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ALGM Allegro Microsystems

Participants
Katherine Blye Senior Director of IR
Ravi Vig President and Chief Executive Officer
Paul Walsh Chief Financial Officer
Gary Mobley Wells Fargo
Mark Lipacis Jefferies
Blayne Curtis Barclays
John Pitzer Credit Suisse
Srinivas Pajjuri SMBC
Vijay Rakesh Mizuho
Call transcript
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Operator

Thank you for standing by, and welcome to Allegro MicroSystems 3Q Fiscal 2021 Financial Results. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Thank you. And I would now like to hand the conference over to Katie Blye. ahead. go Please

Katherine Blye

Vig; thank third and joined joining today Officer, us by Paul Financial Good Walsh. results you for Allegro Ravi Executive Chief quarter President I'm Allegro's fiscal for Chief Allegro's Officer, evening and for and year today XXXX.

our performance will outlook. a our and summary review We provide of quarterly financial

results projections. to Please filed by from on other XXXX. update documents assumes press risk including used prospectus the may discussed be measures SEC, final will in intended within issued result, statements our laws. These financial with about factors is obligation are measures IPO The Our and financial and uncertainties to other refer subject the accompanying Investor page the statements we XX, of our earnings and be being assumptions, note made earnings cause the information on website. webcasted, our a presentation forward-looking similar other of that federal no that The events on page and replace and filed calculated based to during call results our in and us are than detail risks by today projections meaning tables materially Relations be to a October the substitute the that any and shortly. forward-looking discussed Please today could to this vary future current recording Company non-GAAP release IR include This GAAP are that release financial Allegro's will call available available of a statements actual as comments prevented. differently on securities expectations are forward-looking are not companies. for include and conference the

our Allegro's our make of meaningful over We are the earnings of of non-GAAP been press IR to results be operating because Ravi will and more enable call Ravi? found CEO, providing to during may and core clearly ongoing our I GAAP comparisons to call today's core in page. operations. to posted financial results has supplemental information investors it President Reconciliation release, highlight the referenced measures can Vig. which turn now the

Ravi Vig

sequentially. Katie, and these I'm you, remain we turn our detailed automotive, All EPS And our for quarter. in non-GAAP Paul Non-GAAP up Paul? million, the results I'll also guidance. end to up from above $X to be fiscal customer that coming diluted momentum a financials. current to or was to a the plus margin operating into business is review QX, XXX was the million. anticipated upwards extended accelerated Strong to strong non-GAAP came we tightening ahead expect range half coupled well of the share was and fiscal over expectations a recovery great We're driven the everyone. for margin XX% tailwinds by report a on evening, company. pleased quarter and as with have efforts increase it basis that to to outlook pleased strong fiscal first bookings, the business. record record and within to and 'XX. expected of also gross a the considered, With benefit Demand mind, Non-GAAP to objectives approximately minus the million revenue, in is $XXX.X to $X.XX. $X.XX nearly QX $X.XX a XX%. part in Walsh to report outlined. again a visibility particularly income resulting Thank chain. continue In EPS the market we sequentially, $XXX to first end public with for is record good in our restocking. March the backlog move for in demand have points was track new anticipated gross revenue of XX% throughout Non-GAAP of at fourth per for With quarter start market customer we now full quarter, diluted strategic from supply of in call of sequentially in

Paul Walsh

for million you, Demand Thank fiscal our end end but the QX of particularly in period revenue Net Ravi. and last markets. up to levels same record across to XX% in surged $XXX.X XX% sequentially was compared core markets, accelerate $XXX.X as or year sequentially the half with XX% strengthened bookings order automotive. of XX% backlog We and our to and of year-over-year. XX% extended first visibility progressed revenue million, 'XX. increased the increasing into saw fiscal mix quarter Automotive our

was was up revenue of see healthy and we increasing demand customer sequentially $XX.X revenue, to continue industrial also XX% XX% X% to total very strong, and or Our Industrial backlog. accelerated, year-over-year. million

have ago QX. other in XX% of an we sequentially. increase margin any for our than greater was revenue. million Our year the and XX.X%, period. $XX.X across business the X% quarter meaningful to not up GAAP for compared quarter top customers, or XX% was customers This of growth the was gross did Despite sequentially

