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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 10-Q
_________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 24, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                             to                            
Commission File Number: 001-39675
_________________
ALLEGRO MICROSYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
_________________
Delaware46-2405937
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
955 Perimeter Road
Manchester,New Hampshire03103
(Address of principal executive offices)(Zip Code)
(603626-2300
(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:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per shareALGMThe Nasdaq Global Select Market
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, 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.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
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 January 19, 2022, the registrant had 189,913,804 shares of common stock, $0.01 par value per share, outstanding.



TABLE OF CONTENTS
Page



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, the impact of the ongoing and global COVID-19 pandemic on our business, 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,” “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” in this Quarterly Report and Part II, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the year ended March 26, 2021 (the “2021 Annual Report”) and Part II, Item 1A., “Risk Factors” of our subsequently filed Quarterly Reports on Form 10-Q. These risks and uncertainties include, but are not limited to:
downturns or volatility in general economic conditions, including as a result of the COVID-19 pandemic, particularly in the automotive market;
our ability to compete effectively, expand our market share and increase our net sales and profitability;
our ability to compensate for decreases in average selling prices of our products;
the cyclical nature of the analog semiconductor industry;
shifts in our product mix or customer mix, which could negatively impact our gross margin;
our ability to manage any sustained yield problems or other delays at our third-party wafer fabrication facilities or in the final assembly and test of our products;
any disruptions at our primary third-party wafer fabrication facilities;
our ability to fully realize the benefits of past and potential future initiatives designed to improve our competitiveness, growth and profitability;
our ability to accurately predict our quarterly net sales and operating results;
our ability to adjust our supply chain volume to account for changing market conditions and customer demand;
our reliance on a limited number of third-party wafer fabrication facilities and suppliers of other materials;
our dependence on manufacturing operations in the Philippines;
our reliance on distributors to generate sales;
our indebtedness may limit our flexibility to operate our business;
the loss of one or more significant end customers;
our ability to develop new product features or new products in a timely and cost-effective manner;
our ability to meet customers’ quality requirements;
uncertainties related to the design win process and our ability to recover design and development expenses and to generate timely or sufficient net sales or margins;
changes in government trade policies, including the imposition of tariffs and export restrictions;
our exposures to warranty claims, product liability claims and product recalls;
our ability to protect our proprietary technology and inventions through patents or trade secrets;
our ability to commercialize our products without infringing third-party intellectual property rights;
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disruptions or breaches of our information technology systems;
risks related to governmental regulation and other legal obligations, including privacy, data protection, information security, consumer protection, environmental and occupational health and safety, anti-corruption and anti-bribery, and trade controls;
our dependence on international customers and operations;
the availability of rebates, tax credits and other financial incentives on end-user demands for certain products;
the volatility of currency exchange rates;
risks related to acquisitions of and investments in new businesses, products or technologies, joint ventures and other strategic transactions;
our ability to raise capital to support our growth strategy;
our ability to effectively manage our growth and to retain key and highly skilled personnel;
changes in tax rates or the adoption of new tax legislation;
risks related to litigation, including securities class action litigation; and
our ability to accurately estimate market opportunity and growth forecasts.
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report 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. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, 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.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
December 24, 2021 (Unaudited)
March 26,
2021
Assets
Current assets:
Cash and cash equivalents$259,208 $197,214 
Restricted cash7,497 6,661 
Trade accounts receivable, net of provision for expected credit losses of $70 at December 24, 2021 and allowance for doubtful accounts of $138 at March 26, 2021
76,235 69,500 
Trade and other accounts receivable due from related party28,305 23,832 
Accounts receivable – other
1,485 1,516 
Inventories78,858 87,498 
Prepaid expenses and other current assets16,198 18,374 
Current portion of related party note receivable1,406  
Assets held for sale 25,969 
Total current assets469,192 430,564 
Property, plant and equipment, net207,705 192,393 
Operating lease right-of-use assets15,922  
Deferred income tax assets20,942 26,972 
Goodwill20,043 20,106 
Intangible assets, net35,985 36,366 
Related party note receivable, less current portion6,094  
Equity investment in related party27,456 26,664 
Other assets, net48,078 14,613 
Total assets$851,417 $747,678 
Liabilities, Non-Controlling Interest and Stockholders’ Equity
Current liabilities:
Trade accounts payable$34,189 $35,389 
Amounts due to related party4,051 2,353 
Accrued expenses and other current liabilities59,262 78,932 
Current portion of operating lease liabilities3,339  
Total current liabilities100,841 116,674 
Obligations due under Senior Secured Credit Facilities25,000 25,000 
Operating lease liabilities, less current portion12,907  
Other long-term liabilities16,830 19,133 
Total liabilities155,578 160,807 
Commitments and contingencies (Note 16)
Stockholders’ Equity:
Preferred Stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding at December 24, 2021 and March 26, 2021
  
