Financial Data and Key Metrics Changes - Q2 sales were $187 million, representing a 12% sequential increase but a 32% decline year-over-year [22][23] - Non-GAAP EPS was $0.08, at the high end of the outlook range [22][8] - Gross margin was 48.8%, operating margin was 11.7%, and adjusted EBITDA was 17.2% of sales [22] - Cash flow from operations was $16 million, with free cash flow of $6 million [28] Business Line Data and Key Metrics Changes - Automotive sales were $142 million, an 8% sequential increase but a 28% year-over-year decline, accounting for 76% of total sales [23] - E-mobility sales increased to $71 million, up 14% sequentially [23] - Industrial and other sales were $45 million, a 27% sequential increase but a 42% year-over-year decline [24] - Magnetic sensor sales were $129 million, increasing 12% sequentially, representing 69% of total sales [24] Market Data and Key Metrics Changes - Sales by geography: 26% in China, 21% in the rest of Asia, 20% in Japan, 18% in the Americas, and 15% in Europe [25] - China saw a 54% increase in shipments in Q2, indicating strong demand recovery [39][15] Company Strategy and Development Direction - The company is focused on executing new product roadmaps and has launched new TMR current sensors [8][9] - There is a strong emphasis on innovation and design wins across various applications, including automotive and industrial markets [9][11] - The company is localizing production in China to better serve local OEMs and is on track to launch parts from a new supply chain by year-end [14][62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about global demand for magnetic sensing and power semiconductor solutions, particularly in the automotive sector [12][17] - There is a recognition of ongoing inventory rebalancing, especially in North America and Europe, which may lead to near-term challenges [16][92] - The company expects third-quarter sales to range from $170 million to $180 million, reflecting continued progress towards vehicle electrification [32][20] Other Important Information - The company repurchased 39 million shares from Sanken Electric, reducing Sanken's ownership from 51% to 33% [29] - A $35 million non-cash GAAP loss was recorded due to a forward repurchase fair value adjustment [30] Q&A Session Summary Question: Can you walk us through the changes in revenue and inventory? - Management noted that the guidance for December is higher than June levels, with significant momentum in China, where shipments were up 54% [39][40] Question: Can you expand on the gate driver win with a China OEM? - The win was related to the GaN isolated gate driver, which offers significant space and cost savings, and is expected to gain traction in the market [42][41] Question: How does the competitive landscape look for magnetic sensors? - Management is confident in maintaining and potentially extending market share due to strong design wins and new product introductions [74] Question: What is the current inventory situation in the distribution channel? - Inventory levels are approaching normal in China and Asia, while North America and Europe still have work to do [71][72] Question: What are the expectations for gross margin moving forward? - Management expects gross margins to improve slightly in Q3, with a range of 49% to 51% [33][56] Question: What is the outlook for end consumption of devices? - Management believes that end market demand remains strong, with pockets of inventory digestion primarily in North America and Europe [92][93]

[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) This section summarizes Allegro MicroSystems' Q2 FY2025 performance, financial highlights, and Q3 FY2025 business outlook [Second Quarter 2025 Performance Overview](index=1&type=section&id=1.1.%20Second%20Quarter%202025%20Performance%20Overview) 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](index=1&type=chunk) - **Non-GAAP EPS was $0.08**, at the high end of outlook[2](index=2&type=chunk) - Sequential growth observed in Automotive and Industrial and Other end markets[2](index=2&type=chunk) - Company is investing for growth and accelerating new product introductions[2](index=2&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=1.2.%20Second%20Quarter%202025%20Financial%20Highlights) 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](index=1&type=section&id=1.3.%20Business%20Outlook%20for%20Third%20Quarter%202025) 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](index=4&type=chunk) - **Expected Non-GAAP Gross Margin: 49% to 51%**[4](index=4&type=chunk) - **Expected Non-GAAP Diluted Earnings per Share: $0.04 to $0.08**[4](index=4&type=chunk) - **Outlook factors: continued progress in vehicle electrification, ongoing inventory rebalancing, and typical December quarter seasonality**[4](index=4&type=chunk) [Company Information](index=2&type=section&id=2.%20Company%20Information) This section provides an overview of Allegro MicroSystems' business and details for their earnings webcast [About Allegro MicroSystems](index=2&type=section&id=2.1.