Allegro Microsystems, Inc. · NASDAQ:ALGM
Allegro Microsystems — Investor Day (March 2023)
66 slides from Allegro Microsystems's investor day presentation, Mar 14, 2023
Slide 1: Analyst Day 2023
INNOVATION WITH PURPOSE = ALLEGRO VannnD . _ microsystems Analyst Day 2023
Slide 2: Jalene Hoover, Analyst Day 2023
Jalene Hoover VP of Investor Relations & Corporate Communications Analyst Day 2023 March 14
Slide 3: Forward-looking statements
Forward-looking statements This presentation and the accompanying oral remarks contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward- looking sta
Slide 4: Agenda
Agenda VINEET NARGOLWALA Welcome & opening remarks President & Chief Executive Officer MIKE DOOGUE Technology: Innovation with purpose Senior Vice President & Chief Technology Officer MAX GLOVER How we win in Automotive & Industrial Senior Vice President, Worldwide Sales SUMAN NARAYAN Senior Vice Pr
Slide 5: Welcome and Opening Remarks
VINEET NARGOLWALA President and Chief Executive Officer Welcome and Opening Remarks Analyst Day 2023 Analyst Day March 14 March 14, 2023
Slide 6: Allegro's growth and transformation is entering its next phase
Allegro’s growth and transformation is entering its next phase Allegro • Focus on e-Mobility, Clean Energy & Automation 3.0 Allegro • Accelerated Technology and Product Innovation 2.0 Allegro • Integrated ESG foundation 1.0 • Continued Growth and Margin Expansion • Efficient Capital Deployment Today
Slide 7: Allegro: A global leader in Sensing and Power IC solutions
Allegro: A global leader in Sensing and Power IC solutions Market leading Aligned to high growth technology & portfolio markets with secular trends Industrial Power Magnetic 19% 38% Sales by Sensing Product1 62% Auto Sales by Other 69% Market1 12% #1 in Magnetic Sensor2 & Leader in Power ICs 100-yea
Slide 8: We are moving the world to a safer and more sustainable future
We are moving the world to a safer and more sustainable future New image Highly Leadership focused Innovation in Magnetic Attractive market with Purpose Sensing & financial presence Power ICs profile 8
Slide 9: Our market strategies, coupled with our technology expertise, deliver long-term growth
Our market strategies, coupled with our technology expertise, deliver long-term sustainable growth Focus on e-Mobility & Target Industrial Focus on Sensing and Power ICs Sensing xEV & Clean Energy & ADAS Automation $3.9B SAM1 $3.5B SAM1 25% CAGR2 18% CAGR2 Power 9 1SAM is calculated using third-part
Slide 10: We win as cars electrify and add ADAS features
We win as cars electrify and add ADAS features Accelerating regulation xEV +21% CAGR ADAS +10% CAGR ICE -11% CAGR Decline in battery costs Vehicle Production1 & ADAS Adoption 50% e-Mobility Opportunity: ALGM opportunity: $3.9B SAM2 ~$1001 25% CAGR3 (>2x ICE vehicles) 1Third-party data and internal e
Slide 11: We win as Clean Energy and Industrial Automation grow
We win as Clean Energy and Industrial Automation grow Global Renewable Energy Capacity1 Robotics & Automation Motor Drive Units4 +30% +6% $2.2B SAM2 ALGM Opportunity: $1.3B SAM2 ALGM Opportunity: >$300 in Charging Stations5 30% CAGR3 6% CAGR3 >$300 in Automated Assembly lines5 >$1,000 in a Solar Far
Slide 12: Our ESG initiatives are integral to our strategy
Our ESG initiatives are integral to our strategy “We are moving the world to a safer and more sustainable future” Minimize our impact on Build a diverse & the planet innovative workforce Maximize the positive impact of our products Engage our supply chain to Cultivate opportunities in advance sustai
Slide 13: Allegro is positioned to help Automotive and Industrial customers
Allegro is positioned to help Automotive and Industrial customers move to a more sustainable future Decades of valued Innovation with Purpose Performance customer relationships • Insights beyond market research • Designs beyond the specification • Automotive new part qualification • Deep application
Slide 14: We are ready for the future with a strong leadership team
We are ready for the future with a strong leadership team >300 Years >300 Years >250 Years Public company experience Semiconductor experience Automotive & Industrial experience Derek D’Antilio Mike Doogue SVP & Chief Financial Officer SVP & Chief Technology Officer Suman Narayan Max Glover SVP, Prod
Slide 15: Technology: Innovation with Purpose
MIKE DOOGUE SVP & Chief Technology Officer Technology: Innovation with Purpose Analyst Day 2023 Analyst Day March 14 March 14, 2023
Slide 16: Automotive first technology drives leadership in Sensing & Power
Automotive first technology drives leadership in Sensing & Power Magnetic Power ICs Sensor ICs • Motor Drivers spin motors and • #1 in the Market1 fans quietly, efficiently and reliably • Accurate, high speed Current Sensors make power systems • Regulators convert high voltages smaller and more effi
Slide 17: Differentiated wafer technology achieves market leading integration
Differentiated wafer technology achieves market leading integration Three decades meeting the most stringent auto standards • 175 ◦C for 1000+ hours • 120 V capable • Extremely low failure rate, < 200 PPB Proprietary, patented tech within a fabless business model Industry leading levels of circuit i
Slide 18: Decades of leadership in sensors growing stronger as cars electrify
Decades of leadership in sensors growing stronger as cars electrify 1990 Today • 6 billion ICs shipped in last 10 years1 • >1000 Sensor patents • >30 packages 1Shipments from CY2013 to CY2022. 18
Slide 19: Current Sensor leaders across xEV & Target Industrial markets
Current Sensor leaders across xEV & Target Industrial markets • Broadest portfolio • ICs for inverters, chargers, battery systems, electric motors, etc. • Up to 40 Current Sensors in an xEV • 2 to 10x more efficient • More accurate, <1% error possible • Higher voltage, >1000 V capable Allegro ICs he
Slide 20: Extended Allegro leadership through TMR
Extended Allegro leadership through TMR • >85%1 of market from Hall-effect ICs for next 5 years, TMR adoption accelerating in 5 to 10 year horizon • We are in high volume production with unique automotive grade, monolithic TMR ICs • 8x higher resolution • >2x accuracy improvements • Developing optim
Slide 21: Auto playbook applied to Power ICs
Auto playbook applied to Power ICs: 3X market share1 in 5 years Consumer Auto & Focus Industrial 1990 Pivot Today • Leverage auto grade wafer technology • >250 patents • Developed auto grade, value-add packaging • >1 billion ICs shipped in last 10 years2 21 1Company data and data inputs from Omdia P
Slide 22: Wafer, package and algorithm innovations drive Power IC leadership
Wafer, package and algorithm innovations drive Power IC leadership DIGITAL • Single package integration of efficient power drivers & embedded algorithms • Easy-to-use, “plug & play” ICs Fan using Using Competitors Allegro • Allegro ICs: • Reduce the cost and size of motors, fans & pumps Allegro ICs
Slide 23: Up to $30 of xEV content from Isolated Gate Drivers
Up to $30 of xEV content from our highly integrated, Isolated Gate Drivers • Power systems need multiple Isolated Gate Drivers • Auto: On-board charger, traction inverter • Industrial: Solar inverters, EV chargers, power supplies Single Chip Allegro “Microsystem” • Allegro ICs: • Up to 40% more effi
Slide 24: Investment in differentiated technology drives above market growth
Investment in differentiated technology drives above market growth Unique Automotive Innovations R&D investments We win as cars first wafer, package solve meaningful strongly aligned to electrify and clean and circuit customer e-Mobility and energy expands technology challenges Target Industrials 24
Slide 25: How We Win in Automotive
MAX GLOVER Senior Vice President, Worldwide Sales SUMAN NARAYAN Senior Vice President, Products How We Win in Automotive Analyst Day 2023 March 14
Slide 26: How Allegro wins in the markets we serve
How Allegro wins in the markets we serve Automotive first Joint innovation Global scale via design and of differentiated direct sales, manufacturing solutions with technical centers, methodology market leaders in robust channel focus segments partners 26
Slide 27: Focused market approach delivers customer value across portfolio
Focused market approach delivers customer value across portfolio Magnetic Sensing $4.8B SAM1 +10% CAGR2 Power $9.3B SAM1 +9% CAGR2 27 1SAM 1 SAM is calculated using third party data and internal estimates for FY28 2 CAGR is calculated is calculated using third-party data and internal estimates for F
Slide 28: Unmatched Automotive pedigree: Three decades, >10B parts shipped
Unmatched Automotive pedigree: Three decades, >10B parts shipped Allegro e-Mobility solutions designed in at all Top Global OEMs Balance No customer >10% of sales Long-term Visibility Multi-year project awards High Substitution Cost Designed in as sole supplier e-Mobility Sales Confidence Majority i
Slide 29: e-Mobility drives Allegro's Automotive sales growth
e-Mobility drives Allegro’s Automotive sales growth Automotive SAM1 ($B) • > 2X content opportunity with BEV • Joint development with leading EV OEMs e-Mobility Growth and Tier 1s 25% CAGR2 • Optimized cross-portfolio ADAS and EV powertrain solutions Majority of Automotive design wins already tied t
Slide 30: e-Mobility market provides strong volume and content growth
e-Mobility market provides strong volume and content growth Market growth e-Mobility expands content e-Mobility • On-Board Charger • Traction Inverter CAGR2 • DC-DC Converter EV +21% ICE Powertrain 2x • Battery Management • Engine Control • Personal HVAC ICE -11% • Transmission • Steer by Wire • Oil
Slide 31: Customers need Allegro to help solve their design challenges
Customers need Allegro to help solve their design challenges Battery efficiency Charge time Safety 31 31 * Allegro Internal and 3rd party estimates; Growth FY23+
Slide 32: Electrification & safety adoption drive our e-Mobility opportunity
Electrification & safety adoption drive our e-Mobility opportunity xEV Powertrain ADAS Traction Electric Power Steering Braking Inverter On-board Thermal Charger Management Battery Management We win as cars electrify and adopt autonomous feature sets 32 32
Slide 33: Every power conversion is an opportunity to extend battery life
Every power conversion is an opportunity to extend battery life Highest accuracy, bandwidth & integration increases power conversion efficiency • Current sensors OBC • Motor drivers • Isolated gate Inverter drivers DC-DC Tier 1 OEM 33
Slide 34: Optimized steering solutions designed with Allegro products
Optimized steering solutions designed with Allegro products Quieter, safer and smaller electronics • Current sensors • Motor drivers • Position sensors • Power regulators Tier 1 OEM 34 34
Slide 35: Braking systems leverage proven steering solutions
Braking systems leverage proven steering solutions Need for high levels of integration and redundancy for safety • Current sensors • Motor drivers • Position sensors • Speed sensors • Power regulators Tier 1 OEM 35
Slide 36: Allegro's technology supports our customers' future roadmap
Allegro’s technology supports our customers’ future roadmap Electrohydraulic Electromechanical Corner Modules 2X Content Braking growth >2x MORE Content Electric power steering Steer-by-wire growth 3X Content Steering growth Integrates inverters, traction motor, steering & braking into a single syst
Slide 37: Innovation with Purpose: Industry leading solutions
Innovation with Purpose: Industry leading solutions Highest Accuracy Highest Resolution Intelligent Industry’s First 5 MHz Current Sensor TMR Angle Sensor Motor Driver Current Sensor Coming soon Industry’s best accuracy 8x higher resolution than Efficient and reliable Enables SiC and GaN provides pr
Slide 38: Auto growth led by expansion of e-Mobility
Auto growth led by expansion of e-Mobility • Allegro has the pedigree, customer relationships and focused strategy to win in a changing Automotive industry Grow Automotive 7-10% above SAAR • e-Mobility led by EV Powertrain, Steering and Braking 38
Slide 39: How We Win in Industrial
How We Win in Industrial Analyst Day 2023 March 14
Slide 40: Unmatched Automotive pedigree translates to Industrial credibility
Unmatched Automotive pedigree translates to Industrial credibility Automotive playbook Global reach through Partnerships with market leaders channel partnerships Customers require quality & safety Strong distribution channel Ability to serve customers in region Extended product support 10+ Year avai
Slide 41: Clean Energy and Automation drive Industrial sales growth
Clean Energy and Automation drive Industrial sales growth Industrial SAM1 ($B) • Translate electrification of vehicles to electrification of everything Clean Energy & • Current sensors everywhere there is power Automation Growth generation, conversion or storage 18% CAGR2 • Leadership in precise and
Slide 42: Efficient power conversion drives growth in Clean Energy
Efficient power conversion drives growth in Clean Energy Market growth Enabling the Clean Energy ecosystem EVCI Market Deployments Units1 +29% Power Power Conversion Creation Micro Inverter Deployment Units1 Power Storage +20% Power Deployment Power Conversion 1Third-party data and internal estimate
Slide 43: Leverage EV technology into Industrial applications
Leverage EV technology into Industrial applications Solar inverters EV charging Data center Automation We win as Clean Energy grows & the world Automates 43
Slide 44: Solar uses the same solutions as EV inverters
Solar uses the same solutions as EV inverters for power conversion Reliability in harsh environments • Current sensors • Isolated gate drivers 44
Slide 45: Maximizing energy transfer to reduce charge time
Maximizing energy transfer to reduce charge time Higher bandwidth and accuracy reduces energy loss • Current sensors • Isolated gate drivers DC Fast Charger Type AC Wallbox DC Charger Charger Allegro $3 $75 $450+ opportunity 45
Slide 46: High speed fans improve thermal efficiency
High speed fans improve thermal efficiency Efficient operation with energy savings • Motor drivers • Current sensors 46
Slide 47: Industrial Automation leverages Automotive solutions
Industrial Automation leverages Automotive solutions Intelligent motor control • Current sensors • Position sensor • Motor drivers 47
Slide 48: Industrial growth led by expansion of Clean Energy and Automation
Industrial growth led by expansion of Clean Energy and Automation • Allegro has the global scale and reach to win with customers who value Automotive first products and Grow Industrial 5-10% above manufacturing pedigree Broad Industrial Market • Leading in Clean Energy and Automation Markets 48
Slide 49: Business Performance & New Financial Model
DEREK D’ANTILIO SVP and Chief Financial Officer Business Performance & New Financial Model Analyst Day 2023 March 14
Slide 50: Operational transformation has enabled significant margin expansion
Operational transformation has enabled significant margin expansion Allegro 3.0 IPO Model >55% Allegro 2.0 Allegro 1.0 Allegro 1.0 Integrated device manufacturer Allegro 2.0 Operational transformation Allegro 3.0 Fabless asset-lite business model 1Refer to Non-GAAP Gross Margin reconciliations in th
Slide 51: Fabless asset-lite business model enables agility and scale
Fabless asset-lite business model enables agility and scale Auto Grade Fab Partners1 Assembly2 Test Proprietary Advanced Target Processes Packaging Zero & Multi- Solutions Defects Sourced Regional Focus Fosters Optimized Internal / External Mix Automotive Grade Quality Customer Intimacy >Flexibility
Slide 52: Track record of execution
Net Sales2 ($M) & Non-GAAP Operating Income (% of Sales) 1,2 Track record of execution • Above market sales growth • Increasing % of sales in Strategic Growth Areas • Significant operating leverage • Progressive operating margin expansion • EPS growth >2x sales growth • Exceeding expectations every
Slide 53: Well-diversified globally with leading OEMs and distribution partners
Well-diversified globally with leading OEMs and distribution partners Sales by Geography1 Channel Mix1 • Well-balanced geographical distribution • Strong relationships with auto OEMs built over • Enabled by regional sales and tech centers decades • Engaging with strategic customers on long-term • St
Slide 54: Well-positioned to out-grow large and expanding target markets
