Wolfspeed Reports Financial Results for the First Quarter of Fiscal Year 2025
Solidifying Capital Structure, Simplifying Business to Accelerate Profitability and Continuing to Build Core Sales Demand
Executed Access to Incremental
Streamlining Business to 200mm Pure Play Yielding
Quarterly Financial Highlights (Continuing operations only. All comparisons are to the first quarter of fiscal 2024.)
-
Consolidated revenue of approximately
$195 million , as compared to approximately$197 million -
Mohawk Valley Fab contributed approximately
$49 million in revenue
-
Mohawk Valley Fab contributed approximately
-
Power device design-ins of
$1.5 billion -
Power device design-wins of
$1.3 billion -
GAAP gross margin of approximately (19)%, compared to approximately 13%
-
GAAP gross margin includes the impacts of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab. Underutilization was
$26.4 million as compared to$34.4 million . See "Start-up and Underutilization Costs" below for additional information.
-
GAAP gross margin includes the impacts of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab. Underutilization was
- Non-GAAP gross margin of 3%, compared to 16%
-
Ended Q1 with
~$1.7 billion in cash and investments; does not include initial draw down of$250 million from lender group
“This quarter we took action to solidify the capital structure, simplifying our business to accelerate structural profitability and support the build out of our state-of-the-art silicon carbide facilities. We will have a 200mm silicon carbide footprint at
Lowe continued, "To drive operational improvements, we are taking action to enhance efficiency, align our business with current market conditions and become the first silicon carbide company to transition to pure-play 200-millimeter. The transition to a fully 200-millimeter platform allows us to take further initiatives to streamline our cost structure, including closing our manual
“We delivered 2.5 times year-over-year growth in our automotive business in the first quarter, and we expect our EV revenue to continue to grow throughout calendar 2025, as the total number of car models using a
Business Outlook:
For its second quarter of fiscal 2025,
Restructuring and Facility Closure:
During the first quarter of fiscal 2025,
For the second quarter of fiscal 2025, the Company expects to incur
Start-up and Underutilization Costs:
When a new facility begins revenue generating production, the operating costs of that facility that were previously expensed as start-up costs are instead primarily reflected as part of the cost of production within the cost of revenue, net line item in our statement of operations. For example, the Mohawk Valley Fab began revenue generating production at the end of fiscal 2023 and the costs of operating this facility in fiscal 2024 and going forward are primarily reflected in cost of revenue, net.
During the period when production begins, but before the facility is at its expected utilization level,
For the second quarter of fiscal 2025, operating expenses are expected to include approximately
Quarterly Conference Call:
The conference call will be available to the public through a live audio web broadcast via the Internet. For webcast details, visit
Supplemental financial information, including the non-GAAP reconciliation attached to this press release, is available on
About
Non-GAAP Financial Measures:
This press release highlights the Company's financial results on both a GAAP and a non-GAAP basis. The GAAP results include certain costs, charges and expenses that are excluded from non-GAAP results. By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the Company's performance, core results and underlying trends.
