美國
證券交易委員會
華盛頓特區 20549
表單
(標記一個)
根據1934年證券交易法第13或15(d)條款提交的季度報告 |
截至季度期
或
根據1934年證券交易法第13條或第15(d)條的過渡報告 |
對於過渡期從 到 _____________
委員會檔案編號：
(註冊人名稱如章程中所列)
(州或其他管轄區的 公司註冊或組織) |
(美國國稅局僱主 |
(主要執行辦公室地址) |
(Zip Code) |
(
（註冊人電話號碼，包括區號）
不適用
(前名稱，前地址和前財政年度，如自上次報告以來有所更改)
根據法案第12(b)節註冊的證券：
每個類別的標題 |
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交易 標的(們) |
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註冊的每個交易所的名稱 |
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請勾選是否註冊人（1）在過去12個月內（或在註冊人被要求提交此類報告的更短期限內）已提交根據1934年證券交易法第13節或第15(d)節要求提交的所有報告，以及（2）在過去90天內是否受到此類提交要求的約束。
請通過勾選的方式指示註冊人是否在過去12個月內（或在註冊人被要求提交此類文件的較短期間內）根據S-t法規第405條（本章第232.405條）提交了所有需要提交的互動數據文件。
請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。
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☒ |
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加速報告人 |
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☐ |
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非加速報告人 |
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☐ |
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小型報告公司 |
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新興成長公司 |
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如果是新興成長型公司，在選中複選標記的同時，如果公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則，則表明該公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則。☐
請在以下方框內打勾，以指示註冊人是否爲殼公司（如交易所法規第12b-2條規定）。 是 ☐ 否
截至2024年10月28日，註冊人已
目錄
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2 |
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第一部分。 |
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項目1. |
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項目2. |
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項目3。 |
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項目4。 |
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第二部分。 |
32 |
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項目1. |
32 |
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項目1A。 |
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項目2. |
32 |
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第五項。 |
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第六項。 |
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35 |
前向LO正在查看聲明
本季度報告（表格10-Q）（以下簡稱「季度報告」）包含根據1995年《私人證券訴訟改革法》定義的前瞻性聲明。我們希望這些前瞻性聲明受到1933年《證券法》第27A節及1934年《證券交易法》第21E節中關於前瞻性聲明的安全港條款的保護（以下簡稱「交易所法」）。本季度報告中除歷史事實聲明之外的所有聲明，包括關於我們未來經營結果和財務狀況、業務策略、潛在產品以及管理層對未來經營的計劃和目標的聲明，都可能是前瞻性聲明。這些聲明涉及已知和未知的風險、不確定性及其他重要因素，可能導致我們的實際結果、表現或成就與任何前瞻性聲明所表達或暗示的未來結果、表現或成就存在實質性差異。
關於我們未來運營和財務狀況、業務策略、管理層未來運營的計劃和目標的聲明，包括但不限於關於流動性、增長和盈利策略及影響我們業務的因素和趨勢的聲明，都是前瞻性聲明。在某些情況下，您可以通過以下術語識別前瞻性聲明，例如「目標」、「可能」、「將要」、「應該」、「期望」、「探索」、「計劃」、「預期」、「能夠」、「打算」、「目標」、「項目」、「會」、「考慮」、「相信」、「估計」、「預測」、「潛在」、「尋求」或「繼續」或這些術語的否定形式或其他類似表達，儘管並非所有前瞻性聲明都包含這些詞。沒有任何前瞻性聲明能保證未來的結果、表現或成就，大家應避免對這些聲明過度依賴。
前瞻性聲明基於我們管理層的信念和假設，以及當前可用的信息。這些信念和假設可能會或可能不會被證明是正確的。此外，這些前瞻性聲明可能受到衆多已知和未知的風險、不確定性和假設的影響，實際結果可能會因各種因素而與前瞻性聲明中表達或暗示的結果有實質性差異，包括但不限於在本季度報告第I部分第2項中所識別的因素。「管理層財務狀況和運營結果的討論與分析」以及本季度報告第II部分第1A項「風險因素」，以及我們截至2024年3月29日的年度報告（「2024年度報告」）中第I部分第1A項「風險因素」，該報告於2024年5月23日提交給證券交易委員會（「SEC」），任何此類因素可能會隨着時間的推移在我們的10-Q季度報告和其他與SEC提交的文件中更新。
您應該完整地閱讀本季度報告及我們引用的文件，並理解我們實際的未來業績可能與我們的預期有實質性差異。我們以這些警告性的聲明來限制我們所有的前瞻性聲明。所有前瞻性聲明僅在本季度報告的日期時有效，除非適用法律要求，我們不打算公開更新或修訂任何前瞻性聲明，無論是由於任何新信息、未來事件，還是其他原因。
除非文中另有要求，否則提到的「我們」、「我們」、「我們的」、「公司」和「Allegro」均指Allegro Microsystems, Inc.及其合併子公司的運營。
2
第一部分 – 財務信息
項目 1. 壓縮的內容合併財務報表附註（未經審計）
Allegro Microsystems, INC.
濃縮合並日期資產負債表
(以千爲單位，除面值和股份金額外)
(未經審計)
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9月27日， |
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三月二十九日， |
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資產 |
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流動資產： |
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現金及現金等價物 |
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$ |
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受限制現金 |
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應收貿易賬款，淨額 |
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存貨 |
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預付所得稅 |
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預付款項及其他流動資產 |
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關聯方應收款的現期部分 |
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總流動資產 |
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物業、廠房及設備，淨值 |
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經營租賃使用權資產，淨額 |
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遞延所得稅資產 |
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商譽 |
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無形資產，淨值 |
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關聯方應收票據，減去流動部分 |
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對關聯方的權益投資 |
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其他資產 |
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總資產 |
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$ |
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負債、非控制性權益和股東權益 |
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流動負債： |
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應付賬款 |
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$ |
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$ |
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應付相關方金額 |
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應計費用和其他流動負債 |
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當前運營租賃負債部分 |
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長期債務的流動部分 |
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總流動負債 |
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長期債務 |
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經營租賃負債，扣除流動部分 |
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其他長期負債 |
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總負債 |
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股東權益： |
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優先股，$ |
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普通股，$ |
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額外實收資本 |
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(累計虧損) 留存收益 |
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累計其他綜合損失 |
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歸屬於Allegro Microsystems, Inc.的權益 |
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非控股權益 |
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股東權益總額 |
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總負債、非控股權益和股東權益 |
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$ |
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$ |
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附帶說明是這些合併基本報表不可或缺的一部分。
3
Allegro Microsystems, INC.
簡明合併 運營報表
(以千爲單位，除每股和每份股金額外)
（未經審計）
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三個月期末 |
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六個月期間結束 |
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9月27日， |
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9月29日， |
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9月27日， |
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9月29日， |
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淨銷售額 |
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$ |
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$ |
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$ |
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$ |
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關聯方淨銷售 |
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總淨銷售額 |
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營業成本 |
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對相關方的營業成本 |
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毛利潤 |
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營業費用： |
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研究和開發 |
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銷售、一般和行政 |
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總營業費用 |
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營業收入（虧損） |
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其他（費用）收入： |
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利息支出 |
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利息收入 |
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前購回合同公允價值變動損失 |
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其他（費用）收益，淨 |
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(虧損) 收入所得稅之前的收入 |
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所得稅（收益）準備 |
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淨（虧損）收入 |
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歸屬於非控制性權益的凈利潤 |
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歸屬於Allegro Microsystems, Inc.的淨虧損（收入）。 |
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$ |
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$ |
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$ |
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$ |
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歸屬於Allegro Microsystems, Inc.的每股普通股淨虧損（收入）： |
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基本 |
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$ |
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稀釋 |
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$ |
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加權平均流通股數： |
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基本 |
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稀釋 |
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附帶的說明是這些壓縮合並基本報表的重要組成部分。
4
Allegro Microsystems, INC.
濃縮合並財務報表全面（損失）收入的條目
(以千爲單位)
(未經審計)
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三個月期末 |
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截至六個月期間 |
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9月27日， |
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9月29日， |
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9月27日， |
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9月29日， |
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淨（虧損）收入 |
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$ |
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$ |
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$ |
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歸屬於非控制性權益的凈利潤 |
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歸屬於Allegro Microsystems的淨（損失）利潤 |
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其他全面收益（損失）： |
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外幣翻譯調整，稅後 |
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綜合（損失）收益 |
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歸屬於非控制性權益的其他綜合（損失）收益 |
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歸屬於Allegro Microsystems的綜合（損失）收入 |
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附帶說明是這些合併基本報表不可或缺的一部分。
5
Allegro Microsystems, INC.
濃縮合並財務報表權益變動表
（以千爲單位，除分享金額外）
(未經審計)
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優先股 |
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普通股 |
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額外 |
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留存收益 |
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累計 |
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非控股 |
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股份 |
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金額 |
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股份 |
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金額 |
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資本 |
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業績 |
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Loss |
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興趣 |
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總資產 |
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截至2023年6月30日的餘額 |
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$ |
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$ |
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凈利潤 |
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股票補償，扣除放棄及限制性股票兌現 |
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在權益獎勵淨結算中扣繳的稅款支付 |
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外幣折算調整 |
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( |
) |
|
|
( |
) |
|
|
( |
) |
截至2023年9月29日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||||
|
|
優先股 |
|
|
普通股 |
|
|
額外 |
|
|
留存收益 |
|
|
累計 |
|
|
非控股 |
|
|
|
|
|||||||||||||||
|
|
股份 |
|
|
金額 |
|
|
股份 |
|
|
金額 |
|
|
資本 |
|
|
(累計虧損) |
|
|
Loss |
|
|
興趣 |
|
|
總資產 |
|
|||||||||
截至2024年6月28日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||||
淨損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
員工股票購買計劃發行 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||||
股票激勵補償，扣除失效和限制性股票歸屬 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
普通股發行，扣除承銷折扣 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
回購普通股 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
在權益獎勵淨結算中扣繳的稅款支付 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
外幣折算調整 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
截至2024年9月27日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||||
附帶說明是這些合併基本報表不可或缺的一部分。
6
Allegro Microsystems, INC.
