Allegro MicroSystems, Inc.

Good morning and welcome to Allegro Microsystems' third quarter fiscal 2024 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to Jalene Hoover, Vice President, Investor Relations and Corporate Communications.

Thank you, Kevin. Good morning, and thank you for joining us today to discuss Allegro's third fiscal quarter 2024 results. I'm joined today by Allegro's President and Chief Executive Officer, Vineet Nargawalla, and Allegro's Chief Financial Officer, Derek Dantilio. They will provide highlights of our business, review our quarterly financial performance, and share our fourth quarter and full fiscal year 2024 outlook. We will follow our prepared remarks with a Q&A session. Our earnings release and prepared remarks include certain non-GAAP financial measures. The non-GAAP financial measures that are discussed today are not intended to replace or be a substitute for our GAAP financial results. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release, which is available in the investor relations page of our website at www.elecromicro.com. This call is also being webcast and a replay will be available in the events and presentation section of our IR page shortly. During the course of this conference call, we will make projections and other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are based on current expectations and assumption as of today's date and as a result are subject to risks and uncertainties that could cause actual results or events to differ materially from projections. Important factors that can affect our business, including factors that could cause actual results to differ from our forward-looking statements, are described in detail in our earnings release for the third quarter of fiscal 2024 and in our most recent periodic filings with the Securities and Exchange Commission. Our estimates or other forward-looking statements may change, and the company assumes no obligation to update forward-looking statements to reflect actual results, changes to assumptions, or other events that may occur, except as required by law. It is now my pleasure to turn the call over to Allegro's President and CEO, Vineet Nargawalla. Vineet?

Thank you, Jalene, and good morning, everybody, and thank you for joining our third quarter fiscal year 2024 conference call. I'm pleased to report that we delivered another solid quarter against a weaker backdrop in fiscal Q3, consistent with expectations and our guidance. While we expect continued inventory digestion across markets in the short term, Our design wind momentum continues at record levels and reinforces our confidence in our ability to grow above market over the mid to long term, consistent with our target financial model. Furthermore, we're actively managing the business to optimize profitability and cash flow throughout this cycle. In Q3, we delivered sales of $255 million, up 2% year-over-year, reflecting continued strength in automotive. Sales in our strategic growth areas, including e-mobility and industrial, which includes clean energy and automation, we're up approximately 20% year-over-year to $150 million, or 59% of total sales. Innovation with purpose is our core value. During the quarter, we announced the launch of the second product of our high-voltage isolated gate driver portfolio. Allegro's newest power-through solution adds crucial safety features designed to protect against high operating temperatures in electric powertrain systems. It also provides high performance in noisy environments present in microinverters in solar applications, power supplies in data center applications, and onboard chargers for electric vehicles. Recall that our high voltage isolated gate driver technology came to us through our acquisition of Hay Day just over a year ago. The progress we're making with our power through product family demonstrates our ability to effectively integrate acquired technology and bring it to market quickly. We're applying the same approach and intensity to our recent acquisition of Crocus, which further strengthens our magnetic sensing IC portfolio and extends our leadership in this very important product category. I'm pleased to report that the integration of the Crocus team and its TMR technology is progressing really well. The acquired business is fully transitioned into our systems and processes, Product sales are underway with sampling activity accelerating in e-mobility and industrial markets. Both the Allegro and Crocus TMR offerings are now combined under a common brand, XtremeSense, which now represents the world's leading and most comprehensive portfolio, offering the highest accuracy, the lowest power consumption, and the highest sensitivity for the world's most demanding applications. Feedback across the customer base has been very encouraging, and the strong majority of our customer discussions recently at CES featured TMR. Moving on to the broader macro environment, industry estimates indicate that calendar year 2024 automotive demand will be stable with continued growth in XEVs, which includes battery electric vehicles and full hybrids. While XEV adoption varies greatly by geography, The growing number of XEV launches proves that the momentum is strong and increasing. Recall that Allegro is well represented in all automotive segments with our solutions supporting all powertrains. Today, ADAS represents the majority of e-mobility sales and XEV the fastest growing component. And while e-mobility is a key strategic focus, nearly half of our automotive sales are in other automotive applications such as ICE powertrain and safety, comfort, and convenience, which is agnostic of the choice of powertrain. Additionally, OEMs use of both hybrid and full electric platforms to meet fuel economy and emissions regulations positions as well. Allegro's content in full hybrid vehicles is similar to that in BEVs, with both significantly higher than that in ICE, and so Allegro wins no matter which platforms OEMs invest in. While automotive demand remains stable and we see continued strong momentum in e-mobility, we are seeing certain inventory dynamics where tiers and contract manufacturers are bearing back inventory from the 8 to 10 weeks during the supply chain crisis to pre-pandemic levels of 4 to 6 weeks as carrying costs become a factor and OEMs end support premiums for inventory. Despite these dynamics, we expect our automotive business to deliver above market growth for fiscal year 24 consistent with our target financial model. Our fourth quarter sales outlook comprehends macroeconomic conditions, including ongoing inventory digestion in industrial and consumer markets, as well as pockets of inventory rebalancing in automotive. Looking to the future, we continue to see strong design win activity with 80% of our Q3 design wins in our strategic growth areas and more than 50% in the area of e-mobility. Key highlights from our third quarter design wins include the following. In automotive, we were awarded multiple programs by leading Japanese OEM for an XEV platform. This was for current sensors on onboard chargers and AC inverters, and for our magnetic position sensors for electronic power steering systems. In China, we were awarded multi-solution design wins for XEV powertrains and EPS systems with the leading automotive OEM using our current sensor and power technology. In the industrial end market, we won several designs using our current and isolation sensor technology for clean energy applications, including solar and EV charging. In data center applications, We recorded several design wins with our motor drivers with a major OEM for cooling high performance AI servers using both traditional fans as well as liquid cooling. We remain focused on serving our customers and extending our market leading positions. We're investing for the future with a focus on maximizing growth in these strategic focus areas while positioning the business to scale and grow profitably. This focus is being rewarded by our customers with more business. and our record design wins indicate that we are winning in the market. In fact, for fiscal year 2024, we are on track to close over a billion dollars in design wins, with the majority turning to revenue over the next three years. This is proof that our strategy is working, underpinning our confidence in our ability to deliver above-market performance over the long term. I want to thank our teams globally for serving our customers and the continued execution of our strategy. I'll now turn the call over to Derek to review the Q3 financial results and provide guidance for our fourth quarter. Derek?