%20About%20Allegro%20MicroSystems) 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](index=1&type=chunk) - **Designer, developer, fabless manufacturer, and marketer of sensor ICs and application-specific analog power ICs**[7](index=7&type=chunk) - **Key markets: Automotive and Industrial**[7](index=7&type=chunk) - **Product applications: vehicle electrification, automotive ADAS safety features, automation for Industry 4.0, data centers, and clean energy**[7](index=7&type=chunk) [Earnings Webcast Details](index=2&type=section&id=2.2.%20Earnings%20Webcast%20Details) 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](index=6&type=chunk) - **Presenters: Vineet Nargolwala (President and CEO) and Derek P. D'Antilio (EVP and CFO)**[6](index=6&type=chunk) - **Availability: Recording posted on investors.allegromicro.com for at least 90 days**[6](index=6&type=chunk) [GAAP Financial Statements](index=4&type=section&id=3.%20GAAP%20Financial%20Statements) This section presents Allegro MicroSystems' unaudited GAAP consolidated statements of operations, balance sheets, and cash flows [Condensed Consolidated Statements of Operations](index=4&type=section&id=3.1.%20Condensed%20Consolidated%20Statements%20of%20Operations) 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](index=4&type=section&id=3.2.%20Supplemental%20Schedule%20of%20Total%20Net%20Sales) 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](index=5&type=section&id=3.3.%20Condensed%20Consolidated%20Balance%20Sheets) 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](index=6&type=section&id=3.4.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) 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](index=8&type=section&id=4.%20Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section explains Allegro MicroSystems' non-GAAP financial measures and reconciles them to GAAP results [Non-GAAP Financial Measures Overview](index=8&type=section&id=4.1.%20Non-GAAP%20Financial%20Measures%20Overview) 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](index=14&type=chunk) - **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](index=14&type=chunk) - **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](index=14&type=chunk) - **Non-GAAP measures are supplemental and not substitutes for GAAP measures**[14](index=14&type=chunk) [Reconciliation of Non-GAAP Gross Profit and Gross Margin](index=8&type=section&id=4.2.%20Reconciliation%20of%20Non-GAAP%20Gross%20Profit%20and%20Gross%20Margin) 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](index=9&type=section&id=4.3.%20Reconciliation%20of%20Non-GAAP%20Operating%20Expenses) 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](index=10&type=section&id=4.4.%20Reconciliation%20of%20Non-GAAP%20Operating%20Income%20and%20Operating%20Margin) 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](index=10&type=section&id=4.5.%20Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA) 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](index=11&type=section&id=4.6.%20Reconciliation%20of%20Non-GAAP%20Profit%20before%20Tax) 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](index=11&type=section&id=4.7.%20Reconciliation%20of%20Non-GAAP%20Income%20Tax%20Provision%20and%20Effective%20Tax%20Rate) 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](index=12&type=section&id=4.8.%20Reconciliation%20of%20Non-GAAP%20Net%20Income%20and%20Earnings%20per%20Share) 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](index=13&type=section&id=4.9.%20Reconciliation%20of%20Non-GAAP%20Free%20Cash%20Flow) 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](index=2&type=section&id=5.%20Additional%20Information) This section contains important disclaimers regarding forward-looking statements and investor contact details [Forward-Looking Statements](index=2&type=section&id=5.1.%20Forward-Looking%20Statements) 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](index=8&type=chunk) - **Involve known and unknown risks, uncertainties, and important factors that may cause actual results to differ materially**[8](index=8&type=chunk) - **Readers should not place undue reliance on these statements and should refer to Form 10-K and 10-Q for risk factors**[8](index=8&type=chunk)[9](index=9&type=chunk) - **Non-GAAP financial measures are supplemental and not substitutes for GAAP**[9](index=9&type=chunk) [Investor Contact](index=13&type=section&id=5.2.%20Investor%20Contact) 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](index=26&type=chunk) - **Contact Information: +1 (512) 751-6526, jhoover@allegromicro.com**[26](index=26&type=chunk)

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents Allegro MicroSystems' unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Allegro MicroSystems' unaudited condensed consolidated financial statements and related notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | 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](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | 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](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | 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](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) | 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](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | 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](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of the Business and Basis of Presentation](index=10&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) - 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](index=25&type=chunk) - 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](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - 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](index=28&type=chunk) - 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](index=30&type=chunk) [3. Revenue from Contracts with Customers](index=11&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) 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](index=12&type=section&id=4.