Wolfspeed(WOLF) - 2025 Q4 - Annual Results

Executive Summary & Company Overview Wolfspeed reported declining revenue and significant GAAP losses for FY25, with the CEO expressing confidence in future leadership in silicon carbide technology, while navigating Chapter 11 reorganization Quarterly & Full Fiscal Year Financial Highlights Wolfspeed reported a decline in consolidated revenue for both Q4 and the full fiscal year 2025 compared to 2024, with GAAP gross margin and EPS worsening significantly due to substantial losses | Metric | Q4 FY25 (Millions $) | Q4 FY24 (Millions $) | YoY Change (%) | FY25 (Millions $) | FY24 (Millions $) | YoY Change (%) | | :-------------------------------- | :------------------ | :------------------ | :-------------- | :---------------- | :---------------- | :-------------- | | Consolidated Revenue | $197 | $201 | -2.0% | $758 | $807 | -6.1% | | Mohawk Valley Fab Revenue | $94.1 | $41 | +129.5% | N/A | N/A | N/A | | GAAP Gross Margin | (13)% | 1% | -14 pp | (16)% | 10% | -26 pp | | Non-GAAP Gross Margin | (1)% | 5% | -6 pp | 2% | 13% | -11 pp | | Underutilization Costs | $23.6 | $24.0 | -1.7% | $105.2 | $124.4 | -15.4% | | GAAP Loss Per Share | ($4.30) | ($1.39) | +209.4% | ($11.39) | ($4.56) | +149.8% | | Non-GAAP Loss Per Share | ($0.77) | ($0.89) | -13.5% | ($3.32) | ($2.59) | +28.2% | CEO Statement & Strategic Outlook CEO Robert Feurle expressed strong confidence in Wolfspeed's market position, highlighting its world-class greenfield facility, vertically integrated footprint, strengthened leadership, and robust IP portfolio as key differentiators for global leadership in silicon carbide technology - CEO Robert Feurle is confident in Wolfspeed's position to be the global leader in silicon carbide technology, citing its world-class greenfield and vertically integrated facility, recent senior leadership additions, and robust IP portfolio[4] - The next important milestone is court approval of the Plan of Reorganization and emergence from Chapter 11 with a much stronger financial structure[4] About Wolfspeed, Inc. Wolfspeed, Inc. is a market leader in silicon carbide technologies, pioneering advanced semiconductor technology for various applications including silicon carbide material, Power Modules, Discrete Power Devices, and Power Die Products, aiming to enable disruptive innovations globally - Wolfspeed leads the market in silicon carbide technologies, powering disruptive innovations globally[5] - The company's product offerings include silicon carbide material, Power Modules, Discrete Power Devices, and Power Die Products[5] GAAP Financial Statements Wolfspeed's GAAP statements show substantial FY25 net losses from goodwill impairment, increased liabilities, and significant cash usage Condensed Consolidated Statements of Operations Wolfspeed reported a significant increase in net loss for both the fourth quarter and the full fiscal year 2025, primarily driven by a substantial goodwill impairment charge and increased restructuring and other expenses | Metric (Millions $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :------------------ | :------ | :------ | :--- | :--- | | Revenue, net | $197.0 | $200.7 | $757.6 | $807.2 | | Cost of revenue, net | $222.7 | $198.3 | $879.2 | $729.8 | | Gross (loss) profit | ($25.7) | $2.4 | ($121.6) | $77.4 | | Gross margin percentage | (13)% | 1% | (16)% | 10% | | Operating loss | ($581.6) | ($145.9) | ($1,329.2) | ($445.3) | | Net loss from continuing operations | ($669.3) | ($174.9) | ($1,609.2) | ($573.6) | | Net loss | ($669.3) | ($174.9) | ($1,609.2) | ($864.2) | | Basic and diluted loss per share (Continuing operations) | ($4.30) | ($1.39) | ($11.39) | ($4.56) | - Goodwill impairment of $359.2 million was recognized in both Q4 and the full fiscal year 2025, significantly impacting operating loss[14] - Restructuring and other expenses increased substantially to $122.8 