Wolfspeed Reports Financial Results for the Third Quarter of Fiscal Year 2025
Quarterly Financial Highlights (Continuing operations only. All comparisons are to the third quarter of fiscal 2024.)
-
Consolidated revenue of
$185 million , as compared to$201 million -
Mohawk Valley Fab contributed
$78 million in revenue, as compared to$28 million
-
Mohawk Valley Fab contributed
- GAAP gross margin of (12)%, compared to 11%
-
Non-GAAP gross margin of 2%, compared to 15%
-
GAAP and non-GAAP gross margin includes the impacts of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab. Underutilization was
$26.3 million as compared to$30.4 million .
-
GAAP and non-GAAP gross margin includes the impacts of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab. Underutilization was
-
GAAP loss per share of (
$1.86 ), compared to ($1.18 ) -
Non-GAAP loss per share of (
$0.72 ), compared to ($0.62 )
“At the beginning of the year, the Company outlined a plan focused on strengthening our capital structure, improving our path to profitability, and raising cost effective capital to support our growth plan. I’m pleased to report that the Board and management have made significant progress against all of the priorities we outlined – completing our
Quarterly Conference Call:
The conference call will be available to the public through a live audio web broadcast via the Internet. For webcast details, visit
About
Non-GAAP Financial Measures:
This press release highlights the Company's financial results on both a GAAP and a non-GAAP basis. The GAAP results include certain costs, charges and expenses that are excluded from non-GAAP results. By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the Company's performance, core results and underlying trends.
Forward Looking Statements:
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 and optimize our capital structure and access funding. Actual results could differ materially due to a number of factors, including but not limited to, ongoing uncertainty in global economic and geopolitical conditions, such as the ongoing military conflict between
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
|||||||||||
|
Three months ended |
|
Nine months ended |
||||||||
(in millions of |
|
|
|
|
|
|
|
||||
Revenue, net |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue, net |
207.9 |
|
|
178.2 |
|
|
656.5 |
|
|
531.5 |
|
Gross (loss) profit |
(22.5 |
) |
|
22.5 |
|
|
(95.9 |
) |
|
75.0 |
|
Gross margin percentage |
(12 |
)% |
|
11 |
% |
|
(17 |
)% |
|
12 |
% |
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
||||
Research and development |
42.2 |
|
|
52.5 |
|
|
137.5 |
|
|
141.9 |
|
Sales, general and administrative |
41.1 |
|
|
55.8 |
|
|
154.4 |
|
|
184.8 |
|
Factory start-up costs |
23.5 |
|
|
14.4 |
|
|
66.0 |
|
|
33.3 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
|
0.9 |
|
|
0.9 |
|
Loss on disposal or impairment of long-lived assets |
31.1 |
|
|
0.6 |
|
|
157.5 |
|
|
1.0 |
|
Other operating expense |
33.8 |
|
|
5.3 |
|
|
135.4 |
|
|
12.5 |
|
Total operating expense |
172.0 |
|
|
128.9 |
|
|
651.7 |
|
|
374.4 |
|
Operating loss |
(194.5 |
) |
|
(106.4 |
) |
|
(747.6 |
) |
|
(299.4 |
) |
Operating loss percentage |
(105 |
)% |
|
(53 |
)% |
|
(133 |
)% |
|
(49 |
)% |
|
|
|
|
|
|
|
|
||||
Non-operating expense, net |
90.9 |
|
|
42.4 |
|
|
191.9 |
|
|
98.7 |
|
Loss before income taxes |
(285.4 |
) |
|
(148.8 |
) |
|
(939.5 |
) |
|
(398.1 |
) |
Income tax expense |
0.1 |
|
|
0.1 |
|
|
0.4 |
|
|
0.6 |
|
Net loss from continuing operations |
(285.5 |
) |
|
(148.9 |
) |
|
(939.9 |
) |
|
(398.7 |
) |
Net loss from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
(290.6 |
) |
Net loss |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
|
|
|
|
|
|
||||
Basic and diluted loss per share |
|
|
|
|
|
|
|
||||
Continuing operations |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Net loss |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
|
|
|
|
|
|
||||
