• Allegro MicroSystems Reports Fourth Quarter and Fiscal Year 2022 Results

    Source: Nasdaq GlobeNewswire / 09 May 2022 15:15:01   America/Chicago

    MANCHESTER, N.H., May 09, 2022 (GLOBE NEWSWIRE) -- Allegro MicroSystems, Inc. (“Allegro” or the “Company”) (Nasdaq:ALGM), a global leader in power and sensing semiconductor solutions for motion control and energy efficient systems, today announced financial results for its fourth quarter and fiscal year 2022 that ended March 25, 2022. The Company’s net sales increased 7% sequentially to a new quarterly record of $200.3 million. Both GAAP and non-GAAP gross margin also reached records, and earnings per share was at the high end of guidance.

    Quarter Highlights:

    • Total net sales of $200.3 million increased 14% year-over-year, exceeding guidance.
    • Automotive net sales of $141.2 million were up 19% year-over-year.
    • Industrial net sales of $34.7 million were up 19% year-over-year.
    • GAAP gross margin of 54.7% and non-GAAP gross margin of 55.6% set new records.
    • Operating margin on a GAAP basis was 15.1% and on a non-GAAP basis was 23.2%.
    • GAAP diluted earnings per share was $0.13 and non-GAAP diluted EPS was $0.21, up 11% sequentially and at the high end of guidance.

    For the full year, net sales were $768.7 million, an increase of 30% compared to the prior year. Gross margin was 53.0% on a GAAP basis, an increase of 583 bps over the prior year, and 54.1% on a non-GAAP basis, an increase of 410 bps over the prior year and representing new records and meaningful progress toward the Company’s target of 55%. Improvements in operating income resulted in significant earnings per share growth on both a GAAP and non-GAAP basis.

    Fiscal Year Highlights:

    • Total net sales of $768.7 million were up 30% year-over-year.
    • Automotive net sales of $531.6 million were up 34% year-over-year.
    • Industrial net sales of $133.2 million were up 40% year-over-year.
    • GAAP gross margin was 53.0% and non-GAAP gross margin was 54.1%.
    • Operating margin on a GAAP basis was 17.8% and on a non-GAAP basis was 23.2%.
    • GAAP diluted earnings per share was $0.62, representing 520% year-over-year growth, and non-GAAP diluted EPS was $0.78, representing 70% year-over-year growth.

    “Allegro’s outstanding fourth quarter execution capped a year of record results as well as the achievement of several key milestones,” said Ravi Vig, President and CEO of Allegro MicroSystems. “In fiscal 2022, we demonstrated magnetic sensor and power technology leadership, drove record revenues across our business, and meaningfully grew earnings per share through margin expansion and operating leverage. The secular trends that drive our long-term trajectory – including vehicle electrification, advanced driver assistance systems, data center efficiency and efficient motion control – continue to see strong adoption in the market. In addition, our design win momentum and record backlog will continue to serve as significant growth drivers for fiscal 2023, contributing to an increase in our full year revenue growth outlook to the high-teens.”

    Business Summary and Outlook

    Automotive represented 71% of revenue in the quarter and grew 8.0% sequentially, driven by strong content expansion across active safety, comfort and convenience as well as vehicle electrification applications. Automotive net sales for fiscal year 2022 grew 34% year-over-year to reach a record high of $531.6 million, with ADAS and xEV growing to approximately 36% of automotive revenue. The Company shared that new products represented the majority of design wins during the fiscal year, driven by the close alignment of its innovation pipeline with high growth xEV and ADAS applications.

    Industrial end markets represented 17% of revenue in the quarter and increased 9% sequentially, reaching record levels. The Company continued to gain momentum across multiple categories, including data center, green energy and EV charging infrastructure. Industrial sales for fiscal year 2022 grew 40% year-over-year to reach a record high of $133.2 million, resulting from the Company’s alignment to key trends in automation and efficient motion control, as well as its successful transformation to improve its scale and focus in the broad market.

    For the first quarter ending June 24, 2022, the Company expects total net sales to be in the range of $205 million to $210 million. Non-GAAP gross margin is expected to be in the range of 54% to 55% and non-GAAP earnings per diluted share are expected to be in the range of $0.22 to $0.23.

    Allegro has not provided a reconciliation of its first fiscal quarter outlook for non-GAAP gross margin and non-GAAP earnings per diluted share because estimates of all of the reconciling items cannot be provided without unreasonable efforts. It is difficult to reasonably provide a forward-looking estimate between such forward-looking non-GAAP measures and the comparable forward-looking GAAP measures. Certain factors that are materially significant to Allegro’s ability to estimate these items are out of its control and/or cannot be reasonably predicted.

    Earnings Webcast

    A webcast will be held on Tuesday, May 10, 2022 at 8:30 a.m. Eastern time. Ravi Vig, President and Chief Executive Officer and Derek D’Antilio, Chief Financial Officer, will discuss Allegro’s financial results.

    The webcast will be available on the Investor Relations section of the Company’s website at investors.allegromicro.com. A recording of the webcast will be posted in the same location shortly after the call concludes and will be available for at least 30 days.

