Company Achieves New Quarterly Sales Record

MANCHESTER, N.H., July 28, 2022 (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 first quarter 2023 that ended June 24, 2022.

Quarter Highlights:

  • Total net sales were a record $217.8 million, increasing 16% year-over-year.
  • Automotive net sales were a record $149.6 million, increasing 12% year-over-year.
  • Industrial net sales were a record $40.1 million, increasing 32% year-over-year.
  • GAAP gross margin was 54.4% and non-GAAP gross margin was 54.9%.
  • GAAP operating margin was 6.9% and on a non-GAAP basis was 25.3%.
  • GAAP diluted earnings per share was $0.05 and non-GAAP diluted EPS was $0.24.
  • Announced agreement to acquire Heyday Integrated Circuits, a leader in highly integrated gate drivers for high efficiency power applications.

“Allegro achieved another record quarter, highlighted by strong top-line growth and improving operating leverage that contributed to non-GAAP diluted EPS increasing 33% year-over-year,” said Vineet Nargolwala, President and CEO of Allegro MicroSystems. “Our first quarter results were driven by record sales in both our automotive and industrial markets, as we continued to work closely with our manufacturing partners to ramp supply in support of robust customer demand. Allegro’s strong alignment to secular mega-trends remains paramount to our increasing content and share gains as well as design win momentum in our strategic focus areas of E-Mobility (xEV and ADAS), Clean Energy, Data Centers and Industry 4.0. With leading positions in these high-growth market segments combined with our expanding supply capacity, we are raising our growth outlook for fiscal 2023 to approximately 20% year-over-year.”

Business Summary

Automotive net sales increased 6% sequentially and 12% year-over-year and represented 69% of net sales in the quarter. Net sales was higher across all of the Company’s automotive end markets, led by strong demand in Allegro’s strategic growth areas of ADAS and xEV, which expanded to a record 38% of automotive net sales.

Industrial net sales increased 16% sequentially and 32% year-over-year to 18% of net sales in the quarter. Record industrial net sales in the quarter was primarily driven by continued momentum for the Company’s solutions in strategic end markets, including Clean Energy, Data Center, and Industry 4.0.

First quarter net sales into Other markets, which includes computing, consumer and smart home, increased sequentially and year-over-year to $28.0 million, or 13% of total net sales.

Outlook

For the second quarter ending September 23, 2022, the Company expects total net sales to be in the range of $220 million to $230 million. Non-GAAP gross margin is expected to be in the range of 54% to 55%, non-GAAP operating expenses are anticipated to be approximately 29% of net sales, and non-GAAP earnings per diluted share are expected to be in the range of $0.25 to $0.27.

Allegro has not provided a reconciliation of its second fiscal quarter outlook for non-GAAP gross margin, non-GAAP operating expenses and non-GAAP earnings per 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 Thursday, July 28, 2022 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 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 our expected financial performance for our second fiscal quarter ending September 23, 2022. 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,” “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, expand our market share and increase our net sales and profitability; our reliance on a limited number of third-party 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 cyclical nature of the analog semiconductor industry; any downturn in the automotive market; our ability to compensate for decreases in average selling prices of our products and increases in input costs; any disruptions at our primary third-party wafer fabrication facilities; 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 reliance on a limited number of third-party wafer fabrication facilities and suppliers of other materials; our dependence on manufacturing operations in the Philippines; our reliance on distributors to generate sales; COVID-19 induced lock-downs and suppression 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 tariffs and export restrictions; 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 related to governmental regulation and other legal obligations, including privacy, data protection, information security, consumer protection, environmental and occupational health and safety, anti-corruption and anti-bribery, and trade controls; 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; the dilutive impact on the price of our shares upon future issuance by us or future sales by our stockholders; our lack of intent to declare or pay dividends for the foreseeable future; anti-takeover provisions in our organizational documents and under the General Corporation Law of the State of Delaware (the “DGCL”); the exclusive forum provision in our Certificate of Incorporation for disputes with stockholders; our inability to design, implement or maintain effective internal control over financial reporting; changes in tax rates or the adoption of new tax legislation; and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 18, 2022, 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 Relations 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 STATEMENT OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)