Forward Looking Statements:
The schedules attached to this release are an integral part of the release. This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause Wolfspeed’s actual results to differ materially from those indicated in the forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our plans to grow the business, our ability to achieve our targets for the second quarter of fiscal 2025 and periods beyond, our ability to meet targeted utilization rates and accelerate the shift of our device fabrication to the Mohawk Valley Fab, our revenue and market growth, and our ability to reduce costs, optimize our capital structure and access funding. Actual results could differ materially due to a number of factors, including but not limited to, ongoing uncertainty in global economic and geopolitical conditions, such as the ongoing military conflict between
|
|||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
(unaudited) |
|||||
|
Three months ended |
||||
(in millions of |
|
|
|
||
Revenue, net |
|
|
|
|
|
Cost of revenue, net |
230.9 |
|
|
172.7 |
|
Gross profit |
(36.2 |
) |
|
24.7 |
|
Gross margin percentage |
(19 |
)% |
|
13 |
% |
|
|
|
|
||
Operating expenses: |
|
|
|
||
Research and development |
50.9 |
|
|
44.1 |
|
Sales, general and administrative |
62.2 |
|
|
64.1 |
|
Factory start-up costs |
19.7 |
|
|
8.4 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
Loss on disposal or impairment of other assets |
0.6 |
|
|
0.1 |
|
Other operating expense |
60.2 |
|
|
2.6 |
|
Total operating expense |
193.9 |
|
|
119.6 |
|
Operating loss |
(230.1 |
) |
|
(94.9 |
) |
Operating loss percentage |
(118 |
)% |
|
(48 |
)% |
|
|
|
|
||
Non-operating expense, net |
51.7 |
|
|
28.5 |
|
Loss before income taxes |
(281.8 |
) |
|
(123.4 |
) |
Income tax expense |
0.4 |
|
|
0.2 |
|
Net loss from continuing operations |
(282.2 |
) |
|
(123.6 |
) |
Net loss from discontinued operations |
— |
|
|
(272.1 |
) |
Net loss |
( |
) |
|
( |
) |
|
|
|
|
||
Basic and diluted loss per share |
|
|
|
||
Continuing operations |
( |
) |
|
( |
) |
Net loss |
( |
) |
|
( |
) |
|
|
|
|
||
Weighted average shares - basic and diluted (in thousands) |
126,733 |
|
|
125,105 |
|
|
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(unaudited) |
|||||
(in millions of |
|
|
|
||
Assets |
|
|
|
||
Current assets: |
|
|
|
||
Cash, cash equivalents, and short-term investments |
|
|
|
|
|
Accounts receivable, net |
145.4 |
|
|
147.4 |
|
Inventories |
467.9 |
|
|
440.7 |
|
Income taxes receivable |
0.3 |
|
|
0.5 |
|
Prepaid expenses |
58.3 |
|
|
56.6 |
|
Other current assets |
98.9 |
|
|
179.8 |
|
Total current assets |
2,458.4 |
|
|
2,999.6 |
|
Property and equipment, net |
3,959.3 |
|
|
3,652.3 |
|
|
359.2 |
|
|
359.2 |
|
Intangible assets, net |
23.7 |
|
|
23.9 |
|
Long-term receivables |
2.2 |
|
|
2.3 |
|
Other long-term investments |
79.3 |
|
|
79.3 |
|
Deferred tax assets |
1.1 |
|
|
1.1 |
|
Investment tax credit receivable |
723.5 |
|
|
641.8 |
|
Other assets |
251.1 |
|
|
225.1 |
|
Total assets |
|
|
|
|
|
|
|
|
|
||
Liabilities and Shareholders' Equity |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
Contract liabilities and distributor-related reserves |
62.9 |
|
|
62.3 |
|
Income taxes payable |
1.3 |
|
|
1.0 |
|
Finance lease liabilities |
0.5 |
|
|
0.5 |
|
Other current liabilities |
117.8 |
|
|
77.9 |
|
Total current liabilities |
782.9 |
|
|
665.3 |
|
|
|
|
|
||
Long-term liabilities: |
|
|
|
||
Long-term debt |
3,132.6 |
|
|
3,126.2 |
|
Convertible notes, net |
3,037.3 |
|
|
3,034.9 |
|
Deferred tax liabilities |
10.8 |
|
|
10.8 |
|
Finance lease liabilities - long-term |
8.8 |
|
|
8.9 |
|
Other long-term liabilities |
256.5 |
|
|
256.4 |
|
Total long-term liabilities |
6,446.0 |
|
|
6,437.2 |
|
|
|
|
|
||
Shareholders’ equity: |
|
|
|
||