凝縮合並權益變動表 - 繼續
（以千爲單位，除分享金額外）
(未經審計)
|
|
優先股 |
|
|
普通股 |
|
|
額外 |
|
|
留存收益 |
|
|
累計 |
|
|
非控股 |
|
|
|
|
|||||||||||||||
|
|
股份 |
|
|
金額 |
|
|
股份 |
|
|
金額 |
|
|
資本 |
|
|
業績 |
|
|
Loss |
|
|
興趣 |
|
|
總資產 |
|
|||||||||
截至2023年3月31日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||||
凈利潤 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
員工股票購買計劃發行 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
股票激勵補償，扣除失效和限制性股票歸屬 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
在權益獎勵淨結算中扣繳的稅款支付 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
外幣折算調整 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
截至2023年9月29日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||||
|
|
優先股 |
|
|
普通股 |
|
|
額外 |
|
|
留存收益 |
|
|
累計 |
|
|
非控股 |
|
|
|
|
|||||||||||||||
|
|
股份 |
|
|
金額 |
|
|
股份 |
|
|
金額 |
|
|
資本 |
|
|
(累計虧損) |
|
|
Loss |
|
|
興趣 |
|
|
總資產 |
|
|||||||||
2024年3月29日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||||
淨損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
員工股票購買計劃發行 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
股票激勵補償，扣除失效和限制性股票歸屬 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
普通股發行，扣除承銷折扣 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
回購普通股 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
在權益獎勵淨結算中扣繳的稅款支付 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
外幣折算調整 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||
截至2024年9月27日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||||
附帶說明是這些合併基本報表不可或缺的一部分。
7
Allegro Microsystems, INC.
簡化合並 現金流量表
(以千爲單位)
(未經審計)
|
|
六個月期間結束 |
|
|||||
|
|
9月27日， |
|
|
9月29日， |
|
||
經營活動產生的現金流： |
|
|
|
|
|
|
||
淨（虧損）收入 |
|
$ |
( |
) |
|
$ |
|
|
調整淨（虧損）收入與淨現金提供的營業活動之間的對賬： |
|
|
|
|
|
|
||
折舊和攤銷 |
|
|
|
|
|
|
||
遞延融資費用攤銷 |
|
|
|
|
|
|
||
遞延所得稅 |
|
|
( |
) |
|
|
( |
) |
基於股票的補償 |
|
|
|
|
|
|
||
前購回合同公允價值變動損失 |
|
|
|
|
|
|
||
存貨準備和預期信用損失 |
|
|
|
|
|
|
||
可交易證券公允價值變動 |
|
|
|
|
|
|
||
其他非現金調整項目 |
|
|
|
|
|
|
||
經營資產和負債的變動： |
|
|
|
|
|
|
||
應收賬款 |
|
|
|
|
|
( |
) |
|
存貨 |
|
|
( |
) |
|
|
( |
) |
預付費用和其他資產 |
|
|
( |
) |
|
|
( |
) |
應付賬款 |
|
|
|
|
|
|
||
與相關方的應收和應付 |
|
|
|
|
|
|
||
應計費用及其他流動和長期負債 |
|
|
( |
) |
|
|
( |
) |
經營活動提供的淨現金 |
|
|
|
|
|
|
||
投資活動的現金流： |
|
|
|
|
|
|
||
購買物業、廠房和設備 |
|
|
( |
) |
|
|
( |
) |
可出售證券銷售 |
|
|
|
|
|
|
||
投資活動中使用的淨現金 |
|
|
( |
) |
|
|
( |
) |
融資活動產生的現金流： |
|
|
|
|
|
|
||
向關聯方提供的貸款 |
|
|
|
|
|
( |
) |
|
再融資2023年定期貸款融資的淨收益 |
|
|
|
|
|
|
||
2023年定期貸款融資的借款還款 |
|
|
( |
) |
|
|
|
|
融資租賃付款 |
|
|
( |
) |
|
|
|
|
相關方應收票據的收款 |
|
|
|
|
|
|
||
與股權獎勵淨分享結算相關的稅款支付 |
|
|
( |
) |
|
|
( |
) |
員工股票購買計劃下普通股發行收益 |
|
|
|
|
|
|
||
回購普通股 |
|
|
( |
) |
|
|
|
|
普通股票發行的淨收益 |
|
|
|
|
|
|
||
債務發行成本的支付 |
|
|
|
|
|
( |
) |
|
融資活動所使用的淨現金 |
|
|
( |
) |
|
|
( |
) |
匯率變動對現金及現金等價物以及受限現金的影響 |
|
|
|
|
|
( |
) |
|
現金及現金等價物淨（減少）增加額和受限制的現金 |
|
|
( |
) |
|
|
|
|
期初的現金及現金等價物和受限現金 |
|
|
|
|
|
|
||
期末的現金及現金等價物和受限現金： |
|
$ |
|
|
$ |
|
||
附帶說明是這些合併基本報表不可或缺的一部分。
8
Allegro Microsystems, INC.
未經審計的簡明附註 基本報表
(金額以千爲單位，除股票和每股金額外)
1. 業務性質和報告基礎
Allegro Microsystems, Inc.及其合併子公司（"公司"）是設計、開發和製造運動控制及能源高效系統中傳感與電源解決方案的全球領導者。公司總部位於新罕布什爾州曼徹斯特，業務遍佈多個大陸。
所附的未經審計的合併財務報表是根據美國公認會計原則（"GAAP"）編制的。通常包含在公司年度審計財務報表及其附註中的某些信息和腳註披露已在這些臨時財務報表中被簡化或省略。這些未經審計的合併財務報表包括公司的賬戶及其子公司的賬戶。所有內部交易和餘額已在合併中被消除。這些未經審計的合併財務報表應與公司年度報告中的合併財務報表及相關附註一同閱讀，該報告爲截至2024年3月29日的財年所編制。此處包含的2024年3月29日的合併資產負債表源於公司的審計合併財務報表。在公司管理層看來，所呈現的臨時期間財務報表反映了公司財務狀況、經營結果和現金流量的所有必要調整，以確保公平的報告。這些未經審計的合併財務報表中報告的結果不一定表明全年可能預期的結果。
財務期間
公司的第二季度三個月期間爲13周。公司的2025財政年度第二季度於2024年9月27日結束，公司2024財政年度第二季度於2023年9月29日結束。
2. 重要會計政策概述
估計的使用
編制符合GAAP的合併基本報表需要管理層作出估計和假設，這些估計和假設影響到合併基本報表日資產、負債的報告金額，以及應急事項的披露和報告期間淨銷售額與費用的金額。管理層不斷評估其估計、假設和判斷，包括與收購無形資產的評估、減值評估、商譽、無形資產和有形長期資產的估值、存貨的淨可變現價值、所得稅、基於股票的補償以及銷售折讓相關的內容。實際結果可能與這些估計存在差異，這些差異可能對合並基本報表產生重大影響。
重新分類
爲了使之前期間的金額符合當前期間的報告分類，已對某些金額進行了重新分類。
信用風險集中
截至2024年9月27日和2024年3月29日，沒有任何分銷商或客戶佔公司應收交易賬戶淨額的10%或更多。
截至2024年9月27日的三個月和六個月期間，沒有任何分銷商或客戶佔總淨銷售的10%或更多。截至2023年9月29日的三個月和六個月期間，一位分銷商客戶佔有相應比例。
9
Allegro Microsystems, INC.
未經審計的簡明合併基本報表註釋 - （續）
(金額以千爲單位，除股票和每股金額外)
近期會計公告
在2023年12月，財務會計準則委員會（"FASB"）發佈了會計標準更新（"ASU"）第2023-09號，所得稅（主題740），關於所得稅披露的改進（"ASU 2023-09"）。ASU 2023-09要求實體提供公司稅率調節的附加信息，以及關於各個管轄區已支付所得稅的額外披露。ASU 2023-09適用於2024年12月15日後開始的年度報告期間，並允許提前採用。ASU 2023-09應當前瞻性地應用，但實體可以選擇對每個呈現的期間進行追溯應用。公司預計該指南不會對其運營結果、現金流或財務狀況產生不利影響，但將導致在基本報表內擴展披露。
在2023年11月，FASB發佈了ASU第2023-07號，部門報告（主題280），關於可報告部門披露的改進（"ASU 2023-07"）。ASU 2023-07要求在年度和季度期間提供與公衆實體可報告部門相關的增量披露（特別是關於部門費用），但不改變部門的定義、確定部門的方法或將經營部門聚合爲可報告部門的標準。公司正處於評估其單一部門的重大費用及確定適當的增強披露的過程中。
所有其他近期會計公告被認定對公司的財務狀況、運營結果、現金流或相關披露沒有重大影響。
3. 來自客戶合同的營業收入
下表總結了截至2024年9月27日和2023年9月29日的三個月和六個月期間，按市場、按產品和按地區分類的淨銷售額。按照市場分類的淨銷售額是基於產品的各種特徵及公司產品將被納入的應用進行確定的。按地區分類的淨銷售額是根據產品交通的地點進行確定的。
按市場分類的淨銷售額：
在準備2024財年第三季度的臨時簡明合併基本報表時，公司發現了在按市場分類的淨銷售額中存在的不重要錯誤，其中客戶退貨和銷售折讓在過去的期間被錯誤分類爲汽車、工業和其他市場。前期報告的總淨銷售額或淨（損失）收入沒有受到任何影響。
公司對修訂的重要性進行了定性和定量的評估，並認爲修訂對2024財年之前的期間、2023財年年報和2022財年年報的合併基本報表不重要。
|
|
三個月期末 |
|
|
六個月期間結束 |
|
||||||||||
|
|
9月27日， |
|
|
9月29日， |
|
|
9月27日， |
|
|
9月29日， |
|
||||
汽車 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
工業和其他 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
總淨銷售額 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
按產品分類的淨銷售額：
|
|
三個月期末 |
|
|
六個月期間結束 |
|
||||||||||
|
|
9月27日， |
|
|
9月29日， |
|
|
9月27日， |
|
|
9月29日， |
|
||||
電源集成電路 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
磁性傳感器 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
總淨銷售額 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
10
Allegro Microsystems, INC.
