Allegro MicroSystems(ALGM) - 2025 Q2 - Quarterly Results

Executive Summary This section summarizes Allegro MicroSystems' Q2 FY2025 performance, financial highlights, and Q3 FY2025 business outlook Second Quarter 2025 Performance Overview Allegro MicroSystems reported Q2 FY2025 sales of $187 million, a 12% sequential increase, with growth in both Automotive and Industrial and Other markets. Non-GAAP EPS was $0.08, at the high end of their outlook, driven by continued demand and inventory rebalancing - Sales increased 12% sequentially to $187 million[1] - Non-GAAP EPS was $0.08, at the high end of outlook[2] - Sequential growth observed in Automotive and Industrial and Other end markets[2] - Company is investing for growth and accelerating new product introductions[2] Second Quarter 2025 Financial Highlights This section details the key GAAP and Non-GAAP financial metrics for Q2 FY2025, showing total net sales of $187.391 million, a GAAP gross margin of 45.7%, and a non-GAAP diluted EPS of $0.08 Q2 FY2025 Financial Highlights | Metric | September 27, 2024 (Unaudited) | June 28, 2024 (Unaudited) | September 29, 2023 (Unaudited) | | :-------------------------- | :----------------------------- | :------------------------ | :----------------------------- | | Net Sales | | | | | Automotive | $141,893 | $131,184 | $197,321 | | Industrial and other | $45,498 | $35,735 | $78,188 | | Total net sales | $187,391 | $166,919 | $275,509 | | GAAP Financial Measures | | | | | Gross margin % | 45.7% | 44.8% | 57.9% | | Operating margin % | 2.2% | (6.4)% | 26.5% | | Diluted EPS | $(0.18) | $(0.09) | $0.34 | | Non-GAAP Financial Measures | | | | | Gross margin % | 48.8% | 48.8% | 58.3% | | Operating margin % | 11.7% | 6.0% | 31.3% | | Diluted EPS | $0.08 | $0.03 | $0.40 | Business Outlook for Third Quarter 2025 For Q3 FY2025, Allegro MicroSystems anticipates net sales between $170 million and $180 million, with non-GAAP gross margin expected to be 49% to 51%, and non-GAAP diluted EPS between $0.04 and $0.08. This outlook considers vehicle electrification progress, inventory rebalancing, and seasonal factors - Expected Net Sales for Q3 FY2025: $170 million to $180 million[4] - Expected Non-GAAP Gross Margin: 49% to 51%[4] - Expected Non-GAAP Diluted Earnings per Share: $0.04 to $0.08[4] - Outlook factors: continued progress in vehicle electrification, ongoing inventory rebalancing, and typical December quarter seasonality[4] Company Information This section provides an overview of Allegro MicroSystems' business and details for their earnings webcast About Allegro MicroSystems Allegro MicroSystems is a global fabless manufacturer of sensor ICs and application-specific analog power ICs, primarily serving the automotive and industrial markets. Their products support vehicle electrification, ADAS safety, Industry 4.0 automation, and energy-saving applications - Global leader in power and sensing semiconductor solutions[1] - Designer, developer, fabless manufacturer, and marketer of sensor ICs and application-specific analog power ICs[7] - Key markets: Automotive and Industrial[7] - Product applications: vehicle electrification, automotive ADAS safety features, automation for Industry 4.0, data centers, and clean energy[7] Earnings Webcast Details Allegro MicroSystems held an earnings webcast on October 31, 2024, at 8:30 a.m. ET, where the CEO and CFO discussed business and financial results. A recording is available on the Investor Relations section of the company's website - Webcast Date & Time: Thursday, October 31, 2024, at 8:30 a.m. Eastern Time[6] - Presenters: Vineet Nargolwala (President and CEO) and Derek P. D'Antilio (EVP and CFO)[6] - Availability: Recording posted on investors.allegromicro.com for at least 90 days[6] GAAP Financial Statements This section presents Allegro MicroSystems' unaudited GAAP consolidated statements of operations, balance sheets, and cash flows Condensed Consolidated Statements of Operations The GAAP Condensed Consolidated Statements of Operations for Q2 FY2025 show total net sales of $187.391 million, a GAAP gross profit of $85.662 million, and a net loss attributable to Allegro MicroSystems, Inc. of $(33.675) million, resulting in a diluted EPS of $(0.18) Condensed Consolidated Statements of Operations (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :------------------------------------ | :----------------- | :----------------- | | Total net sales | $187,391 | $275,509 | | Cost of goods sold | $101,729 | $116,006 | | Gross profit | $85,662 | $159,503 | | Research and development expenses | $43,510 | $43,428 | | Selling, general and administrative | $38,085 | $43,160 | | Total operating expenses | $81,595 | $86,588 | | Operating income (loss) | $4,067 | $72,915 | | Other (expense) income | $(12,398) | $156 | | Change in fair value of forward contract | $(34,752) | — | | Income (loss) before income taxes | $(43,083) | $73,071 | | Income tax (benefit) provision | $(9,470) | $7,400 | | Net (loss) income | $(33,613) | $65,671 | | Net income attributable to Allegro MicroSystems, Inc. | $(33,675) | $65,617 | | Diluted EPS | $(0.18) | $0.34 | Supplemental Schedule of Total Net Sales Allegro's total net sales for Q2 FY2025 decreased by 32% year-over-year to $187.391 million. Automotive segment sales declined by 28% YoY, and Industrial and other sales decreased by 42% YoY Supplemental Schedule of Total Net Sales (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Segment (in thousands) | September 27, 2024 | September 29, 2023 | Change Amount | % Change | | :--------------------- | :----------------- | :----------------- | :------------ | :------- | | Automotive | $141,893 | $197,321 | $(55,428) | (28)% | | Industrial and other | $45,498 | $78,188 | $(32,690) | (42)% | | Total net sales | $187,391 | $275,509 | $(88,118) | (32)% | Condensed Consolidated Balance Sheets As of September 27, 2024, Allegro MicroSystems reported total assets of $1,492.117 million, a decrease from $1,530.603 million at March 29, 2024. Total liabilities increased to $553.409 million from $398.887 million, while total stockholders' equity decreased to $938.708 million from $1,131.716 million Condensed Consolidated Balance Sheets (as of September 27, 2024 vs. March 29, 2024) | Metric (in thousands) | September 27, 2024 | March 29, 2024 | | :-------------------------------------------------- | :----------------- | :------------- | | Assets | | | | Total current assets | $523,560 | $572,213 | | Property, plant and equipment, net | $325,051 | $321,175 | | Goodwill | $203,151 | $202,425 | | Intangible assets, net | $266,753 | $276,854 | | Total assets | $1,492,117 | $1,530,603 | | Liabilities, Non-Controlling Interests and Stockholders' Equity | | | | Total current liabilities | $124,008 | $117,908 | | Long-term debt | $396,056 | $249,611 | | Total liabilities | $553,409 | $398,887 | | Total stockholders' equity | $938,708 | $1,131,716 | Condensed Consolidated Statements of Cash Flows For Q2 FY2025, net cash provided by operating activities was $15.547 million, a decrease from $46.730 million in the prior year period. Net cash used in investing activities was $(9.972) million, and net cash provided by financing activities was $7.086 million Condensed Consolidated Statements of Cash Flows (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :------------------------------------------ | :----------------- | :----------------- | | Net cash provided by operating activities | $15,547 | $46,730 | | Net cash used in investing activities | $(9,972) | $(24,987) | | Net cash provided by (used in) financing activities | $7,086 | $(4,732) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $14,861 | $16,110 | | Cash and cash equivalents and restricted cash at end of period | $199,038 | $378,431 | Non-GAAP Financial Measures and Reconciliations This section explains Allegro MicroSystems' non-GAAP financial measures and reconciles them to GAAP results Non-GAAP Financial Measures Overview Allegro MicroSystems uses various non-GAAP financial measures, such as non-GAAP Gross Profit, Operating Income, EBITDA, and EPS, to evaluate business performance, identify trends, and make strategic decisions. These measures exclude certain non-cash or infrequent items like acquisition-related expenses, amortization of acquired intangibles, stock-based compensation, and restructuring costs, providing a supplemental view of core operations - Non-GAAP measures are used to evaluate business, measure performance, identify trends, prepare forecasts, and make strategic decisions[14] - Key non-GAAP measures include Gross Profit, Gross Margin, Operating Expenses, Operating Income, Operating Margin, EBITDA, Adjusted EBITDA, Profit before Tax, Income Tax Provision, Effective Tax Rate, Net Income, Basic and Diluted EPS, and Free Cash Flow[14] - Exclusions from GAAP: acquisition and integration expenses, amortization of acquired intangible assets, stock-based compensation, restructuring actions, related party activities, and other non-operational costs[14] - Non-GAAP measures are supplemental and not substitutes for GAAP measures[14] Reconciliation of Non-GAAP Gross Profit and Gross Margin For