 | $1,131.7 | | Cash and cash equivalents | $173.1 | $212.1 | | Trade accounts receivable, net | $63.4 | $118.5 | | Inventories | $175.9 | $162.3 | | Long-term debt | $202.6 | $249.6 | Condensed Consolidated Statements of Operations | Metric (in millions, except per share) | Three-Month Period Ended June 28, 2024 | Three-Month Period Ended June 30, 2023 | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Net sales | $166.9 | $278.3 | | Gross profit | $74.8 | $158.0 | | Operating (loss) income | $(10.6) | $70.7 | | Net (loss) income | $(17.6) | $60.9 | | Net (loss) income attributable to Allegro MicroSystems, Inc. | $(17.7) | $60.9 | | Basic Net (loss) income per common share | $(0.09) | $0.32 | | Diluted Net (loss) income per common share | $(0.09) | $0.31 | Condensed Consolidated Statements of Comprehensive Income | Metric (in millions) | Three-Month Period Ended June 28, 2024 | Three-Month Period Ended June 30, 2023 | | :----------------------------------------------------- | :------------------------------------- | :------------------------------------- | | Net (loss) income | $(17.6) | $60.9 | | Foreign currency translation adjustment, net of tax | $(3.2) | $(0.5) | | Comprehensive (loss) income | $(20.9) | $60.4 | | Comprehensive (loss) income attributable to Allegro MicroSystems, Inc. | $(20.8) | $60.4 | Condensed Consolidated Statements of Changes in Equity | Metric (in millions, except share amounts) | Balance at March 29, 2024 | Balance at June 28, 2024 | | :------------------------------------------ | :------------------------ | :----------------------- | | Common Stock Shares | 193,164,609 | 193,836,578 | | Common Stock Amount | $1.9 | $1.9 | | Additional Paid-In Capital | $694.3 | $693.3 | | Retained Earnings | $463.0 | $445.3 | | Accumulated Other Comprehensive Loss | $(28.8) | $(31.9) | | Non-Controlling Interests | $1.3 | $1.3 | | Total Equity | $1,131.7 | $1,109.8 | Condensed Consolidated Statements of Cash Flows | Cash Flow Activity (in millions) | Three-Month Period Ended June 28, 2024 | Three-Month Period Ended June 30, 2023 | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash provided by operating activities | $34.2 | $49.7 | | Net cash used in investing activities | $(11.0) | $(34.9) | | Net cash used in financing activities | $(60.4) | $(11.0) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(38.0) | $3.6 | Notes to Unaudited Condensed Consolidated Financial Statements 1. Nature of the Business and Basis of Presentation - Allegro MicroSystems, Inc. is a global leader in designing, developing, and manufacturing sensing and power solutions for automotive and industrial markets, headquartered in Manchester, New Hampshire[25] - The company's first quarter of fiscal year 2025 ended June 28, 2024, and the first quarter of fiscal year 2024 ended June 30, 2023[26] 2. Summary of Significant Accounting Policies - As of June 28, 2024, one distributor customer accounted for 10.4% of the Company's outstanding trade accounts receivable, net. For the three-month period ended June 28, 2024, no distributor or customer accounted for 10% or more of total net sales[28] - The FASB issued ASU No. 2023-09 (Income Taxes) and ASU No. 2023-07 (Segment Reporting), requiring additional disclosures. The Company is evaluating their impact, but does not anticipate ASU 2023-09 to have an adverse impact on financial results[30] 3. Revenue from Contracts with Customers Net Sales by Application (in millions) | Application | Three-Month June 28, 2024 | Three-Month June 30, 2023 | | :----------------- | :------------------------ | :------------------------ | | Automotive | $131.2 | $185.4 | | Industrial and other | $35.7 | $92.9 | | Total net sales | $166.9 | $278.3 | Net Sales by Product (in millions) | Product | Three-Month June 28, 2024 | Three-Month June 30, 2023 | | :------------------------ | :------------------------ | :------------------------ | | Power integrated circuits | $51.8 | $104.0 | | Magnetic sensors | $115.1 | $174.3 | | Total net sales | $166.9 | $278.3 | Net Sales by Geography (in millions) | Geography | Three-Month June 28, 2024 | Three-Month June 30, 2023 | | :------------ | :------------------------ | :------------------------ | | United States | $22.3 | $48.8 | | Other Americas | $5.2 | $8.5 | | Europe | $26.9 | $55.4 | | Japan | $40.6 | $41.6 | | Greater China | $31.9 | $62.2 | | South Korea | $21.8 | $29.5 | | Other Asia | $18.2 | $32.3 | | Total net sales | $166.9 | $278.3 | 4. Fair Value Measurements Fair Value Measurement of Assets (in millions) | Asset | June 28, 2024 (Level 1) | March 29, 