未經審計的簡明合併基本報表註釋 - （續）
(金額以千爲單位，除股票和每股金額外)
按地區劃分的淨銷售額：
|
|
三個月期末 |
|
|
六個月期間結束 |
|
||||||||||
|
|
9月27日， |
|
|
9月29日， |
|
|
9月27日， |
|
|
9月29日， |
|
||||
美洲： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
美國 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
其他美洲 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
歐洲、中東和非洲: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
歐洲 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
亞洲: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
大中華 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
日本 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
韓國 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
其他亞洲 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
總淨銷售額 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
公司確認銷售淨額減去退貨和銷售折讓的金額，包括髮放的信用、價格保護調整以及庫存週轉權利。到2024年9月27日和2024年3月29日，與退貨和銷售折讓相關的負債爲 $
4. 公允價值計量
以下表格提供了截至2024年9月27日和2024年3月29日公司的金融資產和負債的信息，按照公平價值進行定期計量：
|
|
2024年9月27日的公允價值計量： |
|
|||||
|
|
一級 |
|
|
總公平價值 |
|
||
資產: |
|
|
|
|
|
|
||
現金等價物： |
|
|
|
|
|
|
||
貨幣型基金 |
|
$ |
|
|
$ |
|
||
受限現金： |
|
|
|
|
|
|
||
貨幣型基金 |
|
|
|
|
|
|
||
總資產 |
|
$ |
|
|
$ |
|
||
|
|
截至2024年3月29日的公允價值計量： |
|
|||||
|
|
一級 |
|
|
總公平價值 |
|
||
資產: |
|
|
|
|
|
|
||
現金等價物： |
|
|
|
|
|
|
||
貨幣型基金 |
|
$ |
|
|
$ |
|
||
受限現金： |
|
|
|
|
|
|
||
貨幣型基金 |
|
|
|
|
|
|
||
總資產 |
|
$ |
|
|
$ |
|
||
以公允價值持續計量的資產和負債還包括政府證券、單位投資信託基金、貸款、債券、股票以及其他投資，這些構成公司的確定收益計劃資產。有關這些資產和負債的公允價值信息，包括它們在公允價值層級中的分類，已包含在公司截至2024年3月29日的年度報告的註釋15，"養老計劃"中。公司確定收益計劃資產的變動在截至2024年9月27日的六個月期間內並不重大。
在截至2024年9月27日和2023年9月29日的六個月期間內，沒有在第1級、第2級和第3級資產或負債之間進行轉移。
截至2024年9月27日，公司債務的公允價值爲 $
11
Allegro Microsystems, INC.
未經審計的簡明合併基本報表註釋 - （續）
(金額以千爲單位，除股票和每股金額外)
5. 交易應收賬款，淨額
交易應收賬款，淨額，由以下組成：
|
|
9月27日， |
|
|
三月二十九日， |
|
||
應收賬款 |
|
$ |
|
|
$ |
|
||
減： |
|
|
|
|
|
|
||
預期信用損失準備金 |
|
|
( |
) |
|
|
( |
) |
退貨和銷售折扣 |
|
|
( |
) |
|
|
( |
) |
總計 |
|
$ |
|
|
$ |
|
||
預計信用損失準備金的變動在所呈現的任何期間都不重大。
6. 庫存
庫存包括材料、人工和間接費用，包含以下內容：
|
|
9月27日， |
|
|
三月二十九日， |
|
||
原材料和供應品 |
|
$ |
|
|
$ |
|
||
在製品 |
|
|
|
|
|
|
||
成品 |
|
|
|
|
|
|
||
總計 |
|
$ |
|
|
$ |
|
||
公司記錄的庫存準備總計 $
7. 資產、廠房和設備，淨值
資產、廠房和設備的淨值按成本列示，包括以下內容：
|
|
9月27日， |
|
|
三月二十九日， |
|
||
土地 |
|
$ |
|
|
$ |
|
||
建築物、建築改進和租賃改進 |
|
|
|
|
|
|
||
機械和設備 |
|
|
|
|
|
|
||
辦公設備 |
|
|
|
|
|
|
||
使用權資產 |
|
|
|
|
|
|
||
建設中的工程 |
|
|
|
|
|
|
||
總計 |
|
|
|
|
|
|
||
減少累計折舊 |
|
|
( |
) |
|
|
( |
) |
總計 |
|
$ |
|
|
$ |
|
||
總折舊費用爲 $
物業、廠房和設備淨額，包括顯著提高生產能力或延長使用壽命的改進，按歷史成本計價，減去累計折舊。折舊使用直線法根據資產的估計使用壽命進行計算。公司定期審查物業、廠房和設備的估計使用壽命。對估計使用壽命的變更自變更日期起進行前瞻性記錄。維持和維修支出按發生時計入費用。
12
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
The Company continues to expand and optimize its global manufacturing capacities, such as by its recent expansion of operations at its Philippines location, as well as its recent acquisition of Crocus Technology International Corp. (“Crocus”). Through its expansion efforts, newly acquired machinery and equipment and continuous maintenance and evaluation of on-hand equipment, the Company recognized advancements in equipment quality indicating increased estimated useful lives. During its first quarter, periodic review of the estimated useful lives of long-lived assets, the Company determined that the useful lives of its machinery and equipment should be increased. Effective March 30, 2024, the Company increased the useful lives of a significant portion of its machinery and equipment from
8. Goodwill and Intangible Assets
The table below summarizes the changes in the carrying amount of goodwill as follows:
|
|
Total |
|
|
Balance at March 29, 2024 |
|
$ |
|
|
Measurement period adjustments |
|
|
|
|
Foreign currency translation |
|
|
|
|
Balance at September 27, 2024 |
|
$ |
|
|
During the six-month period ended September 27, 2024, the Company recognized a $
Intangible assets, net, were as follows:
|
|
September 27, 2024 |
|
|||||||||
Description |
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
Patents |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
||
Completed technologies |
|
|
|
|
|
( |
) |
|
|
|
||
Indefinite-lived process technology and trademarks |
|
|
|
|
|
— |
|
|
|
|
||
Trademarks and other |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
March 29, 2024 |
|
|||||||||
Description |
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
Patents |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Customer relationships |
|
|
|
|
|
( |
) |
|
|
|
||
Completed technologies |
|
|
|
|
|
( |
) |
|
|
|
||
Indefinite-lived process technology and trademarks |
|
|
|
|
|
— |
|
|
|
|
||
Trademarks and other |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Intangible assets amortization expense was $
13
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
9. Debt and Other Borrowings
The Company’s debt obligations consisted of the following:
|
|
September 27, |
|
|
March 29, |
|
||
|
|
|
|
|
|
|
||
2023 Term Loan Facility |
|
$ |
|
|
$ |
|
||
Unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Total loans outstanding |
|
|
|
|
|
|
||
Finance lease liabilities |
|
|
|
|
|
|
||
Total debt |
|
|
|
|
|
|
||
Current portion of long-term debt and finance lease liabilities |
|
|
( |
) |
|
|
( |
) |
Total long-term debt and finance lease liabilities, less current portion |
|
$ |
|
|
$ |
|
||
2023 Revolving Credit Facility
On June 21, 2023, the Company entered into a revolving credit facility credit agreement (as amended, the “2023 Revolving Credit Agreement”) with Morgan Stanley Senior Funding, Inc., as administrative agent, collateral agent, a letter of credit issuer and a lender, and the other agents, lenders and letter of credit issuers parties. The 2023 Revolving Credit Agreement provided for a $
The Company will also pay a quarterly commitment fee of
The 2023 Revolving Credit Agreement provides for customary events of default. Upon an event of default, the administrative agent with the consent of, or at the request of, the holders of more than
2023 Term Loan Facility
On October 31, 2023, the Company entered into a $
A payment of $
14
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
Refinanced 2023 Term Loan Facility
On August 6, 2024, the Company entered into the Second Amendment, which increased the total capacity of the 2023 Revolving Credit Facility to $
The Second Amendment also provided for a new $
The Company was in compliance with its debt covenants as of September 27, 2024 and March 29, 2024.
A payment of $
10. Commitments and Contingencies
Legal proceedings
The Company is subject to various legal proceedings, claims, and regulatory examinations or investigations arising in the normal course of business, the outcomes of which are subject to significant uncertainty, and the Company’s ultimate liability, if any, is difficult to predict. The Company records an accrual for legal contingencies when it is determined that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, the ability to make a reasonable estimate of the loss. If the occurrence of liability is probable and estimable, the Company will disclose the nature of the contingency and, if estimable, will provide the likely amount of such loss or range of loss. The Company is not aware of any pending or threatened legal proceeding against the Company that it believes could have a material adverse effect on the Company’s business, operating results, cash flows or financial condition.
11. Net (Loss) Income per Share
The following table sets forth the basic and diluted net (loss) income attributable to Allegro MicroSystems, Inc. per share:
|
|
Three-Month Period Ended |
|
|
Six-Month Period Ended |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
September 27, |
|
|
September 29, |
|
||||
Net (loss) income attributable to Allegro MicroSystems, Inc. |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted average shares of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of common stock equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average shares of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net (loss) income per common share attributable to Allegro MicroSystems, Inc. stockholders |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Diluted net (loss) income per common share attributable to Allegro MicroSystems, Inc. stockholders |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
15
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
The computed net (loss) income per share for the three- and six-month periods ended September 27, 2024 and September 29, 2023 does not assume conversion of securities that would have an antidilutive effect on (loss) income per share. The following represents contingently issuable shares under the restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) excluded from the computation of net (loss) income per share, as such securities would have an antidilutive effect on net (loss) income per share if the Company had reported net income for those periods:
|
|
Three-Month Period Ended |
|
|
Six-Month Period Ended |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
September 27, |
|
|
September 29, |
|
||||
RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The following table represents issued and issuable weighted average dilutive share information underlying our outstanding RSUs, PSUs and participation in our employee stock purchase plan (“ESPP”) for the respective periods:
|
|
Three-Month Period Ended |
|
|
Six-Month Period Ended |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
September 27, |
|
|
September 29, |
|
||||
RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ESPP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
12. Common Stock and Stock-Based Compensation
Restricted Stock Units
The following table summarizes the Company’s RSU activity for the six-month period ended September 27, 2024:
|
|
Shares |
|
|
Weighted-Average |
|
||
Outstanding at March 29, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Issued |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding at September 27, 2024 |
|
|
|
|
$ |
|
||
As of September 27, 2024, total unrecognized compensation expense for awards issued was $
Performance Stock Units
The following table summarizes the Company’s PSU activity for the six-month period ended September 27, 2024:
|
|
Shares |
|
|
Weighted-Average |
|
||
Outstanding at March 29, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Excess shares issued due to achievement of performance conditions |
|
|
|
|
|
|
||
Issued |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding at September 27, 2024 |
|
|
|
|
$ |
|
||
Included in the outstanding shares are
16
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations:
|
|
Three-Month Period Ended |
|
|
Six-Month Period Ended |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
September 27, |
|
|
September 29, |
|
||||
Cost of goods sold |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
13. Income Taxes
The Company recorded the following tax (benefit) provision in its condensed consolidated statements of operations:
|
|
Three-Month Period Ended |
|
|
Six-Month Period Ended |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
September 27, |
|
|
September 29, |
|
||||
(Benefit) provision for income taxes |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Effective tax rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
The Company’s (benefit) provision for income taxes is comprised of the year-to-date taxes based on an estimate of the annual effective tax rate plus the tax impact of discrete items.
