8-K
false000086629100008662912024-02-012024-02-01

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 1, 2024

 

 

Allegro MicroSystems, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-39675

46-2405937

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

955 Perimeter Road

 

Manchester, New Hampshire

 

03103

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (603) 626-2300

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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.

 


Item 2.02 Results of Operations and Financial Condition.

On February 1, 2024, Allegro MicroSystems, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended December 29, 2023. The full text of the press release issued is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.

Description

Exhibit 99.1

Press Release issued by Allegro MicroSystems, Inc. on February 1, 2024

Exhibit 104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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 hereunto duly authorized.

ALLEGRO MICROSYSTEMS, INC.

Date: February 1, 2024

By:

  /s/ Derek P. D’Antilio

 Derek P. D’Antilio

 Senior Vice President, Chief Financial Officer and Treasurer

 


EX-99.1

Exhibit 99.1

Allegro MicroSystems Reports Third Quarter 2024 Results

 

–Total Sales Increased 2% Year-over-Year –

–E-Mobility Drives 18% Year-over-Year Increase in Automotive Sales –

Manchester, NH, February 1, 2024 – Allegro MicroSystems, Inc. (“Allegro” or the “Company”) (Nasdaq:ALGM), a global leader in power and sensing semiconductor solutions for motion control and energy efficient systems, today announced financial results for its third quarter ended December 29, 2023.

“We delivered third-quarter net sales of $255 million, up 2% year-over-year, driven by continued strength in Automotive, which grew 18% year-over-year. Non-GAAP EPS was $0.32, 10% above the midpoint of guidance on in-line sales, and free cash flow increased $27 million, or more than 170% sequentially,” said Vineet Nargolwala, President and CEO of Allegro. "Sales into e-Mobility applications increased by 45% year-over-year to 54% of third-quarter Automotive sales, establishing a new milestone. While we expect continued inventory digestion across end markets in the short-term, our design win momentum continues at record levels and reinforces our confidence in our ability to grow above market in the mid to long term, consistent with our target financial model.”

 

Third Quarter Financial Highlights:

In thousands, except per share data

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

September 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Net Sales*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

194,764

 

 

$

197,321

 

 

$

164,719

 

 

$

577,515

 

 

$

467,959

 

Industrial

 

 

45,949

 

 

 

60,962

 

 

 

53,737

 

 

 

180,021

 

 

 

146,797

 

Other

 

 

14,271

 

 

 

17,226

 

 

 

30,333

 

 

 

51,250

 

 

 

89,452

 

Total net sales

 

$

254,984

 

 

$

275,509

 

 

$

248,789

 

 

$

808,786

 

 

$

704,208

 

GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

 

 

52.5

%

 

 

57.9

%

 

 

57.3

%

 

 

55.8

%

 

 

55.8

%

Operating margin %

 

 

14.4

%

 

 

26.5

%

 

 

26.4

%

 

 

22.3

%

 

 

19.9

%

Diluted EPS

 

$

0.17

 

 

$

0.34

 

 

$

0.33

 

 

$

0.82

 

 

$

0.65

 

Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

 

 

54.6

%

 

 

58.3

%

 

 

58.0

%

 

 

57.0

%

 

 

56.4

%

Operating margin %

 

 

27.2

%

 

 

31.3

%

 

 

30.3

%

 

 

29.8

%

 

 

27.9

%

Diluted EPS

 

$

0.32

 

 

$

0.40

 

 

$

0.35

 

 

$

1.11

 

 

$

0.91

 

*During the preparation of the third quarter fiscal year 2024 interim condensed consolidated financial statements, the Company identified an immaterial error in the classification of net sales by application within the table above, whereby customer returns and sales allowances were incorrectly classified by application between Automotive, Industrial and Other in the prior periods presented above. There was no impact to previously reported total net sales or net income in any of the periods noted above.

Business Outlook

For the fourth quarter ending March 29, 2024, the Company expects net sales to be in the range of $230 million to $240 million. The Company also estimates the following results on a non-GAAP basis:

Gross Margin is expected to be between 53% and 54%,
Operating Expenses are expected to be approximately 31% of sales, and
Diluted Earnings per Share is expected to be in the range of $0.19 to $0.23.

