Allegro MicroSystems Swings to Profit on Strong Sales Growth

TL;DR

**ALGM is back in the black, ditching last year's massive loss and showing strong sales growth – buy the dip!**

AI Summary

Allegro MicroSystems, Inc. reported a significant turnaround in its financial performance for the three-month period ended September 26, 2025, achieving a net income of $6.583 million compared to a net loss of $33.613 million in the prior-year period. This improvement was driven by a 14.3% increase in net sales, reaching $214.294 million from $187.391 million. Gross profit also rose to $99.292 million from $85.662 million year-over-year. For the six-month period, the company still posted a net loss of $6.579 million, a substantial improvement from the $51.226 million loss in the same period last year. Operating income for the three-month period increased to $6.243 million from $4.067 million. A key factor in the improved net income was the absence of a $34.752 million loss on change in fair value of forward repurchase contract, which impacted the prior-year's results. The company also reduced its long-term debt by $58.568 million, from $344.703 million as of March 28, 2025, to $286.135 million as of September 26, 2025.

Why It Matters

This turnaround is crucial for investors, signaling Allegro's ability to navigate market challenges and return to profitability, which could boost investor confidence and stock performance. For employees, improved financial health often translates to greater job security and potential for growth. Customers benefit from a more stable supplier, ensuring continued innovation and product availability in the automotive and industrial sectors. In the broader market, Allegro's performance reflects resilience in the semiconductor industry, particularly in sensing and power solutions, and could indicate a strengthening demand environment for these critical components, impacting competitors positively or negatively depending on their market share.

Risk Assessment

Risk Level: medium — While Allegro MicroSystems, Inc. showed a strong return to profitability for the quarter, the company still reported a net loss of $6.579 million for the six-month period ended September 26, 2025. Additionally, the balance sheet shows a decrease in cash and cash equivalents from $121.334 million to $117.492 million, and total assets decreased from $1,420.961 million to $1,384.328 million, indicating some ongoing financial pressures despite the quarterly improvement.

Analyst Insight

Investors should closely monitor Allegro's next earnings report to confirm sustained profitability and continued revenue growth. The significant reduction in long-term debt is a positive sign, but the overall decrease in total assets warrants attention. Consider this a potential turnaround story, but with a cautious approach until a consistent trend of positive net income and asset growth is established.

Financial Highlights

revenue

$214.294M

total Assets

$1,384.328M

total Debt

$287.688M

net Income

$6.583M

gross Margin

46.3%

cash Position

$117.492M

revenue Growth

+14.3%

Key Numbers

• $214.294M — Net Sales (3-month) (Increased 14.3% from $187.391M year-over-year)
• $6.583M — Net Income (3-month) (Swung from a $33.613M net loss in the prior-year period)
• $99.292M — Gross Profit (3-month) (Increased from $85.662M year-over-year)
• $6.243M — Operating Income (3-month) (Increased from $4.067M year-over-year)
• $286.135M — Long-Term Debt (Reduced by $58.568M from March 28, 2025)
• $117.492M — Cash and Cash Equivalents (Decreased from $121.334M as of March 28, 2025)
• $1,384.328M — Total Assets (Decreased from $1,420.961M as of March 28, 2025)
• 185,119,045 — Common Stock Shares Outstanding (As of October 27, 2025)

Key Players & Entities

• ALLEGRO MICROSYSTEMS, INC. (company) — registrant
• NASDAQ Stock Market LLC (regulator) — exchange where ALGM is registered
• SEC (regulator) — Securities and Exchange Commission
• $214.294 million (dollar_amount) — net sales for three-month period ended September 26, 2025
• $187.391 million (dollar_amount) — net sales for three-month period ended September 27, 2024
• $6.583 million (dollar_amount) — net income for three-month period ended September 26, 2025
• $33.613 million (dollar_amount) — net loss for three-month period ended September 27, 2024
• $34.752 million (dollar_amount) — loss on change in fair value of forward repurchase contract in prior-year period
• $286.135 million (dollar_amount) — long-term debt as of September 26, 2025
• $344.703 million (dollar_amount) — long-term debt as of March 28, 2025

