Our estimates or other forward-looking statements may change, and the company assumes no obligation to update forward-looking statements to reflect actual results, changes to assumptions or other events that may occur except as required by law. It is now my pleasure to turn the call over to Allegro’s President and CEO, Vineet Nargolwala. Vineet?

Vineet Nargolwala: Thank you, Galen, and good morning, everybody, and thank you for joining our third quarter fiscal year 2024 conference call. I’m pleased to report that we delivered another solid quarter against a weaker backdrop in fiscal Q3, consistent with expectations and our guidance. While we expect continued inventory digestion across markets in the short term, our design win momentum continues at record levels and reinforces our confidence in our ability to grow above market over the mid- to long term, consistent with our target financial model. Furthermore, we are actively managing the business to optimize profitability and cash flow throughout the cycle. In Q3, we delivered sales of $255 million, up 2% year-over-year, reflecting continued strength in automotive.

Sales in our strategic growth areas, including e-mobility and Industrial, which includes clean energy and automation, we’re up approximately 20% year-over-year to $150 million or 59% of total sales. Innovation with purpose is our core value. During the quarter, we announced the launch of the second product of our high-voltage isolated gate driver portfolio. Allegro’s newest Power-Thru solution has crucial safety features designed to protect against high operating temperatures in electric powertrain systems. It also provides high performance in noisy environments present in microinverters in solar applications, power supplies and data center applications and onboard chargers for electric vehicles. Recall that a high-voltage isolated gate driver technology came to us through our acquisition of Heyday just over a year ago.

The progress we are making with our Power-Thru product family demonstrates our ability to effectively integrate acquired technology and bring it to market quickly. We’re applying the same approach and intensity to our recent acquisition of Crocus which further strengthens our magnetic-sensing IC portfolio and extends our leadership in this very important product category. I’m pleased to report that the integration of the Crocus team and its TMR technology is progressing really well. The acquired business is fully transitioned into our systems and processes. Product sales are underway with sampling activity accelerating in e-mobility and industrial markets. Both the Allegro and Crocus TMR offerings are now combined under a common brand ExtremeSense, which now represents the world’s leading and most comprehensive portfolio, offering the highest accuracy, the lowest power consumption and the highest sensitivity for the world’s most demanding applications.

Feedback across the customer base has been very encouraging, and the strong majority of our customer discussions recently at CES featured TMR. Moving on to the broader macro environment. Industry estimates indicate that calendar year 2024 automotive demand will be stable with continued growth in xEVs, which includes battery electric vehicles and full hybrids. While xEV adoption varies greatly by geography, the growing number of xEV launches proves that the momentum is strong and increasing. Recall that Allegro is well represented in all automotive segments with our solutions supporting all powertrains. Today, ADAS represents the majority of e-mobility sales and xEV the fastest-growing component. And while e-mobility is a key strategic focus, nearly half of our automotive sales are in other automotive applications such as ICE powertrain and safety, comfort and convenience, which is agnostic of the choice of powertrain.

Additionally, OEs use of both hybrid and full electric platforms to meet fuel economy and emissions regulations positions us well. Allegro’s content in full hybrid vehicles is similar to that in BEVs with both significantly higher than that in ICE. And so Allegro wins, no matter which platforms OEMs invest in. While automotive demand remains stable, and we see continued strong momentum in e-mobility, we are seeing certain inventory dynamics where tiers and contract manufacturers are paring back inventory from the 8 to 10 weeks during the supply chain crisis to pre-pandemic levels of 4 to 6 weeks as carrying costs pick up a factor and OEMs and support premiums for inventory. Despite these dynamics, we expect our automotive business to deliver above-market growth for fiscal year ‘24, consistent with our target financial model.

Our fourth quarter sales outlook comprehends macroeconomic conditions including ongoing inventory digestion in industrial and consumer markets as well as pockets of inventory rebalancing in automotive. Looking to the future. We continue to see strong design win activity with 80% of our Q3 design wins in our strategic growth areas and more than 50% in the area of e-mobility. Key highlights from our third quarter design wins include the following: in automotive, we were awarded multiple programs by a leading Japanese OEM for an xEV platform. This was for current sensors on onboard chargers and AC inverters and for our magnetic position sensors for electronic power steering systems; in China, we were awarded multi-solution design wins for xEV powertrains and EPS systems with a leading automotive OEM using our current sensor and power technology; in the industrial end market, we won several designs using our current and isolation sensor technology for clean energy applications, including solar and EV charging; in data center applications, we recorded several design wins with our motor drivers with a major OEM for cooling, high-performance AI servers using port traditional fabs as well as liquid cooling.

We remain focused on serving our customers and extending our market-leading positions. We’re investing for the future with a focus on maximizing growth in these strategic focus areas while positioning the business to scale and grow profitably. This focus is being rewarded by our customers with more business and our record design wins indicate that we are winning in the market. In fact, for fiscal year 2024, we are on track to close over $1 billion in design wins with the majority turning to revenue over the next 3 years. This is proof that our strategy is working, underpinning our confidence in our ability to deliver above-market performance over the long term. I want to thank our teams globally for serving our customers and the continued execution of our strategy.

I’ll now turn the call over to Derek to review the Q3 financial results and provide guidance for our fourth quarter. Derek?