 

“Allegro is well positioned to support the megatrends of electrification and automation, and we are taking appropriate actions to navigate near-term impacts from inventory digestion.” said Derek D’Antilio, CFO of Allegro. “We are prudently managing our costs and significantly improving cash flow while continuing to invest strategically for growth.”


Allegro has not provided a reconciliation of its fourth fiscal quarter outlook for non-GAAP Gross Margin, non-GAAP Operating Expenses, and non-GAAP Diluted Earnings per Share because estimates of all of the reconciling items cannot be provided without unreasonable efforts. It is difficult to reasonably provide a forward-looking estimate between such forward-looking non-GAAP measures and the comparable forward-looking U.S. generally accepted accounting principles (“GAAP”) measures. Certain factors that are materially significant to Allegro’s ability to estimate these items are out of its control and/or cannot be reasonably predicted.

Earnings Webcast

A webcast will be held on Thursday, February 1, 2024 at 8:30 a.m., Eastern Time. Vineet Nargolwala, President and Chief Executive Officer, and Derek D’Antilio, Chief Financial Officer, will discuss Allegro’s business and financial results.

The webcast will be available on the Investor Relations section of the Company’s website at investors.allegromicro.com. A recording of the webcast will be posted in the same location shortly after the call concludes and will be available for at least 90 days.

About Allegro MicroSystems

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

Forward-Looking Statements

This press release 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. All statements other than statements of historical facts contained in this press release 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, including, among others, statements regarding the liquidity, growth and profitability strategies and factors affecting our business are 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.

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 current expectations, 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 II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2023, as updated in Part II, Item 1A “Risk Factors” of our Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2023, filed with the SEC on November 6, 2023. These risks and uncertainties include, but are not limited to: downturns or volatility in general economic conditions; our ability to compete effectively, expand our market share and increase our net sales and profitability; our reliance on a limited number of third-party semiconductor wafer fabrication facilities and suppliers of other materials; our failure to adjust purchase commitments and inventory management based on changing market conditions or customer demand; shifts in our product mix or customer mix, which could negatively impact our gross margin; the risk that the expected benefits of acquisitions may not be realized or that integration of acquired businesses may not continue as rapidly as we anticipate; the cyclical nature of the analog semiconductor industry; any downturn or disruption in the automotive market; our ability to compensate for decreases in average selling prices of our products and increases in input costs; 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; 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 dependence on manufacturing operations in the Philippines; our reliance on distributors to generate sales; the effects of COVID-19 on our supply chain and customer demand; our ability to develop new product features or new products in a timely and cost-effective manner; our ability to manage growth; any slowdown in the growth of our end markets; the loss of one or more significant customers; 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 export restrictions and tariffs; our exposures to warranty claims, product liability claims and product recalls; our dependence on international customers and operations; the availability of rebates, tax credits and other financial incentives on end-user demands for certain products; risks, liabilities, costs and obligations related to governmental regulation and other legal obligations, including export control, privacy, data protection, information


security, consumer protection, environmental and occupational health and safety, anti-corruption and anti-bribery, and trade controls; the volatility of currency exchange rates; our ability to raise capital to support our growth strategy; our indebtedness may limit our flexibility to operate our business; our ability to effectively manage our growth and to retain key and highly skilled personnel; our ability to protect our proprietary technology and inventions through patents or trade secrets; our ability to commercialize our products without infringing third-party intellectual property rights; disruptions or breaches of our information technology systems or those of our third-party service providers; our principal stockholders have substantial control over us; the inapplicability of the “corporate opportunity” doctrine to any director or stockholder who is not employed by us; anti-takeover provisions in our organizational documents and under the General Corporation Law of the State of Delaware; our inability to design, implement or maintain effective internal control over financial reporting; changes in tax rates or the adoption of new tax legislation; the negative impacts of sustained inflation on our business; disruptions in the banking and financial sector that limit our or our partners’ ability to access capital and borrowings; the physical, transition and litigation risks presented by climate change; and other events beyond our control. 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 press release 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 press release, 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.

