In addition to the measures presented in our consolidated financial statements, we regularly review other measures, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP Profit before Tax, non-GAAP Income Tax Provision, non-GAAP Effective Tax Rate, non-GAAP Net Income Attributable to Allegro MicroSystems, Inc, non-GAAP Basic and Diluted Earnings per Share, non-GAAP Free Cash Flow, and non-GAAP Free Cash Flow as percentage of net sales (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations, and in the case of non-GAAP Income Tax Provision, management believes that this non-GAAP measure of income taxes provides it with the ability to evaluate the non-GAAP Income Tax Provision across different reporting periods on a consistent basis, independent of special items and discrete items, which may vary in size and frequency. These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities.
The Non-GAAP Financial Measures are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges such as those being adjusted in the calculation of these Non-GAAP Financial Measures. Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. These Non-GAAP Financial Measures exclude costs related to acquisition and related integration expenses, amortization of acquired intangible assets, stock-based compensation, restructuring actions, related party activities and other non-operational costs.
Non-GAAP Income Tax Provision
In calculating non-GAAP Income Tax Provision, we have added back the following to GAAP Income Tax Provision:
- Tax effect of adjustments to GAAP results—Represents the estimated income tax effect of the adjustments to non-GAAP Profit before Tax described below and elimination of discrete tax adjustments.
| Reconciliation of Non-GAAP Gross Profit | ||||||||||||
| Three-Month Period Ended | ||||||||||||
| June 28, 2024 | March 29, 2024 | June 30, 2023 | ||||||||||
| (Dollars in thousands) | ||||||||||||
| GAAP Gross Profit | $ | 74,771 | $ | 123,248 | $ | 157,950 | ||||||
| GAAP Gross Margin (% of net sales) | 44.8 | % | 51.2 | % | 56.8 | % | ||||||
| Non-GAAP adjustments | ||||||||||||
| Transaction-related costs | (1 | ) | 566 | — | ||||||||
| Purchased intangible amortization | 4,875 | 4,959 | 402 | |||||||||
| Restructuring costs | 1,200 | 1 | — | |||||||||
| Stock-based compensation | 561 | 734 | 2,606 | |||||||||
| Total Non-GAAP Adjustments | $ | 6,635 | $ | 6,260 | $ | 3,008 | ||||||
| Non-GAAP Gross Profit | $ | 81,406 | $ | 129,508 | $ | 160,958 | ||||||
| Non-GAAP Gross Margin (% of net sales) | 48.8 | % | 53.8 | % | 57.8 | % | ||||||
