ALGM - Earnings call transcript Q2 2025 | Allegro MicroSystems, Inc.

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Operator

Good morning, and welcome to the Allegro MicroSystems Second Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions]. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference call is being recorded. to of conference Communications. Investor like Hoover, to now President Vice Relations would hand over the Jalene I and Corporate

Jalene Hoover

financial you, review Officer, discuss D'Antilio. highlights and and for morning, third today Officer, by performance XXXX Cory. Derek for and joined our and Thank us Chief of quarter Allegro's President joining Financial Executive results. thank I'm provide today's Nargolwala, our second our They Allegro's you to quarterly will Allegro's business, fiscal Vineet quarter share call outlook. Good Chief

prepared We will with follow session. our remarks a Q&A

financial earnings certain replace of available is most financial of measures non-GAAP in website today The being Our GAAP page release, be a prepared replay directly and are measures in not of these non-GAAP comparable our are shortly. our www.allegromicro.com. This will release the webcast our call remarks included are Reconciliations be our earnings Presentations non-GAAP section financial page discussed results. also Events and is the a at that Relations which IR measures include to substitute in measures. to GAAP and intended the for financial Investor available financial

recent our the of business, our and or in cause other statements, with that and Securities Exchange conference differ current earnings forward-looking materially expectations this from the are and assumptions most or on Commission. in from described differ of filings periodic a fiscal will course uncertainties of and wish results are we as in factors to date that other result, actual release our risks We to cause can company. and the actual During future differ could financial projections statements could projections. Important such to statements factors based our are make and events quarter future subject of for regarding call, the or affect forward-looking that the XXXX performance second caution to including today's detail results to that events as

obligation expectations occur forward-looking assumptions other to change, is call actual may turn no by reflect except to update forward-looking to to may company President assumes events pleasure over and to Allegro's required my CEO, Vineet as estimates, Our It statements law. that changes or now Vineet? statements the or other and Nargolwala. the results,

Vineet Nargolwala

Thank other conference you, EPS Jalene, call. good you with results was automotive high year for second sales Non-GAAP consistent $X.XX $XXX million, fiscal our and in with XXXX environment. QX morning, end delivered our markets. despite guidance of thank We sequential and our challenging growth industrial at and quarter the macro were and outlook. a joining end

launched our focused energy acquisition new products streamline and center, well a and this a inverter sensor important solutions our areas on with a current PHEV strategic paying design focus In continue using vehicle focus Japanese is infrastructure for large AI as win leading OEM applications. And build had solar powertrain, we our innovation solutions. ] data for off wins. automotive suited QX, across laser solutions high-power maps to momentum density electric our the space design charging with X [ first are customers. sensors, improving new savings In Extreme which while road high-bandwidth we and TMR current of represent innovative new cost designs bring the We to Crocus. These QX, product announced TMR They're our to provide executing Sense company's efficiency. high-resolution on since sensors

energy won for major portfolio metering clean America. smart in project a Extreme North Sense Our application

glucose business across further starting technology batteries we xEV And the manufacturer we're Crocus This gate isolated with used our for high-voltage monitoring. test where highlights using we end Chinese a design win discuss architectures expands secured vehicle of markets, applications. lithium solar between win to finally, wins in diverse and Our we to automotive. The seeing now medical industrial want our and our a what in gain portfolio another markets. I secured traction. TMR drivers the nature blood equipment with and obtained our automotive of to continue acquisition the through large resilience

expected region plants Europe, momentum new are domestic of We and announcements Asia. Chinese South America now X XXXX. highly design several with their state differentiated in the BYD new on stride XE first this of to meet both moving significant to made I've and price China terms customers. Overall, point. responded across past how production months, in by teams I'm and production like of key and XX% a Europe solutions by with resources our we architectures the expanding engagement recognize the global market had on of are with models deep opportunity in China as North encouraged by get localizing Japan, and semiconductor newly demand the engagement and formed They're China of the outside production with a China, with Neo production the really pleased products partners, exceed really our in end Over future partners. I'm heading are continued to Chinese total power more and in collaborate the customers things sense and a OEMs for parts America progress China supply domestic our in vehicle our the ground, progress year. customers remain our and and production the and the and XX% launch of before mid-XX% inventory this channel. to magnetic win solutions. growth early including I the from encouraged of on at Southeast xEVs proactively for rebalancing the full sensing of that in chain slew of continued report every will by with our

