Wolfspeed(US:WOLF)2025-11-07 21:04Bankruptcy and Restructuring - The company filed for Chapter 11 bankruptcy on June 30, 2025, to implement a prepackaged plan of reorganization[147]. - The restructuring support agreement was executed with stakeholders holding over 97% of the company's senior secured notes and over 67% of convertible notes[148]. - A rights offering was initiated on August 14, 2025, for approximately $301.13 million in new convertible second-lien senior secured notes[149]. - The company emerged from Chapter 11 on September 29, 2025, with 25,840,656 shares of new common stock issued and 73,030,424 shares reserved for issuance[152]. - The company issued secured financing totaling $2.1 billion, including $1.3 billion in new senior secured notes due 2030[157]. - The restructuring plan included a backstop premium of $30.25 million for backstop parties[149]. - The company reduced its overall funded debt by approximately 70%, representing a reduction of approximately $4.6 billion, and reduced its annual total cash interest payments by approximately 60%[206]. - The company has no off-balance sheet arrangements as of September 28, 2025, ensuring liquidity and capital resources are not subject to off-balance sheet risks[210]. Financial Performance - Revenue for the three months ended September 28, 2025, increased by $2.1 million to $196.8 million, a 1% increase compared to the same period in 2024[171][176]. - Power Products revenue rose by 36% to $131.8 million, while Materials Products revenue decreased by 33% to $65.0 million[176]. - Gross margin decreased to (39.2)% from (18.6)%, primarily due to underutilization of the Siler City Fab and unfavorable product mix[171][177]. - Operating loss was $161.4 million, an improvement from a loss of $230.1 million in the prior year[171][174]. - Diluted loss per share increased to $4.12 from $2.23[171][174]. - Cash provided by operating activities was $5.7 million, compared to cash used of $132.0 million in the previous year[171][174]. - Research and development expenses decreased by 38% to $31.7 million, representing 16% of revenue[171][178]. - Sales, general and administrative expenses decreased by $24.3 million, or 39%, from $62.2 million in Q3 2024 to $37.9 million in Q3 2025, representing 19% of revenue[179]. - Net cash provided by operating activities for the first three months of fiscal 2026 was $5.7 million, a significant improvement from a cash used of $132.0 million in the same period of fiscal 2025, reflecting a 104% increase[205]. - Net cash provided by investing activities was $136.9 million in the first three months of fiscal 2026, compared to net cash used of $193.0 million in the same period of fiscal 2025, marking a 171% increase[205]. Strategic Focus and Future Outlook - The company is focused on accelerating product innovation, optimizing manufacturing processes, and improving financial performance[172][175]. - The company continues to expect increased mid and long-term demand for silicon carbide materials and devices despite current softening demand[171]. - The company has invested in new production facilities and R&D to support new product development and lower costs[171]. - The company expects to incur ongoing underutilization costs until market demand for products meets or exceeds production capacity[181]. - The company expects gross capital investment to decrease significantly to approximately $0.1 billion during the remainder of fiscal 2026[207]. - The company anticipates receiving an additional $0.7 billion of incentives primarily related to the AMIC refundable tax credits during fiscal 2026[207]. - The company is evaluating strategic opportunities, including potential acquisitions and joint ventures, and may access capital markets through the issuance of debt or equity[209]. - The company expects to maintain operations and meet obligations to customers, vendors, and employees in the ordinary course of business over the next 12 months[206]. Shareholder and Equity Matters - Two equity compensation plans were adopted, reserving 4,058,925 shares for the long-term incentive plan and 8,117,851 shares for the management incentive plan[158]. - The company issued a warrant to Renesas for 4,943,555 shares of new common stock at an exercise price of $23.95 per share[155]. - The company plans to issue 16,852,372 shares of new common stock to Renesas upon receiving regulatory approvals[153].