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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 27, 2025
or
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to _____________
Commission File Number: 001-39675
ALLEGRO MICROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
46-2405937 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
955 Perimeter Road Manchester, New Hampshire |
03103 |
(Address of principal executive offices) |
(Zip Code) |
(603) 626-2300
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.01 per share |
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ALGM |
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The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☒ |
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Accelerated filer |
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☐ |
Non-accelerated filer |
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☐ |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 28, 2025, the registrant had 185,040,489 shares of common stock, par value $0.01 per share, outstanding.
TABLE OF CONTENTS
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Page |
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Forward-Looking Statements |
2 |
PART I. |
Financial Information |
3 |
Item 1. |
Condensed Consolidated Financial Statements (Unaudited) |
3 |
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Condensed Consolidated Balance Sheets as of June 27, 2025 and March 28, 2025 (Unaudited) |
3 |
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Condensed Consolidated Statements of Operations for the three-month periods ended June 27, 2025 and
June 28, 2024 (Unaudited) |
4 |
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Condensed Consolidated Statements of Comprehensive Loss for the three-month periods ended June 27, 2025 and June 28, 2024 (Unaudited) |
5 |
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Condensed Consolidated Statements of Changes in Equity for the three-month periods ended June 27, 2025 and June 28, 2024 (Unaudited) |
6 |
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Condensed Consolidated Statements of Cash Flows for the three-month periods ended June 27, 2025 and
June 28, 2024 (Unaudited) |
7 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
8 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
26 |
Item 4. |
Controls and Procedures |
27 |
PART II. |
Other Information |
28 |
Item 1. |
Legal Proceedings |
28 |
Item 1A. |
Risk Factors |
28 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
28 |
Item 5. |
Other Information |
28 |
Item 6. |
Exhibits |
29 |
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Signatures |
30 |
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products and the plans and objectives of management for future operations, may be forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding the liquidity, growth and profitability strategies and factors and trends affecting our business are forward-looking statements. Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “would,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seek,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking 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 factors, including, but not limited to, those identified in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A. “Risk Factors” in this Quarterly Report and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended March 28, 2025, filed with the Securities and Exchange Commission (“SEC”) on May 22, 2025 (the “2025 Annual Report”), as any such factors may be updated from time to time in our Quarterly Reports on Form 10-Q, and our other filings with the SEC.
You should read this Quarterly Report and the documents that we reference completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report, and except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise.
Unless the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Allegro” refer to the operations of Allegro MicroSystems, Inc. and its consolidated subsidiaries.
PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
(Unaudited)
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June 27,
2025 |
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March 28,
2025 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
129,106 |
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$ |
121,334 |
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Restricted cash |
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10,273 |
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9,773 |
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Trade accounts receivable, net |
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89,379 |
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84,598 |
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Inventories |
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173,796 |
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183,914 |
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Prepaid income taxes |
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968 |
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36,662 |
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Prepaid expenses and other current assets |
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27,054 |
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30,247 |
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Assets held for sale |
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16,508 |
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16,508 |
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Total current assets |
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447,084 |
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483,036 |
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Property, plant and equipment, net |
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305,195 |
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302,919 |
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Operating lease right-of-use assets, net |
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20,652 |
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20,849 |
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Deferred income tax assets |
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73,839 |
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68,528 |
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Goodwill |
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203,328 |
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202,475 |
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Intangible assets, net |
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256,414 |
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262,115 |
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Equity investment in related party |
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30,874 |
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31,695 |
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Other assets |
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51,822 |
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49,344 |
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Total assets |
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$ |
1,389,208 |
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$ |
1,420,961 |
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Liabilities, Non-Controlling Interest and Stockholders’ Equity |
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Current liabilities: |
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Trade accounts payable |
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$ |
45,609 |
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$ |
38,733 |
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Amounts due to related party |
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2,902 |
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6,535 |
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Accrued expenses and other current liabilities |
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64,832 |
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60,083 |
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Current portion of operating lease liabilities |
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5,807 |
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5,487 |
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Current portion of long-term debt |
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1,535 |
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1,423 |
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Total current liabilities |
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120,685 |
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112,261 |
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Long-term debt |
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310,790 |
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344,703 |
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Operating lease liabilities, less current portion |
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16,952 |
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16,878 |
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Other long-term liabilities |
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16,524 |
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16,019 |
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Total liabilities |
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464,951 |
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489,861 |
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Commitments and contingencies (Note 10) |
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Stockholders’ Equity: |
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Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding |
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— |
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— |
|
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 184,941,989 shares issued and outstanding at June 27, 2025; 1,000,000,000 shares authorized, 184,286,567 issued and outstanding at March 28, 2025 |
|
|
1,849 |
|
|
|
1,843 |
|
Additional paid-in capital |
|
|
1,013,795 |
|
|
|
1,012,055 |
|
Accumulated deficit |
|
|
(66,818 |
) |
|
|
(53,591 |
) |
Accumulated other comprehensive loss |
|
|
(26,173 |
) |
|
|
(30,752 |
) |
Equity attributable to Allegro MicroSystems, Inc. |
|
|
922,653 |
|
|
|
929,555 |
|
Non-controlling interest |
|
|
1,604 |
|
|
|
1,545 |
|
Total stockholders’ equity |
|
|
924,257 |
|
|
|
931,100 |
|