OEMs a inventory structures market the With we're quarter that recognize to sales. In continued design increase seeing and activity still standpoint needs. a aligned progress us, largely China their in digestion trying to normal are North our we are to strong seeing Europe get and return supporting investments behind ordering patterns, and cost and from shipments second America,

made customers. Despite we challenges, we in committed digestion, future autonomous have are patterns America an that near-term features. of highly continued the inventory encouraged choppiness remain near-term we order expect in more these to progress and auto electrified and OEMs from North While adoption European

confident are and support in well positioned ability our are magnetic challenges, We solutions. these with we and to navigate semiconductor customers' world-leading them to sensing power

we calendar our Japan increased customers. industrial in activity by encouraged period. Asia demand seeing expect customers and XXXX, continue a We our solutions. point and signals rest digestion we're inventory other from are to expanding make signs are after some electric in at still of end progress in seeing year we Our prolonged the their and of In steady battery hybrid recover the and market, to

in sales the third-party third towards quarter progress quarter comprehends estimates is rebalancing Our outlook seasonality. inventory typical Ongoing December electrification. latest continued vehicle and reflected

the serving continues product While our new customers. our introductions we to be remain macro on uncertain, and accelerating strategies, focused our executing

for to the growth our financial acceleration. I quarter. the and third to work executing focusing customers. at around hard continued control, over to by extend and our invest to Derek and market QX their on on continue teams Derek? provide serving highest review our the the can we call for teams, deliver want and level I'll the We're We progress our in is the outlook with our what now the to made encouraged customers leadership for results turn to dedication and commitments and shareholders. world believe our intent for poised thank business our our the

Derek D'Antilio

adjusted QX you, was was XX.X%, Thank XX.X% morning, margin Good Sales our million, operating with gross EBITDA Starting summary was a and were XX.X% Vineet. everyone. of sales. financial $XXX of results. margin

outlook our As end a result, earnings per share $X.XX were of range. the at high

million, million QX and sales and XX% a QX an automotive X% Total of were $XXX were were in sales increasing due but of XX% sales sales and and sequentially markets. increases by sales 'XX. to to declined XX% $XX sales [indiscernible] an were Industrial e-mobility and increase XX% million industrial fiscal to year-over-year sequentially our sequentially. Industrial increase declined decline. sequentially QX by XX% of Europe. other of XX% our broad-based other in of sales. From XX% increased sales distribution million compared of $XX million, product XX% of XX% of Japan, Sales Auto customers sales. the million, year-over-year. magnetic geography representing of Asia, were XX% in represented $XXX rest XX% QX sales $XX a power perspective, sensor XX% $XX increasing sequentially and and QX of channel through XX% by XX% were were China, sequentially. Sales in in Sales balanced Sales and XX% sales products Americas with well were again XX% the increasing in our

million XX.X% tax but was R&D 'XX. a effective operating QX and on ago. The $XX compared were our X% the down to X% was expenses impact quarter of nearly previous to year in projected the doubling XX% than fiscal to [indiscernible]. lower tax rate from be sequentially sales, now due down and credit taxable XX.X% X% year of QX for Operating and X%, Gross margin turning QX, to from was our Now a of full is X% relatively fixed income. outlook favorable rate margin lower effective

share, The QX. XXX income million $X.XX $XX net shares was million count second and per from $X.XX quarter share up diluted was or diluted in

was to QX, and balance XX sheet term to balance million $XX QX and from From DSO was Cash QX. $XXX XX ended days million, loan with a to million working the cash Moving approximately was XXX $X $XXX of days QX. compared flow at capital the cash million. of XXX days was in was cash flow and end CapEx in operations the million perspective, and were flow. $XX inventory free We compared

in XX%. net and modeling minutes which repurchase XX take cash share ownership on Before offering term an repurchased key incremental I million discuss Sanken's retired our in QX a from Sanken shares shares outlook, highlight loan to XX with Sanken Electric to July. I'd XX% million a shares Allegro XX and to hand. million like transaction, this purposes, Allegro deals the related our an fund issued from equity To from past few $XXX purchased and million to reduced Allegro for

