GlobeNewswire Inc | Feb 2, 2021 04:05PM EST

February 02, 2021

MANCHESTER, N.H., Feb. 02, 2021 (GLOBE NEWSWIRE) -- Allegro MicroSystems, Inc. (Allegro or the Company) (Nasdaq:ALGM), a global leader in power and sensing semiconductor solutions for motion control and energy efficient systems, today announced financial results for its third fiscal quarter ended December 25, 2020. Total net sales of $164.4million for the three-month period exceeded expectations, increasing 20% from the prior quarter and, for our core end markets only, up 21% from the same period in fiscal 2020. GAAP loss per share was $0.04. Non-GAAP diluted earnings per share, which excludes one-time and certain non-cash items, was $0.13, also exceeding expectations.

We benefited in the third fiscal quarter from the strong recovery in automotive, continued strength in industrial and solid operational execution. With this meaningful step up in revenue, we are well ahead of forecasts while delivering margin improvement, said Ravi Vig, President and CEO of Allegro MicroSystems. Good visibility and unprecedented bookings and backlog give us confidence in delivering another record quarter in fiscal Q4. With progress on our manufacturing efficiency initiatives and strong momentum in our design funnel, we believe we are well positioned to deliver on our long-term growth and profitability objectives.

Business Summary

Automotive total net sales were up 27% sequentially during the third fiscal quarter driven by global auto production recovery and restocking across the automotive supply chain. ADAS and xEV, strategic investment areas for the Company, represented approximately one third of the automotive business and continue to exceed the long-term growth rates of foundational automotive business in internal combustion engine (ICE) and Safety, Comfort and Convenience. ICE applications represented a significant portion of the automotive upside in fiscal third quarter, growing double digits compared to both the prior period and the same period in fiscal 2020.

Industrial total net sales in the third quarter were up 11% year-over-year compared to the prior year fiscal period and were up 9% from the prior quarter. Within industrial, broad-based revenue, which includes a variety of end applications and customers, increased by nearly 50% from the prior period. The Companys Other business also increased compared to the prior period by 5%.

Business Outlook

For the fourth fiscal quarter ending March 26, 2021, the Company expects total net sales to increase and be in the range of $165million to $169million. Non-GAAP gross margin is expected to be in the range of 50% to 51%, and non-GAAP earnings per fully-diluted share for the same period is expected to be in the range of $0.13 to $0.15.

Allegro has not provided a reconciliation of its fourth fiscal quarter outlook for non-GAAP gross margin and non-GAAP earnings per fully-diluted share because estimates of all of the reconciling items cannot be provided without unreasonable efforts. It is difficult to reasonably provide a forward-looking estimate between such forward-looking non-GAAP measures and the comparable forward-looking GAAP measures. Certain factors that are materially significant to Allegros ability to estimate these items are out of its control and/or cannot be reasonably predicted.

Earnings Webcast

A webcast will be held on Tuesday, February 2, at 5:00 p.m. Eastern time. Ravi Vig, Chief Executive Officer and Paul Walsh, Chief Financial Officer, will discuss Allegros financial results.

The webcast will be available on the Investor Relations section of the companys website at investors.allegromicro.com. A recording of the webcast will be posted in the same location shortly after the call concludes and will be available for at least 30 days.

About Allegro MicroSystems

Allegro MicroSystems is a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (ICs) and application-specific analog power ICs enabling emerging technologies in the automotive and industrial markets. Allegros diverse product portfolio provides efficient and reliable solutions for the electrification of vehicles, automotive ADAS safety features, automation for Industry 4.0 and power saving technologies for data centers and green energy applications.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding the expected benefits resulting from our acquisition of Voxtel and our expected financial performance for our third fiscal quarter ending December 25, 2020. In some cases, you can identify forward-looking statements by terms such as anticipate, believe, could, expect, should, plan, intend, estimate, target, mission, may, will, would, should, could, target, potential, project, predict, contemplate, potential, or the negative thereof and similar words and expressions.