    About Allegro MicroSystems

    Allegro MicroSystems is a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific analog power ICs enabling emerging technologies in the automotive and industrial markets. Allegro’s diverse product portfolio provides efficient and reliable solutions for the electrification of vehicles, automotive ADAS safety features, automation for Industry 4.0 and power saving technologies for data centers and green energy applications.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance for our first fiscal quarter ending June 24, 2022. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” “target,” “mission,” “may,” “will,” “would,” “project,” “predict,” “contemplate,” “potential,” or the negative thereof and similar words and expressions.

    Forward-looking statements are based on management’s current expectations, beliefs and assumptions and on information currently available to us. Such statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various important factors, including, but not limited to: downturns or volatility in general economic conditions, including as a result of the COVID-19 pandemic, particularly in the automotive market; COVID-19 induced lock-downs and suppression on our supply chain and customer demand; our ability to compete effectively, expand our market share and increase our net sales and profitability; our ability to compensate for decreases in average selling prices of our products; the cyclical nature of the analog semiconductor industry; shifts in our product mix or customer mix, which could negatively impact our gross margin; our ability to manage any sustained yield problems or other delays at our third-party wafer fabrication facilities or in the final assembly and test of our products; any disruptions at our primary third-party wafer fabrication facilities; our ability to fully realize the benefits of past and potential future initiatives designed to improve our competitiveness, growth and profitability; our ability to accurately predict our quarterly net sales and operating results; our ability to adjust our supply chain volume to account for changing market conditions and customer demand; our reliance on a limited number of third-party wafer fabrication facilities and suppliers of other materials; our dependence on manufacturing operations in the Philippines; our reliance on distributors to generate sales; our indebtedness may limit our flexibility to operate our business; the loss of one or more significant end customers; our ability to develop new product features or new products in a timely and cost-effective manner; our ability to meet customers’ quality requirements; uncertainties related to the design win process and our ability to recover design and development expenses and to generate timely or sufficient net sales or margins; changes in government trade policies, including the imposition of tariffs and export restrictions; our exposures to warranty claims, product liability claims and product recalls; our ability to protect our proprietary technology and inventions through patents or trade secrets; our ability to commercialize our products without infringing third-party intellectual property rights; disruptions or breaches of our information technology systems; risks related to governmental regulation and other legal obligations, including privacy, data protection, information security, consumer protection, environmental and occupational health and safety, anti-corruption and anti-bribery, and trade controls; our dependence on international customers and operations; the availability of rebates, tax credits and other financial incentives on end-user demands for certain products; the volatility of currency exchange rates; risks related to acquisitions of and investments in new businesses, products or technologies, joint ventures and other strategic transactions; our ability to raise capital to support our growth strategy; our ability to effectively manage our growth and to retain key and highly skilled personnel; changes in tax rates or the adoption of new tax legislation; risks related to litigation, including securities class action litigation; and our ability to accurately estimate market opportunity and growth forecasts; and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 19, 2021, as any such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investors Relations page of our website at investors.allegromicro.com.

    All forward-looking statements speak only as of the date of this press release and, except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

    ALLEGRO MICROSYSTEMS, INC.
    CONSOLIDATED STATEMENT OF OPERATIONS
    (in thousands, except share and per share amounts)

     Three-Month Period Ended Fiscal Year Ended
     March 25,
    2022    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
    		 March 27,
    2020
     (Unaudited) (Unaudited) (Unaudited)  
    Net sales$163,559  $143,017  $619,861  $486,546  $465,532 
    Net sales to related party 36,734   32,091   148,813   104,661   184,557 
    Total net sales 200,293   175,108   768,674   591,207   650,089 
    Cost of goods sold 90,690   88,102   361,214   312,305   388,813 
    Gross profit 109,603   87,006   407,460   278,902   261,276 
    Operating expenses:         
    Research and development 32,432   28,140   121,873   108,649   102,052 
    Selling, general and administrative 46,822   34,799   150,937   153,476   106,396 
    Impairment of long-lived assets —   7,119   —   7,119   — 
    Change in fair value of contingent consideration 100   (2,500)  (2,000)  (2,500)  — 
    Total operating expenses 79,354   67,558   270,810   266,744   208,448 
    Operating income 30,249   19,448   136,650   12,158   52,828 
    Other income (expense):         
    Loss on debt extinguishment —   —   —   (9,055)  — 
    Interest income (expense), net 707   (668)  (1,057)  (2,603)  (110)
    Foreign currency transaction (loss) gain (513)  (1,558)  (568)  (2,889)  1,391 
    Income in earnings of equity investment 215   6   1,007   1,413   — 
    Other, net (502)  (178)  4,714   (475)  (831)
    Income (loss) before income taxes 30,156   17,050   140,746   (1,451)  53,278 
    Income tax provision (benefit) 4,504   8,361   21,191   (19,552)  16,173 
    Net income 25,652   8,689   119,555   18,101   37,105 
    Net income attributable to non-controlling interests 36   45   148   148   134 
    Net income attributable to Allegro MicroSystems, Inc.$25,616  $8,644  $119,407  $17,953  $36,971 
    Net income attributable to Allegro MicroSystems, Inc. per share:         
    Basic$0.13  $0.05  $0.63  $0.22  $3.70 
    Diluted$0.13  $0.05  $0.62  $0.10  $3.70 
    Weighted average shares outstanding:         
    Basic 189,997,738   189,429,893   189,748,427   83,448,055   10,000,000 
    Diluted 192,125,252   190,860,556   191,811,205   176,416,645   10,000,000 