These result, increased a shares shares. million outstanding XX%. declined the XXX count float Allegro's As by to million from public laterals also share transactions XXX

$XX and transaction facilitation reimbursed fee. In Allegro addition, million Sanken all paid and transaction fees expenses Allegro

result adjustment. of between closing $XX repurchase As forward required resulted a noncash transactions, as This to price record a the fixed fair a Allegro decline these the under loss repurchase in price a value of QX. GAAP and million in stock GAAP

opportunity the from with to XXXX loan took loan, SOFR to points. I'll now QX the million plus reprice term Finally, in conjunction we XXX SOFR term basis outlook. plus our XXX entire to the incremental turn $XXX

of sales in third expect $XXX to We range million quarter the million. $XXX to be

mentioned, As in Vineet towards quarter this continued progress vehicle rebalancing inventory December seasonality. electrification, ongoing customer range contemplates

non-GAAP We also project the basis. following on a

this loan, term bringing payment our We another the be million $XX and on down expect XX% debt $XXX we morning, made and balance to million. between gross XX% margin to voluntary

$X approximately be we now result, million. quarter non-GAAP a interest to As third expect expense

our expect rate to share shares. We X% count average diluted our approximately be be weighted tax XXX to approximately million and

As a to result, we $X.XX and between expect be share. non-GAAP $X.XX EPS per

back I'll Now for the Jalene? questions. call to turn Jalene

Jalene Hoover

management's concludes remarks. prepared This

questions, we I'd third conference with the call line to Before like share for fiscal you. open quarter your up our

on in Scottsdale, at Presentations Hotel of We Technology Annual [ Events Investor are Resort section attending the [ in in Conference Wells San updated Fargo's website investor and at due Palace December to ] TMT direct Global to XX. I Global and on also UBS' at [ website. Summit Terranea ] Francisco the Verdes], Conference the December presentation Palos the would December XXnd located an of like our Hotel the Technology in Annual Fenician Rancho X X Barclays Eighth

questions. will now open please review We your for call Q&A the Corey, instructions.

Operator

Instructions]. [Operator

comes of Jefferies. Our from Curtis first call Blayne

Blayne Curtis

you Vineet, I a correction very had ask, obviously, to June. sharp want in just

I September, And could that that. you of you big was at down a grow kind of in comfortable again. but the such that that, felt think then sequential the you correction did time off

So should back they I'm below levels, was just way be. to of kind going that those which you're you of to kind thought curious, were June be where

back was So I'm us And strongly. a auto, well. part what that can December of curious of but assuming you December? changed. through in down Is kind up that walk industrial big for as I'm is also just correction

Vineet Nargolwala

Blayne, Vineet. is this

for the thanks question. So

will inventory the higher looked And our for than guide digestion. when time as So will normal down really at my where remarks, automotive quarter I at we challenge biggest the made we our -- seeing in when that some sector, frame, the levels. I look June. some our back that in we're said momentum in you progress great bringing good we prepared And into I in were in be the December midpoint, was that trends tell really at China.

European see there. by totals and Our has Where in shipments we and great China, reduction okay? China America in rebalancing inventory the and or the we the up still were quarter us behind digestion the in some sales lingering American effects further of in is compounded all OEMs is second some by North XX%, which production the see momentum inventory North been Europe OEMs. And

piece So next I that think in quarter. think that's of as we're the new we about layering data the

Blayne Curtis

And some just And with win you on Can vendors. of Chinese carbide driver and product there's to gate it's bundle mentioned about a to China you. trying just for there's a I silicon you [indiscernible] a that? obviously, then OEM. carbide. want the ask with you, new discussion paired Obviously, a just situation for big a I'm understand, Chinese silicon expand

of a better breaking that kind You're performing with bundle ships.

win maybe what that on and expand [indiscernible] Just curious kind of drove the pipeline.

