Mohawk Valley Fab Revenue Tripled Sequentially;
On Track for 20% Utilization in Fourth Quarter of Fiscal 2024
Year-over-year Revenue Growth of 20 Percent;
Record Quarterly Design-Wins Totaling $2.9 Billion
Wolfspeed, Inc. (NYSE: WOLF) today announced its results for the
second quarter of fiscal 2024.
Quarterly Financial Highlights (Continuing operations only.
All comparisons are to the second quarter of fiscal 2023)
- Consolidated revenue of $208.4 million, compared to $173.8
million
- Mohawk Valley Fab contributed $12 million in revenue, a 3x
increase from the prior quarter
- Power device design-ins of $2.1 billion
- Quarterly record design-wins of $2.9 billion - over 75% related
to automotive applications
- GAAP gross margin of 13.3%, compared to 32.6%
- Non-GAAP gross margin of 16.4%, compared to 35.8%
- GAAP and non-GAAP gross margins for the second quarter of
fiscal 2024 include the impact of $35.6 million of underutilization
costs, representing approximately 1,700 basis points of gross
margin. See "Start-up and Underutilization Costs" below for
additional information
- Completed sale of our RF Business to MACOM Technology Solutions
Holdings, Inc. (MACOM) for $75 million in cash and 711,528 shares
of MACOM common stock (the RF Business Divestiture)
"We’re proud of our results this quarter, which reflect robust
execution of our strategy and fortify our vision for the future of
Wolfspeed and silicon carbide," said Wolfspeed CEO, Gregg Lowe. "We
have made considerable progress at our Mohawk Valley facility,
tripling revenue sequentially. Our successful scale-up of 200mm
wafer production and continued qualification of high-quality EV
products on 200mm substrates are critical steps in meeting the
continued customer demand. This is demonstrated by a record $2.9
billion of design-wins, predominantly in the EV sector across
multiple OEMs."
Lowe continued, “Our steadfast commitment to our long-term goals
is bolstered by the conversion of our design-ins into significant
design-wins. This solidifies our confidence in the electrification
trend, which increasingly depends on the widespread adoption of
silicon carbide technology. We are pioneers in this transformative
era, steering towards a more electrified and efficient future."
Business Outlook:
For its third quarter of fiscal 2024, Wolfspeed targets revenue
from continuing operations in a range of $185 million to $215
million. GAAP net loss from continuing operations is targeted at
$134 million to $155 million, or $1.07 to $1.23 per diluted share.
Non-GAAP net loss from continuing operations is targeted to be in a
range of $71 million to $87 million, or $0.57 to $0.69 per diluted
share. Targeted non-GAAP net loss from continuing operations
excludes $63 million to $68 million of estimated expenses, net of
tax, primarily related to stock-based compensation expense,
amortization of discount and debt issuance costs, net of
capitalized interest, project, transformation and transaction costs
and loss on Wafer Supply Agreement. The GAAP and non-GAAP targets
from continuing operations do not include any estimated change in
the fair value of the shares of MACOM common stock that we acquired
in connection with the RF Business Divestiture.
Start-up and Underutilization Costs:
As part of expanding its production footprint to support
expected growth, Wolfspeed is incurring significant factory
start-up costs relating to facilities the Company is constructing
or expanding that have not yet started revenue generating
production. These factory start-up costs have been and will be
expensed as operating expenses in the statement of operations.
When a new facility begins revenue generating production, the
operating costs of that facility that were previously expensed as
start-up costs will instead be 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 going forward will be primarily
reflected in cost of revenue, net in future periods.
During the period when production begins, but before the
facility is at its expected utilization level, Wolfspeed expects
some of the costs to operate the facility will not be absorbed into
the cost of inventory. The costs incurred to operate the facility
in excess of the costs absorbed into inventory are referred to as
underutilization costs and are expensed as incurred to cost of
revenue, net. These costs are expected to be substantial as
Wolfspeed ramps up the facility to the expected utilization
level.