%20Fair%20Value%20Measurements) 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](index=39&type=chunk) [5. Trade Accounts Receivable, net](index=14&type=section&id=5.%20Trade%20Accounts%20Receivable%2C%20net) 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](index=14&type=section&id=6.%20Inventories) 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](index=43&type=chunk) [7. Property, Plant and Equipment, net](index=14&type=section&id=7.%20Property%2C%20Plant%20and%20Equipment%2C%20net) 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](index=46&type=chunk) [8. Goodwill and Intangible Assets](index=16&type=section&id=8.%20Goodwill%20and%20Intangible%20Assets) 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](index=49&type=chunk) [9. Debt and Other Borrowings](index=17&type=section&id=9.%20Debt%20and%20Other%20Borrowings) 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](index=54&type=chunk) - 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](index=55&type=chunk) [10. Commitments and Contingencies](index=18&type=section&id=10.%20Commitments%20and%20Contingencies) - 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](index=57&type=chunk) [11. Net (Loss) income per Share](index=18&type=section&id=11.%20Net%20(Loss)%20income%20per%20Share) 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](index=19&type=section&id=12.%20Common%20Stock%20and%20Stock-Based%20Compensation) 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](index=20&type=section&id=13.%20Income%20Taxes) 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](index=72&type=chunk) [14. Related Party Transactions](index=20&type=section&id=14.%20Related%20Party%20Transactions) - 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](index=73&type=chunk)[76](index=76&type=chunk) - 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](index=73&type=chunk) - 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](index=73&type=chunk) [15. Subsequent Events](index=21&type=section&id=15.%20Subsequent%20Events) - 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](index=76&type=chunk) - 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](index=76&type=chunk) - 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](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operating results, and key performance drivers for the quarter ended June 28, 2024 [Overview](index=22&type=section&id=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](index=79&type=chunk) 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](index=22&type=section&id=Business%20Updates) - 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](index=80&type=chunk) - 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](index=80&type=chunk) - 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](index=80&type=chunk) - 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](index=80&type=chunk)[82](index=82&type=chunk) - 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](index=82&type=chunk) [Other Key Factors and Trends Affecting Our Operating Results](index=24&type=section&id=Other%20Key%20Factors%20and%20Trends%20Affecting%20Our%20Operating%20Results) [Inflation](index=24&type=section&id=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](index=84&type=chunk) [Design Wins with New and Existing Customers](index=24&type=section&id=Design%20Wins%20with%20New%20and%20Existing%20Customers) - 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](index=85&type=chunk) - 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](index=85&type=chunk) [Customer Demand, Orders and Forecasts](index=24&type=section&id=Customer%20Demand%2C%20Orders%20and%20Forecasts) - 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](index=86&type=chunk) [Manufacturing Costs and Product Mix](index=24&type=section&id=Manufacturing%20Costs%20and%20Product%20Mix) - 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](index=87&type=chunk)[89](index=89&type=chunk) - Gross margin generally decreases with lower production volumes due to reduced absorption of fixed manufacturing costs and increases when volumes are higher[89](index=89&type=chunk) [Cyclical Nature of the Semiconductor Industry](index=26&type=section&id=Cyclical%20Nature%20of%20the%20Semiconductor%20Industry) - 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](index=90&type=chunk) - During expansion, margins improve as fixed costs are spread over higher volumes; during contractions, sales, production, and margins generally decline[90](index=90&type=chunk) [2017 Tax Cuts and Jobs Act](index=26&type=section&id=2017%20Tax%20Cuts%20and%20Jobs%20Act) - 