Total liabilities, non-controlling interest and stockholders’ equity |
|
$ |
1,389,208 |
|
|
$ |
1,420,961 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Net sales |
|
$ |
203,405 |
|
|
$ |
166,919 |
|
Cost of goods sold |
|
|
112,103 |
|
|
|
92,148 |
|
Gross profit |
|
|
91,302 |
|
|
|
74,771 |
|
Operating expenses: |
|
|
|
|
|
|
Research and development |
|
|
46,500 |
|
|
|
45,204 |
|
Selling, general and administrative |
|
|
47,542 |
|
|
|
40,197 |
|
Total operating expenses |
|
|
94,042 |
|
|
|
85,401 |
|
Operating loss |
|
|
(2,740 |
) |
|
|
(10,630 |
) |
Other (expense) income: |
|
|
|
|
|
|
Interest expense |
|
|
(6,359 |
) |
|
|
(5,377 |
) |
Interest income |
|
|
234 |
|
|
|
494 |
|
Other expense, net |
|
|
(1,128 |
) |
|
|
(1,060 |
) |
Loss before income taxes |
|
|
(9,993 |
) |
|
|
(16,573 |
) |
Income tax provision |
|
|
3,169 |
|
|
|
1,040 |
|
Net loss |
|
|
(13,162 |
) |
|
|
(17,613 |
) |
Net income attributable to non-controlling interests |
|
|
65 |
|
|
|
62 |
|
Net loss attributable to Allegro MicroSystems, Inc. |
|
$ |
(13,227 |
) |
|
$ |
(17,675 |
) |
Net loss per common share attributable to Allegro MicroSystems, Inc.: |
|
|
|
|
|
|
Basic |
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
Diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
184,587,027 |
|
|
|
193,465,708 |
|
Diluted |
|
|
184,587,027 |
|
|
|
193,465,708 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Net loss |
|
$ |
(13,162 |
) |
|
$ |
(17,613 |
) |
Net income attributable to non-controlling interests |
|
|
65 |
|
|
|
62 |
|
Net loss attributable to Allegro MicroSystems, Inc. |
|
|
(13,227 |
) |
|
|
(17,675 |
) |
Other comprehensive loss: |
|
|
|
|
|
|
Foreign currency translation adjustment, net of tax |
|
|
4,596 |
|
|
|
(3,188 |
) |
Comprehensive loss |
|
|
(8,631 |
) |
|
|
(20,863 |
) |
Other comprehensive (loss) gain attributable to non-controlling interests |
|
|
(17 |
) |
|
|
83 |
|
Comprehensive loss attributable to Allegro MicroSystems, Inc. |
|
$ |
(8,648 |
) |
|
$ |
(20,780 |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Retained |
|
|
Accumulated
Other
Comprehensive |
|
|
Non-Controlling |
|
|
Total Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Loss |
|
|
Interests |
|
|
Equity |
|
Balance at March 29, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
193,164,609 |
|
|
$ |
1,932 |
|
|
$ |
694,332 |
|
|
$ |
463,012 |
|
|
$ |
(28,841 |
) |
|
$ |
1,281 |
|
|
$ |
1,131,716 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17,675 |
) |
|
|
— |
|
|
|
62 |
|
|
|
(17,613 |
) |
Stock-based compensation, net of forfeitures and restricted stock vested |
|
|
— |
|
|
|
— |
|
|
|
671,969 |
|
|
|
6 |
|
|
|
10,092 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,098 |
|
Payments of taxes withheld on net settlement of equity awards |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,171 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,171 |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,105 |
) |
|
|
(83 |
) |
|
|
(3,188 |
) |
Balance at June 28, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
193,836,578 |
|
|
$ |
1,938 |
|
|
$ |
693,253 |
|
|
$ |
445,337 |
|
|
$ |
(31,946 |
) |
|
$ |
1,260 |
|
|
$ |
1,109,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated |
|
|
Accumulated
Other
Comprehensive |
|
|
Non-Controlling |
|
|
Total Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Interest |
|
|
Equity |
|
Balance at March 28, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
184,286,567 |
|
|
$ |
1,843 |
|
|
$ |
1,012,055 |
|
|
$ |
(53,591 |
) |
|
$ |
(30,752 |
) |
|
$ |
1,545 |
|
|
$ |
931,100 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13,227 |
) |
|
|
— |
|
|
|
65 |
|
|
|
(13,162 |
) |
Dividends to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23 |
) |
|
|
(23 |
) |
Stock-based compensation, net of forfeitures and restricted stock vested |
|
|
— |
|
|
|
— |
|
|
|
655,422 |
|
|
|
6 |
|
|
|
10,728 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,734 |
|
Payments of taxes withheld on net settlement of equity awards |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,988 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,988 |
) |
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,579 |
|
|
|
17 |
|
|
|
4,596 |
|
Balance at June 27, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
184,941,989 |
|
|
$ |
1,849 |
|
|
$ |
1,013,795 |
|
|
$ |
(66,818 |
) |
|
$ |
(26,173 |
) |
|
$ |
1,604 |
|
|
$ |
924,257 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(13,162 |
) |
|
$ |
(17,613 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
16,216 |
|
|
|
16,458 |
|
Amortization of deferred financing costs |
|
|
933 |
|
|
|
781 |
|
Deferred income taxes |
|
|
(5,061 |
) |
|
|
(4,999 |
) |
Stock-based compensation |
|
|
10,762 |
|
|
|
10,118 |
|
Provisions for inventory and expected credit losses |
|
|
3,450 |
|
|
|
2,377 |
|
Other non-cash reconciling items |
|
|
(58 |
) |
|
|
14 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Trade accounts receivable |
|
|
(5,332 |
) |
|
|
55,134 |
|
Inventories |
|
|
7,233 |
|
|
|
(15,986 |
) |
Prepaid expenses and other assets |
|
|
35,965 |
|
|
|
(1,715 |
) |
Trade accounts payable |
|
|
6,281 |
|
|
|
200 |
|
Due to and from related parties |
|
|
(3,633 |
) |
|
|
3,437 |
|
Accrued expenses and other current and long-term liabilities |
|
|
8,024 |
|
|
|
(14,010 |
) |
Net cash provided by operating activities |
|
|
61,618 |
|
|
|
34,196 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(10,600 |
) |
|
|
(10,977 |
) |
Net cash used in investing activities |
|
|
(10,600 |
) |
|
|
(10,977 |
) |
Cash flow from financing activities: |
|
|
|
|
|
|
Repayment of term loan |
|
|
(35,000 |
) |
|
|
(50,000 |
) |
Finance lease payments |
|
|
(202 |
) |
|
|
(145 |
) |
Receipts on related party notes receivable |
|
|
— |
|
|
|
938 |
|
Payments for taxes related to net share settlement of equity awards |
|
|
(8,988 |
) |
|
|
(11,171 |
) |
Net cash used in financing activities |
|
|
(44,190 |
) |
|
|
(60,378 |
) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
|
|
1,444 |
|
|
|
(825 |
) |
Net increase (decrease) in cash and cash equivalents and restricted cash |
|
|
8,272 |
|
|
|
(37,984 |
) |
Cash and cash equivalents and restricted cash at beginning of period |
|
|
131,107 |
|
|
|
222,161 |
|
Cash and cash equivalents and restricted cash at end of period: |
|
$ |
139,379 |
|
|
$ |
184,177 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(Amounts in thousands, except share and per share amounts)
1. Nature of the Business and Basis of Presentation
Allegro MicroSystems, Inc., together with its consolidated subsidiaries (the “Company”), is a leading global designer, developer, fabless manufacturer and marketer of sensing and power solutions for motion control and energy-efficient systems in automotive and industrial and other markets. The Company is incorporated under the laws of Delaware. The Company is headquartered in Manchester, New Hampshire and has a global footprint across multiple continents.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed in, or omitted from, these interim financial statements. These unaudited condensed consolidated financial statements include the Company’s accounts and those of its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 28, 2025. The March 28, 2025 condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements. In the opinion of the Company’s management, the financial statements for the interim periods presented reflect all adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year.
Financial Periods
The Company’s first quarter three-month period is a 13-week period. The Company’s first quarter of fiscal year 2026
ended June 27, 2025, and the Company’s first quarter of fiscal year 2025 ended June 28, 2024.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated 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 consolidated financial statements and the reported amounts of net sales and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, assumptions and judgments, including those related to the valuation of acquired intangible assets, impairment assessment and valuation of goodwill, intangible assets and tangible long-lived assets, the net realizable value of inventory, income taxes, stock-based compensation, and sales allowances. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements.
Concentrations of Credit Risk
As of both June 27, 2025 and March 28, 2025, no distributor or customer accounted for 10% or more of the Company’s outstanding trade accounts receivable, net.
For the three-month periods ended June 27, 2025 and June 28, 2024, no distributor or customer accounted for 10% or more of total net sales.
Segment Information
The Company operates as one reportable segment, which involves the design, development, production and distribution of various integrated circuits in various markets worldwide. The Company has a single, company-wide management team that administers all properties as a whole rather than as discrete operating segments. The Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, measures financial performance as a single enterprise and not on a legal entity or end market basis. The CODM uses consolidated net income or loss, as reported in the Consolidated Statement of Operations, as the profitability measure in making decisions. The measure of segment assets is reported on the balance sheet as total assets. Throughout the year, the CODM allocates capital resources on a project-by-project basis across the Company’s entire asset base to maximize profitability without regard to a legal entity or end market basis. The Company operates in a number of countries throughout the world in a variety of product lines through its business unit structure.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires additional disclosures of the nature of expenses included in the Company’s income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 will be applied prospectively with the option for retrospective application. The FASB subsequently issued ASU 2025-01 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) to clarify that all public business entities are required to adopt the guidance as stipulated in ASU 2024-03 in annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires entities to provide additional information of the Company’s tax rate reconciliation, as well as additional disclosures about income taxes paid by jurisdiction. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied prospectively, but entities have the option to apply it retrospectively for each period presented. The Company does not anticipate this guidance will have an adverse impact on its results of operations, cash flows, or financial condition, but it will result in expanded disclosure within the financial statements.