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 189,797,145 shares issued and outstanding at December 24, 2021; 1,000,000,000 shares authorized, 189,588,161 issued and outstanding at March 26, 2021
1,898 1,896 
Additional paid-in capital612,106 592,170 
Retained earnings97,342 3,551 
Accumulated other comprehensive loss(16,677)(11,865)
Equity attributable to Allegro MicroSystems, Inc.694,669 585,752 
Non-controlling interests1,170 1,119 
Total stockholders’ equity
695,839 586,871 
Total liabilities, non-controlling interest and stockholders’ equity$851,417 $747,678 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)

Three-Month Period EndedNine-Month Period Ended
December 24,
2021
December 25,
2020
December 24,
2021
December 25,
2020
Net sales$147,168 $138,010 $456,302 $343,529 
Net sales to related party39,461 26,439 112,079 72,570 
Total net sales186,629 164,449 568,381 416,099 
Cost of goods sold85,464 90,024 270,524 224,203 
Gross profit101,165 74,425 297,857 191,896 
Operating expenses:
Research and development30,297 30,999 89,441 80,509 
Selling, general and administrative37,963 67,650 104,115 118,677 
Change in fair value of contingent consideration(2,700) (2,100) 
Total operating expenses65,560 98,649 191,456 199,186 
Operating income (loss)35,605 (24,224)106,401 (7,290)
Other income (expense):
Loss on debt extinguishment (9,055) (9,055)
Interest expense, net(269)(2,598)(1,764)(1,935)
Foreign currency transaction loss(3)(145)(55)(1,331)
Income in earnings of equity investment287 949 792 1,407 
Other, net3,634 (510)5,216 (297)
Income (loss) before income tax provision (benefit)39,254 (35,583)110,590 (18,501)
Income tax provision (benefit)6,281 (30,523)16,687 (27,913)
Net income (loss)32,973 (5,060)93,903 9,412 
Net income attributable to non-controlling interests37 35 112 103 
Net income (loss) attributable to Allegro MicroSystems, Inc.$32,936 $(5,095)$93,791 $9,309 
Net income (loss) attributable to Allegro MicroSystems, Inc. per share (Note 17):
Basic$0.17 $(0.04)$0.49 $0.19 
Diluted$0.17 $(0.04)$0.49 $0.05 
Weighted average shares outstanding:
Basic189,736,901 124,363,078 189,665,324 48,121,026 
Diluted192,068,222 124,363,078 191,678,951 171,638,787 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)

Three-Month Period EndedNine-Month Period Ended
December 24,
2021
December 25,
2020
December 24,
2021
December 25,
2020
Net income (loss)$32,973 $(5,060)$93,903 $9,412 
Net income attributable to non-controlling interest37 35 112 103 
Net income (loss) attributable to Allegro MicroSystems, Inc.32,936 (5,095)93,791 9,309 
Other comprehensive (loss) income:
Foreign currency translation adjustment(1,306)3,972 (4,873)10,152 
Net actuarial loss amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax   (313)
Comprehensive income (loss)31,630 (1,123)$88,918 $19,148 
Other comprehensive (income) loss attributable to non-controlling interest(3)(10)61 (34)
Comprehensive income (loss) attributable to Allegro MicroSystems, Inc.$31,627 $(1,133)$88,979 $19,114 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except share amounts)
(Unaudited)