FAQ

Risk Factors

• Dependence on Key Customers [high — market]: The company's revenue is significantly dependent on a small number of customers. A substantial portion of net sales may be attributable to a few customers. The loss of any of these key customers or a significant reduction in their purchases could have a material adverse effect on the business, financial condition, and results of operations.
• Supply Chain Disruptions [medium — operational]: The company relies on a limited number of suppliers for certain components and manufacturing services. Disruptions in the supply chain, whether due to geopolitical events, natural disasters, or supplier-specific issues, could impact the company's ability to meet customer demand and fulfill orders, leading to lost sales and increased costs.
• Fluctuations in Fair Value of Financial Instruments [medium — financial]: The company has experienced and may continue to experience fluctuations in the fair value of financial instruments, such as forward repurchase contracts. For example, a $34.752 million loss on change in fair value of a forward repurchase contract impacted the prior-year period's results, highlighting the potential for significant financial impact.
• Compliance with Export Controls and Trade Regulations [medium — regulatory]: The company's products are subject to U.S. and foreign export control laws and regulations. Non-compliance with these regulations could result in significant penalties, including fines and restrictions on business operations, impacting international sales and market access.
• Intense Competition [high — market]: The semiconductor industry is highly competitive, with numerous established players and emerging companies. Allegro faces competition from companies with greater financial resources and broader product portfolios, which could pressure pricing and market share.
• Product Development and Technological Obsolescence [high — operational]: The semiconductor market is characterized by rapid technological change. The company must continuously invest in research and development to introduce new products and enhance existing ones. Failure to innovate or keep pace with technological advancements could lead to product obsolescence and loss of competitive advantage.

Industry Context

Allegro MicroSystems operates in the highly competitive semiconductor industry, which is characterized by rapid technological advancements and cyclical demand. Key trends include the increasing demand for power-efficient and high-performance integrated circuits in automotive, industrial, and consumer electronics markets. The industry faces ongoing challenges related to supply chain management, geopolitical risks, and intense R&D investment requirements.

Regulatory Implications

Allegro must navigate a complex web of global regulations, including export controls and trade compliance, particularly given the international nature of semiconductor manufacturing and sales. Non-compliance can lead to significant penalties and operational disruptions. Additionally, evolving environmental regulations and product safety standards require continuous attention and investment to ensure market access and maintain corporate responsibility.

What Investors Should Do

1. Monitor customer concentration
2. Assess inventory management
3. Evaluate debt reduction strategy
4. Analyze R&D investment and product pipeline

Key Dates

• 2025-09-26: End of the three-month period — Reported a net income of $6.583 million, a significant turnaround from a net loss of $33.613 million in the prior year, driven by a 14.3% increase in net sales to $214.294 million.
• 2025-03-28: End of the prior fiscal year — Total assets were $1,420.961 million and long-term debt was $344.703 million.
• 2024-09-27: End of the prior-year three-month period — Reported a net loss of $33.613 million on net sales of $187.391 million. A $34.752 million loss on change in fair value of forward repurchase contract impacted results.

Glossary

Net sales

The total revenue generated from the sale of goods and services after deducting returns, allowances, and discounts. (Indicates the company's top-line performance and market demand for its products.)

Gross profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. (Measures the efficiency of production and pricing strategies.)

Operating income

Profitability from a company's core business operations, excluding interest and taxes. (Shows the profitability of the company's primary business activities.)

Net income

The company's total profit after all expenses, interest, and taxes have been deducted from revenue. (Represents the bottom-line profitability available to shareholders.)

Accumulated deficit

The cumulative net losses of a company since its inception, minus any cumulative net income. (Indicates the company's historical profitability; a large deficit can signal past struggles.)

Long-term debt

Financial obligations that are due more than one year from the balance sheet date. (Represents the company's long-term borrowing and financial leverage.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair market value of its net assets. (Represents the premium paid for factors like brand reputation or customer relationships.)

Intangible assets, net

Non-physical assets that have value, such as patents, trademarks, and copyrights, net of accumulated amortization. (Represents the value of intellectual property and other non-physical assets.)