Forward-looking statements are based on managements current expectations, beliefs and assumptions and on information currently available to us. Such statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various important factors, including, but not limited to: downturns or volatility in general economic conditions, including as a result of the COVID-19 pandemic, particularly in the automotive market; our ability to compete effectively with intense competition, expand our market share and increase our profitability; our ability to compensate for decreases in average selling prices of our products; the cyclical nature of the analog semiconductor industry; our ability to manage any sustained yield problems or other delays at our third-party wafer fabrication facilities or in the final assembly and test of our products; our ability to fully realize the benefits of past and potential future initiatives designed to improve our competitiveness, growth and profitability; our ability to accurately predict our quarterly net sales and operating results; our ability to adjust our supply chain volume to account for changing market conditions and customer demand; our dependence on manufacturing operations in the Philippines; changes in government trade policies, including the imposition of tariffs and export restrictions; and our ability to protect our proprietary technology and inventions through patents or trade secrets; and other important factors discussed under the caption Risk Factors in our final prospectus on Form 424(b) filed with the U.S. Securities and Exchange Commission (SEC) on October 30, 2020, as any such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SECs website at www.sec.gov and the Investors & Media page of our website at investors.allegromicro.com.

All forward-looking statements speak only as of the date of this press release and, except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

ALLEGRO MICROSYSTEMS, INC.Consolidated Statements of Operations(in thousands, except share and per share amounts)(Unaudited)

Three-Month Period Ended Nine-Month Period Ended December 25, December 27, December 25, December 27, 2020 2019 2020 2019Net sales $ 138,010 $ 143,267 $ 343,529 $ 426,158 Net sales to 26,439 16,535 72,570 49,327 related partyTotal net sales 164,449 159,802 416,099 475,485 Cost of goods sold 90,024 98,277 224,203 285,967 Gross profit 74,425 61,525 191,896 189,518 Operating expenses: Research and 30,999 25,485 80,509 77,565 developmentSelling, general 67,650 24,909 118,677 78,030 and administrativeTotal operating 98,649 50,394 199,186 155,595 expensesOperating (loss) (24,224 ) 11,131 (7,290 ) 33,923 incomeOther (expense) income:Loss on debt (9,055 ) ? (9,055 ) ? extinguishmentInterest (expense) (2,598 ) 10 (1,935 ) (60 )income, netForeign currencytransaction (loss) (145 ) (560 ) (1,331 ) 2,800 gainIncome in earningsof equity 949 ? 1,407 ? investmentOther, net (510 ) (81 ) (297 ) (1,177 )(Loss) incomebefore income tax (35,583 ) 10,500 (18,501 ) 35,486 (benefit) provisionIncome tax (30,523 ) 1,542 (27,913 ) 11,710 (benefit) provisionNet (loss) income (5,060 ) 8,958 9,412 23,776 Net incomeattributable to 35 32 103 101 non-controllinginterestsNet (loss) incomeattributable to $ (5,095 ) $ 8,926 $ 9,309 $ 23,675 AllegroMicroSystems, Inc.Net (loss) incomeattributable toAllegro MicroSystems, Inc.per share:Basic $ (0.04 ) $ 0.89 $ 0.19 $ 2.37 Diluted $ (0.04 ) $ 0.89 $ 0.05 $ 2.37 Weighted average shares outstanding:Basic 124,363,078 10,000,000 48,121,026 10,000,000 Diluted 124,363,078 10,000,000 171,638,787 10,000,000

Supplemental Schedule of Total Net Sales

The following table summarizes net sales by core end market and other applications. Other applications include sales of wafer foundry products and from the distribution of Sanken products unrelated to and no longer part of the Companys business in fiscal year 2021.

Three-Month Period Ended Change Nine-Month Period Ended Change December December December December 25, 27, Amount % 25, 27, Amount % 2020 2019 2020 2019 (Dollars in thousands)Core end markets: Automotive $ 113,902 $ 99,074 $ 14,828 15.0 % $ 279,759 $ 289,681 $ (9,922 ) (3.4 ) %Industrial 23,654 21,358 2,296 10.8 % 65,710 56,095 9,615 17.1 %Other 26,893 15,070 11,823 78.5 % 70,630 53,399 17,231 32.3 %Total core end 164,449 135,502 28,947 21.4 % 416,099 399,175 16,924 4.2 %marketsOther applications: Wafer foundry ? 16,634 (16,634 ) ? % ? 49,622 (49,622 ) ? %productsDistribution of ? 7,666 (7,666 ) ? % ? 26,688 (26,688 ) ? %Sanken productsTotal net sales $ 164,449 $ 159,802 $ 4,647 2.9 % $ 416,099 $ 475,485 $ (59,386 ) (12.5 ) %

Supplemental Schedule of Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its unaudited consolidated statements of operations:

Three-Month Period Ended Nine-Month Period Ended December 25, December December 25, December(In thousands) 2020 27, 2020 27, 2019 2019Cost of sales $ 4,694 $ 47 $ 4,844 $ 137 Research and 2,984 20 3,037 65 developmentSelling, general and 38,198 236 39,020 849 administrativeTotal stock-based $ 45,876 $ 303 $ 46,901 $ 1,051 compensation

