Allegro Microsystems, Inc.: Form 10-Q for the period ended Dec 26, 2025
Filed with the SEC on Jan 30, 2026 and accepted by EDGAR at Jan 30, 2026, 09:17 ET.
Management's discussion and analysis
As filed, 45,702 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the fiscal year ended March 28, 2025, filed with the SEC on May 22, 2025 (the “2025 Annual Report”).
In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section titled “Forward-Looking Statements” and in Part I, Item 1A. “Risk Factors” of our 2025 Annual Report, and Part II, Item 1A. “Risk Factors” of this Quarterly Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
We operate on a 52- or 53-week fiscal year ending on the last Friday of March. Each fiscal quarter has 13 weeks, except in a 53-week year, when the fourth fiscal quarter has 14 weeks. All references to the three- and nine-month periods ended December 26, 2025 and December 27, 2024 relate to the 13- and 39-week periods ended December 26, 2025 and December 27, 2024, respectively. All references to “2026,” “fiscal year 2026” or similar references relate to the 52-week period ending March 27, 2026. All references to “2025,” “fiscal year 2025” or similar references relate to the 52-week period ended March 28, 2025.
Overview
We are a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific power ICs enabling the most important emerging technologies in the automotive and industrial markets. With the broadest portfolio of magnetic sensor IC solutions available, underpinned by our strong position in the automotive market, we are the leading magnetic sensor supplier worldwide based on market share. Our products are foundational to automotive and industrial electronic systems. Our sensor ICs enable our customers to precisely measure motion, speed, position and current, while our power ICs include high-temperature and high-voltage capable motor drivers, power management ICs, light emitting diode driver ICs and isolated gate drivers. We believe that our technology expertise, combined with our deep applications knowledge and strong customer relationships, enable us to develop solutions that provide more value to customers than typical ICs. Compared to a typical IC, our solutions are more integrated, intelligent and sophisticated for complex applications and easier for customers to use.
We are headquartered in Manchester, New Hampshire and have a global footprint across multiple continents. Our portfolio includes more than 1,500 products, and we ship over 1.5 billion units annually to more than 10,000 customers worldwide. During the three- and nine-month periods ended December 26, 2025, we generated $229.2 million and $646.9 million in total net sales, respectively, with $8.4 million and $1.8 million in net income, respectively. During the three- and nine-month periods ended December 27, 2024, we generated $177.9 million and $532.2 million in total net sales, respectively, with $6.8 million and $58.0 million in net losses, respectively.
Business Updates
On January 21, 2026, we entered into Amendment No. 4 (the “Fourth Amendment”) to the Credit Agreement dated as of June 21, 2023 (as amended, restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “2023 Revolving Credit Agreement”) by and among the Company, Allegro MicroSystems, LLC (“AML”), lending institutions from time to time party thereto, and Morgan Stanley Senior Funding, Inc., as the administrative agent and the collateral agent. The Fourth Amendment provided for a new $285,000 tranche of term loans maturing in October 2030 (the “2026 Refinanced Loans”), the proceeds of which were used, in relevant part, to refinance all outstanding borrowing under the 2025 Refinanced Loans (as defined in Note 9, “Debt and Other Borrowings” to the unaudited condensed consolidated financial statements included in this Quarterly Report). The 2026 Refinanced Loans amortize at a rate of 0.00% per annum. The 2026 Refinanced Loans bear interest, at our option, at a rate equal to (i) Term SOFR in effect from time to time plus 1.75% or (ii) the highest of (x) the Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50%, (y) the prime lending rate or (z) the one-month Term SOFR plus 1.00% in effect from time to time plus 0.75%. The 2026 Refinanced Loans will mature on October 31, 2030.
Other Key Factors and Trends Affecting Our Operating Results
Our financial condition and results of operations have been, and will continue to be, affected by numerous other factors and trends, including the following:
Inflation
Although inflation has moderated in recent periods, inflation rates in the markets in which we operate have increased and may continue to rise as a result of cost increases attributable to global tariff policies. Inflation in recent quarters has led us to experience higher costs, including higher labor costs, wafer and other costs for materials from suppliers, and transportation and energy costs. Our suppliers have raised their prices and may continue to raise prices, and in the competitive markets in which we operate, we may not be able to make corresponding price increases to preserve our gross margins and profitability. If inflation rates continue to rise or remain elevated for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity. While we have attempted to offset increases in these costs through various productivity and cost reduction initiatives, as well as adjusting our selling prices and releasing new products with improved gross margins, our ability to increase our average selling prices depends on market conditions and competitive dynamics. Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs.