associated the net margin for mix prior adjustments amortization $X.X impacted which and schedule, million supplied pricing Non-GAAP expectations. in one-time commitment, AMTC gross related of asset our final million strength the facility. lines. Polar increasing cost which gross fiscal from future manufacturing include reflect in The the of $X.X margin the improvements recovery Our mostly $X.X AMTC intangible margin efficiency also in savings sales. and our acceleration compensation include all completed an Gross despite product of million Gross manufacturing rapid margin exiting results demand, XX.X%, of our not initiatives, expected 'XX relocation was for we in demand our margin to just Thailand, $X.X does non-GAAP occurred of the stock facility versus closing costs in Polar, phase performance one-time a resulting gross wafers Voxtel. of from $X.X margin totaled now X.X% was adjustments this our for our transfer highlighting all production AMTC strong of of in ahead million we across with IPO-related million profile charges, for facility the wind of by of rapid down by are the of

range and of year, cost For to expect investments wafer the these quarters, to into will consideration Polar, enabling fiscal a QX. respond demand, from to increase capacity in last additional expect margin we later our mix XX% from we gross fiscal continue foundry of provide source higher benefits 'XX. to additional next That wafers non-GAAP us strategic source in but XX% to some sources quickly few supply than made all to higher of Taking partners. fortunately the a which factors, cost Asian in said, we at to

non-GAAP line We maintain shifts increasing was continue of Due non-GAAP half now $X.X increasing related increase million million. associated up GAAP with a towards throughout to $XX.X markets. aligns one-time one-time prior mix expenses with The quite with revenue operating includes gross were compensation $XX.X from term, 'XX higher acceleration second stock-based IPO, to conviction and and GAAP we discussed. for million increased higher the QX. FY mid-XX% million. year variable million, million has efficiency Fiscal finish of the million benefit in OpEx we the million accrual in to ongoing than of our to items our margin broadly the expected in non-GAAP in augment our strong Total expense we've year. noted not significant be 'XX, growth including expect XX% range improvements anticipate to a back where catch incremental to in expectations, activities in towards as items the $XX compensation, R&D $XX.X the Longer now our result end The by half. a sequentially higher-margin loss uniquely in half, was operating $XX with operating the in first anticipated compensation nonlinear even our SG&A $XX.X we $X to the of manufacturing QX been resulting with This non-GAAP margin expenses The gains transformational catch-up earlier. variable performance second consolidation manufacturing impacted year-to-date recently. revenue to

expense operating As non-GAAP a compensation $X.X with catch by or million, XX% variable investment $XX was non-GAAP million. non-GAAP sequentially R&D $XX.X million SG&A and increased up, to $XX.X the income million result, of Even include the XX.X% not our for closing the in to manufacturing $X.X related revenue. savings sales. cost Again, Thailand, net adjustments this of X.X% facility does future of million representing totaled of AMTC expected was which

of We net function per $XX come million loan We GAAP which term experienced non-GAAP about XX.X% QX executed fiscal to $X.X operating be non-GAAP XX% effective income only of revenue, in The late shares which share. to closer XX% negative expense in QX months in share to had at increase tax $X.XX resulted will the count and to was business a our fiscal the million quarter is of fiscal the Only the the of million Non-GAAP third The was high of of XX in of 'XX. improved $XX was loss quarter revenue to interest of $XXX,XXX that the remains, the months XX% diluted operated expense leverage rate million, the and to the effective was non-GAAP above repayment fiscal two below as or QX core million QX. beginning for $XXX in share is range. tax shares $XXX,XXX offered for earnings $X.XX the XX.X% per increased expect of and QX on we be believe expected levels QX November. our in debt of as expect to this guidance on we rate result. interest throughout be Weighted diluted step in down impact average diluted This per a IPO. in net excludes QX. million additional two XXX.X expenses end

quarter. is and about diluted shares, count million in the XXX.X expect to million count nominally XXX.X current share to fourth Our share diluted fiscal increase the we

and QX and flows the million, cash story. cash two $XXX compared quarter generated expansion to inventories balance inclusive ended decreased various $XX In we continue flows cash strong $XX from at We while to million in Cash to was million, accelerating $XX and million historical Our the transactions of level execution quarter million, with reflecting discipline million but of remain the in the approaching was were focus cash. operating XX undertaken of the expectations POS in in be with Channel demand. spending sequentially equivalents receivable DSO business cash at million ending balance of sequentially, and fundamentals operating which transformation evident net Accounts fiscal our in financing $XX our restricted second and and $XX finish given were inventory quarter, quarter. offset consistent our our norms. Net at balances is our down sheet. flow with continue in business $XX exceeded days quarter margin high objectives to days, the down we summary, are highs. on while Ravi? related sell-through historic historic lows, long-term a by to

