Allegro MicroSystems(ALGM) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q1 revenue reached $188.1 million, up 64% year-over-year and exceeding guidance, driven by strong automotive demand and industrial strength [10][9] - GAAP gross margin hit 50%, while non-GAAP gross margin improved to over 52%, both reflecting strong revenue and manufacturing improvements [9][11] - GAAP diluted EPS rose to $0.14, and non-GAAP diluted EPS increased by 24% to $0.18, surpassing expectations [15][9] Business Line Data and Key Metrics Changes - Automotive revenue represented 71% of total revenue, reaching a record $133.5 million, up 75% year-over-year [10][11] - Industrial revenue accounted for 16% of total revenue, reaching $30.3 million, up 49% year-over-year [11] - Other business revenue declined 13% sequentially to $23.8 million, reflecting supply challenges [11][24] Market Data and Key Metrics Changes - Automotive growth outperformed global car production, indicating increased content per vehicle and a trend towards feature-rich vehicles [10][19] - Demand visibility remains strong across diverse blue-chip customers, with low inventory levels in the distribution channel [10][16] Company Strategy and Development Direction - The company is focused on expanding its R&D pipeline and leveraging design wins to drive long-term growth [17][24] - Strategic product lines, particularly in automotive and industrial sectors, are expected to continue outperforming the market [17][19] - The company is committed to enhancing its manufacturing capabilities and addressing supply constraints through partnerships with wafer suppliers [8][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory due to strong demand for differentiated technology [8][24] - Supply constraints are expected to ease in the second half of the fiscal year as additional wafer capacity comes online [9][25] - The outlook for Q2 anticipates revenue in the range of $185 million to $191 million, with automotive revenue expected to be flat [25] Other Important Information - The company reported a historic high in cash and equivalents, ending Q1 with $230 million [16] - Backlog levels are at historic highs, providing visibility into future demand [9][53] Q&A Session Summary Question: Supply constraints and wafer manufacturing partners - Management noted that the relationship with Polar has been beneficial, allowing for more wafers to service market demand [28] Question: Outlook for automotive market demand - Management sees continued strength in xEV and ADAS segments, with significant design win momentum [30] Question: Gross margin outlook with new wafer suppliers - Management indicated that TSMC's ramp-up is expected to enhance gross margins, despite some cost increases from Polar [35][38] Question: Inventory practices and supply-demand balance - Management believes that current shipments are meeting end demand, with no signs of inventory build-up among customers [45][60] Question: Design win pipeline for EVs and ADAS - Management reported strong growth in design wins for inverters and onboard chargers in the EV sector [51] Question: Backlog growth and market visibility - Management confirmed that backlog continues to grow healthily across all end markets, providing strong visibility into demand [53]