Design Wins with New and Existing Customers
Our end customers continually develop new products in existing and new application areas, and we work closely with our significant original equipment manufacturer customers in most of our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate sales can be lengthy, typically between two and four years. As a result, our future sales are highly dependent on our continued success at winning design mandates from our customers. Further, because we expect the average sales prices (“ASPs”) of our products to decline over time, we consider design wins to be critical to our future success as they help mitigate declines in ASPs. We anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win, with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of a customer’s products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful introduction and market acceptance of our customers’ end products, which may be affected by several factors beyond our control.
Customer Demand, Orders and Forecasts
Demand for our products is highly dependent on market conditions in the end markets in which our customers operate, which are generally subject to seasonality, cyclicality, tariffs and other pricing increases and competitive conditions. In addition, a substantial portion of our total net sales is derived from sales to customers that purchase large volumes of our products. These customers generally provide periodic forecasts of their requirements. However, these forecasts do not commit such customers to minimum purchases, and customers can revise these forecasts without penalty. In addition, as is customary in the semiconductor industry, customers are generally permitted to cancel orders for our products within a specified period. Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, changes in forecasts or the timing of orders from customers expose us to the risks of inventory shortages or excess inventory. We are currently operating in an inflationary environment for our products as a result of global tariff policies, which also have the potential to reduce end market demand in certain markets. We believe that we are emerging from an extended period in which we and other semiconductor companies experienced a downturn in market demand, primarily driven by reduced demand from customers across various markets and digestion of excess accumulated inventory. In addition, factors that cause a reduction in demand from the end users of our OEMs’ or other customers’ products, including as a result of increased prices resulting from global trade policies, tariffs or a recessionary environment in the markets in which we operate, may in the future continue to cause our direct customers to significantly reduce the number of products ordered from us.
Manufacturing Costs and Product Mix
Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, we expect their ASPs to decline in the long term. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers, as we target new design win opportunities and manage the product life cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand as it did throughout fiscal year 2025, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.
Cyclical Nature of the Semiconductor Industry
The semiconductor industry has historically been highly cyclical and is characterized by increasingly rapid technological change, product obsolescence, competitive pricing pressures, evolving standards, short product life cycles in consumer and other rapidly changing markets and fluctuations in product supply and demand. New technology may result in sudden changes in system designs or platform changes that may render some of our products obsolete and require us to devote significant research and development resources to compete effectively. Periods of rapid growth and capacity expansion are occasionally followed by significant market corrections in which sales decline, inventories accumulate, and facilities go underutilized. During periods of expansion, our margins generally improve as fixed costs are spread over higher manufacturing volumes and unit sales. In addition, we may build inventory to meet increasing market demand for our products during these times, which serves to absorb fixed costs further and increase our gross margins. During an expansion cycle, we may increase capital spending and hiring to add to our production capacity. During periods of slower growth or industry contractions, our sales, production and productivity and margins generally decline.
Results of Operations
Three-Month Period Ended December 26, 2025 Compared to Three-Month Period Ended December 27, 2024
The following table summarizes our results of operations and our results of operations as a percentage of total net sales for the three-month periods ended December 26, 2025 and December 27, 2024.