Vineet Nargolwala

combine cost proposition we with XX% isolated essentially you're system functions and So to isolated overall system or looking while a the gate and power right. almost regaining who actually option. are XX% carbide into really bring driver drivers also value feds chip. There a one are We X gate on different driver. silicon gate GaN as And where at overall great unique and is our savings to sourcing our at space exactly flexibility win was our reduce OEMs for astute savings. GaN And FETs is they cost look ways

related silicon you getting the we're we've customers be drivers some that. released carbide amount Thank into stamp win the our which of are well, to That a traction And that to drivers so been shortly really of -- was got with good for question. our market. waiting sampling we'll And long as that. GaN have

Operator

Next question Thomas comes of O'Malley Barclays. from

Thomas O'Malley

little Mine is bit a broader.

kind pretty general So on your XXXX, auto of but this year lock, and versus stop the on from down year stuff it if much grown if where at reported just that's like year, much pandemic look peer 'XX the space modestly. not peers with just your you're everyone of seeing I yet, calendar before and than based XX-ish you're to on the at like percent I auto look kind bear sharper group. just like obviously, a today, has looks correction guidance, down just the And you've the

correction before So just lean the think type have just your earlier describe, you to could one, where you are bit product cut of taking and a supply that maybe a you others you're given more do today inventory where little this maybe the would or see of you that statistics customers more guess difference? any or are recover Or direct where would and explain that today, sort down first quickly? I around work the channels that's question. chain

Vineet Nargolwala

realities. to customers you make an new that Tom, me to are thank up for extreme based that others comment be how long-term on navigating in sector. Yes, we hard really the of I situations what have tell challenging agreements we automotive inventory on the perhaps lock it's through would you pretty to on strategic question. volumes didn't for use consider didn't sense

with the that customers we weren't order backlog so And excess also into visibility were our closely channel. make we to inventory our patterns putting very our into advanced working and with sure

say our we inventory helping that medicine work out and took the believe that their positions. channel that in done we good have from we some So and I from really customers our early would clear

customers what so get I other but And plans out OEMs, their around the as and aligned challenges needs, are our be how be poised out inventory remains our in it it acceleration. seen we're we of going on and near-term to confident place, for these think OEM we [indiscernible] the that get coming to production to side, market

Derek D'Antilio

window, that for talking year, call up sort is ago were this time started of we exactly I'd year late in that you on about we last long year, a late, opening if particularly Derek. about our the things were the in add And remember Tom, cancellation November a items. just lead

second every channel. in that, So -- goes has things. And We're answer couple that going in the in XX% Even couple things did we been back kind up as auto inventory the we in very was happens in come on question, your years. customers the of saw last part and proactively. that relatively to though industrial of of Vineet C&I, hold pretty right? those things did backlog China. we consistent of that is side not all the are auto, to And this through all distribution, distribution the And quarters. and and China all And the of China. clearly both down, QX mentioned, our

which in quite of So to good rest still there's have still Asia done work is to regions. be good. work done, is relatively North say flat, is frankly. be and America Japan other pretty shape. The in I'd Europe

Thomas O'Malley

of at on it accelerated some normalized, Helpful. kind kind Obviously, is that peak just is into kind that like metric question, and quarter? if seasonality does weeks of line June bottom in there. off and the Where some inventory that us just of you that March December And now? growth are things the is of you can expect do you more describing with see give where of the where would that normally? looking you're And in

Derek D'Antilio

Yes, Tom.

So in want exact there a one At either. provided to have were the don't of the we'd aggregate, that We to well years below be I'm be going not fishnet that. couple provide I ago, what weeks. we like within point, X typically XX to to

lead people We're and above that it's deep much Some seeing closer we're XX actually much XX, now. pockets inventory. there. China the and is orders in too getting that. to where seeing right is in regions behavior still moving of time Japan maybe within America are Europe above Other dipping that. weeks, small to kind that like of closer and regions are North historically

acceleration that see indication might XXXX. an are some start those So of we kind in things to

