Allegro MicroSystems Reports Fourth Quarter Record Revenue and Accelerating Profits

5/5/2021, 2:00 PM (Source: GlobeNewswire)

MANCHESTER, N.H., May 05, 2021 (GLOBE NEWSWIRE) -- 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 fourth fiscal quarter and fiscal year ended March 26, 2021. Record fourth quarter total net sales of $175.1 million for the three-month period exceeded expectations in the fourth quarter and resulted in fiscal year total net sales of $591.2 million. Profitability also exceeded expectations, with improvements in both gross margin and operating income resulting in significant earnings per share growth on both a GAAP and non-GAAP basis sequentially.

Quarter Highlights:

  • Total net sales of $175.1 million was up 6.5% sequentially and on a non-GAAP basis, core end markets grew 22.3% from the same period in fiscal 2020.
  • Automotive and Industrial net sales for the quarter grew 12.3% and 30.7%, respectively, from the same period in fiscal 2020.
  • Gross margin on a GAAP basis was 49.7% and 50.9% on a Non-GAAP basis.
  • Operating margin on a GAAP basis was 11.1% and increased to 19.7% on a non-GAAP basis.
  • GAAP earnings per diluted share was $0.05, up $0.09 sequentially. Non-GAAP earnings per diluted share was $0.15, up $0.02, growing 15.4% sequentially.

“Our strong performance in the fourth quarter was driven by accelerating revenue in our target markets and increased profitability resulting from continued progress toward our manufacturing transformation,” said Ravi Vig, President and CEO of Allegro MicroSystems. “I am pleased with our design win momentum, which has yielded market share gains and is a testament to our industry-leading technologies and alignment with growing markets like vehicle electrification and data centers. We believe our strengthening fundamentals and resilient manufacturing model give us a solid foundation for long-term out-performance of our end markets.”

Business Summary

Record automotive net sales were up 4% sequentially during the fourth fiscal quarter driven by strong global automotive demand and a favorable vehicle production mix, despite supply chain constraints. Shifts to higher value features on automotive platforms are driving increased demand for Allegro products in ADAS and comfort and convenience systems. Automotive net sales grew 1% for the full year, outpacing an 8% reduction in global car production.

Industrial net sales in the fourth quarter exceeded expectations and were up 23% sequentially and up 21% for the full year, reaching new record highs. Growth was driven by data center, building and factory automation, and green energy applications. All three categories were up double-digits sequentially.

Business Outlook

For the first fiscal quarter ending June 25, 2021, the Company expects total net sales to be in the range of $176 million to $179 million. Non-GAAP gross margin is expected to be about 51.0% and non-GAAP earnings per fully-diluted share for the same period is expected to be in the range of $0.15 to $0.17.

Allegro has not provided a reconciliation of its first fiscal quarter outlook for non-GAAP gross margin and non-GAAP earnings per fully-diluted 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 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 Wednesday, May 5, 2021 at 8:30 a.m. Eastern time. Ravi Vig, Chief Executive Officer and Paul Walsh, Chief Financial Officer, will discuss Allegro’s 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 30 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 green energy applications.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding the expected benefits resulting from our acquisition of Voxtel and our expected financial performance for our first fiscal quarter ending June 25, 2021. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” “target,” “mission,” “may,” “will,” “would,” “should,” “could,” “target,” “potential,” “project,” “predict,” “contemplate,” “potential,” or the negative thereof and similar words and expressions.

Forward-looking statements are based on management’s current expectations, beliefs and assumptions and on information currently available to us. Such 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 important factors, including, but 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 with intense competition, expand our market share and increase our profitability; our ability to compensate for decreases in average selling prices of our products; the cyclical nature of the analog semiconductor industry; 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 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 dependence on manufacturing operations in the Philippines; changes in government trade policies, including the imposition of tariffs and export restrictions; and our ability to protect our proprietary technology and inventions through patents or trade secrets; and other important factors discussed under the caption “Risk Factors” in our final prospectus on Form 424(b) filed with the U.S. Securities and Exchange Commission (“SEC”) on February 8, 2021, as any such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investors & Media page of our website at investors.allegromicro.com.

