DURHAM, N.C. — Wolfspeed, Inc. (NYSE: WOLF) has announced its results for the fourth quarter of fiscal 2023 and the full 2023 fiscal year.
Quarterly Financial Highlights (all comparisons are to the fourth quarter of fiscal 2022)
- Revenue of $235.8 million, compared to $228.5 million
- GAAP gross margin of 27.4%, compared to 34.5%
- Non-GAAP gross margin of 29.0%, compared to 36.5%
- GAAP net loss from continuing operations of $113.3 million, or $0.91 per diluted share, compared to $61.8 million, or $0.50 per diluted share
- Non-GAAP net loss from continuing operations of $52.8 million, or $0.42 per diluted share, compared to $26.0 million*, or $0.21* per diluted share
- Quarterly design-ins of $1.6 billion
Full Fiscal Year Financial Highlights (all comparisons are to fiscal 2022)
- Revenue of $921.9 million, compared to $746.2 million
- GAAP gross margin of 30.3%, compared to 33.4%
- Non-GAAP gross margin of 32.6%, compared to 35.6%
- GAAP net loss from continuing operations of $329.9 million, or $2.65 per diluted share, compared to $295.1 million, or $2.46 per diluted share
- Non-GAAP net loss from continuing operations of $180.7 million, or $1.45 per diluted share, compared to $115.4 million*, or $0.96* per diluted share
- Year-to-date design-ins of $8.3 billion
- *See ‘Non-GAAP Financial Measures’ below for information about changes to the Company’s presentation of non-GAAP financial measures for present and future periods.
“We are very pleased with our progress in fiscal 2023 as we secured $5 billion of funding to support our continued capacity expansion plans, initiated construction on our 200mm materials factory in North Carolina, and generated initial revenue from the Mohawk Valley 200mm device fab,” said Wolfspeed CEO, Gregg Lowe. “With approximately $8.3 billion of customer design-ins secured in the last 12 months, customers are continuing to select Wolfspeed for their future silicon carbide device needs, so we must remain keenly focused on scaling our materials and device capacity in fiscal 2024.”
Business Outlook:
For its first quarter of fiscal 2024, Wolfspeed targets revenue in a range of $220 million to $240 million. GAAP net loss is targeted at $145 million to $169 million, or $1.16 to $1.35 per diluted share. Non-GAAP net loss is targeted to be in a range of $75 million to $94 million, or $0.60 to $0.75 per diluted share. Targeted non-GAAP net loss excludes $70 million to $75 million of estimated expenses, net of tax, related to stock-based compensation expense, amortization or impairment of acquisition-related intangibles, amortization of debt issuance costs, net of capitalized interest, project, transformation and transaction costs and loss on Wafer Supply Agreement. Targets in this paragraph, other than revenue, reflect the presentation changes described below. 1
Start-up and Underutilization Costs:
As part of expanding our production footprint to support expected growth, we are incurring significant factory start-up costs relating to facilities that we are 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 our 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 will instead be primarily reflected as part of the cost of production within the cost of revenue, net line item in our statement of operations. For example, our new silicon carbide device fabrication facility in Marcy, New York began revenue-generating production at the end of fiscal 2023 and the costs of operating this facility going forward will be primarily reflected in cost of revenue, net in future periods.
During the period when production begins, but before the facility is at its expected utilization level, we expect 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.
We expect that these costs will be substantial as we ramp up the facility to the expected utilization level. We incurred $39.5 million and $160.2 million of factory start-up costs for the fourth quarter and full fiscal year 2023, respectively, which accounted for a significant portion of our operating expenses. For the first quarter of fiscal 2024, we target our operating expenses to include approximately $8 million of factory start-up costs primarily in connection with our materials expansion efforts and our cost of revenue, net, to include approximately $37 million of underutilization costs primarily in connection with our new silicon carbide device fabrication facility in Marcy, New York.
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