    Supplemental Schedule of Total Net Sales

    The following table summarizes total net sales by market within the Company’s unaudited consolidated statements of operations:

     Three-Month Period Ended Change Fiscal Year Ended Change
     March 25,
    2022    		 March 26,
    2021    		 Amount % March 25,
    2022    		 March 26,
    2021    		 Amount %
     (Dollars in thousands)
    Automotive$141,213 $118,539 $22,674  19.1% $531,564 $398,298 $133,266 33.5%
    Industrial 34,654  29,162  5,492  18.8%  133,187  94,872  38,315 40.4%
    Other 24,426  27,407  (2,981) (10.9)%  103,923  98,037  5,886 6.0%
    Total net sales$200,293 $175,108 $25,185  14.4% $768,674 $591,207 $177,467 30.0%

    Supplemental Schedule of Stock-Based Compensation

    The Company recorded stock-based compensation expense in the following expense categories of its unaudited consolidated statements of operations:

     Three-Month Period Ended Fiscal Year Ended
    (In thousands)March 25,
    2022    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
    Cost of sales$1,184 $314 $3,176 $5,158
    Research and development 1,119  536  3,933  3,573
    Selling, general and administrative 12,598  2,119  26,439  41,139
    Total stock-based compensation$14,901 $2,969 $33,548 $49,870

    Supplemental Schedule of Acquisition Related Intangible Amortization Costs

    The Company recorded intangible amortization expense related to its acquisition of Voxtel in the following expense categories of its unaudited consolidated statements of operations:

     Three-Month Period Ended Fiscal Year Ended
    (In thousands)March 25,
    2022    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
    Cost of sales$273 $273  1,092  651
    Selling, general and administrative 22  37  90  117
    Total intangible amortization$295 $310 $1,182 $768

    ALLEGRO MICROSYSTEMS, INC.
    CONSOLIDATED BALANCE SHEETS
    (in thousands, except share and per share amounts)

     March 25, 
    2022
    (Unaudited)    		 March 26,
    2021
    Assets   
    Current assets:   
    Cash and cash equivalents$282,383  $197,214 
    Restricted cash 7,416   6,661 
    Trade accounts receivable, net of provision for expected credit losses of $105 at March 25, 2022 and allowances for doubtful accounts $138 at March 26, 2021 87,359   69,500 
    Trade and other accounts receivable due from related party 27,360   23,832 
    Accounts receivable - other 4,144   1,516 
    Inventories 86,160   87,498 
    Prepaid expenses and other current assets 14,995   18,374 
    Current portion of related party note receivable 1,875   — 
    Assets held for sale —   25,969 
    Total current assets 511,692   430,564 
    Property, plant and equipment, net 210,028   192,393 
    Operating lease right-of-use assets 16,049   — 
    Deferred income tax assets 17,967   26,972 
    Goodwill 20,009   20,106 
    Intangible assets, net 35,970   36,366 
    Related party note receivable, less current portion 5,625   — 
    Equity investment in related party 27,671   26,664 
    Other assets, net 47,609   14,613 
    Total assets$892,620  $747,678 
    Liabilities, Non-Controlling Interest and Stockholders' Equity   
    Current liabilities:   
    Trade accounts payable$29,836  $35,389 
    Amounts due to related party 5,222   2,353 
    Accrued expenses and other current liabilities 65,459   78,932 
    Current portion of operating lease liabilities 3,706   — 
    Total current liabilities 104,223   116,674 
    Obligations due under Senior Secured Credit Facilities 25,000   25,000 
    Operating lease liabilities, less current portion 12,748   — 
    Other long-term liabilities 15,286   19,133 
    Total liabilities 157,257   160,807 
    Stockholders' Equity:   
    Preferred Stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding at March 25, 2022 and March 26, 2021 —   — 
    Common stock, $0.01 par value; 1,000,000,000 shares authorized, 190,473,595 shares issued and outstanding at March 25, 2022; 1,000,000,000 shares authorized, 189,588,161 issued and outstanding at March 26, 2021 1,905   1,896 
    Additional paid-in capital 627,792   592,170 
    Retained earnings 122,958   3,551 
    Accumulated other comprehensive loss (18,448)  (11,865)
    Equity attributable to Allegro MicroSystems, Inc. 734,207   585,752 
    Non-controlling interests 1,156   1,119 
    Total stockholders' equity 735,363   586,871 
    Total liabilities, non-controlling interest and stockholders' equity$892,620  $747,678 

    ALLEGRO MICROSYSTEMS, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)