The Company is subject to tax in the U.S. and various foreign jurisdictions. The Company’s effective income tax rate fluctuates primarily because of the change in the mix of its U.S. and foreign income, the impact of discrete transactions and law changes, tax benefits generated by the foreign derived intangible income deduction including the permanent impacts of Internal Revenue Code Section 174 Capitalization, and research credits; offset by non-deductible stock-based compensation and other charges.
The increase in the effective tax rate for the three- and six-month periods results mainly from a decrease in forecasted US GAAP income before taxes, less tax deductions for share-based compensation, and an increase in nondeductible expenses primarily related to the Sanken Electric Co., Ltd. (“Sanken”) and Polar Semiconductor, LLC (“PSL”) transactions discussed in Note 14.
Share repurchase transactions with Sanken
On July 23, 2024, the Company entered into a share repurchase agreement with Sanken (the “Share Repurchase Agreement”) pursuant to which the Company agreed to repurchase
To fund the First Closing, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Barclays Capital Inc. and Morgan Stanley & Co. LLC, as representatives of the several underwriters (the “Underwriters”), on July 24, 2024, pursuant to which the Company agreed to sell
17
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
On July 26, 2024, the Company completed the Equity Offering pursuant to the Underwriting Agreement of
On July 29, 2024, the Company completed the First Closing under the Share Repurchase Agreement, repurchasing
On August 7, 2024, the Company completed the Second Closing under the Share Repurchase Agreement, repurchasing
The Share Repurchase Agreement was accounted for as a forward repurchase contract as there were certain terms that could have caused the obligation not to be fulfilled. Accordingly, the contract was initially recorded as a liability at its fair value with subsequent remeasurements recognized in loss on change in fair value of forward repurchase contract until the completion of the First Closing and Second Closing. The Company recognized a loss of $
In connection with the Share Repurchase Agreement, the Company entered into a Second Amended and Restated Stockholders Agreement with Sanken (the “Second Amended and Restated Stockholders Agreement”), which amended and restated the Amended and Restated Stockholders Agreement, dated as of June 16, 2022, by and among the Company, Sanken and OEP SKNA, L.P. (“OEP”). The Second Amended and Restated Stockholders Agreement, which became effective in accordance with its terms on July 29, 2024, removed OEP as a party and amended certain rights and obligations of the Company and Sanken.
Other transactions involving Sanken
Although certain costs are shared or allocated, cost of goods sold and gross margins attributable to related party sales are consistent with those of third-party customers. There were
As of September 27, 2024, Sanken held approximately
Transactions involving Polar Semiconductor, LLC (“PSL”)
On April 25, 2024, the Company, Sanken, PSL and PS Investment Aggregator, L.P. (“Subscriber”) entered into a Sale and Subscription Agreement (the “PSL Agreement”), pursuant to which Subscriber and certain of its affiliates agreed to make capital contributions to PSL of $
At the PSL Closing, the Company, Sanken and Subscriber entered into an amended and restated limited partnership agreement (the “Limited Partnership Agreement”) with Polar Semiconductor GP I, LLC. The Limited Partnership Agreement contains representations, warranties and covenants of the parties customary for a transaction of this type, the reimbursement of expenses and costs, and restrictions on transfers.
The Company purchases in-process products from PSL. Purchases of various products from PSL totaled $
18
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
Notes Receivable from PSL
On December 2, 2021, AML entered into a loan agreement with PSL wherein PSL provided an initial promissory note to AML for a principal amount of $
Prior to discharge, during the six-month period ended September 27, 2024, PSL made required quarterly payments to AML totaling $
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the year ended March 29, 2024, filed with the SEC on May 23, 2024 (the “2024 Annual Report”).
In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section titled “Forward-Looking Statements” and in Part I, Item 1A. “Risk Factors” of our 2024 Annual Report, and Part II, Item 1A. “Risk Factors” of this Quarterly Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
We operate on a 52- or 53-week fiscal year ending on the last Friday of March. Each fiscal quarter has 13 weeks, except in a 53-week year, when the fourth fiscal quarter has 14 weeks. All references to the three- and six-month periods ended September 27, 2024 and September 29, 2023 relate to the 13- and 26-week periods ended September 27, 2024 and September 29, 2023, respectively. All references to “2025,” “fiscal year 2025” or similar references relate to the 52-week period ending March 28, 2025. All references to “2024,” “fiscal year 2024” or similar references relate to the 52-week period ended March 29, 2024.
Overview
We are a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific analog power ICs enabling the most critical technologies in the automotive and industrial markets. We are a leading supplier of magnetic sensor IC solutions worldwide, based on market share, driven by our market leadership in the automotive market. Our products are foundational to automotive and industrial electronic systems. Our sensor ICs enable our customers to precisely measure motion, speed, position and current, while our power ICs include high-temperature and high-voltage capable motor drivers, power management ICs, light emitting diode driver ICs and isolated gate drivers. We believe that our technology expertise, combined with our deep applications knowledge and strong customer relationships, enable us to develop solutions that provide more value to customers than typical ICs. Compared to a typical IC, our solutions are more integrated, intelligent and sophisticated for complex applications and easier for customers to use.
We are headquartered in Manchester, New Hampshire and have a global footprint across multiple continents. Our portfolio includes more than 1,000 products, and we ship over 1.5 billion units annually to more than 10,000 customers worldwide. During the three- and six-month periods ended September 27, 2024, we generated $187.4 million and $354.3 million in total net sales, respectively, with $(33.6) million and $(51.2) million in net loss, respectively. During the three- and six-month periods ended September 29, 2023, we generated $275.5 million and $553.8 million in total net sales, respectively, with $65.7 million and $126.6 million in net income, respectively.
Business Updates
On July 23, 2024, we entered into a share repurchase agreement (the “Share Repurchase Agreement” and the transaction thereunder, the “Sanken Transaction”) with Sanken Electric Co., Ltd. (“Sanken”), pursuant to which we agreed to repurchase 38,767,315 shares of our common stock from Sanken at a price per share equal to the price per share at which the underwriters in a public underwritten equity offering of shares of our common stock would purchase shares (the “Equity Offering”). The repurchase of shares of common stock occurred in two separate closings, with the first closing taking place after the closing of the Equity Offering (the “First Closing”) and the second closing (the “Second Closing”) occurring after the receipt of the proceeds from borrowings under the Refinanced 2023 Term Loan Facility (as defined below). The First Closing of the share repurchase was conditioned upon the closing of the Equity Offering and certain other conditions, and the Second Closing of the share repurchase was conditioned upon the receipt of net proceeds of no less than $300.0 million from incremental term loans under the Refinanced 2023 Term Loan Facility. Pursuant to the terms of the Share Repurchase Agreement, Sanken reimbursed us for the expenses incurred by us in connection with the transactions contemplated by the Share Repurchase Agreement, plus a facilitation fee of $35.0 million.
To fund the First Closing, we entered into an underwriting agreement (the “Underwriting Agreement”) with Barclays Capital Inc. and Morgan Stanley & Co. LLC, as representatives of the several underwriters (the “Underwriters”) on July 24, 2024, pursuant to which we agreed to sell 25,000,000 shares of our common stock, to the Underwriters at a price of $23.16 per share. Under the terms of the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase up to an additional 3,750,000 shares of common stock at the same purchase price, which option was exercised in full prior to the closing of the Equity Offering.
20
On July 26, 2024, we completed the Equity Offering pursuant to the Underwriting Agreement of 28,750,000 shares of our common stock at a public offering price of $24.00 per share resulting in net proceeds to us of approximately $665.9 million, after deducting approximately $24.2 million of underwriting discounts. As described above, we used the net proceeds of the Equity Offering to complete the First Closing under the Share Repurchase Agreement.
On July 29, 2024, we completed the First Closing under the Share Repurchase Agreement, repurchasing 28,750,000 shares of our common stock for aggregate consideration of $628.3 million, which was the Equity Offering price, less the facilitation fee of $35.0 million, underwriting discounts, and reimbursable transaction expenses. The shares repurchased in the First Closing were retired.
In connection with the Share Repurchase Agreement, we entered into a Second Amended and Restated Stockholders Agreement with Sanken (the “Second Amended and Restated Stockholders Agreement”), which amended and restated the Amended and Restated Stockholders Agreement, dated as of June 16, 2022, by and among us, Sanken and OEP SKNA, L.P. (“OEP”). The Second Amended and Restated Stockholders Agreement, which became effective in accordance with its terms on July 29, 2024, removed OEP as a party and amended certain rights and obligations of us and Sanken.
On August 6, 2024, we entered into Amendment No. 2 (the “Second Amendment”) to the revolving credit facility credit agreement entered into on June 21, 2023 (as amended, the “2023 Revolving Credit Agreement” and the credit facility thereunder, as amended, the “2023 Revolving Credit Facility”) with Allegro MicroSystems, LLC, Morgan Stanley Senior Funding, Inc., as the administrative agent and the collateral agent, and each lender from time to time party thereto. The Second Amendment increased the total capacity of the 2023 Revolving Credit Facility to $256.0 million.
The Second Amendment also provided for a new $400 million tranche of term loans maturing in 2030 (the “Refinanced 2023 Term Loan Facility”), the proceeds of which were primarily used to (i) repurchase a portion of our common stock in connection with the Second Closing, (ii) refinance the 2023 Term Loan Facility (as defined in Note 9, “Debt and Other Borrowings” to the condensed consolidated financial statements included in this Quarterly Report), (iii) pay fees and expenses in connection with the foregoing and (iv) for general corporate purposes. The Refinanced 2023 Term Loan Facility amortizes at a rate of 1.00% per annum. The Refinanced 2023 Term Loan Facility bears interest, at our option, at a rate equal to (i) Term SOFR (as defined in the 2023 Revolving Credit Agreement) in effect from time to time plus 2.25% or (ii) the highest of (x) the Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50%, (y) the prime lending rate or (z) the one-month Term SOFR plus 1.0% in effect from time to time plus 1.25%. The 2023 Term Loan Refinancing will mature on October 31, 2030. The Refinanced 2023 Term Loan Facility is subject to covenants consistent with the 2023 Revolving Credit Agreement covenants. As the terms of the refinancing were not substantially different than the terms of the Second Amendment, the refinancing was accounted for as a debt modification. In conjunction with the refinancing, we recognized $3.6 million as a debt discount which will amortized to interest expense over the remaining term using the effective interest method. Borrowings under the Second Amendment are collateralized by substantially all of our assets.