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](index=91&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) [Overall Financial Performance](index=26&type=section&id=Overall%20Financial%20Performance) 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](index=26&type=section&id=Total%20Net%20Sales) - 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](index=94&type=chunk)[95](index=95&type=chunk) [Sales Trends by Market](index=28&type=section&id=Sales%20Trends%20by%20Market) 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](index=97&type=chunk) [Sales Trends by Product](index=28&type=section&id=Sales%20Trends%20by%20Product) 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](index=98&type=chunk) [Sales Trends by Geographic Location](index=28&type=section&id=Sales%20Trends%20by%20Geographic%20Location) 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](index=100&type=chunk) [Cost of goods sold](index=30&type=section&id=Cost%20of%20goods%20sold) - 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](index=101&type=chunk) - 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](index=101&type=chunk) [Gross profit and gross margin](index=30&type=section&id=Gross%20profit%20and%20gross%20margin) - 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](index=102&type=chunk) [Research and development expenses](index=30&type=section&id=Research%20and%20development%20expenses) - Research and development (R&D) expenses increased by **$2.2 million** (**5.2%**) YoY, primarily due to higher personnel costs[103](index=103&type=chunk) - 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](index=103&type=chunk) [Selling, general and administrative expenses](index=30&type=section&id=Selling%2C%20general%20and%20administrative%20expenses) - 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](index=104&type=chunk) - 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](index=104&type=chunk) [Interest expense](index=30&type=section&id=Interest%20expense) - 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](index=105&type=chunk) [Interest income](index=30&type=section&id=Interest%20income) - Interest income decreased by **$0.3 million** (**41.4%**) YoY, primarily due to lower cash balances[106](index=106&type=chunk) [Other income (expense), net](index=30&type=section&id=Other%20income%20(expense)%2C%20net) - 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](index=107&type=chunk) - 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](index=107&type=chunk) [Income tax provision](index=30&type=section&id=Income%20tax%20provision) - 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](index=108&type=chunk) - 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](index=108&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) 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](index=109&type=chunk) - The Company expects to strategically invest in expanding operations in China, Europe, Japan, and India to directly manage and service customers[109](index=109&type=chunk) [Cash Flows from Operating, Investing and Financing Activities](index=31&type=section&id=Cash%20Flows%20from%20Operating%2C%20Investing%20and%20Financing%20Activities) 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](index=112&type=chunk) - 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](index=115&type=chunk) - 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](index=115&type=chunk) [Debt Obligations](index=33&type=section&id=Debt%20Obligations) - Information regarding the Company's debt obligations is detailed in Note 9, 'Debt and Other Borrowings,' of the unaudited condensed consolidated financial statements[116](index=116&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) - 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](index=117&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) - There have been no material changes in the Company's critical accounting policies and estimates since March 29, 2024[118](index=118&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) 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](index=119&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) 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](index=34&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) - 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](index=120&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=34&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - 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](index=121&type=chunk) [Changes in Internal Control over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - 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](index=122&type=chunk) [PART II. Other Information](index=35&type=section&id=PART%20II.%20Other%20Information) This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) 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](index=124&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) 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](index=125&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) 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](index=126&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) 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](index=126&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) 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](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)