Ravi Vig

recovery, Thank market third year about the revenue early you, Strong prior has supported quarter of the put innings our internal us Paul. expectations. of demand ahead a

Paul margins. rapidly good maintain As at and increasing to mentioned, to highs. demand, the well we operations team new our Revenue responded is were able

to 'XX our are We expected benefits that XX% Unique expect our and XX% forecast revenue. while supply cost 'XX. products fiscal our year-over-year, third to be that in the growth and transformation will growth year-over-year quarter. and year a representing raising market over X% the the our Power our we to sequentially up are in improve reduce will back Allegra manufacturing of and maintaining outlook, profitability beyond. fiscal IC of Coming our were outperform flexibility year-over-year

leader we magnetic which market As are in sensor represented of you know, XX% the revenue. ICs,

in IC at we and up the the the $X XX% was strength about cars our We look revenue forecast automotive quarter, rates. produced. measure. quarter now Third believe on consensus $XXX.X low XX% our reflects about half that markets, sensor Taking coming magnetic equal inventories customer XX% increased growth, a at growth gains share automotive that automotive sequential million. our quarter, to the restocking of reflects helped Industry by the growth. market believe growth year-over-year that into customers end our relatively and million drive history Based closer production million XX remainder is and our of sequential and about production during revenue automotive automotive were

restocking customer production to into of automotive continue QX. rates be well ahead of order continued car Our suggestive fiscal

our is for indicative While have recovery share ADAS automotive. nice that outpace in applications type Korea, Last our ADAS to momentum to This represent on had power global ICE rates quarter, magnetic focused our grow xEV, design electric growth and XX% at in provides X/X foundational design increased market power continue approximately long-term sequentially in QX sensors of automotive of xEV we growth, business, in convenience. long-term business both safety these securing over sustainable customers the I'm tailwinds, report terrific and including wins towards and XX% of an wins we and for our real steering both ICs. overall happy progress confident objectives. and and and that program and some

We new xEV fourth wins customers, vehicle X system start revenue steering contributing multiple Tier quarter. also global won are as to the and at expected business as inverter program to platforms. soon the These Japanese

this us giving in of confidence safety We and both believe ICE QX. gaining we the business, foundational Our in convenience in and sequentially longevity revenue. double-digit applications, year-over-year are share confident further these grew

and our see energy cost this market and servicing powertrains efficiency we emerging the believe ICs innovative ourselves these orders market-leading technology bias technology sensor and we products, systems. that performance complexity on our the began competition. and position electrified adoption XMR back momentum also leadership for and GMR are expand for flexibility, overall in speed Last demonstrates we rapid ICE transmission production distancing improving we with vehicles. A reducing offer We enhances the as of silicon both from size, further system share installation and year,

recovery, call business with This Paul XX% addressing as This pause recently mainly current products factors story to These inventories. seen inverters, IP quarter combiner where solar our energy, isolation systems photovoltaic, carbon like the In our Heightened distribution market-leading the where wind water a acknowledged like sustainable further a is applications building-at-home in even project in was coordinated power current of we've key portfolio our our the through The motor action the supports And proud near-term We POS year-over-year QX, notable technology due disclosure applications, dissipation, incoming growth shine. chip, A broad-based our time and power reduce and small reflects innovative the climate regional changer applications. during unique our the energy outperformance higher the focus are up double boxes, the X.X mentioned, includes DC we strong measurement that global measurements. the is deliver as and many applications, panel supply across and the inverters. range took for simplifies course, and market of We was long nearly areas skies This Our cleaner second-generation industrial, growth expected, we Allegro center share industrial sequentially be sector same AC other small family. IoT in level monitoring great exceeded resulting up pull-through, Industrial in primarily in customer renewable order to solar declining but high-voltage by sequentially new future customers last channel a and, demand was Data was X%. been automation Within XX% for has and X% and taking business a volts to and with form powered rates issues. center energy third broad averages. which tail pent-up is industrial product future. of Industry Industry data sequentially applications. power. perfectly sequentially. end remained and more released center markets with and levels server year. XX% X.X, This tracking signs revenue business continued a momentum. record device will and is we Sequentially, broad-based channel, growth see Allegro's QX, game mission center of compared growth cooling. reflect The and of our exiting finally, on important, telecom and sensor our IoT into capabilities high-voltage demand particularly to our like green to element business to and market data efficiency our end industrial, serviced committed renewable leverage for devices, strategic data from exactly demand quarter, by the our are the XX drivers energy power up and intersecting and and are sell of in sensors grew XXXX

as in We that end expect run business higher the rates decline momentum contributed will the to steadily in COVID-specific peripherals printers normalize. and markets has the other