All other recent accounting pronouncements were determined to not have a material impact on the Company’s financial position, results of operations, cash flows, or related disclosures.
3. Revenue from Contracts with Customers
The following tables summarize net sales disaggregated by market, by product and by geography for the three-month periods ended June 27, 2025 and June 28, 2024. The categorization of net sales by market is determined using various characteristics of the product and the application into which the Company’s product will be incorporated. The categorization of net sales by geography is determined based on the location to which the products are shipped.
Net sales by market:
In the fourth quarter of fiscal year 2025 during the preparation of the consolidated financial statements, the Company identified an immaterial misclassification of net sales by market, whereby customer returns and sales allowances were incorrectly classified by market between Automotive and Industrial and Other in prior periods. There was no impact to previously reported total net sales or net loss in any of the periods.
The Company assessed the materiality of the revision qualitatively and quantitatively and determined the revisions to be immaterial to the prior period interim fiscal year 2025 condensed consolidated financial statements. All prior period amounts have been revised in the tables below.
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Automotive |
|
$ |
144,264 |
|
|
$ |
127,394 |
|
Industrial and other |
|
|
59,141 |
|
|
|
39,525 |
|
Total net sales |
|
$ |
203,405 |
|
|
$ |
166,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
September 27, 2024 |
|
|
December 27, 2024 |
|
|
March 28, 2025 |
|
Automotive |
|
$ |
139,680 |
|
|
$ |
128,637 |
|
|
$ |
139,494 |
|
Industrial and other |
|
|
47,711 |
|
|
|
49,235 |
|
|
|
53,330 |
|
Total net sales |
|
$ |
187,391 |
|
|
$ |
177,872 |
|
|
$ |
192,824 |
|
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
Net sales by product:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Magnetic sensors |
|
$ |
129,166 |
|
|
$ |
115,109 |
|
Power integrated circuits |
|
|
74,239 |
|
|
|
51,810 |
|
Total net sales |
|
$ |
203,405 |
|
|
$ |
166,919 |
|
Net sales by geography:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Americas: |
|
|
|
|
|
|
United States |
|
$ |
23,774 |
|
|
$ |
22,267 |
|
Other Americas |
|
|
8,848 |
|
|
|
5,224 |
|
EMEA: |
|
|
|
|
|
|
Europe |
|
|
30,473 |
|
|
|
26,906 |
|
Asia: |
|
|
|
|
|
|
Greater China |
|
|
57,569 |
|
|
|
31,860 |
|
Japan |
|
|
33,653 |
|
|
|
40,643 |
|
South Korea |
|
|
19,603 |
|
|
|
21,773 |
|
Other Asia |
|
|
29,485 |
|
|
|
18,246 |
|
Total net sales |
|
$ |
203,405 |
|
|
$ |
166,919 |
|
The Company recognizes sales net of returns and sales allowances, which comprises credits issued, price protection adjustments and stock rotation rights. At June 27, 2025 and March 28, 2025, the liabilities associated with returns and sales allowances were $33,467 and $33,855, respectively, and were netted against trade accounts receivable in the condensed consolidated balance sheets.
Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. The Company elected not to disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
4. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities as of June 27, 2025 and
March 28, 2025, measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement at June 27, 2025: |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Total Fair Value |
|
Assets: |
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
Money market fund deposits |
|
$ |
31,146 |
|
|
$ |
— |
|
|
$ |
31,146 |
|
Time deposits |
|
|
— |
|
|
|
3,065 |
|
|
|
3,065 |
|
Restricted cash: |
|
|
|
|
|
|
|
|
|
Money market fund deposits |
|
|
10,273 |
|
|
|
— |
|
|
|
10,273 |
|
Total assets |
|
$ |
41,419 |
|
|
$ |
3,065 |
|
|
$ |
44,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement at March 28, 2025: |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Total Fair Value |
|
Assets: |
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
Money market fund deposits |
|
$ |
30,814 |
|
|
$ |
— |
|
|
$ |
30,814 |
|
Restricted cash: |
|
|
|
|
|
|
|
|
|
Money market fund deposits |
|
|
9,773 |
|
|
|
— |
|
|
|
9,773 |
|
Total assets |
|
$ |
40,587 |
|
|
$ |
— |
|
|
$ |
40,587 |
|
Assets and liabilities measured at fair value on a recurring basis also consist of government securities, unit investment trust funds, loans, bonds, stock and other investments, which constitute the Company’s defined benefit plan assets. Fair value information for those assets and liabilities, including their classification in the fair value hierarchy, is included in Note 15, “Retirement Plans” within the Company’s Annual Report on Form 10-K for the year ended March 28, 2025. The changes in the Company’s defined benefit plan assets were not material for the three-month period ended June 27, 2025.
During the three-month periods ended June 27, 2025 and June 28, 2024, there were no transfers among Level 1, Level 2 and Level 3 assets or liabilities.
The fair value of the Company’s debt was $310,388 and $343,275 as of June 27, 2025 and March 28, 2025, respectively. The fair value was determined based on the quoted price of the debt in an inactive market on the last trading date of the reporting period and has been classified as Level 2 within the fair value hierarchy.
5. Trade Accounts Receivable, net
Trade accounts receivable, net, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
June 27,
2025 |
|
|
March 28,
2025 |
|
Trade accounts receivable |
|
$ |
124,038 |
|
|
$ |
119,071 |
|
Less: |
|
|
|
|
|
|
Provision for expected credit losses |
|
|
(1,192 |
) |
|
|
(618 |
) |
Returns and sales allowances |
|
|
(33,467 |
) |
|
|
(33,855 |
) |
Total |
|
$ |
89,379 |
|
|
$ |
84,598 |
|
The changes in the provision for expected credit losses were not material for any of the periods presented.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
6. Inventories
Inventories include materials, labor and overhead and consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
June 27,
2025 |
|
|
March 28,
2025 |
|
Raw materials and supplies |
|
$ |
7,306 |
|
|
$ |
7,354 |
|
Work in process |
|
|
131,972 |
|
|
|
127,651 |
|
Finished goods |
|
|
34,518 |
|
|
|
48,909 |
|
Total |
|
$ |
173,796 |
|
|
$ |
183,914 |
|
The Company recorded inventory provisions totaling $2,886 and $2,377 for the three-month periods ended June 27, 2025 and June 28, 2024, respectively.