Allegro MicroSystems, Inc. (NASDAQ:ALGM) Q1 2025 Earnings Conference Call August 1, 2024 8:30 AM ET Company Participants Jalene Hoover - Vice President of Investor Relations & Corporate Communications Vineet Nargolwala - President & Chief Executive Officer Derek D'Antilio - Senior Vice President, Chief Financial Officer & Treasurer Conference Call Participants Chris Caso - Wolfe Research Blayne Curtis - Jefferies Quinn Bolton - Needham Vijay Rakesh - Mizuho Thomas O'Malley - Barclays Joshua Buchalter - TD C ...

First Quarter Financial Highlights and Business Outlook [First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Allegro reported Q1 FY2025 sales of **$167 million** and non-GAAP EPS of **$0.03**, alongside inventory rebalancing and capital actions Q1 FY2025 Key Financial Metrics (GAAP vs. Non-GAAP) | Financial Metric | Q1 FY2025 (ended June 28, 2024) | Q4 FY2024 (ended Mar 29, 2024) | Q1 FY2023 (ended June 30, 2023) | | :--- | :--- | :--- | :--- | | **Total Net Sales** | **$166.9M** | **$240.6M** | **$278.3M** | | GAAP Gross Margin % | 44.8% | 51.2% | 56.8% | | GAAP Operating Margin % | (6.4)% | 6.6% | 25.4% | | GAAP Diluted EPS | $(0.09) | $(0.04) | $0.31 | | Non-GAAP Gross Margin % | 48.8% | 53.8% | 57.8% | | Non-GAAP Operating Margin % | 6.0% | 23.8% | 30.8% | | Non-GAAP Diluted EPS | $0.03 | $0.25 | $0.39 | Q1 FY2025 Net Sales by Market (vs. Prior Periods) | Market | Q1 FY2025 (ended June 28, 2024) | Q4 FY2024 (ended Mar 29, 2024) | Q1 FY2023 (ended June 30, 2023) | | :--- | :--- | :--- | :--- | | Automotive | $131.2M | $181.9M | $185.4M | | Industrial and other | $35.7M | $58.6M | $92.9M | - Made a **$50 million** voluntary debt repayment during the quarter[2](index=2&type=chunk) - Announced a repurchase and retirement of **39 million** shares from its majority shareholder, which is expected to broaden ownership and increase liquidity[2](index=2&type=chunk)[3](index=3&type=chunk) [Business Outlook for Second Quarter 2025](index=1&type=section&id=Business%20Outlook) Allegro projects Q2 FY2025 net sales of **$182-192 million**, expecting low double-digit growth and non-GAAP EPS of **$0.04-0.08** Q2 FY2025 Non-GAAP Outlook | Metric | Expected Range/Value | | :--- | :--- | | Net Sales | $182M - $192M | | Gross Margin | 49% - 51% | | Interest Expense | Approx. $7M | | Diluted EPS | $0.04 - $0.08 | - The company expects a return to low double-digit sequential sales growth in the second quarter[2](index=2&type=chunk) - Allegro noted that it cannot provide a reconciliation of its forward-looking non-GAAP measures to GAAP measures without unreasonable effort due to the unpredictability of certain factors[6](index=6&type=chunk) Financial Statements (GAAP) [Condensed Consolidated Statement of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) Allegro reported Q1 FY2025 net sales of **$166.9 million** (**40%** decrease), leading to a GAAP operating loss of **$10.6 million** and net loss of **$17.7 million** Q1 FY2025 Statement of Operations Summary (Year-over-Year) | Metric (in thousands) | Q1 FY2025 (ended June 28, 2024) | Q1 FY2024 (ended June 30, 2023) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $166,919 | $278,293 | (40.0)% | | Gross Profit | $74,771 | $157,950 | (52.7)% | | Operating (Loss) Income | $(10,630) | $70,746 | N/A | | Net (Loss) Income | $(17,613) | $60,889 | N/A | | Diluted (Loss) Income per Share | $(0.09) | $0.31 | N/A | Q1 FY2025 Net Sales by Market (Year-over-Year) | Market (in thousands) | Q1 FY2025 | Q1 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Automotive | $131,184 | $185,430 | (29)% | | Industrial and other | $35,735 | $92,863 | (62)% | | **Total Net Sales** | **$166,919** | **$278,293** | **(40)%** | [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Allegro's total assets decreased to **$1.45 billion**, with liabilities reduced to **$339.0 million** and equity at **$1.11 billion** as of June 28, 2024 Balance Sheet Summary (Quarter-over-Quarter) | Account (in thousands) | June 28, 2024 | March 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $173,136 | $212,143 | | Inventories | $175,901 | $162,302 | | **Total Assets** | **$1,448,890** | **$1,530,603** | | Long-term debt | $202,589 | $249,611 | | **Total Liabilities** | **$339,048** | **$398,887** | | **Total Stockholders' Equity** | **$1,109,842** | **$1,131,716** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Q1 FY2025 net cash from operations was **$34.2 million**, with **$11.0 million** used in investing and **$60.4 million** in financing, resulting in a **$38.0 million** cash decrease Cash Flow Summary (Year-over-Year) | Cash Flow Activity (in thousands) | Q1 FY2025 (ended June 28, 2024) | Q1 FY2024 (ended June 30, 2023) | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,196 | $49,663 | | Net cash used in investing activities | $(10,977) | $(34,939) | | Net cash used in financing activities | $(60,378) | $(11,035) | | **Net (decrease) increase in cash** | **$(37,984)** | **$3,616** | - A significant use of cash in financing activities was a **$50.0 million** payment on the 2023 term loan