Operator

Buchalter comes of next TD Josh from Cowen. Our question

Unknown Analyst

] Lane Josh. for This on is [

some the a takes? know a trends Where industrial. the seeing the puts a the a green lining it's industrial And next of recovery. X been I of quarter, you the see growth switching inventory shoots? a you you to of of to in get are where mentioned up? kind the correction. and slog quarters, kind posted do X looking have follow-up. healthy bit gears bit little forward What But are into you And So through I sequential pretty to broad-based and

Vineet Nargolwala

take [ Lean], is I'll this question. the Sure. Vineet.

that last Other you'll segments. Industrial and we recall combined So our quarter,

for continuing is this commentary. success in So some business of consumer. that's medical seeing nicely sort broad-based highlighted more We're We've perform also to our us.

We major seeing with nice some very some OEMs. pickup select positions have there. We're consumer

full auto to industrial seeing we're in other. encouraging showing recover the hopeful in and some Obviously, the Industrial segments are certain of terms really hesitant We strength patterns, recovery likely most do. there's has a others, initial segment we're call signs it and a think We in segment, recovery some pickup broad-based inventory prolonged XXXX. work signs, than more and But Other will been some in taxation. Industrial us is to what after gives that in

Unknown Analyst

Great. I one And guess then for Derek.

at the on color X.X% expected give next Looking terms a sales down revenue help But mix, -- just puts of quarter, gross to midpoint. takes like segment call of the the bit Can you in slightly cetera? et quarter-over-quarter. out channels, there, parse it, into margin expectations expand and

Derek D'Antilio

Lenny]. [ Yes,

sort was had there. a of, was China QX, XX.X%, quality gross geographical of heavy and right? mix, in a So component points There call the of some I'll plus a resolution basis onetime in it, XX our about margin we've

geographical range goes go factories I'm the in cost as starts normalize that our again. that then we utilization to onetime mix in to better pretty and XX% into away. As XX% We're getting QX, confident

to the QX. bridge So that's QX from really

Operator

question Wolfe Caso Research. Our of from next comes Chris

Christopher Caso

expect in how auto, plays obviously, as QX of industrial lot follow-up QX of the you could last into that and of because, product a maybe going made you you of buckets maybe on China there QX. where give in changed? in out was sense as what's go and the just kind into in on lot you in mix There for lot Industrial China a normalizes of the QX. you go I mix with what a some that guess a comment Maybe QX,

Derek D'Antilio

sales not Yes, guide -- going declining to Chris, X midpoint, to expect market, consistent we're be right? but X%, the by the between at are sales going pretty we markets. That's

Product So when I have biggest can mix the product that. geographical and log talk impact about mix. mix, mix on it's

even business that component to other that. sales and geographically So our of impact sensor things can higher parts extent the certain of a have current those and

Christopher Caso

local I also on Okay. production what's wonder made mean, could you some of Maybe China to be to if up your that the strategy the some move to the which is you line some there on able and what Understood. domestic the making some I supply about you're there. of chain, give there? OEMs of address color comments into the follow going China some is changes time that?

Vineet Nargolwala

to Sure, Chris. Happy question. This is Vineet. the take

we And a talking the production, we our year the ago, take end frame. longer. The supplier as both process time see boom by about xEVs, little we hybrids as localize will So year. of parts partner vehicles, first But as the well OSATs. are plug-in the from electric the to especially significant new China China. And about qualification of our energy as wafer battery to off obviously in this bit we a roll on manufacturing are related started OSAT shorter almost over they started OSATs starting a wafer in or saw as as plans vehicles call to it, well

about And that. so excited really

our We are schedule. ahead of

really So a move paced that to will pleased endeavor the will different And we taken progress by sizable the into team. And be of China portion that about by China. time to parts. revenues qualify our

remember, you automotive all grade. will parts are As of our

that's increasingly, So manufacturing. time. that make our way our take be China to local want focus best to they sure serving are served does we But that it customers the is really, and

Christopher Caso

And with to that with domestic that moving implications margin there Are production into follow-on. my any just a follow-on China?