 Three-Month Period Ended
 June 24,
2022		 June 25,
2021
Net sales$176,044  $152,689 
Net sales to related party 41,709   35,453 
Total net sales 217,753   188,142 
Cost of goods sold 99,379   93,982 
Gross profit 118,374   94,160 
Operating expenses:   
Research and development 33,857   29,554 
Selling, general and administrative 69,980   32,064 
Change in fair value of contingent consideration (200)  300 
Total operating expenses 103,637   61,918 
Operating income 14,737   32,242 
Other income (expense):   
Interest expense, net (120)  (345)
Foreign currency transaction gain (loss) 1,924   (254)
(Loss) income in earnings of equity investment (864)  279 
Other, net (3,429)  48 
Income before income taxes 12,248   31,970 
Income tax provision 1,965   4,263 
Net income 10,283   27,707 
Net income attributable to non-controlling interests 36   38 
Net income attributable to Allegro MicroSystems, Inc.$10,247  $27,669 
Net income attributable to Allegro MicroSystems, Inc. per share:   
Basic$0.05  $0.15 
Diluted$0.05  $0.14 
Weighted average shares outstanding:   
Basic 190,638,135   189,585,381 
Diluted 192,406,276   191,163,074 

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
 June 24,
2022		 June 25,
2021		 Amount %
 (Dollars in thousands)
Automotive$149,649 $133,523 $16,126 12.1%
Industrial 40,140  30,309  9,831 32.4%
Other 27,964  24,310  3,654 15.0%
Total net sales$217,753 $188,142 $29,611 15.7%

Supplemental Schedule of Stock-Based Compensation

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

 Three-Month Period Ended
(In thousands)June 24,
2022		 June 25,
2021
Cost of sales$832 $528
Research and development 1,128  752
Selling, general and administrative 32,176  3,551
Total stock-based compensation$34,136 $4,831

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 operations:

 Three-Month Period Ended
(In thousands)June 24,
2022		 June 25,
2021
Cost of sales$273 $273
Selling, general and administrative 22  29
Total intangible amortization$295 $302

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

 June 24,
2022		 March 26,
2021
Assets   
Current assets:   
Cash and cash equivalents$286,557  $282,383 
Restricted cash 9,715   7,416 
Trade accounts receivable, net of provision for expected credit losses of $149 and $105 at June 24, 2022 and March 25, 2022, respectively 91,552   87,359 
Trade and other accounts receivable due from related party 30,109   27,360 
Accounts receivable – other 1,430   4,144 
Inventories 88,933   86,160 
Prepaid expenses and other current assets 18,863   14,995 
Current portion of related party note receivable 1,875   1,875 
Total current assets 529,034   511,692 
Property, plant and equipment, net 214,808   210,028 
Operating lease right-of-use assets 15,158   16,049 
Deferred income tax assets 25,505   17,967 
Goodwill 19,953   20,009 
Intangible assets, net 36,142   35,970 
Related party note receivable, less current portion 5,156   5,625 
Equity investment in related party 26,807   27,671 
Other assets, net 53,550   47,609 
Total assets$926,113  $892,620 
Liabilities, Non-Controlling Interests and Stockholders' Equity   
Current liabilities:   
Trade accounts payable$34,492  $29,836 
Amounts due to related party 4,704   5,222 
Accrued expenses and other current liabilities 68,952   65,459 
Current portion of operating lease liabilities 3,656   3,706 
Total current liabilities 111,804   104,223 
Obligations due under Senior Secured Credit Facilities 25,000   25,000 
Operating lease liabilities, less current portion 11,893   12,748 
Other long-term liabilities 14,056   15,286 
Total liabilities 162,753   157,257 
Stockholders' Equity:   
Preferred Stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding at June 24, 2022 and March 25, 2022 —   — 
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 191,180,179 shares issued and outstanding at June 24, 2022; 1,000,000,000 shares authorized, 190,473,595 issued and outstanding at March 25, 2022 1,912   1,905 
Additional paid-in capital 652,317   627,792 
Retained earnings 133,205   122,958 
Accumulated other comprehensive loss (25,198)  (18,448)
Equity attributable to Allegro MicroSystems, Inc. 762,236   734,207 
Non-controlling interests 1,124   1,156 
Total stockholders' equity 763,360   735,363 
Total liabilities, non-controlling interest and stockholders' equity$926,113  $892,620 

