Allegro MicroSystems, Inc.

Good day, and thank you for standing by. Welcome to the Allegro Microsystems Q3 Fiscal 2023 Financial Results Conference Call. 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. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jalene Hoover. Please go ahead.

Thank you, Tanya. Good morning, and thank you for joining us today to discuss Allegro's third quarter fiscal 2023 results. I joined Allegro at the beginning of January, and with more than two decades in semis, I'm thrilled to join at such an exciting time in Allegro's life cycle. I look forward to working with the team as well as with all of you. I'm joined today by Allegro's President and Chief Executive Officer, Vineet Norgowalla, and Allegro's Chief Financial Officer, Derek D'Antilio. They will provide highlights of our business, review our quarterly financial performance, and provide a summary of our outlook. We will follow our prepared remarks with 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 webcast and a replay will be available on our IR page shortly. Please note that comments other than statements of historical fact made during this conference call, including forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements may 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 differ materially from anticipated results 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, as amended on Form 10-K-A, filed on August 29, 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. 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 GAAP. Please refer to the press release posted to our website for information regarding our non-GAAP financial results and a reconciliation of our GAAP to 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 is now my pleasure to turn the call over to Allegro's President and CEO, Vineet Nargawala. Vineet?

Thank you, Jalene, and welcome to the Allegro team. And good morning and thank you all for joining us this morning for our fiscal third quarter conference call. I'm pleased to report that Allegro had another record quarter, with sales increasing 5% sequentially and 33% year-over-year, to $249 million and near the high end of our guidance range. Our growth continues to be driven by ongoing momentum in our e-mobility and industrial markets with sales in these strategic focus areas increasing 11% sequentially and 56% year-over-year. Gross margin also expanded in the quarter due to higher sales of feature-rich products as well as continued favorable foreign exchange. This allowed us to deliver record operating margins of 30% in the quarter. Further highlighting our operating leverage, earnings per share increased more than 80% year over year on revenue growth of 33%. Coming off this strong quarter, along with a fourth quarter guidance, we're increasing full year sales growth expectations to 26% over fiscal 2022. In support of this growth, We are also making progress in alleviating the supply constraints that have limited our ability to serve our customers over the past several quarters. Let me expand on this with some proof points. First, while our overall backlog remains strong, our past year backlog is beginning to decline as we ship more products to fulfill a portion of prior outstanding orders. We view this as a positive step as it improves order lead times for our customers. We have also continued to work with our customers to allow for reschedules and cancellations within certain parameters. Second, channel inventory has begun to normalize, with certain distributors approaching historical levels. Finally, we have been able to grow our internal supply of wafers and die bank during the quarter to support anticipated growth. In another positive and very important step announced last week, Our U.S.-based fab partner, Polar Semiconductor, is expected to receive a $150 million equity investment to expand its 200-millimeter wafer fabrication capacity, which positions Polar and Allegro to support anticipated growth in customer demand. Shifting to key business highlights for the quarter. Sales in our automotive business increased 8% sequentially to a new quarterly record and represented year-over-year growth of 80%. Our focus on the secular megatrend of e-mobility, which includes the increasing electrification of vehicles and the higher adoption of ADAS feature sets, continues to drive Allegro's growth above market. In fact, e-mobility applications expanded to a record 43% of Allegro's third quarter automotive sales, reflecting the combined contribution from our sensing and power products. In addition, the majority of third quarter automotive design wins were in e-mobility. We continue to focus efforts across the company on the strategic fast-growing opportunity. Notable design wins include a large ADAS application for our power products in a steering system for a North American OEM, as well as multiple wins with a Chinese EV manufacturer. We also achieved another record in our industrial business, with sales growing 6% sequentially and 60% year-over-year. Continued growth of clean energy and industrial automation end markets drove our performance in the third quarter. Overall design wind traction has remained strong and well-balanced across target markets, as well as our magnetic sensors and PowerIC product portfolios. I'm equally pleased with our performance from a product line perspective. We continue to reinforce our market leadership in magnetic sensors, which grew 25% year-over-year. Our PowerIC portfolio continued to see very robust sales, growing 50% on a year-over-year basis. These results underscore our core value of innovation with purpose, the strong alignment of our R&D investments and portfolio with our strategic focus areas, as well as our initiatives to accelerate new product velocity. And finally, punctuating our continued investments in innovation, last week we announced plans to open our newest R&D center in Richardson, Texas, which will expand Allegro's research and development efforts. I'll now turn the call over to Derek, to review the financial results and provide guidance for our fiscal fourth quarter. Derek? Thank you, Vinit.