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 contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

ALLEGRO MICROSYSTEMS, INC.
Consolidated Statements of Operations

(in thousands, except share and per share amounts)

 Three-Month Period Ended Fiscal Year Ended
 (Unaudited) (Unaudited) (Unaudited)  
 March 26,
2021
 March 27,
2020
 March 26,
2021
 March 27,
2020
Net sales$143,017  $121,997  $486,546  $465,532 
Net sales to related party32,091  52,607  104,661  184,557 
Total net sales175,108  174,604  591,207  650,089 
Cost of goods sold88,102  102,846  312,305  388,813 
Gross profit87,006  71,758  278,902  261,276 
Operating expenses:       
Research and development28,140  24,487  108,649  102,052 
Selling, general and administrative34,799  28,366  153,476  106,396 
Impairment of long-lived assets7,119    7,119   
Change in fair value of contingent consideration(2,500)   (2,500)  
Total operating expenses67,558  52,853  266,744  208,448 
Operating (loss) income19,448  18,905  12,158  52,828 
Other (expense) income:       
Loss on debt extinguishment    (9,055)  
Interest expense, net(668) (50) (2,603) (110)
Foreign currency transaction (loss) gain(1,558) (1,409) (2,889) 1,391 
Income in earnings of equity investment6    1,413   
Other, net(178 346  (475) (831)
Income (loss) before income taxes17,050  17,792  (1,451) 53,278 
Income tax provision (benefit)8,361  4,463  (19,552) 16,173 
Net  income8,689  13,329  18,101  37,105 
Net income attributable to non-controlling interests45  33  148  134 
Net income attributable to Allegro MicroSystems, Inc.$8,644  $13,296  $17,953  $36,971 
Net income attributable to Allegro MicroSystems, Inc. per share:       
Basic$0.05  $1.33  $0.22  $3.70 
Diluted$0.05  $1.33  $0.10  $3.70 
Weighted average shares outstanding:       
Basic189,429,893  10,000,000  83,448,055  10,000,000 
Diluted190,860,556  10,000,000  176,416,645  10,000,000 
            

Supplemental Schedule of Total Net Sales

The following table summarizes net sales by core end market and other applications. Other applications include sales of wafer foundry products and from the distribution of Sanken products unrelated to and no longer part of the Company’s business in fiscal year 2021.

 Three-Month Period Ended
 Change
 Fiscal Year Ended
 Change
 March 26,
2021
 March 27,
2020
 Amount 
%
 March 26,
2021
 March 27,
2020
 Amount 
%
  
 (Dollars in thousands)
Core end markets:                     
Automotive$118,539  $105,596  $12,943   12.3% $398,298  $395,277  $3,021   0.8%
Industrial 29,162   22,304  6,858   30.7%  94,872   78,399  16,473   21.0%
Other 27,407   15,223  12,184   80.0%  98,037   68,622  29,415   42.9%
Total core end markets 175,108   143,123  31,985   22.3%  591,207   542,298  48,909   9.0%
Other applications:                             
Wafer foundry products    22,748  (22,748)  (100.0)%     72,370  (72,370)  (100.0)%
Distribution of Sanken products    8,733  (8,733)  (100.0)%     35,421  (35,421)  (100.0)%
Total net sales$175,108  $174,604  $504   0.3% $591,207  $650,089  $(58,882)  (9.1)%
                      

Supplemental Schedule of Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its unaudited consolidated statements of income:

 Three-Month Period Ended Fiscal Year Ended
(In thousands)March 26,
2021
 March 27,
2020
 March 26,
2021
 March 27,
2020
Cost of sales$314  $46  $5,158  $183 
Research and development536  22  3,573  87 
Selling, general and administrative2,119  316  41,139  1,165 
Total stock-based compensation$2,969  $384  $49,870  $1,435 
                

Supplemental Schedule of Acquisition Related Intangible Amortization Costs

The Company recorded intangible amortization expense related to its acquisition of Voxtel in the following expense categories of its unaudited consolidated statements of income:

 Three-Month Period Ended Fiscal Year Ended
(In thousands)March 26,
2021
 March 27,
2020
 March 26,
2021
 March 27,
2020
Cost of sales$273  $   651    
Selling, general and administrative37    117   
Total intangible amortization$310  $  $768  $ 
                