2024 (Level 1) | | :------------------------- | :---------------------- | :----------------------- | | Money market fund deposits | $36.7 | $36.2 | | Restricted cash | $11.0 | $10.0 | | Total assets | $47.7 | $46.2 | - The fair value of the Company's long-term debt was $197.9 million as of June 28, 2024, classified as Level 2 within the fair value hierarchy[39] 5. Trade Accounts Receivable, net Trade Accounts Receivable, net (in millions) | Metric | June 28, 2024 | March 29, 2024 | | :----------------------------------- | :------------ | :------------- | | Trade accounts receivable | $102.6 | $163.5 | | Less: Provision for expected credit losses | $(0.07) | $(0.15) | | Less: Returns and sales allowances | $(39.2) | $(44.8) | | Total | $63.4 | $118.5 | 6. Inventories Inventories (in millions) | Component | June 28, 2024 | March 29, 2024 | | :------------------------- | :------------ | :------------- | | Raw materials and supplies | $8.7 | $9.5 | | Work in process | $116.9 | $110.2 | | Finished goods | $50.3 | $42.5 | | Total | $175.9 | $162.3 | - The Company recorded inventory provisions totaling $2.4 million for the three-month period ended June 28, 2024, compared to $5.1 million for the same period in 2023[43] 7. Property, Plant and Equipment, net Property, Plant and Equipment, net (in millions) | Component | June 28, 2024 | March 29, 2024 | | :----------------------------- | :------------ | :------------- | | Land | $24.8 | $25.6 | | Buildings, improvements | $63.8 | $65.6 | | Machinery and equipment | $679.9 | $674.2 | | Office equipment | $6.8 | $7.0 | | Right-of-use asset | $8.1 | $8.2 | | Construction in progress | $42.3 | $39.1 | | Total | $825.8 | $819.7 | | Less accumulated depreciation | $(506.0) | $(498.5) | | Total, net | $319.8 | $321.2 | - Effective March 30, 2024, the Company increased the estimated useful lives of a significant portion of its machinery and equipment from seven years to ten years. This change decreased depreciation expense by $4.5 million, decreased interim income tax expense by $3.6 million, and increased net income by $8.1 million (or $0.04 per share) for the three months ended June 28, 2024[46] 8. Goodwill and Intangible Assets Goodwill (in millions) | Metric | Total | | :------------------------- | :---- | | Balance at March 29, 2024 | $202.4 | | Foreign currency translation | $(0.1) | | Balance at June 28, 2024 | $202.3 | Intangible Assets, net (in millions) | Description | June 28, 2024 Net Carrying Amount | March 29, 2024 Net Carrying Amount | | :----------------------------------------- | :-------------------------------- | :--------------------------------- | | Patents | $23.5 | $22.9 | | Customer relationships | $11.5 | $11.7 | | Completed technologies | $234.4 | $240.0 | | Indefinite-lived process technology and trademarks | $2.3 | $2.3 | | Trademarks and other | $0 | $0 | | Total | $271.7 | $276.9 | - Intangible assets amortization expense was $6.3 million for the three-month period ended June 28, 2024, significantly higher than $1.5 million for the same period in 2023[49] 9. Debt and Other Borrowings Debt Obligations (in millions) | Metric | June 28, 2024 | March 29, 2024 | | :----------------------------------------- | :------------ | :------------- | | 2023 Term Loan Facility | $199.4 | $249.4 | | Unamortized debt issuance costs | $(3.6) | $(4.3) | | Total loans outstanding | $195.8 | $245.1 | | Finance lease liabilities | $8.2 | $8.4 | | Total debt | $204.0 | $253.5 | | Current portion of long-term debt and finance lease liabilities | $(1.4) | $(3.9) | | Total long-term debt and finance lease liabilities, less current portion | $202.6 | $249.6 | - As of June 28, 2024, there were no outstanding borrowings under the $224.0 million 2023 Revolving Credit Facility, and the Company was in compliance with its loan debt covenants[54] - A $50.0 million payment was applied to the 2023 Term Loan Facility on April 30, 2024, eliminating future required minimum quarterly payments, with the balance due October 31, 2030[55] 10. Commitments and Contingencies - The Company does not believe there are any current legal matters that could have a material adverse effect on its financial position, results of operations, or cash flows[57] 11. Net (Loss) income per Share Net (Loss) Income per Common Share Attributable to Allegro MicroSystems, Inc. (in millions, except per share) | Metric | Three-Month Period Ended June 28, 2024 | Three-Month Period Ended June 30, 2023 | | :----------------------------------------- | :------------------------------------- | :------------------------------------- | | Net (loss) income attributable to Allegro MicroSystems, Inc. | $(17.7) | $60.9 | | Basic weighted average shares outstanding | 193,465,708 | 191,997,330 | | Diluted weighted average shares outstanding | 193,465,708 | 194,991,906 | | Basic net (loss) income per common share | $(0.09) | $0.32 | | Diluted net (loss) income per common share | $(0.09) | $0.31 | Antidilutive Shares Excluded from EPS Calculation | Security | Three-Month Period Ended June 28, 2024 | Three-Month Period Ended June 30, 2023 | | :------- | :------------------------------------- | :------------------------------------- | | RSUs | 754,975 | — | | PSUs | 214,527 | 65,943 | 12. Common Stock and Stock-Based Compensation RSU Activity for Three-Month Period Ended June 28, 2024 | Metric | Shares | Weighted-Average Grant Date Fair Value | | :------------------------------------ | :---------- | :------------------------------------- | | Outstanding at March 29, 2024 | 2,215,621 | $29.82 | | Granted | 1,278,203 | $28.87 | | Issued | (762,311) | $28.47 | | Forfeited | (51,109) | $29.90 | | Outstanding at June 28, 2024 | 2,680,404 | $29.76 | PSU Activity for Three-Month Period Ended June 28, 2024 | Metric | Shares | Weighted-Average Grant Date Fair Value | | :------------------------------------ | :---------- | :------------------------------------- | | Outstanding at March 29, 2024 | 2,429,393 | $25.64 | | Granted | 527,474 | $31.07 | | Excess shares issued due to achievement of performance conditions | 12,358 | $13.94 | | Issued | (301,716) | $28.51 | | Forfeited | (34,731) | $34.39 | | Outstanding at June 28, 2024 | 2,632,778 | $26.21 | Total Stock-Based Compensation Expense (in millions) | Expense Category | Three-Month June 28, 2024 | Three-Month June 30, 2023 | | :-------------------------------- | :------------------------ | :------------------------ | | Cost of sales | $0.6 | $2.6 | | Research and development | $3.7 | $2.9 | | Selling, general and administrative | $5.8 | $5.6 | | Total stock-based compensation | $10.1 | $11.0 | 13. Income Taxes Income Tax Provision and Effective Tax Rate (in millions) | Metric | Three-Month June 28, 2024 | Three-Month June 30, 2023 | | :----------------------- | :------------------------ | :------------------------ | | Provision for income taxes | $1.0 | $7.2 | | Effective tax rate | (6.3)% | 10.6% | - The decline in the effective tax rate year-over-year is primarily due to the change in (Loss) Income before income taxes, the impact of FDII benefits and research credits, offset by non-deductible stock-based compensation charges and tax expense from discrete transactions[72] 14. Related Party Transactions - As of June 28, 2024, Sanken Electric Co., Ltd. held approximately 50.8% of the Company's outstanding common stock. A share repurchase agreement was entered into with Sanken on July 23, 2024[73][76] - The Company purchases in-process products from Polar Semiconductor, LLC (PSL), an entity 70% owned by Sanken and 30% by the Company. Purchases from PSL totaled $15.0 million for the three-month period ended June 28, 2024[73] - The Company, Sanken, and others entered into a Sale and Subscription Agreement for PSL, involving $175.0 million in capital contributions and a reorganization where the Company will own approximately 10.2% of PSL's ultimate parent entity[73] 15. Subsequent Events - On July 23, 2024, the Company entered into a Share Repurchase Agreement with Sanken to repurchase 38,767,315 shares of common stock, with Sanken reimbursing the Company for expenses including a $35.0 million facilitation fee[76] - The first closing of the share repurchase occurred on July 29, 2024, repurchasing 28,750,000 shares for $621.5 million, funded by net proceeds from an Equity Offering[76] - On July 26, 2024, the Company completed an underwritten equity offering of 28,750,000 shares at $24.00 per share, generating net proceeds of approximately $665.9 million[76] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operating results, and key performance drivers for the quarter ended June 28, 2024 Overview - Allegro MicroSystems is a global leader in sensor ICs and application-specific analog power ICs for automotive and industrial markets, shipping over 1.5 billion units annually to more than 10,000 customers[79] Key Financial Results (in millions) | Metric | Three-Month June 28, 2024 | Three-Month June 30, 2023 | | :---------- | :------------------------ | :------------------------ | | Total Net Sales | $166.9 | $278.3 | | Net (Loss) Income | $(17.6) | $60.9 | Business Updates - The Company entered into a Share Repurchase