Common stock |
0.2 |
|
|
0.2 |
|
Additional paid-in-capital |
3,843.6 |
|
|
3,821.9 |
|
Accumulated other comprehensive loss |
(4.3 |
) |
|
(11.6 |
) |
Accumulated deficit |
(3,210.6 |
) |
|
(2,928.4 |
) |
Total shareholders’ equity |
628.9 |
|
|
882.1 |
|
Total liabilities and shareholders’ equity |
|
|
|
|
|
|
|||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
(unaudited) |
|||||
|
Three months ended |
||||
(in millions of |
|
|
|
||
Operating activities: |
|
|
|
||
Net loss |
( |
) |
|
( |
) |
Net loss from discontinued operations |
— |
|
|
(272.1 |
) |
Net loss from continuing operations |
(282.2 |
) |
|
(123.6 |
) |
Adjustments to reconcile net loss to cash used in operating activities of continuing operations: |
|
|
|
||
Depreciation and amortization |
71.1 |
|
|
40.1 |
|
Amortization of debt issuance costs and discount, net of non-cash capitalized interest |
6.7 |
|
|
7.2 |
|
Stock-based compensation |
23.7 |
|
|
19.7 |
|
Loss on disposal or impairment of long-lived assets |
0.6 |
|
|
— |
|
Amortization of premium on investments, net |
(3.8 |
) |
|
(5.3 |
) |
Realized gain on sale of investments |
0.1 |
|
|
— |
|
Deferred income taxes |
— |
|
|
0.3 |
|
Changes in operating assets and liabilities: |
|
|
|
||
Accounts receivable, net |
2.0 |
|
|
0.6 |
|
Inventories |
(25.6 |
) |
|
(50.0 |
) |
Prepaid expenses and other assets |
(10.5 |
) |
|
(34.7 |
) |
Accounts payable |
20.2 |
|
|
(18.1 |
) |
Accrued salaries and wages and other liabilities |
65.1 |
|
|
45.3 |
|
Contract liabilities and distributor-related reserves |
0.6 |
|
|
5.8 |
|
Net cash used in operating activities of continuing operations |
(132.0 |
) |
|
(112.7 |
) |
Net cash used in operating activities of discontinued operations |
— |
|
|
(34.7 |
) |
Cash used in operating activities |
(132.0 |
) |
|
(147.4 |
) |
Investing activities: |
|
|
|
||
Purchases of property and equipment |
(437.0 |
) |
|
(442.0 |
) |
Purchases of patent and licensing rights |
(1.2 |
) |
|
(1.3 |
) |
Purchases of short-term investments |
(56.1 |
) |
|
(775.3 |
) |
Proceeds from maturities of short-term investments |
256.2 |
|
|
370.0 |
|
Proceeds from sale of short-term investments |
3.1 |
|
|
24.8 |
|
Reimbursement of property and equipment purchases from long-term incentive agreement |
42.0 |
|
|
39.6 |
|
Net cash used in investing activities of continuing operations |
(193.0 |
) |
|
(784.2 |
) |
Net cash used in investing activities of discontinued operations |
— |
|
|
(1.7 |
) |
Cash used in investing activities |
(193.0 |
) |
|
(785.9 |
) |
Financing activities: |
|
|
|
||
Proceeds from long-term debt borrowings |
— |
|
|
1,000.0 |
|
Payments of debt issuance costs |
— |
|
|
(46.0 |
) |
Proceeds from issuance of common stock |
— |
|
|
0.5 |
|
Tax withholding on vested equity awards |
(3.6 |
) |
|
(15.0 |
) |
Payments on long-term debt borrowings, including finance lease obligations |
(0.1 |
) |
|
(0.1 |
) |
Incentive-related escrow refunds |
10.0 |
|
|
— |
|
Commitment fees on long-term incentive agreement |
(1.5 |
) |
|
(1.0 |
) |
Cash provided by financing activities |
4.8 |
|
|
938.4 |
|
Effects of foreign exchange changes on cash and cash equivalents |
0.4 |
|
|
(0.1 |
) |
Net change in cash and cash equivalents |
(319.8 |
) |
|
5.0 |
|
Cash and cash equivalents, beginning of period |
1,045.9 |
|
|
1,757.0 |
|
Cash and cash equivalents, end of period |
|
|
|
|
|
Product Line Revenue |
|||
|
Three months ended |
||
(in millions of |
|
|
|
Power Products |
|
|
|
Materials Products |
97.6 |
|
96.2 |
Total |
|
|
|
Non-GAAP Measures of Financial Performance
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP,
Reconciliation to the nearest GAAP measure of all historical non-GAAP measures included in this press release can be found in the tables included with this press release.