Common Stock, Class ACommon Stock, Class LPreferred StockCommon Stock
Additional
Paid-In Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Non-Controlling InterestsTotal Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at September 25, 202010,000,000 $100 638,298 $6 — $—  $ $439,732 $208,759 $(14,133)$1,042 $635,506 
Net (loss) income— — — — — — — — — (5,095)— 35 (5,060)
Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries— — — — — — — — 527 — — — 527 
Reclassification of certain class L shares— — — — — — — — 298 — — — 298 
Stock-based compensation— — — — — — — — 45,876 — — — 45,876 
Issuance of common stock in connection with IPO, net of underwriting discounts and other offering costs— — — — — — 25,000,000 250 321,175 — — — 321,425 
Conversion of Class A and Class L common stock into common stock in connection with the IPO(10,000,000)(100)(636,301)(6)— — 166,500,000 1,665 (1,559)— — — — 
Repurchase of Class A and Class L common stock to cover related taxes— — (1,997)— — — (2,068,274)(21)(27,686)— — — (27,707)
Conversion of LTCIP/TRIP awards into restricted stock units in connection with the IPO— — — — — — — — 2,081 — — — 2,081 
Cash dividend paid to holders of Class A common stock— — — — — — — — (191,242)(208,758)— — (400,000)
Foreign currency translation adjustment— — — — — — — — — — 3,962 10 3,972 
Balance at December 25, 2020 $  $ — $— 189,431,726 $1,894 $589,202 $(5,094)$(10,171)$1,087 $576,918 

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ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - (continued)
(in thousands, except share amounts)
(Unaudited)

Preferred StockCommon Stock
Additional
Paid-In Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Non-Controlling InterestsTotal Equity
SharesAmountSharesAmount
Balance at September 24, 2021— $— 189,702,550 $1,897 $604,488 $64,406 $(15,368)$1,130 $656,553 
Net income— — — — — 32,936 — 37 32,973 
Stock-based compensation, net of forfeitures— — 94,595 1 7,618 — — — 7,619 
Foreign currency translation adjustment— — — — — — (1,309)3 (1,306)
Balance at December 24, 2021— $— 189,797,145 $1,898 $612,106 $97,342 $(16,677)$1,170 $695,839 



8

ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - (continued)
(in thousands, except share amounts)
(Unaudited)
Common Stock, Class ACommon Stock, Class LPreferred StockCommon Stock
Additional
Paid-In Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Non-Controlling InterestsTotal Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at March 27, 202010,000,000 $100 622,470 $6 — $—  $ $458,697 $194,355 $(19,976)$950 $634,132 
Net income— — — — — — — — — 9,309 — 103 9,412 
Issuance of Class L shares, net of forfeitures— — 15,828 — — — — — — — — — — 
Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries— — — — — — — — (19,165)— — — (19,165)
Reclassification of certain class L shares— — — — — — — — — — — — — 
Stock-based compensation— — — — — — — — 46,901 — — — 46,901 
Issuance of common stock in connection with IPO, net of underwriting discounts and other offering costs— — — — — — 25,000,000 250 321,175 — — — 321,425 
Conversion of Class A and Class L common stock into common stock in connection with the IPO(10,000,000)(100)(636,301)(6)— — 166,500,000 1,665 (1,559)— — — — 
Repurchase of Class A and Class L common stock to cover related taxes— — (1,997)— — — (2,068,274)(21)(27,686)— — — (27,707)
Conversion of LTCIP/TRIP awards into restricted stock units in connection with the IPO— — — — — — — — 2,081 — — — 2,081 
Cash dividend paid to holders of Class A common stock— — — — — — (191,242)(208,758)— — (400,000)
Foreign currency translation adjustment— — — — — — — — — — 10,118 34 10,152 
Net actuarial loss and amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax— — — — — — — — — — (313)— (313)
Balance at December 25, 2020 — $  $ — $— 189,431,726 $1,894 $589,202 $(5,094)$(10,171)$1,087 $576,918 
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ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - (continued)
(in thousands, except share amounts)
(Unaudited)