Wolfspeed incurred $10.5 million of factory start-up costs and
$35.6 million of underutilization costs in the second quarter of
fiscal 2024. No underutilization costs were incurred in the second
quarter of fiscal 2023.
For the third quarter of fiscal 2024, operating expenses are
expected to include approximately $13 million of factory start-up
costs primarily in connection with materials expansion efforts.
Cost of revenue, net, is expected to include approximately $36
million of underutilization costs primarily in connection with the
Mohawk Valley Fab.
Quarterly Conference Call:
Wolfspeed will host a conference call at 5:00 p.m. Eastern time
today to review the highlights of its second quarter results and
its fiscal third quarter 2024 business outlook, including
significant factors and assumptions underlying the targets noted
above.
The conference call will be available to the public through a
live audio web broadcast via the Internet. For webcast details,
visit Wolfspeed's website at investor.wolfspeed.com/events.cfm.
Supplemental financial information, including the non-GAAP
reconciliation attached to this press release, is available on
Wolfspeed's website at investor.wolfspeed.com/results.cfm.
About Wolfspeed, Inc.
Wolfspeed (NYSE: WOLF) leads the market in the worldwide
adoption of silicon carbide technologies. We provide
industry-leading solutions for efficient energy consumption and a
sustainable future. Wolfspeed’s product families include silicon
carbide material and power devices targeted for various
applications such as electric vehicles, fast charging, and
renewable energy and storage. We unleash the power of possibilities
through hard work, collaboration and a passion for innovation.
Learn more at www.wolfspeed.com.
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.
Wolfspeed's management evaluates results and makes operating
decisions using both GAAP and non-GAAP measures included in this
press release. Non-GAAP results are not prepared in accordance with
GAAP and non-GAAP information should be considered a supplement to,
and not a substitute for, financial statements prepared in
accordance with GAAP. Investors and potential investors are
encouraged to review the reconciliation of non-GAAP financial
measures to their most directly comparable GAAP measures attached
to this press release.
Beginning with the fourth quarter of fiscal 2023, the Company no
longer excludes start-up expenses from its non-GAAP measures and
does not exclude underutilization from its non-GAAP measures. Prior
period non-GAAP measures have been updated in this press release to
reflect the current presentation of the Company's non-GAAP
measures. As a result of this change, previously published non-GAAP
financial measures for the Company for prior periods which exclude
start-up expenses are not directly comparable to the non-GAAP
measures included herein.
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 third quarter
of fiscal 2024 and periods beyond, our ability to meet targeted
utilization rates at the Mohawk Valley Fab, and our market growth.
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 Russia and Ukraine and the ongoing conflicts in
the Middle East, infrastructure development or customer or
industrial demand that could negatively affect product demand,
including as a result of an economic slowdown or recession,
collectability of receivables and other related matters as
consumers and businesses may defer purchases or payments, or
default on payments; risks associated with our expansion plans,
including design and construction delays and cost overruns, timing
and amount of government incentives actually received, issues in
installing and qualifying new equipment and ramping production,
poor production process yields and quality control, and potential
increases to our restructuring costs; the risk that we do not meet
our production commitments to those customers who provide us with
capacity reservation deposits or similar payments; the risk that we
may experience production difficulties that preclude us from
shipping sufficient quantities to meet customer orders or that
result in higher production costs, lower yields and lower margins;
our ability to lower costs; the risk that our results will suffer
if we are unable to balance fluctuations in customer demand and
