Wolfspeed Reports Financial Results for the First Quarter of Fiscal Year 2025
Wolfspeed (NYSE: WOLF) reported Q1 FY2025 results with consolidated revenue of $195M, slightly down from $197M YoY.
The Mohawk Valley Fab contributed $49M in revenue. GAAP gross margin was -19% impacted by $26.4M in underutilization costs, while non-GAAP gross margin was 3%. The company ended Q1 with $1.7B in cash and investments.
Wolfspeed secured $2.5B in liquidity through CHIPS, lenders, and tax credits, and is streamlining operations to save $200M annually. The company targets $3B annual revenue from its silicon carbide facilities.
For Q2 FY2025, Wolfspeed projects revenue between $160M-$200M, with a GAAP net loss of $401M-$362M and non-GAAP net loss of $145M-$114M. Restructuring and start-up costs continue to impact financials. The company expects $174M in restructuring costs for Q2 FY2025.
Wolfspeed (NYSE: WOLF) ha riportato i risultati del primo trimestre dell'anno fiscale 2025 con un fatturato consolidato di 195 milioni di dollari, leggermente in calo rispetto ai 197 milioni di dollari dell'anno precedente.
Il fabbricato di Mohawk Valley ha contribuito con 49 milioni di dollari di fatturato. Il margine lordo GAAP è stato del -19%, influenzato da costi di sottoutilizzo pari a 26,4 milioni di dollari, mentre il margine lordo non-GAAP è stato del 3%. L'azienda ha chiuso il primo trimestre con 1,7 miliardi di dollari in liquidità e investimenti.
Wolfspeed ha ottenuto 2,5 miliardi di dollari in liquidità attraverso CHIPS, prestatori e crediti d'imposta, e sta semplificando le operazioni per risparmiare 200 milioni di dollari all'anno. L'azienda punta a un fatturato annuale di 3 miliardi di dollari dalle sue strutture in carburo di silicio.
Per il secondo trimestre dell'anno fiscale 2025, Wolfspeed prevede un fatturato compreso tra 160 e 200 milioni di dollari, con una perdita netta GAAP di 401-362 milioni di dollari e una perdita netta non-GAAP di 145-114 milioni di dollari. I costi di ristrutturazione e avvio continuano a influenzare i risultati finanziari. L'azienda prevede 174 milioni di dollari in costi di ristrutturazione per il secondo trimestre dell'anno fiscale 2025.
Wolfspeed (NYSE: WOLF) reportó los resultados del primer trimestre del año fiscal 2025 con ingresos consolidados de 195 millones de dólares, ligeramente por debajo de los 197 millones de dólares del año anterior.
La Fábrica de Mohawk Valley contribuyó con 49 millones de dólares en ingresos. El margen bruto GAAP fue del -19%, afectado por costos de infrautilización de 26,4 millones de dólares, mientras que el margen bruto no-GAAP fue del 3%. La empresa terminó el primer trimestre con 1,7 mil millones de dólares en efectivo e inversiones.
Wolfspeed aseguró 2,5 mil millones de dólares en liquidez a través de CHIPS, prestamistas y créditos fiscales, y está optimizando las operaciones para ahorrar 200 millones de dólares anuales. La compañía tiene como objetivo un ingreso anual de 3 mil millones de dólares de sus instalaciones de carburo de silicio.
Para el segundo trimestre del año fiscal 2025, Wolfspeed proyecta ingresos entre 160 millones y 200 millones de dólares, con una pérdida neta GAAP de 401-362 millones de dólares y una pérdida neta no-GAAP de 145-114 millones de dólares. Los costos de reestructuración y de inicio continúan afectando las finanzas. La compañía espera 174 millones de dólares en costos de reestructuración para el segundo trimestre del año fiscal 2025.
Wolfspeed (NYSE: WOLF)는 2025 회계연도 1분기 결과를 발표하며 총 수익이 1억 9,500만 달러로 작년 같은 기간의 1억 9,700만 달러에서 소폭 감소했다고 전했습니다.