Preferred StockCommon Stock
Additional
Paid-In Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Non-Controlling InterestsTotal Equity
SharesAmountSharesAmount
Balance at March 26, 2021— $— 189,588,161 $1,896 $592,170 $3,551 $(11,865)$1,119 $586,871 
Net income— — — — — 93,791 — 112 93,903 
Employee stock purchase plan issuances— — 59,563 — 1,291 — — — 1,291 
Stock-based compensation, net of forfeitures— — 149,421 2 18,645 — — — 18,647 
Foreign currency translation adjustment— — — — — — (4,812)(61)(4,873)
Balance at December 24, 2021— $— 189,797,145 $1,898 $612,106 $97,342 $(16,677)$1,170 $695,839 


The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

Nine-Month Period Ended
December 24,
2021
December 25,
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$93,903 $9,412 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization36,522 36,225 
Amortization of deferred financing costs75 226 
Deferred income taxes(3,061)(17,526)
Stock-based compensation18,647 46,901 
(Gain) loss on disposal of assets(349)272 
Loss on debt extinguishment 9,055 
Gain on contingent consideration change in fair value(2,100) 
Provisions for inventory and credit losses/bad debt4,787 3,857 
Unrealized gains on marketable securities(4,482) 
Changes in operating assets and liabilities:
Trade accounts receivable(6,133)(5,975)
Accounts receivable - other(9)115 
Inventories3,251 1,118 
Prepaid expenses and other assets(11,870)(29,655)
Trade accounts payable2,026 2,411 
Due to/from related parties(2,775)8,283 
Accrued expenses and other current and long-term liabilities(9,874)(1,185)
Net cash provided by operating activities118,558 63,534 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment(55,792)(25,880)
Acquisition of business, net of cash acquired(12,549)(8,500)
Proceeds from sales of property, plant and equipment27,407 314 
Investments in marketable securities(9,189) 
Contribution of cash balances due to divestiture of subsidiary
 (16,335)
Net cash used in investing activities(50,123)(50,401)
CASH FLOWS FROM FINANCING ACTIVITIES:
Related party note receivable(7,500)51,377 
Proceeds from initial public offering, net of underwriting discounts and other offering costs 321,425 
Payments for taxes related to net share settlement of equity awards (27,707)
Proceeds from issuance of common stock under employee stock purchase plan1,291  
Dividends paid (400,000)
Borrowings of senior secured debt, net of deferred financing costs 315,719 
Repayment of senior secured debt (300,000)
Repayment of unsecured credit facilities (33,000)
Net cash used in financing activities(6,209)(72,186)
Effect of exchange rate changes on Cash and cash equivalents and Restricted cash604 3,350 
Net increase in Cash and cash equivalents and Restricted cash62,830 (55,703)
Cash and cash equivalents and Restricted cash at beginning of period203,875 219,876 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD:$266,705 $164,173 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents at beginning of period$197,214 $214,491 
Restricted cash at beginning of period6,661 5,385 
Cash and cash equivalents and Restricted cash at beginning of period$203,875 $219,876 
Cash and cash equivalents at end of period259,208 157,653 
Restricted cash at end of period7,497 6,520 
Cash and cash equivalents and Restricted cash at end of period$266,705 $164,173 
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ALLEGRO MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)
(in thousands)
(Unaudited)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest$541 $2,559 
Cash paid for income taxes16,635 7,568 
Noncash transactions:
Changes in Trade accounts payable related to Property, plant and equipment, net$(4,934)$(786)
Loans to cover purchase of common stock under employee stock plan