Now for guidance. the fiscal QX

fourth As date to see to with strong we quarter discussed, momentum the we backlog. record in continue

the monitoring and $XXX by in the as with created be demand through $XXX million in other expect revenue industrial Balancing expect closely be we navigating recovery single sequentially, the chain of and industry. However, digits know, we are up and these both we be million. expected revenue to challenges factors, to flat rapid low to supply the range you automotive company to

upwards expect the We XX% to range to of XX%, margin from trending be in QX. gross non-GAAP

operating $XX.X to We million expect non-GAAP decline expenses million. to to $XX

We share of range to $X.XX per the per expect earnings share. to non-GAAP in be diluted $X.XX

to extraordinarily a visibility and Just and up, team's wrap another strong progress momentum our on to record efficiency we in our backlog quarter. in in QX. delivering are about ability increasing to funnel we and driving demand respond to improvements initiatives, on With deliver are objectives. to quarter positioned fiscal are our the Good manufacturing confidence margin contribute us long-term and well believe continue giving design to record excited the

Katie? We will now be happy to questions. take your

Katherine Blye

with please will review question-and-answer instructions our the participants. Thank you, Ravi. Operator, you

Operator

Thank from And the Fargo. first of line comes Instructions] your from question you. Wells [Operator Mobley Gary

open. Your line now is

Gary Mobley

with my asking wanted about extend me I to start congratulations margin. let And calendar question. gross strong my by on year. taking finish for out Thanks a

sort December can gross reported of us, the you're through job you But the relative wondering expecting us was in may that obviously your did variance you in Paul, quarter and I improvement. of have And limitations of and what a how the you How sort amendments walking forcing out with quarter? I down margin and guide for So Polar pretty break good the UMC? if be follow-up. to more an you quarter that then March gross impact a purchase than with to into played the have overall in December take capacity margin

Paul Walsh

valve, Polar. we to mix towards Gary. - Yes, margin a you fortunate foundry rely in on Thanks, quarters, safety as if in indicated we're But Polar. was to long for able the ourselves committed heavier quarter of we've the be will. at Sure. drivers a we'll other wafers actually term, have partners well. as from And UMC that as with the and that gross of mix coming to to expand consider one continuing the a We

think I through. in that near-term growth. something that can impede don't So, have it's work limitations any We capacity we us necessarily will our

about good So, it. we pretty feel

Gary Mobley

Okay.

follow-up at some the your and wanted in about update a related transition of qualification guys I As ask there? TSMC. to sort of your you topic, Could give us eventual to you manufacturing

Ravi Vig

So take Paul, I'll that.

Paul Walsh

Sure.

Ravi Vig

ongoing. activity So has TSMC our been

We given have our in activity cycles it next This 'XX, this ramp we expected, automotive, FY fiscal getting fiscal particular in second we supply-demand expect the half, that into rate. long to in had projected year qualification as expect we in that revenue and stock to is up from have 'XX. the to wafers

Operator

Next Lipacis from is Jefferies. with Mark question

open. now is line Your

Mark Lipacis

question So backlog. first the on

doesn't profile out I'm about went up backlog hoping backlog -- backlog, do help it's lower about, and as the could days of you midpoint. -- there's is a two instead growth you can strong just extent the X% has I not of sequential that growth to a And you're me the -- help quarter? first changed. wondering what how like guiding -- reconciling then you and the for me backlog your talk growth outlook? of I'm And like it that the into June the Thanks. backlog in the quarter, you at difference there's Paul, can Maybe think up from obvious the sounds suppliers, goes that the from like just quarters XX lot a and extent into visibility have that backlog ago, about reconcile lot. if So not to constraints

Paul Walsh

Thank backlog. we good very you, Mark. into our Yes, in visibility have ordinary times,

excellent We visibility seen. have what like has we've accelerated, continue into has the to everyone Certainly, seen. demand

get visibility, and good So, but visibility in gives as the the we have well. into June current it us confidence great quarter certainly, quarter, we

gives confidence, with it lot helps think it of I a and our forward. So, certainly planning us going