ALLEGRO MICROSYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

 Three-Month Period Ended
 June 24,
2022		 June 25,
2021
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income$10,283  $27,707 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization 11,918   12,172 
Amortization of deferred financing costs 24   25 
Deferred income taxes (7,784)  (1,454)
Stock-based compensation 34,136   4,831 
Gain on disposal of assets (3)  (35)
(Gain) loss on contingent consideration change in fair value (200)  300 
Provisions for inventory and expected credit losses 2,640   1,613 
Unrealized loss on marketable securities 3,486   — 
Changes in operating assets and liabilities:   
    Trade accounts receivable (4,718)  (9,956)
    Accounts receivable - other 2,714   (97)
    Inventories (4,888)  5,142 
    Prepaid expenses and other assets (13,102)  1,719 
    Trade accounts payable 4,075   (2,993)
    Due to/from related parties (3,267)  1,917 
    Accrued expenses and other current and long-term liabilities 2,427   (2,396)
Net cash provided by operating activities 37,741   38,495 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Purchases of property, plant and equipment (14,389)  (15,346)
Net cash used in investing activities (14,389)  (15,346)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Receipts on related party note receivable 469   — 
Payments for taxes related to net share settlement of equity awards (9,606)  — 
Net cash used in financing activities (9,137)  — 
Effect of exchange rate changes on Cash and cash equivalents and Restricted cash (7,742)  2,608 
Net increase in Cash and cash equivalents and Restricted cash 6,473   25,757 
Cash and cash equivalents and Restricted cash at beginning of period 289,799   203,875 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD:$296,272  $229,632 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:   
Cash and cash equivalents at beginning of period$282,383  $197,214 
Restricted cash at beginning of period 7,416   6,661 
Cash and cash equivalents and Restricted cash at beginning of period$289,799  $203,875 
Cash and cash equivalents at end of period 286,557   221,934 
Restricted cash at end of period 9,715   7,698 
Cash and cash equivalents and Restricted cash at end of period$296,272  $229,632 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:   
Cash paid for interest$452  $269 
Cash refunded for income taxes (1,027)  (538)
Noncash transactions:   
Trade accounts payable related to Property, plant and equipment, net$(2,602) $(5,535)
Noncash lease liabilities arising from obtaining right-of-use assets 150   356 

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, 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;
  • certain 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 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.

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.

  • Voxtel inventory impairment—Represents costs related to the discontinuation of one of our product lines manufactured by Voxtel.
  • Stock-based compensation—Represents non-cash expenses arising from the grant of stock-based awards. A significant portion of the cost included in fiscal year 2023 related to retirement of the former CEO.
  • AMTC Facility consolidation one-time costs—Represents one-time costs incurred in connection with closing of the AMTC Facility and transitioning of test and assembly functions to 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, and we sold the AMTC Facility in August 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, 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 through fiscal year 2022.

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) one-time transaction-related legal, consulting and registration fees related to a secondary offering on behalf of certain stockholders in fiscal 2022, and (ii) one-time transaction-related legal and consulting fees in fiscal 2023 and 2022 not related to (i).
  • Severance—Represents severance costs associated with (i) 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, (ii) costs related to the discontinuation of one of our product lines manufactured by Voxtel in fiscal year 2022, and (iii) nonrecurring separation costs related to the departures of executive officers in fiscal years 2023 and 2022.
  • Change in fair value of contingent consideration—Represents the change in fair value of contingent consideration payable in connection with the acquisition of Voxtel.