(Dollars in thousands)
| Three-Month Period Ended December 26, 2025 | As a % of Net Sales | Three-Month Period Ended December 27, 2024 | As a % of Net Sales | Change $%* | ||
|---|---|---|---|---|---|---|
| Total net sales | $229,210 | 100.0% | $177,872 | 100.0% | $51,338 | 28.9% |
| Cost of goods sold | 122,109 | 53.3% | 96,657 | 54.3% | 25,452 | 26.3% |
| Gross profit | 107,101 | 46.7% | 81,215 | 45.7% | 25,886 | 31.9% |
| Operating expenses: | ||||||
| Research and development | 52,878 | 23.1% | 43,317 | 24.4% | 9,561 | 22.1% |
| Selling, general and administrative | 44,649 | 19.5% | 37,939 | 21.3% | 6,710 | 17.7% |
| Total operating expenses | 97,527 | 42.5% | 81,256 | 45.7% | 16,271 | 20.0% |
| Operating income (loss) | 9,574 | 4.2% | (41) | (0.0)% | 9,615 | NM |
| Other (expense) income: | ||||||
| Interest expense | (4,910) | (2.1)% | (7,762) | (4.4)% | 2,852 | (36.7)% |
| Interest income | 114 | 0.0% | 388 | 0.2% | (274) | (70.6)% |
| Other expense, net | (4,284) | (1.9)% | (187) | (0.1)% | (4,097) | NM |
| Income (loss) before income taxes | 494 | 0.2% | (7,602) | (4.3)% | 8,096 | (106.5)% |
| Income tax benefit | (7,868) | (3.4)% | (803) | (0.5)% | (7,065) | 879.8% |
| Net income (loss) | 8,362 | 3.6% | (6,799) | (3.8)% | 15,161 | (223.0)% |
| Net income attributable to non-controlling interests | 63 | 0.0% | 61 | 0.0% | 2 | 3.3% |
| Net income (loss) attributable to Allegro MicroSystems, Inc. | $8,299 | 3.6% | $(6,860) | (3.9)% | $15,159 | (221.0)% |
| *NM = Not meaningful |
Total net sales
Total net sales increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024. The increase was primarily driven by e-Mobility products, which includes our advanced driver assistance systems (“ADAS”) and components for electrified and hybrid vehicles (“xEV”), data center applications, internal combustion engine products, and industrial automation and robotics products, partially offset by a decrease in broad-based industrial products and personal and industrial transport products.
Sales trends by market
In the fourth quarter of fiscal year 2025 during the preparation of the consolidated financial statements, the Company identified an immaterial misclassification of net sales by market, whereby customer returns and sales allowances were incorrectly classified by market between Automotive and Industrial and Other in prior periods. There was no impact to previously reported total net sales or net loss in any of the periods.
The Company assessed the materiality of the revision qualitatively and quantitatively and determined the revisions to be immaterial to the prior period interim fiscal year 2025 condensed consolidated financial statements. All prior period amounts have been revised in the table below.
The following table summarizes total net sales by market. The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed.
(Dollars in thousands)
| Three-Month Period Ended December 26, 2025 | December 27, 2024 | Change Amount% | ||
|---|---|---|---|---|
| Automotive | $164,543 | $128,637 | $35,906 | 27.9% |
| Industrial and Other | 64,667 | 49,235 | 15,432 | 31.3% |
| Total net sales | $229,210 | $177,872 | $51,338 | 28.9% |
Automotive net sales increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, primarily due to growth in e-Mobility products and internal combustion engine products.
Industrial and Other net sales increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, primarily due to increases in demand for data center applications and industrial automation and robotics products, partially offset by a decrease in broad-based industrial products and personal and industrial transport products.
Sales trends by product
The following table summarizes net sales by product.
(Dollars in thousands)
| Three-Month Period Ended December 26, 2025 | December 27, 2024 | Change Amount% | ||
|---|---|---|---|---|
| Magnetic sensors (“MS”) | $137,771 | $113,842 | $23,929 | 21.0% |
| Power integrated circuits (“PIC”) | 91,439 | 64,030 | 27,409 | 42.8% |
| Total net sales | $229,210 | $177,872 | $51,338 | 28.9% |
The increase in PIC sales was primarily driven by an increase in demand for our motor and high performance power products. The increase in MS sales was primarily due to an increase in demand for our current and isolator products, as well as our magnetic speed and position sensors.
Sales trends by geographic location
The following table summarizes net sales by geographic location based on ship-to location.
(Dollars in thousands)
| Americas: | Three-Month Period Ended December 26, 2025 | December 27, 2024 | Change Amount% | |
|---|---|---|---|---|
| United States | $21,847 | $19,229 | $2,618 | 13.6% |
| Other Americas | 11,164 | 5,899 | 5,265 | 89.3% |
| EMEA: | ||||
| Europe | 25,948 | 27,296 | (1,348) | (4.9)% |
| Asia: | ||||
| Greater China | 68,461 | 50,378 | 18,083 | 35.9% |
| Japan | 39,865 | 36,812 | 3,053 | 8.3% |
| South Korea | 19,954 | 17,152 | 2,802 | 16.3% |
| Other Asia | 41,971 | 21,106 | 20,865 | 98.9% |
| Total net sales | $229,210 | $177,872 | $51,338 | 28.9% |
Other Asia net sales increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, in both Automotive and Industrial and Other applications, primarily in data center applications, partially offset by declines in broad-based industrial products. Greater China net sales increased primarily driven by an increase in ADAS and xEV components. Other Americas net sales increased in both Automotive and Industrial and Other applications, primarily in ADAS. Japan net sales increased in Automotive applications, primarily in xEV components, partially offset with a decrease in personal and industrial transport products. South Korea net sales increased primarily in internal combustion engine products. United States net sales increased in Automotive applications, primarily in internal combustion engine products, partially offset by declines in broad-based industrial products.