ALLEGRO MICROSYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

 (Unaudited)  
 March 26, 2021  March 27, 2020
Assets   
Current assets:   
Cash and cash equivalents$197,214  $214,491 
Restricted cash6,661  5,385 
Trade accounts receivable, net of allowances of doubtful accounts of $138 and $288 at March 26, 2021 and March 27, 2020, respectively69,500  59,457 
Trade and other accounts receivable due from related party23,832  30,851 
Accounts receivable - other1,516  1,796 
Inventories87,498  127,227 
Prepaid expenses and other current assets18,374  9,014 
Assets held for sale25,969   
Total current assets430,564  448,221 
Property, plant and equipment, net192,393  332,330 
Deferred income tax assets26,972  7,217 
Goodwill20,106  1,285 
Intangible assets, net36,366  19,958 
Equity investment in related party26,664   
Other assets, net14,613  8,810 
Total assets$747,678  $817,821 
Liabilities, Non-Controlling Interest and Stockholders' Equity   
Current liabilities:   
Trade accounts payable$35,389  $20,762 
Amounts due to related party2,353  4,494 
Accrued expenses and other current liabilities78,932  56,855 
Current portion of related party debt  25,000 
Bank lines-of-credit  43,000 
Total current liabilities116,674  150,111 
Obligations due under Senior Secured Credit Facilities, less current portion25,000   
Related party notes payable, less current portion  17,700 
Other long-term liabilities19,133  15,878 
Total liabilities160,807  183,689 
Commitments and contingencies   
Stockholders' Equity:   
Preferred Stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding at March 26, 2021 and March 27, 2020   
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 189,588,161 shares issued and outstanding at March 26, 2021; no shares authorized, issued or outstanding at March 27, 20201,896   
Class A, $0.01 par value; No shares authorized, issued or outstanding at March 26, 2021; 12,500,000 shares authorized; 10,000,000 shares issued and outstanding at March 27, 2020  100 
Class L, $0.01 par value; No shares authorized, issued or outstanding at March 26, 2021; 1,000,000 shares authorized; 622,470 shares issued and outstanding at March 27, 2020  6 
Additional paid-in capital592,170  458,697 
Retained earnings3,551  194,355 
Accumulated other comprehensive loss(11,865) (19,976)
Equity attributable to Allegro MicroSystems, Inc.585,752  633,182 
Non-controlling interests1,119  950 
Total stockholders' equity586,871  634,132 
Total liabilities, non-controlling interest and stockholders' equity$747,678  $817,821 
        

ALLEGRO MICROSYSTEMS, INC.
Consolidated Statements of Cash Flows
(in thousands)

 Fiscal Year Ended
 (Unaudited)  
 March 26,
2021
 March 27,
2020
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income$18,101  $37,105 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization48,307  64,048 
Amortization of debt issuance costs226   
Deferred income taxes(18,930) (4,909)
Stock-based compensation49,870  1,435 
Loss on disposal of assets269  698 
Loss on debt extinguishment9,055   
Gain on contingent consideration change in fair value(2,500)  
Impairment on assets held for sale7,119   
Provisions for inventory and bad debt5,019  3,891 
Changes in operating assets and liabilities:   
Trade accounts receivable(9,303) 16,441 
Accounts receivable - other(28) 346 
Inventories7,641  346 
Prepaid expenses and other assets(29,048) 2,629 
Trade accounts payable15,099  (3,122)
Due from/to related parties4,878  (23,946)
Accrued expenses and other current and long-term liabilities14,795  (13,543)
Net cash provided by operating activities120,570  81,419 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Purchases of property, plant and equipment(40,673) (45,615)
Acquisition of business, net of cash acquired(11,555)  
Proceeds from sales of property, plant and equipment318  3,936 
Disposal of cash balances of subsidiary(16,335)  
Net cash used in investing activities(68,245) (41,679)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Related party note receivable51,377  30,000 
Proceeds from initial public offering, net of underwriting discounts and other offering costs321,425   
Payments for taxes related to net share settlement of equity awards(27,707)  
Dividends paid(400,000)  
Borrowings of senior secured debt, net of deferred financing costs315,719  43,000 
Repayment of senior secured debt(300,000)  
Repayment of unsecured credit facilities(33,000)  
Capital contribution  9,500 
Net cash (used) provided by financing activities(72,186) 82,500 
Effect of exchange rate changes on Cash and cash equivalents and Restricted cash3,860  (5,621)
Net (decrease) increase in Cash and cash equivalents and Restricted cash(16,001) 116,619 
Cash and cash equivalents and Restricted cash at beginning of period219,876  103,257 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD$203,875  $219,876 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:   
Cash and cash equivalents at beginning of period$214,491  $99,743 
Restricted cash at beginning of period5,385  3,514 
Cash and cash equivalents and Restricted cash at beginning of period$219,876  $103,257 
Cash and cash equivalents at end of period197,214  214,491 
Restricted cash at end of period6,661  5,385 
Cash and cash equivalents and Restricted cash at end of period$203,875  $219,876 
        