This press release includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission (“SEC”) rules. These non-GAAP financial measures are provided in addition to, and not as a substitute for or superior to measures of, financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of the presented non-GAAP financial measures as tools for comparison.

This press release may not be reproduced, forwarded to any person or published, in whole or in part.


ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

 

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

Net sales

 

$

254,984

 

 

$

248,789

 

 

$

808,786

 

 

$

704,208

 

Cost of goods sold

 

 

121,156

 

 

 

106,195

 

 

 

357,505

 

 

 

311,218

 

Gross profit

 

 

133,828

 

 

 

142,594

 

 

 

451,281

 

 

 

392,990

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

44,396

 

 

 

39,593

 

 

 

130,799

 

 

 

109,017

 

Selling, general and administrative

 

 

52,746

 

 

 

37,373

 

 

 

140,135

 

 

 

143,770

 

Total operating expenses

 

 

97,142

 

 

 

76,966

 

 

 

270,934

 

 

 

252,787

 

Operating income

 

 

36,686

 

 

 

65,628

 

 

 

180,347

 

 

 

140,203

 

Interest and other income (expense)

 

 

(315

)

 

 

6,463

 

 

 

(2,801

)

 

 

3,222

 

Income before income taxes

 

 

36,371

 

 

 

72,091

 

 

 

177,546

 

 

 

143,425

 

Income tax provision

 

 

2,969

 

 

 

7,540

 

 

 

17,584

 

 

 

17,943

 

Net income

 

 

33,402

 

 

 

64,551

 

 

 

159,962

 

 

 

125,482

 

Net income attributable to non-controlling interests

 

 

57

 

 

 

32

 

 

 

150

 

 

 

102

 

Net income attributable to Allegro MicroSystems, Inc.

 

$

33,345

 

 

$

64,519

 

 

$

159,812

 

 

$

125,380

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

 

$

0.34

 

 

$

0.83

 

 

$

0.66

 

Diluted

 

$

0.17

 

 

$

0.33

 

 

$

0.82

 

 

$

0.65

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

192,724,541

 

 

 

191,328,538

 

 

 

192,384,315

 

 

 

191,082,141

 

Diluted

 

 

194,570,380

 

 

 

193,935,908

 

 

 

194,925,040

 

 

 

193,100,762

 

 

Supplemental Schedule of Total Net Sales

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

 

Three-Month Period Ended

 

 

Change

 

 

Nine-Month Period Ended

 

 

Change

 

 

December 29,
2023

 

 

December 23,
2022

 

 

Amount

 

 

%

 

 

December 29,
2023

 

 

December 23,
2022

 

 

Amount

 

 

%

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

Automotive

 

$

194,764

 

 

$

164,719

 

 

$

30,045

 

 

 

18

%

 

$

577,515

 

 

$

467,959

 

 

$

109,556

 

 

 

23

%

Industrial

 

 

45,949

 

 

 

53,737

 

 

 

(7,788

)

 

 

(14

)%

 

 

180,021

 

 

 

146,797

 

 

 

33,224

 

 

 

23

%

Other

 

 

14,271

 

 

 

30,333

 

 

 

(16,062

)

 

 

(53

)%

 

 

51,250

 

 

 

89,452

 

 

 

(38,202

)

 

 

(43

)%

Total net sales

 

$

254,984

 

 

$

248,789

 

 

$

6,195

 

 

 

2

%

 

$

808,786

 

 

$

704,208

 

 

$

104,578

 

 

 

15

%

 


ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

December 29,

 

 

March 31,

 

 

2023
(Unaudited)

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

214,308

 

 

$

351,576

 

Restricted cash

 

 

9,427

 

 

 

7,129

 

Trade accounts receivable, net

 

 

114,324

 

 

 

111,290

 

Trade and other accounts receivable due from related party

 

 

154

 

 

 

13,494

 

Inventories

 

 

165,553

 

 

 

151,301

 

Prepaid expenses and other current assets

 

 