Cost of goods sold
Cost of goods sold increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, primarily due to higher production volume in support of higher product sales.
Cost of goods sold as a percentage of our total net sales was 53.3% and 54.3% for the three-month periods ended December 26, 2025 and December 27, 2024, respectively. The decrease was primarily due to the increase in net sales.
Gross profit and gross margin
Gross profit increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, primarily due to the increase in net sales and a change in product mix.
Gross margin was 46.7% and 45.7% for the three-month periods ended December 26, 2025 and December 27, 2024, respectively. The increase was primarily due to the increase in net sales and a change in product mix.
Research and development expenses
Research and development (“R&D”) expenses increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, primarily due to the increase in personnel costs, including the projected funding of the annual incentive program.
R&D expenses as a percentage of our total net sales was 23.1% and 24.4% for the three-month periods ended December 26, 2025 and December 27, 2024, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, partially offset by the increase in the projected funding of the annual incentive program.
Selling, general and administrative expenses
Selling, general and administrative (“SG&A”) expenses increased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, primarily due to an increase in personnel costs, including the projected funding of the annual incentive program.
SG&A expenses as a percentage of our total net sales was 19.5% and 21.3% in the three-month periods ended December 26, 2025 and December 27, 2024, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, partially offset by an increase in the projected funding of the annual incentive program.
Interest expense
Interest expense decreased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024. The decrease is due to the voluntary payments applied to the outstanding balance of the 2025 Refinanced Loans.
Interest income
Interest income decreased in the three-month period ended December 26, 2025 compared to the three-month period ended December 27, 2024, primarily due to lower cash and cash equivalents balances.
Other expense, net
The foreign currency loss recorded in the three-month period ended December 26, 2025 was primarily due to the U.S. Dollar impact on transactions in the Philippines. The foreign currency loss recorded in the three-month period ended December 27, 2024 was primarily due to realized and unrealized losses from our Philippine location.
We recorded a net loss of $3.6 million related to our equity investment in Polar Semiconductor, LLC (“PSL”) in the three-month period ended December 26, 2025.
Income tax benefit
Income tax benefit and the effective income tax rate were approximately $7.9 million and (1,592.7)%, respectively, in the three-month period ended December 26, 2025, compared to income tax benefit and effective income tax rate of approximately $0.8 million and 10.6%, respectively, in the three-month period ended December 27, 2024. The change in the effective tax rate for the three-month period ended December 26, 2025, compared to the three-month period ended December 27, 2024 primarily resulted from a decrease in GAAP loss before taxes and the One Big Beautiful Bill Act (“OBBB”) impacts described in Note 13, “Income Taxes” to the unaudited condensed consolidated financial statements included in this Quarterly Report.
Nine-Month Period Ended December 26, 2025 Compared to Nine-Month Period Ended December 27, 2024
The following table summarizes our results of operations and our results of operations as a percentage of total net sales for the nine-month periods ended December 26, 2025 and December 27, 2024.