7. Property, Plant and Equipment, net
Property, plant and equipment, net, is stated at cost and consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
June 27,
2025 |
|
|
March 28,
2025 |
|
Land |
|
$ |
25,405 |
|
|
$ |
25,175 |
|
Buildings, building improvements and leasehold improvements |
|
|
67,157 |
|
|
|
66,258 |
|
Machinery and equipment |
|
|
689,815 |
|
|
|
670,902 |
|
Office equipment |
|
|
6,768 |
|
|
|
6,677 |
|
Right-of-use asset |
|
|
8,826 |
|
|
|
8,182 |
|
Construction in progress |
|
|
43,860 |
|
|
|
51,580 |
|
Total |
|
|
841,831 |
|
|
|
828,774 |
|
Less accumulated depreciation |
|
|
(536,636 |
) |
|
|
(525,855 |
) |
Total |
|
$ |
305,195 |
|
|
$ |
302,919 |
|
Total depreciation expense amounted to $9,175 and $9,797 for the three-month periods ended June 27, 2025 and June 28, 2024, respectively. Total amortization expense for the right-of-use asset amounted to $343 and $349 for the three-month periods ended June 27, 2025 and June 28, 2024, respectively.
Property, plant and equipment, net, including improvements that significantly add to productive capacity or extend useful life, are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The Company periodically reviews the estimated useful lives of property, plant and equipment. Changes to estimated useful lives are recorded prospectively from the date of the change. Maintenance and repairs expenditures are charged to expense as incurred.
The Company classified various units of machinery and equipment as held for sale, as management approved a plan in the fourth quarter of fiscal year 2025 to market these assets to third-party buyers. The planned disposal of these assets does not constitute a strategic shift in the Company’s operations and therefore does not meet the discontinued operations criteria. These assets are intended to be sold within one year of their designation as held for sale. Assets held for sale are measured at the lower of carrying value or the fair value less cost to sell. As of both June 27, 2025 and March 28, 2025, the value of these assets was measured at $16,508.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
8. Goodwill and Intangible Assets
The table below summarizes the changes in the carrying amount of goodwill as follows:
|
|
|
|
|
|
|
Total |
|
Balance at March 28, 2025 |
|
$ |
202,475 |
|
Foreign currency translation |
|
|
853 |
|
Balance at June 27, 2025 |
|
$ |
203,328 |
|
Intangible assets, net, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 27, 2025 |
|
Description |
|
Gross |
|
|
Accumulated
Amortization |
|
|
Net Carrying
Amount |
|
Patents |
|
$ |
50,375 |
|
|
$ |
(26,436 |
) |
|
$ |
23,939 |
|
Customer relationships |
|
|
15,197 |
|
|
|
(4,535 |
) |
|
|
10,662 |
|
Completed technologies |
|
|
255,618 |
|
|
|
(36,077 |
) |
|
|
219,541 |
|
Indefinite-lived process technology and trademarks |
|
|
2,272 |
|
|
|
— |
|
|
|
2,272 |
|
Trademarks and other |
|
|
93 |
|
|
|
(93 |
) |
|
|
— |
|
Total |
|
$ |
323,555 |
|
|
$ |
(67,141 |
) |
|
$ |
256,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, 2025 |
|
Description |
|
Gross |
|
|
Accumulated
Amortization |
|
|
Net Carrying
Amount |
|
Patents |
|
$ |
49,749 |
|
|
$ |
(25,710 |
) |
|
$ |
24,039 |
|
Customer relationships |
|
|
14,964 |
|
|
|
(4,102 |
) |
|
|
10,862 |
|
Completed technologies |
|
|
255,588 |
|
|
|
(30,648 |
) |
|
|
224,940 |
|
Indefinite-lived process technology and trademarks |
|
|
2,274 |
|
|
|
— |
|
|
|
2,274 |
|
Trademarks and other |
|
|
86 |
|
|
|
(86 |
) |
|
|
— |
|
Total |
|
$ |
322,661 |
|
|
$ |
(60,546 |
) |
|
$ |
262,115 |
|
Intangible assets amortization expense was $6,698 and $6,312 for the three-month periods ended June 27, 2025 and June 28, 2024, respectively.
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:
|
|
|
|
|
|
|
|
|
|
|
June 27,
2025 |
|
|
March 28,
2025 |
|
Term Loan Facility |
|
$ |
310,000 |
|
|
$ |
345,000 |
|
Unamortized debt issuance costs |
|
|
(5,211 |
) |
|
|
(6,071 |
) |
Total loans outstanding |
|
|
304,789 |
|
|
|
338,929 |
|
Finance lease liabilities |
|
|
7,536 |
|
|
|
7,197 |
|
Total debt |
|
|
312,325 |
|
|
|
346,126 |
|
Current portion of long-term debt and finance lease liabilities |
|
|
(1,535 |
) |
|
|
(1,423 |
) |
Total long-term debt and finance lease liabilities, less current portion |
|
$ |
310,790 |
|
|
$ |
344,703 |
|
2025 Refinancing and Repricing of Term Loan Facility
On February 6, 2025, the Company entered into Amendment No. 3 (the “Third Amendment”) to the Credit Agreement dated as of June 21, 2023 (as previously amended by Amendment No. 1 and the Second Amendment (as defined below), and as further amended, restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “2023 Revolving Credit Agreement”) by and among the Company, Allegro MicroSystems, LLC (“AML”), lending institutions from time to time party thereto, and Morgan Stanley Senior Funding, Inc., as the administrative agent and the collateral agent.
The Third Amendment provided for a new $375,000 tranche of term loans maturing in 2030 (the “2025 Refinanced Loans”), the proceeds of which were used, in relevant part, to (i) refinance all outstanding borrowing under the Refinanced 2023 Term Loan Facility (as defined below), (ii) pay fees and expenses in connection with the foregoing and (iii) for general corporate purposes. The 2025 Refinanced Loans amortize at a rate of 0.00% per annum. The 2025 Refinanced Loans bear interest, at the Company’s option, at a rate equal to (i) Term SOFR (as defined in the Credit Agreement) in effect from time to time plus 2.00% 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 1.00% in effect from time to time plus 1.00%. The 2025 Refinanced Loans will mature on October 31, 2030. The Company incurred costs of $1,090 in connection with the Third Amendment.
Payments of $25,000 and $10,000 were applied to the outstanding balance of the 2025 Refinanced Loans on April 30, 2025 and May 30, 2025, respectively. An additional payment of $25,000 was applied to the outstanding balance of the 2025 Refinanced Loans on July 31, 2025.
The Company was in compliance with its debt covenants as of June 27, 2025.
2023 Revolving Credit Facility
On June 21, 2023, the Company entered into the 2023 Revolving Credit Agreement that provided for a $224,000 revolving credit facility, which included a $20,000 letter of credit subfacility. On August 6, 2024, upon entry into Amendment No. 2 (the “Second Amendment”) to the 2023 Revolving Credit Agreement, the total capacity of the revolving credit facility was increased to $256,000, and the Second Amendment also provided for a new $400,000 tranche of term loans maturing in 2030 (the “Refinanced 2023 Term Loan Facility”). The revolving credit facility is available until, and loans made thereunder will mature on, June 21, 2028. Under the terms of the 2023 Revolving Credit Agreement, interest is calculated at a rate equal to (i) Term SOFR (as defined in the 2023 Revolving Credit Agreement) in effect, plus the applicable spread (ranging from 1.50% to 1.75%) 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 1.00% in effect, plus the applicable spread (ranging from 0.50% to 0.75%). The applicable spreads are based on the Company’s Total Net Leverage Ratio (as defined in the 2023 Revolving Credit Agreement) at the time of the applicable borrowing. Issuance costs related to the revolving credit facility were not significant. As of June 27, 2025, there were no outstanding borrowings under the revolving credit facility.