Consolidated Statements of Cash Flows (cont.)
(in thousands)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:   
Cash paid for interest$2,746  $2,448 
Cash paid for income taxes$8,908  $15,873 
Non-cash transactions:   
Changes in Trade accounts payable related to Property, plant and equipment, net$(3,226) $(1,542)
Assets held for sale transferred from property, plant and equipment, net$25,969  $ 
Loans to cover purchase of common stock under employee stock plan$171  $232 
        

Non-GAAP Financial Measures

In addition to the measures presented in our consolidated financial statements, we regularly review other metrics, 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 metrics 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, non-GAAP Net Income 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. By presenting these Non-GAAP Financial Measures, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance, and we believe that investors’ understanding of our performance is enhanced by our presenting these Non-GAAP Financial Measures, as they provide a reasonable basis for comparing our ongoing results of operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management and the investment community with valuable insight into matters such as: our ongoing core operations, our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance. 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. In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude certain cash charges as a means of more accurately predicting our liquidity requirements. We believe that these Non-GAAP Financial Measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.

These Non-GAAP Financial Measures have significant limitations as analytical tools. Some of these limitations are that:

  • such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
  • such measures exclude certain costs which are important in analyzing our GAAP results;
  • such measures do not reflect changes in, or cash requirements for, our working capital needs;
  • such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
  • such measures do not reflect our tax expense or the cash requirements to pay our taxes; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future;
  • such measures do not reflect any cash requirements for such replacements; and
  • other companies in our industry may calculate such measures differently than we do, thereby further limiting their usefulness as comparative measures.

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 added back 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.

Our prior disclosure referred to non-GAAP Gross Profit and non-GAAP Gross Margin as Adjusted Gross Profit and Adjusted Gross Margin, respectively. No changes have been made to how we calculate these measures.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We calculate non-GAAP Gross Profit and non-GAAP Gross Margin excluding the items below from cost of goods sold in applicable periods and we calculate non-GAAP Gross Margin as non-GAAP Gross Profit divided by total net sales.

  • PSL and Sanken Distribution Agreement - Represents the elimination of inventory cost amortization and foundry service payment related to one-time costs incurred in connection with the disposition of Polar Semiconductor, LLC (“PSL”) during the fiscal year ended March 26, 2021 (the “PSL Divestiture”).
  • Stock-based compensation - Represents non-cash expenses arising from the grant of stock-based awards.
  • AMTC Facility consolidation one-time costs - Represents one-time costs incurred in connection with closing of our manufacturing facility in Thailand (the “AMTC Facility”) and transitioning of test and assembly functions to our manufacturing facility in the Philippines (the “AMPI Facility”) announced in fiscal year 2020 consisting of: moving equipment between facilities, contract terminations and other non-recurring charges. The closure and transition of the AMTC Facility was substantially completed as of the end of March 2021. These costs are in addition to, and not duplicative of, the adjustments noted in note (*) below.
  • Amortization of acquisition-related intangible assets - Represents non-cash expenses associated with the amortization of intangible assets in connection with the acquisition of Voxtel, Inc., which closed in August 2020.
  • COVID-19 related expenses - Represents expenses attributable to the COVID-19 pandemic primarily related to increased purchases of masks, gloves and other protective materials, and overtime premium compensation paid for maintaining 24-hour service at the AMPI Facility.

(*) Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin in this release do not include adjustments consisting of:

  • Additional AMTC related costs - Represents costs relating to the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility in the Philippines announced in fiscal year 2020 consisting of: the net savings expected to result from the movement of work to the AMPI Facility, which facility had duplicative capacity based on the buildouts of the AMPI Facility in fiscal years 2019 and 2018. The elimination of these costs did not reduce our production capacity and therefore did not have direct effects on our ability to generate revenue. The closure and transition of the AMTC Facility was substantially completed as of the end of March 2021.
  • Out of period adjustment for depreciation expense of giant magnetoresistance assets (“GMR assets”) - Represents a one-time depreciation expense related to the correction of an immaterial error, related to 2017, for certain manufacturing assets that have reached the end of their useful lives.

Non-GAAP Operating Expenses, non-GAAP Operating Income and non-GAAP Operating Margin

We calculate non-GAAP Operating Expenses and non-GAAP Operating Income excluding the same items excluded above to the extent they are classified as operating expenses, and also excluding the items below in applicable periods. We calculate non-GAAP Operating Margin as non-GAAP Operating Income divided by total net sales.

  • Transaction fees - Represents transaction-related legal and consulting fees incurred primarily in connection with (i) the unsuccessful acquisition of a competitor in fiscal year 2019, (ii) the acquisition of Voxtel, Inc. in fiscal year 2020, and (iii) the PSL Divestiture and the transfer of the Sanken products distribution business to PSL in fiscal year 2020, and (iv) one-time transaction-related legal and consulting fees in fiscal 2021.
  • Severance - Represents severance costs associated with (i) labor savings initiatives to manage overall compensation expense as a result of the declining sales volume during the applicable period, including a voluntary separation incentive payment plan for employees near retirement and a reduction in force and (ii) the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility announced and initiated in fiscal year 2020.
  • Impairment of long-lived assets – Represents impairment charge incurred in connection with the planned sale of the AMTC Facility.
  • Change in fair value of contingent consideration – Represents the change in fair value of contingent consideration payable in connection with the acquisition of Voxtel, Inc.

(**) Non-GAAP Operating Income in this release does not include adjustments consisting of those set forth in note (*) to the calculation of non-GAAP Gross Profit, and the corresponding calculation of non-GAAP Gross Margin, above or:

  • Labor savings - Represents salary and benefit costs related to employees whose positions were eliminated through voluntary separation programs or other reductions in force (not associated with the closure of the AMTC Facility or any other plant or facility) and a restructuring of overhead positions from high-cost to low-cost jurisdictions net of costs for newly hired employees in connection with such restructuring.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin
We calculate EBITDA as net income minus interest income (expense), tax provision (benefit), and depreciation and amortization expenses. We calculate Adjusted EBITDA as EBITDA excluding the same items excluded above and also excluding the items below in applicable periods, We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total net sales.

  • Non-core loss (gain) on sale of equipment - Represents non-core miscellaneous losses and gains on the sale of equipment.
  • Miscellaneous legal judgment charge – Represents a one-time charge associated with the final payment of the previously accrued amount payable with respect to a VAT dispute related to the construction of the AMPI Facility.
  • Loss on debt extinguishment – Represents one-time costs representing deferred financing costs associated with the $300.0 million of our term loan facility repaid during the year ended March 26, 2021.
  • Foreign currency translation loss (gain) - Represents losses and gains resulting from the remeasurement and settlement of intercompany debt and operational transactions, as well as transactions with external customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.
  • Income in earnings of equity investment - Represents our equity method investment in PSL.
  • Inventory cost amortization - Represents intercompany inventory transactions incurred from purchases made from PSL in fiscal year 2020. Such costs are one-time incurred expenses impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs are not expected to have a continuing impact on our operating results after our second fiscal quarter of fiscal year 2021.
  • Foundry service payment - Represents foundry service payments incurred under our Price Support Agreement with PSL in respect to the guaranteed capacity at PSL to support our production forecast and are one-time costs incurred impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs are not expected to have a continuing impact on our operating results after fiscal year 2021.