capacity, including bringing on additional capacity on a timely
basis to meet customer demand; the risk that longer manufacturing
lead times may cause customers to fulfill their orders with a
competitor's products instead; product mix; risks associated with
the ramp-up of production of our new products, and our entry into
new business channels different from those in which we have
historically operated; our ability to convert customer design-ins
to design-wins and sales of significant volume, and, if customer
design-in activity does result in such sales, when such sales will
ultimately occur and what the amount of such sales will be; the
risk that the markets for our products will not develop as we
expect, including the adoption of our products by electrical
vehicle manufacturers and the overall adoption of electrical
vehicles; the risk that the economic and political uncertainty
caused by the tariffs imposed by the United States on Chinese
goods, and corresponding Chinese tariffs and currency devaluation
in response, may negatively impact demand for our products; the
risk that we or our channel partners are not able to develop and
expand customer bases and accurately anticipate demand from end
customers, which can result in increased inventory and reduced
orders as we experience wide fluctuations in supply and demand;
risks related to international sales and purchases; risks resulting
from the concentration of our business among few customers,
including the risk that customers may reduce or cancel orders or
fail to honor purchase commitments; the risk that our investments
may experience periods of significant market value and interest
rate volatility causing us to recognize fair value losses on our
investment; the risk posed by managing an increasingly complex
supply chain (including managing the impacts of ongoing supply
constraints in the semiconductor industry and meeting purchase
commitments under take-or-pay arrangements with certain suppliers)
that has the ability to supply a sufficient quantity of raw
materials, subsystems and finished products with the required
specifications and quality; risks relating to the COVID-19 pandemic
or future outbreaks of infectious diseases or similar public health
events, including the risk of disruptions to our operations, supply
chain, including our contract manufacturers, or customer demand;
the risk we may be required to record a significant charge to
earnings if our remaining goodwill or amortizable assets become
impaired; risks relating to confidential information theft or
misuse, including through cyber-attacks or cyber intrusion; our
ability to complete development and commercialization of products
under development; the rapid development of new technology and
competing products that may impair demand or render our products
obsolete; the potential lack of customer acceptance for our
products; risks associated with ongoing litigation; the risk that
customers do not maintain their favorable perception of our brand
and products, resulting in lower demand for our products; the risk
that our products fail to perform or fail to meet customer
requirements or expectations, resulting in significant additional
costs; risks associated with strategic transactions; and other
factors discussed in our filings with the Securities and Exchange
Commission (SEC), including our report on Form 10-K for the fiscal
year ended June 25, 2023, and subsequent reports filed with the
SEC. These forward-looking statements represent Wolfspeed's
judgment as of the date of this release. Except as required under
the U.S. federal securities laws and the rules and regulations of
the SEC, Wolfspeed disclaims any intent or obligation to update any
forward-looking statements after the date of this release, whether
as a result of new information, future events, developments,
changes in assumptions or otherwise.
Wolfspeed® is a registered trademark of Wolfspeed, Inc.
WOLFSPEED, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
Three months ended
Six months ended
(in millions of U.S. Dollars, except per
share data)
December 31, 2023
December 25, 2022
December 31, 2023
December 25, 2022
Revenue, net
$208.4
$173.8
$405.8
$363.2
Cost of revenue, net
180.6
117.1
353.3
238.8
Gross profit
27.8
56.7
52.5
124.4
