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 December 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 February 2, 2024, the registrant had 193,125,832 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 (Unaudited)

3

 

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

3

 

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

4

 

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

5

 

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

6

 

Condensed Consolidated Statements of Cash Flows for the nine-month periods ended December 29, 2023 and December 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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II.

Other Information

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

Item 5.

Other Information

32

Item 6.

Exhibits

33

 

Signatures

34

 

 


 

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 (Unaudited)

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share amounts)

(Unaudited)

 

 

December 29,
2023

 

 

March 31,
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

 

Operating lease right-of-use assets

 

 

21,620

 

 

 

16,866

 

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

 

 

48,936

 

 

 

69,230

 

Total assets

 

$

1,565,301

 

 

$

1,181,155

 

Liabilities, Non-Controlling Interests and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

37,633

 

 

$

56,256

 

Amounts due to related party

 

 

3,158

 

 

 

9,682

 

Accrued expenses and other current liabilities

 

 

69,951

 

 

 

94,894

 

Current portion of operating lease liabilities

 

 

5,486

 

 

 

4,493

 

Current portion of long-term debt

 

 

3,959

 

 

 

 

Total current liabilities

 

 

120,187

 

 

 

165,325

 

Long-term debt

 

 

250,464

 

 

 

25,000

 

Operating lease liabilities, less current portion

 

 

16,321

 

 

 

13,048

 

Deferred income tax liabilities

 

 

27,740

 

 

 

 

Other long-term liabilities

 

 

15,103

 

 

 

10,967

 

Total liabilities

 

 

429,815

 

 

 

214,340

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

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, 193,047,658 shares issued and outstanding at December 29, 2023; 1,000,000,000 shares authorized, 191,754,292 issued and outstanding at March 31, 2023

 

 

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

 

 

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

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

Net sales

 

$

254,984

 

 

$

203,672

 

 

$

802,625

 

 

$

572,356

 

Net sales to related party

 

 

 

 

 

45,117

 

 

 

6,161

 

 

 

131,852

 

Total net sales

 

 

254,984

 

 

 

248,789

 

 

 

808,786

 

 

 

704,208

 

Cost of goods sold

 

 

121,156

 

 

 

84,776

 

 

 

354,561

 

 

 

247,805

 

Cost of goods sold to related party

 

 

 

 

 

21,419

 

 

 

2,944

 

 

 

63,413

 

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

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,854

)

 

 

(613

)

 

 

(5,381

)

 

 

(1,581

)

Interest income

 

 

857

 

 

 

360

 

 

 

2,550

 

 

 

1,144

 

Other income (expense), net

 

 

2,682

 

 

 

6,716

 

 

 

30

 

 

 

3,659

 

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

 

 

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

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

December 23,
2022

 

 

December 29,
2023

 

 

December 23,
2022

 

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

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax

 

 

3,618

 

 

 

8,303

 

 

 

(1,188

)

 

 

(6,414

)

Comprehensive income

 

 

36,963

 

 

 

72,822

 

 

 

158,624

 

 

 

118,966

 

Other comprehensive gain attributable to non-controlling interests

 

 

2

 

 

 

(56

)

 

 

83

 

 

 

81

 

Comprehensive income attributable to Allegro MicroSystems,
   Inc.

 

$

36,965

 

 

$

72,766

 

 

$

158,707

 

 

$

119,047

 

 

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 September 23, 2022

 

 

 

 

$

 

 

 

191,308,141

 

 

$

1,913

 

 

$

662,082

 

 

$

183,819

 

 

$

(33,028

)

 

$

1,089

 

 

$

815,875

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64,519

 

 

 

 

 

 

32

 

 

 

64,551

 

Stock-based compensation, net of forfeitures and restricted stock vested

 

 

 

 

 

 

 

 

127,728

 

 

 

1

 

 

 

8,862

 

 

 

 

 

 

 

 

 

 

 

 

8,863

 

Payments of taxes withheld on net settlement of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,036

)

 

 

 

 

 

 

 

 

 

 

 

(3,036

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,247

 

 

 

56

 

 

 

8,303

 

Balance at December 23, 2022

 

 

 

 

$

 

 

 

191,435,869

 

 

$

1,914

 

 

$

667,908

 

 

$

248,338

 

 

$

(24,781

)

 

$

1,177

 