million in Q4 FY25 (from $6.2 million in Q4 FY24) and $417.6 million for FY25 (from $20.6 million in FY24)[14] Condensed Consolidated Balance Sheets As of June 29, 2025, Wolfspeed's total assets decreased, primarily due to a significant reduction in cash and cash equivalents and the impairment of goodwill, while total liabilities increased dramatically, leading to a negative total shareholders' equity | Metric (Millions $) | June 29, 2025 | June 30, 2024 | YoY Change (%) | | :------------------ | :------------ | :------------ | :------------- | | Total assets | $6,854.4 | $7,984.6 | -14.2% | | Cash, cash equivalents, and short-term investments | $955.4 | $2,174.6 | -56.1% | | Goodwill | $0 | $359.2 | -100.0% | | Total current liabilities | $7,090.0 | $665.3 | +965.7% | | Current maturity on long-term borrowings | $6,538.0 | $0 | N/A | | Total long-term liabilities | $211.5 | $6,437.2 | -96.7% | | Total liabilities | $7,301.5 | $7,102.5 | +2.8% | | Total shareholders' equity | ($447.1) | $882.1 | -150.7% | - The company's goodwill was fully impaired, reducing its value from $359.2 million to zero[16] - A significant increase in current maturity on long-term borrowings to $6,538.0 million from zero in the prior year indicates a reclassification of debt, contributing to the negative shareholders' equity[16] Consolidated Statements of Cash Flows Wolfspeed continued to use significant cash in operating and investing activities for fiscal year 2025, though investing cash outflow decreased compared to FY24, leading to a substantial decrease in the cash balance despite cash provided by financing activities | Metric (Millions $) | FY25 | FY24 | YoY Change (%) | | :-------------------------------------- | :----- | :----- | :------------- | | Net cash used in operating activities | ($711.7) | ($725.6) | -1.9% | | Net cash used in investing activities | ($268.1) | ($1,943.3) | -86.2% | | Cash provided by financing activities | $400.1 | $1,958.0 | -79.6% | | Net change in cash and cash equivalents | ($578.7) | ($711.1) | -18.6% | | Cash and cash equivalents, end of period | $467.2 | $1,045.9 | -55.4% | - Purchases of property and equipment decreased significantly from $2,274.0 million in FY24 to $1,271.4 million in FY25[19] - Proceeds from long-term debt borrowings decreased from $2,000.0 million in FY24 to $240.0 million in FY25[19] Product Line Revenue Wolfspeed's FY25 total revenue declined, primarily due to Materials Products, though Q4 Power Products revenue increased | Product Line (Millions $) | Q4 FY25 | Q4 FY24 | YoY Change (%) | FY25 | FY24 | YoY Change (%) | | :------------------------ | :------ | :------ | :------------- | :--- | :--- | :------------- | | Power Products | $118.6 | $104.6 | +13.4% | $414.0 | $415.6 | -0.4% | | Materials Products | $78.4 | $96.1 | -18.4% | $343.6 | $391.6 | -12.3% | | Total | $197.0 | $200.7 | -1.8% | $757.6 | $807.2 | -6.1% | Non-GAAP Financial Measures & Reconciliations Wolfspeed uses non-GAAP measures to clarify core operational performance by excluding non-cash and non-recurring items, showing improved metrics Introduction to Non-GAAP Measures Wolfspeed uses various non-GAAP financial measures, including non-GAAP gross margin, operating loss, net loss, diluted loss per share, EBITDA, adjusted EBITDA, and free cash flow, to provide investors with additional insights into the company's core performance and underlying trends, supplementing GAAP results - Wolfspeed utilizes non-GAAP measures to offer additional information for analyzing core performance and underlying trends, supplementing GAAP results[6][21][24] - Non-GAAP measures presented include non-GAAP gross margin, operating loss, non-operating (expense) income, net, net loss, diluted loss per share, EBITDA, adjusted EBITDA, and free cash flow[21] Rationale for Non-GAAP Adjustments Wolfspeed excludes specific items from its non-GAAP measures, such as stock-based