Derek D'Antilio

positive gross expect we Chris, to margins, over be yes. that to do time,

Operator

] question Joslin comes [ from Our UBS. Grant next of

Timothy Arcuri

Tim. It's

other? the about bit can a versus little one talk PMIC? the So going Is you sensors outlook on better market what's versus with magnetic in

Vineet Nargolwala

Tim, not particularly.

leader comes we to that, tends We our orders. sensing. design or than of lot well, solutions move selling which our share, momentum we're that leadership portfolio, the in our we it power selected in kind whether fair win on. a the whereas sort to together. Having of to think do in magnetic more we applications them seeing said Generally, as have of focus obviously make I we're tend to broad-based wins

you how gives these sense that move a for hopefully, things together. So

Derek D'Antilio

Into were up bit QX, typically, sensing was up they kind in in of more automotive. industrial other a was Magnetic And a there's XX%. and more sensing up similarly. and Power bit power XX%.

kind correlate So those you can of X a little bit.

Timothy Arcuri

Perfect. Yes. Got it.

next I were are think than May, of back get Derek, on by about of talk about as margin to obviously, So is in as And into gross the of you sort come can mid-XXs the think hopeful you sort But the drop kind some of year? maybe look through kind to gross and then. March. worse off we puts what And the incremental bottom? takes you you things of thought margin should you

Derek D'Antilio

Yes.

XX%, to historically gave QX, bit points we of be mix. like been X of you the that's believe expected by and had years, absent see Lanny here as going margins as pointed actually gross that those essentially. we was the true we've still good public and that last to we're drop-through when been a take decline still little pretty XX%, that QX midpoint in where that's in QX expect and we guidance. When kind basis guidance the still hold the So since of of I it's [ onetime XXX into out, I our X% charges onetime a utilization in the items out still ] improved news. having Tim, having in at revenues

those that lot -- plus those momentum your products drivers, the ASPs. Bayer gate continue put revenue of normalization through. have in the market or TMR top at of products, are released get region, if from as we've have we number inherently drop tailwinds new we and the gross isolated in model, by of should these revenue margins get higher start industrial to that a On As a you in that, expect we to XX% mix

Operator

next from Vijay Mizuho. Our question Rakesh comes of

Vijay Rakesh

X Just questions. quick

guess? talk disti normal they ] I are you inventories levels, and where should On the to [ side, can be versus where

Derek D'Antilio

XX Yes, not Vijay, about and for earlier to way Japan or that's channel of regions aggregate It's we been built like the I mentioned last more couple off as a little [ carry X levels weeks, inventory, ] X.X are consistent that and of in ago. that. quarters saying in that distribution of they're typically the years far bit normal Japan

that's in come pretty just China to towards elongated heading data centers There's has distribution weeks. So had is think, that. pretty XX some good close shape. some inventory that products getting we've with that of taking for an I like pockets significantly, are Asia, Rest down time specific time. quite that

still next Vineet Europe North has work over in to and X. mentioned, As do America the quarter or

Vijay Rakesh

Got it. And then as year. you look out, let's next say, or to

share pricing that? And pressure? your competitive seeing magnetic you you in of side? are if on any some around stable into the do expect can you think pricing the do give Or pretty sensor terms how be wondering What year, landscape next Just looks. to you color

Vineet Nargolwala

Yes.

is, we will we're where market. only our excited bringing that's confidence really not our that focus engagement base. gives about maintain our likely Vijay, wins, So me and slew momentum most we've all the with design magnetic introduction product talked one, X there lot of the okay? customers. that start maybe about our of And products momentum new the but in in in of our new sensing, with share was it, Look, I'll to extend a questions share but And really

the some months. it more prepared weeks remarks, in in hear You'll last in coming quarter. and I my highlighted about we the highlighted some

new in of velocity. product lot momentum So there's our a

pricing extend environment. and help we're excited think that. build, the And So us maintain into going about back I say that's I From standpoint, to would share. a stable

In associated So we contracts governed what I automotive, by strategic with mean the by design do that. wins are and that? our

we've off it quarters customers, So starts typically, with back got get of very and very, launch volume that's a of some And in that's a at the our typical. higher then usually And when as ago. X% we And couple that we that a price. share part range. We to ramps, productivity.