Supplemental Schedule of Acquisition Related Intangible Amortization Costs

The Company recorded intangible amortization expense related to its acquisition of Voxtel in the following expense categories of its unaudited consolidated statements of operations:

Three-Month Period Nine-Month Period Ended Ended December December December December(In thousands) 25, 27, 25, 27, 2020 2019 2020 2019Cost of sales $ 273 $ ? 378 ? Selling, general and 71 ? 80 ? administrativeTotal intangible amortization $ 344 $ ? $ 458 $ ?

ALLEGRO MICROSYSTEMS, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts)

December 25, March 27, 2020 2020 (Unaudited)Assets Current assets: Cash and cash equivalents $ 157,653 $ 214,491 Restricted cash 6,520 5,385 Trade accounts receivable, net of allowances fordoubtful accounts of $138 and $288 at December25, 67,334 59,457 2020 and March27, 2020, respectivelyTrade and other accounts receivable due from related 20,153 30,851 partyAccounts receivable - other 1,373 1,796 Inventories 94,021 127,227 Prepaid expenses and other current assets 31,476 9,014 Total current assets 378,530 448,221 Property, plant and equipment, net 214,372 332,330 Deferred income tax assets 23,188 7,217 Goodwill 20,249 1,285 Intangible assets, net 36,420 19,958 Equity investment in related party 26,657 ? Other assets, net 12,482 8,810 Total assets $ 711,898 $ 817,821 Liabilities, Non-Controlling Interest and Stockholders' EquityCurrent liabilities: Trade accounts payable $ 20,262 $ 20,762 Amounts due to related party 2,078 4,494 Accrued expenses and other current liabilities 66,779 56,855 Current portion of related party debt ? 25,000 Bank lines-of-credit ? 43,000 Total current liabilities 89,119 150,111 Obligations due under Senior Secured Credit 25,000 ? FacilitiesRelated party notes payable, less current portion ? 17,700 Other long-term liabilities 20,861 15,878 Total liabilities 134,980 183,689 Commitments and contingencies Stockholders' Equity: Preferred Stock, $0.01 par value; 20,000,000 sharesauthorized, no shares issued or outstanding at ? ? December25, 2020 and March27, 2020Common stock, $0.01 par value; 1,000,000,000 sharesauthorized, 189,431,726 shares issued and 1,894 ? outstanding at December25, 2020; no sharesauthorized, issued or outstanding at March27, 2020Class A, $0.01 par value; No shares authorized,issued or outstanding at December25, 2020; ? 100 12,500,000 shares authorized; 10,000,000 sharesissued and outstanding at March27, 2020Class L, $0.01 par value; No shares authorized,issued or outstanding at December25, 2020; ? 6 1,000,000 shares authorized; 622,470 shares issuedand outstanding at March27, 2020Additional paid-in capital 589,202 458,697 (Accumulated deficit) / retained earnings (5,094 ) 194,355 Accumulated other comprehensive loss (10,171 ) (19,976 )Equity attributable to Allegro MicroSystems, Inc. 575,831 633,182 Non-controlling interests 1,087 950 Total stockholders' equity 576,918 634,132 Total liabilities, non-controlling interest and $ 711,898 $ 817,821 stockholders' equity

ALLEGRO MICROSYSTEMS, INC.Consolidated Statements of Cash Flows(in thousands)(Unaudited)