모호크 밸리 공장은 4,900만 달러의 수익을 기여했습니다. GAAP 총 마진은 -19%였으며, 이는 2,640만 달러의 사용률 미달 비용에 영향을 받았으며, 비 GAAP 총 마진은 3%였습니다. 회사는 1분기를 17억 달러의 현금 및 투자로 마감했습니다.
Wolfspeed는 CHIPS, 대출자 및 세금 공제를 통해 25억 달러의 유동성을 확보했으며 2억 달러의 연간 비용 절감을 위해 운영을 간소화하고 있습니다. 이 회사는 실리콘 카바이드 시설에서 연간 30억 달러의 수익을 목표로 하고 있습니다.
2025 회계연도 2분기 동안 Wolfspeed는 1억 6,000만 달러에서 2억 달러 사이의 수익을 예상하고 있으며, GAAP 기준 순손실은 4억 1,000만 달러에서 3억 6,200만 달러, 비 GAAP 기준 순손실은 1억 4,500만 달러에서 1억 1,400만 달러로 예상합니다. 구조조정 및 스타트업 비용이 계속해서 재무에 영향을 미치고 있습니다. 이 회사는 2025 회계연도 2분기에 1억 7,400만 달러의 구조조정 비용을 예상합니다.
Wolfspeed (NYSE: WOLF) a annoncé les résultats du premier trimestre de l'exercice fiscal 2025, avec un chiffre d'affaires consolidé de 195 millions de dollars, légèrement en baisse par rapport à 197 millions de dollars l'année dernière.
La fabrique de Mohawk Valley a contribué avec 49 millions de dollars de revenus. La marge brute GAAP était de -19%, impactée par des coûts de sous-utilisation de 26,4 millions de dollars, tandis que la marge brute non-GAAP était de 3%. L'entreprise a terminé le premier trimestre avec 1,7 milliard de dollars en liquidités et investissements.
Wolfspeed a sécurisé 2,5 milliards de dollars de liquidités via CHIPS, des prêteurs et des crédits d'impôt, et rationalise ses opérations pour économiser 200 millions de dollars par an. L'entreprise vise un chiffre d'affaires annuel de 3 milliards de dollars de ses installations en carbure de silicium.
Pour le deuxième trimestre de l'exercice fiscal 2025, Wolfspeed prévoit un chiffre d'affaires compris entre 160 millions et 200 millions de dollars, avec une perte nette GAAP de 401 millions à 362 millions de dollars et une perte nette non-GAAP de 145 millions à 114 millions de dollars. Les coûts de restructuration et de démarrage continuent d'avoir un impact sur les finances. L'entreprise prévoit 174 millions de dollars de coûts de restructuration pour le deuxième trimestre de l'exercice fiscal 2025.
Wolfspeed (NYSE: WOLF) hat die Ergebnisse für das erste Quartal des Geschäftsjahres 2025 bekannt gegeben, mit einem konsolidierten Umsatz von 195 Millionen US-Dollar, was einen leichten Rückgang gegenüber 197 Millionen US-Dollar im Vorjahr darstellt.
Das Werk im Mohawk Valley trug 49 Millionen US-Dollar zum Umsatz bei. Die GAAP-Bruttomarge lag bei -19%, beeinflusst durch Unterauslastungskosten von 26,4 Millionen US-Dollar, während die non-GAAP-Bruttomarge 3% betrug. Das Unternehmen schloss das erste Quartal mit 1,7 Milliarden US-Dollar an Barmitteln und Investitionen ab.
Wolfspeed sicherte sich 2,5 Milliarden US-Dollar an Liquidität durch CHIPS, Kreditgeber und Steuergutschriften und optimiert die Abläufe, um jährlich 200 Millionen US-Dollar einzusparen. Das Unternehmen strebt einen jährlichen Umsatz von 3 Milliarden US-Dollar aus seinen Siliziumkarbid-Anlagen an.