Year-Over-Year Comparison

Allegro MicroSystems has demonstrated a significant financial recovery in the three-month period ended September 26, 2025, compared to the prior year. Net sales increased by 14.3% to $214.294 million, and the company swung from a substantial net loss of $33.613 million to a net income of $6.583 million. This improvement was partly due to the absence of a significant loss on financial instruments that impacted the prior year. Total assets have slightly decreased to $1,384.328 million from $1,420.961 million, while long-term debt has been reduced by $58.568 million to $286.135 million, indicating a stronger balance sheet.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share ALGM The NASDAQ Stock Mar

Filing Documents

• algm-20250926.htm (10-Q) — 2778KB
• algm-ex10_1.htm (EX-10.1) — 21KB
• algm-ex31_1.htm (EX-31.1) — 16KB
• algm-ex31_2.htm (EX-31.2) — 16KB
• algm-ex32_1.htm (EX-32.1) — 10KB
• algm-ex32_2.htm (EX-32.2) — 10KB
• 0001193125-25-259807.txt ( ) — 9570KB
• algm-20250926.xsd (EX-101.SCH) — 1142KB
• algm-20250926_htm.xml (XML) — 1684KB

Forward-Looking Statements

Forward-Looking Statements 2 PART I. Financial Information 3 Item 1. Condensed Consolidated Financial Statements (Unaudited) 3 Condensed Consolidated Balance Sheets as of September 26, 2025 and March 28, 2025 (Unaudited) 3 Condensed Consolidated Statements of Operations for the three- and six-month periods ended September 26, 2025 and September 27, 2024 (Unaudited) 4 Condensed Consolidated Statements of Comprehensive Income (Loss) for the three- and six-month periods ended September 26, 2025 and September 27, 2024 (Unaudited) 5 Condensed Consolidated Statements of Changes in Equity for the three- and six-month periods ended September 26, 2025 and September 27, 2024 (Unaudited) 6 Condensed Consolidated Statements of Cash Flows for the six-month periods ended September 26, 2025 and September 27, 2024 (Unaudited) 8 Notes to Unaudited Condensed Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 Item 4.

Controls and Procedures

Controls and Procedures 31 PART II. Other Information 32 Item 1.

Legal Proceedings

Legal Proceedings 32 Item 1A.

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 5. Other Information 32 Item 6. Exhibits 33

Signatures

Signatures 34 FORWARD-LO OKING STATEMENTS This Quarterly Report on Form 10-Q (the "Quarterly Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products and the plans and objectives of management for future operations, may be forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

– FINAN CIAL INFORMATION

PART I – FINAN CIAL INFORMATION

Condensed Con solidated Financial Statements (Unaudited)

Item 1. Condensed Con solidated Financial Statements (Unaudited) ALLEGRO MICROSYSTEMS, INC. CONDENSED CONSOLI DATED BALANCE SHEETS (in thousands, except par value and share amounts) (Unaudited) September 26, 2025 March 28, 2025 Assets Current assets: Cash and cash equivalents $ 117,492 $ 121,334 Restricted cash 9,322 9,773 Trade accounts receivable, net 105,770 84,598 Inventories 170,681 183,914 Prepaid income taxes 9,363 36,662 Prepaid expenses and other current assets 40,324 30,247 Assets held for sale 16,508 16,508 Total current assets 469,460 483,036 Property, plant and equipment, net 300,438 302,919 Operating lease right-of-use assets, net 18,035 20,849 Deferred income tax assets 72,955 68,528 Goodwill 203,467 202,475 Intangible assets, net 250,929 262,115 Equity investment in related party 28,542 31,695 Other assets 40,502 49,344 Total assets $ 1,384,328 $ 1,420,961 Liabilities, Non-Controlling Interest and Stockholders' Equity Current liabilities: Trade accounts payable $ 41,761 $ 38,733 Amounts due to related party 3,263 6,535 Accrued expenses and other current liabilities 68,305 60,083 Current portion of operating lease liabilities 5,777 5,487 Current portion of long-term debt 1,553 1,423 Total current liabilities 120,659 112,261 Long-term debt 286,135 344,703 Operating lease liabilities, less current portion 15,233 16,878 Other long-term liabilities 16,472 16,019 Total liabilities 438,499 489,861 Commitments and contingencies (Note 10) Stockholders' Equity: Preferred stock, $ 0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding — — Common stock, $ 0.01 par value; 1,000,000,000 shares authorized, 185,111,604 shares issued and outstanding at September 26, 2025; 1,000,000,000 shares authorized, 184,286,567 issued and outstanding at March

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