41,980

 

 

 

27,289

 

Current portion of related party note receivable

 

 

3,750

 

 

 

3,750

 

Total current assets

 

 

549,496

 

 

 

665,829

 

Property, plant and equipment, net

 

 

325,822

 

 

 

263,099

 

Deferred income tax assets

 

 

79,420

 

 

 

50,359

 

Goodwill

 

 

214,709

 

 

 

27,691

 

Intangible assets, net

 

 

293,699

 

 

 

52,378

 

Related party note receivable, less current portion

 

 

5,625

 

 

 

8,438

 

Equity investment in related party

 

 

25,974

 

 

 

27,265

 

Other assets

 

 

70,556

 

 

 

86,096

 

Total assets

 

$

1,565,301

 

 

$

1,181,155

 

Liabilities, Non-Controlling Interests and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

37,633

 

 

$

56,256

 

Amount due to related party

 

 

3,158

 

 

 

9,682

 

Accrued expenses and other current liabilities

 

 

75,437

 

 

 

99,387

 

Current portion of long-term debt

 

 

3,959

 

 

 

 

Total current liabilities

 

 

120,187

 

 

 

165,325

 

Long-term debt

 

 

250,464

 

 

 

25,000

 

Other long-term liabilities

 

 

59,164

 

 

 

24,015

 

Total liabilities

 

 

429,815

 

 

 

214,340

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

1,931

 

 

 

1,918

 

Additional paid-in capital

 

 

684,063

 

 

 

674,179

 

Retained earnings

 

 

470,127

 

 

 

310,315

 

Accumulated other comprehensive loss

 

 

(21,889

)

 

 

(20,784

)

Equity attributable to Allegro MicroSystems, Inc.

 

 

1,134,232

 

 

 

965,628

 

Non-controlling interests

 

 

1,254

 

 

 

1,187

 

Total stockholders' equity

 

 

1,135,486

 

 

 

966,815

 

Total liabilities, non-controlling interests and stockholders' equity

 

$

1,565,301

 

 

$

1,181,155

 

 


ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

December 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

33,402

 

 

$

64,551

 

 

$

159,962

 

 

$

125,482

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

20,195

 

 

 

12,580

 

 

 

49,548

 

 

 

36,705

 

Amortization of deferred financing costs

 

 

185

 

 

 

25

 

 

 

292

 

 

 

74

 

Deferred income taxes

 

 

(10,119

)

 

 

(11,956

)

 

 

(28,253

)

 

 

(28,387

)

Stock-based compensation

 

 

10,920

 

 

 

8,902

 

 

 

32,839

 

 

 

51,242

 

Loss on disposal of assets

 

 

(25

)

 

 

37

 

 

 

18

 

 

 

287

 

Change in fair value of contingent consideration

 

 

 

 

 

 

 

 

 

 

 

(2,700

)

Provisions for inventory and receivables reserves

 

 

429

 

 

 

1,512

 

 

 

9,851

 

 

 

1,744

 

Change in fair value of marketable securities

 

 

 

 

 

(3,453

)

 

 

3,579

 

 

 

5

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

5,081

 

 

 

(11,414

)

 

 

(2,564

)

 

 

(5,894

)

Accounts receivable - other

 

 

(93

)

 

 

(546

)

 

 

(462

)

 

 

2,000

 

Inventories

 

 

11,312

 

 

 

(21,808

)

 

 

(19,909

)

 

 

(39,136

)

Prepaid expenses and other assets

 

 

7,461

 

 

 

(8,291

)

 

 

(12,623

)

 

 

(17,761

)

Trade accounts payable

 

 

(12,299

)

 

 

10,625

 

 

 

(9,604

)

 

 

19,553

 

Due to (from) related party

 

 

705

 

 

 

2,408

 

 

 

6,817

 

 

 

(3,273

)

Accrued expenses and other current and long-term liabilities

 

 

9,404

 

 

 

10,682

 

 

 

(20,540

)

 

 

5,717

 

Net cash provided by operating activities

 

 

76,558

 

 

 

53,854

 

 

 

168,951

 