(Dollars in thousands)
| Nine-Month Period Ended December 26, 2025 | As a % of Net Sales | Nine-Month Period Ended December 27, 2024 | As a % of Net Sales | Change $% | ||
|---|---|---|---|---|---|---|
| Total net sales | $646,909 | 100.0% | $532,182 | 100.0% | $114,727 | 21.6% |
| Cost of goods sold | 349,214 | 54.0% | 290,534 | 54.6% | 58,680 | 20.2% |
| Gross profit | 297,695 | 46.0% | 241,648 | 45.4% | 56,047 | 23.2% |
| Operating expenses: | ||||||
| Research and development | 150,269 | 23.2% | 132,031 | 24.8% | 18,238 | 13.8% |
| Selling, general and administrative | 134,349 | 20.8% | 116,221 | 21.8% | 18,128 | 15.6% |
| Total operating expenses | 284,618 | 44.0% | 248,252 | 46.6% | 36,366 | 14.6% |
| Operating income (loss) | 13,077 | 2.0% | (6,604) | (1.2)% | 19,681 | (298.0)% |
| Other (expense) income: | ||||||
| Interest expense | (16,999) | (2.6)% | (23,492) | (4.4)% | 6,493 | (27.6)% |
| Interest income | 507 | 0.1% | 1,302 | 0.2% | (795) | (61.1)% |
| Loss on change in fair value of forward repurchase contract | — | —% | (34,752) | (6.5)% | 34,752 | (100.0)% |
| Other expense, net | (8,799) | (1.4)% | (3,712) | (0.7)% | (5,087) | 137.0% |
| Loss before income taxes | (12,214) | (1.9)% | (67,258) | (12.6)% | 55,044 | (81.8)% |
| Income tax benefit | (13,997) | (2.2)% | (9,233) | (1.7)% | (4,764) | 51.6% |
| Net income (loss) | 1,783 | 0.3% | (58,025) | (10.9)% | 59,808 | (103.1)% |
| Net income attributable to non-controlling interests | 192 | 0.0% | 185 | 0.0% | 7 | 3.8% |
| Net income (loss) attributable to Allegro MicroSystems, Inc. | $1,591 | 0.2% | $(58,210) | (10.9)% | $59,801 | (102.7)% |
Total net sales
Total net sales increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024. The increase was primarily driven by e-Mobility products, which includes ADAS and xEV components, data center applications, medical applications, industrial automation and robotics and internal combustion engine products, partially offset by a decrease in consumer products, personal and industrial transport products and safety, comfort and convenience applications.
Sales trends by market
The following table summarizes total net sales by market. The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed.
(Dollars in thousands)
| Nine-Month Period Ended December 26, 2025 | December 27, 2024 | Change Amount% | ||
|---|---|---|---|---|
| Automotive | $464,652 | $395,711 | $68,941 | 17.4% |
| Industrial and Other | 182,257 | 136,471 | 45,786 | 33.5% |
| Total net sales | $646,909 | $532,182 | $114,727 | 21.6% |
Automotive net sales increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily due to an increase in demand for e-Mobility products, which includes ADAS and xEV components, as well as our internal combustion engine products, partially offset by a decrease in safety, comfort and convenience applications.
Industrial and Other net sales increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily due to an increase in demand for data center applications, medical applications, and industrial automation and robotics, partially offset by a decrease in consumer products.
Sales trends by product
The following table summarizes net sales by product.
(Dollars in thousands)
| Nine-Month Period Ended December 26, 2025 | December 27, 2024 | Change Amount% | ||
|---|---|---|---|---|
| MS | $397,657 | $357,651 | $40,006 | 11.2% |
| PIC | 249,252 | 174,531 | 74,721 | 42.8% |
| Total net sales | $646,909 | $532,182 | $114,727 | 21.6% |
The increase in PIC sales was primarily driven by an increase in demand for our motor and high performance power products. The increase in MS sales was primarily due to an increase in demand for our current and isolator products, magnetic speed sensors and our tunneling magnetoresistance sensor solutions.
Sales trends by geographic location
The following table summarizes net sales by geographic location based on ship-to location.
(Dollars in thousands)
| Americas: | Nine-Month Period Ended December 26, 2025 | December 27, 2024 | Change Amount% | |
|---|---|---|---|---|
| United States | $69,541 | $69,235 | $306 | 0.4% |
| Other Americas | 32,263 | 17,549 | 14,714 | 83.8% |
| EMEA: | ||||
| Europe | 84,626 | 81,482 | 3,144 | 3.9% |
| Asia: | ||||
| Greater China | 187,910 | 131,233 | 56,677 | 43.2% |
| Japan | 109,079 | 115,171 | (6,092) | (5.3)% |
| South Korea | 57,977 | 57,096 | 881 | 1.5% |
| Other Asia | 105,513 | 60,416 | 45,097 | 74.6% |
| Total net sales | $646,909 | $532,182 | $114,727 | 21.6% |
Greater China net sales increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily driven by ADAS and xEV components, industrial automation and robotics products, safety, comfort and convenience applications and data center applications, partially offset by a decrease in consumer products. Other Asia net sales increased in data center applications, medical applications and safety, comfort and convenience applications, partially offset by a decrease in consumer products. Other Americas net sales increased in both Automotive and Industrial and Other applications, primarily in ADAS components and clean energy applications. Europe net sales increased primarily in Automotive markets, driven by ADAS components, as well as growth in industrial automation and robotics, partially offset by decreases in clean energy applications, consumer products, and safety, comfort and convenience applications. Japan net sales declined primarily in safety, comfort and convenience applications and personal and industrial transport products, partially offset by an increase in data center applications.