about think trying no there. Competitive getting perhaps advice, pricing more bit a talked So fill I to pressure, we fabs, change desperate. some little

that And that are certainly, look function past value. I people and more the focusing fit think on become really seeing at, to normalized has to what now. is okay,

stable. So I would it's say

Operator

Our next of Evercore. from Lipacis comes question Mark

Mark Lipacis

a had and spent sense if past are do particularly look levels customers at Vineet, levels? levels have normal to said And lot your chain? this you that below you you going going Xs, of visiting normal quarter. above you I of to Tier customers, Or inventory downstream your visited past past distributors is wondering that part a they're do there and normal the to own time for supply guess distributors at still I'm Great. the normal the think further at you

Vineet Nargolwala

That's thanks. respond in inventory. are the some they're at parts Asia, think to is question. skinny of best that pretty come distributors, where good split we parts, are And a and lead there I on We're trying to maybe would about insightful feel see time. a some to this. broad That distributors geographical look I really orders a inventory as indicates say look the customers where within can. too we trending. In we're in and at Mark, China we beyond starting and they we that little

recall, us will very allowing up agile strategic you in As some we've that's way. a respond built inventory dieback to

sort even we has America, and skinny customers think in by the Europe In the as a We the portfolio on is that's inventory. way, realigned on a of rates, lot cuts contract churn, perhaps next out and expect as and go the they quarter, North on production of some in parts order that been manufacturers goes quarter bit too to to of with figure OEMs, impact have more in compounded by recently tiers into to to happen, situation repositioning what which a become serve need of a having downstream perhaps do bit little be inventory of causing honest. the portfolio, the

pockets well might harder picture at manufacturers might with read that close bit say, transparency, no to So be they the in And now right? and the as inventory, it's might are hard realigned collaboration pockets but where in there excess full the be are be and little inventory as OEMs so look little there product to a plans, that we there have a peers. and working that's where on based contract they -- through

Mark Lipacis

All very helpful. right. That's

may. if follow-up, a For I

moving discussed to the you just bank. -- Just die that,

And -- in decline is on a your you inventories or the large times your to in on your effective of balance had base And the how to extent that us to think you here you quarters? of could can aggregate it's goods? your for And remind do aggregate here? -- customers? happens the an sheet. to able own respond several over next own inventory we're bank your what And affecting You finished impacting own decline you're the that? mostly shooting die basis lead Is characterize target that just

Derek D'Antilio

this is Mark, Yes, Derek.

at the quarter-over-quarter. Obviously, So revenue is our X% pretty inventory quarter-over-quarter. dollars million the million by actually the of from about function increase December increased significantly $XXX to guidance, $X as declining midpoint in days revenue quarter. The down in of our $XXX a came

expect in continue We die to favorable we're bit as to the on-balance those inventories get turn we buy near future. use a our purchase we can to we increase pricing as confident continue wafers into which wafers little sheet bank, to and

that within that bit of respond So inventory, within inventory then ensure tick have or see is for quarter. the goods catalog bank to up And quarter such wafer type die distributors. to look because goods we can bank. I that to And about some inventory expect we parts this we're next a standard carefully days particularly either at our the orders, little finished parts we half or is that finished inventory quarter starting

Mark. of profile, at how look we our inventory kind that's So

Vineet Nargolwala

us. strategic to to bank And the that, Mark, die is for important really add just

basis As I OEMs sure about channel visited has over CMs. But in customers the the to channel the I of the what's heard concerned. very past with gone happening refrain months, they on are skinny. globally or The inventory very at that aren't an aggregate are concerned we was -- couple constant

to in And ways. be protect OEM helps and the so us, us that lot customer of a dibank honest, our in putting we're place final

think in industrial And we that's the of this and so period go auto through really that, both turbulent here we markets. a as important the sort

Operator

next final of comes for question Quinn a Needham Bolton from The more One Company. & question.