 

$

894,556

 

 

 

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 September 29, 2023

 

 

 

 

$

 

 

 

192,469,731

 

 

$

1,925

 

 

$

683,891

 

 

$

436,782

 

 

$

(25,509

)

 

$

1,199

 

 

$

1,098,288

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,345

 

 

 

 

 

 

57

 

 

 

33,402

 

Stock-based compensation, net of forfeitures and restricted stock vested

 

 

 

 

 

 

 

 

577,927

 

 

 

6

 

 

 

10,904

 

 

 

 

 

 

 

 

 

 

 

 

10,910

 

Payments of taxes withheld on net settlement of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,732

)

 

 

 

 

 

 

 

 

 

 

 

(10,732

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,620

 

 

 

(2

)

 

 

3,618

 

Balance at December 29, 2023

 

 

 

 

$

 

 

 

193,047,658

 

 

$

1,931

 

 

$

684,063

 

 

$

470,127

 

 

$

(21,889

)

 

$

1,254

 

 

$

1,135,486

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125,380

 

 

 

 

 

 

102

 

 

 

125,482

 

Employee stock purchase plan issuances

 

 

 

 

 

 

 

 

89,454

 

 

 

1

 

 

 

1,572

 

 

 

 

 

 

 

 

 

 

 

 

1,573

 

Stock-based compensation, net of forfeitures and restricted stock vested

 

 

 

 

 

 

 

 

872,820

 

 

 

8

 

 

 

51,186

 

 

 

 

 

 

 

 

 

 

 

 

51,194

 

Payments of taxes withheld on net settlement of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,642

)

 

 

 

 

 

 

 

 

 

 

 

(12,642

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,333

)

 

 

(81

)

 

 

(6,414

)

Balance at December 23, 2022

 

 

 

 

$

 

 

 

191,435,869

 

 

$

1,914

 

 

$

667,908

 

 

$

248,338

 

 

$

(24,781

)

 

$

1,177

 

 

$

894,556

 

 

 

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 31, 2023

 

 

 

 

$

 

 

 

191,754,292

 

 

$

1,918

 

 

$

674,179

 

 

$

310,315

 

 

$

(20,784

)

 

$

1,187

 

 

$

966,815

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

159,812

 

 

 

 

 

 

150

 

 

 

159,962

 

Employee stock purchase plan issuances

 

 

 

 

 

 

 

 

76,204

 

 

 

1

 

 

 

1,898

 

 

 

 

 

 

 

 

 

 

 

 

1,899

 

Stock-based compensation, net of forfeitures and restricted stock vested

 

 

 

 

 

 

 

 

1,217,162

 

 

 

12

 

 

 

32,809

 

 

 

 

 

 

 

 

 

 

 

 

32,821

 

Payments of taxes withheld on net settlement of equity awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,823

)

 

 

 

 

 

 

 

 

 

 

 

(24,823

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,105

)

 

 

(83

)

 

 

(1,188

)

Balance at December 29, 2023

 

 

 

 

$

 

 

 

193,047,658

 

 

$

1,931

 

 

$

684,063

 

 

$

470,127

 

 

$

(21,889

)

 

$

1,254

 

 

$

1,135,486

 

 

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

7


 

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

Nine-Month Period Ended

 

 

December 29,
2023

 

 

December 23,
2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

159,962

 

 

$

125,482

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

49,548

 

 

 

36,705

 

Amortization of deferred financing costs

 

 

292

 

 

 

74

 

Deferred income taxes

 

 

(28,253

)

 

 

(28,387

)

Stock-based compensation

 

 

32,839

 

 

 

51,242

 

Loss on disposal of assets

 

 

18

 

 

 

287

 

Change in fair value of contingent consideration

 

 

 

 

 

(2,700

)

Provisions for inventory and expected credit losses

 

 

9,851

 

 

 

1,744

 

Change in fair value of marketable securities

 

 

3,579

 

 

 

5

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Trade accounts receivable

 

 

(2,564

)

 

 

(5,894

)

Accounts receivable - other

 

 

(462

)

 

 

2,000

 

Inventories

 

 

(19,909

)

 

 

(39,136

)

Prepaid expenses and other assets

 

 

(12,623

)

 

 

(17,761

)

Trade accounts payable

 

 

(9,604

)

 

 

19,553

 