The Company will also pay a quarterly commitment fee of 0.20% to 0.25% on the daily amount by which the commitments under the revolving credit facility exceed the outstanding loans and letters of credit under the revolving credit facility. The 2023 Revolving Credit Agreement contains certain covenants applicable to the Company and its subsidiaries, including limitations on additional indebtedness, liens, various fundamental changes, dividends and distributions, investments (including acquisitions), transactions with affiliates, asset sales, prepayment of junior financing, changes in business and other limitations customary in senior secured credit facilities. In addition, the Company is required to maintain a Total Net Leverage Ratio of no more than 4.00 to 1.00 at the end of each
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
fiscal quarter, which may, subject to certain limitations, be increased to 4.50 to 1.00 for four fiscal quarters subsequent to the Company completing an acquisition for consideration in excess of $500,000.
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 50% in principal amount of the loans and commitments, may terminate the commitments and accelerate the maturity of the loans and enforce certain other remedies.
The Company was in compliance with the revolving credit facility covenants as of June 27, 2025.
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 per Share
The following table sets forth the basic and diluted net loss attributable to Allegro MicroSystems, Inc. per share:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Net loss attributable to Allegro MicroSystems, Inc. |
|
$ |
(13,227 |
) |
|
$ |
(17,675 |
) |
|
|
|
|
|
|
|
Basic weighted average common shares |
|
|
184,587,027 |
|
|
|
193,465,708 |
|
Dilutive effect of common stock equivalents |
|
|
— |
|
|
|
— |
|
Diluted weighted average common shares |
|
|
184,587,027 |
|
|
|
193,465,708 |
|
|
|
|
|
|
|
|
Basic net loss per common share attributable to Allegro MicroSystems, Inc. stockholders |
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
Diluted net loss per common share attributable to Allegro MicroSystems, Inc. stockholders |
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
The computed net loss per share for the three-month periods ended June 27, 2025 and June 28, 2024 does not assume conversion of securities that would have an antidilutive effect on net loss 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 per share, as such securities would have an antidilutive effect on net loss per share if the Company had reported net income for those periods:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
RSUs |
|
|
1,709,351 |
|
|
|
754,975 |
|
PSUs |
|
|
260,179 |
|
|
|
214,527 |
|
There were no issued and issuable weighted average dilutive shares underlying our outstanding RSUs, PSUs and participation in our employee stock purchase plan for the three-month periods ended June 27, 2025 and June 28, 2024.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
12. Common Stock and Stock-Based Compensation
Restricted Stock Units
The following table summarizes the Company’s RSU activity for the three-month period ended June 27, 2025:
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Weighted-Average
Grant Date
Fair Value |
|
Outstanding at March 28, 2025 |
|
|
2,330,344 |
|
|
$ |
28.88 |
|
Granted |
|
|
1,786,046 |
|
|
|
26.91 |
|
Issued |
|
|
(802,676 |
) |
|
|
29.54 |
|
Forfeited |
|
|
(33,577 |
) |
|
|
28.48 |
|
Outstanding at June 27, 2025 |
|
|
3,280,137 |
|
|
$ |
27.65 |
|
As of June 27, 2025, total unrecognized compensation expense for awards issued was $80,557, which is expected to be recognized over a weighted-average period of 1.19 years. The total grant date fair value of RSUs vested was $23,708 for the three-month period ended June 27, 2025.
Performance Stock Units
The following table summarizes the Company’s PSU activity for the three-month period ended June 27, 2025:
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Weighted-Average
Grant Date
Fair Value |
|
Outstanding at March 28, 2025 |
|
|
2,145,781 |
|
|
$ |
24.86 |
|
Granted |
|
|
538,098 |
|
|
|
28.89 |
|
Cancelled |
|
|
(52,435 |
) |
|
|
28.63 |
|
Issued |
|
|
(178,585 |
) |
|
|
29.34 |
|
Forfeited |
|
|
(70,439 |
) |
|
|
26.40 |
|
Outstanding at June 27, 2025 |
|
|
2,382,420 |
|
|
$ |
25.30 |
|
PSUs are included at 0% - 200% of target goals. The total compensation cost related to unvested awards not yet recorded at
June 27, 2025 was $20,498, which is expected to be recognized over a weighted average period of 1.25 years. The total grant date fair value of PSUs vested was $5,240 for the three-month period ended June 27, 2025.
The Company recorded pre-tax stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Cost of goods sold |
|
$ |
888 |
|
|
$ |
561 |
|
Research and development |
|
|
2,911 |
|
|
|
3,735 |
|
Selling, general and administrative |
|
|
6,963 |
|
|
|
5,822 |
|
Total pre-tax stock-based compensation expense |
|
$ |
10,762 |
|
|
$ |
10,118 |
|
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
13. Income Taxes
The Company recorded the following income tax provision in its condensed consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
Income tax provision |
|
$ |
3,169 |
|
|
$ |
1,040 |
|
Effective tax rate |
|
|
(31.7 |
)% |
|
|
(6.3 |
)% |
The Company’s income tax provision 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 decrease in the effective tax rate for the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024 results mainly from a decrease in GAAP loss before taxes and increased non-deductible share-based compensation, offset by increased foreign-derived intangible income tax benefits and the quarterly impact of discrete transaction benefits.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was enacted into law including changes that will be applicable to the Company beginning in fiscal year 2026. As the legislation was signed into law after the close of the Company’s first quarter, the impacts are not included in the Company’s operating results for the three-month period ended June 27, 2025. In general, the OBBB extended (and modified) the 2017 Tax Cuts and Jobs Act provisions. The Company is evaluating the future impact of these tax law changes on the Company’s financial statements.
14. Restructuring
In January 2025, management committed to a plan that included rebalancing its workforce and consolidation of leased facilities in an effort to optimize its cost structure (the “January 2025 Restructuring”). The Company incurred $600 of severance and other related restructuring costs, net of non-cash adjustments, associated with the January 2025 Restructuring during the three-month period ended June 27, 2025, bringing cumulative costs to $6,360. The Company made immaterial cash payments in the three-month period ended June 27, 2025. The Company’s accrual for severance and other employee-related benefits amount to $500 at June 27, 2025 and is reported in accrued expenses and other current liabilities in the Company’s consolidated balance sheets. The January 2025 restructuring is materially complete, and the Company does not expect to incur additional material charges.
15. Related Party Transactions
Share repurchase transactions with Sanken Electric Co., LTD. (“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 38,767,315 shares of the Company’s common stock from Sanken in a privately negotiated transaction 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 the 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 occurring after the receipt of the proceeds from borrowings under the Refinanced 2023 Term Loan Facility (the “Second Closing”). 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 $300,000 from the Refinanced 2023 Term Loan Facility. Pursuant to the terms of the Share Repurchase Agreement, Sanken reimbursed the Company for the expenses incurred by the Company in connection with the transactions contemplated by the Share Repurchase Agreement, and paid a facilitation fee of $35,000, which was recorded within additional paid-in-capital with the consolidated statements of changes in equity.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
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 25,000,000 shares of the Company’s common stock to the Underwriters at a price of $23.16 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to an additional 3,750,000 shares of the Company’s common stock at the same purchase price, which option was exercised in full prior to the closing of the Equity Offering.
On July 26, 2024, the Company completed the Equity Offering pursuant to the Underwriting Agreement of 28,750,000 shares of its common stock at a public offering price of $24.00 per share resulting in net proceeds to the Company of approximately $665,850, after deducting $24,150 of underwriting discounts. As described above, the Company used the net proceeds of the Equity Offering to complete the First Closing under the Share Repurchase Agreement.
