10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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 September 29, 2023

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)

 

 

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:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

ALGM

 

The 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, 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.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller 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 November 1, 2023, the registrant had 192,473,839 shares of common stock, par value $0.01 per share, outstanding.

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

Forward-Looking Statements

2

PART I.

Financial Information

3

Item 1.

Condensed Consolidated Financial Statements

3

 

Condensed Consolidated Balance Sheets as of September 29, 2023 and March 31, 2023 (Unaudited)

3

 

Condensed Consolidated Statements of Operations for the three- and six-month periods ended September 29, 2023 and September 23, 2022 (Unaudited)

4

 

Condensed Consolidated Statements of Comprehensive Income for the three- and six-month periods ended September 29, 2023 and September 23, 2022 (Unaudited)

5

 

Condensed Consolidated Statements of Changes in Equity for the three- and six-month periods ended September 29, 2023 and September 23, 2022 (Unaudited)

6

 

Condensed Consolidated Statements of Cash Flows for the six-month periods ended September 29, 2023 and September 23, 2022 (Unaudited)

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

PART II.

Other Information

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

 

Signatures

32

 

 


 

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 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on May 25, 2023 (the “2023 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, changed circumstances 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.

2


 

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share amounts)

(Unaudited)

 

 

September 29,
2023

 

 

March 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

370,013

 

 

$

351,576

 

Restricted cash

 

 

8,418

 

 

 

7,129

 

Trade accounts receivable, net

 

 

118,947

 

 

 

111,290

 

Trade and other accounts receivable due from related party

 

 

741

 

 

 

13,494

 

Inventories

 

 

173,089

 

 

 

151,301

 

Prepaid expenses and other current assets

 

 

39,938

 

 

 

27,289

 

Current portion of related party note receivable

 

 

3,750

 

 

 

3,750

 

Total current assets

 

 

714,896

 

 

 

665,829

 

Property, plant and equipment, net

 

 

312,047

 

 

 

263,099

 

Operating lease right-of-use assets

 

 

20,804

 

 

 

16,866

 

Deferred income tax assets

 

 

68,385

 

 

 

50,359

 

Goodwill

 

 

27,707

 

 

 

27,691

 

Intangible assets, net

 

 

51,677

 

 

 

52,378

 

Related party note receivable, less current portion

 

 

6,563

 

 

 

8,438

 

Equity investment in related party

 

 

25,474

 

 

 

27,265

 

Other assets

 

 

57,384

 

 

 

69,230

 

Total assets

 

$

1,284,937

 

 

$

1,181,155

 

Liabilities, Non-Controlling Interests and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

62,603

 

 

$

56,256

 

Amounts due to related party

 

 

3,041

 

 

 

9,682

 

Accrued expenses and other current liabilities

 

 

63,394

 

 

 

94,894

 

Current portion of operating lease liabilities

 

 

5,203

 

 

 

4,493

 

Total current liabilities

 

 

134,241

 

 

 

165,325

 

Obligations due under Senior Secured Credit Facilities

 

 

25,000

 

 

 

25,000

 

Operating lease liabilities, less current portion

 

 

16,004

 

 

 

13,048

 

Other long-term liabilities

 

 

11,404

 

 

 

10,967

 

Total liabilities

 

 

186,649

 

 

 

214,340

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.01 par value; 1,000,000,000 shares authorized, 192,469,731 shares issued and outstanding at September 29, 2023; 1,000,000,000 shares authorized, 191,754,292 issued and outstanding at March 31, 2023

 

 

1,925

 

 

 

1,918

 

Additional paid-in capital

 

 

683,891

 

 

 

674,179

 

Retained earnings

 

 

436,782

 

 

 

310,315

 

Accumulated other comprehensive loss

 

 

(25,509

)

 

 

(20,784

)

Equity attributable to Allegro MicroSystems, Inc.

 

 

1,097,089

 

 

 

965,628

 

Non-controlling interests

 

 

1,199

 

 

 

1,187

 

Total stockholders’ equity

 

 

1,098,288

 

 

 

966,815

 

Total liabilities, non-controlling interests and stockholders’ equity

 

$

1,284,937

 

 

$

1,181,155

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

 

 

Three-Month Period Ended

 

 

Six-Month Period Ended

 

 

September 29,
2023

 

 

September 23,
2022

 

 

September 29,
2023

 

 

September 23,
2022

 

Net sales

 

$

271,930

 

 

$

192,640

 

 

$

550,223

 

 

$

368,684

 

Net sales to related party

 

 

3,579

 

 

 

45,026

 

 

 

3,579

 

 

 

86,735

 

Total net sales

 

 

275,509

 

 

 

237,666

 

 

 

553,802

 

 

 

455,419

 

Cost of goods sold

 

 

114,095

 

 

 

83,962

 

 

 

234,438

 

 

 

163,029

 

Cost of goods sold to related party

 

 

1,911

 

 

 

21,682

 

 

 

1,911

 

 

 

41,994

 

Gross profit

 

 

159,503

 

 

 

132,022

 

 

 

317,453

 

 

 

250,396

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

43,428

 

 

 

35,567

 

 

 

86,403

 

 

 

69,424

 

Selling, general and administrative

 

 

43,160

 

 

 

36,617

 

 

 

87,389

 

 

 

106,397

 

Total operating expenses

 

 

86,588

 

 

 

72,184

 

 

 

173,792

 

 

 

175,821

 

Operating income

 

 

72,915

 

 

 

59,838

 

 

 

143,661

 

 

 

74,575

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(758

)

 

 

(531

)

 

 

(1,527

)

 

 

(968

)

Interest income

 

 

850

 

 

 

467

 

 

 

1,693

 

 

 

784

 

Other income (expense), net

 

 

64

 

 

 

(688

)

 

 

(2,652

)

 

 

(3,057

)

Income before income taxes

 

 

73,071

 

 

 

59,086

 

 

 

141,175

 

 

 

71,334

 

Income tax provision

 

 

7,400

 

 

 

8,438

 

 

 

14,615

 

 

 

10,403

 

Net income

 

 

65,671

 

 

 

50,648

 

 

 

126,560

 

 

 

60,931

 

Net income attributable to non-controlling interests

 

 

54

 

 

 

34

 

 

 

93

 

 

 

70

 

Net income attributable to Allegro MicroSystems, Inc.