Gross margin percentage
13
%
33
%
13
%
34
%
Operating expenses:
Research and development
45.3
39.4
89.4
79.7
Sales, general and administrative
64.9
50.4
129.0
100.4
Factory start-up costs
10.5
37.6
18.9
76.0
Amortization of acquisition-related
intangibles
0.3
0.6
0.6
1.1
Loss on disposal or impairment of other
assets
0.3
0.1
0.4
0.2
Other operating expense
4.6
1.6
7.2
3.5
Total operating expense
125.9
129.7
245.5
260.9
Operating loss
(98.1
)
(73.0
)
(193.0
)
(136.5
)
Operating loss percentage
(47
)%
(42
)%
(48
)%
(38
)%
Non-operating expense (income), net
27.8
(1.0
)
56.3
(50.5
)
Loss before income taxes
(125.9
)
(72.0
)
(249.3
)
(86.0
)
Income tax expense
0.3
0.1
0.5
0.2
Net loss from continuing
operations
(126.2
)
(72.1
)
(249.8
)
(86.2
)
Net loss from discontinued operations
(18.5
)
(18.8
)
(290.6
)
(30.9
)
Net loss
(144.7
)
(90.9
)
(540.4
)
(117.1
)
Basic and diluted loss per
share
Continuing operations
($1.00
)
($0.58
)
($1.99
)
($0.69
)
Net loss
($1.15
)
($0.73
)
($4.31
)
($0.94
)
Weighted average shares - basic and
diluted (in thousands)
125,602
124,344
125,363
124,190
WOLFSPEED, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions of U.S. Dollars)
December 31, 2023
June 25, 2023
Assets
Current assets:
Cash, cash equivalents, and short-term
investments
$2,635.7
$2,954.9
Accounts receivable, net
132.6
154.8
Inventories
370.2
284.9
Income taxes receivable
0.6
0.8
Prepaid expenses
78.1
36.8
Other current assets
228.9
131.5
Current assets held for sale from
discontinued operations
—
42.8
Total current assets
3,446.1
3,606.5
Property and equipment, net
2,850.1
2,165.5
Goodwill
359.2
359.2
Intangible assets, net
23.9
23.9
Long-term receivables
2.5
2.6
Other long-term investments
66.1
—
Deferred tax assets
1.2
1.2
Other assets
541.1
303.3
Long-term assets held for sale from
discontinued operations
—
124.5
Total assets
$7,290.2
$6,586.7
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$524.0
$534.5
Accrued contract liabilities
51.1
39.0
Income taxes payable
10.0
9.6
Finance lease liabilities
0.4
0.4
Other current liabilities
85.7
35.7
Current liabilities held for sale from
discontinued operations
—
8.6
Total current liabilities
671.2
627.8
Long-term liabilities:
Long-term debt
2,137.3
1,149.5
Convertible notes, net
3,030.3
3,025.6
Deferred tax liabilities
10.8
3.9
Finance lease liabilities - long-term
9.0
9.2
Other long-term liabilities
281.4
143.5
Long-term liabilities held for sale from
discontinued operations
—
5.3
Total long-term liabilities
5,468.8
4,337.0
Shareholders’ equity:
Common stock
0.2
0.2
Additional paid-in-capital
3,766.8
3,711.0
Accumulated other comprehensive loss
(12.2
)
(25.1
)
Accumulated deficit
(2,604.6
)
(2,064.2
)
Total shareholders’ equity
1,150.2
1,621.9
Total liabilities and shareholders’
equity
$7,290.2
$6,586.7
WOLFSPEED, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Six months ended
(in millions of U.S. Dollars)
December 31, 2023
December 25, 2022
Operating activities:
Net loss
($540.4
)
($117.1
)
Net loss from discontinued operations
(290.6
)
(30.9
)
Net loss from continuing operations
(249.8
)
(86.2
)
Adjustments to reconcile net loss to cash
used in operating activities of continuing operations:
Depreciation and amortization
88.7
68.0
Amortization of debt issuance costs and
discount, net of non-cash capitalized interest
14.7
2.9
Stock-based compensation
42.1
38.9
Gain on equity investment
(5.4
)
—
Loss on disposal or impairment of
long-lived assets, including loss on disposal portion of factory
start-up costs
0.4
2.0
Amortization of (premium) discount on
investments, net
(13.8
)
2.2
Deferred income taxes
0.1
0.3
Changes in operating assets and
liabilities:
Accounts receivable, net
22.2
(19.1
)
Inventories
(82.6
)
(41.5
)
Prepaid expenses and other assets
(74.4
)
(3.6
)
Accounts payable
(58.0
)
1.6
Accrued salaries and wages and other
liabilities
5.2
(32.7
)
Accrued contract liabilities
15.0
(2.7
)
Net cash used in operating activities of
continuing operations
(295.6
)
(69.9
)
Net cash used in operating activities of
discontinued operations
(54.3
)
(9.8
)
Cash used in operating
activities
(349.9
)
(79.7
)
Investing activities:
Purchases of property and equipment
(1,052.2
)
(234.1
)
Purchases of patent and licensing
rights
(3.2
)
(2.3
)
Proceeds from sale of property and
equipment
0.4
1.7
Purchases of short-term investments
(1,307.2
)
(814.1
)
Proceeds from maturities of short-term
investments
734.7
115.5
Proceeds from sale of short-term
investments
25.8
43.1
Reimbursement of property and equipment
purchases from long-term incentive agreement
79.4
70.7
Proceeds from sale of business
75.6
101.8
Net cash used in investing activities of
continuing operations
(1,446.7
)
(717.7
)
Net cash used in investing activities of
discontinued operations
(3.1
)
(4.3
)
Cash used in investing
activities
(1,449.8
)
(722.0
)
Financing activities:
Proceeds from long-term debt
borrowings
1,000.0
—
Proceeds from convertible notes
—
1,750.0
Payments of debt issuance costs
(46.0
)
(31.4
)
Cash paid for capped call transactions
—
(273.9
)
Proceeds from issuance of common stock
10.9
11.2
Tax withholding on vested equity
awards
(16.7
)
(17.3
)
Payments on long-term debt borrowings,
including finance lease obligations
(0.2
)
(0.3
)
Commitment fees on long-term incentive
agreement
(1.0
)
(1.0
)
Cash provided by financing
activities
947.0
1,437.3
Effects of foreign exchange changes on
cash and cash equivalents
0.1
—
Net change in cash and cash
equivalents
(852.6
)
635.6
Cash and cash equivalents, beginning of
period
1,757.0
449.5
Cash and cash equivalents, end of
period
$904.4
$1,085.1
Product Line Revenue
Three months ended
Six months ended
(in millions of U.S. Dollars)
December 31, 2023
December 25, 2022
December 31, 2023
December 25, 2022
Power Products
$107.7
$96.0
$208.9
$200.5
Materials Products
100.7
77.8
196.9
162.7
Total
$208.4
$173.8
$405.8
$363.2
Non-GAAP Measures of Financial Performance
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles, or GAAP, Wolfspeed uses non-GAAP measures of certain
components of financial performance. These non-GAAP measures
include non-GAAP gross margin, non-GAAP operating (loss) income,
non-GAAP non-operating income (expense), net, non-GAAP net (loss)
income, non-GAAP diluted (loss) earnings per share and free cash
flow. These measures are presented for continuing operations
only.
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 Wolfspeed's results of
operations as determined in accordance with GAAP. These non-GAAP
measures should only be used to evaluate Wolfspeed's results of
operations in conjunction with the corresponding GAAP measures.
Wolfspeed believes that these non-GAAP measures, when shown in
conjunction with the corresponding GAAP measures, enhance
investors' and management's overall understanding of the Company's
current financial performance and the Company's prospects for the
future, including cash flows available to pursue opportunities to
enhance shareholder value. In addition, because Wolfspeed has
historically reported certain non-GAAP results to investors, the
Company believes the inclusion of non-GAAP measures provides
consistency in the Company's financial reporting.
For its internal budgeting process, and as discussed further
below, Wolfspeed's management uses financial statements that do not
include the items listed below and the income tax effects
associated with the foregoing. Wolfspeed's management also uses
non-GAAP measures, in addition to the corresponding GAAP measures,
in reviewing the Company's financial results.
Wolfspeed excludes the following items from one or more of its
non-GAAP measures when applicable:
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. Wolfspeed excludes stock-based compensation
expenses from its non-GAAP measures because they are non-cash
expenses that Wolfspeed does not use to evaluate core operating
performance.
Amortization or impairment of acquisition-related intangibles.
Wolfspeed incurs amortization or impairment of acquisition-related
intangibles in connection with acquisitions. Wolfspeed excludes
these items because they are non-cash expenses that Wolfspeed does
not use to evaluate core operating performance.
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. Wolfspeed excludes these items
because Wolfspeed believes they are not reflective of the ongoing
operating results of Wolfspeed's business.
Severance costs. The Company has incurred costs in conjunction
with the termination of key executive personnel. Wolfspeed excludes
these items because Wolfspeed believes they have no direct
correlation to the ongoing operating results of Wolfspeed's
business.