 

 

145,658

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(34,399

)

 

 

(14,343

)

 

 

(110,500

)

 

 

(49,563

)

Acquisition of business, net of cash acquired

 

 

(408,119

)

 

 

 

 

 

(408,119

)

 

 

(19,728

)

Proceeds from sale of marketable securities

 

 

 

 

 

 

 

 

16,175

 

 

 

 

Net cash used in investing activities

 

 

(442,518

)

 

 

(14,343

)

 

 

(502,444

)

 

 

(69,291

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Loans made to related party

 

 

 

 

 

 

 

 

 

 

 

(7,500

)

Repayment Borrowings of senior secured debt, net of deferred financing costs

 

 

(25,000

)

 

 

 

 

 

(25,000

)

 

 

 

Repayment of term loan facility

 

 

245,452

 

 

 

 

 

 

245,452

 

 

 

 

Repayment of senior secured debt

 

 

(743

)

 

 

 

 

 

(743

)

 

 

 

Receipts on related party note receivable

 

 

938

 

 

 

938

 

 

 

2,813

 

 

 

1,875

 

Payments for taxes related to net share settlement of equity awards

 

 

(10,732

)

 

 

(3,036

)

 

 

(24,823

)

 

 

(12,642

)

Proceeds from issuance of common stock under employee stock purchase plan

 

 

 

 

 

 

 

 

1,899

 

 

 

1,573

 

Payment for debt issuance costs

 

 

 

 

 

 

 

 

(1,450

)

 

 

 

Net cash provided by (used in) financing activities

 

 

209,915

 

 

 

(2,098

)

 

 

198,148

 

 

 

(16,694

)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

 

1,349

 

 

 

3,433

 

 

 

375

 

 

 

(5,344

)

Net (decrease) increase in cash and cash equivalents and restricted cash

 

 

(154,696

)

 

 

40,846

 

 

 

(134,970

)

 

 

54,329

 

Cash and cash equivalents and restricted cash at beginning of period

 

 

378,431

 

 

 

303,282

 

 

 

358,705

 

 

 

289,799

 

Cash and cash equivalents and restricted cash at end of period:

 

$

223,735

 

 

$

344,128

 

 

$

223,735

 

 

$

344,128

 

 


Non-GAAP Financial Measures

In addition to the measures presented in our consolidated financial statements, we regularly review other measures, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, non-GAAP Profit before Tax, non-GAAP Provision for Income Tax, non-GAAP Net Income and non-GAAP Basic and Diluted Earnings per Share, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations, and in the case of non-GAAP Provision for Income Tax, management believes that this non-GAAP measure of income taxes provides it with the ability to evaluate the non-GAAP Provision for Income Taxes across different reporting periods on a consistent basis, independent of special items and discrete items, which may vary in size and frequency. These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities.

The Non-GAAP Financial Measures are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges such as those being adjusted in the calculation of these Non-GAAP Financial Measures. Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. These Non-GAAP Financial Measures exclude costs related to acquisition and related integration expenses, amortization of acquired intangible assets, stock-based compensation, restructuring actions, related party activities and other non-operational costs.

Non-GAAP Provision for Income Tax

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

Tax effect of adjustments to GAAP results—Represents the estimated income tax effect of the adjustments to non-GAAP Profit before Tax described below and elimination of discrete tax adjustments.

 

Reconciliation of Non-GAAP Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

September 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

GAAP Gross Profit

 

$

133,828

 

 

$

159,503

 

 

$

142,594

 

 

$

451,281

 

 

$

392,990

 

Non-GAAP adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction-related costs

 

 

523

 

 

 

 

 

 

 

 

 

523

 

 

 

 

Purchased intangible amortization

 

 

3,648

 

 

 

273

 

 

 

589

 

 

 

4,323

 

 

 

1,240

 

Restructuring costs

 

 

166

 

 

 

 

 

 

 

 

 

166

 

 

 

 

Stock-based compensation*

 

 

1,073

 

 

 

946

 

 

 

1,156

 

 

 

4,625

 

 

 

3,112

 

Total Non-GAAP Adjustments

 

$

5,410

 

 

$

1,219

 

 

$

1,745

 

 

$

9,637

 

 

$

4,352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Gross Profit

 

$

139,238

 

 

$

160,722

 

 

$

144,339

 

 

$

460,918

 

 

$

397,342

 

Non-GAAP Gross Margin (% of net sales)

 

 

54.6

%

 

 

58.3

%

 

 

58.0

%

 

 

57.0

%

 

 

56.4

%

*Included in Stock-based compensation is $142 of restructuring costs.