facility[18](index=18&type=chunk) Non-GAAP Financial Measures and Reconciliations [Reconciliation of Non-GAAP Gross Profit](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Gross%20Profit) Q1 FY2025 non-GAAP gross profit was **$81.4 million** (**48.8%** margin), adjusted from GAAP gross profit of **$74.8 million** by **$6.6 million** in non-GAAP items Q1 FY2025 GAAP to Non-GAAP Gross Profit Reconciliation (in thousands) | Metric | Q1 FY2025 | | :--- | :--- | | GAAP Gross Profit | $74,771 | | GAAP Gross Margin % | 44.8% | | **Total Non-GAAP Adjustments** | **$6,635** | | *Purchased intangible amortization* | *$4,875* | | *Restructuring costs* | *$1,200* | | *Stock-based compensation* | *$561* | | Non-GAAP Gross Profit | $81,406 | | Non-GAAP Gross Margin % | 48.8% | [Reconciliation of Non-GAAP Operating Expenses & Income](index=9&type=section&id=Reconciliation%20of%20Non-GAAP%20Operating%20Expenses%20%26%20Income) Q1 FY2025 non-GAAP operating income was **$10.0 million** (**6.0%** margin), contrasting with a GAAP operating loss of **$10.6 million** after **$20.6 million** in adjustments Q1 FY2025 GAAP to Non-GAAP Operating Income Reconciliation (in thousands) | Metric | Q1 FY2025 | | :--- | :--- | | GAAP Operating (Loss) Income | $(10,630) | | GAAP Operating Margin % | (6.4)% | | **Total Non-GAAP Adjustments** | **$20,595** | | *Stock-based compensation* | *$10,118* | | *Purchased intangible amortization* | *$5,410* | | *Restructuring costs* | *$2,414* | | *Transaction-related costs* | *$1,842* | | Non-GAAP Operating Income | $9,965 | | Non-GAAP Operating Margin % | 6.0% | [Reconciliation of EBITDA and Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA) Q1 FY2025 Adjusted EBITDA was **$21.9 million** (**13.1%** margin), derived by adjusting the GAAP net loss of **$17.6 million** for standard add-backs and non-GAAP items Q1 FY2025 GAAP Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 FY2025 | | :--- | :--- | | GAAP Net (Loss) Income | $(17,613) | | Interest expense, net | $4,883 | | Income tax provision | $1,040 | | Depreciation & amortization | $16,458 | | **EBITDA** | **$4,768** | | Stock-based compensation | $10,118 | | Restructuring costs | $2,414 | | Other adjustments | $4,649 | | **Adjusted EBITDA** | **$21,949** | | Adjusted EBITDA Margin % | 13.1% | [Reconciliation of Non-GAAP Profit before Tax and Income Tax Provision](index=11&type=section&id=Reconciliation%20of%20Non-GAAP%20Profit%20before%20Tax%20and%20Income%20Tax%20Provision) Allegro's Q1 FY2025 non-GAAP profit before tax was **$6.7 million**, adjusted from a GAAP loss of **$16.6 million** by **$23.3 million** in non-GAAP items Q1 FY2025 GAAP to Non-GAAP Pre-Tax Profit Reconciliation (in thousands) | Metric | Q1 FY2025 | | :--- | :--- | | GAAP (Loss) Income before Income Taxes | $(16,573) | | Total Non-GAAP Adjustments | $23,300 | | **Non-GAAP Profit before Tax** | **$6,727** | Q1 FY2025 GAAP to Non-GAAP Tax Provision Reconciliation (in thousands) | Metric | Q1 FY2025 | | :--- | :--- | | GAAP Income Tax Provision | $1,040 | | GAAP effective tax rate | (6.3)% | | Tax effect of adjustments to GAAP results | $(395) | | **Non-GAAP Income Tax Provision** | **$645** | | **Non-GAAP effective tax rate** | **9.6%** | [Reconciliation of Non-GAAP Earnings per Share](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Earnings%20per%20Share) Allegro reported Q1 FY2025 non-GAAP diluted EPS of **$0.03**, contrasting with a GAAP loss of **($0.09)**, derived from a non-GAAP net income of **$6.0 million** Q1 FY2025 GAAP to Non-GAAP EPS Reconciliation | Metric | Q1 FY2025 | | :--- | :--- | | GAAP Diluted (Loss) Earnings per Share | $(0.09) | | GAAP Net (Loss) Income (in thousands) | $(17,675) | | Total Non-GAAP Adjustments (pre-tax, in thousands) | $23,300 | | Tax effect of adjustments (in thousands) | $395 | | **Non-GAAP Net Income (in thousands)** | **$6,020** | | Diluted weighted average common shares | 194,705,716 | | **Non-GAAP Diluted Earnings per Share** | **$0.03** | [Reconciliation of Non-GAAP Free Cash Flow](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Free%20Cash%20Flow) Q1 FY2025 non-GAAP free cash flow was **$23.2 million** (**13.9%** of net sales), derived from GAAP operating cash flow of **$34.2 million** less capital expenditures Q1 FY2025 Free Cash Flow Reconciliation (in thousands) | Metric | Q1 FY2025 | | :--- | :--- | | GAAP Operating Cash Flow | $34,196 | | Purchases of property, plant and equipment | $(10,977) | | **Non-GAAP Free Cash Flow** | **$23,219** | | Non-GAAP Free Cash Flow % of net sales | 13.9% |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 29, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number: 001-39675 ALLEGRO MICROSYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 46-240 ...

Allegro MicroSystems, Inc. (NASDAQ:ALGM) Q4 2024 Earnings Conference Call May 9, 2024 8:30 AM ET Company Participants Jalene Hoover - Vice President of Investor Relations & Corporate Communications Vineet Nargolwala - President & Chief Executive Officer Conference Call Participants Gary Mobley - Wells Fargo Securities Chris Caso - Wolfe Research Joshua Buchalter - TD Cowen Quinn Bolton - Needham & Company Vijay Rakesh - Mizuho Mark Lipacis - Evercore ISI Operator Good morning and welcome to the Allegro Micr ...