Nine-Month Period Ended December December 25, 27, 2020 2019CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 9,412 $ 23,776 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 36,225 47,608 Amortization of deferred financing costs 226 ? Deferred income taxes (17,526 ) (288 )Stock-based compensation 46,901 1,051 Loss on disposal of assets 272 718 Loss on debt extinguishment 9,055 ? Provisions for inventory and bad debt 3,857 3,353 Changes in operating assets and liabilities: Trade accounts receivable (5,975 ) 15,540 Accounts receivable - other 115 657 Inventories 1,118 (341 )Prepaid expenses and other assets (29,655 ) (6,165 )Trade accounts payable 2,411 1,100 Due to/from related parties 8,283 (20,969 )Accrued expenses and other current and long-term (1,185 ) (17,270 )liabilitiesNet cash provided by operating activities 63,534 48,770 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (25,880 ) (34,997 )Acquisition of business, net of cash acquired (8,500 ) ? Proceeds from sales of property, plant and equipment 314 3,936 Contribution of cash balances due to divestiture of (16,335 ) ? subsidiaryNet cash used in investing activities (50,401 ) (31,061 )CASH FLOWS FROM FINANCING ACTIVITIES: Related party note receivable 51,377 30,000 Proceeds from initial public offering, net of 321,425 ? underwriting discounts and other offering costsPayments for taxes related to net share settlement of (27,707 ) ? equity awardsDividends paid (400,000 ) ? Borrowings of senior secured debt, net of deferred 315,719 ? financing costsRepayment of senior secured debt (300,000 ) ? Repayment of unsecured credit facilities (33,000 ) ? Net cash (used in) provided by financing activities (72,186 ) 30,000 Effect of exchange rate changes on Cash and cash 3,350 (6,452 )equivalents and Restricted cashNet (decrease) increase in Cash and cash equivalents (55,703 ) 41,257 and Restricted cashCash and cash equivalents and Restricted cash at 219,876 103,257 beginning of periodCASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END $ 164,173 $ 144,514 OF PERIOD:RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:Cash and cash equivalents at beginning of period $ 214,491 $ 99,743 Restricted cash at beginning of period 5,385 3,514 Cash and cash equivalents and Restricted cash at $ 219,876 $ 103,257 beginning of periodCash and cash equivalents at end of period 157,653 139,306 Restricted cash at end of period 6,520 5,208 Cash and cash equivalents and Restricted cash at end $ 164,173 $ 144,514 of periodSUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest $ 2,559 $ 872 Cash paid for income taxes $ 7,568 $ 12,937 Noncash transactions: Changes in Trade accounts payable related to $ (786 ) $ (2,663 )Property, plant and equipment, netLoans to cover purchase of common stock under $ 171 $ 232 employee stock plan

Non-GAAP Financial Measures

In addition to the measures presented in our consolidated financial statements, we regularly review other metrics, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key metrics we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, non-GAAP Profit before Tax, non-GAAP Provision for Income Tax, non-GAAP Net Income, non-GAAP Net Income per Share, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin (collectively, Non-GAAP Financial Measures). These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a noncash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations, and in the case of non-GAAP Provision for Income Tax, management believes that this non-GAAP measure of income taxes provides it with the ability to evaluate the non-GAAP Provision for Income Taxes across different reporting periods on a consistent basis, independent of special items and discrete items, which may vary in size and frequency. By presenting these Non-GAAP Financial Measures, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance, and we believe that investors understanding of our performance is enhanced by our presenting these Non-GAAP Financial Measures, as they provide a reasonable basis for comparing our ongoing results of operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management and the investment community with valuable insight into matters such as our ongoing core operations and the underlying business trends that are affecting our performance. These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities. We believe that these Non-GAAP Financial Measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.

These Non-GAAP Financial Measures have significant limitations as analytical tools. Some of these limitations are that:

-- such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; -- such measures exclude certain costs which are important in analyzing our GAAP results; -- such measures do not reflect changes in, or cash requirements for, our working capital needs; -- such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt; -- such measures do not reflect our tax expense or the cash requirements to pay our taxes; although depreciation and amortization are noncash charges excluded from our non-GAAP results, the assets being depreciated and amortized will often have to be replaced in the future; -- such measures do not reflect any cash requirements for such replacements; and -- other companies in our industry may calculate such measures differently than we do, thereby further limiting their usefulness as comparative measures.

These Non-GAAP Financial Measures are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges such as those added back in the calculation of these Non-GAAP Financial Measures. Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.

Our prior disclosure referred to non-GAAP Gross Profit and non-GAAP Gross Margin as Adjusted Gross Profit and Adjusted Gross Margin, respectively. No changes have been made to how we calculate these measures.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We calculate non-GAAP Gross Profit and non-GAAP Gross Margin excluding the items below from cost of goods sold in applicable periods. We calculate non-GAAP Gross Margin as non-GAAP Gross Profit divided by total net sales.