Mark Lipacis

demand double through once all environments cycles Okay. them? Great. visibility or the that? Can you've times sense And building pretty it That's about the a a all get way you ordering out start you into when what have you manage to high. inventory, do how you give concerned where like are when double visibility safety I a risk of kind us to of helpful. about do and into That's this, had. people of and the production kind end lot Do there? of assess the And inventories line? products building ship you you get ordering worrying up Does stocks point you have before, before your been how get you of

Paul Walsh

our we do for into Well, And have have visibility week. inventories alluded we've I every lean. our call, and The backlog discipline earlier quite And is in in the time. we Sure. is ordering long been the we visibility we that most those channel. a demand to monitor as distribution a just something great had patterns have that's patterns, mean, are

that level any want would And channel? I but ask Ravi -- of certainly -- to that beyond probably customers, visibility I see different. it's if the shed you non-distribution color what so the into -- different there we I from that on a would think is from for and

Ravi Vig

Yes.

the end our the of a of is of substantial What to said, there we backlog, monitoring trying monitor -- their are but customer, we rates given that end production Paul we've been point. this increasing. restocking have know customers, that customer the communication with our at and acceleration demand -- on signals. we rapid customers. is as constant the many have substantial the is been think, also I been There know We pull do in

I is could we backlog of like a this, actually all it do of times cycles. But through have getting ahead semiconductor this, think we've in risks shipments the been So, like of as our times And we really in the blend. themselves. extract that

this are and in that ahead we terms to making best their not our sure of getting customers carefully, very very order So cautious the ability of in that monitor we patterns. are

Operator

Your from of next is question Curtis Blayne Barclays.

Your line open. now is

Blayne Curtis

curious, margins Just kind and Inventories inventories. came a assuming kind of I'm of -- obviously, down, headwind to gross it's some gross you're obviously, trying manage it's to Polar, mixtures margin.

you're of little the quarter? with managing get a would March just And in I'm bit the levels, more to -- of if you but you're back And kind color Polar little then a inventories come So the just this curious us about little how the kind the normalized could And better seeing you improvement thinking get timing you back more when just you off? just up? help you can more then as if could trajectory, give that see? could, some to some mix when of on allocations granularity a

Paul Walsh

take I'll Blayne, that. Sure.

down. surprise So inventory. focused acceleration yes, we wasn't on appropriate demand levels came ensuring the inventory that and have It very revenue. in the a We're given really of

might Polar, that a when to to which strategy to from goal environment, to need at wind little alluded tailwind down, beyond. quarter margin as it's both able moment may would as to being And we off sustainable happen both look fact, long-term long a the Long Polar, but a continue with the create for because long-term from our just term, on at we strategic and with roll -- Polar so, March perspective in unclear and anything of the also UMC, we would a but And is it's a when strategic we the continue to demand significant to. -- the term. manage not to capacity wind goal fill that of gross

Blayne Curtis

the I Photonics a you almost was under of actually I last And Okay. two little do it's $X small a want part to the -- but quarters, million. know then business, ask

coming it bit outlook? So versus least seems in any just of what on drivers -- at segment, had. of and I seems comments it's better Photonics what it's better tracking any know bit than it's I had the but like I it a like kind a small a

Ravi Vig

Yes.

I think phase. at Photonics really it's is this where, point, in a segment a reinvestment

focused more applicable to are on and that we be to LIDAR. re-architecting product development automotive So, business

As from. business come to our metrics we front. automotive but for revenue in have products progressing is the real on engagements of real next in past, product over going come we which down and we've small automotive terms this design our real focus expect start LIDAR, said quarters. particular releases the revenue, the and to Yes, will to customer of in our is wins And the couple

Operator

John from next Suisse. question of your And Pitzer Credit

Your line is now open.

