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01/11 03:43
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals multiple challenges: a significant decline in sales, lower gross margins, and operational efficiency risks. Despite optimistic guidance on backlog growth and strategic initiatives, the Q&A section highlights potential supply chain issues and unclear management responses. The share repurchase is a positive, but the financial performance and uncertainties overshadow it. Overall, the sentiment leans negative due to weak financials and lack of clarity on key concerns.
Q4 2025 Sales $193 million, a decline of 20% year-over-year due to significant customer inventory reductions.
Q4 2025 Non-GAAP EPS $0.06, which is above the midpoint of guidance.
Q4 2025 Gross Margin 45.6%, below expectations due to a combination of mix and lower absorption.
Q4 2025 Operating Margin 9%, down from 10.8% in Q3 and 23.8% a year ago.
Q4 2025 Adjusted EBITDA 14.8% of sales.
FY 2025 Sales $725 million, a decline of 31% year-over-year, reflecting significant customer inventory reductions.
FY 2025 Gross Margin 48%.
FY 2025 Operating Margin 9.5%.
FY 2025 Adjusted EBITDA 15.6%.
FY 2025 Earnings Per Share $0.24.
Cash Flow from Operations Q4 2025 $20 million.
Free Cash Flow Q4 2025 $15 million.
Q4 2025 Cash $131 million.
Q4 2025 Debt $345 million.
Inventory Days Q4 2025 148 days, down from 182 days in Q3.
Voluntary Debt Payments FY 2025 $105 million.
New Product Releases: During fiscal 2025, Allegro released 50% more products compared to their IPO year, including new XtremeSense TMR current sensors and high voltage isolated gate driver ICs.
TMR Magnetic Sensors: Allegro secured new TMR wins in the biomedical market and a new automotive win in an XEV thermal management application.
Power Applications: Introduced a new family of high voltage isolated gate driver ICs, representing a nearly $3 billion SAM expansion opportunity.
Market Expansion in Automotive: Allegro continues to accelerate wins in the e-mobility market, which offers a $5 billion SAM opportunity and an estimated 16% CAGR.
Industrial Market Growth: Emerging opportunities in robotics, data center, clean energy, and medical markets, with an approximate $3 billion SAM opportunity and a 15% CAGR.
Operational Efficiency Initiatives: Initiated a restructuring program expected to result in annualized cost savings of at least $15 million, with half aimed at reducing cost of goods sold.
Supply Chain Optimization: Plans to release new products with optimized supply chain and design architectures to unlock significant manufacturing cost reductions.
Strategic Shift in Leadership: Mike Duke emphasizes relentless innovation and securing impactful design wins as key strategic priorities.
Response to Acquisition Proposals: Allegro's Board considered acquisition proposals from onsemi but ultimately onsemi withdrew its interest.
Regulatory Issues: The company acknowledges the evolving environment regarding tariffs, indicating that quantifying their potential impact remains challenging. While there are currently immaterial direct impacts, the indirect effects are harder to predict.
Supply Chain Challenges: The company is starting to see select component or raw material shortages, which could pose challenges to fulfilling orders and maintaining production levels.
Economic Factors: The company reported a significant decline in sales year-over-year, reflecting customer inventory reductions and a challenging economic environment.
Competitive Pressures: Allegro is focused on maintaining its competitive advantages through relentless innovation and securing impactful design wins in growth markets, indicating awareness of competitive pressures in the industry.
Operational Efficiency Risks: The company is executing operational efficiency initiatives to enhance gross margins and profitability, which may involve risks associated with restructuring and optimizing supply chains.
New Product Development: Accelerate new product development and unlock SAM expansion to secure impactful design wins with leading customers in growth markets.
Innovation Focus: Relentless innovation to drive leadership in new and existing markets and applications, aiming for double-digit sales growth in automotive and industrial end markets.
Market Expansion: Targeting a $12 billion market opportunity with a focus on TMR magnetic sensors and high voltage isolated gate driver ICs.
Automotive Growth: E-mobility market offers a $5 billion SAM opportunity with an estimated 16% CAGR.
Operational Efficiency: Execute operational efficiency initiatives to enhance gross margins and profitability, including a restructuring program expected to yield $15 million in annualized cost savings.
Q1 2026 Sales Guidance: Expect first quarter sales to be in the range of $192 million to $202 million, an 18% year-over-year increase.
Gross Margin Guidance: Expect gross margin to be between 46% and 48%, an increase of 140 basis points at the midpoint.
Operating Expenses Guidance: Expect OpEx to be approximately $72 million, an increase of $2 million, or 3% sequentially.
Non-GAAP EPS Guidance: Expect non-GAAP EPS to be between $0.06 and $0.10 per share, demonstrating potential operating leverage.
Share Repurchase Program: During fiscal 2025, Allegro repurchased 39 million shares from its largest shareholder, Sanken Electric, reducing Sanken's ownership from 51% to 33%. This transaction increased Allegro's free float by 30% and reduced the total shares outstanding by 5%.
The earnings call summary indicates strong financial performance with a 12% YoY sales increase and improved EPS. Product development shows promising growth, especially in automotive and data center markets. Market strategy is well-aligned with emerging trends like e-mobility and AI. Financial health appears stable with efficient cost management and reduced inventory. Shareholder returns are likely supported by the positive outlook. Adjustments from the Q&A section further bolster this view, with optimism in key growth areas and stable pricing. Overall, the sentiment is positive, predicting a stock price increase of 2% to 8%.
The earnings call summary presents mixed signals. While there are positive aspects like an 18% YoY sales increase and strong momentum in e-Mobility, uncertainties persist. Management's reluctance to provide specific guidance on distribution channel refilling and tariff impacts, along with normal price reductions, tempers optimism. The absence of immediate shareholder returns and a focus on debt repayment also weigh on sentiment. Overall, the outlook is balanced, leading to a neutral stock price prediction.
The earnings call reveals multiple challenges: a significant decline in sales, lower gross margins, and operational efficiency risks. Despite optimistic guidance on backlog growth and strategic initiatives, the Q&A section highlights potential supply chain issues and unclear management responses. The share repurchase is a positive, but the financial performance and uncertainties overshadow it. Overall, the sentiment leans negative due to weak financials and lack of clarity on key concerns.
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