-- PSL and Sanken Distribution Agreement Represents the elimination of inventory cost amortization and foundry service payment related to one-time costs incurred in connection with the PSL Divestiture. -- Stock-based compensation Represents noncash expenses arising from the grant of stock awards. -- AMTC Facility consolidation one-time costs Represents one-time costs incurred in connection with closing of the AMTC Facility and transitioning of test and assembly functions to the AMPI Facility announced and initiated in fiscal year 2020, consisting of moving equipment between facilities, contract terminations and other non-recurring charges. The closure and transition of the AMTC Facility is expected to be substantially complete by the end of March 2021. These costs are in addition to, and not duplicative of, the adjustments noted in note (*) below. -- Amortization of acquisition-related intangible assets Represents noncash expenses associated with the amortization of intangible assets in connection with the acquisition of Voxtel, Inc., which closed in August 2020. -- COVID-19 related expenses Represents expenses attributable to the COVID-19 pandemic primarily related to increased purchases of masks, gloves and other protective materials, and overtime premium compensation paid for maintaining 24-hour service at the AMPI Facility.

(*) Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin in this release do not include adjustments consisting of:

-- Additional AMTC related costs Represents costs related to the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility in the Philippines announced in fiscal year 2020 consisting of: the net savings expected to result from the capacity transition to the AMPI Facility, which facility had duplicative capacity based on the buildouts of the AMPI Facility in fiscal years 2019 and 2018. The elimination of these costs did not reduce our production capacity and therefore did not have direct effects on our ability to generate revenue. The closure and transition of the AMTC Facility is expected to be substantially complete by the end of March 2021. -- Out of period adjustment for depreciation expense of giant magnetoresistance assets (GMR assets) Represents a one-time depreciation expense related to the correction of an immaterial error, related to 2017, for certain manufacturing assets that have reached the end of their useful lives. -- Labor savings Represents salary and benefit costs related to employees whose positions were eliminated through voluntary separation programs or other reductions in force (not associated with the closure of the AMTC Facility or any other plant or facility) and a restructuring of overhead positions from high-cost to low-cost jurisdictions net of costs for newly hired employees in connection with such restructuring.

Non-GAAP Operating Expenses, non-GAAP Operating Income and non-GAAP Operating Margin

We calculate non-GAAP Operating Expenses and non-GAAP Operating Income excluding the same items excluded above to the extent they are classified as operating expenses, and also excluding the items below in applicable periods. We calculate non-GAAP Operating Margin as non-GAAP Operating Income divided by total net sales.

-- Transaction fees Represents transaction-related legal and consulting fees incurred primarily in connection with (i) the unsuccessful acquisition of a competitor in fiscal year 2019, (ii) the acquisition of Voxtel, Inc. in fiscal year 2020, and (iii) the PSL Divestiture and the transfer of the Sanken products distribution business to PSL in fiscal year 2020. -- Severance Represents severance costs associated with (i) labor savings initiatives to manage overall compensation expense as a result of the declining sales volume during the applicable period, including a voluntary separation incentive payment plan for employees near retirement and a reduction in force and (ii) the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility announced and initiated in fiscal year 2020.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

We calculate EBITDA as net income minus interest income (expense), tax provision, and depreciation and amortization expenses. We calculate Adjusted EBITDA as EBITDA excluding the same items excluded above and also excluding the items below in applicable periods. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total net sales.

-- Non-core (gain) loss on sale of equipment Represents non-core miscellaneous losses and gains on the sale of equipment. -- Miscellaneous legal judgment charge Represents a one-time charge associated with the final payment of the previously accrued amount payable with respect to a VAT dispute related to the construction of the AMPI Facility. -- Foreign currency translation loss (gain) Represents losses and gains resulting from the remeasurement and settlement of intercompany debt and operational transactions, as well as transactions with external customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded. -- Income in earnings of equity investment Represents our equity method investment in PSL. -- Inventory cost amortization Represents intercompany inventory transactions incurred from purchases made from PSL in fiscal year 2020. Such costs are one-time incurred expenses impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs are not expected to have a continuing impact on our operating results after our second fiscal quarter of fiscal year 2021. -- Foundry service payment Represents foundry service payments incurred under our Price Support Agreement with PSL in respect to the guaranteed capacity at PSL to support our production forecast and are one-time costs incurred impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs are not expected to have a continuing impact on our operating results after fiscal year 2021.

Non-GAAP Profit before Tax

We calculate non-GAAP Profit before Tax as Profit before Tax excluding the same items excluded above and also excluding the items below in applicable periods.

-- Loss on debt extinguishment Represents one-time costs representing deferred financing costs associated with the $300.0 million of our term loan facility repaid during the nine-month period ended December 25, 2020. -- Interest on repaid portion of term loan facility Represents interest expense associated with the $300.0 million of our term loan facility repaid during the period.