Agreement with Sanken to repurchase 38,767,315 shares of common stock, including a $35.0 million facilitation fee from Sanken[80] - The first closing of the share repurchase on July 29, 2024, involved repurchasing 28,750,000 shares for $621.5 million, funded by net proceeds from an Equity Offering[80] - An underwritten equity offering on July 26, 2024, of 28,750,000 shares at $24.00 per share generated approximately $665.9 million in net proceeds[80] - The Company expects to amend the 2023 Revolving Credit Agreement to incur new incremental term loans to finance the second closing of the share repurchase and increase revolving commitments by $32.0 million[80][82] - On July 31, 2024, a $400 million Term Loan tranche was allocated to refinance the 2023 Term Loan Facility, finance a portion of the Second Closing, and for general corporate purposes, with a lower interest rate of SOFR + 2.25%[82] Other Key Factors and Trends Affecting Our Operating Results Inflation - Increased inflation has led to higher costs for labor, wafer, materials, transportation, and energy. The Company aims to offset these through productivity, cost reduction, price adjustments, and new products, but may not fully recover increases[84] Design Wins with New and Existing Customers - Future sales are highly dependent on successful design wins, which typically have a lengthy lead time of two to four years from initiation to sales generation[85] - Average Selling Prices (ASPs) are expected to decline over time, making new design wins critical for future success and requiring significant R&D expenditures without guarantee of selection[85] Customer Demand, Orders and Forecasts - Demand for products is highly dependent on end-market conditions, subject to seasonality, cyclicality, and competitive pressures. Customer forecasts are non-binding, posing risks of order cancellations and inventory imbalances[86] Manufacturing Costs and Product Mix - Gross margin is influenced by ASPs, product mix, material costs, yields, and manufacturing efficiencies. While ASPs are expected to decline long-term, this is often offset by improvements in manufacturing yields and lower costs[87][89] - Gross margin generally decreases with lower production volumes due to reduced absorption of fixed manufacturing costs and increases when volumes are higher[89] Cyclical Nature of the Semiconductor Industry - The semiconductor industry is highly cyclical, characterized by rapid technological change, product obsolescence, and fluctuations in supply and demand, leading to periods of growth and market corrections[90] - During expansion, margins improve as fixed costs are spread over higher volumes; during contractions, sales, production, and margins generally decline[90] 2017 Tax Cuts and Jobs Act - The 174 Capitalization requirement, effective fiscal year 2023, mandates capitalization and amortization of R&D expenditures, increasing annual cash taxes by approximately $15.8 million and providing a foreign derived intangible income (FDII) benefit of $7.7 million for fiscal year 2025[91] Results of Operations Overall Financial Performance Summary of Results of Operations (in millions) | Metric | June 28, 2024 | % of Net Sales | June 30, 2023 | % of Net Sales | Change Amount | Change % | | :----------------------------------------- | :------------ | :------------- | :------------ | :------------- | :------------ | :------- | | Net sales | $166.9 | 100.0% | $278.3 | 100.0% | $(111.4) | (40.0)% | | Cost of goods sold | $92.1 | 55.2% | $120.3 | 43.2% | $(28.2) | (23.4)% | | Gross profit | $74.8 | 44.8% | $158.0 | 56.8% | $(83.2) | (52.7)% | | Operating (loss) income | $(10.6) | (6.4)% | $70.7 | 25.4% | $(81.4) | (115.0)% | | Net (loss) income attributable to Allegro MicroSystems, Inc. | $(17.7) | (10.6)% | $60.9 | 21.9% | $(78.5) | (129.0)% | Total Net Sales - Total net sales decreased by $111.4 million (40.0%) for the three-month period ended June 28, 2024, compared to June 30, 2023. This decline was driven by an overall reduction in customer inventory levels and decreased shipments across all end markets, including e-Mobility, safety comfort, industrial, data center, and consumer products[94][95] Sales Trends by Market Net Sales by Market (in millions) | Market | Three-Month June 28, 2024 | Three-Month June 30, 2023 | Change Amount | Change % | | :----------------- | :------------------------ | :------------------------ | :------------ | :------- | | Automotive | $131.2 | $185.4 | $(54.2) | (29.3)% | | Industrial and other | $35.7 | $92.9 | $(57.1) | (61.5)% | | Total net sales | $166.9 | $278.3 | $(111.4) | (40.0)% | - Automotive net sales decreased primarily due to inventory rebalancing and mix across general markets. Industrial and other net sales decreased due to reduced demand and distribution inventory reductions[97] Sales Trends by Product Net Sales by Product (in millions) | Product | Three-Month June 28, 2024 | Three-Month June 30, 2023 | Change Amount | Change % | | :------------------------ | :------------------------ | :------------------------ | :------------ | :------- | | Power integrated circuits | $51.8 | $104.0 | $(52.2) | (50.2)% | | Magnetic sensors and other | $115.1 | $174.3 | $(59.2) | (34.0)% | | Total net sales | $166.9 | $278.3 | $(111.4) | (40.0)% | - The decline in Power Integrated Circuits (PIC) sales was driven by decreased demand for motor products. Magnetic Sensors (MS) and other sales decreased due to a decline in current and isolator products, as well as magnetic speed and position sensors[98] Sales Trends by Geographic Location Net Sales by Geographic Location (in millions) | Geography | Three-Month June 28, 2024 | Three-Month June 30, 2023 | Change Amount | Change % | | :------------ | :------------------------ | :------------------------ | :------------ | :------- | | United States | $22.3 | $48.8 | $(26.6) | (54.4)% | | Other Americas | $5.2 | $8.5 | $(3.3) | (38.6)% | | Europe | $26.9 | $55.4 | $(28.5) | (51.4)% | | Japan | $40.6 | $41.6 | $(0.9) | (2.3)% | | Greater China | $31.9 | $62.2 | $(30.4) | (48.8)% | | South Korea | $21.8 | $29.5 | $(7.7) | (26.2)% | | Other Asia | $18.2 | $32.3 | $(14.0) | (43.4)% | | Total net sales | $166.9 | $278.3 | $(111.4) | (40.0)% | - Americas net sales decreased due to declines in the US automotive and industrial markets. Europe and Other Asia saw declines in industrial markets, South Korea in automotive, and Greater China in automotive markets served by distributors managing inventory[100] Cost of goods sold - Cost of goods sold decreased by $28.2 million (23.4%) YoY, primarily due to reduced production volume and product mix, partially offset by increased amortization of intangible assets from the Crocus acquisition[101] - Cost of goods sold as a percentage of total net sales increased from 43.2% to 55.2% YoY, mainly due to the reduction in production volume and product mix[101] Gross profit and gross margin - Gross profit decreased by $83.2 million (52.7%) YoY, and gross margin decreased from 56.8% to 44.8% YoY, both primarily due to the decline in net sales and product mix[102] Research and development expenses - Research and development (R&D) expenses increased by $2.2 million (5.2%) YoY, primarily due to higher personnel costs[103] - R&D expenses as a percentage of total net sales increased from 15.4% to 27.1% YoY, driven by increased costs and the decline in net sales[103] Selling, general and administrative expenses - Selling, general and administrative (SG&A) expenses decreased by $4.0 million (9.1%) YoY, mainly due to lower general operating and outside service costs, partially offset by increased personnel and severance expenses[104] - SG&A expenses as a percentage of total net sales increased from 15.9% to 24.1% YoY, primarily due to the factors noted and the decline in net sales[104] Interest expense - Interest expense increased by $4.6 million (599.2%) YoY, driven by higher interest payments on the 2023 Term Loan Facility used to finance the Crocus acquisition[105] Interest income - Interest income decreased by $0.3 million (41.4%) YoY, primarily due to lower cash balances[106] Other income (expense), net - The Company recorded a foreign currency loss in both periods, with Q1 FY25 primarily due to realized and unrealized gains from its Philippines location, and Q1 FY24 due to losses from its United Kingdom location[107] - Investment income was $0.5 million in Q1 FY25, compared to unrealized losses of $8.9 million offset by $5.2 million of realized gains in Q1 FY24[107] Income tax provision - Income tax provision decreased by $6.2 million (85.6%) YoY, and the effective tax rate (ETR) declined from 10.6% to (6.3%) YoY[108] - The ETR decline is primarily attributed to the change in (Loss) income before income taxes, discrete transactions, and the impact of FDII benefits and research credits, partially offset by non-deductible stock-based compensation charges[108] Liquidity and Capital Resources Liquidity Metrics (in millions) | Metric | June 28, 2024 | March 29, 2024 | | :---------------------- | :------------ | :------------- | | Cash and cash equivalents | $173.1 | $212.1 | | Working capital | $384.7 | $454.3 | - The Company's primary liquidity requirements include working capital, capital expenditures, debt payments, and growth initiatives. The capital deployment strategy for FY25 focuses on using cash on hand and the 2023 Revolving Credit Facility to support growth and potential acquisitions[109] - The Company expects to strategically invest in expanding operations in China, Europe, Japan, and India to directly manage and service customers[109] Cash Flows from Operating, Investing and Financing Activities Summary of Cash Flows (in millions) | Cash Flow Activity | Three-Month June 28, 2024 | Three-Month June 30, 2023 | | :----------------- | :------------------------ | :------------------------ | | Operating activities | $34.2 | $49.7 | | Investing activities | $(11.0) | $(34.9) | | Financing activities | $(60.4) | $(11.0) | | Net (decrease) increase | $(38.0) | $3.6 | - Net cash provided by operating activities decreased YoY, primarily due to a net loss and changes in operating assets and liabilities, including a $55.1 million decrease in trade accounts receivable and a $16.0 million increase in inventories to support anticipated sales growth[112] - Net cash used in investing activities decreased YoY, mainly due to lower purchases of property, plant, and equipment ($11.0 million in Q1 FY25 vs $44.9 million in Q1 FY24)[115] - Net cash used in financing activities significantly increased YoY, primarily due to a $50.0 million payment on the 2023 Term Loan Facility and $11.2 million in taxes related to equity award settlements[115] Debt Obligations - Information regarding the Company's debt obligations is detailed in Note 9, 'Debt and Other Borrowings,' of the unaudited condensed consolidated financial statements[116] Recent Accounting Pronouncements - A full description of recent accounting pronouncements, including adoption dates and effects on financial statements, is provided in Note 2, 'Summary of Significant Accounting Policies'[117] Critical Accounting Estimates - There have been no material changes in the Company's critical accounting policies and estimates since March 29, 2024[118] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the company's market risk exposures since the last annual report - There have been no material changes in the Company's exposures to market risk (interest rate, foreign currency exchange rate, and inflation risks) since March 29, 2024[119] Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting, including inherent limitations and management's conclusions Limitations on Effectiveness of Controls and Procedures - Management acknowledges that any controls and procedures, regardless of design, can only provide reasonable assurance of achieving desired control objectives due to resource constraints and the need for judgment[120] Evaluation of Disclosure Controls and Procedures - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of June 28, 2024[121] Changes in Internal Control over Financial Reporting - There were no changes in the Company's internal control over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[122] PART II. Other Information This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section confirms that the company is not currently party to any material legal proceedings that are expected to have a material adverse effect on its business or financial condition - The Company is not currently party to any material legal proceedings, nor is it aware of any pending or threatened legal proceedings that could have a material adverse effect on its business, operating results, cash flows, or financial condition[124] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report and Prospectus - There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended March 29, 2024, and its Prospectus on Form S-3ASR dated July 23, 2024[125] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or use of proceeds to report during the period - There were no unregistered sales of equity securities or use of proceeds to report[126] Item 5. Other Information This section reports that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three-month period ended June 28, 2024 - No director or officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three-month period ended June 28, 2024[126] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including agreements, certifications, and XBRL documents - Key exhibits filed include the Sale and Subscription Agreement (10.1), Certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1, 32.2), and Inline XBRL documents (101.INS, 101.SCH, 104)[127][128][129]