     Fiscal Year Ended
     March 25,
    2022
    (Unaudited)    		 March 26,
    2021    		 March 27,
    2020
    CASH FLOWS FROM OPERATING ACTIVITIES:     
    Net income$119,555  $18,101  $37,105 
    Adjustments to reconcile net income to net cash provided by operating activities:     
    Depreciation and amortization 48,527   48,307   64,048 
    Amortization of debt issuance costs 101   226   — 
    Deferred income taxes 7,498   (18,931)  (4,909)
    Stock-based compensation 33,548   49,870   1,435 
    (Gain) loss on disposal of assets (349)  269   698 
    Loss on debt extinguishment —   9,055   — 
    Change in fair value of contingent consideration (2,000)  (2,500)  — 
    Impairment of long-lived assets —   7,119   — 
    Provisions for inventory and credit losses/bad debt 6,297   5,019   3,891 
    Unrealized gains on marketable securities (3,722)  —   — 
    Changes in operating assets and liabilities:     
        Trade accounts receivable (18,347)  (9,303)  16,441 
        Accounts receivable - other (2,668)  (28)  346 
        Inventories (4,471)  7,641   346 
        Prepaid expenses and other assets (19,450)  (29,047)  2,629 
        Trade accounts payable (4,348)  15,099   (3,122)
        Due to/from related parties (659)  4,878   (23,946)
        Accrued expenses and other current and long-term liabilities (3,383)  14,795   (13,543)
    Net cash provided by operating activities 156,129   120,570   81,419 
    CASH FLOWS FROM INVESTING ACTIVITIES:     
    Purchases of property, plant and equipment (69,941)  (40,673)  (45,615)
    Acquisition of business, net of cash acquired (14,549)  (11,555)  — 
    Proceeds from sales of property, plant and equipment 27,408   318   3,936 
    Investments in marketable securities (9,189)  —   — 
    Contribution of cash balances due to divestiture of subsidiary —   (16,335)  — 
    Net cash used in investing activities (66,271)  (68,245)  (41,679)
    CASH FLOWS FROM FINANCING ACTIVITIES:     
    Related party note receivable (7,500)  51,377   30,000 
    Proceeds from initial public offering, net of underwriting discounts and other offering costs —   321,425   — 
    Payments for taxes related to net share settlement of equity awards     — 
    Proceeds from issuance of common stock under equity award and purchase plans less payments for taxes related to net share settlement of equity awards 2,193   (27,707)  — 
    Dividends paid —   (400,000)  — 
    Borrowings of senior secured debt, net of deferred financing costs —   315,719   43,000 
    Repayment of senior secured debt —   (300,000)  — 
    Repayment of unsecured credit facilities —   (33,000)  — 
    Capital contribution —   —   9,500 
    Net cash (used in) provided by financing activities (5,307)  (72,186)  82,500 
    Effect of exchange rate changes on Cash and cash equivalents and Restricted cash 1,373   3,860   (5,621)
    Net (decrease) increase in Cash and cash equivalents and Restricted cash 85,924   (16,001)  116,619 
    Cash and cash equivalents and Restricted cash at beginning of period 203,875   219,876   103,257 
    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD:$289,799  $203,875  $219,876 
    RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:     
    Cash and cash equivalents at beginning of period$197,214  $214,491  $99,743 
    Restricted cash at beginning of period 6,661   5,385   3,514 
    Cash and cash equivalents and Restricted cash at beginning of period$203,875  $219,876  $103,257 
    Cash and cash equivalents at end of period 282,383   197,214   214,491 
    Restricted cash at end of period 7,416   6,661   5,385 
    Cash and cash equivalents and Restricted cash at end of period$289,799  $203,875  $219,876 

    Consolidated Statements of Cash Flows (cont.)
    (in thousands)

    SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:     
    Cash paid for interest$813  $2,746  $2,448 
    Cash paid for income taxes$22,195  $8,908  $15,873 
    Non-cash transactions:     
    Changes in Trade accounts payable related to Property, plant and equipment, net$(2,021) $(3,226) $(1,542)
    Assets held for sale transferred from property, plant and equipment, net —   25,969   — 
    Loans to cover purchase of common stock under employee stock plan —   171   232 
    Recognition of right of use assets and lease liability upon adoption of new accounting standard 356   —   — 

    Non-GAAP Financial Measures

    In addition to the measures presented in our consolidated financial statements, we regularly review other measures, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, non-GAAP Profit before Tax, non-GAAP Provision for Income Tax, non-GAAP Net Income, non-GAAP Net Income per Share, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations, and in the case of non-GAAP Provision for Income Tax, management believes that this non-GAAP measure of income taxes provides it with the ability to evaluate the non-GAAP Provision for Income Taxes across different reporting periods on a consistent basis, independent of special items and discrete items, which may vary in size and frequency. By presenting these Non-GAAP Financial Measures, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance, and we believe that investors’ understanding of our performance is enhanced by our presenting these Non-GAAP Financial Measures, as they provide a reasonable basis for comparing our ongoing results of operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management and the investment community with valuable insight into matters such as: our ongoing core operations, our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance. These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities. In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude certain cash charges as a means of more accurately predicting our liquidity requirements. We believe that these Non-GAAP Financial Measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.