Financial Performance - Full Year 2024 sales increased by 8% to a record $1.05 billion[2] - Non-GAAP diluted earnings per share for the full year reached a record $1.35[3] - Q4 2024 net sales were $240.581 million, with automotive sales contributing $181.939 million[5] - Full year 2024 gross margin was 54.8% on a GAAP basis and 56.3% on a non-GAAP basis[5] - Q1 2025 net sales are expected to be between $160 million and $170 million[6] - Q1 2025 non-GAAP diluted earnings per share are projected to be in the range of $0.01 to $0.03[6] - Net sales for the three-month period ending March 29, 2024, were $240.581 million, a decrease of 11% compared to $269.445 million in the same period last year[13][15] - Gross profit for the three-month period ending March 29, 2024, was $123.248 million, down from $153.089 million in the same period last year[13] - Operating income for the three-month period ending March 29, 2024, was $15.897 million, a significant decrease from $63.104 million in the same period last year[13] - Net loss for the three-month period ending March 29, 2024, was $7.115 million, compared to a net income of $61.977 million in the same period last year[13] - Total net sales for the twelve-month period ending March 29, 2024, were $1.049367 billion, an 8% increase compared to $973.653 million in the same period last year[13][15] - Non-GAAP Gross Profit for the three months ended March 31, 2024, was $129.508 million, with a Non-GAAP Gross Margin of 53.8%[23] - Non-GAAP Gross Profit for the twelve months ended March 31, 2024, was $590.426 million, with a Non-GAAP Gross Margin of 56.3%[23] - Non-GAAP Operating Income for the twelve-month period ended March 29, 2024, was $298,598 thousand, up from $278,176 thousand in the previous year[25] - Non-GAAP Operating Margin for the twelve-month period ended March 29, 2024, was 28.5%, slightly down from 28.6% in the previous year[26] - Adjusted EBITDA for the three-month period ended March 29, 2024, was $73,878 thousand, compared to $87,242 thousand for the same period in 2023[27] - Adjusted EBITDA Margin for the twelve-month period ended March 29, 2024, was 34.7%, up from 33.7% in the previous year[27] - Non-GAAP Profit before Tax for the twelve-month period ended March 29, 2024, was $296,599 thousand, compared to $278,455 thousand in the previous year[28] - GAAP Operating Income for the three-month period ended March 29, 2024, was $15,897 thousand, down from $36,686 thousand in the same period in 2023[25] - GAAP Net Loss for Q1 2024 was $7.115 million, compared to a net income of $33.345 million in Q4 2023 and $61.977 million in Q1 2023[30] - Non-GAAP Net Income for Q1 2024 was $47.914 million, compared to $61.549 million in Q4 2023 and $71.567 million in Q1 2023[30] - Non-GAAP Diluted Earnings per Share for Q1 2024 was $0.25, compared to $0.32 in Q4 2023 and $0.37 in Q1 2023[30] Automotive Sales - Automotive sales grew by 17% year-over-year, driven by a 38% increase in e-Mobility[2] - Automotive market sales increased by 2% to $181.939 million for the three-month period ending March 29, 2024, compared to $178.802 million in the same period last year[15] Industrial Sales - Industrial market sales decreased by 29% to $43.789 million for the three-month period ending March 29, 2024, compared to $61.807 million in the same period last year[15] Cash Flow and Debt - The company made a $50 million voluntary payment on its term loan, reducing annualized interest expense by approximately $4 million[6] - Net cash provided by operating activities for the three months ended March 31, 2024, was $12.764 million, compared to $47.548 million for the same period in 2023[19] - Net cash used in investing activities for the three months ended March 31, 2024, was $14.272 million, compared to $30.405 million for the same period in 2023[19] - Net cash provided by financing activities for the three months ended March 31, 2024, was $730,000, compared to a net cash used of $3.304 million for the same period in 2023[19] - The company's cash and cash equivalents and restricted cash at the end of the period were $222.161 million, compared to $358.705 million at the end of the same period in 2023[19] - The company's net (decrease) increase in cash and cash equivalents and restricted cash for the three months ended March 31, 2024, was a decrease of $1.574 million, compared to an increase of $14.577 million for the same period in 2023[19] - The company's net (decrease) increase in cash and cash equivalents and restricted cash for the twelve months ended March 31, 2024, was a decrease of $136.544 million, compared to an increase of $68.906 million for the same period in 2023[19] - Non-GAAP Free Cash Flow for Q1 2024 was $17.336 million, representing 6.4% of net sales, compared to $56.943 million (5.4% of net sales) for the twelve-month period ending March 29, 2024[31] - Purchases of property, plant and equipment for Q1 2024 were $30.212 million, contributing to the Non-GAAP Free Cash Flow calculation[31] Research and Development - Research and development expenses for the three-month period ending March 29, 2024, were $45.839 million, an increase from $41.833 million in the same period last year[13] - Research and Development Expenses (Non-GAAP) for the twelve-month period ended March 29, 2024, were $159,934 thousand, up from $140,878 thousand in the previous year[24] Non-GAAP Adjustments - Total Non-GAAP Adjustments for the three months ended March 31, 2024, were $6.260 million, including $4.959 million for purchased intangible amortization and $734,000 for stock-based compensation[23] - Total Non-GAAP Adjustments for the twelve months ended March 31, 2024, were $15.897 million, including $9.282 million for purchased intangible amortization and $5.359 million for stock-based compensation[23] - Total Non-GAAP Adjustments for the twelve-month period ended March 29, 2024, were $101,802 thousand, compared to $67,109 thousand in the previous year[28] - Total Non-GAAP Adjustments for Q1 2024 were $35.766 million, including $13.218 million for impairment of long-lived assets and $9.618 million for stock-based compensation[30] Tax Rates - GAAP effective tax rate for Q1 2024 was 141.0%, significantly higher than 8.2% in Q4 2023 and 8.7% in Q1 2023[29] - Non-GAAP effective tax rate for Q1 2024 was 9.5%, compared to 9.8% in Q4 2023 and 11.6% in Q1 2023[29] Assets and Liabilities - Total assets as of March 29, 2024, were $1.530603 billion, an increase from $1.181155 billion as of March 31, 2023[17] - Long-term debt as of March 29, 2024, was $249.611 million, up from $25 million as of March 31, 2023[17] Operational Expenses - Non-GAAP Operating Expenses for the three-month period ended March 29, 2024, were $72,175 thousand, compared to $69,928 thousand for the same period in 2023[24] - Selling, General and Administrative Expenses (Non-GAAP) for the twelve-month period ended March 29, 2024, were $131,894 thousand, down from $133,982 thousand in the previous year[24] Transaction Costs - Transaction-related costs for Q1 2024 were $7.144 million, compared to $10.409 million in Q4 2023 and $544,000 in Q1 2023[30] Share Information - Basic weighted average common shares outstanding for Q1 2024 were 193,139,519, slightly higher than 192,724,541 in Q4 2023[30] Product and Technology - Record design wins exceeded $1 billion in fiscal year 2024[3] - The company introduced high voltage isolated gate drivers and added TMR technology to its portfolio during fiscal year 2024[3]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 29, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _____________ Commission File Number: 001-39675 ALLEGRO MICROSYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 46-2405937 (S ...