On August 7, 2024, we completed the Second Closing under the Share Repurchase Agreement, repurchasing 10,017,315 shares of our common stock for aggregate cash consideration of $225.5 million, which was the Equity Offering price less underwriting discounts and reimbursable transaction expenses. As described above, we used a portion of the proceeds from the Refinanced 2023 Term Loan Facility and existing cash on hand to complete the Second Closing. The shares repurchased in the Second Closing were retired.
On September 20, 2024, we, along with Sanken, Polar Semiconductor LLC (“PSL”), and PS Investment Aggregator, L.P. (“Subscriber”), completed the transaction (the “PSL Closing”) contemplated by a Sale and Subscription Agreement that we, Sanken, PSL and Subscriber entered into on April 25, 2024 (the “PSL Agreement” and the transaction thereunder, the “PSL Transaction”). As contemplated by the PSL Agreement, Subscriber and certain of its affiliates agreed to make capital contributions to PSL of $175.0 million in exchange for an equity interest in PSL, and we agreed to discharge the PSL Promissory Notes (as defined in Note 14, “Related Party Transactions” to the condensed consolidated financial statements included in this Quarterly Report) held by us for a value of $10.4 million in exchange for PSL equity interests. Following the PSL Closing, we owned approximately 10.2% of PSL. As a result of the share issuance to Subscriber, we recognized a net loss of $2.8 million related to the difference between the selling price per share and its carrying amount per share and after a gain from the conversion of the PSL Promissory Notes. The loss is included in Other (expense) income, net in the condensed consolidated statements of operations.
At the PSL Closing, we, Sanken and Subscriber entered into an amended and restated limited partnership agreement (the “Limited Partnership Agreement”) with Polar Semiconductor GP I, LLC. The Limited Partnership Agreement contains representations, warranties and covenants of the parties customary for a transaction of this type, the reimbursement of expenses and costs, and restrictions on transfers.
21
Other Key Factors and Trends Affecting Our Operating Results
Our financial condition and results of operations have been, and will continue to be, affected by numerous other factors and trends, including the following:
Inflation
Inflation rates in the markets in which we operate have increased and may continue to rise. Inflation over the last several quarters has led us to experience higher costs, including higher labor costs, wafer and other costs for materials from suppliers, and transportation and energy costs. Our suppliers have raised their prices and may continue to raise prices, and in the competitive markets in which we operate, we may not be able to make corresponding price increases to preserve our gross margins and profitability. If inflation rates continue to rise or remain elevated for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity. While we have generally been able to offset increases in these costs through various productivity and cost reduction initiatives, as well as adjusting our selling prices and releasing new products with improved gross margins, our ability to increase our average selling prices depends on market conditions and competitive dynamics. Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs.
Design Wins with New and Existing Customers
Our end customers continually develop new products in existing and new application areas, and we work closely with our significant original equipment manufacturer customers in most of our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate sales can be lengthy, typically between two and four years. As a result, our future sales are highly dependent on our continued success at winning design mandates from our customers. Further, despite current inflationary conditions, we expect the average sales prices (“ASPs”) of our products to decline over time, and we consider design wins to be critical to our future success as they help mitigate declines in ASPs. We anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win, with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of the customer’s products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful introduction and market acceptance of our customers’ end products, which may be affected by several factors beyond our control.
Customer Demand, Orders and Forecasts
Demand for our products is highly dependent on market conditions in the end markets in which our customers operate, which are generally subject to seasonality, cyclicality and competitive conditions. In addition, a substantial portion of our total net sales is derived from sales to customers that purchase large volumes of our products. These customers generally provide periodic forecasts of their requirements. However, these forecasts do not commit such customers to minimum purchases, and customers can revise these forecasts without penalty. In addition, as is customary in the semiconductor industry, customers are generally permitted to cancel orders for our products within a specified period. Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, changes in forecasts or the timing of orders from customers expose us to the risks of inventory shortages or excess inventory. We are currently operating in an inflationary environment for our products.
Manufacturing Costs and Product Mix
Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, we expect their ASPs to decline in the long term. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers, as we target new design win opportunities and manage the product life cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand as it did in the first quarter, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.
22
Cyclical Nature of the Semiconductor Industry
The semiconductor industry has historically been highly cyclical and is characterized by increasingly rapid technological change, product obsolescence, competitive pricing pressures, evolving standards, short product life cycles in consumer and other rapidly changing markets and fluctuations in product supply and demand. New technology may result in sudden changes in system designs or platform changes that may render some of our products obsolete and require us to devote significant research and development resources to compete effectively. Periods of rapid growth and capacity expansion are occasionally followed by significant market corrections in which sales decline, inventories accumulate, and facilities go underutilized. During periods of expansion, our margins generally improve as fixed costs are spread over higher manufacturing volumes and unit sales. In addition, we may build inventory to meet increasing market demand for our products during these times, which serves to absorb fixed costs further and increase our gross margins. During an expansion cycle, we may increase capital spending and hiring to add to our production capacity. During periods of slower growth or industry contractions, our sales, production and productivity and margins generally decline.
2017 Tax Cuts and Jobs Act
Pursuant to the 2017 Tax Cuts and Jobs Act, beginning in fiscal year 2023, U.S. tax law now requires us to capitalize and amortize domestic and foreign research and development expenditures over five and 15 years, for domestic and foreign research, respectively (“174 Capitalization”). The impact of 174 Capitalization for fiscal year 2025 is an increase in annual cash taxes of approximately $5.0 million and a foreign derived intangible income benefit of $5.5 million. Additionally, the Internal Revenue Service has issued Notice 2024-12 and is expected to issue final guidance which may modify this law or change its impact.
Results of Operations
Three-Month Period Ended September 27, 2024 Compared to Three-Month Period Ended September 29, 2023
The following table summarizes our results of operations and our results of operations as a percentage of total net sales for the three-month periods ended September 27, 2024 and September 29, 2023.
|
|
Three-Month Period Ended |
|
|
Three-Month Period Ended |
|
|
Change |
|
|||||||||||||||
|
|
September 27, |
|
|
As a % of |
|
|
September 29, |
|
|
As a % of |
|
|
$ |
|
|
% |
|
||||||
|
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||
Total net sales(1) |
|
$ |
187,391 |
|
|
|
100.0 |
% |
|
$ |
275,509 |
|
|
|
100.0 |
% |
|
$ |
(88,118 |
) |
|
|
(32.0 |
)% |
Cost of goods sold (1) |
|
|
101,729 |
|
|
|
54.3 |
% |
|
|
116,006 |
|
|
|
42.1 |
% |
|
|
(14,277 |
) |
|
|
(12.3 |
)% |
Gross profit |
|
|
85,662 |
|
|
|
45.7 |
% |
|
|
159,503 |
|
|
|
57.9 |
% |
|
|
(73,841 |
) |
|
|
(46.3 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development |
|
|
43,510 |
|
|
|
23.2 |
% |
|
|
43,428 |
|
|
|
15.8 |
% |
|
|
82 |
|
|
|
0.2 |
% |
Selling, general and administrative |
|
|
38,085 |
|
|
|
20.3 |
% |
|
|
43,160 |
|
|
|
15.7 |
% |
|
|
(5,075 |
) |
|
|
(11.8 |
)% |
Total operating expenses |
|
|
81,595 |
|
|
|
43.5 |
% |
|
|
86,588 |
|
|
|
31.4 |
% |
|
|
(4,993 |
) |
|
|
(5.8 |
)% |
Operating income |
|
|
4,067 |
|
|
|
2.2 |
% |
|
|
72,915 |
|
|
|
26.5 |
% |
|
|
(68,848 |
) |
|
|
(94.4 |
)% |
Other (expense) income, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense |
|
|
(10,353 |
) |
|
|
(5.5 |
)% |
|
|
(758 |
) |
|
|
(0.3 |
)% |
|
|
(9,595 |
) |
|
|
1,265.8 |
% |
Interest income |
|
|
420 |
|
|
|
0.2 |
% |
|
|
850 |
|
|
|
0.3 |
% |
|
|
(430 |
) |
|
|
(50.6 |
)% |
Loss on change in fair value of forward repurchase contract |
|
|
(34,752 |
) |
|
|
(18.5 |
)% |
|
|
— |
|
|
|
— |
% |
|
|
(34,752 |
) |
|
|
— |
% |
Other (expense) income, net |
|
|
(2,465 |
) |
|
|
(1.3 |
)% |
|
|
64 |
|
|
|
0.0 |
% |
|
|
(2,529 |
) |
|
|
(3,951.6 |
)% |
(Loss) income before income tax (benefit) provision |
|
|
(43,083 |
) |
|
|
(23.0 |
)% |
|
|
73,071 |
|
|
|
26.5 |
% |
|
|
(116,154 |
) |
|
|
(159.0 |
)% |
Income tax (benefit) provision |
|
|
(9,470 |
) |
|
|
(5.1 |
)% |
|
|
7,400 |
|
|
|
2.7 |
% |
|
|
(16,870 |
) |
|
|
(228.0 |
)% |
Net (loss) income |
|
|
(33,613 |
) |
|
|
(17.9 |
)% |
|
|
65,671 |
|
|
|
23.8 |
% |
|
|
(99,284 |
) |
|
|
(151.2 |
)% |
Net income attributable to non-controlling interests |
|
|
62 |
|
|
|
0.0 |
% |
|
|
54 |
|
|
|
0.0 |
% |
|
|
8 |
|
|
|
14.8 |
% |
Net (loss) income attributable to Allegro MicroSystems, Inc. |
|
$ |
(33,675 |
) |
|
|
(18.0 |
)% |
|
$ |
65,617 |
|
|
|
23.8 |
% |
|
$ |
(99,292 |
) |
|
|
(151.3 |
)% |
(1) Our total net sales and cost of goods sold for the periods presented above include related party sales and cost of goods sold generated with Sanken. See our unaudited condensed consolidated financial statements included in this Quarterly Report for additional information regarding our related party net sales for the periods set forth above.
Total net sales
Total net sales decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023. The decrease was primarily driven by an overall reduction in customer held inventory and corresponding to a decline in shipments across all end markets. The decline in shipments impacted all applications, including e-Mobility products, safety comfort and convenience applications, and broad-based and other industrial applications, including clean energy and automation, and data center applications, partially offset by an increase in smart home applications.