Non-GAAP Profit before Tax and Non-GAAP Net Income

We calculate non-GAAP Profit before Tax as Profit before Tax excluding the same items excluded above and also excluding the item below in applicable periods. We calculate non-GAAP Net Income as Net Income excluding the same items excluded above and also excluding the item below in applicable periods.

  • Interest on repaid portion of term loan facility – Represents interest expense associated with the $300.0 million of our term loan facility repaid during the period.

Non-GAAP Provision for Income Tax

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

  • Tax effect of adjustments to GAAP results - Represents the estimated income tax effect of the adjustments to non-GAAP Profit Before Tax described above and elimination of discrete tax adjustments.
  Three-Month Period Ended Fiscal Year Ended
  March 26,
2021
 December 25,
2020
 March 27,
2020
 March 26,
2021
 March 27,
2020
   
  (Dollars in thousands)
Reconciliation of Gross Profit           
           
GAAP Gross Profit  $87,006  $74,425  $71,758  $278,902  $261,276 
           
PSL and Sanken distribution agreement 930  1,500    8,628   
Stock-based compensation 314  4,694  46  5,158  183 
AMTC facility consolidation one-time costs 625  607    2,184   
Amortization of acquisition-related intangible assets 273  273    651   
COVID-19 related expenses 64  65    202   
Total Non-GAAP Adjustments 2,206  7,139  46  16,823  183 
           
Non-GAAP gross profit*  89,212  81,564  71,804  295,725  261,459 
Non-GAAP gross margin  50.9% 49.6% 41.1% 50.0% 40.2%


*Non-GAAP Gross Profit and the corresponding calculation of  non-GAAP Gross Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $—, $1,198, and $2,290 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and (ii) additional AMTC related costs of $6,553 and $9,361 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.
  


  Three-Month Period Ended Fiscal Year Ended
  March 26,
2021
 December 25,
2020
 March 27,
2020
 March 26,
2021
 March 27,
2020
   
  (Dollars in thousands)
Reconciliation of Operating Expenses           
           
GAAP Operating Expenses  $67,558  $98,649  $52,853  $266,744  $208,448 
           
Research and Development Expenses          
GAAP Research and Development Expenses 28,140  30,999  24,487  108,649  102,052 
Stock-based compensation 536  2,984  22  3,573  87 
AMTC facility consolidation one-time costs   1    2   
COVID-19 related expenses 8  32    100   
Transaction fees       18   
Non-GAAP Research and Development Expenses 27,596  27,982  24,465  104,956  101,965 
           
Selling, General and Administrative Expenses          
GAAP Selling, General and Administrative Expenses 34,799  67,650  28,366  153,476  106,396 
Stock-based compensation 2,119  38,198  316  41,139  1,165 
AMTC facility consolidation one-time costs 1,488  1,620    5,626   
Amortization of acquisition-related intangible assets 37  71    117   
COVID-19 related expenses 250  338  581  4,926  581 
Transaction fees 3,727  1,729  2,553  7,426  6,335 
Severance   (181) 3,263  156  6,415 
Non-GAAP Selling, General and Administrative  Expenses 27,178  25,875  21,653  94,086  91,900 
           
Impairment of long-lived assets 7,119      7,119   
Change in fair value of contingent consideration (2,500)     (2,500)  
           
Total Non-GAAP Adjustments 12,784  44,792  6,735  67,702  14,583 
           
Non-GAAP operating expenses * $54,774  $53,857  $46,118  $199,042  $193,865 


*Non-GAAP Operating Expenses do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $—, $19, and $2,621 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and (ii) additional AMTC related  costs of $723 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.
  