Weighted average shares - basic and diluted (in thousands) |
153,897 |
|
|
125,830 |
|
|
136,550 |
|
|
125,514 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) |
|||||
(in millions of |
|
|
|
||
Assets |
|
|
|
||
Current assets: |
|
|
|
||
Cash, cash equivalents, and short-term investments |
|
|
|
|
|
Accounts receivable, net |
164.6 |
|
|
147.4 |
|
Inventories |
459.1 |
|
|
440.7 |
|
Investment tax credit receivable |
586.2 |
|
|
— |
|
Prepaid expenses |
81.2 |
|
|
56.6 |
|
Other current assets |
249.5 |
|
|
180.3 |
|
Total current assets |
2,870.2 |
|
|
2,999.6 |
|
Property and equipment, net |
3,911.6 |
|
|
3,652.3 |
|
|
359.2 |
|
|
359.2 |
|
Intangible assets, net |
23.8 |
|
|
23.9 |
|
Long-term receivables |
3.0 |
|
|
2.3 |
|
Other long-term investments |
— |
|
|
79.3 |
|
Deferred tax assets |
1.1 |
|
|
1.1 |
|
Investment tax credit receivable |
133.5 |
|
|
641.8 |
|
Other assets |
271.8 |
|
|
225.1 |
|
Total assets |
|
|
|
|
|
|
|
|
|
||
Liabilities and Shareholders' Equity |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
Contract liabilities and distributor-related reserves |
44.6 |
|
|
62.3 |
|
Income taxes payable |
1.1 |
|
|
1.0 |
|
Finance lease liabilities |
0.5 |
|
|
0.5 |
|
Other current liabilities |
179.7 |
|
|
77.9 |
|
Total current liabilities |
618.5 |
|
|
665.3 |
|
|
|
|
|
||
Long-term liabilities: |
|
|
|
||
Long-term debt |
3,469.8 |
|
|
3,126.2 |
|
Convertible notes, net |
3,042.0 |
|
|
3,034.9 |
|
Deferred tax liabilities |
10.8 |
|
|
10.8 |
|
Finance lease liabilities - long-term |
8.5 |
|
|
8.9 |
|
Other long-term liabilities |
211.9 |
|
|
256.4 |
|
Total long-term liabilities |
6,743.0 |
|
|
6,437.2 |
|
|
|
|
|
||
Shareholders’ equity: |
|
|
|
||
Common stock |
0.2 |
|
|
0.2 |
|
Additional paid-in-capital |
4,085.2 |
|
|
3,821.9 |
|
Accumulated other comprehensive loss |
(4.4 |
) |
|
(11.6 |
) |
Accumulated deficit |
(3,868.3 |
) |
|
(2,928.4 |
) |
Total shareholders’ equity |
212.7 |
|
|
882.1 |
|
Total liabilities and shareholders’ equity |
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
|||||
|
Nine months ended |
||||
(in millions of |
|
|
|
||
Operating activities: |
|
|
|
||
Net loss |
( |
) |
|
( |
) |
Net loss from discontinued operations |
— |
|
|
(290.6 |
) |
Net loss from continuing operations |
(939.9 |
) |
|
(398.7 |
) |
Adjustments to reconcile net loss to cash used in operating activities of continuing operations: |
|
|
|
||
Depreciation and amortization |
191.7 |
|
|
135.7 |
|
Amortization of debt issuance costs and discount, net of non-cash capitalized interest |
34.7 |
|
|
21.7 |
|
Stock-based compensation |
62.7 |
|
|
63.9 |
|
Unrealized loss (gain) on equity investment |
9.2 |
|
|
(7.3 |
) |
Loss on disposal or impairment of property and equipment |
152.7 |
|
|
1.0 |
|
Impairment of ROU Assets |
4.8 |
|
|
— |
|
Amortization of premium on investments, net |
(7.8 |
) |
|
(21.4 |
) |
Paid-in-kind interest on long-term debt |
75.5 |
|
|
— |
|
Deferred income taxes |
— |
|
|
0.1 |
|
Changes in operating assets and liabilities: |
|
|
|
||
Accounts receivable, net |
(17.2 |
) |
|
30.5 |
|
Inventories |
(20.8 |
) |
|
(132.9 |
) |
Prepaid expenses and other assets |
7.3 |
|
|
(83.6 |
) |
Accounts payable |
(16.7 |
) |
|
(48.2 |
) |
Accrued salaries and wages and other liabilities |
22.5 |
|
|
(4.3 |
) |
Contract liabilities and distributor-related reserves |
(27.9 |
) |
|
11.7 |
|
Net cash used in operating activities of continuing operations |
(469.2 |
) |
|
(431.8 |
) |
Net cash used in operating activities of discontinued operations |
— |
|
|
(54.3 |
) |
Cash used in operating activities |
(469.2 |
) |
|
(486.1 |
) |
|
|
|
|
||
Investing activities: |
|
|
|
||
Purchases of property and equipment |
(1,059.5 |
) |
|
(1,629.7 |
) |
Purchases of patent and licensing rights |
(3.9 |
) |
|
(4.3 |
) |
Proceeds from sale of property and equipment |
1.0 |
|
|
0.4 |
|
Purchases of short-term investments |
(243.2 |
) |
|
(1,488.6 |
) |
Proceeds from maturities of short-term investments |
773.1 |
|
|
1,244.1 |
|