Für das zweite Quartal des Geschäftsjahres 2025 prognostiziert Wolfspeed einen Umsatz zwischen 160 Millionen und 200 Millionen US-Dollar, mit einem GAAP-Nettoverlust von 401 Millionen bis 362 Millionen US-Dollar und einem non-GAAP-Nettoverlust von 145 Millionen bis 114 Millionen US-Dollar. Die Umstrukturierungs- und Startkosten wirken sich weiterhin auf die Finanzen aus. Das Unternehmen erwartet im zweiten Quartal des Geschäftsjahres 2025 Umstrukturierungskosten in Höhe von 174 Millionen US-Dollar.
- Secured $2.5 billion in liquidity.
- Targeting $200 million in annual cash savings through streamlining.
- 2.5 times YoY growth in automotive business.
- GAAP gross margin of -19%.
- Non-GAAP gross margin dropped to 3%.
- Projected Q2 FY2025 GAAP net loss of $401M-$362M.
- Incurred $87.1 million in restructuring costs in Q1 FY2025.
Insights
A concerning quarter for Wolfspeed with
The transition to 200mm wafers and automotive growth (2.5x YoY) are positive indicators, but high start-up and underutilization costs at Mohawk Valley (
The strategic shift to pure-play 200mm production represents a critical operational pivot. Closing the manual 150mm Durham facility while streamlining manufacturing footprint will drive efficiency but carries significant near-term costs -
Solidifying Capital Structure, Simplifying Business to Accelerate Profitability and Continuing to Build Core Sales Demand
Executed Access to Incremental
Streamlining Business to 200mm Pure Play Yielding
Quarterly Financial Highlights (Continuing operations only. All comparisons are to the first quarter of fiscal 2024.)
-
Consolidated revenue of approximately
, as compared to approximately$195 million $197 million -
Mohawk Valley Fab contributed approximately
in revenue$49 million
-
Mohawk Valley Fab contributed approximately
-
Power device design-ins of
$1.5 billion -
Power device design-wins of
$1.3 billion -
GAAP gross margin of approximately (19)%, compared to approximately
13% -
GAAP gross margin includes the impacts of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab. Underutilization was
as compared to$26.4 million . See "Start-up and Underutilization Costs" below for additional information.$34.4 million
-
GAAP gross margin includes the impacts of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab. Underutilization was
-
Non-GAAP gross margin of
3% , compared to16% -
Ended Q1 with
~ in cash and investments; does not include initial draw down of$1.7 billion from lender group$250 million
“This quarter we took action to solidify the capital structure, simplifying our business to accelerate structural profitability and support the build out of our state-of-the-art silicon carbide facilities. We will have a 200mm silicon carbide footprint at Mohawk Valley and
Lowe continued, "To drive operational improvements, we are taking action to enhance efficiency, align our business with current market conditions and become the first silicon carbide company to transition to pure-play 200-millimeter. The transition to a fully 200-millimeter platform allows us to take further initiatives to streamline our cost structure, including closing our manual
“We delivered 2.5 times year-over-year growth in our automotive business in the first quarter, and we expect our EV revenue to continue to grow throughout calendar 2025, as the total number of car models using a Wolfspeed silicon carbide solution in the power train increased by 4x from 2023 to 2024 and is expected to grow by another approximately
Business Outlook:
For its second quarter of fiscal 2025, Wolfspeed targets revenue from continuing operations in a range of
Restructuring and Facility Closure:
During the first quarter of fiscal 2025, Wolfspeed initiated a facility closure and consolidation plan to optimize its cost structure and accelerate its transition from 150mm to 200mm silicon carbide devices. The costs incurred as a result of this restructuring plan include severance and employee benefit costs, voluntary termination benefits and other facility closure-related costs. Wolfspeed incurred
For the second quarter of fiscal 2025, the Company expects to incur
Start-up and Underutilization Costs:
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
For the second quarter of fiscal 2025, operating expenses are expected to include approximately
Quarterly Conference Call:
Wolfspeed will host a conference call at 5:00 p.m. Eastern time today to review the highlights of its first quarter results and its fiscal second 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 that power the world’s most disruptive innovations. As the pioneers of silicon carbide, and creators of the most advanced semiconductor technology on earth, we are committed to powering a better world for everyone. Through silicon carbide material, Power Modules, Discrete Power Devices and Power Die Products targeted for various applications, we will bring you The Power to Make It Real.TM 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.