Non-GAAP measures presented in this press release are not in accordance with or an alternative to measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with
For its internal budgeting process, and as discussed further below,
Stock-based compensation expense. This expense consists of expenses for stock options, restricted stock, performance stock awards and employee stock purchases through its Employee Stock Purchase Program.
Amortization or impairment of acquisition-related intangibles.
Project, transformation and transaction costs. The Company has incurred professional services fees and other costs associated with completed and potential acquisitions and divestitures, as well as internal transformation programs focused on optimizing the Company's administrative processes.
Restructuring and facility closure costs. During the first quarter of fiscal 2025, the Company began to incur costs to optimize its operating model and accelerate our transition to 200mm silicon carbide offerings through facility closures and headcount reduction initiatives.
Amortization of discount and debt issuance costs, net of capitalized interest. The issuance of the Company's convertible senior notes in
Loss (gain) on Wafer Supply Agreement. In connection with the completed sale of the LED Products business unit to SMART Global Holdings, Inc., and its wholly owned subsidiary, the Company entered into a Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), pursuant to which the Company supplies
Income tax adjustment. This amount reconciles GAAP tax (benefit) expense to a calculated non-GAAP tax (benefit) expense utilizing a non-GAAP tax rate. The non-GAAP tax rate estimates an appropriate tax rate if the listed non-GAAP items were excluded. This reconciling item adjusts non-GAAP net (loss) income to the amount it would be if the calculated non-GAAP tax rate was applied to non-GAAP (loss) income before income taxes.
In addition to the non-GAAP measures discussed above,
|
|||||
Reconciliation of GAAP to Non-GAAP Measures - Continuing Operations Only |
|||||
(in millions of |
|||||
(unaudited) |
|||||
|
|||||
Non-GAAP Gross Margin |
|||||
|
Three months ended |
||||
|
|
|
|
||
GAAP gross profit |
( |
) |
|
|
|
GAAP gross margin percentage |
(19 |
)% |
|
13 |
% |
Adjustments: |
|
|
|
||
Stock-based compensation expense |
8.5 |
|
|
6.0 |
|
Restructuring and facility closure costs |
34.3 |
|
|
— |
|
Non-GAAP gross profit |
|
|
|
|
|
Non-GAAP gross margin percentage |
3 |
% |
|
16 |
% |
Non-GAAP Operating Loss |
|||||
|
Three months ended |
||||
|
|
|
|
||
GAAP operating loss |
( |
) |
|
( |
) |
GAAP operating loss percentage |
(118 |
)% |
|
(48 |
)% |
Adjustments: |
|
|
|
||
Stock-based compensation expense: |
|
|
|
||
Cost of revenue, net |
8.5 |
|
|
6.0 |
|
Research and development |
3.2 |
|
|
2.7 |
|
Sales, general and administrative |
12.0 |
|
|
11.0 |
|
Total stock-based compensation expense |
23.7 |
|
|
19.7 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
Project, transformation and transaction costs |
6.0 |
|
|
2.6 |
|
Restructuring and facility closure costs: |
|
|
|
||
Cost of revenue, net |
34.3 |
|
|
— |
|
Other operating expense |
52.8 |
|
|
— |
|
Total restructuring and other costs |
87.1 |
|
|
— |