compensation, acquisition-related intangibles amortization, asset and goodwill impairments, gains/losses on property disposal, write-offs of deferred financing costs, pre-petition charges, legal settlements, customs matters, project/transformation/transaction costs, restructuring/facility closure costs, executive severance, debt-related amortization, Wafer Supply Agreement losses, and equity investment gains, because these are considered non-cash, non-recurring, or not reflective of ongoing core operating performance - Stock-based compensation is excluded as a non-cash expense not used to evaluate core operating performance[25] - Goodwill impairment of $359.2 million and asset impairment charges are excluded as they are not reflective of ongoing operating results[27][28] - Restructuring and facility closure costs, pre-petition charges, and write-off of deferred financing costs are excluded due to their non-recurring nature and direct relation to the 2025 Restructuring Plan and Chapter 11 Cases[30][31][35] Non-GAAP Gross Margin Reconciliation For fiscal year 2025, Wolfspeed's GAAP gross loss of ($121.6) million was adjusted by adding back $36.9 million for stock-based compensation and $97.1 million for restructuring and facility closure costs, resulting in a non-GAAP gross profit of $12.4 million | Metric (Millions $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :------------------ | :------ | :------ | :--- | :--- | | GAAP gross (loss) profit | ($25.7) | $2.4 | ($121.6) | $77.4 | | Stock-based compensation expense | $9.7 | $8.5 | $36.9 | $28.5 | | Restructuring and facility closure costs | $14.6 | $0 | $97.1 | $0 | | Non-GAAP gross profit | ($1.4) | $10.9 | $12.4 | $105.9 | | GAAP gross margin percentage | (13)% | 1% | (16)% | 10% | | Non-GAAP gross margin percentage | (1)% | 5% | 2% | 13% | Non-GAAP Operating Loss Reconciliation Wolfspeed's GAAP operating loss of ($1,329.2) million for FY25 was significantly reduced to a non-GAAP operating loss of ($406.3) million after adding back total adjustments of $922.9 million, which included goodwill impairment, restructuring costs, stock-based compensation, and asset impairment | Metric (Millions $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :------------------ | :------ | :------ | :--- | :--- | | GAAP operating loss | ($581.6) | ($145.9) | ($1,329.2) | ($445.3) | | Total stock-based compensation expense | $10.6 | $21.0 | $73.3 | $84.9 | | Goodwill impairment | $359.2 | $0 | $359.2 | $0 | | Total restructuring and other costs | $54.5 | $0 | $232.0 | $0 | | Asset impairment | $15.0 | $0 | $170.2 | $0 | | Total adjustments to GAAP operating loss | $487.6 | $27.0 | $922.9 | $104.3 | | Non-GAAP operating loss | ($94.0) | ($118.9) | ($406.3) | ($341.0) | Non-GAAP Non-Operating (Expense) Income Reconciliation For fiscal year 2025, Wolfspeed's GAAP non-operating expense of ($289.7) million was adjusted to ($199.6) million non-GAAP, primarily by adding back amortization of discount and debt issuance costs, loss on Wafer Supply Agreement, and write-off of deferred financing costs, while subtracting gain on equity investment | Metric (Millions $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------------- | :------ | :------ | :--- | :--- | | GAAP non-operating expense, net | ($97.8) | ($28.5) | ($289.7) | ($127.2) | | Gain on equity investment | ($31.8) | ($11.2) | ($22.6) | ($18.5) | | Amortization of discount and debt issuance costs, net | $14.3 | $6.8 | $48.8 | $28.4 | | Loss on Wafer Supply Agreement | $0 | $4.9 | $9.2 | $25.3 | | Write-off of deferred financing cost | $54.7 | $0 | $54.7 | $0 | | Non-GAAP non-operating expense, net | ($60.6) | ($28.0) | ($199.6) | ($84.3) | Non-GAAP Net Loss & Diluted Loss Per Share Reconciliation Wolfspeed's GAAP net loss from continuing operations of ($1,609.2) million for FY25 was adjusted to a non-GAAP net loss of ($469.0) million, reflecting