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 second 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, 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
Wolfspeed® is a registered trademark of Wolfspeed, Inc.
WOLFSPEED, INC. |
|||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
(unaudited) |
|||||
|
Three months ended |
||||
(in millions of |
September 29, 2024 |
|
September 24, 2023 |
||
Revenue, net |
|
|
|
|
|
Cost of revenue, net |
230.9 |
|
|
172.7 |
|
Gross profit |
(36.2 |
) |
|
24.7 |
|
Gross margin percentage |
(19 |
)% |
|
13 |
% |
|
|
|
|
||
Operating expenses: |
|
|
|
||
Research and development |
50.9 |
|
|
44.1 |
|
Sales, general and administrative |
62.2 |
|
|
64.1 |
|
Factory start-up costs |
19.7 |
|
|
8.4 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
Loss on disposal or impairment of other assets |
0.6 |
|
|
0.1 |
|
Other operating expense |
60.2 |
|
|
2.6 |
|
Total operating expense |
193.9 |
|
|
119.6 |
|
Operating loss |
(230.1 |
) |
|
(94.9 |
) |
Operating loss percentage |
(118 |
)% |
|
(48 |
)% |
|
|
|
|
||
Non-operating expense, net |
51.7 |
|
|
28.5 |
|
Loss before income taxes |
(281.8 |
) |
|
(123.4 |
) |
Income tax expense |
0.4 |
|
|
0.2 |
|
Net loss from continuing operations |
(282.2 |
) |
|
(123.6 |
) |
Net loss from discontinued operations |
— |
|
|
(272.1 |
) |
Net loss |
( |
) |
|
( |
) |
|
|
|
|
||
Basic and diluted loss per share |
|
|
|
||
Continuing operations |
( |
) |
|
( |
) |
Net loss |
( |
) |
|
( |
) |
|
|
|
|
||
Weighted average shares - basic and diluted (in thousands) |
126,733 |
|
|
125,105 |
|
WOLFSPEED, INC. |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(unaudited) |
|||||
(in millions of |
September 29, 2024 |
|
June 30, 2024 |
||
Assets |
|
|
|
||
Current assets: |
|
|
|
||
Cash, cash equivalents, and short-term investments |
|
|
|
|
|
Accounts receivable, net |
145.4 |
|
|
147.4 |
|
Inventories |
467.9 |
|
|
440.7 |
|
Income taxes receivable |
0.3 |
|
|
0.5 |
|
Prepaid expenses |
58.3 |
|
|
56.6 |
|
Other current assets |
98.9 |
|
|
179.8 |
|
Total current assets |
2,458.4 |
|
|
2,999.6 |
|
Property and equipment, net |
3,959.3 |
|
|
3,652.3 |
|
Goodwill |
359.2 |
|
|
359.2 |
|
Intangible assets, net |
23.7 |
|
|
23.9 |
|
Long-term receivables |
2.2 |
|
|
2.3 |
|
Other long-term investments |
79.3 |
|
|
79.3 |
|
Deferred tax assets |
1.1 |
|
|
1.1 |
|
Investment tax credit receivable |
723.5 |
|
|
641.8 |
|
Other assets |
251.1 |
|
|
225.1 |
|
Total assets |
|
|
|
|
|
|
|
|
|
||
Liabilities and Shareholders' Equity |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
Contract liabilities and distributor-related reserves |
62.9 |
|
|
62.3 |
|
Income taxes payable |
1.3 |
|
|
1.0 |
|
Finance lease liabilities |
0.5 |
|
|
0.5 |
|
Other current liabilities |
117.8 |
|
|
77.9 |
|
Total current liabilities |
782.9 |
|
|
665.3 |
|
|
|
|
|
||
Long-term liabilities: |
|
|
|
||
Long-term debt |
3,132.6 |
|
|
3,126.2 |
|
Convertible notes, net |
3,037.3 |
|
|
3,034.9 |
|
Deferred tax liabilities |
10.8 |
|
|
10.8 |
|
Finance lease liabilities - long-term |
8.8 |
|
|
8.9 |
|
Other long-term liabilities |
256.5 |
|
|
256.4 |
|
Total long-term liabilities |
6,446.0 |
|
|
6,437.2 |
|
|
|
|
|
||
Shareholders’ equity: |
|
|
|
||
Common stock |
0.2 |
|
|
0.2 |
|
Additional paid-in-capital |
3,843.6 |
|
|
3,821.9 |
|
Accumulated other comprehensive loss |
(4.3 |
) |
|
(11.6 |
) |
Accumulated deficit |