Derek D’Antilio: Thank you, Vineet. Good morning, everyone. Starting with a summary of our Q3 financial results. Sales were $255 million, gross margin was 54.6% and operating income was 27.2%, and adjusted EBITDA was 34% of sales. As a result, earnings were $0.32 per share, 10% above the midpoint of our guidance range and exceeding the high end. Total Q3 sales increased by 2% compared to Q3 of fiscal ‘23, and sales to our automotive customers were $195 million, an increase of 18% year-over-year and representing 76% of Q3 sales. E-mobility sales increased by 6% sequentially and 45% year-over-year representing 54% of third quarter auto sales, up from 44% a year ago. Industrial sales were $46 million, declining 25% sequentially and 14% year-over-year.

Other sales, which includes consumer applications were $14 million, down 17% sequentially and 53% year-over-year. Sales through our distribution channel, which comprise the majority of the industrial and other sales were down 10% sequentially as expected. We continue to monitor our channel point-of-sale sell-through closely to manage inventories to appropriate levels. From a product perspective, magnetic sensor sales were $154 million, declining 13% sequentially and flat year-over-year. Sales of our Power Products were $101 million, increasing 2% sequentially and 7% year-over-year. Sales by geography were again well balanced with 30% of sales in China, 24% in the rest of Asia, 17% in Japan, 15% in Europe and 14% in the Americas. Now turning to Q3 profitability.

Gross margin was 54.6% and in line with our expectations for the quarter. Gross margin has remained healthy through this sales decline as a result of our fabulous and our flexible manufacturing model. Operating expenses were $70 million or 27% of sales, down from 28% of sales a year ago and included 2 months of Crocus. Third quarter R&D expenses were 15% of sales and SG&A was 12% of sales. Operating margin was 27.2% of sales compared to 31.3% in Q2 and 30% a year ago. The effective tax rate for the quarter was 10%, slightly better than expected due to the geographical mix of income. We are now projecting our full year non-GAAP tax rate to be approximately 12%. The third quarter diluted share count was 194.6 million shares and net income was $62 million or $0.32 per share.

Moving to the balance sheet and cash flow. We ended Q3 with cash of $224 million. Cash flow from operations in the quarter was $77 million and free cash flow was $42 million, an increase of $27 million or more than 170% sequentially. From a working capital perspective, DSO was 41 days compared to 40 days in Q2 and inventory declined by $8 million and days in inventory were 124 days compared to 136 days in Q2. Capital expenditures in the third quarter were $34 million as we are completing a capacity expansion of our operations in the Philippines. Also in the third quarter, we opened a new Philippines tech and shared services center and made investments in R&D labs in strategic locations. I’d like to take a few moments now to speak to the actions we are taking to optimize our financial performance with a focus on free cash flow.

First, we continue to prioritize investments in our strategic growth areas, specifically in R&D and sales. However, in response to the recent slowdown in sales, we have aligned factory costs with production levels and taken actions, which have contributed to an $8 million or 11% sequential decline in organic operating expenses. We now expect organic operating expenses to decline by approximately 9% in the second half of fiscal ‘24 compared to the first half. To further optimize cash flow, we are managing our material purchases, including wafers to align to current production levels. We are also nearing the end of our most recent capacity expansion in the Philippines. And as a result, we expect CapEx to decline by approximately $25 million or 30% in the second half of fiscal ‘24, compared to the first half of the year.

Now I’ll provide a few additional updates on the Crocus acquisition. As Vineet mentioned, integration is progressing well and planned synergies are on schedule. In Q3, we completed the full systems integration and a number of tax and legal steps to allow us to utilize significant pre-acquisition tax net operating losses and enable us to begin to realize tax and operating benefits. Finally, I’ll turn to our Q4 and full year 2024 outlook. We expect fourth quarter sales to be in the range of $230 million to $240 million, which reflects continued inventory digestion. At the midpoint of our Q4 guidance, we are projecting sales growth of 7% for fiscal ‘24, with auto sales expected to grow in the high teens in fiscal ‘24. Based on our current view and historical cycles, we estimate continued inventory digestion for a couple of quarters, and we expect Q1 of fiscal ‘25 for the June quarter to be our trough quarter.

We expect Q4 gross margin to be between 53% and 54%, reflecting the projected product and channel mix. We expect operating expenses to be approximately 31% of sales, and Q4 operating expenses include a full quarter of Crocus and the annual payroll tax reset. We expect our non-GAAP tax rate to be approximately 12%, and our diluted share count to be approximately 195.8 million shares. As a result, we expect non-GAAP EPS to be between $0.19 and $0.23 per share. Now I’ll turn the call back to Jalene for the Q&A session. Jalene?

Jalene Hoover: Thank you, Derek. This concludes management’s prepared remarks. Before we open the call for your questions, I’d like to share our fourth fiscal quarter conference line up with you. We are attending Wolfe’s Inaugural Semiconductor Conference on February 15 at the Jay Autograph Collection in San Francisco, California; Susquehanna’s 13th Annual Technology Conference on March 1 with attendance virtual and Morgan Stanley’s TMT Conference on March 4 at the Palace Hotel in San Francisco, California. We will now open the call for your questions. Kevin, please review the Q&A instructions.

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