Allegro MicroSystems — Second Quarter 2027 Earnings Summary

Financial Performance:

• Total net sales for the quarter ended September 25, 2026, were $276.884 million, a 29% increase year-over-year from $214.294 million.
• Automotive segment sales reached $172.492 million, up 11% year-over-year.
• Industrial and Other segment sales reached $104.392 million, up 79% year-over-year.
• GAAP gross margin was 49.2% compared to 46.3% in the prior year quarter; GAAP operating margin was 12.8% compared to 2.9%.
• GAAP diluted EPS was $0.12, quadrupling from $0.03 in the prior year quarter.
• Non-GAAP gross margin was 51.5% compared to 49.6% in the prior year quarter; Non-GAAP operating margin was 20.6% compared to 13.9%.
• Non-GAAP diluted EPS was $0.26, doubling from $0.13 in the prior year quarter.
• GAAP operating income was $35.448 million compared to $6.243 million in the prior year quarter.
• Net cash provided by operating activities was $36.848 million for the quarter.
• Cash and cash equivalents were $193.039 million as of September 25, 2026, up from $168.753 million as of March 27, 2026.
• Total debt was $287.155 million ($285.649 million long-term and $1.506 million current portion) as of September 25, 2026.

Guidance and Future Outlook:

• For the third quarter of fiscal 2027 ending December 25, 2026, total net sales are expected to be between $278 million and $288 million, implying 23% year-over-year growth at the midpoint.
• Non-GAAP gross margin for Q3 is expected to be between 51.5% and 52.5%.
• Non-GAAP operating expenses for Q3 are expected to be $87 million, plus or minus $1 million.
• Non-GAAP diluted EPS for Q3 is expected to be between $0.25 and $0.29, implying an 80% year-over-year increase at the midpoint.
• Management expressed high confidence in exceeding the target model of mid-teens annual sales growth, citing record design wins, a robust backlog, and expanding content in Automotive and Industrial markets.

Business Segments and Product Lines:

• Data center sales established a new record during the quarter.
• Design wins increased nearly 40% year-over-year, representing the highest quarterly design-win performance since the 2020 IPO.
• Bookings increased for the eighth consecutive quarter.
• Broad year-over-year sales growth was driven by Automotive and Industrial end markets.

Market and Competitive Landscape:

• The company leverages expertise in magnetic sensing and power ICs to propel electrification, automation, AI data center, and robotics forward.
• Allegro reinforces its status as a pioneer in "automotive-grade" technology.

Risks and Challenges:

• The press release lists numerous forward-looking risks including economic downturns, competition, reliance on third-party fabrication facilities, inventory management challenges, cyclical industry nature, automotive market downturns, integration risks, margin pressure from pricing or input costs, yield problems, manufacturing disruptions in the Philippines, reliance on distributors, geopolitical conflicts, new product development delays, customer concentration, government trade policies, warranty claims, currency volatility, and regulatory compliance.

Management Commentary and Tone:

• Mike Doogue, President and CEO, stated the company delivered its seventh consecutive quarter of sequential sales growth and noted significantly strengthened forward demand signals.
• Derek D'Antilio, Executive Vice President and CFO, highlighted the execution of strategic priorities to expand profitability and generate strong cash flow.
• Management tone is confident, citing record design wins and a robust backlog as leading indicators for future growth.

Other Key Points:

• On September 30, 2026, the company made a $25 million voluntary debt repayment.
• The company reported a $20 million payment to a related party within the six-month period ended September 25, 2026.
• A webcast was held on October 29, 2026, featuring the President and CEO and the Executive Vice President and CFO.