(3,210.6 |
) |
|
(2,928.4 |
) |
Total shareholders’ equity |
628.9 |
|
|
882.1 |
|
Total liabilities and shareholders’ equity |
|
|
|
|
|
WOLFSPEED, INC. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
(unaudited) |
|||||
|
Three months ended |
||||
(in millions of |
September 29, 2024 |
|
September 24, 2023 |
||
Operating activities: |
|
|
|
||
Net loss |
( |
) |
|
( |
) |
Net loss from discontinued operations |
— |
|
|
(272.1 |
) |
Net loss from continuing operations |
(282.2 |
) |
|
(123.6 |
) |
Adjustments to reconcile net loss to cash used in operating activities of continuing operations: |
|
|
|
||
Depreciation and amortization |
71.1 |
|
|
40.1 |
|
Amortization of debt issuance costs and discount, net of non-cash capitalized interest |
6.7 |
|
|
7.2 |
|
Stock-based compensation |
23.7 |
|
|
19.7 |
|
Loss on disposal or impairment of long-lived assets |
0.6 |
|
|
— |
|
Amortization of premium on investments, net |
(3.8 |
) |
|
(5.3 |
) |
Realized gain on sale of investments |
0.1 |
|
|
— |
|
Deferred income taxes |
— |
|
|
0.3 |
|
Changes in operating assets and liabilities: |
|
|
|
||
Accounts receivable, net |
2.0 |
|
|
0.6 |
|
Inventories |
(25.6 |
) |
|
(50.0 |
) |
Prepaid expenses and other assets |
(10.5 |
) |
|
(34.7 |
) |
Accounts payable |
20.2 |
|
|
(18.1 |
) |
Accrued salaries and wages and other liabilities |
65.1 |
|
|
45.3 |
|
Contract liabilities and distributor-related reserves |
0.6 |
|
|
5.8 |
|
Net cash used in operating activities of continuing operations |
(132.0 |
) |
|
(112.7 |
) |
Net cash used in operating activities of discontinued operations |
— |
|
|
(34.7 |
) |
Cash used in operating activities |
(132.0 |
) |
|
(147.4 |
) |
Investing activities: |
|
|
|
||
Purchases of property and equipment |
(437.0 |
) |
|
(442.0 |
) |
Purchases of patent and licensing rights |
(1.2 |
) |
|
(1.3 |
) |
Purchases of short-term investments |
(56.1 |
) |
|
(775.3 |
) |
Proceeds from maturities of short-term investments |
256.2 |
|
|
370.0 |
|
Proceeds from sale of short-term investments |
3.1 |
|
|
24.8 |
|
Reimbursement of property and equipment purchases from long-term incentive agreement |
42.0 |
|
|
39.6 |
|
Net cash used in investing activities of continuing operations |
(193.0 |
) |
|
(784.2 |
) |
Net cash used in investing activities of discontinued operations |
— |
|
|
(1.7 |
) |
Cash used in investing activities |
(193.0 |
) |
|
(785.9 |
) |
Financing activities: |
|
|
|
||
Proceeds from long-term debt borrowings |
— |
|
|
1,000.0 |
|
Payments of debt issuance costs |
— |
|
|
(46.0 |
) |
Proceeds from issuance of common stock |
— |
|
|
0.5 |
|
Tax withholding on vested equity awards |
(3.6 |
) |
|
(15.0 |
) |
Payments on long-term debt borrowings, including finance lease obligations |
(0.1 |
) |
|
(0.1 |
) |
Incentive-related escrow refunds |
10.0 |
|
|
— |
|
Commitment fees on long-term incentive agreement |
(1.5 |
) |
|
(1.0 |
) |
Cash provided by financing activities |
4.8 |
|
|
938.4 |
|
Effects of foreign exchange changes on cash and cash equivalents |
0.4 |
|
|
(0.1 |
) |
Net change in cash and cash equivalents |
(319.8 |
) |
|
5.0 |
|
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 |
||
(in millions of |
September 29, 2024 |
|
September 24, 2023 |
Power Products |
|
|
|
Materials Products |
97.6 |
|
96.2 |
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, 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.