Non-GAAP Provision for Income Tax

In calculating non-GAAP Provision for Income Tax, we have added-back the following to GAAP Provision for Income Taxes:

-- Tax effect of adjustments to GAAP results - Represents the estimated income tax effect of the adjustments to non-GAAP Profit Before Tax described above and elimination of discrete tax adjustments.

Three-Month Period Ended Nine-Month Period Ended December September December December December 25, 25, 27, 25, 27, 2020 2020 2019 2020 2019 (Dollars in thousands)Reconciliation of Gross Profit GAAP Gross Profit $ 74,425 $ 61,770 $ 61,525 $ 191,896 $ 189,518 PSL and SankenDistribution 1,500 2,815 ? 7,698 ? AgreementStock-based 4,694 53 47 4,844 137 compensationAMTC Facilityconsolidation 607 408 ? 1,559 ? one-time costsAmortization ofacquisition-related 273 105 ? 378 ? intangible assetsCOVID-19 related 65 73 ? 138 ? expensesTotal $ 7,139 $ 3,454 $ 47 $ 14,617 $ 137 Non-GAAP Gross $ 81,564 $ 65,224 $ 61,572 $ 206,513 $ 189,655 Profit*Non-GAAP Gross 49.6 % 47.7 % 38.5 % 49.6 % 39.9 %Margin*

* Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $1,198, $2,281, and $ for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $, $768, and $ for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and (ii) additional AMTC related costs of $6,553 and $ for the nine months ended December25, 2020 and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $ for the nine months ended September 25, 2020 and September 27, 2019, respectively.

Three-Month Period Ended Nine-Month Period Ended December September December December December 25, 25, 27, 25, 27, 2020 2020 2019 2020 2019 (Dollars in thousands)Reconciliation of Operating Expenses GAAP Operating $ 98,649 $ 49,368 $ 50,394 $ 199,186 $ 155,595 Expenses Research andDevelopment ExpensesGAAP Research andDevelopment 30,999 25,130 25,485 80,509 77,565 ExpensesStock-based 2,984 32 20 3,037 65 compensationAMTC Facilityconsolidation 1 ? ? 2 ? one-time costsCOVID-19 related 32 ? ? 92 ? expensesTransaction fees ? ? ? 18 ? Non-GAAP Researchand Development 27,982 25,098 25,465 77,360 77,500 Expenses Selling, Generaland Administrative ExpensesGAAP Selling,General and 67,650 24,238 24,909 118,677 78,030 AdministrativeExpensesStock-based 38,198 495 236 39,020 849 compensationAMTC Facilityconsolidation 1,620 1,358 ? 4,138 ? one-time costsAmortization ofacquisition-related 71 9 ? 80 ? intangible assetsCOVID-19 related 338 398 ? 4,676 ? expensesTransaction fees 1,729 1,871 2,335 3,699 3,782 Severance (181 ) ? 454 156 3,152 Non-GAAP Selling,General and 25,875 20,107 21,884 66,908 70,247 AdministrativeExpenses Total Non-GAAP 44,792 4,163 3,045 54,918 7,848 Adjustments Non-GAAP operating $ 53,857 $ 45,205 $ 47,349 $ 144,268 $ 147,747 expenses *

* Non-GAAP Operating Expenses do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $19, $380, and $2,939 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and labor savings costs of $109, $, and $1,072 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and (ii) additional AMTC related costs of $723 and $8,603 for the nine months ended December25, 2020 and December27, 2019, respectively, and labor savings costs of $218 and $5,884 for the nine months ended December25, 2020 and December27, 2019, respectively.

Three-Month Period Ended Nine-Month Period Ended December September December December December 25, 25, 27, 25, 27, 2020 2020 2019 2020 2019 (Dollars in thousands)Reconciliation ofOperating (Loss) Income GAAP Operating $ (24,224 ) $ 12,402 $ 11,131 $ (7,290 ) $ 33,923 (Loss) Income PSL and SankenDistribution 1,500 2,815 ? 7,698 ? AgreementStock-based 45,876 580 303 46,901 1,051 compensationAMTC Facilityconsolidation 2,228 1,766 ? 5,699 ? one-time costsAmortization ofacquisition-related 344 114 ? 458 ? intangible assetsCOVID-19 related 435 471 ? 4,906 ? expensesTransaction fees 1,729 1,871 2,335 3,717 3,782 Severance (181 ) ? 454 156 3,152 Total $ 51,931 $ 7,617 $ 3,092 $ 69,535 $ 7,985 Non-GAAP Operating $ 27,707 $ 20,019 $ 14,223 $ 62,245 $ 41,908 Income*Non-GAAP OperatingMargin* (% of net 16.8 % 14.6 % 8.9 % 15.0 % 8.8 %sales)

* Non-GAAP Operating Income and the corresponding calculation of non-GAAP Operating Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $1,217, $2,661, and $2,939 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, labor savings costs of $109, $, and $1,072 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $, $768, and $ for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and (ii) additional AMTC related costs of $7,276 and $8,603 for the nine months ended December25, 2020 and December27, 2019, respectively, labor savings costs of $218 and $5,884 for the nine months ended December25, 2020 and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $ for the nine months ended December25, 2020 and December27, 2019, respectively.