Q2 FY2025, Allegro's GAAP Gross Profit was $85.662 million (45.7% gross margin). After non-GAAP adjustments totaling $5.718 million (primarily for purchased intangible amortization and stock-based compensation), the Non-GAAP Gross Profit was $91.380 million, resulting in a Non-GAAP Gross Margin of 48.8% Reconciliation of Non-GAAP Gross Profit and Gross Margin (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :--------------------------------- | :----------------- | :----------------- | | GAAP Gross Profit | $85,662 | $159,503 | | GAAP Gross Margin (% of net sales) | 45.7% | 57.9% | | Non-GAAP adjustments: | | | | Purchased intangible amortization | $4,875 | $273 | | Stock-based compensation | $817 | $946 | | Total Non-GAAP Adjustments | $5,718 | $1,219 | | Non-GAAP Gross Profit | $91,380 | $160,722 | | Non-GAAP Gross Margin (% of net sales) | 48.8% | 58.3% | Reconciliation of Non-GAAP Operating Expenses GAAP Operating Expenses for Q2 FY2025 were $81.595 million. After non-GAAP adjustments of $12.233 million (including stock-based compensation, restructuring costs, and purchased intangible amortization), Non-GAAP Operating Expenses were $69.362 million Reconciliation of Non-GAAP Operating Expenses (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :------------------------------------------ | :----------------- | :----------------- | | GAAP Operating Expenses | $81,595 | $86,588 | | Non-GAAP adjustments: | | | | Research and Development Expenses: | | | | Stock-based compensation | $3,523 | $3,602 | | Selling, General and Administrative Expenses: | | | | Transaction-related costs | $275 | $1,804 | | Purchased intangible amortization | $535 | $357 | | Restructuring costs | $2,046 | — | | Stock-based compensation | $7,205 | $6,329 | | Total Non-GAAP Adjustments | $12,233 | $12,194 | | Non-GAAP Operating Expenses | $69,362 | $74,394 | Reconciliation of Non-GAAP Operating Income and Operating Margin Allegro reported a GAAP Operating Income of $4.067 million (2.2% operating margin) for Q2 FY2025. After non-GAAP adjustments totaling $17.951 million, the Non-GAAP Operating Income was $22.018 million, resulting in a Non-GAAP Operating Margin of 11.7% Reconciliation of Non-GAAP Operating Income and Operating Margin (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :----------------------------------- | :----------------- | :----------------- | | GAAP Operating Income (Loss) | $4,067 | $72,915 | | GAAP Operating Margin (% of net sales) | 2.2% | 26.5% | | Non-GAAP adjustments: | | | | Transaction-related costs | $491 | $1,806 | | Purchased intangible amortization | $5,410 | $630 | | Restructuring costs | $2,322 | — | | Stock-based compensation | $11,545 | $10,877 | | Total Non-GAAP Adjustments | $17,951 | $13,413 | | Non-GAAP Operating Income | $22,018 | $86,328 | | Non-GAAP Operating Margin (% of net sales) | 11.7% | 31.3% | Reconciliation of EBITDA and Adjusted EBITDA For Q2 FY2025, Allegro's GAAP Net Loss was $(33.613) million, leading to an EBITDA of $(17.153) million. After significant adjustments, including a $34.752 million loss on change in fair value of forward repurchase contract, Adjusted EBITDA was $32.311 million, representing an Adjusted EBITDA Margin of 17.2% Reconciliation of EBITDA and Adjusted EBITDA (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :------------------------------------------ | :----------------- | :----------------- | | GAAP Net (Loss) Income | $(33,613) | $65,671 | | Interest expense | $10,353 | $758 | | Income tax (benefit) provision | $(9,470) | $7,400 | | Depreciation & amortization | $15,997 | $15,145 | | EBITDA | $(17,153) | $88,124 | | Non-GAAP adjustments: | | | | Transaction-related costs | $3,295 | $1,806 | | Restructuring costs | $2,067 | — | | Stock-based compensation | $11,545 | $10,877 | | Loss on change in fair value of forward repurchase contract | $34,752 | — | | Adjusted EBITDA | $32,311 | $102,108 | | Adjusted EBITDA Margin (% of net sales) | 17.2% | 37.1% | Reconciliation of Non-GAAP Profit before Tax Allegro's GAAP Loss before Income Taxes for Q2 FY2025 was $(43.083) million. After adding back $58.638 million in non-GAAP adjustments, including a $34.752 million loss on change in fair value of forward repurchase contract and stock-based compensation, the Non-GAAP Profit before Tax was $15.555 million Reconciliation of Non-GAAP Profit before Tax (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :------------------------------------------ | :----------------- | :----------------- | | GAAP (Loss) Income before Income Taxes | $(43,083) | $73,071 | | Non-GAAP