Proceeds from sale of short-term investments |
39.4 |
|
|
52.7 |
|
Reimbursement of capital expenditures from incentives and investment credits |
238.6 |
|
|
178.4 |
|
Proceeds from sale of business |
— |
|
|
75.6 |
|
Net cash used in investing activities of continuing operations |
(254.5 |
) |
|
(1,571.4 |
) |
Net cash used in investing activities of discontinued operations |
— |
|
|
(3.1 |
) |
Cash used in investing activities |
(254.5 |
) |
|
(1,574.5 |
) |
|
|
|
|
||
Financing activities: |
|
|
|
||
Proceeds from long-term debt borrowings |
240.0 |
|
|
1,500.0 |
|
Payments of debt issuance costs and commitment fees |
(40.2 |
) |
|
(46.0 |
) |
Proceeds from issuance of common stock |
203.9 |
|
|
10.9 |
|
Tax withholding on vested equity awards |
(3.9 |
) |
|
(17.5 |
) |
Payments on long-term debt borrowings, including finance lease obligations |
(0.4 |
) |
|
(0.3 |
) |
Incentive-related escrow refunds |
10.0 |
|
|
— |
|
Commitment fees on long-term incentive agreement |
(1.5 |
) |
|
(1.0 |
) |
Net cash provided by financing activities of continuing operations |
407.9 |
|
|
1,446.1 |
|
Cash provided by financing activities |
407.9 |
|
|
1,446.1 |
|
Effects of foreign exchange changes on cash and cash equivalents |
0.1 |
|
|
(0.1 |
) |
Net change in cash and cash equivalents |
(315.7 |
) |
|
(614.6 |
) |
Cash and cash equivalents: |
|
|
|
||
Cash and cash equivalents, beginning of period |
1,045.9 |
|
|
1,757.0 |
|
Cash and cash equivalents, end of period |
|
|
|
|
|
Product Line Revenue |
|||||||
|
Three months ended |
|
Nine months ended |
||||
(in millions of |
|
|
|
|
|
|
|
Power Products |
|
|
|
|
|
|
|
Materials Products |
77.9 |
|
98.6 |
|
265.2 |
|
295.5 |
Total |
|
|
|
|
|
|
|
Non-GAAP Measures of Financial Performance
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP,
Reconciliation to the nearest GAAP measure of all historical non-GAAP measures included in this press release can be found in the tables included with this press release.
Non-GAAP measures presented in this press release are not in accordance with or an alternative to measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with
For its internal budgeting process, and as discussed further below,
Stock-based compensation expense. This expense consists of expenses for stock options, restricted stock, performance stock awards and employee stock purchases through its Employee Stock Purchase Program.
Amortization or impairment of acquisition-related intangibles.
Asset impairment.
Legal Settlement. In the third quarter of fiscal 2025,
Loss on customs matter. In the third quarter of fiscal 2024,
Project, transformation and transaction costs. The Company has incurred professional services fees and other costs associated with completed and potential acquisitions and divestitures, as well as internal transformation programs focused on optimizing the Company's administrative processes.
Restructuring and facility closure costs. During the first quarter of fiscal 2025, the Company began to incur costs to optimize its operating model and accelerate its transition to 200mm silicon carbide offerings through facility closures and headcount reduction initiatives.
Executive severance costs. The Company has incurred costs in conjunction with the termination of key executive personnel.
Amortization of discount and debt issuance costs, net of capitalized interest. The issuance of the Company's convertible senior notes in
Loss (gain) on Wafer Supply Agreement. In connection with the completed sale of the LED Products business unit to SMART Global Holdings, Inc., and its wholly owned subsidiary, the Company entered into a Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), pursuant to which the Company supplies
Gain (loss) on equity investment. The Company received shares of MACOM common stock in connection with the RF Business Divestiture. These shares are accounted for utilizing the fair value option and changes in the fair value of the shares are recognized in income.