Gain on arbitration proceedings. In the first quarter of fiscal
2023, Wolfspeed received an arbitration award in relation to a
former customer failing to fulfill contractual obligations to
purchase a certain amount of product over a period of time. A final
payment was received in the second quarter of fiscal 2023.
Wolfspeed excludes this item because Wolfspeed believes it is not
reflective of the ongoing operating results of Wolfspeed's
business.
Amortization of discount and debt issuance costs, net of
capitalized interest. The issuance of the Company's convertible
senior notes in April 2020, February 2022 and November 2022, the
sale of the Company's 2030 senior secured notes in June 2023 and
the receipt of deposits in connection with an unsecured customer
refundable deposit agreement in July 2023 results in amortization
of discount and debt issuance costs. Wolfspeed excludes
amortization of discount and debt issuance costs from its non-GAAP
measures because they are non-cash expenses that Wolfspeed does not
use to evaluate core operating performance.
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
CreeLED, Inc. (CreeLED) with certain silicon carbide materials and
fabrication services for up to four years. Wolfspeed excludes the
financial impact of this agreement because Wolfspeed believes it is
not reflective of the ongoing operating results of Wolfspeed's
business.
Gain (loss) on equity investment. The Company received shares of
MACOM common stock in connection with the RF Business Divestiture.
These shares are accounted for utilizing the fair value option and
changes in the fair value of the shares are recognized in income.
Wolfspeed excludes the impact of these gains or losses from its
non-GAAP measures because Wolfspeed believes it is not reflective
of the ongoing operating results of Wolfspeed's business.
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.
Wolfspeed may incur some of these same expenses, including
income taxes associated with these expenses, in future periods.
In addition to the non-GAAP measures discussed above, Wolfspeed
also uses free cash flow as a measure of operating performance and
liquidity. Free cash flow represents operating cash flows from
continuing operations less net purchases of property and equipment
and patent and licensing rights. Wolfspeed considers free cash flow
to be an operating performance and a liquidity measure that
provides useful information to management and investors about the
amount of cash generated by the business after the purchases of
property and equipment, a portion of which can then be used to,
among other things, invest in Wolfspeed's business, make strategic
acquisitions and strengthen the balance sheet. A limitation of the
utility of free cash flow as a measure of operating performance and
liquidity is that it does not represent the residual cash flow
available to the company for discretionary expenditures, as it
excludes certain mandatory expenditures such as debt service.
WOLFSPEED, INC.
Reconciliation of GAAP to
Non-GAAP Measures - Continuing Operations Only
(in millions of U.S. Dollars,
except per share amounts and percentages)
(unaudited)
Non-GAAP Gross Margin
Three months ended
Six months ended
December 31, 2023
December 25, 2022
December 31, 2023
December 25, 2022
GAAP gross profit
$27.8
$56.7
$52.5
$124.4
GAAP gross margin percentage
13
%
33
%
13
%
34
%
Adjustments:
Stock-based compensation expense
6.4
5.5
12.4
11.3
Non-GAAP gross profit
$34.2
$62.2
$64.9
$135.7
Non-GAAP gross margin percentage
16
%
36
%
16
%
37
%
Non-GAAP Operating Loss
Three months ended
Six months ended
December 31, 2023
December 25, 2022
December 31, 2023
December 25, 2022
GAAP operating loss
($98.1
)
($73.0
)
($193.0
)
($136.5
)
GAAP operating loss percentage
(47
)%
(42
)%
(48
)%
(38
)%
Adjustments:
Stock-based compensation expense:
Cost of revenue, net
6.4
5.5
12.4
11.3
Research and development
3.4
4.1
6.1
6.5
Sales, general and administrative
12.6
9.5
23.6
21.1
Total stock-based compensation expense
22.4
19.1
42.1
38.9
Amortization of acquisition-related
intangibles
0.3
0.6
0.6
1.1
Project, transformation and transaction
costs
4.6
1.1
7.2
2.0
Executive severance costs
—
0.3
—
1.3
Restructuring costs
—
0.2
—
0.2
Total adjustments to GAAP operating
loss
27.3
21.3
49.9
43.5
Non-GAAP operating loss
($70.8
)
($51.7
)
($143.1
)
($93.0
)
Non-GAAP operating loss percentage
(34
)%
(30
)%
(35
)%
(26
)%
Non-GAAP Non-Operating (Expense)
Income, net
Three months ended
Six months ended
December 31, 2023
December 25, 2022
December 31, 2023
December 25, 2022
GAAP non-operating (expense) income,
net
($27.8
)
$1.0
($56.3
)
$50.5
Adjustments:
Gain on arbitration proceedings
—
(0.9
)
—
(50.3
)
Gain on equity investment
(5.4
)
—
(5.4
)
—
Amortization of discount and debt issuance
costs, net of capitalized interest
7.4
1.6
14.6
2.9
Loss on Wafer Supply Agreement
6.6
2.6
13.5
2.5
Non-GAAP non-operating (expense) income,
net
($19.2
)
$4.3
($33.6
)
$5.6
Non-GAAP Net Loss
Three months ended
Six months ended
December 31, 2023
December 25, 2022
December 31, 2023
December 25, 2022
GAAP net loss
($126.2
)
($72.1
)
($249.8
)
($86.2
)
Adjustments:
Stock-based compensation expense
22.4
19.1
42.1
38.9
Amortization of acquisition-related
intangibles
0.3
0.6
0.6
1.1
Project, transformation and transaction
costs
4.6
1.1
7.2
2.0
Executive severance costs
—
0.3
—
1.3
Restructuring costs
—
0.2
—
0.2
Gain on arbitration proceedings
—
(0.9
)
—
(50.3
)
Gain on equity investment
(5.4
)
—
(5.4
)
—
Amortization of discount and debt issuance
costs, net of capitalized interest
7.4
1.6
14.6
2.9
Loss on Wafer Supply Agreement
6.6
2.6
13.5
2.5
Total adjustments to GAAP net loss before
provision for income taxes
35.9
24.6
72.6
(1.4
)
Income tax adjustment - benefit
(expense)
20.7
11.6
41.0
21.6
Non-GAAP net loss
($69.6
)
($35.9
)
($136.2
)
($66.0
)
Non-GAAP diluted loss per share
($0.55
)
($0.29
)
($1.09
)
($0.53
)
Non-GAAP weighted average shares (in
thousands)
125,602
124,344
125,363
124,190
Free Cash Flow
Three months ended
Six months ended
December 31, 2023
December 25, 2022
December 31, 2023
December 25, 2022
Net cash used in operating activities
($182.9
)
($63.2
)
($295.6
)
($69.9
)
Less: PP&E spending, net of
reimbursements from long-term incentive agreement
(570.4
)
(102.4
)
(972.8
)
(163.4
)
Less: Patents spending
(1.9
)
(1.2
)
(3.2
)
(2.3
)
Total free cash flow
($755.2
)
($166.8
)
($1,271.6
)
($235.6
)
WOLFSPEED, INC.
Business Outlook Unaudited
GAAP to Non-GAAP Reconciliation
Three Months Ended
(in millions of U.S. Dollars)
March 31, 2024
GAAP net loss from continuing
operations outlook range
($155) to ($134)
Adjustments:
Stock-based compensation expense
22
Amortization of discount and debt issuance
costs, net of capitalized interest
7
Project, transformation and transaction
costs
7
Loss on Wafer Supply Agreement
6
Total adjustments to GAAP net loss before
provision for income taxes
42
Income tax adjustment
26 to 21
Non-GAAP net loss from continuing
operations outlook range
($87) to ($71)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240131230208/en/
Tyler Gronbach Wolfspeed, Inc. Vice President of External
Affairs Phone: 919-407-4820 investorrelations@wolfspeed.com
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