On July 29, 2024, the Company completed the First Closing under the Share Repurchase Agreement, repurchasing 28,750,000 shares of the Company’s common stock for aggregate consideration of $628,256, which was the Equity Offering price, less the facilitation fee of $35,000, underwriting discounts, and reimbursable transaction expenses. The shares repurchased in the First Closing were retired.
On August 7, 2024, the Company completed the Second Closing under the Share Repurchase Agreement, repurchasing 10,017,315 shares of the Company’s common stock for aggregate cash consideration of $225,549, which was the Equity Offering price, less underwriting discounts and reimbursable transaction expenses. As described above, the Company 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 also retired.
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 $34,752 as a result of the fair value forward repurchase contract in the condensed consolidated statements of operations.
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 were shared or allocated, cost of goods sold and gross margins attributable to related party sales were consistent with those of third-party customers. There were no trade accounts receivables, net, from Sanken as of June 27, 2025
or March 28, 2025. There were no other accounts receivable from Sanken as of June 27, 2025 and March 28, 2025, respectively.
As of June 27, 2025, Sanken held approximately 32.3% of the Company’s outstanding common stock.
Sanken Distribution Agreement
On March 30, 2023, the Company entered into a termination of the distribution agreement with Sanken (the “Termination Agreement”). The Termination Agreement formally terminated the distribution agreement dated as of July 5, 2007, by and between the Company and Sanken (the “Distribution Agreement”), effective March 31, 2023. In connection with the termination of the Distribution Agreement, and, as provided for in the Termination Agreement, the Company made a one-time payment of $5,000 to Sanken in exchange for the cancellation of Sanken’s exclusive distribution rights in Japan. Concurrent with the Termination Agreement, AML and Sanken also entered into a short-term, non-exclusive distribution agreement (as amended, the “Short-Term Distribution Agreement”) and a consulting agreement (the “Consulting Agreement”), each of which was effective April 1, 2023. In addition, the Company allowed a one-time sales return from Sanken of resalable inventory of $4,200. The Short-Term Distribution Agreement provided for the management and sale of Company product inventory for a period of 24 months from April 1, 2023. Under the terms of the Consulting Agreement, Sanken agreed to continue to provide transition services for a period of six months from
April 1, 2023 to a strategic customer as orders for the customer were transitioned from Sanken to the Company, and the Company agreed to pay Sanken for providing these transition services.
On March 31, 2025, the Company and Sanken entered into an amendment to the Short-Term Distribution Agreement to extend the term by 12 months. No payments were made by the Company to Sanken under the Short-Term Distribution Agreement or the Consulting Agreement in the three-month period ended June 27, 2025.
ALLEGRO MICROSYSTEMS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements – (continued)
(Amounts in thousands, except share and per share amounts)
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 $175,000 in exchange for an equity interest in PSL, which closed on September 20, 2024 (the “PSL Closing”). As contemplated by the PSL Agreement, the Company agreed to discharge all outstanding promissory notes from PSL held by the Company for a value of $10,350 in exchange for PSL equity interests. Following the PSL Closing, the Company owned approximately 10.2% of PSL.
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.
Other transactions involving PSL
The Company purchases in-process products from PSL. Purchases of various products from PSL totaled $8,270 and $14,956 for the three-month periods ended June 27, 2025 and June 28, 2024, respectively. Accounts payable to PSL included in amounts due to related party totaled $2,902 and $6,535 as of June 27, 2025 and March 28, 2025, respectively.
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 28, 2025, filed with the SEC on May 22, 2025 (the “2025 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 2025 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-month periods ended June 27, 2025
and June 28, 2024 relate to the 13-week periods ended June 27, 2025 and June 28, 2024, respectively. All references to “2026,” “fiscal year 2026” or similar references relate to the 52-week period ending March 27, 2026. All references to “2025,” “fiscal year 2025” or similar references relate to the 52-week period ended March 28, 2025.
Overview
We are a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific power ICs enabling the most important emerging technologies in the automotive and industrial markets. With the broadest portfolio of magnetic sensor IC solutions available, underpinned by our strong position in the automotive market, we are the leading magnetic sensor supplier worldwide based on market share. 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 1,500 products, and we ship over 1.5 billion units annually to more than 10,000 customers worldwide. During the three-month periods ended June 27, 2025 and June 28, 2024, we generated $203.4 million and $166.9 million in total net sales, respectively, with $13.2 million and $17.6 million in net loss, respectively.
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
Although inflation has moderated in recent periods, inflation rates in the markets in which we operate have increased and may continue to rise as a result of cost increases attributable to global tariff policies. Inflation in recent 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 attempted 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, because we expect the average sales prices (“ASPs”) of our products to decline over time, 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 a 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, tariffs and other pricing increases 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 as a result of global tariff policies, which also have the potential to reduce end market demand in certain markets. Over the past several quarters, we and other semiconductor companies have experienced a downturn in market demand, primarily driven by softening demand from customers across various markets and digestion of excess accumulated inventory. In addition, factors that cause a reduction in demand from the end users of our OEMs’ or other customers’ products, including as a result of increased prices resulting from global trade policies, tariffs or a recessionary environment in the markets in which we operate, may in the future continue to cause our direct customers to significantly reduce the number of products ordered from us.
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 throughout fiscal year 2025, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.
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.
Results of Operations
Three-Month Period Ended June 27, 2025 Compared to Three-Month Period Ended June 28, 2024
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 June 27, 2025 and June 28, 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
Three-Month Period Ended |
|
|
Change |
|
|
|
June 27,
2025 |
|
|
As a % of
Net Sales |
|
|
June 28,
2024 |
|
|
As a % of
Net Sales |
|
|
$ |
|
|
% |
|
|
|
|
|
(Dollars in thousands) |
|
Total net sales |
|
$ |
203,405 |
|
|
|
100.0 |
% |
|
$ |
166,919 |
|
|
|
100.0 |
% |
|
$ |
36,486 |
|
|
|
21.9 |
% |
Cost of goods sold |
|
|
112,103 |
|
|
|
55.1 |
% |
|
|
92,148 |
|
|
|
55.2 |
% |
|
|
19,955 |
|
|
|
21.7 |
% |
Gross profit |
|
|
91,302 |
|
|
|
44.9 |
% |
|
|
74,771 |
|
|
|
44.8 |
% |
|
|
16,531 |
|
|
|
22.1 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
46,500 |
|
|
|
22.9 |
% |
|
|
45,204 |
|
|
|
27.1 |
% |
|
|
1,296 |
|
|
|
2.9 |
% |
Selling, general and administrative |
|
|
47,542 |
|
|
|
23.4 |
% |
|
|
40,197 |
|
|
|
24.1 |
% |
|
|
7,345 |
|
|
|
18.3 |
% |
Total operating expenses |
|
|
94,042 |
|
|
|
46.2 |
% |
|
|
85,401 |
|
|
|
51.2 |
% |
|
|
8,641 |
|
|
|
10.1 |
% |
Operating loss |
|
|
(2,740 |
) |
|
|
(1.3 |
)% |
|
|
(10,630 |
) |
|
|
(6.4 |
)% |
|
|
7,890 |
|
|
|
(74.2 |
)% |
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(6,359 |
) |
|
|
(3.1 |
)% |
|
|
(5,377 |
) |
|
|
(3.2 |
)% |
|
|
(982 |
) |
|
|
18.3 |
% |
Interest income |
|
|
234 |
|
|
|
0.1 |
% |
|
|
494 |
|
|
|
0.3 |
% |
|
|
(260 |
) |
|
|
(52.6 |
)% |
Other expense, net |
|
|
(1,128 |
) |
|
|
(0.6 |
)% |
|
|
(1,060 |
) |
|
|
(0.6 |
)% |
|
|
(68 |
) |
|
|
6.4 |
% |
Loss before income taxes |
|
|
(9,993 |
) |
|
|
(4.9 |
)% |
|
|
(16,573 |
) |
|
|
(9.9 |
)% |
|
|
6,580 |
|
|
|
(39.7 |
)% |
Income tax provision |
|
|
3,169 |
|
|
|
1.6 |
% |
|
|
1,040 |
|
|
|
0.6 |
% |
|
|
2,129 |
|
|
|
204.7 |
% |
Net loss |
|
|
(13,162 |
) |
|
|
(6.5 |
)% |
|
|
(17,613 |
) |
|
|
(10.6 |
)% |
|
|
4,451 |
|
|
|
(25.3 |
)% |
Net income attributable to non-controlling interests |
|
|
65 |
|
|
|
0.0 |
% |
|
|
62 |
|
|
|
0.0 |
% |
|
|
3 |
|
|
|
4.8 |
% |
Net loss attributable to Allegro MicroSystems, Inc. |
|
$ |
(13,227 |
) |
|
|
(6.5 |
)% |
|
$ |
(17,675 |
) |
|
|
(10.6 |
)% |
|
$ |
4,448 |
|
|
|
(25.2 |
)% |
Total net sales
Total net sales increased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024. The increase was primarily driven by data center applications, industrial automation and robotics, medical and other broad-based industrial applications, and e-Mobility products, which includes our advanced driver assistance systems (“ADAS”) and components for electrified vehicles (“EV”).
