Mohawk Valley Momentum Driving 100%
Year-over-Year Growth in EV Revenue
Mohawk Valley Fab Targeted to Reach 25%
Utilization in Q1FY25, One Quarter Ahead of Schedule
Company Plans to Accelerate Shift of Device
Fabrication to 200mm Mohawk Valley Fab, Assess Timing of Closure of
150mm Durham Device Fab
Reducing FY25 net CapEx Spend by $200
Million
Wolfspeed, Inc. (NYSE: WOLF) today announced its results for the
fourth quarter of fiscal 2024 and the full 2024 fiscal year.
Quarterly Financial Highlights (Continuing operations only.
All comparisons are to the fourth quarter of fiscal 2023.)
- Consolidated revenue of approximately $201 million, as compared
to approximately $203 million
- Mohawk Valley Fab contributed approximately $41 million in
revenue
- Power device design-ins of $2.0 billion
- Quarterly design-wins of $0.5 billion
- GAAP gross margin of 1%, compared to 29%
- Non-GAAP gross margin of 5%, compared to 31%
- GAAP and non-GAAP gross margins for the fourth quarter of
fiscal 2024 include the impact of $24 million of underutilization
costs. See "Start-up and Underutilization Costs" below for
additional information.
Full Fiscal Year Financial Highlights (all comparisons are to
fiscal 2023)
- Consolidated revenue of approximately $807 million, as compared
to approximately $759 million
- GAAP gross margin of 10% as compared to 32%
- Non-GAAP gross margin of 13% as compared to 35%
- GAAP and non-GAAP gross margins for fiscal 2024 include the
impact of approximately $124 million of underutilization costs. See
"Start-up and Underutilization Costs" below for additional
information.
“We have two priorities we are focused on: optimizing our
capital structure for both the near term and long term and driving
performance in our state-of-the-art, 200-millimeter fab, and this
quarter was a step forward on both of these priorities,” said
Wolfspeed CEO, Gregg Lowe. “We achieved 20% utilization at Mohawk
Valley in June and continued to see strong revenue growth from that
fab. Our 200mm device fab is currently producing solid results,
which are at significantly lower costs than our Durham 150mm fab.
This improved profitability gives us the confidence to accelerate
the shift of our device fabrication to Mohawk Valley, while we
assess the timing of the closure of our 150mm device fab in Durham.
At the JP, we have also made great progress, installing and
activating initial furnaces in the fourth quarter. We have already
processed the first silicon carbide boules from the JP and the
quality is in line with the high-quality materials coming out of
Building 10.
“At the same time, we are taking proactive steps to slow down
the pace of our CapEx by approximately $200 million in fiscal 2025
and identify areas across our entire footprint to reduce operating
costs. We also remain in constructive talks with the CHIPS office
on a Preliminary Memorandum of Terms for capital grants under the
CHIPS Act. In addition to any potential capital grants from the
CHIPS program, our long-term CapEx plan is expected to generate
more than $1 billion in cash refunds from Section 48D tax credits
from the IRS, of which we’ve already accrued approximately $640
million on our balance sheet,” continued Lowe.
Business Outlook:
For its first quarter of fiscal 2025, Wolfspeed targets revenue
from continuing operations in a range of $185 million to $215
million. GAAP net loss is targeted at $226 million to $194 million,
or $1.79 to $1.54 per diluted share. Non-GAAP net loss from
continuing operations is targeted to be in a range of $138 million
to $114 million, or $1.09 to $0.90 per diluted share. Targeted
non-GAAP net loss excludes $88 million to $80 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 common stock of MACOM Technology
Solutions Holdings, Inc. (MACOM) that we acquired in connection
with the sale to MACOM of our RF product line (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 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, 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 continue to be
substantial as Wolfspeed ramps up the facility to the expected or
normal utilization level.
Wolfspeed incurred $20.5 million of factory start-up costs and
$24.0 million of underutilization costs in the fourth quarter of
fiscal 2024. No underutilization costs were incurred in the fourth
quarter of fiscal 2023.
For the first quarter of fiscal 2025, operating expenses are
expected to include approximately $25 million of factory start-up
costs primarily in connection with materials expansion efforts.