John Pitzer

understand Polar? Or just was from the third solid incremental Street in quarter of make reported, where couldn't it Congratulations closure? most I where from that quarter? going you the on go And recognize relative delta was you bps on results. why by like being things fiscal gross the is the versus the all if that's margins to Paul, I to driven sure. that's costs wanted back this it, and the revisit XX December to just

Paul Walsh

what like Basically, XX%. guidance or I entered towards that, when as John. we bps question, amount guidance of think the of Good I as part was XX and having we revenue guiding Without characterize the to November. quarter, thereabouts was of range, back would I range to it anticipate this XX XX our

-- wind than production XXs. close more can't adjustment to said, won't it's essentially don't viewed include Thailand complete being going XX.X%, That reason the we we with AMTC, that forma And pro facility the a down So quite non-GAAP have mean, much as in really because it really were phase, I with we adjustment. a we with the the rather forward. more and as

John Pitzer

fourth the gross closure. Thailand from includes fiscal margin the benefit quarter the effectively, So guidance

Paul Walsh

of exactly. Yes, little in. in see a but bit are, way and know we how phase, That's should should We We're things Yes. the some that. be ramp-up, benefit. those there's wind seeing you down the

John Pitzer

Ravi. for question second my then And

much side, this that shutter up, is inventory? think talked your things structurally the are auto both importantly, change being half I how is you kind will guys the and And because perhaps forced that auto tells I'm restocking. cars. remember about do do I'm you pricing you of but cost curious, capacity And they being think of major your first are important right side the you rising time on are, vis-à-vis cyclically structurally can to just how just more now? think more curious, OEMs kind moving to kind Just tight view auto think this equation of about where especially of strength they the how semiconductors, strong supply which get inventory? building can't you the hold given more how ships of will cost I

Ravi Vig

Yes.

So, extraordinarily seeing the quarters. tightening we're the COVID already And belt in levels. think of the down impact part buckles low think and of the I the the of automotive I to chain got inventories supply

I think this started in was a trend actually prior that the year.

depleted supply and where chain. semi-supply large the or as declining. into COVID it quarters couple critical stated seeing to of visibilities we with something, And we're which So, this rebound unusual is the inventory forecasted we We're has recovery that with inventory more, automotive. the levels, And completely which speak. we're and year quite through no backlog a recovery, continued maybe been chain, trends low came the depleting out extraordinarily vehicles, what change is I as the our this And kept this you've of we more has us. are quarters, seeing or for one semis becoming go operation more seeing rightly sometimes the think and now, in

part recognizing they automotive there customers, customers cellular address to bigger automotive us. you increasing think the of automotive are of our was are against giving I supply this see created the or But competing what part So, they -- I'm by what the in sorry, your ending demand that I doesn't think are the on apply trends XG. processors the are high second and is end think up I question? this. And something is from the shortfall going trying their restocking. us visibility. is to And It where the by really

John Pitzer

trying that? can cover with increases? take incremental Sort Can relations? you right of How philosophy pricing long-term cost pricing it customer are your beyond costs up manage you take up now, to to you

Ravi Vig

Yes.

don't we typically, we're purchasing a or commodity customers. our means and What we that transactional our both suppliers company, either are commoditize selling. with not not or with our is So, that

that we that long-term at whether in have agreements are help us of suppliers we everybody of -- are will pricing, suppliers pricing. of with the that And companies our on a critical control, that do lot we constraints we customers our other with situations agreements But this customers which with have our So, least there's look conversations out occur seeing. hand, on have expect our we terms at. with also

to now, fashion limited We addressing a continue market. in we pricing while right are the monitor

the We continue chain and supply chain supply to continue the cost. to monitor monitor

is So, conversation some a yes, it our with that our with having customers, we're customers. of

Operator

of And from SMBC. Pajjuri Srinivas question next

Your now is open. line

Srinivas Pajjuri

design back wins. your And to a public want comment being to I about go congrats on solid and Ravi, just company execution.

little you about I think And a XX% to said ICE your you digits, surprising is are me. design up double mentioned bit is or business your that so. up which also news

designs? So think improving you could and if winning with you talk a give if about ICE about versus the on were for margins gross new and xEV and I these more you -- pipeline these said And you're are products. color bit optimistic ADAS, win in the where also, design us past, the

talk could margin are about these going drive you any opportunity? wins to new If incremental if design

Ravi Vig

Yes.

the Q-over-Q. up we XX% be or or xEV, those So electric it were in And design I in say could of when terms areas. xEV battery electric. hybrid our of were design bulk ADAS wins wins, And

some of are design impactful. these And wins

ADAS particular ICE so actually this emerging to and Typically, higher similar more revenue and accelerating -- than that and and which is xEV is starting they have will having. We quarter beyond margins business, impact meaningful the our that wins business has mature. expect ADAS our business our we're

being best-in-class deemed We're are in seeing this And in We're We're our up worldwide. customers. picked seeing as and being xEV Japan. really it is about So, seeing we seeing Europe. this and products in happy are Korea. it where that market-leading it by trend ADAS we're