    These Non-GAAP Financial Measures have significant limitations as analytical tools. Some of these limitations are that:

    • such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
    • such measures exclude certain costs which are important in analyzing our GAAP results;
    • such measures do not reflect changes in, or cash requirements for, our working capital needs;
    • such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
    • such measures do not reflect our tax expense or the cash requirements to pay our taxes;
    • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future;
    • such measures do not reflect any cash requirements for such replacements; and
    • other companies in our industry may calculate such measures differently than we do, thereby further limiting their usefulness as comparative measures.

    The Non-GAAP Financial Measures are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges such as those being adjusted in the calculation of these Non-GAAP Financial Measures. Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.

    Our prior disclosure referred to non-GAAP Gross Profit and non-GAAP Gross Margin as Adjusted Gross Profit and Adjusted Gross Margin, respectively. No changes have been made to how we calculate these measures.

    Non-GAAP Gross Profit and Non-GAAP Gross Margin

    We calculate non-GAAP Gross Profit and non-GAAP Gross Margin excluding the items below from cost of goods sold in applicable periods, and we calculate non-GAAP Gross Margin as non-GAAP Gross Profit divided by total net sales.

    • Voxtel inventory impairment—Represents costs related to the discontinuation of one of our product lines manufactured by Voxtel.
    • Inventory cost amortization—Represents intercompany inventory transactions incurred from purchases made from PSL in fiscal year 2020. Such costs are one-time incurred expenses impacting our operating results during fiscal year 2021 following the disposition of PSL during the fiscal year ended March 26, 2021 (the “PSL Divestiture”). Such costs did not have a continuing impact on our operating results after our second fiscal quarter of fiscal year 2021.
    • Foundry service payment—Represents foundry service payments incurred under our Price Support Agreement with PSL in respect to the guaranteed capacity at PSL to support our production forecast and are one-time costs incurred impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs did have a continuing impact on our operating results after fiscal year 2021.
    • Stock-based compensation—Represents non-cash expenses arising from the grant of stock-based awards.
    • AMTC Facility consolidation one-time costs—Represents one-time costs incurred in connection with closing of the AMTC Facility and transitioning of test and assembly functions to the AMPI Facility announced in fiscal year 2020, consisting of: moving equipment between facilities, contract terminations and other non-recurring charges. The closure and transition of the AMTC Facility was substantially completed as of the end of March 2021 and closed on the sale in August 2021. These costs are in addition to, and not duplicative of, the adjustments noted in note (*) below.
    • Amortization of acquisition-related intangible assets—Represents non-cash expenses associated with the amortization of intangible assets in connection with the acquisition of Voxtel, which closed in August 2020.
    • COVID-19 related expenses—Represents expenses attributable to the COVID-19 pandemic primarily related to increased purchases of masks, gloves and other protective materials, and overtime premium compensation paid for maintaining 24-hour service at the AMPI Facility.

    (*) Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin in this release do not include adjustments consisting of:

    • Additional AMTC-related costs—Represents costs relating to the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility in the Philippines announced in fiscal year 2020 consisting of the net savings expected to result from the movement of work to the AMPI Facility, which facility had duplicative capacity based on the buildouts of the AMPI Facility in fiscal years 2019 and 2018. The elimination of these costs did not reduce our production capacity and therefore did not have direct effects on our ability to generate revenue. The closure and transition of the AMTC Facility was substantially completed as of the end of March 2021.
    • Out-of-period adjustment for depreciation expense of giant magnetoresistance assets (“GMR assets”)—Represents a one-time depreciation expense related to the correction of an immaterial error, related to 2017, for certain manufacturing assets that have reached the end of their useful lives.

    Non-GAAP Operating Expenses, non-GAAP Operating Income and non-GAAP Operating Margin

    We calculate non-GAAP Operating Expenses and non-GAAP Operating Income excluding the same items excluded above to the extent they are classified as operating expenses, and also excluding the items below in applicable periods. We calculate non-GAAP Operating Margin as non-GAAP Operating Income divided by total net sales.

    • Transaction fees—Represents transaction-related legal and consulting fees incurred primarily in connection with (i) the acquisition of Voxtel in fiscal year 2020, (ii) one-time transaction-related legal and consulting fees in fiscal 2021, (iii) one-time transaction-related legal, consulting and registration fees related to a secondary offering on behalf of certain shareholders in fiscal 2022, and (iv) one-time transaction-related legal and consulting fees in fiscal 2022 not related to (iii).
    • Severance—Represents severance costs associated with (i) labor savings initiatives to manage overall compensation expense as a result of the declining sales volume during the applicable period, including a voluntary separation incentive payment plan for employees near retirement and a reduction in force, (ii) the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility announced and initiated in fiscal year 2020, (iii) costs related to the discontinuation of one of our product lines manufactured by Voxtel in fiscal year 2022, and (iv) nonrecurring separation costs related to the departure of an officer in fiscal year 2022.
    • Impairment of long-lived assets—Represents impairment charge incurred in connection with the sale of the AMTC Facility.
    • Change in fair value of contingent consideration—Represents the change in fair value of contingent consideration payable in connection with the acquisition of Voxtel.