Cost of revenue, net, is expected to include approximately $24
million of underutilization costs 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 fourth quarter results and
its fiscal first quarter 2025 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 costs 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 first 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 and optimize our capital
structure. 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, changes in progress on infrastructure
development or changes in 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 if consumers and businesses defer purchases
or payments, or default on payments; risks associated with our
expansion plans, including design and construction delays, cost
overruns, the timing and amount of government incentives actually
received, including, among other things, any direct grants and tax
credits under the CHIPS Act, issues in installing and qualifying
new equipment and ramping production, poor production process
yields and quality control, and potential increases to our
restructuring costs; our ability to obtain additional funding,
including, among other things, from government funding, public or
private equity offerings, or debt financings, on favorable terms
and on a timely basis, if at all; 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 electric vehicle
manufacturers and the overall adoption of electric 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,
including production and product mix, 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
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; the risk that we are not able to successfully execute
or achieve the potential benefits of our efforts to enhance our
value; 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 United States 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
Fiscal years ended
(in millions of U.S. Dollars, except per
share data)
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
Revenue, net
$200.7
$202.7
$807.2
$758.5
Cost of revenue, net
198.3
144.0
729.8
515.6
Gross profit
2.4
58.7
77.4
242.9
Gross margin percentage
1
%
29
%
10
%
32
%
Operating expenses:
Research and development
60.0
43.6
201.9
165.7
Sales, general and administrative
61.6
58.8
246.4
214.3
Factory start-up costs
20.5
39.6
53.8
160.2
Amortization of acquisition-related
intangibles
0.2
0.4
1.1
1.7
Loss on disposal or impairment of other
assets
0.2
0.1
1.2
2.0
Other operating expense
5.8
5.8
18.3
10.8
Total operating expense
148.3
148.3
522.7
554.7
Operating loss
(145.9
)
(89.6
)
(445.3
)
(311.8
)
Operating loss percentage
(73
)%
(44
)%
(55
)%
(41
)%
Non-operating expense (income), net
28.5
1.4
127.2
(52.0
)
Loss before income taxes
(174.4
)
(91.0
)
(572.5
)
(259.8
)
Income tax expense
0.5
0.2
1.1
0.7
Net loss from continuing
operations
(174.9
)
(91.2
)
(573.6
)
(260.5
)
Net loss from discontinued operations
—
(22.1
)
(290.6
)
(69.4
)
Net loss
($174.9
)
($113.3
)
($864.2
)
($329.9
)
Basic and diluted loss per
share
Continuing operations
($1.39
)
($0.73
)
($4.56
)
($2.09
)
Net loss
($1.39
)
($0.91
)
($6.88
)
($2.65
)
Weighted average shares - basic and
diluted (in thousands)
126,245
124,679
125,693
124,374
WOLFSPEED, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions of U.S. Dollars)
June 30, 2024
June 25, 2023
Assets
Current assets:
Cash, cash equivalents, and short-term
investments
$2,174.6
$2,954.9
Accounts receivable, net
147.4
154.8
Inventories
440.7
284.9
Income taxes receivable
0.5
0.8
Prepaid expenses
56.6
36.8
Other current assets
179.8
131.5
Current assets held for sale from
discontinued operations
—
42.8
Total current assets
2,999.6
3,606.5
Property and equipment, net
3,652.3
2,165.5
Goodwill
359.2
359.2
Intangible assets, net
23.9
23.9
Long-term receivables
2.3
2.6
Other long-term investments
79.3
—
Deferred tax assets
1.1
1.2
Other assets
866.9
303.3
Long-term assets held for sale from
discontinued operations
—
124.5
Total assets
$7,984.6
$6,586.7
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$523.6
$534.5
Contract liabilities and
distributor-related reserves
62.3
39.0
Income taxes payable
1.0
9.6
Finance lease liabilities
0.5
0.5
Other current liabilities
77.9
35.7
Current liabilities held for sale from
discontinued operations
—
8.6
Total current liabilities
665.3
627.9
Long-term liabilities:
Long-term debt
3,126.2
1,149.5
Convertible notes, net
3,034.9
3,025.6
Deferred tax liabilities
10.8
3.9
Finance lease liabilities - long-term
8.9
9.2
Other long-term liabilities
256.4
143.4