adjustments: | | | | Transaction-related costs | $3,295 | $1,806 | | Purchased intangible amortization | $5,410 | $630 | | Restructuring costs | $2,067 | — | | Stock-based compensation | $11,545 | $10,877 | | Loss on change in fair value of forward repurchase contract | $34,752 | — | | Total Non-GAAP Adjustments | $58,638 | $14,614 | | Non-GAAP Profit before Tax | $15,555 | $87,685 | Reconciliation of Non-GAAP Income Tax Provision and Effective Tax Rate For Q2 FY2025, the GAAP Income Tax Benefit was $(9.470) million, with an effective tax rate of 22.0%. After adjusting for the tax effect of non-GAAP adjustments, the Non-GAAP Income Tax Provision was $601 thousand, resulting in a Non-GAAP Effective Tax Rate of 3.9% Reconciliation of Non-GAAP Income Tax Provision and Effective Tax Rate (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric | September 27, 2024 | September 29, 2023 | | :------------------------------------------ | :----------------- | :----------------- | | GAAP Income Tax (Benefit) Provision | $(9,470) | $7,400 | | GAAP effective tax rate | 22.0% | 10.1% | | Tax effect of adjustments to GAAP results | $10,071 | $2,554 | | Non-GAAP Income Tax Provision | $601 | $9,954 | | Non-GAAP effective tax rate | 3.9% | 11.4% | Reconciliation of Non-GAAP Net Income and Earnings per Share Allegro's GAAP Net Loss Attributable to Allegro MicroSystems, Inc. for Q2 FY2025 was $(33.675) million, with a diluted EPS of $(0.18). After non-GAAP adjustments totaling $58.638 million and a tax effect of $(10.071) million, the Non-GAAP Net Income was $14.892 million, leading to a Non-GAAP Diluted EPS of $0.08 Reconciliation of Non-GAAP Net Income and Earnings per Share (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric | September 27, 2024 | September 29, 2023 | | :----------------------------------------------------------------- | :----------------- | :----------------- | | GAAP Net (Loss) Income Attributable to Allegro MicroSystems, Inc. | $(33,675) | $65,617 | | GAAP Diluted Earnings per Share | $(0.18) | $0.34 | | Non-GAAP adjustments: | | | | Transaction-related costs | $3,295 | $1,806 | | Purchased intangible amortization | $5,410 | $630 | | Restructuring costs | $2,067 | — | | Stock-based compensation | $11,545 | $10,877 | | Loss on change in fair value of forward repurchase contract | $34,752 | — | | Other costs | $1,428 | $1,301 | | Total Non-GAAP Adjustments | $58,638 | $14,614 | | Tax effect of adjustments to GAAP results | $(10,071) | $(2,554) | | Non-GAAP Net Income Attributable to Allegro MicroSystems, Inc. | $14,892 | $77,677 | | Non-GAAP Diluted Earnings per Share | $0.08 | $0.40 | Reconciliation of Non-GAAP Free Cash Flow For Q2 FY2025, GAAP Operating Cash Flow was $15.547 million. After deducting purchases of property, plant, and equipment of $(9.972) million, the Non-GAAP Free Cash Flow was $5.575 million, representing 3.0% of net sales Reconciliation of Non-GAAP Free Cash Flow (Three-Month Period Ended September 27, 2024 vs. September 29, 2023) | Metric (in thousands) | September 27, 2024 | September 29, 2023 | | :------------------------------------------ | :----------------- | :----------------- | | GAAP Operating Cash Flow | $15,547 | $46,730 | | GAAP Operating Cash Flow (% of net sales) | 8.3% | 17.0% | | Non-GAAP adjustments: | | | | Purchases of property, plant and equipment | $(9,972) | $(10,977) | | Non-GAAP Free Cash Flow | $5,575 | $23,219 | | Non-GAAP Free Cash Flow (% of net sales) | 3.0% | 13.9% | Additional Information This section contains important disclaimers regarding forward-looking statements and investor contact details Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, indicating that they are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from expectations. It advises against undue reliance and refers readers to SEC filings for a comprehensive list of risk factors - Statements are forward-looking and covered by safe harbor provisions[8] - Involve known and unknown risks, uncertainties, and important factors that may cause actual results to differ materially[8] - Readers should not place undue reliance on these statements and should refer to Form 10-K and 10-Q for risk factors[8][9] - Non-GAAP financial measures are supplemental and not substitutes for GAAP[9] Investor Contact Jalene Hoover, VP of Investor Relations & Corporate Communications, is the primary contact for investor inquiries, with contact details provided - Contact Person: Jalene Hoover, VP of Investor Relations & Corporate Communications[26] - Contact Information: +1 (512) 751-6526, jhoover@allegromicro.com[26]