    (**) Non-GAAP Operating Income in this release does not include adjustments consisting of those set forth in note (*) to the calculation of non-GAAP Gross Profit, and the corresponding calculation of non-GAAP Gross Margin, above or:

    • Labor savings—Represents salary and benefit costs related to employees whose positions were eliminated through voluntary separation programs or other reductions in force (not associated with the closure of the AMTC Facility or any other plant or facility) and a restructuring of overhead positions from high-cost to low-cost jurisdictions net of costs for newly hired employees in connection with such restructuring.

    EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

    We calculate EBITDA as net income minus interest income (expense), tax provision (benefit), and depreciation and amortization expenses. We calculate Adjusted EBITDA as EBITDA excluding the same items excluded above and also excluding the items below in applicable periods. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total net sales.

    • Non-core loss (gain) on sale of equipment—Represents non-core miscellaneous losses and gains on the sale of equipment.
    • Miscellaneous legal judgment charge—Represents a one-time charge associated with the final payment of the previously accrued amount payable with respect to a VAT dispute related to the construction of the AMPI Facility.
    • Loss on debt extinguishment—Represents one-time costs representing deferred financing costs associated with the $300.0 million of our term loan facility repaid during the fiscal year ended March 26, 2021.
    • Foreign currency translation loss—Represents losses and gains resulting from the remeasurement and settlement of intercompany debt and operational transactions, as well as transactions with external customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.
    • Income in earnings of equity investment—Represents our equity method investment in PSL.
    • Unrealized losses (gains) on investments—Represents mark-to-market adjustments on equity investments with readily determinable fair values.

    Non-GAAP Profit before Tax, Non-GAAP Net Income, and Non-GAAP Basic and Diluted Earnings Per Share

    We calculate non-GAAP Profit before Tax as Profit before as Income (Loss) before Income Taxes excluding the same items excluded above and also excluding the item below in applicable periods. We calculate non-GAAP Net Income as Net Income excluding the same items excluded above and also excluding the item below in applicable periods.

    • Interest on repaid portion of term loan facility—Represents interest expense associated with the $300.0 million of our term loan facility repaid during the period.

    Non-GAAP Provision for Income Tax

    In calculating non-GAAP Provision for Income Tax, we have added back the following to GAAP Income Tax Provision (Benefit):

    • Tax effect of adjustments to GAAP results—Represents the estimated income tax effect of the adjustments to non-GAAP Profit Before Tax described above and elimination of discrete tax adjustments.
      Three-Month Period Ended Fiscal Year Ended
      March 25,
    2022    		 December 24,
    2021    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
      (Dollars in thousands)
    Reconciliation of Non-GAAP Gross Profit           
               
    GAAP Gross Profit  $109,603  $101,165  $87,006  $407,460  $278,902 
               
    Voxtel inventory impairment  —   —   —   3,106   — 
    Inventory cost amortization  —   —   —   —   2,698 
    Foundry service payment  —   —   930   —   5,930 
    Stock-based compensation  1,184   742   314   3,176   5,158 
    AMTC Facility consolidation one-time costs  —   —   625   144   2,184 
    Amortization of acquisition-related intangible assets  273   273   273   1,092   651 
    COVID-19 related expenses  296   137   64   1,092   202 
    Total Non-GAAP Adjustments $1,753  $1,152  $2,206  $8,610  $16,823 
               
    Non-GAAP gross profit* $111,356  $102,317  $89,212  $416,070  $295,725 
    Non-GAAP gross margin  55.6%  54.8%  50.9%  54.1%  50.0%
    • Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $— and $6,553 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $— and $768 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.


      Three-Month Period Ended Fiscal Year Ended
      March 25,
    2022    		 December 24,
    2021    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
      (Dollars in thousands)
    Reconciliation of Non-GAAP Operating Expenses           
               
    GAAP Operating Expenses  $79,354 $65,560  $67,558  $270,810  $266,744 
               
    Research and Development Expenses          
    GAAP Research and Development Expenses  32,432  30,297   28,140   121,873   108,649 
    Stock-based compensation  1,119  1,019   536   3,933   3,573 
    AMTC Facility consolidation one-time costs  —  —   —   2   2 
    COVID-19 related expenses  3  6   8   23   100 
    Transaction fees  5  —   —   5   18 
    Non-GAAP Research and Development Expenses  31,305  29,272   27,596   117,910   104,956 
               
    Selling, General and Administrative Expenses          
    GAAP Selling, General and Administrative Expenses  46,822  37,963   34,799   150,937   153,476 
    Stock-based compensation  12,598  5,859   2,119   26,439   41,139 
    AMTC Facility consolidation one-time costs  74  108   1,488   657   5,626 
    Amortization of acquisition-related intangible assets  22  23   37   90   117 
    COVID-19 related expenses  215  356   250   1,503   4,926 
    Transaction fees  384  1,085   3,727   1,498   7,426 
    Severance  —  578   —   746   156 
    Non-GAAP Selling, General and Administrative Expenses  33,529  29,954   27,178   120,004   94,086 
               