Quinn Bolton

bit America could some And here. weeks time December. reset Europe, decline comments at of only the understand the your circle inventory low the about you with a quarter, lower sales. you end seeing North grow think cuts, year. revenue. quarter double the X pockets that took we're but I inventory of In you thought and I'm fiscal Then hoping of the guys total in help ago, you square of a to in a sort and given pretty from be you And able your that little production demand through might Obviously, the of of customer said end June X/X heavy you in I of saw out digits that's that decline. base June a

end normalized in And your where and It you, of most a Japan guess pretty consumption you to the rest better devices so China, back Asia like I trying I'm sense are? levels. to get do just inventory of from is think sounds of

I'm to of And inventory in expectations? there below kind a run you fair amount the of well type? so the now rate just out, December business sell prior out sort your that are Is of that digestion is Or implying September embedded still trying numbers? and of figure POS

Vineet Nargolwala

than tiers probably bit that to and of my the North America got more Europe that inventory right? in okay? Had have perhaps in have it's are not longer exposure by it's And a are that. and North strong through. It's through this went our America we are And is [indiscernible] of not saying that And short Quinn, for in serve get have what solutions, European really their market transition they the taking namely to products want categorization ready pockets all America auto in end I at we demand repositioning American right, really to North OEMs future. question that Great and are go keep only America as and North electric further of answer to and the your start in little German I inventory with is just electrified and the North cost I have trying happen question. by in based compounded OEMs, expected, pretty to confirm that or that an for cuts production little businesses still think customers see they and we regions mind Europe, you this -- the look various sitting seeing substantial, bit excess work are Vineet. conversations And and to to on which we the demand a

what's that's weighing So really them. on

I think look it beyond we would. you say if much playing pretty that, it's way would thought out I the

Quinn Bolton

for maybe inventory of jump, $XXX this these so as a of sort that you figure a or think hefty if would but may cards and be of you're that quickly. of you get back And kind December, through X of I just that destruction a think the all of quarters, you to X rate next kind in kind I'm the pretty number, level a or million pockets think sort get to do difficult closer mean, out of you or getting over to, above. That's million have trying to Is that to again, may run you just think whether still whether natural that production lower consumption parts, don't your million a $XXX it's say, in is back says quarter? that's been demand you to $XXX or do prior think closer there the Or $XXX a quarter? it lower million you demand

Derek D'Antilio

is this Quinn, Yes, Derek.

markets digits. some refreshed the low investor shipping posted I'll presentation of to end end of inventory our refreshed about is FY We've about that this nothing maybe talked this $XXX I we in that go actually double that excess changed we had we the $XX in markets. We quarter million, way when at QX 'XX, We've data. our has So back million the and we Internet approach were still growing about to morning. see the and

has nothing there. So changed

In to that now, when that's get terms of hard run we given when that right rate, near-term the choppiness. to back is timing call

Vineet Nargolwala

it's it take of America for would America, was North really might be automotive a production, how question our does largely now And estimates you still are at or our get than completely more artifact there inventory bubble tell as an target I I tiers Europe. SAAR in XX%. it's that least that that, plus X% the to digested. And model some for track long and So Europe, obviously, to right? North said, consumption

the consumption be in. to So that's -- continues factor to model got you've believe intact. that that But we

Quinn Bolton

it. Got

at a growing So maybe range quarter kind of end $XXX XX%. sort consumption, of million that in

that's fiscal So see. about? get it whether kind to end like or once 'XX, that back be right you that's level, But 'XX the sounds thinking we'll levels of to demand

Derek D'Antilio

numbers. updating believe exercise still I as model, in through We that extensive a our really mentioned, both we investor presentation on planning Yes. corroborated went our our long-term pretty those strategic and

actually an of And some or things better not, public years see the investor being in around was presentation years. that X believe is growth next of we xEV pretty or went growth it EV it's ago, the there interesting good you'll expectation world even today when X the for

in corroborated that data data We're We we but do the our pleasantly were the that. we hearing from that. surprised of some So filed. customers,

Operator

much. to no questions over like to At this back showing in I turn the would queue. time, the Thank further call for you remarks. now closing very am Jalene I

Jalene Hoover

call. We Thank time join appreciate to you you, taking This concludes Corey. the this conference us. morning's

Operator

in This Thank your you participation program. conference call. today's conclude does the for

You may now disconnect.

Allegro MicroSystems (ALGM) 31 Oct 242025 Q2 Earnings call transcript