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 our transition to 200mm silicon carbide offerings through facility closures and headcount reduction initiatives. Wolfspeed does not include these expenses when evaluating core operating activities for strategic decision making, forecasting future results and evaluating current performance, as these activities may be non-recurring, unusual, infrequent or directly related to an event that is distinct and non-reflective of the Company's ongoing business operations. Restructuring and facility closure costs primarily consist of severance, asset-related charges and other closure-related costs related to facilities in the process of closing or already closed. Other closure-related costs primarily consist of contract termination costs, manufacturing transition charges and certain inventory abandonments that are directly attributable to a facility closure. Contract termination costs relate to penalties incurred to terminate vendor arrangements that are directly attributable to a facility closure. Manufacturing transition charges include non-productive manufacturing expenses incurred during the period from when shutdown activities commence to when a facility is closed. Inventory abandonments relate to identification and disposal of inventory that will not be utilized after a product line is transferred to a new manufacturing location. Loss on disposition of assets results from abandonment of non-productive assets in accordance with a restructuring plan.
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.
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 |
|||||
(unaudited) |
|||||
|
|||||
Non-GAAP Gross Margin |
|||||
|
Three months ended |
||||
|
September 29, 2024 |
|
September 24, 2023 |
||
GAAP gross profit |
( |
) |
|
|
|
GAAP gross margin percentage |
(19 |
)% |
|
13 |
% |
Adjustments: |
|
|
|
||
Stock-based compensation expense |
8.5 |
|
|
6.0 |
|
Restructuring and facility closure costs |
34.3 |
|
|
— |
|
Non-GAAP gross profit |
|
|
|
|
|
Non-GAAP gross margin percentage |
3 |
% |
|
16 |
% |
Non-GAAP Operating Loss |
|||||
|
Three months ended |
||||
|
September 29, 2024 |
|
September 24, 2023 |
||
GAAP operating loss |
( |
) |
|
( |
) |
GAAP operating loss percentage |
(118 |
)% |
|
(48 |
)% |
Adjustments: |
|
|
|
||
Stock-based compensation expense: |
|
|
|
||
Cost of revenue, net |
8.5 |
|
|
6.0 |
|
Research and development |
3.2 |
|
|
2.7 |
|
Sales, general and administrative |
12.0 |
|
|
11.0 |
|
Total stock-based compensation expense |
23.7 |
|
|
19.7 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
Project, transformation and transaction costs |
6.0 |
|
|
2.6 |
|
Restructuring and facility closure costs: |
|
|
|
||
Cost of revenue, net |
34.3 |
|
|
— |
|
Other operating expense |
52.8 |
|
|
— |
|
Total restructuring and other costs |
87.1 |
|
|
— |
|
Total adjustments to GAAP operating loss |
117.1 |
|
|
22.6 |
|
Non-GAAP operating loss |
( |
) |
|
( |
) |
Non-GAAP operating loss percentage |
(58 |
)% |
|
(37 |
)% |
Non-GAAP Non-Operating (Expense) Income, net |
|||||
|
Three months ended |
||||
|
September 29, 2024 |
|
September 24, 2023 |
||
GAAP non-operating expense, net |
( |
) |
|
( |
) |
Adjustments: |
