Allegro MicroSystems, Inc.

Good day, and thank you for standing by. Welcome to Allegro Microsystems Q2 Fiscal 2023 Financial Results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Leanne Seavers, President Shelton Group. Please go ahead.

Good morning, and thank you for joining us today for Allegro's second quarter fiscal 23 results. I'm joined today by Allegro's president and CEO, Vineet Nargawalla, and Allegro's chief financial officer, Derek D'Antiglio. They will provide highlights of our business, review our quarterly financial performance, and provide a summary of our outlook. After the presentation, we'll answer questions in a Q&A session. Our earnings release and the accompanying financial tables are available on the investor relations page of our website at www.allegro-micro.com. This call is being webcasted and the recording will be available on our IR page shortly. Please note that comments other than statements of historical fact made during this conference call include forward-looking statements for purposes of the safe harbor of provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties that could cause actual results to vary materially from our anticipations and projections. Please refer to the earnings press release we issued today and other documents filed by us with the SEC, including the risk factors discussed in detail in our most recent 10-K filed on May 18, 2022, and subsequent 10-Qs. While we may elect to update forward-looking statements at some point in the future, the company assumes no obligation to update any forward-looking information presented, even if our estimates or assumptions change. Also, unless otherwise noted during the call, all references to income statement-related financial measures other than sales will be to financial measures not prepared in accordance with generally accepted accounting principles or gaps. please refer to our press release posted to our website for information regarding our non-GAAP financial results and a reconciliation of our GAAP and non-GAAP financial measures. The non-GAAP financial measures that are discussed today are not intended to replace or be a substitute for the presentation of Allegro's GAAP financial results and may be calculated differently than similar measures used by other companies. We are providing this information because it may enable investors to make meaningful comparisons of core operating results and more clearly highlight the results of our core ongoing operations. It's now my pleasure to turn the call over to Allegro's President and CEO, Vinit Nargawala. Vinit, please go ahead.

Thank you, Leanne. Good morning and welcome to our fiscal second quarter earnings call. Before getting into my prepared remarks, I want to take this opportunity to recognize Allegro's team members in Ukraine. I want to acknowledge the tremendous courage and extend my appreciation for the dedication in the face of very real and ongoing hardship. Our team in Ukraine is an integral part of Allegra's global operations, and we will continue doing all that we can do to support our colleagues and their families during this brutal conflict. Shifting gears to the overall business, we had an excellent quarter that was highlighted by the team's strong execution to meet continuous robust demand despite several cross-currents in the macroeconomic environment. Revenue was another quarterly record at $237.7 million, representing sustained sequential growth and an acceleration of growth year-over-year. Our better-than-expected top-line performance in the quarter was largely due to continued momentum in our strategic focus areas of e-mobility and select industrial markets, and incremental improvement in supply from our foundry partners. Margins also came in strong on the back of operational execution and favorable foreign exchange. This highlights the substantial operating leverage in our model, contributing to significant bottom-line growth. Having now been in the role for four months, I want to briefly expand on some of my observations and actions taken today. On our previous quarterly call, I indicated that my initial plan centered around Electro getting even closer to our customers and finding new ways to energize our growth while also executing better as a team. And that has underpinned the activities of our entire leadership team over the past few months. This has involved meeting with a broad swath of our teams and customers, including our global sites in Europe, Asia, and the Americas. In fact, Derek and I just returned from two consecutive weeks of face-to-face meetings with our teams, customers, and strategic partners in Asia. These meetings have underscored the tremendous growth available to us and the opportunities to expand our customer relationships. As part of our intent to improve customer intimacy, we have created OEM-focused business development teams for both the automotive and industrial end markets. These global teams will engage directly with OEMs and Tier 1s on hard-to-do and mission-critical problems, leverage our global engineering organization to develop solutions, and our partner network to deliver them. We have terrific capabilities across the global team, and we will augment and expand our expertise in specific areas and geographies. For example, Today, we are working to establish additional resources in geographies such as Europe and Japan to bring us closer to multiple strategic customers. In further support of this strategy and to accelerate our future growth, we recently completed an agreement to transition our go-to-market approach in Japan that will allow for more direct customer engagement. Going forward, we will directly lead our engagements with Japanese auto OEMs. which is particularly meaningful as a transition to a fully electric future. In addition, we have commenced a series of steps to accelerate our innovation and enhance the execution of our product roadmap. This includes establishing a new role and the appointment of Mike Duke as our first ever chief technology officer. Mike will lead a dedicated team to incubate new technologies both organically as well as through partners in our strategic growth areas and bring proven concepts to scale. In conjunction with this appointment, we are also pleased to have Suman Narayas lead the execution of our product roadmaps and customer programs as Senior Vice President of Products. Suman will work closely with our global sales teams to execute a product strategy in the market, as well as with our operations teams on initiatives to improve the customer experience and expand margins. Also during the quarter, we successfully closed the acquisition of Hayday Integrated Circuits, an early-stage Fabless company. As a reminder, Hayday focuses on the design of fully integrated, isolated gate drivers for applications that leverage high-voltage gallium nitride and silicon carbide materials. Hayday not only complements Allegro's existing sensor IC solutions for energy efficiency, it also meaningfully expands our future SAN to include applications across XEV, solar inverters, data center, and broad industrial markets. While we don't expect material revenue contribution in the near term, we are fully committed to capitalizing on this opportunity and have appointed one of our most experienced executives to lead the scaling of this disruptive technology and bring it to market. At the foundation of Allegro's success is our focus on secular megatrends that are driving outsized growth with specific end markets that include e-mobility data centers, clean energy, and Industry 4.0. While we are primarily developing new technology platforms for e-mobility, we see a great opportunity to leverage our technology as we solve similar problems for customers in our target industrial markets. And across all these end markets, I see a unique opportunity for Allegro that extends beyond providing superior technology and service, the more profound opportunity to enable our customers' transition to a more sustainable future. Turning to the key highlights for the quarter, we continue to realize growing traction with our new products targeting our strategic growth areas. Design wind momentum was strong, overall demand continued to outpace near-term capacity, and we exited the quarter with over a year's worth of auto backlog. Our automotive business had another strong quarter with sequential and year-over-year growth led by accelerated adoption of our IC solutions for XEV inverter and onboard charging applications. Complementing our traction and vehicle electrification, we saw continued customer adoption of a cross-portfolio content in ADAS solutions for advanced steering and braking applications. E-mobility, which represents our XEV and ADAS applications, expanded to a record 41% of automotive sales in the fiscal second quarter. And we are pleased with the balanced contribution of both our sensing and power products to this growth. E-mobility design wins increased 68% compared to fiscal Q1. Of note is the team's work directly with the major EV manufacturer to incorporate Allegro's ICs into one of the newest model steering systems. Our industrial business achieved record sales with solid double-digit growth sequentially and year-over-year. Growth was driven by our target markets of Industry 4.0, clean energy, and data centers. Data Center continues to offer significant opportunities for long-term growth, as highlighted by our two new multi-year design wins in the quarter. From a product line perspective, we continue to extend our market leadership in magnetic sensors, as our innovative and best-in-class products are adopted by automotive OEMs building out the electrified platforms. We are also very pleased with our Power IC business, which grew 21% sequentially and almost 50% year-over-year. We continue to make strides with these products' efficiency story, especially in motors. I'll now turn the call over to Derek to review the financial results and provide guidance for our fiscal third quarter. Derek?