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 (gain) loss on sale of equipment—Represents non-core miscellaneous losses and gains on the sale of equipment.
  • Foreign currency translation (gain) loss—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.
  • (Loss) income in earnings of equity investment—Represents our equity method investment in Polar Semiconductor, LLC (“PSL”).
  • Unrealized loss on investments—Represents mark-to-market adjustments on equity investments with readily determinable fair values.

Non-GAAP Profit before Tax, Non-GAAP Net Income, and Non-GAAP Basic and Diluted Earnings Per Share

We calculate non-GAAP Profit before Tax as Income (Loss) before Income Taxes 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.

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 (Benefit):

  • 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
  June 24,
2022		 March 25,
2022		 June 25,
2021
  (Dollars in thousands)
Reconciliation of Non-GAAP Gross Profit       
       
GAAP Gross Profit  $118,374  $109,603  $94,160 
       
Voxtel inventory impairment  —   —   2,835 
Stock-based compensation  832   1,184   528 
AMTC Facility consolidation one-time costs  —   —   137 
Amortization of acquisition-related intangible assets  273   273   273 
COVID-19 related expenses  —   296   343 
Total Non-GAAP Adjustments $1,105  $1,753  $4,116 
       
Non-GAAP Gross Profit $119,479  $111,356  $98,276 
Non-GAAP Gross Margin  54.9%  55.6%  52.2%


  Three-Month Period Ended
  June 24,
2022		 March 25,
2022		 June 25,
2021
  (Dollars in thousands)
Reconciliation of Non-GAAP Operating Expenses       
       
GAAP Operating Expenses  $103,637  $79,354 $61,918
       
Research and Development Expenses      
GAAP Research and Development Expenses  33,857   32,432  29,554
Stock-based compensation  1,128   1,119  752
AMTC Facility consolidation one-time costs  —   —  2
COVID-19 related expenses  —   3  6
Transaction fees  202   5  —
Non-GAAP Research and Development Expenses  32,527   31,305  28,794
       
Selling, General and Administrative Expenses      
GAAP Selling, General and Administrative Expenses  69,980   46,822  32,064
Stock-based compensation  32,176   12,598  3,551
AMTC Facility consolidation one-time costs  96   74  324
Amortization of acquisition-related intangible assets  22   22  29
COVID-19 related expenses  —   215  381
Transaction fees  1,597   384  23
Severance  4,186   —  168
Non-GAAP Selling, General and Administrative Expenses  31,903   33,529  27,588
       
Change in fair value of contingent consideration  (200)  100  300
       
Total Non-GAAP Adjustments  39,207   14,520  5,536
       
Non-GAAP Operating Expenses $64,430  $64,834 $56,382


  Three-Month Period Ended
  June 24,
2022		 March 25,
2022		 June 25,
2021
  (Dollars in thousands)
Reconciliation of Non-GAAP Operating Income       
       
GAAP Operating Income  $14,737  $30,249  $32,242 
       
Voxtel inventory impairment  —   —   2,835 
Stock-based compensation  34,136   14,901   4,831 
AMTC Facility consolidation one-time costs  96   74   463 
Amortization of acquisition-related intangible assets  295   295   302 
COVID-19 related expenses  —   514   730 
Change in fair value of contingent consideration  (200)  100   300 
Transaction fees  1,799   389   23 
Severance  4,186   —   168 
Total Non-GAAP Adjustments $40,312  $16,273  $9,652 
       
Non-GAAP Operating Income $55,049  $46,522  $41,894 
Non-GAAP Operating Margin (% of net sales)   25.3%  23.2%  22.3%


  Three-Month Period Ended
  June 24,
2022		 March 25,
2022		 June 25,
2021
  (Dollars in thousands)
Reconciliation of EBITDA and Adjusted EBITDA      
       
GAAP Net Income $10,283  $25,652  $27,707 
       
Interest expense (income), net  120   (707)  345 
Income tax provision  1,965   4,504   4,263 
Depreciation & amortization  11,918   12,006   12,172 
EBITDA  $24,286  $41,455  $44,487 
       