Three-Month Period Ended Nine-Month Period Ended December September December December December 25, 25, 27, 25, 27, 2020 2020 2019 2020 2019 (Dollars in thousands)Reconciliationof EBITDA and AdjustedEBITDA GAAP Net $ (5,060 ) $ 9,618 $ 8,958 $ 9,412 $ 23,776 (Loss) Income Interestexpense 2,598 (350 ) (10 ) 1,935 60 (income), netIncome tax(benefit) (30,523 ) 2,082 1,542 (27,913 ) 11,710 provisionDepreciation & 12,199 12,487 16,131 36,225 47,608 amortizationEBITDA $ (20,786 ) $ 23,837 $ 26,621 $ 19,659 $ 83,154 Non-core(gain) loss on (7 ) 331 532 286 1,091 sale ofequipmentMiscellaneouslegal 574 ? ? 574 ? judgementchargeLoss on debt 9,055 ? ? 9,055 ? extinguishmentForeigncurrency 145 1,318 560 1,331 (2,800 )translationloss (gain)Income inearnings of (949 ) (246 ) ? (1,407 ) ? equityinvestmentStock-based 45,876 580 303 46,901 1,051 compensationAMTC Facilityconsolidation 2,228 1,766 ? 5,699 ? one-time costsCOVID-19related 435 471 ? 4,906 ? expensesTransaction 1,729 1,871 2,335 3,717 3,782 feesSeverance (181 ) ? 454 156 3,152 PSL and SankenDistribution 1,500 2,815 ? 7,698 ? AgreementAdjusted $ 39,619 $ 32,743 $ 30,805 $ 98,575 $ 89,430 EBITDA*Adjusted 24.1 % 24.0 % 19.3 % 23.7 % 18.8 %EBITDA Margin*

* Adjusted EBITDA and the corresponding calculation of Adjusted EBITDA Margin do not include adjustments for the following components of our net income: (i) additional AMTC related costs of $1,217, $2,661, and $2,939 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and labor savings costs of $109, $, and $1,072 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively and (ii) additional AMTC related costs of $7,276 and $8,603 for the nine months ended December 25, 2020 and December 27, 2019, respectively, and labor savings costs of $218 and $5,884 for the nine months ended December25, 2020 and December27, 2019, respectively.

Three-Month Period Ended Nine-Month Period Ended December September December December December 25, 25, 27, 25, 27, 2020 2020 2019 2020 2019 (Dollars in thousands)Reconciliation of(Loss) Profit before Tax GAAP (Loss) Profit $ (35,583 ) $ 11,700 $ 10,500 $ (18,501 ) $ 35,486 before Tax Non-core (gain)loss on sale of (7 ) 331 532 286 1,091 equipmentMiscellaneous legal 574 ? ? 574 ? judgment chargeLoss on debt 9,055 ? ? 9,055 ? extinguishmentForeign currencytransaction loss 145 1,318 560 1,331 (2,800 )(gain)Income in earningsof equity (949 ) (246 ) ? (1,407 ) ? investmentPSL and SankenDistribution 1,500 2,815 ? 7,698 ? AgreementStock-based 45,876 580 303 46,901 1,051 compensationInterest on repaidportion of Term 2,163 ? ? 2,163 ? Loan FacilityAMTC Facilityconsolidation 2,228 1,766 ? 5,699 ? one-time costsAmortization ofacquisition-related 344 114 ? 458 ? intangible assetsCOVID-19 related 435 471 ? 4,906 ? expensesTransaction fees 1,729 1,871 2,335 3,717 3,782 Severance (181 ) ? 454 156 3,152 Total $ 62,912 $ 9,020 $ 4,184 $ 81,537 $ 6,276 Non-GAAP Profit $ 27,329 $ 20,720 $ 14,684 $ 63,036 $ 41,762 before Tax*

* Non-GAAP Profit before Tax does not include adjustments for the following components of our net income: (i) additional AMTC related costs of $1,217, $2,661, and $2,939 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, labor savings costs of $109, $, and $1,072 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $, $768, and $ for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and (ii) additional AMTC related costs of $7,276 and $8,603 for the nine months ended December25, 2020 and December27, 2019, respectively, labor savings costs of $218 and $5,884 for the nine months ended December25, 2020 and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $ for the nine months ended December25, 2020 and December27, 2019, respectively.