 

$

65,617

 

 

$

50,614

 

 

$

126,467

 

 

$

60,861

 

Net income per common share attributable to Allegro
   MicroSystems, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

$

0.26

 

 

$

0.66

 

 

$

0.32

 

Diluted

 

$

0.34

 

 

$

0.26

 

 

$

0.65

 

 

$

0.32

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

192,431,094

 

 

 

191,284,631

 

 

 

192,214,210

 

 

 

190,959,616

 

Diluted

 

 

195,100,855

 

 

 

192,639,576

 

 

 

195,055,495

 

 

 

192,654,097

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

 

 

Three-Month Period Ended

 

 

Six-Month Period Ended

 

 

September 29,
2023

 

 

September 23,
2022

 

 

September 29,
2023

 

 

September 23,
2022

 

Net income

 

$

65,671

 

 

$

50,648

 

 

$

126,560

 

 

$

60,931

 

Net income attributable to non-controlling interests

 

 

54

 

 

 

34

 

 

 

93

 

 

 

70

 

Net income attributable to Allegro MicroSystems, Inc.

 

 

65,617

 

 

 

50,614

 

 

 

126,467

 

 

 

60,861

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax

 

 

(4,348

)

 

 

(7,899

)

 

 

(4,806

)

 

 

(14,717

)

Comprehensive income

 

 

61,269

 

 

 

42,715

 

 

 

121,661

 

 

 

46,144

 

Other comprehensive gain attributable to non-controlling interests

 

 

37

 

 

 

69

 

 

 

81

 

 

 

137

 

Comprehensive income attributable to Allegro MicroSystems,
   Inc.

 

$

61,306

 

 

$

42,784

 

 

$

121,742

 

 

$

46,281

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

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

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total Equity

 

Balance at June 24, 2022

 

 

 

 

$

 

 

 

191,180,179

 

 

$

1,912

 

 

$

652,317

 

 

$

133,205

 

 

$

(25,198

)

 

$

1,124

 

 

$

763,360

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50,614

 

 

 

 

 

 

34

 

 

 

50,648

 

Employee stock purchase plan issuances

 

 

 

 

 

 

 

 

89,454

 

 

 

1

 

 

 

1,572

 

 

 

 

 

 

 

 

 

 

 

 

1,573

 

Stock-based compensation, net of forfeitures

 

 

 

 

 

 

 

 

38,508

 

 

 

 

 

 

8,193

 

 

 

 

 

 

 

 

 

 

 

 

8,193

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,830

)

 

 

(69

)

 

 

(7,899

)

Balance at September 23, 2022

 

 

 

 

$

 

 

 

191,308,141

 

 

$

1,913

 

 

$

662,082

 

 

$

183,819

 

 

$

(33,028

)

 

$

1,089

 

 

$

815,875

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Non-Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total Equity

 

Balance at June 30, 2023

 

 

 

 

$

 

 

 

192,371,784

 

 

$

1,924

 

 

$

674,692

 

 

$

371,165

 

 

$

(21,198

)

 

$

1,182

 

 

$

1,027,765

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,617

 

 

 

 

 

 

54

 

 

 

65,671

 

Stock-based compensation, net of forfeitures

 

 

 

 

 

 

 

 

97,947

 

 

 

1

 

 

 

10,868

 

 

 

 

 

 

 

 

 

 

 

 

10,869

 

Payments of taxes withheld on net settlement of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,669

)

 

 

 

 

 

 

 

 

 

 

 

(1,669

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,311

)

 

 

(37

)

 

 

(4,348

)

Balance at September 29, 2023

 

 

 

 

$

 

 

 

192,469,731

 

 

$

1,925

 

 

$

683,891

 

 

$

436,782

 

 

$

(25,509

)

 

$

1,199

 

 

$

1,098,288

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY – continued

(in thousands, except share amounts)

(Unaudited)

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Non-Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total Equity

 

Balance at March 25, 2022

 

 

 

 

$

 

 

 

190,473,595

 

 

$

1,905

 

 

$

627,792

 

 

$

122,958

 

 

$

(18,448

)

 

$

1,156

 

 

$

735,363

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60,861

 

 

 

 

 

 

70

 

 

 

60,931

 

Employee stock purchase plan issuances

 

 

 

 

 

 

 

 

89,454

 

 

 

1

 

 

 

1,572

 

 

 

 

 

 

 

 

 

 

 

 

1,573

 

Stock-based compensation, net of forfeitures

 

 

 

 

 

 

 

 

745,092

 

 

 

7

 

 

 

42,324

 

 

 

 

 

 

 

 

 

 

 

 

42,331

 

Payments of taxes withheld on net settlement of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,606

)

 

 

 

 

 

 

 

 

 

 

 

(9,606

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,580

)

 

 

(137

)

 

 

(14,717

)

Balance at September 23, 2022

 

 

 

 

$

 

 

 

191,308,141

 

 

$

1,913

 

 

$

662,082

 

 

$

183,819

 

 

$

(33,028

)

 

$

1,089

 

 

$

815,875

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Non-Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Interests

 

 

Total Equity