Non-core (gain) loss on sale of equipment  (3)  1   (35)
Voxtel inventory impairment  —   —   2,835 
Foreign currency translation (gain) loss  (1,924)  513   254 
Loss (income) in earnings of equity investment  864   (215)  (279)
Unrealized loss on investments  3,486   760   — 
Stock-based compensation  34,136   14,901   4,831 
AMTC Facility consolidation one-time costs  96   74   463 
COVID-19 related expenses  —   514   730 
Change in fair value of contingent consideration  (200)  100   300 
Transaction fees  1,799   389   23 
Severance  4,186   —   168 
Adjusted EBITDA $66,726  $58,492  $53,777 
Adjusted EBITDA Margin (% of net sales)  30.6%  29.2%  28.6%


  Three-Month Period Ended
  June 24,
2022		 March 25,
2022		 June 25,
2021
  (Dollars in thousands)
Reconciliation of Non-GAAP Profit before Tax      
       
GAAP Income before Tax Provision $12,248  $30,156  $31,970 
       
Non-core (gain) loss on sale of equipment  (3)  1   (35)
Voxtel inventory impairment  —   —   2,835 
Foreign currency translation (gain) loss  (1,924)  513   254 
Loss (income) in earnings of equity investment  864   (215)  (279)
Unrealized loss on investments  3,486   760   — 
Stock-based compensation  34,136   14,901   4,831 
AMTC Facility consolidation one-time costs  96   74   463 
Amortization of acquisition-related intangible assets  295   295   302 
COVID-19 related expenses  —   514   730 
Change in fair value of contingent consideration  (200)  100   300 
Transaction fees  1,799   389   23 
Severance  4,186   —   168 
Total Non-GAAP Adjustments $42,735  $17,332  $9,592 
       
Non-GAAP Profit before Tax $54,983  $47,488  $41,562 


  Three-Month Period Ended
  June 24,
2022		 March 25,
2022		 June 25,
2021
  (Dollars in thousands)
Reconciliation of Non-GAAP Provision for Income Taxes      
       
GAAP Income Tax Provision $1,965  $4,504  $4,263 
GAAP effective tax rate  16.0%  14.9%  13.3%
       
Tax effect of adjustments to GAAP results  5,900   2,817   2,091 
       
Non-GAAP Provision for Income Taxes $7,865  $7,321  $6,354 
Non-GAAP effective tax rate   14.3%  15.4%  15.3%


  Three-Month Period Ended
  June 24,
2022		 March 25,
2022		 June 25,
2021
  (Dollars in thousands)
Reconciliation of Non-GAAP Net Income      
       
GAAP Net Income  $10,283  $25,652  $27,707 
GAAP Basic Earnings per Share $0.05  $0.14  $0.15 
GAAP Diluted Earnings per Share $0.05  $0.13  $0.14 
       
Non-core (gain) loss on sale of equipment  (3)  1   (35)
Voxtel inventory impairment  —   —   2,835 
Foreign currency translation (gain) loss  (1,924)  513   254 
Loss (income) in earnings of equity investment  864   (215)  (279)
Unrealized loss on investments  3,486   760   — 
Stock-based compensation  34,136   14,901   4,831 
AMTC Facility consolidation one-time costs  96   74   463 
Amortization of acquisition-related intangible assets  295   295   302 
COVID-19 related expenses  —   514   730 
Change in fair value of contingent consideration  (200)  100   300 
Transaction fees  1,799   389   23 
Severance  4,186   —   168 
Tax effect of adjustments to GAAP results  (5,900)  (2,817)  (2,091)
       
Non-GAAP Net Income $47,118  $40,167  $35,208 
Basic weighted average common shares  190,638,135   189,997,738   189,585,381 
Diluted weighted average common shares  192,406,276   192,125,252   191,163,074 
Non-GAAP Basic Earnings per Share $0.25  $0.21  $0.19 
Non-GAAP Diluted Earnings per Share $0.24  $0.21  $0.18 

Investor Contact:
Derek D’Antilio
Chief Financial Officer
Phone: (603) 626-2300
ddantilio@allegromicro.com