Long-term liabilities held for sale from
discontinued operations
—
5.3
Total long-term liabilities
6,437.2
4,336.9
Shareholders’ equity:
Common stock
0.2
0.2
Additional paid-in-capital
3,821.9
3,711.0
Accumulated other comprehensive loss
(11.6
)
(25.1
)
Accumulated deficit
(2,928.4
)
(2,064.2
)
Total shareholders’ equity
882.1
1,621.9
Total liabilities and shareholders’
equity
$7,984.6
$6,586.7
WOLFSPEED, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Fiscal years ended
(in millions of U.S. Dollars)
June 30, 2024
June 25, 2023
Operating activities:
Net loss
($864.2
)
($329.9
)
Net loss from discontinued operations
(290.6
)
(69.4
)
Net loss from continuing operations
(573.6
)
(260.5
)
Adjustments to reconcile net loss to cash
used in operating activities of continuing operations:
Depreciation and amortization
181.0
145.6
Amortization of debt issuance costs and
discount, net of non-cash capitalized interest
28.4
7.5
Stock-based compensation
84.9
72.7
Gain on equity investment
(18.5
)
—
Loss on disposal or impairment of
long-lived assets, including loss on disposal portion of factory
start-up costs
1.2
3.8
Amortization of premium on investments,
net
(27.5
)
(4.7
)
Deferred income taxes
0.2
0.5
Changes in operating assets and
liabilities:
Accounts receivable, net
7.4
(4.6
)
Inventories
(152.3
)
(93.1
)
Prepaid expenses and other assets
(124.7
)
(20.8
)
Accounts payable
(45.8
)
27.0
Accrued salaries and wages and other
liabilities
(50.2
)
(0.7
)
Contract liabilities and
distributor-related reserves
18.2
25.1
Net cash used in operating activities of
continuing operations
(671.3
)
(102.2
)
Net cash used in operating activities of
discontinued operations
(54.3
)
(40.4
)
Cash used in operating
activities
(725.6
)
(142.6
)
Investing activities:
Purchases of property and equipment
(2,274.0
)
(949.6
)
Purchases of patent and licensing
rights
(5.9
)
(4.9
)
Proceeds from sale of property and
equipment
0.4
1.7
Purchases of short-term investments
(1,601.1
)
(1,191.0
)
Proceeds from maturities of short-term
investments
1,448.4
637.2
Proceeds from sale of short-term
investments
237.9
110.1
Reimbursement of property and equipment
purchases from long-term incentive agreement
178.5
155.5
Proceeds from sale of business
75.6
101.8
Net cash used in investing activities of
continuing operations
(1,940.2
)
(1,139.2
)
Net cash used in investing activities of
discontinued operations
(3.1
)
(7.8
)
Cash used in investing
activities
(1,943.3
)
(1,147.0
)
Financing activities:
Proceeds from long-term debt
borrowings
2,000.0
1,200.0
Proceeds from convertible notes
—
1,750.0
Payments of debt issuance costs
(46.0
)
(82.1
)
Cash paid for capped call transactions
—
(273.9
)
Proceeds from issuance of common stock
23.4
23.8
Tax withholding on vested equity
awards
(18.0
)
(19.2
)
Payments on long-term debt borrowings,
including finance lease obligations
(0.4
)
(0.5
)
Commitment fees on long-term incentive
agreement
(1.0
)
(1.0
)
Cash provided by financing
activities
1,958.0
2,597.1
Effects of foreign exchange changes on
cash and cash equivalents
(0.2
)
—
Net change in cash and cash
equivalents
(711.1
)
1,307.5
Cash and cash equivalents, beginning of
period
1,757.0
449.5
Cash and cash equivalents, end of
period
$1,045.9
$1,757.0
Product Line Revenue
Three months ended
Fiscal years ended
(in millions of U.S. Dollars)
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
Power Products
$104.6
$107.1
$415.6
$409.2
Materials Products
96.1
95.6
391.6
349.3
Total
$200.7
$202.7
$807.2
$758.5
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, EBITDA,
adjusted EBITDA 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.
Loss (gain) on legal proceedings. In the third quarter of fiscal
2024, Wolfspeed recognized customs duties totaling approximately
$7.7 million for alleged undervalued duties related to transactions
by the Company's former Lighting Products business unit from 2012
to 2017. In 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. Wolfspeed excludes these items because Wolfspeed believes
they are 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 and in the second half of
fiscal 2024 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. 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 under fair value accounting with
changes in the fair value of the shares being 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
Fiscal years ended
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
GAAP gross profit
$2.4
$58.7
$77.4
$242.9
GAAP gross margin percentage
1
%
29
%
10
%
32
%
Adjustments:
Stock-based compensation expense
8.5
3.5
28.5
20.3
Non-GAAP gross profit
$10.9
$62.2
$105.9
$263.2
Non-GAAP gross margin percentage
5
%
31
%
13
%
35
%
Non-GAAP Operating Loss
Three months ended
Fiscal years ended
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
GAAP operating loss
($145.9
)
($89.6
)
($445.3
)
($311.8
)
GAAP operating loss percentage
(73
)%
(44
)%
(55
)%
(41
)%
Adjustments:
Stock-based compensation expense:
Cost of revenue, net
8.5
3.5
28.5
20.3
Research and development
2.3
2.4
11.4
11.2
Sales, general and administrative
10.2
10.5
45.0
41.2
Total stock-based compensation expense
21.0
16.4
84.9
72.7
Amortization of acquisition-related
intangibles
0.2
0.4
1.1
1.7
Project, transformation and transaction
costs
5.8
4.5
18.3
7.4
Executive severance costs
—
1.5
—
3.4
Total adjustments to GAAP operating
loss
27.0
22.8
104.3
85.2
Non-GAAP operating loss
($118.9
)
($66.8
)
($341.0
)
($226.6
)
Non-GAAP operating loss percentage
(59
)%
(33
)%
(42
)%
(30
)%
Non-GAAP Non-Operating (Expense) Income, net
Three months ended
Fiscal years ended
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
GAAP non-operating (expense) income,
net
($28.5
)
($1.4
)
($127.2
)
$52.0
Adjustments:
Loss (gain) on legal proceedings
—
—
7.7
(50.3
)
Gain on equity investment
(11.2
)
—
(18.5
)
—
Amortization of discount and debt issuance
costs, net of capitalized interest
6.8
2.3
28.4
7.5
Loss on Wafer Supply Agreement
4.9
6.3
25.3
13.6
Non-GAAP non-operating (expense) income,
net
($28.0
)
$7.2
($84.3
)
$22.8
Non-GAAP Net Loss
Three months ended
Fiscal years ended
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
GAAP net loss
($174.9
)
($91.2
)
($573.6
)
($260.5
)
Adjustments:
Stock-based compensation expense
21.0
16.4
84.9
72.7
Amortization of acquisition-related
intangibles
0.2
0.4
1.1
1.7
Project, transformation and transaction
costs
5.8
4.5
18.3
7.4
Executive severance costs
—
1.5
—
3.4
Loss (gain) on legal proceedings
—
—
7.7
(50.3
)
Gain on equity investment
(11.2
)
—
(18.5
)
—
Amortization of discount and debt issuance
costs, net of capitalized interest
6.8
2.3
28.4
7.5
Loss on Wafer Supply Agreement
4.9
6.3
25.3
13.6
Total adjustments to GAAP net loss before
provision for income taxes
27.5
31.4
147.2
56.0
Income tax adjustment - benefit
(expense)
35.4
14.9
100.5
50.8
Non-GAAP net loss
($112.0
)
($44.9
)
($325.9
)
($153.7
)
Non-GAAP diluted loss per share
($0.89
)
($0.36
)
($2.59
)
($1.24
)
Non-GAAP weighted average shares (in
thousands)
126,245
124,679
125,693
124,374
Adjusted EBITDA
Three months ended
Fiscal years ended
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
GAAP net loss
($174.9
)
($91.2
)
($573.6
)
($260.5
)
Reconciling items to EBITDA (Non-GAAP)
Income tax expense
0.5
0.2
1.1
0.7
Interest expense (income)
34.7
(4.2
)
111.3
(15.6
)
Depreciation
44.0
39.7
175.5
139.7
Amortization
1.3
1.4
5.5
5.9
EBITDA (Non-GAAP)
(94.4
)
(54.1
)
(280.2
)
(129.8
)
Reconciling items to adjusted EBITDA
(Non-GAAP)
Stock based compensation
21.0
16.4
84.9
72.7
Project, transformation and transaction
costs
5.8
4.5
18.3
7.4
Executive severance costs
—
1.5
—
3.4
Loss (gain) on legal proceedings
—
—
7.7
(50.3
)
Gain on equity investment
(11.2
)
—
(18.5
)
—
Loss on Wafer Supply Agreement
4.9
6.3
25.3
13.6
Adjusted EBITDA (Non-GAAP)
($73.9
)
($25.4
)
($162.5
)
($83.0
)
Free Cash Flow
Three months ended
Fiscal years ended
June 30, 2024
June 25, 2023
June 30, 2024
June 25, 2023
Net cash used in operating activities
($239.5
)
($38.7
)
($671.3
)
($102.2
)
Less: PP&E spending, net of
reimbursements from long-term incentive agreement
(644.2
)
(400.2
)
(2,095.5
)
(794.1
)
Less: Patents spending
(1.6
)
(1.3
)
(5.9
)
(4.9
)
Total free cash flow
($885.3
)
($440.2
)
($2,772.7
)
($901.2
)
WOLFSPEED, INC.
Business Outlook Unaudited
GAAP to Non-GAAP Reconciliation
Three Months Ended
(in millions of U.S. Dollars)
September 29, 2024
GAAP net loss from continuing
operations outlook range
($226) to ($194)
Adjustments:
Stock-based compensation expense
26
Amortization of discount and debt issuance
costs, net of capitalized interest
7
Project, transformation and transaction
costs
6
Loss on Wafer Supply Agreement
7
Total adjustments to GAAP net loss before
provision for income taxes
46
Income tax adjustment
42 to 34
Non-GAAP net loss from continuing
operations outlook range
($138) to ($114)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240821004874/en/
Tyler Gronbach Wolfspeed, Inc. Vice President of External
Affairs Phone: 919-407-4820 investorrelations@wolfspeed.com
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