Income tax adjustment. This amount reconciles GAAP tax (benefit) expense to a calculated non-GAAP tax (benefit) expense utilizing a non-GAAP tax rate. The non-GAAP tax rate estimates an appropriate tax rate if the listed non-GAAP items were excluded. This reconciling item adjusts non-GAAP net (loss) income to the amount it would be if the calculated non-GAAP tax rate was applied to non-GAAP (loss) income before income taxes.
In addition to the non-GAAP measures discussed above,
Reconciliation of GAAP to Non-GAAP Measures - Continuing Operations Only
(in millions of (unaudited) |
|||||||||||
Non-GAAP Gross Margin |
|||||||||||
|
Three months ended |
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Nine months ended |
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|
||||
GAAP gross (loss) profit |
( |
) |
|
|
|
|
( |
) |
|
|
|
GAAP gross margin percentage |
(12 |
)% |
|
11 |
% |
|
(17 |
)% |
|
12 |
% |
Adjustments: |
|
|
|
|
|
|
|
||||
Stock-based compensation expense |
9.7 |
|
|
7.6 |
|
|
27.2 |
|
|
20.0 |
|
Restructuring and facility closure costs |
16.8 |
|
|
— |
|
|
82.5 |
|
|
— |
|
Non-GAAP gross profit |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross margin percentage |
2 |
% |
|
15 |
% |
|
2 |
% |
|
16 |
% |
Non-GAAP Operating Loss |
|||||||||||
|
Three months ended |
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Nine months ended |
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|
||||
GAAP operating loss |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
GAAP operating loss percentage |
(105 |
)% |
|
(53 |
)% |
|
(133 |
)% |
|
(49 |
)% |
Adjustments: |
|
|
|
|
|
|
|
||||
Stock-based compensation expense: |
|
|
|
|
|
|
|
||||
Cost of revenue, net |
9.7 |
|
|
7.6 |
|
|
27.2 |
|
|
20.0 |
|
Research and development |
3.1 |
|
|
3.0 |
|
|
9.2 |
|
|
9.1 |
|
Sales, general and administrative |
6.0 |
|
|
11.2 |
|
|
26.3 |
|
|
34.8 |
|
Total stock-based compensation expense |
18.8 |
|
|
21.8 |
|
|
62.7 |
|
|
63.9 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
|
0.9 |
|
|
0.9 |
|
Legal settlements |
17.0 |
|
|
— |
|
|
17.0 |
|
|
— |
|
Project, transformation and transaction costs |
6.8 |
|
|
5.3 |
|
|
20.6 |
|
|
12.5 |
|
Restructuring and facility closure costs: |
|
|
|
|
|
|
|
||||
Cost of revenue, net |
16.8 |
|
|
— |
|
|
82.5 |
|
|
— |
|
Other operating expense |
10.0 |
|
|
— |
|
|
95.0 |
|
|
— |
|
Total restructuring and other costs |
26.8 |
|
|
— |
|
|
177.5 |
|
|
— |
|
Executive severance costs |
— |
|
|
— |
|
|
1.4 |
|
|
— |
|
Asset impairment |
30.7 |
|
|
— |
|
|
155.2 |
|
|
— |
|
Total adjustments to GAAP operating loss |
100.4 |
|
|
27.4 |
|
|
435.3 |
|
|
77.3 |
|
Non-GAAP operating loss |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Non-GAAP operating loss percentage |
(51 |
)% |
|
(39 |
)% |
|
(56 |
)% |
|
(37 |
)% |
Non-GAAP Non-Operating (Expense) Income, net |
|||||||||||
|
Three months ended |
|
Nine months ended |
||||||||
|
|
|
|
|
|
|
|
||||
GAAP non-operating expense, net |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Adjustments: |
|
|
|
|
|
|
|
||||
Loss on customs matter |
— |
|
|
7.7 |
|
|
— |
|
|
7.7 |
|
Gain on equity investment |
24.9 |
|
|
(1.9 |
) |
|
9.2 |
|
|
(7.3 |
) |
Amortization of discount and debt issuance costs, net of capitalized interest |
14.5 |
|
|
7.0 |
|
|
34.5 |
|
|
21.6 |
|
Loss on Wafer Supply Agreement |
— |
|
|
6.9 |
|
|
9.2 |
|
|
20.4 |
|
Non-GAAP non-operating expense, net |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Non-GAAP Net Loss |
|||||||||||
|