Sales Trends by Market
In the fourth quarter of fiscal year 2025 during the preparation of the consolidated financial statements, the Company identified an immaterial misclassification of net sales by market, whereby customer returns and sales allowances were incorrectly classified by market between Automotive and Industrial and Other in prior periods. There was no impact to previously reported total net sales or net loss in any of the periods.
The Company assessed the materiality of the revision qualitatively and quantitatively and determined the revisions to be immaterial to the prior period interim fiscal year 2025 condensed consolidated financial statements. All prior period amounts have been revised in the table below.
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 |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
|
Amount |
|
|
% |
|
|
|
(Dollars in thousands) |
|
Automotive |
|
$ |
144,264 |
|
|
$ |
127,394 |
|
|
$ |
16,870 |
|
|
|
13.2 |
% |
Industrial and other |
|
|
59,141 |
|
|
|
39,525 |
|
|
|
19,616 |
|
|
|
49.6 |
% |
Total net sales |
|
$ |
203,405 |
|
|
$ |
166,919 |
|
|
$ |
36,486 |
|
|
|
21.9 |
% |
Automotive net sales increased in the three-month period ended June 27, 2025 compared to the three-month period
ended June 28, 2024, primarily due to an increase in e-Mobility products, which includes ADAS and EV.
Industrial and other net sales increased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024, primarily due to an increase in demand for data center applications, industrial automation and robotics, medical and other broad-based industrial applications.
Sales Trends by Product
The following table summarizes net sales by product.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
Change |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
|
Amount |
|
|
% |
|
|
|
(Dollars in thousands) |
|
Magnetic sensors (“MS”) |
|
$ |
129,166 |
|
|
$ |
115,109 |
|
|
$ |
14,057 |
|
|
|
12.2 |
% |
Power integrated circuits (“PIC”) |
|
|
74,239 |
|
|
|
51,810 |
|
|
|
22,429 |
|
|
|
43.3 |
% |
Total net sales |
|
$ |
203,405 |
|
|
$ |
166,919 |
|
|
$ |
36,486 |
|
|
|
21.9 |
% |
The increase in MS sales was primarily due to an increase in demand for our magnetic speed, tunneling magnetoresistance (“TMR”) sensor solutions and our current and isolator products. The increase in PIC sales was primarily driven by an increase in demand for our motor products and high performance power products.
Sales Trends by Geographic Location
The following table summarizes net sales by geographic location based on ship-to location.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
Change |
|
|
|
June 27,
2025 |
|
|
June 28,
2024 |
|
|
Amount |
|
|
% |
|
|
|
(Dollars in thousands) |
|
Americas: |
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
23,774 |
|
|
$ |
22,267 |
|
|
$ |
1,507 |
|
|
|
6.8 |
% |
Other Americas |
|
|
8,848 |
|
|
|
5,224 |
|
|
|
3,624 |
|
|
|
69.4 |
% |
EMEA: |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
30,473 |
|
|
|
26,906 |
|
|
|
3,567 |
|
|
|
13.3 |
% |
Asia: |
|
|
|
|
|
|
|
|
|
|
|
|
Greater China |
|
|
57,569 |
|
|
|
31,860 |
|
|
|
25,709 |
|
|
|
80.7 |
% |
Japan |
|
|
33,653 |
|
|
|
40,643 |
|
|
|
(6,990 |
) |
|
|
(17.2 |
)% |
South Korea |
|
|
19,603 |
|
|
|
21,773 |
|
|
|
(2,170 |
) |
|
|
(10.0 |
)% |
Other Asia |
|
|
29,485 |
|
|
|
18,246 |
|
|
|
11,239 |
|
|
|
61.6 |
% |
Total net sales |
|
$ |
203,405 |
|
|
$ |
166,919 |
|
|
$ |
36,486 |
|
|
|
21.9 |
% |
Greater China net sales increased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024, primarily driven by an increase in net sales of ADAS and EV and distributors currently managing inventory levels. Other Asia net sales increased in both automotive and industrial and other, primarily in internal combustion engine and data center applications. Americas net sales increased in both automotive and industrial and other applications. Europe net sales increased primarily in automotive markets. Japan net sales declined in automotive, primarily in safety, comfort and convenience applications. South Korea net sales declined in automotive primarily in ADAS and EV.
Cost of goods sold
Cost of goods sold increased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024, primarily due to higher production volume in support of higher product sales and foreign currency impact.
Cost of goods sold as a percentage of our total net sales was 55.1% and 55.2% for the three-month periods ended June 27, 2025 and June 28, 2024, respectively. The decrease was primarily due to the increase in production volume.
Gross profit and gross margin
Gross profit increased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024, primarily due to the increase in net sales and a change in product mix.
Gross margin was 44.9% and 44.8% for the three-month periods ended June 27, 2025 and June 28, 2024, respectively. The increase was primarily due to the increase in net sales and a change in product mix.
Research and development expenses
Research and development (“R&D”) expenses increased in the three-month period ended June 27, 2025 compared to the comparable period in fiscal year 2025, primarily due to the increase of R&D personnel costs.
R&D expenses as a percentage of our total net sales was 22.9% and 27.1% for the three-month periods ended June 27, 2025 and June 28, 2024, respectively. The decrease was primarily due to the increase in net sales.
Selling, general and administrative expenses
Selling, general and administrative (“SG&A”) expenses increased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024, primarily due to an increase in outside service and personnel costs.
SG&A expenses as a percentage of our total net sales was 23.4% and 24.1% in the three-month periods ended June 27, 2025 and June 28, 2024, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, partially offset by an increase in outside service, personnel costs and the funding of the annual incentive program.