|
Total adjustments to GAAP operating loss |
117.1 |
|
|
22.6 |
|
Non-GAAP operating loss |
( |
) |
|
( |
) |
Non-GAAP operating loss percentage |
(58 |
)% |
|
(37 |
)% |
Non-GAAP Non-Operating (Expense) Income, net |
|||||
|
Three months ended |
||||
|
|
|
|
||
GAAP non-operating expense, net |
( |
) |
|
( |
) |
Adjustments: |
|
|
|
||
Amortization of discount and debt issuance costs, net of capitalized interest |
6.7 |
|
|
7.2 |
|
Loss on Wafer Supply Agreement |
9.2 |
|
|
6.9 |
|
Non-GAAP non-operating expense, net |
( |
) |
|
( |
) |
Non-GAAP Net Loss |
|||||
|
Three months ended |
||||
|
|
|
|
||
GAAP net loss |
( |
) |
|
( |
) |
Adjustments: |
|
|
|
||
Stock-based compensation expense |
23.7 |
|
|
19.7 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
Project, transformation and transaction costs |
6.0 |
|
|
2.6 |
|
Restructuring and facility closure costs |
87.1 |
|
|
— |
|
Amortization of discount and debt issuance costs, net of capitalized interest |
6.7 |
|
|
7.2 |
|
Loss on Wafer Supply Agreement |
9.2 |
|
|
6.9 |
|
Total adjustments to GAAP net loss before provision for income taxes |
133.0 |
|
|
36.7 |
|
Income tax adjustment - benefit |
33.4 |
|
|
20.3 |
|
Non-GAAP net loss |
( |
) |
|
( |
) |
|
|
|
|
||
Non-GAAP diluted loss per share |
( |
) |
|
( |
) |
Non-GAAP weighted average shares (in thousands) |
126,733 |
|
|
125,105 |
|
Adjusted EBITDA |
|||||
|
Three months ended |
||||
|
|
|
|
||
GAAP net loss |
( |
) |
|
( |
) |
Reconciling items to EBITDA (Non-GAAP) |
|
|
|
||
Income tax expense |
0.4 |
|
|
0.2 |
|
Interest expense |
42.3 |
|
|
21.1 |
|
Depreciation and amortization |
71.1 |
|
|
40.1 |
|
EBITDA (Non-GAAP) |
(168.4 |
) |
|
(62.2 |
) |
|
|
|
|
||
Reconciling items to adjusted EBITDA (Non-GAAP) |
|
|
|
||
Stock based compensation |
23.7 |
|
|
19.7 |
|
Project, transformation and transaction costs |
6.0 |
|
|
2.6 |
|
Restructuring and facility closure costs(1) |
68.3 |
|
|
— |
|
Loss on Wafer Supply Agreement |
9.2 |
|
|
6.9 |
|
Adjusted EBITDA (Non-GAAP) |
( |
) |
|
( |
) |
|
|
|
|
||
(1)Excludes restructuring-related accelerated depreciation included in "Depreciation and amortization" |
Free Cash Flow |
|||||
|
Three months ended |
||||
|
|
|
|
||
Net cash used in operating activities |
( |
) |
|
( |
) |
Less: PP&E spending, net of reimbursements from long-term incentive agreement |
(395.0 |
) |
|
(402.4 |
) |
Less: Patents spending |
(1.2 |
) |
|
(1.3 |
) |
Total free cash flow |
( |
) |
|
( |
) |
|
||
Business Outlook Unaudited GAAP to Non-GAAP Reconciliation |
||
|
|
Three Months Ended |
(in millions of |
|
|
GAAP net loss from continuing operations outlook range |
|
( |
Adjustments: |
|
|
Stock-based compensation expense |
|
24 |
Restructuring and facility closure costs |
|
174 |
Amortization of discount and debt issuance costs, net of capitalized interest |
|
12 |
Project, transformation and transaction costs |
|
5 |
Total adjustments to GAAP net loss before provision for income taxes |
|
215 |
Income tax adjustment |
|
41 to 33 |
Non-GAAP net loss from continuing operations outlook range |
|
( |
`
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106197166/en/
Vice President of External Affairs
Phone: 919-407-4820
investorrelations@wolfspeed.com
Source: