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Wolfspeed Reports 3Q 2024 Financial Results




DURHAM, N.C.  — Wolfspeed, Inc. today announced its results for the third quarter of fiscal 2024.

Quarterly Financial Highlights (Continuing operations only. All comparisons are to the third quarter of fiscal 2023)

  • Consolidated revenue of approximately $201 million, compared to approximately $193 million
    • Mohawk Valley Fab contributed approximately $28 million in revenue, over a 2x increase from the prior quarter
    • Materials revenue of approximately $99 million – second highest quarter on record
  • Power device design-ins of $2.8 billion
  • Quarterly design-wins of $0.9 billion – 70% related to EV applications
  • GAAP gross margin of 11%, compared to 31%
  • Non-GAAP gross margin of 15%, compared to 34%
    • GAAP and non-GAAP gross margins for the third quarter of fiscal 2024 include the impact of $30 million of underutilization costs, representing approximately 1,500 basis points of gross margin.

“We are pleased with the significant operational milestones achieved in the quarter for Wolfspeed as we continue to be the world’s first fully, vertically integrated 200-millimeter silicon carbide player at scale,” said Wolfspeed CEO, Gregg Lowe. “We are making progress on our Mohawk Valley ramp, more than doubling revenue sequentially in the quarter and reaching more than 16% wafer start utilization in April, giving us confidence in our ability to achieve our 20% utilization target in June 2024.

Construction continues at the JP, our 200mm materials factory in North Carolina. During the quarter, we started installing furnaces and connected the facility to the power grid, and we recently hosted our topping out ceremony. As we’ve said before, Mohawk Valley will be the flywheel of growth for Wolfspeed, and the JP will be instrumental in supplying it with high-quality materials. We are encouraged by the operational progress these facilities have made and how it will support our long-term growth trajectory.”

Lowe continued, “While there have been headlines around general demand weakness in EVs, we still have more demand than we can supply for the foreseeable future. Our second highest quarter of design-ins to date and more than $5 billion of design wins so far this fiscal year, tell a compelling story. While the industrial and energy end markets pose short-term headwinds to our results, we firmly believe in the strength of our long-term prospects as the electrification of all things continues across a broad set of applications.”

Business Outlook:
For its fourth quarter of fiscal 2024, Wolfspeed targets revenue from continuing operations in a range of $185 million to $215 million. GAAP net loss from continuing operations is targeted at $166 million to $189 million, or $1.32 to $1.50 per diluted share. Non-GAAP net loss from continuing operations is targeted to be in a range of $91 million to $109 million, or $0.72 to $0.86 per diluted share. Targeted non-GAAP net loss from continuing operations excludes $75 million to $80 million of estimated expenses, net of tax, primarily related to stock-based compensation expense, amortization of discount and debt issuance costs, net of capitalized interest, project, transformation and transaction costs and loss on Wafer Supply Agreement.

The GAAP and non-GAAP targets from continuing operations do not include any estimated change in the fair value of the shares of common stock of MACOM Technology Solutions Holdings, Inc. (MACOM) that we acquired in connection with the sale to MACOM of our RF product line (RF Business Divestiture).

Start-up and Underutilization Costs:
As part of expanding its production footprint to support expected growth, 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 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, the Mohawk Valley Fab 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, 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 be substantial as Wolfspeed ramps up the facility to the expected utilization level.

Wolfspeed incurred $14.4 million of factory start-up costs and $30.4 million of underutilization costs in the third quarter of fiscal 2024. No underutilization costs were incurred in the third quarter of fiscal 2023.

For the fourth quarter of fiscal 2024, operating expenses are expected to include approximately $20 million of factory start-up costs primarily in connection with materials expansion efforts. Cost of revenue, net, is expected to include approximately $29 million of underutilization costs primarily in connection with the Mohawk Valley Fab.

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