    Change in fair value of contingent consideration  100  (2,700)  (2,500)  (2,000)  (2,500)
               
    Total Non-GAAP Adjustments  14,520  6,334   12,784   32,896   67,702 
               
    Non-GAAP operating expenses * $64,834 $59,226  $54,774  $237,914  $199,042 
    • Non-GAAP Operating Expenses do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $— and $723 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.
      Three-Month Period Ended Fiscal Year Ended
      March 25,
    2022    		 December 24,
    2021    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
      (Dollars in thousands)
    Reconciliation of Non-GAAP Operating Income          
               
    GAAP Operating Income $30,249  $35,605  $19,448  $136,650  $12,158 
               
    Voxtel inventory impairment  —   —   —   3,106   — 
    Inventory cost amortization  —   —   —   —   2,698 
    Foundry service payment  —   —   930   —   5,930 
    Stock-based compensation  14,901   7,620   2,969   33,548   49,870 
    AMTC Facility consolidation one-time costs  74   108   2,113   803   7,812 
    Amortization of acquisition-related intangible assets  295   296   310   1,182   768 
    COVID-19 related expenses  514   499   322   2,618   5,228 
    Impairment of long-lived assets  —   —   7,119   —   7,119 
    Change in fair value of contingent consideration  100   (2,700)  (2,500)  (2,000)  (2,500)
    Transaction fees  389   1,085   3,727   1,503   7,444 
    Severance  —   578   —   746   156 
    Total Non-GAAP Adjustments $16,273  $7,486  $14,990  $41,506  $84,525 
               
    Non-GAAP Operating Income* $46,522  $43,091  $34,438  $178,156  $96,683 
    Non-GAAP Operating Margin* (% of net sales)  23.2%  23.1%  19.7%  23.2%  16.4%
    • Non-GAAP Operating Income and the corresponding calculation of non-GAAP Operating Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $— and $7,276 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $— and $768 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

      Three-Month Period Ended Fiscal Year Ended
      March 25,
    2022    		 December 24,
    2021    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
      (Dollars in thousands)
    Reconciliation of EBITDA and Adjusted EBITDA          
               
    GAAP Net Income $25,652  $32,973  $8,689  $119,555  $18,101 
               
    Interest (income) expense, net  (707)  269   668   1,057   2,603 
    Income tax provision (benefit)  4,504   6,281   8,361   21,191   (19,552)
    Depreciation & amortization  12,006   12,011   12,082   48,527   48,307 
    EBITDA $41,455  $51,534  $29,800  $190,330  $49,459 
               
    Non-core loss (gain) on sale of equipment  1   (19)  156   (349)  442 
    Voxtel inventory impairment  —   —   —   3,106   — 
    Miscellaneous legal judgment charge  —   —   —   —   574 
    Loss on debt extinguishment  —   —   —   —   9,055 
    Foreign currency translation loss  513   3   1,558   568   2,889 
    Income in earnings of equity investment  (215)  (287)  (6)  (1,007)  (1,413)
    Unrealized losses (gains) on investments  760   (3,504)  —   (3,722)  — 
    Stock-based compensation  14,901   7,620   2,969   33,548   49,870 
    AMTC Facility consolidation one-time costs  74   108   2,113   803   7,812 
    COVID-19 related expenses  514   499   322   2,618   5,228 
    Impairment of long-lived assets  —   —   7,119   —   7,119 
    Change in fair value of contingent consideration  100   (2,700)  (2,500)  (2,000)  (2,500)
    Transaction fees  389   1,085   3,727   1,503   7,444 
    Severance  —   578   —   746   156 
    Inventory cost amortization  —   —   —   —   2,698 
    Foundry service payment  —   —   930   —   5,930 
    Adjusted EBITDA* $58,492  $54,917  $46,188  $226,144  $144,763 
    Adjusted EBITDA Margin* (% of net sales)  29.2%  29.4%  26.4%  29.4%  24.5%
    • Adjusted EBITDA and the corresponding calculation of Adjusted EBITDA Margin do not include adjustments for the following components of our net income: (i) AMTC additional costs of $— and $7,276 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.
      Three-Month Period Ended Fiscal Year Ended
      March 25,
    2022    		 December 24,
    2021    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
      (Dollars in thousands)
    Reconciliation of Non-GAAP Profit before Tax          
               
    GAAP Income (Loss) before Tax Provision (Benefit) $30,156  $39,254  $17,050  $140,746  $(1,451)
               