Cost of goods sold
Cost of goods sold increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily due to higher production volume in support of higher product sales and foreign currency impact.
Cost of goods sold as a percentage of our total net sales was 54.0% and 54.6% for the nine-month periods ended
December 26, 2025 and December 27, 2024, respectively. The decrease was primarily due to the increase in net sales.
Gross profit and gross margin
Gross profit increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily due to the increase in net sales and a change in product mix.
Gross margin was 46.0% and 45.4% for the nine-month periods ended December 26, 2025 and December 27, 2024, respectively. The increase was primarily due to the increase in net sales and a change in product mix.
Research and development expenses
R&D expenses increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily due to an increase in personnel costs, including the projected funding of the annual incentive program.
R&D expenses as a percentage of our total net sales was 23.2% and 24.8% for the nine-month periods ended
December 26, 2025 and December 27, 2024, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, partially offset by an increase in the projected funding of the annual incentive program.
Selling, general and administrative expenses
SG&A expenses increased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily due to an increase in personnel costs, including the projected funding of the annual incentive program, outside service and legal fees.
SG&A expenses as a percentage of our total net sales was 20.8% and 21.8% in the nine-month periods ended
December 26, 2025 and December 27, 2024, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, partially offset by an increase in the projected funding of the annual incentive program, outside service and legal fees.
Interest expense
Interest expense decreased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024. The decrease is due to the voluntary payments applied to the outstanding balance of the 2025 Refinanced Loans.
Interest income
Interest income decreased in the nine-month period ended December 26, 2025 compared to the nine-month period ended December 27, 2024, primarily due to lower cash and cash equivalents balances.
Loss on change in fair value of forward repurchase contract
We recorded a loss on change in fair value of a forward repurchase contract in the nine-month period ended December 27, 2024, due to the various settlement dates under the Share Repurchase Agreement.
Other expense, net
The foreign currency loss recorded in the nine-month period ended December 26, 2025 was primarily due to the U.S. Dollar weakening against various currencies, including the Euro and the Philippine Peso. The foreign currency loss recorded in the nine-month period ended December 27, 2024 was primarily due to the realized and unrealized losses from our Philippine location.
We recorded a net loss of $6.7 million related to our equity investment in PSL in the nine-month period ended
December 26, 2025. In the nine-month period ended December 27, 2024, we recorded a net loss of $2.8 million related to the difference between the selling price per share and its carrying amount per share and after a gain from the conversion of the PSL Promissory Notes in connection with the PSL Closing, partially offset by $1.2 million of gains related to earnings in our money market fund deposits.
Income tax benefit
Income tax benefit and the effective income tax rate were approximately $14.0 million and 114.6%, respectively, in the nine-month period ended December 26, 2025, compared to income tax benefit and effective income tax rate of approximately $9.2 million and 13.7%, respectively, in the nine-month period ended December 27, 2024. The change in the effective tax rate for the nine-month period ended December 26, 2025, compared to the nine-month period ended December 27, 2024 was due to a decrease in GAAP loss before income taxes and the OBBB impacts described in Note 13, “Income Taxes” to the unaudited condensed consolidated financial statements included in this Quarterly Report.
Liquidity and Capital Resources
As of December 26, 2025, we had $155.2 million of cash and cash equivalents and $374.3 million of working capital, compared to $121.3 million of cash and cash equivalents and $370.8 million of working capital as of March 28, 2025. Working capital is impacted by the timing and extent of our business needs.
Our primary requirements for liquidity and capital resources besides our growth initiatives are working capital, capital expenditures, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalents. Our current capital deployment strategy for fiscal year 2026 is to utilize cash on hand and capacity under our revolving credit facility to support our continued growth initiatives into select markets and planned capital expenditures, as well as consider potential acquisitions. As of December 26, 2025, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the current fiscal year relate to our operating leases, operating and capital purchase commitments, and expected contributions to our defined benefit and contribution plans. Additionally, we expect to continue to strategically invest in expanding our operations in China, Japan, India and Philippines in order to directly manage and service our customers in these markets, which could result in increases in our total net sales, cost of goods sold and operating expenses. For information regarding the Company’s expected cash requirements and timing of payments related to leases, noncancellable purchase commitments and pension and defined contribution plans, see Note 12, “Leases,” Note 15, “Retirement Plans,” and Note 16, “Commitments and Contingencies” to the audited consolidated financial statements in the Company’s 2025 Annual Report.