ICE. So, question the on your of was part second

growth this bounce that's right at in So on content the restocking really car representative production a not quarter-over-quarter point. the of is ICE really It's going and back now. growth the

Srinivas Pajjuri

fully talk about year, in can margin? is on Got it. Thailand fiscal I look to have a But get the topic. guess baked you the asked gross the the if if beyond related benefits quarter. for next Paul, the puts And takes of questions we trying and fiscal fiscal fourth Paul. as one of factory lot what I'm you then to been gross QX, margin, out the are look to

mean, benefits still any You are there I June the in, fiscal then beyond? next coming if quarter? additional beyond in -- have drivers And other and any next

Paul Walsh

back Sure. tailwind. incremental expect see the look -- how in And rolls short-term something Srini. like is a and mix may as fiscal we facility we through throughout as Polar I basically at many looking Yes, year, so where wafer that's costs as that And offsets off peers, be we offset we're single -- to strong We're end tailwind certainly. headwind at improvements become of manufacturing go we 'XX, a the of that. we a our rising, those. think different areas Thailand

And next we throughout help would certain the so also and efficiencies year. that just fiscal anticipate

Operator

from is Rakesh question Mizuho. Vijay of Next

open. Your now line is

Vijay Rakesh

a on December? at good Paul, Hi, in versus split how Is When XXXX. or and combustion question in mix autos. It's shift how Ravi the the on September your ICE trended and what look moved? auto significantly in wondering it the congrats that you of engine the shift EV, was a

Ravi Vig

Yes.

dominates before, Vijay, car in terms the production car So as volumes. ICE market spoken and we've of

segment, base. So is much EV established emerging growing. rapidly a an it has larger

it, coming a excited but still car We off are small extraordinarily production it's base. about

xEV business best our for can you that So which the year-over-year, grew the quarter. I XX% thing tell is

talking So it's strong extraordinarily about momentum.

in rapid in that products the We continue this and particular of will of products released, are in this adoption new focus seeing we've our very our to acceleration we particular about R&D some area. excited We're the area.

Vijay Rakesh

autos Got thoughts EBITDA think looking year-on-year. grew you December like said quarter, XX% look it forward, expect versus how would outperformance investors any How LVP? go X% you as -- be you should at year-on-year. on the at it. I looks the then And for electrical grew LVP

Ravi Vig

they supply were what of by get in is our supplier data chain that as semiconductor a this is our LVP, we clear difficult And numbers in ourselves. on the looking strategies customers. Yes, modified modulated at or terms multiplicity always of

So pull tend inventory boost tend or to burn things to bills up down. things and inventory offs declines

in it sensor pullback. was was And year, of inventory the a So and lot a it analog XXXX automotive, very the large pullback calendar of result space. especially in in

data that's a So, on a inventory might us. for content little -- it it's in look larger-than-expected growth. are seeing I because story for our ADAS. of the of xEV We're content is Again, statement wonderful just, see we seeing we statistic, but things growing. some pullbacks, mean, my growth how a example,

market. do continue we production So to expect market outperform the auto Obviously, to the statistics. LVP

Operator

And Company. Needham next question from Quinn of & Bolton

Your line is now open.

Quinn Bolton

next expect pretty take shortages couple kind through Hi, of can and nice of Does into you I of levels. it a the production the as that and goes forward Wanted fourth quarters the to known? that, those quarter. revenue until XX do production on is June, to chain production are in and that Paul, looks we're in kind look million the well where the had if Ravi couple Ravi, to think you semiconductor of If some back wondering auto Just thoughts pre-COVID work like you issues? I strong for that backlog. Wondering, mentioned the congratulations down ask, units quarters? on the of annualize script back supply auto March any you