Interest expense
Interest expense increased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024, due to higher interest payments on the Refinanced 2023 Term Loan Facility (as defined in Note 9, “Debt and Other Borrowings” to the unaudited condensed consolidated financial statements included in this Quarterly Report), which increased our total outstanding debt balance.
Interest income
Interest income decreased in the three-month period ended June 27, 2025 compared to the three-month period ended June 28, 2024, primarily due to lower cash and cash equivalent balances.
Other expense, net
The foreign currency loss recorded in the three-month period ended June 27, 2025 was primarily due to U.S. Dollar weakening against the Euro. The foreign currency loss recorded in the three-month period ended June 28, 2024 was primarily due to realized and unrealized losses from our Philippine location.
We recorded a gain of $0.8 million related to our investment in marketable securities and earnings in our money market fund deposits in the three-month period ended June 27, 2025, compared to investment income of $0.5 million related to our money market fund deposits in the three-month period ended June 28, 2024.
Income tax provision
Income tax provision and the effective income tax rate were approximately $3.2 million and (31.7)%, respectively, in the three-month period ended June 27, 2025, compared to income tax provision and effective income tax rate of approximately $1.0 million and (6.3)%, respectively, in the three-month period ended June 28, 2024. The change in the effective tax rate for the three-month period ended June 27, 2025, compared to the three-month period ended June 28, 2024 results mainly from a decrease in GAAP loss before taxes and increased non-deductible share-based compensation, offset by increased foreign-derived intangible income tax benefit and the quarterly impact of discrete transaction benefits.
Liquidity and Capital Resources
As of June 27, 2025, we had $129.1 million of cash and cash equivalents and $326.4 million of working capital, compared to $121.3 million of cash and cash equivalents and $370.8 million of working capital as of March 28, 2025. Working capital is impacted by the timing and extent of our business needs. A payment of $25.0 million was applied to the outstanding balance of the 2025 Refinanced Loans (as defined in Note 9, “Debt and Other Borrowings” to the unaudited condensed consolidated financial statements included in this Quarterly Report) on July 31, 2025.
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 2026 is to utilize cash on hand and capacity under our revolving credit facility to support our continued growth initiatives into select markets and planned capital expenditures, as well as consider potential acquisitions. As of June 27, 2025, 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 15, “Retirement Plans,” and Note 16, “Commitments and Contingencies” to the audited consolidated financial statements in the Company’s 2025 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 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 three-month periods ended June 27, 2025 and June 28, 2024:
|
|
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
|
|
June 27, 2025 |
|
|
June 28, 2024 |
|
|
|
(dollars in thousands) |
|
Net cash provided by operating activities |
|
$ |
61,618 |
|
|
$ |
34,196 |
|
Net cash used in investing activities |
|
|
(10,600 |
) |
|
|
(10,977 |
) |
Net cash used in financing activities |
|
|
(44,190 |
) |
|
|
(60,378 |
) |
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
|
|
1,444 |
|
|
|
(825 |
) |
Net increase (decrease) in cash and cash equivalents and restricted cash |
|
$ |
8,272 |
|
|
$ |
(37,984 |
) |
Operating Activities
Net cash provided by operating activities was $61.6 million in the three-month period ended June 27, 2025, resulting primarily from a net loss of $13.2 million and noncash charges of $26.2 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $48.5 million. Noncash charges primarily included increases of $16.2 million for depreciation and amortization, $10.8 million of stock-based compensation, and $3.5 million for provisions for inventory and expected credit losses, partially offset by $5.1 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $36.0 million decrease in prepaid expenses and other assets, a $7.2 million decrease in inventories, an $8.0 million increase in accrued expenses and other current and long-term liabilities, and a $6.3 million increase in trade accounts payable, partially offset by a $5.3 million increase in trade accounts receivable, net and a $3.6 million decrease in net amounts due to related party. The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year. Trade accounts payable increased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $2.8 million. The decrease in prepaid expenses and other assets was mostly due to the timing of tax payments. The decrease in inventories was primarily the result of the increase in net sales. The decrease in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in accrued expenses and other current and long-term liabilities was primarily the result of higher accrued income taxes and accrued personnel costs.
Net cash provided by operating activities was $34.2 million in the three-month period ended June 28, 2024, resulting primarily from net loss of $17.6 million and noncash charges of $24.7 million, partially offset by a net increase in cash from a decrease in net operating assets and liabilities of $27.1 million. The net decrease in operating assets and liabilities consisted of a $55.1 million decrease in trade accounts receivable, net, a $16.0 million increase in inventories, a $14.0 million decrease in accrued expenses and other current and long-term liabilities, and a $1.7 million increase in prepaid expenses and other assets, partially offset by a $3.4 million increase in net amounts due to related party and a $0.2 million increase in trade accounts payable. The increase in inventories was primarily the result of inventory builds to support anticipated sales growth for the remainder of fiscal year 2025. 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. 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 trade accounts receivable, net, was primarily a result of decreased sales year-over-year. Trade accounts payable decreased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $5.5 million. The increase in net amounts due to related party 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 $10.6 million in the three-month period ended June 27, 2025, consisting of purchases of property, plant and equipment.
Net cash used in investing activities was $11.0 million in the three-month period ended June 28, 2024, consisting of purchases of property, plant and equipment.
Financing Activities
Net cash used in financing activities was $44.2 million in the three-month period ended June 27, 2025, primarily consisting of $35.0 million of payments on our 2025 Refinanced Loans and $9.0 million of taxes related to the net settlement of equity awards.
Net cash used in financing activities was $60.4 million in the three-month period ended June 28, 2024, consisting of a $50.0 million payment on our 2023 Term Loan Facility and $11.2 million of taxes related to the net settlement of equity awards.
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.
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 2025 Annual Report. There have been no material changes in our critical accounting policies and estimates since March 28, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have not been any material changes in our exposures to market risk since March 28, 2025. 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 2025 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 June 27, 2025. Based on the evaluation of our disclosure controls and procedures as of June 27, 2025, 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.
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 2025 Annual Report, as filed with the SEC on May 22, 2025. There have been no material changes to those risk factors previously disclosed in our 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 5. Other Information
During the three-month period ended June 27, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408 of Regulations S-K.
Item 6. Exhibits
(a) Exhibits
|
|
|
Exhibit No. |
|
Description of Exhibit |
|
|
|
10.1 |
|
Amendment, dated March 31, 2025, to the Distribution Agreement dated April 1, 2023 by and between Allegro MicroSystems, LLC and Sanken Electric Co., Ltd (incorporated by reference from Exhibit 10.23 to the Company’s Annual Report on Form 10-K filed on May 22, 2025)† |
|
|
|
31.1* |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2* |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.1** |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.2** |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
101.INS |
|
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 |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Document |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith) |
* Filed herewith.
** Furnished herewith.
† Portions of this exhibit (indicated by “[XXX]” or “[***]”) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K under the Securities Act of 1933, as amended, because they are both (i) not material and (ii) the type of information that the Company customarily and actually treats as private and confidential.
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. |
|
|
|
|
Date: August 1, 2025 |
|
By: |
/s/ Michael C. Doogue |
|
|
|
Michael C. Doogue |
|
|
|
President and Chief Executive Officer (principal executive officer) |
|
|
|
|
Date: August 1, 2025 |
|
By: |
/s/ Derek P. D’Antilio |
|
|
|
Derek P. D’Antilio |
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer) |