 

Reconciliation of Non-GAAP Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

September 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

GAAP Operating Expenses

 

$

97,142

 

 

$

86,588

 

 

$

76,966

 

 

$

270,934

 

 

$

252,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and Development Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Research and Development Expenses

 

 

44,396

 

 

 

43,428

 

 

 

39,593

 

 

 

130,799

 

 

 

109,017

 

Non-GAAP adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction-related costs

 

 

343

 

 

 

2

 

 

 

1

 

 

 

352

 

 

 

404

 

Restructuring costs

 

 

908

 

 

 

 

 

 

 

 

 

908

 

 

 

 

Stock-based compensation*

 

 

3,870

 

 

 

3,602

 

 

 

3,174

 

 

 

10,340

 

 

 

6,013

 

Non-GAAP Research and Development Expenses

 

 

39,275

 

 

 

39,824

 

 

 

36,418

 

 

 

119,199

 

 

 

102,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General and Administrative Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Selling, General and Administrative Expenses

 

 

52,746

 

 

 

43,160

 

 

 

37,373

 

 

 

140,135

 

 

 

146,470

 

Non-GAAP adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction-related costs

 

 

9,543

 

 

 

1,804

 

 

 

35

 

 

 

14,419

 

 

 

1,695

 

Purchased intangible amortization

 

 

495

 

 

 

357

 

 

 

23

 

 

 

1,210

 

 

 

68

 

Restructuring costs

 

 

5,795

 

 

 

 

 

 

291

 

 

 

5,795

 

 

 

4,663

 

Stock-based compensation*

 

 

5,977

 

 

 

6,329

 

 

 

4,572

 

 

 

17,874

 

 

 

42,117

 

Other costs

 

 

283

 

 

 

100

 

 

 

 

 

 

383

 

 

 

 

Non-GAAP Selling, General and Administrative Expenses

 

 

30,653

 

 

 

34,570

 

 

 

32,452

 

 

 

100,454

 

 

 

97,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,700

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Non-GAAP Adjustments

 

 

27,214

 

 

 

12,194

 

 

 

8,096

 

 

 

51,281

 

 

 

52,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Expenses

 

$

69,928

 

 

$

74,394

 

 

$

68,870

 

 

$

219,653

 

 

$

200,527

 

*Included in Stock-based compensation is $341 of restructuring costs in Research and Development and $172 of restructuring costs in Selling, General and Administrative.

 

Reconciliation of Non-GAAP Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

September 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

GAAP Operating Income

 

$

36,686

 

 

$

72,915

 

 

$

65,628

 

 

$

180,347

 

 

$

140,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction-related costs

 

 

10,409

 

 

 

1,806

 

 

 

36

 

 

 

15,294

 

 

 

(601

)

Purchased intangible amortization

 

 

4,143

 

 

 

630

 

 

 

612

 

 

 

5,533

 

 

 

1,308

 

Restructuring costs

 

 

6,869

 

 

 

 

 

 

291

 

 

 

6,869

 

 

 

4,663

 

Stock-based compensation*

 

 

10,920

 

 

 

10,877

 

 

 

8,902

 

 

 

32,839

 

 

 

51,242

 

Other costs

 

 

283

 

 

 

100

 

 

 

 

 

 

383

 

 

 

 

Total Non-GAAP Adjustments

 

$

32,624

 

 

$

13,413

 

 

$

9,841

 

 

$

60,918

 

 

$

56,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Income

 

$

69,310

 

 

$

86,328

 

 

$

75,469

 

 

$

241,265

 

 

$

196,815

 

Non-GAAP Operating Margin (% of net sales)

 

 

27.2

%

 

 

31.3

%

 

 

30.3

%

 

 

29.8

%

 

 

27.9

%

*Included in Stock-based compensation is $655 of restructuring costs.