23
Sales Trends by Market
The following table summarizes total net sales by market. The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed.
|
|
Three-Month Period Ended |
|
|
Change |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
Amount |
|
|
% |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Automotive |
|
$ |
141,893 |
|
|
$ |
197,321 |
|
|
$ |
(55,428 |
) |
|
|
(28.1 |
)% |
Industrial and other |
|
|
45,498 |
|
|
|
78,188 |
|
|
|
(32,690 |
) |
|
|
(41.8 |
)% |
Total net sales |
|
$ |
187,391 |
|
|
$ |
275,509 |
|
|
$ |
(88,118 |
) |
|
|
(32.0 |
)% |
Automotive net sales decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to inventory rebalancing with our automotive contract manufacturing customers looking to manage excess supply, as well as changes in product mix across all general applications.
Industrial and other net sales decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to a decrease in demand for our broad-based and other industrial applications, in addition to distributor inventory reductions, partially offset by an increase in sales of smart home applications.
Sales Trends by Product
The following table summarizes net sales by product.
|
|
Three-Month Period Ended |
|
|
Change |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
Amount |
|
|
% |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Power integrated circuits (“PIC”) |
|
$ |
58,691 |
|
|
$ |
99,737 |
|
|
$ |
(41,046 |
) |
|
|
(41.2 |
)% |
Magnetic sensors (“MS”) and other |
|
|
128,700 |
|
|
|
175,772 |
|
|
|
(47,072 |
) |
|
|
(26.8 |
)% |
Total net sales |
|
$ |
187,391 |
|
|
$ |
275,509 |
|
|
$ |
(88,118 |
) |
|
|
(32.0 |
)% |
The decline in PIC sales was primarily driven by a decrease in demand for our motor products. The decrease in MS and other sales was primarily due to a decline in demand for our current and isolator products, as well as our magnetic speed and position sensors, partially offset by an increase of sales for our tunnel magnetoresistance (“TMR”) solutions.
Sales Trends by Geographic Location
The following table summarizes net sales by geographic location based on ship-to location.
|
|
Three-Month Period Ended |
|
|
Change |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
Amount |
|
|
% |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Americas: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
27,739 |
|
|
$ |
47,724 |
|
|
$ |
(19,985 |
) |
|
|
(41.9 |
)% |
Other Americas |
|
|
6,426 |
|
|
|
9,539 |
|
|
|
(3,113 |
) |
|
|
(32.6 |
)% |
EMEA: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
27,280 |
|
|
|
46,951 |
|
|
|
(19,671 |
) |
|
|
(41.9 |
)% |
Asia: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Greater China |
|
|
48,995 |
|
|
|
69,463 |
|
|
|
(20,468 |
) |
|
|
(29.5 |
)% |
Japan |
|
|
37,716 |
|
|
|
47,275 |
|
|
|
(9,559 |
) |
|
|
(20.2 |
)% |
South Korea |
|
|
18,171 |
|
|
|
29,054 |
|
|
|
(10,883 |
) |
|
|
(37.5 |
)% |
Other Asia |
|
|
21,064 |
|
|
|
25,503 |
|
|
|
(4,439 |
) |
|
|
(17.4 |
)% |
Total net sales |
|
$ |
187,391 |
|
|
$ |
275,509 |
|
|
$ |
(88,118 |
) |
|
|
(32.0 |
)% |
Americas net sales decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to the decline in demand in the United States automotive and industrial and other markets across all applications. In addition, Greater China net sales declined in automotive markets primarily driven by reduced net sales of electric vehicles and advanced driver assistance systems applications. Europe net sales declined in automotive and industrial and other markets, primarily driven by lower net sales across all applications.
24
Cost of goods sold
Cost of goods sold decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to a reduction in shipped volume, as well as change in product mix, partially offset by an increase in amortization of intangible assets in relation to the acquisition of Crocus Technology International Corp. (“Crocus”).
Cost of goods sold as a percentage of our total net sales was 54.3% and 42.1% for the three-month period ended September 27, 2024 and September 29, 2023, respectively. The increase was primarily due to the reduction in production volume, as well as a change in product mix noted above.
Gross profit and gross margin
Gross profit decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to the decrease in net sales and a change in product mix noted above.
Gross margin was 45.7% and 57.9% for the three-month period ended September 27, 2024 and September 29, 2023, respectively. The decrease was primarily due to the decline in net sales and product mix noted above.
Research and development expenses
Research and development (“R&D”) expenses increased in the three-month period ended September 27, 2024 in comparison to the comparable period in fiscal year 2024, primarily due to the increase in R&D supplies, partially offset by a reduction from R&D tax credits and personnel costs, including the annual incentive program.
R&D expenses as a percentage of our total net sales was 23.2% and 15.8% for the three-month periods ended September 27, 2024 and September 29, 2023, respectively. The increase was primarily due to the increase in R&D supplies, partially offset by reduction from R&D tax credits and personnel costs including the annual incentive program, in addition to the decline in net sales.
Selling, general and administrative expenses
Selling, general and administrative (“SG&A”) expenses decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to a decrease in the annual incentive program and outside service costs, partially offset by an increase in personnel and severance expenses.
SG&A expenses as a percentage of our total net sales was 20.3% and 15.7% in the three-month periods ended September 27, 2024 and September 29, 2023, respectively. The increase as a percentage of total net sales was primarily due to a decrease in the annual incentive program and outside service costs, partially offset by an increase in personnel and severance expenses in addition to the decline in net sales.
Interest expense
Interest expense increased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, due to higher interest payments on the Refinanced 2023 Term Loan Facility, which increased our total outstanding debt balance.
Interest income
Interest income decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to lower cash and cash equivalent balances.
Loss on change in fair value of forward repurchase contract
We recorded a loss on the change in fair value of a forward repurchase contract in the three-month period ended September 27, 2024, due to the various settlement dates under the Share Repurchase Agreement.
Other (expense) income, net
The foreign currency gain recorded in the three-month period ended September 27, 2024 was primarily due to U.S. Dollar strengthening against the Philippine Peso. The foreign currency gain recorded in the three-month period ended September 29, 2023, was primarily due to realized and unrealized gains from the British Pound strengthening against the Euro in our United Kingdom location, partially offset by the U.S. Dollar strengthening against the Philippine Peso.
We also recorded a net loss of $2.8 million as a result of the PSL Closing in the three-month period ended September 27, 2024 related to the difference between the selling price per share and its carrying amount per share and after a gain from the conversion of the PSL Promissory notes. Unrealized losses of $2.3 million related to our investment in marketable securities were offset by $3.7 million of gains related to sales of our investment in marketable securities and earnings in our money market fund deposits in the three-month period ended September 29, 2023.
25
Income tax (benefit) provision
Income tax benefit and the effective income tax rate were $(9.5) million and 22.0%, respectively, in the three-month period ended September 27, 2024, compared to income tax provision and effective income tax rate of $7.4 million and 10.1%, respectively, in the three-month period ended September 29, 2023. The increase in the effective tax rate (“ETR”) was mainly due to a decrease in forecasted GAAP income before taxes, less tax deductions for share-based compensation, and an increase in nondeductible expenses primarily related to the Sanken Transaction and PSL Transaction.
Six-Month Period Ended September 27, 2024 Compared to Six-Month Period Ended September 29, 2023
The following table summarizes our results of operations and our results of operations as a percentage of total net sales for the six-month periods ended September 27, 2024 and September 29, 2023.
|
|
Six-Month Period Ended |
|
|
Six-Month Period Ended |
|
|
Change |
|
|||||||||||||||
|
|
September 27, |
|
|
As a % of |
|
|
September 29, |
|
|
As a % of |
|
|
$ |
|
|
% |
|
||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
Total net sales (1) |
|
$ |
354,310 |
|
|
|
100.0 |
% |
|
$ |
553,802 |
|
|
|
100.0 |
% |
|
$ |
(199,492 |
) |
|
|
(36.0 |
)% |
Cost of goods sold (1) |
|
|
193,877 |
|
|
|
54.7 |
% |
|
|
236,349 |
|
|
|
42.7 |
% |
|
|
(42,472 |
) |
|
|
(18.0 |
)% |
Gross profit |
|
|
160,433 |
|
|
|
45.3 |
% |
|
|
317,453 |
|
|
|
57.3 |
% |
|
|
(157,020 |
) |
|
|
(49.5 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development |
|
|
88,714 |
|
|
|
25.0 |
% |
|
|
86,403 |
|
|
|
15.6 |
% |
|
|
2,311 |
|
|
|
2.7 |
% |
Selling, general and administrative |
|
|
78,282 |
|
|
|
22.1 |
% |
|
|
87,389 |
|
|
|
15.8 |
% |
|
|
(9,107 |
) |
|
|
(10.4 |
)% |
Total operating expenses |
|
|
166,996 |
|
|
|
47.1 |
% |
|
|
173,792 |
|
|
|
31.4 |
% |
|
|
(6,796 |
) |
|
|
(3.9 |
)% |
Operating (loss) income |
|
|
(6,563 |
) |
|
|
(1.9 |
)% |
|
|
143,661 |
|
|
|
25.9 |
% |
|
|
(150,224 |
) |
|
|
(104.6 |
)% |
Other (expense) income, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense |
|
|
(15,730 |
) |
|
|
(4.4 |
)% |
|
|
(1,527 |
) |
|
|
(0.3 |
)% |
|
|
(14,203 |
) |
|
|
930.1 |
% |
Interest income |
|
|
914 |
|
|
|
0.3 |
% |
|
|
1,693 |
|
|
|
0.3 |
% |
|
|
(779 |
) |
|
|
(46.0 |
)% |
Loss on change in fair value of forward repurchase contract |
|
|
(34,752 |
) |
|
|
(9.8 |
)% |
|
|
— |
|
|
|
— |
% |
|
|
(34,752 |
) |
|
|
— |
% |
Other (expense) income, net |
|
|
(3,525 |
) |
|
|
(1.0 |
)% |
|
|
(2,652 |
) |
|
|
(0.5 |
)% |
|
|
(873 |
) |
|
|
32.9 |
% |
(Loss) income before income tax (benefit) provision |
|
|
(59,656 |
) |
|
|
(16.8 |
)% |
|
|
141,175 |
|
|
|
25.5 |
% |
|
|
(200,831 |
) |
|
|
(142.3 |
)% |
Income tax (benefit) provision |
|
|
(8,430 |
) |
|
|
(2.4 |
)% |
|
|
14,615 |
|
|
|
2.6 |
% |
|
|
(23,045 |
) |
|
|
(157.7 |
)% |
Net (loss) income |
|
|
(51,226 |
) |
|
|
(14.5 |
)% |
|
|
126,560 |
|
|
|
22.9 |
% |
|
|
(177,786 |
) |
|
|
(140.5 |
)% |
Net income attributable to non-controlling interests |
|
|
124 |
|
|
|
0.0 |
% |
|
|
93 |
|
|
|
0.0 |
% |
|
|
31 |
|
|
|
33.3 |
% |
Net (loss) income attributable to Allegro MicroSystems, Inc. |
|
$ |
(51,350 |
) |
|
|
(14.5 |
)% |
|
$ |
126,467 |
|
|
|
22.8 |
% |
|
$ |
(177,817 |
) |
|
|
(140.6 |
)% |
(1) Our total net sales and cost of goods sold for the periods presented above include related party sales and cost of goods sold generated with Sanken. See our unaudited condensed consolidated financial statements included in this Quarterly Report for additional information regarding our related party net sales for the periods set forth above.