We believe that our existing cash will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses that we expect to incur during the next 12 months. In order to support and achieve our future growth plans, we may need or advantageously seek to obtain additional funding through equity or debt financing. We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next 12 months. If these resources are not sufficient to satisfy our liquidity requirements due to changes in circumstances, we may be required to borrow under our revolving credit facility or seek additional financing. If we raise additional funds by issuing equity securities that are not used to repurchase existing shares outstanding, our stockholders will experience dilution. Debt financing, if available, may contain covenants that significantly restrict our operations or our ability to obtain additional debt financing in the future. Any additional financing that we raise may contain terms that are not favorable to us or our stockholders. We cannot assure you that we would be able to obtain additional financing on terms favorable to us or our existing stockholders, or at all.
Cash Flows from Operating, Investing and Financing Activities
The following table summarizes our cash flows for the nine-month periods ended December 26, 2025 and December 27, 2024:
(dollars in thousands)
| Nine-Month Period Ended December 26, 2025 | December 27, 2024 | |
|---|---|---|
| Net cash provided by operating activities | $127,355 | $41,560 |
| Net cash used in investing activities | (21,160) | (34,245) |
| Net cash used in financing activities | (75,032) | (79,209) |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | 1,129 | (1,305) |
| Net increase (decrease) in cash and cash equivalents and restricted cash | $32,292 | $(73,199) |
Operating Activities
Net cash provided by operating activities was $127.4 million in the nine-month period ended December 26, 2025, resulting primarily from a net income of $1.8 million and noncash charges of $88.9 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $36.7 million. Noncash charges primarily included increases of $49.8 million for depreciation and amortization, $37.3 million of stock-based compensation, and $7.6 million for provisions for inventory and expected credit losses, partially offset by $8.0 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $23.9 million increase in other changes in operating assets and liabilities, net, a $17.7 million decrease in prepaid expenses and other assets, and a $13.7 million increase in trade accounts payable, partially offset by a $15.6 million increase in trade accounts receivable, net, a $1.8 million decrease in net amounts due to related party and a $1.3 million increase in inventories. The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year and timing of collections. Trade accounts payable increased, primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $2.4 million. The decrease in prepaid expenses and other assets was primarily due to the receipt of a tax refund and the additional planning related to the OBBB. The decrease in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in other changes in operating assets and liabilities, net was primarily the result of higher accrued income taxes and accrued personnel costs. The increase in inventories was primarily the result of the increase in production to support the increase in net sales.
Net cash provided by operating activities was $41.6 million in the nine-month period ended December 27, 2024, resulting primarily from a net loss of $58.0 million and noncash charges of $120.0 million, further adjusted by a net decrease in cash from an increase in net operating assets and liabilities of $20.4 million. Noncash charges primarily included increases of $48.6 million for depreciation and amortization, $34.8 million for loss on change in fair value of forward repurchase contract, $32.3 million of stock-based compensation, $7.5 million for provisions for inventory and expected credit losses and $6.6 million of other non-cash reconciling items, partially offset by $11.5 million of deferred income taxes. The net increase in operating assets and liabilities consisted of a $38.1 million increase in inventories, a $21.3 million decrease in other changes in operating assets and liabilities, net, partially offset by $34.4 million decrease in trade accounts receivable, net, a $5.5 million increase in trade accounts payable and a $0.6 million increase in net amounts due to related party. The decrease in trade accounts receivable, net, was primarily a result of decreased sales year-over-year. Trade accounts payable increased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $1.7 million. The increase in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in inventories was primarily the result of inventory builds of standard products to support anticipated sales growth. The increase in prepaid expenses and other assets was mostly due to higher long-term deposits and the timing of tax payments. The decrease in other changes in operating assets and liabilities, net was primarily the result of a reduction in accrued personnel costs due to the timing of payments pursuant to our annual incentive compensation plan.
Investing Activities
Net cash used in investing activities was $21.2 million in the nine-month period ended December 26, 2025, consisting of purchases of property, plant and equipment.