Financial Data and Key Metrics Changes - Sales for Q3 were $255 million, up 2% year-over-year, with gross margin at 54.6% and operating income at 27.2% [6][15] - Earnings per share were $0.32, exceeding the high end of guidance by 10% [15] - Automotive sales reached $195 million, an 18% increase year-over-year, representing 76% of total sales [15] - E-mobility sales increased by 45% year-over-year, now accounting for 54% of automotive sales [15][46] Business Line Data and Key Metrics Changes - Sales in strategic growth areas, including e-mobility and industrial, rose approximately 20% year-over-year to $150 million, making up 59% of total sales [6][15] - Industrial sales were $46 million, down 25% sequentially and 14% year-over-year [15] - Magnetic sensor sales were $154 million, declining 13% sequentially but flat year-over-year [16] Market Data and Key Metrics Changes - Sales by geography were balanced: 30% in China, 24% in the rest of Asia, 17% in Japan, 15% in Europe, and 14% in the Americas [16] - The automotive market is expected to remain stable with growth in xEVs, which includes battery electric vehicles and hybrids [10][11] Company Strategy and Development Direction - The company is focused on maximizing growth in strategic areas while optimizing profitability and cash flow [6][14] - The integration of the Crocus acquisition is progressing well, enhancing the magnetic-sensing IC portfolio [9][20] - The company aims to close over $1 billion in design wins for fiscal year 2024, with the majority expected to convert to revenue over the next three years [14] Management's Comments on Operating Environment and Future Outlook - Management expects continued inventory digestion across markets in the short term but remains confident in above-market growth for the automotive business in fiscal year 2024 [12][21] - The fourth quarter sales outlook is projected between $230 million and $240 million, reflecting ongoing inventory digestion [20] - Management anticipates Q1 of fiscal 2025 to be the trough quarter for inventory levels [21] Other Important Information - The company is investing in localizing parts of its supply chain in China to enhance relationships with local partners [33][34] - The company is managing material purchases to align with current production levels, expecting a decline in capital expenditures by approximately 30% in the second half of fiscal 2024 [19][20] Q&A Session Summary Question: Guidance for the March quarter and June quarter dynamics between auto and industrial segments - Management indicated that inventory digestion is expected across all end markets, particularly in industrial, with automotive demand remaining stable [24][25] Question: Expectations for automotive revenue growth in fiscal 2024 - Management expects automotive sales to grow in the high teens, significantly outpacing the overall market growth [28][46] Question: Factors affecting fourth quarter gross margin guidance - Management noted that pricing dynamics and distribution mix are contributing to the expected decline in gross margin [29][30] Question: Investments in China and local partnerships - Management confirmed investments in localizing supply chains in China to build trust with domestic customers [33][34] Question: Customer sentiment regarding EVs in the U.S. - Management observed significant R&D investments from OEMs in electrifying their fleets, indicating strong design activity despite market sentiment [36][37] Question: Design win activity in data centers, specifically for AI liquid cooling - Management highlighted that their power solutions are being utilized in innovative liquid cooling solutions for AI data centers, indicating strong design win activity [40][41] Question: Confidence in inventory normalization by June quarter - Management expects inventory levels to normalize by Q1 of fiscal 2025, following historical patterns of inventory digestion [42][43] Question: Expectations for gross margin recovery - Management anticipates gross margins to remain in the 53% to 54% range in the near term, with potential recovery as distribution normalizes [63][65]