Total net sales
Total net sales decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023. The decrease was primarily driven by an overall reduction in customer held inventory and corresponding to a decline in shipments across all end markets. The decline in shipments impacted all applications including e-Mobility products, safety comfort and convenience applications, and broad-based and other industrial applications, including clean energy and automation, data center applications and consumer and smart home products.
26
Sales Trends by Market
The following table summarizes total net sales by market. The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed.
|
|
Six-Month Period Ended |
|
|
Change |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
Amount |
|
|
% |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Automotive |
|
$ |
273,077 |
|
|
$ |
382,751 |
|
|
$ |
(109,674 |
) |
|
|
(28.7 |
)% |
Industrial and other |
|
|
81,233 |
|
|
|
171,051 |
|
|
|
(89,818 |
) |
|
|
(52.5 |
)% |
Total net sales |
|
$ |
354,310 |
|
|
$ |
553,802 |
|
|
$ |
(199,492 |
) |
|
|
(36.0 |
)% |
Automotive net sales decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily due to inventory rebalancing with our automotive contract manufacturing customers looking to manage excess supply, as well as changes in product mix across all general markets.
Industrial and other net sales decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily due to a decrease in demand for our broad-based and other industrial applications, in addition to distributor inventory reductions.
Sales Trends by Product
The following table summarizes net sales by product.
|
|
Six-Month Period Ended |
|
|
Change |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
Amount |
|
|
% |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
PIC |
|
$ |
110,501 |
|
|
$ |
203,725 |
|
|
$ |
(93,224 |
) |
|
|
(45.8 |
)% |
MS and other |
|
|
243,809 |
|
|
|
350,077 |
|
|
|
(106,268 |
) |
|
|
(30.4 |
)% |
Total net sales |
|
$ |
354,310 |
|
|
$ |
553,802 |
|
|
$ |
(199,492 |
) |
|
|
(36.0 |
)% |
The decline in PIC sales was primarily driven by a decrease in demand for our motor products. The decrease in MS and other sales was due to a decline in demand for our current and isolator products, as well as our magnetic speed and position sensors, partially offset by an increase in sales of our TMR solutions.
Sales Trends by Geographic Location
The following table summarizes net sales by geographic location based on ship-to location.
|
|
Six-Month Period Ended |
|
|
Change |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
Amount |
|
|
% |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Americas: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
50,006 |
|
|
$ |
96,548 |
|
|
$ |
(46,542 |
) |
|
|
(48.2 |
)% |
Other Americas |
|
|
11,650 |
|
|
|
18,047 |
|
|
|
(6,397 |
) |
|
|
(35.4 |
)% |
EMEA: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
54,186 |
|
|
|
102,339 |
|
|
|
(48,153 |
) |
|
|
(47.1 |
)% |
Asia: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Greater China |
|
|
80,855 |
|
|
|
131,679 |
|
|
|
(50,824 |
) |
|
|
(38.6 |
)% |
Japan |
|
|
78,359 |
|
|
|
88,855 |
|
|
|
(10,496 |
) |
|
|
(11.8 |
)% |
South Korea |
|
|
39,944 |
|
|
|
58,567 |
|
|
|
(18,623 |
) |
|
|
(31.8 |
)% |
Other Asia |
|
|
39,310 |
|
|
|
57,767 |
|
|
|
(18,457 |
) |
|
|
(32.0 |
)% |
Total net sales |
|
$ |
354,310 |
|
|
$ |
553,802 |
|
|
$ |
(199,492 |
) |
|
|
(36.0 |
)% |
Americas net sales decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily due to the decline in the United States automotive and industrial markets across all applications. In Greater China, net sales declined in automotive markets and industrial markets across all applications, which are served through distributors currently managing inventory levels. In addition, Europe net sales declined in automotive and industrial, where demand in internal combustion engine has declined. South Korea net sales declined in the automotive industries, primarily safety, comfort and convenience applications, Other Asia net sales declined across industrial markets, while Japan net sales declined in safety, comfort and convenience applications, data center applications and advanced driver assistance systems, partially offset by an increase in broad-based applications and electric vehicles.
27
Cost of goods sold
Cost of goods sold decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily due to a reduction in shipped volume as well as a change in product mix, partially offset by an increase in amortization of intangible assets in relation to the acquisition of Crocus.
Cost of goods sold as a percentage of our total net sales was 54.7% and 42.7% for the six-month period ended September 27, 2024 and September 29, 2023, respectively. The increase was primarily due to the reduction in production volume, as well as a change in product mix noted above.
Gross profit and gross margin
Gross profit decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, due to the decrease in net sales and a change in product mix noted above.
Gross margin was 45.3% and 57.3% for the six-month period ended September 27, 2024 and September 29, 2023, respectively. The decrease was primarily due to the decline in net sales and product mix noted above.
Research and development expenses
Research and development (“R&D”) expenses increased in the six-month period ended September 27, 2024 in comparison to the comparable period in fiscal year 2024, primarily due to an increase in R&D supplies and personnel costs partially offset by a reduction from R&D tax credits.
R&D expenses as a percentage of our total net sales was 25.0% and 15.6% for the six-month periods ended September 27, 2024 and September 29, 2023, respectively. The increase was primarily due to the increase in R&D supplies and personnel costs partially offset by a reduction from R&D tax credits noted above in addition to the decline in net sales.
Selling, general and administrative expenses
Selling, general and administrative (“SG&A”) expenses decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily due to a decrease in the annual incentive program and outside service costs, partially offset by an increase in personnel and severance expenses.
SG&A expenses as a percentage of our total net sales was 22.1% and 15.8% in the six-month periods ended September 27, 2024 and September 29, 2023, respectively. The increase as a percentage of total net sales was primarily due to a decrease in the annual incentive program and outside service costs, partially offset by an increase in personnel and severance expenses in addition to the decline in net sales.
Interest expense
Interest expense increased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, due to higher interest payments on the Refinanced 2023 Term Loan Facility, which increased our total outstanding debt balance.
Interest income
Interest income decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily due to lower cash and cash equivalent balances.
Loss on change in fair value of forward repurchase contract
We recorded a loss on the change in fair value of a forward repurchase contract in the six-month period ended September 27, 2024, primarily due to the various settlement dates under the Share Repurchase Agreement.
Other (expense) income, net
The foreign currency loss recorded in the six-month period ended September 27, 2024 was primarily due to the U.S. Dollar strengthening against the Peso. The foreign currency loss recorded in the six-month period ended September 29, 2023 was primarily due to realized and unrealized losses from the U.S. Dollar strengthening against the Philippine Peso from our Philippine location.
We also recorded a net loss of $2.8 million as a result of the PSL Closing in the six-month period ended September 27, 2024 related to the difference between the selling price per share and its carrying amount per share and after a gain from the conversion of the PSL Promissory Notes, partially offset by $0.8 million of gains related to earnings in our money market fund deposits. We recorded unrealized losses of $11.2 million related to our investment in marketable securities, partially offset by $10.6 million of gains related to sales of our investment in marketable securities and earnings in our money market fund deposits in the six-month period ended September 29, 2023.
28
Income tax (benefit) provision
Income tax benefit and the effective income tax rate were $(8.4) million and 14.1%, respectively, in the six-month period ended September 27, 2024, compared to income tax provision and effective income tax rate of $14.6 million and 10.4%, respectively, in the six-month period ended September 29, 2023. The increase in the ETR was mainly due to a decrease in forecasted GAAP income before taxes, less tax deductions for share-based compensation, and an increase in nondeductible expenses primarily related to the Sanken Transaction and PSL Transaction.
Liquidity and Capital Resources
As of September 27, 2024, we had $188.8 million of cash and cash equivalents and $399.6 million of working capital, compared to $212.1 million of cash and cash equivalents and $454.3 million of working capital as of March 29, 2024. Working capital is impacted by the timing and extent of our business needs.
On August 6, 2024, we entered into the Second Amendment. The Second Amendment increased the total capacity of the 2023 Revolving Credit Facility to $256 million and provided for a new $400 million Refinanced 2023 Term Loan Facility, the proceeds of which were used, in relevant part to (i) repurchase a portion of our common stock, (ii) refinance the 2023 Term Loan Facility, (iii) pay fees and expenses in connection with the foregoing and (iv) for general corporate purposes. The Refinanced 2023 Term Loan Facility amortizes at a rate of 1.00% per annum. The Refinanced 2023 Term Loan Facility bears interest, at our option, at a rate equal to (i) Term SOFR (as defined in the Credit Agreement) in effect from time to time plus 2.25% or (ii) the highest of (x) the Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50%, (y) the prime lending rate or (z) the one-month Term SOFR plus 1.0% in effect from time to time plus 1.25%. The Refinanced 2023 Term Loan Facility will mature on October 31, 2030.
Our primary requirements for liquidity and capital resources besides our growth initiatives are working capital, capital expenditures, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalents. Our current capital deployment strategy for fiscal year 2025 is to utilize cash on hand and capacity under our 2023 Revolving Credit Facility to support our continued growth initiatives into select markets and planned capital expenditures, as well as consider potential acquisitions. As of September 27, 2024, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the upcoming fiscal year relate to our operating leases, operating and capital purchase commitments, and expected contributions to our defined benefit and contribution plans. Additionally, we expect to continue to strategically invest in expanding our operations in China, Europe, Japan and India in order to directly manage and service our customers in these markets, which could result in increases in our total net sales, cost of goods sold and operating expenses. For information regarding the Company’s expected cash requirements and timing of payments related to leases, noncancellable purchase commitments and pension and defined contribution plans, see Note 12, “Leases,” Note 16, “Commitments and Contingencies” and Note 15, “Retirement Plans” to the audited consolidated financial statements in the Company’s 2024 Annual Report.