|
|
|
||
Amortization of discount and debt issuance costs, net of capitalized interest |
6.7 |
|
|
7.2 |
|
Loss on Wafer Supply Agreement |
9.2 |
|
|
6.9 |
|
Non-GAAP non-operating expense, net |
( |
) |
|
( |
) |
Non-GAAP Net Loss |
|||||
|
Three months ended |
||||
|
September 29, 2024 |
|
September 24, 2023 |
||
GAAP net loss |
( |
) |
|
( |
) |
Adjustments: |
|
|
|
||
Stock-based compensation expense |
23.7 |
|
|
19.7 |
|
Amortization of acquisition-related intangibles |
0.3 |
|
|
0.3 |
|
Project, transformation and transaction costs |
6.0 |
|
|
2.6 |
|
Restructuring and facility closure costs |
87.1 |
|
|
— |
|
Amortization of discount and debt issuance costs, net of capitalized interest |
6.7 |
|
|
7.2 |
|
Loss on Wafer Supply Agreement |
9.2 |
|
|
6.9 |
|
Total adjustments to GAAP net loss before provision for income taxes |
133.0 |
|
|
36.7 |
|
Income tax adjustment - benefit |
33.4 |
|
|
20.3 |
|
Non-GAAP net loss |
( |
) |
|
( |
) |
|
|
|
|
||
Non-GAAP diluted loss per share |
( |
) |
|
( |
) |
Non-GAAP weighted average shares (in thousands) |
126,733 |
|
|
125,105 |
|
Adjusted EBITDA |
|||||
|
Three months ended |
||||
|
September 29, 2024 |
|
September 24, 2023 |
||
GAAP net loss |
( |
) |
|
( |
) |
Reconciling items to EBITDA (Non-GAAP) |
|
|
|
||
Income tax expense |
0.4 |
|
|
0.2 |
|
Interest expense |
42.3 |
|
|
21.1 |
|
Depreciation and amortization |
71.1 |
|
|
40.1 |
|
EBITDA (Non-GAAP) |
(168.4 |
) |
|
(62.2 |
) |
|
|
|
|
||
Reconciling items to adjusted EBITDA (Non-GAAP) |
|
|
|
||
Stock based compensation |
23.7 |
|
|
19.7 |
|
Project, transformation and transaction costs |
6.0 |
|
|
2.6 |
|
Restructuring and facility closure costs(1) |
68.3 |
|
|
— |
|
Loss on Wafer Supply Agreement |
9.2 |
|
|
6.9 |
|
Adjusted EBITDA (Non-GAAP) |
( |
) |
|
( |
) |
|
|
|
|
||
(1)Excludes restructuring-related accelerated depreciation included in "Depreciation and amortization" |
Free Cash Flow |
|||||
|
Three months ended |
||||
|
September 29, 2024 |
|
September 24, 2023 |
||
Net cash used in operating activities |
( |
) |
|
( |
) |
Less: PP&E spending, net of reimbursements from long-term incentive agreement |
(395.0 |
) |
|
(402.4 |
) |
Less: Patents spending |
(1.2 |
) |
|
(1.3 |
) |
Total free cash flow |
( |
) |
|
( |
) |
WOLFSPEED, INC. |
||
Business Outlook Unaudited GAAP to Non-GAAP Reconciliation |
||
|
|
Three Months Ended |
(in millions of |
|
December 29, 2024 |
GAAP net loss from continuing operations outlook range |
|
( |
Adjustments: |
|
|
Stock-based compensation expense |
|
24 |
Restructuring and facility closure costs |
|
174 |
Amortization of discount and debt issuance costs, net of capitalized interest |
|
12 |
Project, transformation and transaction costs |
|
5 |
Total adjustments to GAAP net loss before provision for income taxes |
|
215 |
Income tax adjustment |
|
41 to 33 |
Non-GAAP net loss from continuing operations outlook range |
|
( |
`
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106197166/en/
Tyler Gronbach
Wolfspeed, Inc.
Vice President of External Affairs
Phone: 919-407-4820
investorrelations@wolfspeed.com
Source: Wolfspeed, Inc.
FAQ
What were Wolfspeed's Q1 FY2025 revenue results?
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