  Three-Month Period Ended
 Fiscal Year Ended
  March 26,
2021
 December 25,
2020
 March 27,
2020
 March 26,
2021
 March 27,
2020
   
  (Dollars in thousands)
Reconciliation of Operating Income                
                
GAAP Operating Income (Loss) $19,448  $(24,224) $18,905  $12,158  $52,828 
                
PSL and Sanken distribution agreement 930  1,500    8,628   
Stock-based compensation 2,969  45,876  384  49,870  1,435 
AMTC facility consolidation one-time costs 2,113  2,228    7,812   
Amortization of acquisition-related intangible assets 310  344    768   
COVID-19 related expenses 322  435  581  5,228  581 
Impairment of long-lived assets 7,119      7,119   
Change in fair value of contingent consideration (2,500)     (2,500)  
Transaction fees 3,727  1,729  2,553  7,444  6,335 
Severance   (181) 3,263  156  6,415 
Total Non-GAAP Adjustments $14,990  $51,931  $6,781  $84,525  $14,766 
                
Non-GAAP Operating Income * $34,438  $27,707  $25,686  $96,683  $67,594 
% of net sales  19.7% 16.8% 14.7% 16.4% 10.4%


*Non-GAAP Operating Income and the corresponding calculation of non-GAAP Operating Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $—, $1,217, and $4,911 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and (ii) additional AMTC related costs of $7,276 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.
  


  Three-Month Period Ended
 Fiscal Year Ended
  March 26,
2021
 December 25,
2020
 March 27,
2020
 March 26,
2021
 March 27,
2020
   
  (Dollars in thousands)
Reconciliation of EBITDA and Adjusted EBITDA               
                
GAAP Net Income (Loss) $8,689  $(5,060) $13,329  $18,101  $37,105 
                
Interest expense, net 668  2,598  50  2,603  110 
Income tax provision (benefit) 8,361  (30,523) 4,463  (19,552) 16,173 
Depreciation & amortization 12,082  12,199  16,440  48,307  64,048 
EBITDA $29,800  $(20,786) $34,282  $49,459  $117,436 
                
Non-core loss (gain) on sale of equipment 156  (7) 193  442  1,284 
Miscellaneous legal judgement charge   574    574   
Loss on debt extinguishment   9,055    9,055   
Foreign currency translation loss (gain) 1,558  145  1,409  2,889  (1,391)
Income in earnings of equity method investment (6) (949)   (1,413)  
Stock-based compensation 2,969  45,876  384  49,870  1,435 
AMTC facility consolidation one-time costs 2,113  2,228  106  7,812  106 
COVID-19 related costs 322  435  581  5,228  581 
Impairment of long-lived assets 7,119      7,119   
Change in fair value of contingent consideration (2,500)     (2,500)  
Transaction fees 3,727  1,729  2,553  7,444  6,335 
Severance   (181) 3,263  156  6,415 
PSL and Sanken distribution agreement 930  1,500    8,628   
Adjusted EBITDA $46,188  $39,619  $42,771  $144,763  $132,201 
% of sales 26.4% 24.1% 24.5% 24.5% 20.3%


*Adjusted EBITDA and the corresponding calculation of Adjusted EBITDA Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $—, $1,217, and $4,911 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively and (ii) AMTC additional costs of $7,276 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.
  


  Three-Month Period Ended Fiscal Year Ended
  March 26,
2021
 December 25,
2020
 March 27,
2020
 March 26,
2021
 March 27,
2020
   
  (Dollars in thousands)
Reconciliation of Profit (Loss) before Tax           
           
GAAP Profit (Loss) before Tax  $17,050   $(35,583) $17,792   $(1,451) $53,278  
           
Non-core loss (gain) on sale of equipment 156   (7) 193   442   1,284  
Miscellaneous legal judgment charge —   574   —   574   —  
Loss on debt extinguishment —   9,055   —   9,055   —  
Foreign currency translation loss (gain) 1,558   145   1,409   2,889   (1,391)
Income in earnings of equity investment (6) (949) —   (1,413) —  
PSL and Sanken distribution agreement 930   1,500   —   8,628   —  
Stock-based compensation 2,969   45,876   384   49,870   1,435  
Interest on repaid portion of Term Loan Facility —   2,163   —   2,163   —  
AMTC facility consolidation one-time costs 2,113   2,228   106   7,812   106  
Amortization of acquisition-related intangible assets 310   344   —   768   —  
COVID-19 related expenses 322   435   581   5,228   581  
Impairment of long-lived assets 7,119   —   —   7,119   —  
Change in fair value of contingent consideration (2,500) —   —   (2,500) —  
Transaction fees 3,727   1,729   2,553   7,444   6,335  
Severance —   (181) 3,263   156   6,415  
Total Non-GAAP Adjustments $16,698   $62,912   $8,489   $98,235   $14,765  
           
Non-GAAP Profit before tax* $33,748   $27,329   $26,281   $96,784   $68,043  


*Non-GAAP Profit before Tax does not include adjustments for the following components of our net income: (i) additional AMTC related costs of $—, $1,217, and $4,911 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively,  and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and (ii) additional AMTC related costs of $7,276 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.
  