total adjustments of $1,013.0 million before income taxes and an income tax adjustment benefit of $127.2 million | Metric (Millions $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------------- | :------ | :------ | :--- | :--- | | GAAP net loss from continuing operations | ($669.3) | ($174.9) | ($1,609.2) | ($573.6) | | Total adjustments to GAAP net loss before provision for income taxes | $524.8 | $27.5 | $1,013.0 | $147.2 | | Income tax adjustment - benefit | $24.7 | $35.4 | $127.2 | $100.5 | | Non-GAAP net loss | ($119.8) | ($112.0) | ($469.0) | ($325.9) | | Non-GAAP diluted loss per share | ($0.77) | ($0.89) | ($3.32) | ($2.59) | Adjusted EBITDA Reconciliation For fiscal year 2025, Wolfspeed's GAAP net loss of ($1,609.2) million was reconciled to an Adjusted EBITDA of ($210.9) million, with key adjustments including adding back depreciation and amortization, interest expense, stock-based compensation, goodwill impairment, and restructuring costs | Metric (Millions $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------------- | :------ | :------ | :--- | :--- | | GAAP net loss | ($669.3) | ($174.9) | ($1,609.2) | ($573.6) | | EBITDA (Non-GAAP) | ($543.2) | ($94.4) | ($1,119.2) | ($280.2) | | Stock based compensation | $10.6 | $21.0 | $73.3 | $84.9 | | Goodwill impairment | $359.2 | $0 | $359.2 | $0 | | Restructuring and facility closure costs | $46.8 | $0 | $177.3 | $0 | | Adjusted EBITDA (Non-GAAP) | ($40.7) | ($73.9) | ($210.9) | ($162.5) | Free Cash Flow Wolfspeed defines free cash flow as operating cash flows from continuing operations less net purchases of property and equipment and patent and licensing rights, reporting a negative free cash flow of ($1,748.0) million for fiscal year 2025 - Free cash flow is defined as operating cash flows from continuing operations, less net purchases of property and equipment and patent and licensing rights[43] | Metric (Millions $) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------------- | :------ | :------ | :--- | :--- | | Net cash used in operating activities | ($242.5) | ($239.5) | ($711.7) | ($671.3) | | Less: PP&E spending, net of reimbursements | ($210.1) | ($644.2) | ($1,031.0) | ($2,095.5) | | Less: Patents spending | ($1.4) | ($1.6) | ($5.3) | ($5.9) | | Total free cash flow | ($454.0) | ($885.3) | ($1,748.0) | ($2,772.7) | Forward-Looking Statements & Risks Forward-looking statements are subject to significant risks, particularly from Chapter 11 Cases, global economy, and operational challenges - Forward-looking statements are inherently uncertain and subject to risks that may cause actual results to differ materially[9] - Key risks include those related to the Chapter 11 Cases, such as plan approval, effects on stakeholders, liquidity, ability to retain key personnel, administrative and legal costs, and potential delisting of common stock[9] - Other significant risks involve ongoing uncertainty in global economic and geopolitical conditions, expansion plans, production difficulties, market development, supply chain complexities, and the substantial doubt about Wolfspeed's ability to continue as a going concern[9][10] Cautionary Note Regarding Common Stock Trading Wolfspeed's common stock during Chapter 11 Cases is highly speculative and risky, with no assurance of active market or recovery - Trading in Wolfspeed's common stock during the Chapter 11 Cases is highly speculative and poses substantial risks[11] - Trading prices may bear little or no relationship to the actual recovery by holders of common stock in the Chapter 11 Cases, with no assurance of liquidity or favorable selling prices[11] Contact Information For investor relations inquiries, Tyler Gronbach, Vice President of External Affairs, can be contacted via phone or email - Contact Tyler Gronbach, Vice President of External Affairs, for investor relations at 919-407-4820 or investorrelations@wolfspeed.com[52]