Due to (from) related party

 

 

6,817

 

 

 

(3,273

)

Accrued expenses and other current and long-term liabilities

 

 

(20,540

)

 

 

5,717

 

Net cash provided by operating activities

 

 

168,951

 

 

 

145,658

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(110,500

)

 

 

(49,563

)

Acquisition of business, net of cash acquired

 

 

(408,119

)

 

 

(19,728

)

Proceeds from sales of marketable securities

 

 

16,175

 

 

 

 

Net cash used in investing activities

 

 

(502,444

)

 

 

(69,291

)

Cash flow from financing activities:

 

 

 

 

 

 

Loans made to related party

 

 

 

 

 

(7,500

)

Borrowings of senior secured debt, net of deferred financing costs

 

 

245,452

 

 

 

 

Repayment of term loan facility

 

 

(25,000

)

 

 

 

Repayment of other debt

 

 

(743

)

 

 

 

Receipts on related party note receivable

 

 

2,813

 

 

 

1,875

 

Payments for taxes related to net share settlement of equity awards

 

 

(24,823

)

 

 

(12,642

)

Proceeds from issuance of common stock under employee stock purchase plan

 

 

1,899

 

 

 

1,573

 

Payments for debt issuance costs

 

 

(1,450

)

 

 

 

Net cash provided by (used in) financing activities

 

 

198,148

 

 

 

(16,694

)

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

 

 

375

 

 

 

(5,344

)

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

 

 

(134,970

)

 

 

54,329

 

Cash and cash equivalents and restricted cash at beginning of period

 

 

358,705

 

 

 

289,799

 

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

 

$

223,735

 

 

$

344,128

 

 

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

8


 

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 the automotive and industrial markets. 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 (“U.S. GAAP”) and have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The unaudited condensed consolidated financial statements include the Company’s accounts and those of its subsidiaries. All intercompany 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 31, 2023. 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 third quarter three-month period is a 13-week period. The Company’s third quarter of fiscal 2024 ended December 29, 2023, and the Company’s third quarter of fiscal 2023 ended December 23, 2022.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. 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 unaudited condensed consolidated financial statements and the reported amounts of net sales and expenses during the reporting period. Such estimates relate to useful lives of fixed and intangible assets, provisions for expected credit losses and customer returns and sales allowances. Such estimates also relate to accrued liabilities, the valuation of stock-based awards, deferred tax valuation allowances, the net realizable value of inventory, and other reserves. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates, and such differences may be material to the unaudited condensed consolidated financial statements.

Reclassifications

Certain reclassifications have been made to prior-period amounts to conform to current-period reporting classifications.

Concentrations of Credit Risk

As of December 29, 2023, two customers accounted for 24.3% of the Company’s outstanding trade accounts receivable, net. No other customers accounted for 10% or more of outstanding trade accounts receivable, net as of such dates. As of March 31, 2023, Sanken Electric Co., Ltd. (“Sanken”) and another customer accounted for 10.6% and 17.3%, respectively, of the Company’s outstanding trade accounts receivable, net, including related party trade accounts receivable.

For the nine-month period ended December 29, 2023, one customer accounted for 11.0% of total net sales. For the three- and nine-month periods ended December 23, 2022, Sanken accounted for 18.1% and 18.7% of total net sales, respectively. No other customers accounted for 10% or more of total net sales for either of the three- or nine-month periods ended December 23, 2022 or for the three-month period ended December 29, 2023.

9


ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Recent Accounting Pronouncements

In December 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. 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 jurisdictions. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The ASU 2023-09 should be applied prospectively, but entities have the option to apply it retrospectively for each period presented. The Company is currently evaluating the impact of adopting this guidance.

In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provided temporary relief when transitioning from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) or another applicable rate during the original transition period ending on December 31, 2022. In March 2021, the UK Financial Conduct Authority announced that the intended cessation date of the overnight 1-, 3-, 6-, and 12-month tenors of U.S. dollar LIBOR would be June 30, 2023, which was beyond the current sunset date of Topic 848. In light of this development, the FASB issued this update to defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The adoption of this new guidance did not have a material impact on the Company’s financial position, results of operations, cash flows, or related disclosures.

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 application, by product and by geography for the three- and nine-month periods ended December 29, 2023 and December 23, 2022. The categorization of net sales by application 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.