  Three-Month Period Ended
 Fiscal Year Ended
  March 26,
2021
 December 25,
2020
 March 27,
2020
 March 26,
2021
 March 27,
2020
   
  (Dollars in thousands)
Reconciliation of Provision for Income Taxes                
                
GAAP Provision (Benefit) for Income Taxes $8,361  $(30,523) $4,463  $(19,552) $16,173 
GAAP effective tax rate 32.0% 85.8% 25.1% 1347.5% 30.4%
                
Tax effect of adjustments to GAAP results (3,053) 34,872  1,896  34,486  (2,601)
                
Non-GAAP Provision for Income Taxes $5,308  $4,349  $6,359  $14,934  $13,572 
Non-GAAP effective tax rate  15.7% 15.9% 24.2% 15.4% 20.0%


*Non-GAAP Provision for Income Taxes does not include tax adjustments for the following components of our net income: additional AMTC related costs, labor savings costs, and out of period adjustment for depreciation expense of GMR assets. The related tax effect of those adjustments to GAAP results were $—, $297 and $652 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and $1,851 and $3,897 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.
  


  Three-Month Period Ended
 Fiscal Year Ended
  March 26,
2021
 December 25,
2020
 March 27,
2020
 March 26,
2021
 March 27,
2020
   
  (Dollars in thousands)
Reconciliation of Net Income                
                
GAAP Net Income (Loss) $8,689  $(5,060) $13,329  $18,101  $37,105 
                
Non-core loss (gain) on sale of equipment 156  (7) 193  442  1,284 
Miscellaneous legal judgement charge   574    574   
Loss on debt extinguishment   9,055    9,055   
Foreign currency translation loss 1,558  145  2,800  2,889   
Income in earnings of equity investment (6) (949) (1,391) (1,413) (1,391)
PSL and Sanken distribution agreement 930  1,500    8,628   
Stock-based compensation 2,969  45,876  384  49,870  1,435 
Interest on repaid portion of Term Loan Facility   2,163    2,163   
AMTC facility consolidation one-time costs 2,113  2,228  106  7,812  106 
Amortization of acquisition-related intangible assets 310  344    768   
COVID-19 related expenses 322  435  581  5,228  581 
Impairment of long-lived assets 7,119      7,119   
Change in fair value of contingent consideration (2,500)     (2,500)  
Transaction fees 3,727  1,729  2,553  7,444  6,335 
Severance   (181) 3,263  156  6,415 
Tax effect of adjustments to GAAP results 3,053  (34,872) (1,896) (34,486) 2,601 
                
Non-GAAP Net Income $28,440  $22,980  $19,922  $81,850  $54,471 
Basic weighted average common shares 189,429,893  124,363,078  10,000,000  83,448,055  10,000,000 
Diluted weighted average common shares 190,860,556  181,916,360  10,000,000  176,416,645  10,000,000 
Non-GAAP Basic Earnings per Share $0.15  $0.18  $1.99  $0.98  $5.45 
Non-GAAP Diluted Earnings per Share $0.15  $0.13  $1.99  $0.46  $5.45 


*Non-GAAP Net Income does not include adjustments for the following components of our net income: (i) additional AMTC related costs of $—, $1,217, and $4,911 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, (ii) additional AMTC related costs of $7,276 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and (iii) the related tax effect of adjustments to GAAP results of $—, $297 and $652 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and $1,851 and $3,897 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.
  

Investor Contact: 
Katherine Blye
Investor Relations
Phone: (603) 626-2306
kblye@ALLEGROMICRO.com


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