    Non-core loss (gain) on sale of equipment  1   (19)  156   (349)  442 
    Voxtel inventory impairment  —   —   —   3,106   — 
    Miscellaneous legal judgment charge  —   —   —   —   574 
    Loss on debt extinguishment  —   —   —   —   9,055 
    Foreign currency translation loss  513   3   1,558   568   2,889 
    Income in earnings of equity investment  (215)  (287)  (6)  (1,007)  (1,413)
    Unrealized losses (gains) on investments  760   (3,504)  —   (3,722)  — 
    Inventory cost amortization  —   —   —   —   2,698 
    Foundry service payment  —   —   930   —   5,930 
    Stock-based compensation  14,901   7,620   2,969   33,548   49,870 
    Interest on repaid portion of Term Loan Facility  —   —   —   —   2,163 
    AMTC Facility consolidation one-time costs  74   108   2,113   803   7,812 
    Amortization of acquisition-related intangible assets  295   296   310   1,182   768 
    COVID-19 related expenses  514   499   322   2,618   5,228 
    Change in fair value of contingent consideration  100   (2,700)  (2,500)  (2,000)  (2,500)
    Transaction fees  389   1,085   3,727   1,503   7,444 
    Severance  —   578   —   746   156 
    Total Non-GAAP Adjustments $17,332  $3,679  $16,698  $36,996  $98,235 
               
    Non-GAAP Profit before Tax* $47,488  $42,933  $33,748  $177,742  $96,784 
    • Non-GAAP Profit before Tax does not include adjustments for the following components of our net income: (i) additional AMTC related costs of $— and $7,276 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $— and $768 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

      Three-Month Period Ended Fiscal Year Ended
      March 25,
    2022    		 December 24,
    2021    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
      (Dollars in thousands)
    Reconciliation of Non-GAAP Provision for Income Taxes          
               
    GAAP Income Tax Provision (Benefit) $4,504  $6,281  $8,361  $21,191  $(19,552)
    GAAP effective tax rate  14.9%  16.0%  49.0%  15.1%  1347.5%
               
    Tax effect of adjustments to GAAP results  2,817   561   (3,053)  6,415   34,486 
               
    Non-GAAP Provision for Income Taxes * $7,321  $6,842  $5,308  $27,606  $14,934 
    Non-GAAP effective tax rate  15.4%  15.9%  15.7%  15.5%  15.4%
    • Non-GAAP Provision for Income Taxes does not include tax adjustments for the following components of our net income: additional AMTC related costs, labor savings costs, and out-of-period adjustment for depreciation expense of GMR assets. The related tax effect of those adjustments to GAAP results were $— and $1,851 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.
      Three-Month Period Ended Fiscal Year Ended
      March 25,
    2022    		 December 24,
    2021    		 March 26,
    2021    		 March 25,
    2022    		 March 26,
    2021
      (Dollars in thousands)
    Reconciliation of Non-GAAP Net Income          
               
    GAAP Net Income $25,652  $32,973  $8,689  $119,555  $18,101 
    GAAP Basic Earnings per Share $0.14  $0.17  $0.05  $0.63  $0.22 
    GAAP Diluted Earnings per Share $0.13  $0.17  $0.05  $0.62  $0.10 
               
    Non-core loss (gain) on sale of equipment  1   (19)  156   (349)  442 
    Voxtel inventory impairment  —   —   —   3,106   — 
    Miscellaneous legal judgment charge  —   —   —   —   574 
    Loss on debt extinguishment  —   —   —   —   9,055 
    Foreign currency translation loss  513   3   1,558   568   2,889 
    Income in earnings of equity investment  (215)  (287)  (6)  (1,007)  (1,413)
    Unrealized losses (gains) on investments  760   (3,504)  —   (3,722)  — 
    Inventory cost amortization  —   —   —   —   2,698 
    Foundry service payment  —   —   930   —   5,930 
    Stock-based compensation  14,901   7,620   2,969   33,548   49,870 
    Interest on repaid portion of Term Loan Facility  —   —   —   —   2,163 
    AMTC Facility consolidation one-time costs  74   108   2,113   803   7,812 
    Amortization of acquisition-related intangible assets  295   296   310   1,182   768 
    COVID-19 related expenses  514   499   322   2,618   5,228 
    Impairment of long-lived assets  —   —   7,119   —   7,119 
    Change in fair value of contingent consideration  100   (2,700)  (2,500)  (2,000)  (2,500)
    Transaction fees  389   1,085   3,727   1,503   7,444 
    Severance  —   578   —   746   156 
    Tax effect of adjustments to GAAP results  (2,817)  (561)  3,053   (6,415)  (34,486)
               
    Non-GAAP Net Income* $40,167  $36,091  $28,440  $150,136  $81,850 
    Basic weighted average common shares  189,997,738   189,736,901   189,429,893   189,748,427   83,448,055 
    Diluted weighted average common shares  192,125,252   192,068,222   190,860,556   191,811,205   176,416,645 
    Non-GAAP Basic Earnings per Share $0.21  $0.19  $0.15  $0.79  $0.98 
    Non-GAAP Diluted Earnings per Share $0.21  $0.19  $0.15  $0.78  $0.46 
    • Non-GAAP Net Income does not include adjustments for the following components of our net income: (i) additional AMTC related costs of $— and $7,276 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $— and $768 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and (ii) the related tax effect of adjustments to GAAP results of $— and $1,851 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

    Investor Contact:
    Katherine Blye
    Investor Relations
    Phone: (603) 626-2306
    kblye@ALLEGROMICRO.com 

     


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