Ravi Vig

is and $XX Yes. believe probably and I this IHS still follow and a for between are question. mean, We little automotive LMC, smarter running it's than million they're million. them. expectation we use projecting The production. that good We a $XX we in coming year

ended quarter at $XX million this they're that every the are projection this Given bit a auto customers flattening, at the point. that unit ship projecting flattening we We're in with of every production we -- demand little of at quarter, can the rates. terms we vehicle product wanting actually that a point. last seeing The can

us have. beyond out is next a of unique the giving the So XX-day right strong. visibility couple our we is in backlog extends see that It's the typical demand situation visibility We now extraordinary the where quarters. visibility

strong looking for it's now. So

going there's it's story of a think increasing. LDP I combination believe that we've It's content some for it us, an on. a believe I of -- growth story. that that's got a And is I restocking content combination -- don't

real of So just any either it's going but be not significance. to or flat mildly declining,

Quinn Bolton

does any play quarters out? -- that typically long you half the two-to could in and Does the activity, cycles, it past that four-quarter back gotten your Is like experience phenomenon? From supply many how to out? Or is second the that sounds here plays I of very levels restocking down then long on a And of restocking activity question Great. follow-up it kind mentioned how over through chain had through XXXX. do low just the that how auto sense you quicker? going come restocking think we've

Ravi Vig

I because strategy, near a I Yes. in may to today. looking I Well, think really than I'm term customers. that seeing the on automotive this change we may the think near that. history levels answer a that seeing not applies just They to it's constraints of point against be have sure semiconductors, be midterm interesting, really but this the higher with reliance to to protect better on supply themselves have at strategy they're inventory don't increased

So don't we're goes. strong. to to this we going it going fiscal have to see pulling We have just it out. We're see wait be year. throughout how to see back continued it much that our will see -- 'XX We

about about happy And we have. the So excited visibility pretty we're pretty we're that.

Operator

Lipacis And the from last question Jefferies. Mark of

open. now is line Your

Mark Lipacis

the me queue. working into for back Thanks

versus in talk bit opportunities designed process industrial auto? -- and the here process Can sales you're healthy know extent just designing us in very that growth on for roadshows, this like when you you're question for products shorter remind So the just it automotive shorter chips finding market cycle, And is market. you the opportunity. largely a industrial were the seemed we Is market? sales be little greenfield doing scratch this should from about what I industrial them a are about greenfield to And market a this that sales you expecting the taking there? had versus can in originally a opportunistically a for I the had a to think you in markets. market, opportunity,

Ravi Vig

Yes.

So, question. yes, it's great a

business Industrial that Our of across and as a industrial as well mix automotive very spaces. of is both well design products the apply leverage products actually a targeted

inverters They So example, types automotive, the vehicles. well as inverters for are in that HEV for similar our space. of requirements we have do industrial current the in they solar the in in sensors as

this there data fan Quiet is center of where And So, control also product portfolio. we've done developed in would It product in we and some activities the plan is and line include leads and is proud product data our three-Phase released we've motion cooling synergy a expect more synergy, more our address growing in But the we particular that family of dramatically. year-over-year. centers up for service. motion portfolio. particularly are than embedded synergy substantially drivers algorithms there's There's that electrification that expect would we

our And technology speaks it well been to centers, adoption the targeting and speaks almost but it's up it I data also including particular market centers, needs think both space. how to it's XXX%. increased data of this of needs the of

types it's blend. see both of We activities. So a

activities Our up XX-volt the industrial activity. XX-volt with well automotive very line

X-volt So, our up do and wafer lined We deeply the in technologies not volt very well. levels. very sub-X work

certainly selling a is when customers, platform in this is I particular over cycle, quickly. quick a ramps are on sometimes a notice sudden project quicker. there these happen of platform, designed very same very And then the lot a little there. that large very you win becomes say space. of at Katie? We new that get all you cycles get of once The the would industrial what into design synergy So, one

Katherine Blye

question. I last operator, think or that All Great. our call last is

you thank joining today. all So us for

Paul Walsh

excited, a to bookings And lot our talked we we and everyone a feel -- today that in a we company, and company. is I our in launch visibility, as thank about our this where want public having earnings session and we're Q&A just first as very it's fortunate are initial and public this

very forward and it's you for exciting look soon. we with as to us, So, speaking

Ravi Vig

gross wanted And quarter I had. particularly And Paul. into wrap Thank that in year, we've to and good of you, margin comments. that in the well good deliver thank and quarters attending, the you future, the hopefully evening. line the in a second initiatives is proud as we've been on. Paul's proud we're visibility particularly we the have of both for future. as just us continued all We're It on to wanted journey quarters we And top the the an have exciting and that up. help great have next I great

Operator

you Ladies Thank concludes this today's and gentlemen, everyone. conference.

now may disconnect. You