We believe that our existing cash will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses that we expect to incur during the next 12 months. In order to support and achieve our future growth plans, we may need or advantageously seek to obtain additional funding through equity or debt financing. We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next 12 months. If these resources are not sufficient to satisfy our liquidity requirements due to changes in circumstances, we may be required to borrow under our 2023 Revolving Credit Facility or seek additional financing. If we raise additional funds by issuing equity securities that are not used to repurchase existing shares outstanding, our stockholders will experience dilution. Debt financing, if available, may contain covenants that significantly restrict our operations or our ability to obtain additional debt financing in the future. Any additional financing that we raise may contain terms that are not favorable to us or our stockholders. We cannot assure you that we would be able to obtain additional financing on terms favorable to us or our existing stockholders, or at all.
Cash Flows from Operating, Investing and Financing Activities
The following table summarizes our cash flows for the six-month periods ended September 27, 2024 and September 29, 2023:
|
|
Six-Month Period Ended |
|
|||||
|
|
September 27, 2024 |
|
|
September 29, 2023 |
|
||
|
|
(dollars in thousands) |
|
|||||
Net cash provided by operating activities |
|
$ |
49,743 |
|
|
$ |
96,393 |
|
Net cash used in investing activities |
|
|
(20,949 |
) |
|
|
(59,926 |
) |
Net cash used in financing activities |
|
|
(53,292 |
) |
|
|
(15,767 |
) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
|
|
1,375 |
|
|
|
(974 |
) |
Net (decrease) increase in cash and cash equivalents and restricted cash |
|
$ |
(23,123 |
) |
|
$ |
19,726 |
|
29
Operating Activities
Net cash provided by operating activities was $49.7 million in the six-month period ended September 27, 2024, resulting primarily from a net loss of $51.2 million and noncash charges of $93.2 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $7.7 million. Noncash charges include increases for $34.8 million for loss on change in fair value of forward repurchase contract, $32.5 million of depreciation and amortization, $21.7 million of stock-based compensation and $6.6 million of other non-cash reconciling items, partially offset by $7.8 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $41.4 million decrease in trade accounts receivable, net, a $13.7 million increase in trade accounts payable and a $4.1 million increase in net amounts due to related party partially offset by an $18.8 million increase in inventories, a $15.8 million increase in prepaid expenses and other assets, and a $16.8 million decrease in accrued expenses and other current and long-term liabilities. The decrease in trade accounts receivable, net was primarily a result of decreased sales year-over-year. Trade accounts payable increased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $4.1 million. The increase in net amounts due to related parties was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in inventories was primarily the result of inventory builds of standard products to support anticipated sales growth. The increase in prepaid expenses and other assets was mostly due to higher long-term deposits and the timing of tax payments. The decrease in accrued expenses and other current and long-term liabilities was primarily the result of a reduction in accrued personnel costs due to the timing of payments pursuant to our annual incentive compensation plan.
Net cash provided by operating activities was $96.4 million in the six-month period ended September 29, 2023, resulting primarily from net income of $126.6 million and noncash charges of $46.3 million, partially offset by a net decrease in cash from an increase in net operating assets and liabilities of $76.5 million. The net increase in operating assets and liabilities consisted of a $31.2 million increase in inventories, a $29.9 million decrease in accrued expenses and other current and long-term liabilities, a $16.5 million increase in prepaid expenses and other assets, and a $7.6 million increase in trade accounts receivable, net, partially offset by a $2.7 million increase in trade accounts payable and a $6.1 million increase in net amounts due from related parties. The increase in inventories was primarily the result of inventory builds to support anticipated sales growth for the remainder of fiscal year 2024. The increase in prepaid expenses and other assets were mostly due to higher long-term deposits and the timing of tax payments, including value-added taxes receivable, insurance and contract costs. The decrease in accrued expenses and other current and long-term liabilities was primarily the result of a reduction in accrued personnel costs due to timing of payments pursuant to our annual incentive compensation plan. The increase in trade accounts receivable, net, was primarily a result of increased sales year-over-year, as well as timing of receipts. Accounts payable increased primarily due to the timing of payments to suppliers and vendors, partially offset by higher operating purchases, including unpaid capital expenditures of $20.0 million. The increase in net amounts due to related parties was primarily due to variations in the timing of such payments in the ordinary course of business.
Investing Activities
Net cash used in investing activities was $20.9 million in the six-month period ended September 27, 2024, consisting of purchases of property, plant and equipment.
Net cash used in investing activities was $59.9 million in the six-month period ended September 29, 2023, consisting of purchases of property, plant and equipment of $76.1 million, partially offset by proceeds from the sale of marketable securities of $16.2 million.
Financing Activities
Net cash used in financing activities was $53.3 million in the six-month period ended September 27, 2024, consisting of $853.8 million of repurchases of our common stock, $50.0 million of payment on our 2023 Term Loan Facility and $12.3 million of taxes related to the net settlement of equity awards, offset by the issuance of common stock of $665.9 million, net proceeds of $193.5 million from the Refinanced 2023 Term Loan Facility, proceeds received in connection with the issuance of common stock under our employee stock purchase plan and proceeds received related to the quarterly payment from PSL on our related party loan.
Net cash used in financing activities was $15.8 million in the six-month period ended September 29, 2023, primarily consisting of taxes related to the net settlement of equity awards, additional funds loaned under the Note Purchase Agreement between us and Crocus and payments of debt issuance costs in connection with the 2023 Revolving Credit Facility, partially offset by proceeds received in connection with the issuance of common stock under our employee stock purchase plan and proceeds received related to the quarterly payment from PSL on our related party loan.
Debt Obligations
See Note 9, “Debt and Other Borrowings” to the unaudited condensed consolidated financial statements included in this Quarterly Report for information regarding our debt obligations.
30
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included in this Quarterly Report for a full description of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects on our condensed consolidated financial statements contained in Item 1 of this Quarterly Report.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements included in our 2024 Annual Report. There have been no material changes in our critical accounting policies and estimates since March 29, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have not been any material changes in our exposures to market risk since March 29, 2024. For details on the Company’s interest rate, foreign currency exchange rate, and inflation risks, see Part I, Item 7A. “Quantitative and Qualitative Information About Market Risks” in our 2024 Annual Report.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of September 27, 2024. Based on the evaluation of our disclosure controls and procedures as of September 27, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in claims, regulatory examinations or investigations and proceedings arising in the ordinary course of our business. The outcome of any such claims or proceedings, regardless of the merits, and the Company’s ultimate liability, if any, is inherently uncertain. We are not currently party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.
Item 1A. Risk Factors.
Various risk factors associated with our business are included in our Annual Report, as filed with the SEC on May 23, 2024. There have been no material changes to those risk factors previously disclosed in our Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 5. Other Information.
During the three-month period ended September 27, 2024, no director or officer of the Company
Amendment to Chief Executive Officer Employment Agreement
On October 31, 2024, the Company entered into an amendment (the “Amendment”) to the employment agreement, dated May2, 2022, between the Company and Vineet Nargolwala, the Company’s Chief Executive Officer (the “CEO Employment Agreement”). The Amendment was authorized by the Board of Directors of the Company (the “Board”) at the recommendation of the Board’s Compensation Committee (the “Committee”) following a comprehensive market review by the Committee of all the Company’s executive severance arrangements and based on advice and recommendations from the Committee’s independent compensation consultant.
The Amendment revised the severance amount under the CEO Employment Agreement that would apply in the case of a termination without cause or resignation for good reason outside of a change in control (“CIC”) scenario from 2.0 times base salary (and a pro-rated target level bonus for the year of termination) and up to 12 months of health care continuation payments to 2.0 times base salary plus target annual bonus (and a pro-rated target level bonus for the year of termination) and up to 18 months of health care continuation payments. The Amendment does not change the severance amount under the CEO Employment Agreement that would apply in the case of termination without cause or resignation for good reason within 24 months after the occurrence of a CIC, which remains at a 2.0 times base salary plus target annual bonus and up to 24 months of health care continuation payments. The Amendment also specifies that the CIC “protection” period, during which termination without cause or resignation for good reason would trigger full equity award vesting acceleration is 24 months following the occurrence of a CIC, notwithstanding the fact that this period is 12 months in Mr. Nargolwala’s outstanding equity award agreements.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Amendment, a copy of which is filed as Exhibit 10.5 to this Quarterly Report and incorporated by reference herein.
Amendments to Other Executive Severance Arrangements
As a result of the market review by the Committee, the Committee also authorized the Company to modify the Company’s standard form of executive severance agreement to be entered into with any new executive officers going forward (the “New Severance Agreement”). The New Severance Agreement would provide that in the case of termination without cause or resignation for good reason of the relevant officer, he or she would receive severance payments equal to 1.0 times base salary plus target annual bonus (and a pro-rated target level bonus for the year of termination). The New Severance Agreement also adds a Section 280G “best net benefit” provision, which provides that if the executive’s total payments and benefits in connection with a CIC transaction (“Total Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise Tax”), such Total Payments would be reduced solely to the extent necessary to ensure that no portion of the Total Payments is subject to the Excise Tax (the “Reduced Payments”), but only if such Reduced Payments would be larger than the original Total Payments to the executive on an after-tax basis. Consistent with our current policies and agreements, none of our executive officers would be entitled to receive any “gross up” payments on account of any Excise Tax.
32
The New Severance Agreement does not amend the severance agreements that the Company has previously entered into with its executive officers (other than Mr. Nargolwala), would only be used for newly hired or promoted executives going forward and has not yet been entered into with any individual officers.
To further align with current market practice, the Committee also authorized the Company to amend all of the Company’s outstanding executive restricted stock unit and performance stock unit award agreements to increase the CIC “protection” period from 12 to 24 months following a CIC event, where a termination without cause or resignation for good reason during such period would trigger full equity award vesting acceleration.
33
Item 6. Exhibits
(a) Exhibits
Exhibit No. |
|
Description of Exhibit |
|
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10.1 |
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10.2 |
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10.3 |
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10.4 |
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|
10.5*† |
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31.1* |
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|
31.2* |
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32.1** |
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32.2** |
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101.INS |
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Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
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101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document. |
|
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|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith). |
* Filed herewith.
** Furnished herewith.
† Indicates management contract or compensatory plan, contract or arrangement.
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
ALLEGRO MICROSYSTEMS, INC. |
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|
Date: November 1, 2024 |
|
By: |
/s/ Vineet Nargolwala |
|
|
|
Vineet Nargolwala |
|
|
|
President and Chief Executive Officer (principal executive officer) |
|
|
|
|
Date: November 1, 2024 |
|
By: |
/s/ Derek P. D’Antilio |
|
|
|
Derek P. D’Antilio |
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer) |
35