Three months ended |
|
Nine months ended |
||||||||
|
|
|
|
|
|
|
|
||||
GAAP net loss from continuing operations |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Adjustments: |
|
|
|
|
|
|
|
||||
Stock-based compensation expense |
18.8 |
|
|
21.8 |
|
|
62.7 |
|
|
63.9 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
|
0.9 |
|
|
0.9 |
|
Legal settlements |
17.0 |
|
|
— |
|
|
17.0 |
|
|
— |
|
Project, transformation and transaction costs |
6.8 |
|
|
5.3 |
|
|
20.6 |
|
|
12.5 |
|
Executive severance costs |
— |
|
|
— |
|
|
1.4 |
|
|
— |
|
Restructuring and facility closure costs |
26.8 |
|
|
— |
|
|
177.5 |
|
|
— |
|
Asset impairment |
30.7 |
|
|
— |
|
|
155.2 |
|
|
— |
|
Loss on customs matter |
— |
|
|
7.7 |
|
|
— |
|
|
7.7 |
|
Gain on equity investment |
24.9 |
|
|
(1.9 |
) |
|
9.2 |
|
|
(7.3 |
) |
Amortization of discount and debt issuance costs, net of capitalized interest |
14.5 |
|
|
7.0 |
|
|
34.5 |
|
|
21.6 |
|
Loss on Wafer Supply Agreement |
— |
|
|
6.9 |
|
|
9.2 |
|
|
20.4 |
|
Total adjustments to GAAP net loss before provision for income taxes |
139.8 |
|
|
47.1 |
|
|
488.2 |
|
|
119.7 |
|
Income tax adjustment - benefit |
34.9 |
|
|
24.1 |
|
|
102.5 |
|
|
65.1 |
|
Non-GAAP net loss |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
|
|
|
|
|
|
||||
Non-GAAP diluted loss per share |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Non-GAAP weighted average shares (in thousands) |
153,897 |
|
|
125,830 |
|
|
136,550 |
|
|
125,514 |
|
Adjusted EBITDA |
|||||||||||
|
Three months ended |
|
Nine months ended |
||||||||
|
|
|
|
|
|
|
|
||||
GAAP net loss |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Reconciling items to EBITDA (Non-GAAP) |
|
|
|
|
|
|
|
||||
Income tax expense |
0.1 |
|
|
0.1 |
|
|
0.4 |
|
|
0.6 |
|
Interest expense |
65.9 |
|
|
29.4 |
|
|
171.8 |
|
|
76.6 |
|
Depreciation and amortization |
53.9 |
|
|
47.0 |
|
|
191.7 |
|
|
135.7 |
|
EBITDA (Non-GAAP) |
(165.6 |
) |
|
(72.4 |
) |
|
(576.0 |
) |
|
(185.8 |
) |
|
|
|
|
|
|
|
|
||||
Reconciling items to adjusted EBITDA (Non-GAAP) |
|
|
|
|
|
|
|
||||
Stock based compensation |
18.8 |
|
|
21.8 |
|
|
62.7 |
|
|
63.9 |
|
Project, transformation and transaction costs |
6.8 |
|
|
5.3 |
|
|
20.6 |
|
|
12.5 |
|
Executive severance costs |
— |
|
|
— |
|
|
1.4 |
|
|
— |
|
Legal settlements |
17.0 |
|
|
— |
|
|
17.0 |
|
|
— |
|
Loss on customs matter |
— |
|
|
7.7 |
|
|
— |
|
|
7.7 |
|
Gain on equity investment |
24.9 |
|
|
(1.9 |
) |
|
9.2 |
|
|
(7.3 |
) |
Restructuring and facility closure costs(1) |
22.2 |
|
|
— |
|
|
130.5 |
|
|
— |
|
Asset impairment |
30.7 |
|
|
— |
|
|
155.2 |
|
|
— |
|
Loss on Wafer Supply Agreement |
— |
|
|
6.9 |
|
|
9.2 |
|
|
20.4 |
|
Adjusted EBITDA (Non-GAAP) |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
|
|
|
|
|
|
|
|
||||
(1)Excludes restructuring-related depreciation of |
Free Cash Flow |
|||||||||||
|
Three months ended |
|
Nine months ended |
||||||||
|
|
|
|
|
|
|
|
||||
Net cash used in operating activities |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
Less: PP&E spending, net of reimbursements from long-term incentive agreement |
(24.1 |
) |
|
(478.5 |
) |
|
(820.9 |
) |
|
(1,451.3 |
) |
Less: Patents spending |
(1.5 |
) |
|
(1.1 |
) |
|
(3.9 |
) |
|
(4.3 |
) |
Total free cash flow |
( |
) |
|
( |
) |
|
( |
) |
|
( |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20250508617602/en/
Vice President of External Affairs
Phone: 919-407-4820
investorrelations@wolfspeed.com
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