Net cash used in investing activities was $34.2 million in the nine-month period ended December 27, 2024, primarily consisting of purchases of property, plant and equipment.
Financing Activities
Net cash used in financing activities was $75.0 million in the nine-month period ended December 26, 2025, primarily consisting of $60.0 million of payments on our term loan, $10.4 million of taxes related to the net settlement of equity awards and $4.0 million of payments for intangible assets.
Net cash used in financing activities was $79.2 million in the nine-month period ended December 27, 2024, consisting of $853.9 million of repurchases of our common stock, $75.0 million of payments on our term loan and $12.8 million of taxes related to the net settlement of equity awards, partially offset by the issuance of common stock of $665.9 million, net proceeds of $193.5 million from the 2024 Term Loans, proceeds received in connection with the issuance of common stock under our employee stock purchase plan and proceeds received related to the quarterly payment from PSL on our related party loan.
Debt Obligations
See Note 9, “Debt and Other Borrowings” to the unaudited condensed consolidated financial statements included in this Quarterly Report for information regarding our debt obligations.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included in this Quarterly Report for a full description of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects on our condensed consolidated financial statements contained in Item 1 of this Quarterly Report.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements included in our 2025 Annual Report. There have been no material changes in our critical accounting policies and estimates since March 28, 2025.
Market risk
As filed, 301 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
There have not been any material changes in our exposures to market risk since March 28, 2025. For details on the Company’s interest rate, foreign currency exchange rate, and inflation risks, see Part I, Item 7A. “Quantitative and Qualitative Information About Market Risks” in our 2025 Annual Report.
Controls and procedures
As filed, 1,671 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 26, 2025. Based on the evaluation of our disclosure controls and procedures as of December 26, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Risk factors
As filed, 234 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Various risk factors associated with our business are included in our 2025 Annual Report, as filed with the SEC on May 22, 2025. There have been no material changes to those risk factors previously disclosed in our 2025 Annual Report.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-12-26. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2025-09-27 to 2025-12-26 | $229.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months2025-03-29 to 2025-12-26 | $646.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months2025-09-27 to 2025-12-26 | $122.1m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months2025-03-29 to 2025-12-26 | $349.2m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months2025-09-27 to 2025-12-26 | $107.1m | us-gaap:GrossProfit |
| Gross profit | 9 months2025-03-29 to 2025-12-26 | $297.7m | us-gaap:GrossProfit |
| Research and development | 3 months2025-09-27 to 2025-12-26 | $52.9m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months2025-03-29 to 2025-12-26 | $150.3m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months2025-09-27 to 2025-12-26 | $44.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months2025-03-29 to 2025-12-26 | $134.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months2025-09-27 to 2025-12-26 | $9.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months2025-03-29 to 2025-12-26 | $13.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months2025-09-27 to 2025-12-26 | $4.9m | us-gaap:InterestExpense |
| Interest expense | 9 months2025-03-29 to 2025-12-26 | $17.0m | us-gaap:InterestExpense |
| Income tax | 3 months2025-09-27 to 2025-12-26 | −$7.9m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months2025-03-29 to 2025-12-26 | −$14.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2025-09-27 to 2025-12-26 | $8.3m | us-gaap:NetIncomeLoss |
| Net income | 9 months2025-03-29 to 2025-12-26 | $1.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2025-09-27 to 2025-12-26 | $0.04 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months2025-03-29 to 2025-12-26 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2025-09-27 to 2025-12-26 | $0.04 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months2025-03-29 to 2025-12-26 | $0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2025-09-27 to 2025-12-26 | 186,208,258 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months2025-03-29 to 2025-12-26 | 185,998,601 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months2025-03-29 to 2025-12-26 | $127.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months2025-03-29 to 2025-12-26 | $21.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | At period end2025-12-26 | $155.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2025-12-26 | $515.4m | us-gaap:AssetsCurrent |
| Total assets | At period end2025-12-26 | $1.42bn | us-gaap:Assets |
| Current liabilities | At period end2025-12-26 | $141.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | At period end2025-12-26 | $458.3m | us-gaap:Liabilities |
| Long-term debt | At period end2025-12-26 | $286.2m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | At period end2025-12-26 | $1.6m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | At period end2025-12-26 | $962.7m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001193125-26-030636. Last ingested by Listed: Oct 29, 2026, 07:10 ET. Listed shows no prices and gives no investment advice.