Well-positioned to out-grow large and expanding target markets Market Growth ALGM Growth above Market4 Automotive 3% +7% - 10% • Automotive first Automotive Production1 • Tied to secular megatrends in e-Mobility CAGR FY23-FY282 • e-Mobility SAM CAGR of 25%2 Industrial 6% +5% - 10% • Leverage auto gr
Slide 55: Continued gross margin expansion
Continued gross margin expansion Product differentiation and mix • Product leadership drives shift to more feature rich products • R&D investment in Strategic Growth Areas > • BOM cost reductions Supply chain optimization > • Optimize internal vs. external mix • Wafer technology progression and fab
Slide 56: Target Financial Model
Target Financial Model IPO Model2 New Model1 Low double-digit Low double-digit Focus on faster growing markets and content Sales growth Y-o-Y growth Y-o-Y growth expansion Expansion through product differentiation, supply Gross margin >55% >58% chain optimization, and volume leverage Continued focus
Slide 57: Investment and capital allocation strategy
Investment and capital allocation strategy • Investments in R&D and capital expenditures to drive innovation and technology Investment in leadership Organic Growth • Expanding sales and partner network to enhance customer intimacy • ROIC-based investment decisions Focused • Accelerate growth in our
Slide 58: Innovation with Purpose creates significant value for all stakeholders
Innovation with Purpose creates significant value for all stakeholders Large, growing SAM in secular growth areas of e-Mobility, 1 Clean Energy & Automation 2 Differentiated product portfolio based on proprietary technology We’re moving the 3 Diversified globally with blue chip customers world towar
Slide 59: We are moving the world to a safer and more sustainable future
We are moving the world to a safer and more sustainable future Market Focus Innovation Leadership Financial Model1 e-Mobility Automotive First #1 Mag Sensors Sales Low double- digit growth Clean Energy Product Velocity Motor Drivers Gross Margin >58% Automation Tech Leverage Isolated Gate Drivers Op
Slide 60: GAAP to Non-GAAP Reconciliations
Annual Shareholder Meeting Company Presentation August 2021 GAAP to Non-GAAP Reconciliations 60
Slide 61: GAAP to Non-GAAP Operating Gross Profit
Estimated Fiscal Fiscal Year ended Fiscal Year ended Fiscal Year ended Fiscal Year ended Year ended ($ in millions) March 29, 2019 (FY’19) March 27, 2020 (FY’20) March 26, 2021 (FY’21) March 25, 2022 (FY’22) March 31, 2023 (FY’23e)1 GAAP to Non-GAAP Total N et Sales $724.3 $650.1 $591.2 $768.7 $969.
Slide 62: GAAP to Non-GAAP Operating Expenses Reconciliations
Estimated Fiscal Fiscal Year ended Fiscal Year ended Year ended ($ in millions) March 26, 2021 March 25, 2022 March 31, 2023 (FY’21) (FY’22) (FY’23e)1 GAAP to Non-GAAP Operating Expenses (GAAP) $266.7 $270.8 $326.0 Operating Expenses Research and Development Expenses (GAAP) 108.6 121.9 147.2 (c) Rec
Slide 63: GAAP to Non-GAAP Operating Income Reconciliations
Estimated Fiscal Year Fiscal Year Fiscal Year ended ended ($ in millions) March 26, March 25, ended GAAP to Non-GAAP 2021 (FY’21) 2022 (FY’22) March 31, 2023 (FY’23e)1 Operating Income Operating Income (GAAP) $12.2 $136.7 $218.1 Reconciliations PSL and Sanken Distribution Agreement(a) 8.6 — — Voxtel
Slide 64: GAAP to Non-GAAP Earnings per Share
Estimated Fiscal Fiscal Year ended Fiscal Year ended Year ended ($ in millions) March 26, 2021 March 25, 2022 March 31, 2023 (FY’21) (FY’22) (FY’23e) 1 GAAP to Non- Net Income (GAAP) $18.1 $119.6 $195.1 Diluted Earnings per Share (GAAP) $0.10 $0.62 $1.01 GAAP Earnings PSL and Sanken Distribution Agr
Slide 65: Appendices Chart Descriptions
Appendices Chart Descriptions a) Represents the elimination of inventory cost amortization and foundry service payment related to one-time costs incurred in connection with the PSL Divestiture, LLC (“PSL”). b) Represents costs related to the discontinuation of one of our product lines manufactured b
Slide 66: Thank you
Annual Shareholder Meeting Company Presentation August 2021 Thank you 66