Three-Month Period Ended Nine-Month Period Ended December 25, September December 27, December 25, December 27, 2020 25, 2019 2020 2019 2020 (Dollars in thousands)Reconciliationof (Benefit) Provision forIncome Taxes GAAP (Benefit)Provision for $ (30,523 ) $ 2,082 $ 1,542 $ (27,913 ) $ 11,710 Income TaxesGAAP effective 85.8 % 17.8 % 14.7 % 150.9 % 33.0 %tax rate Tax effect ofadjustments to 34,872 859 992 37,539 (4,497 )GAAP results Non-GAAPProvision for $ 4,349 $ 2,941 $ 2,534 $ 9,626 $ 7,213 Income Taxes *Non-GAAPeffective tax 15.9 % 14.2 % 17.3 % 15.3 % 17.3 %rate

* Non-GAAP Provision for Income Taxes does not include tax adjustments for the following components of our net income: additional AMTC related costs, labor savings costs, and out of period adjustment for depreciation expense of GMR assets. The related tax effect of those adjustments to GAAP results were $297, $768 and $898 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and $1,851 and $3,245 for the nine months ended December25, 2020 and December27, 2019, respectively.

Three-Month Period Ended Nine-Month Period Ended December 25, September 25, December 27, December 25, December 27, 2020 2020 2019 2020 2019 (Dollars in thousands)Reconciliation of Net (Loss) Income GAAP Net (Loss) $ (5,060 ) $ 9,618 $ 8,958 $ 9,412 $ 23,776 Income Non-core (gain)loss on sale of (7 ) 331 532 286 1,091 equipmentMiscellaneous legal 574 ? ? 574 ? judgement chargeLoss on debt 9,055 ? ? 9,055 ? extinguishmentForeign currencytransaction loss 145 1,318 560 1,331 (2,800 )(gain)Income in earningsof equity (949 ) (246 ) ? (1,407 ) ? investmentPSL and SankenDistribution 1,500 2,815 ? 7,698 ? AgreementStock-based 45,876 580 303 46,901 1,051 compensationInterest on repaidportion of Term 2,163 ? ? 2,163 ? Loan FacilityAMTC Facilityconsolidation 2,228 1,766 ? 5,699 ? one-time costsAmortization ofacquisition-related 344 114 ? 458 ? intangible assetsCOVID-19 related 435 471 ? 4,906 ? expensesTransaction fees 1,729 1,871 2,335 3,717 3,782 Severance (181 ) ? 454 156 3,152 Tax effect ofadjustments to GAAP (34,872 ) (859 ) (992 ) (37,539 ) 4,497 results Non-GAAP Net $ 22,980 $ 17,779 $ 12,150 $ 53,410 $ 34,549 Income*Basic weightedaverage common 124,363,078 164,431,726 164,431,726 48,121,026 164,431,726 sharesDiluted weightedaverage common 181,916,360 164,431,726 164,431,726 171,638,787 164,431,726 sharesNon-GAAP Basic 0.18 0.11 0.07 1.11 0.21 Earnings per ShareNon-GAAP Diluted 0.13 0.11 0.07 0.31 0.21 Earnings per Share

* Non-GAAP Net Income does not include adjustments for the following components of our net income: (i) additional AMTC related costs of $1,217, $2,661, and $2,939 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, labor savings costs of $109, $, and $1,072 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $, $768, and $ for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, (ii) additional AMTC related costs of $7,276 and $8,603 for the nine months ended December25, 2020 and December27, 2019, respectively, labor savings costs of $218 and $5,884 for the nine months ended December25, 2020 and December27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $ for the nine months ended December25, 2020 and December27, 2019, respectively, and (iii) the related tax effect of adjustments to GAAP results $297, $768 and $898 for the three months ended December25, 2020, September 25, 2020, and December27, 2019, respectively, and $1,851 and $3,245 for the nine months ended December25, 2020 and December27, 2019, respectively.

Investor Contact: Katherine Blye Investor Relations Phone: (603) 626-2306 kblye@ALLEGROMICRO.com