Reconciliation of EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

September 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

GAAP Net Income

 

$

33,402

 

 

$

65,671

 

 

$

64,551

 

 

$

159,962

 

 

$

125,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

3,854

 

 

 

758

 

 

 

613

 

 

 

5,381

 

 

 

1,581

 

Interest income

 

 

(857

)

 

 

(850

)

 

 

(360

)

 

 

(2,550

)

 

 

(1,144

)

Income tax provision

 

 

2,969

 

 

 

7,400

 

 

 

7,540

 

 

 

17,584

 

 

 

17,943

 

Depreciation & amortization

 

 

20,227

 

 

 

15,145

 

 

 

12,580

 

 

 

49,645

 

 

 

36,705

 

EBITDA

 

$

59,595

 

 

$

88,124

 

 

$

84,924

 

 

$

230,022

 

 

$

180,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction-related costs

 

 

10,409

 

 

 

1,806

 

 

 

36

 

 

 

15,294

 

 

 

(601

)

Restructuring costs

 

 

6,869

 

 

 

 

 

 

291

 

 

 

6,869

 

 

 

4,663

 

Stock-based compensation*

 

 

10,920

 

 

 

10,877

 

 

 

8,902

 

 

 

32,839

 

 

 

51,242

 

Other costs

 

 

(551

)

 

 

1,301

 

 

 

(6,013

)

 

 

5,339

 

 

 

(2,602

)

Adjusted EBITDA

 

$

87,242

 

 

$

102,108

 

 

$

88,140

 

 

$

290,363

 

 

$

233,269

 

Adjusted EBITDA Margin (% of net sales)

 

 

34.2

%

 

 

37.1

%

 

 

35.4

%

 

 

35.9

%

 

 

33.1

%

*Included in Stock-based compensation is $655 of restructuring costs.

 

Reconciliation of Non-GAAP Profit before Tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

September 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

GAAP Income before Income Taxes

 

$

36,371

 

 

$

73,071

 

 

$

72,091

 

 

$

177,546

 

 

$

143,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction-related costs

 

 

10,409

 

 

 

1,806

 

 

 

36

 

 

 

15,294

 

 

 

(601

)

Transaction-related interest

 

 

162

 

 

 

 

 

 

 

 

 

162

 

 

 

 

Purchased intangible amortization

 

 

4,143

 

 

 

630

 

 

 

612

 

 

 

5,533

 

 

 

1,308

 

Restructuring costs

 

 

6,869

 

 

 

 

 

 

291

 

 

 

6,869

 

 

 

4,663

 

Stock-based compensation*

 

 

10,920

 

 

 

10,877

 

 

 

8,902

 

 

 

32,839

 

 

 

51,242

 

Other costs

 

 

(551

)

 

 

1,301

 

 

 

(6,013

)

 

 

5,339

 

 

 

(2,602

)

Total Non-GAAP Adjustments

 

$

31,952

 

 

$

14,614

 

 

$

3,828

 

 

$

66,036

 

 

$

54,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Profit before Tax

 

$

68,323

 

 

$

87,685

 

 

$

75,919

 

 

$

243,582

 

 

$

197,435

 

*Included in Stock-based compensation is $655 of restructuring costs.

 

Reconciliation of Non-GAAP Provision for Income Taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Month Period Ended

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

September 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

 

(Dollars in thousands)

 

 

(Dollars in thousands)

 

GAAP Income Tax Provision

 

$

2,969

 

 

$

7,400

 

 

$

7,540

 

 

$

17,584

 

 

$

17,943

 

GAAP effective tax rate

 

 

8.2

%

 

 

10.1

%

 

 

10.5

%

 

 

9.9

%

 

 

12.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of adjustments to GAAP results

 

 

3,748

 

 

 

2,554

 

 

 

(461