Transaction will allow Wolfspeed to focus on
U.S. capacity expansion to support silicon carbide power device and
materials businesses
Wolfspeed, Inc. (NYSE: WOLF) today announced that Wolfspeed has
entered into a definitive agreement to sell its radio frequency
business (Wolfspeed RF) to MACOM Technology Solutions Holdings,
Inc. (Nasdaq: MTSI) for approximately $75 million in cash, subject
to a customary purchase price adjustment, and 711,528 shares of
MACOM common stock, valued at $50 million based on the 30 trading
day average for MACOM’s common stock through August 21, 2023. The
company expects to close the transaction by the end of this
year.
“Given the significant growth we’ve seen in automotive,
industrial and renewable energy markets, we believe this is the
right time to further focus on scaling our Power device and
materials businesses to meet this accelerated demand,” said
Wolfspeed President and CEO Gregg Lowe. “This transaction also
represents a tremendous opportunity for our RF team to grow and
operate at scale, leveraging MACOM’s diverse customer base, RF
engineering leadership and operational efficiencies.”
Wolfspeed RF’s technology and innovation engine drives a strong
product development pipeline, with deep domain expertise supporting
a competitive gallium nitride (GaN) on silicon carbide product
portfolio optimized for next generation telecommunications
infrastructure, military and other commercial applications.
Leveraging MACOM’s diverse customer base and operational expertise,
Wolfspeed RF will be well positioned to continue to deliver
industry leading products at scale.
The transaction is subject to the expiration of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (“HSR”) and satisfaction of customary closing conditions.
MACOM will assume control of Wolfspeed’s 100mm GaN wafer
fabrication facility in Research Triangle Park, North Carolina (the
“RTP Fab”) approximately two years following the closing of the
transaction to accommodate Wolfspeed’s relocation of certain
production equipment. Prior to such transfer, the shares of MACOM’s
stock that Wolfspeed receives at closing will be subject to
restrictions on transfer.
In connection with the transaction, J.P. Morgan Securities LLC
is acting as financial advisor and Smith Anderson LLP is acting as
legal advisor to Wolfspeed.
Business Outlook
Based on the agreement to sell Wolfspeed RF, the operations of
the RF business will be classified as discontinued operations. As a
result, Wolfspeed is updating its guidance to reflect continuing
operations only.
For its first quarter of fiscal 2024, Wolfspeed targets revenue
from continuing operations in a range of $185 million to $205
million. GAAP net loss from continuing operations is slightly
improved from our August 16, 2023 business outlook, and is targeted
at $138 million to $163 million, or $1.10 to $1.30 per diluted
share. Non-GAAP net loss from continuing operations remains
unchanged from our August 16, 2023 business outlook, and remains
targeted at $75 million to $94 million, or $0.60 to $0.75 per
diluted share. Targeted non-GAAP net loss from continuing
operations excludes $63 million to $69 million of estimated
expenses, net of tax, related to stock-based compensation expense,
amortization of debt issuance costs, net of capitalized interest,
project, transformation and transaction costs and loss on Wafer
Supply Agreement.
About Wolfspeed, Inc.
Wolfspeed (NYSE: WOLF) leads the market in the worldwide
adoption of silicon carbide and GaN technologies. We provide
industry-leading solutions for efficient energy consumption and a
sustainable future. Wolfspeed’s product families include silicon
carbide and GaN materials, power devices and RF devices targeted
for various applications such as electric vehicles, fast charging,
5G, renewable energy and storage, and aerospace and defense. We
unleash the power of possibilities through hard work, collaboration
and a passion for innovation. Learn more at www.wolfspeed.com.
About MACOM Technology Solutions Holdings, Inc.
MACOM (Nasdaq: MTSI) designs and manufactures high-performance
semiconductor products for the Telecommunications, Industrial and
Defense and Datacenter industries. MACOM services over 6,000
customers annually with a broad product portfolio that incorporates
RF, Microwave, Analog and Mixed Signal and Optical semiconductor
technologies. MACOM has achieved certification to the IATF16949
automotive standard, the ISO9001 international quality standard and
the ISO14001 environmental management standard. MACOM operates
facilities across the United States, Europe, Asia and is
headquartered in Lowell, Massachusetts. To learn more visit
www.macom.com.
Non-GAAP Financial Measures
This press release includes Wolfspeed’s business outlook on both
a GAAP and a non-GAAP basis. The GAAP results include certain
costs, charges and expenses that are excluded from non-GAAP
results. By publishing the non-GAAP targets, management intends to
provide investors with additional information to further analyze
Wolfspeed’s performance, core results and underlying trends.
Wolfspeed's management evaluates results and makes operating
decisions using both the GAAP and non-GAAP measures included in
this press release. Investors and potential investors are
encouraged to review the reconciliation of non-GAAP targets to the
most directly comparable GAAP targets attached to this press
release.
Forward Looking Statements
This press release contains forward-looking statements involving
risks and uncertainties, both known and unknown, that may cause
Wolfspeed’s actual results to differ materially from those
indicated in the forward-looking statements. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, such as statements about the anticipated
benefits of the transaction, including future financial and
operating results. Actual results, including with respect to
Wolfspeed’s ability to complete the transaction on time or at all,
Wolfspeed’s realization of the value of MACOM’s stock received in
connection with the transaction, the continued growth of
Wolfspeed’s power products business, and Wolfspeed’s ability to
achieve its targets for the first quarter of fiscal 2024 could
differ materially due to a number of factors, including risks
associated with divestiture transactions generally, including the
inability to obtain, or the delay in obtaining, HSR clearance;
fluctuations in the market price of MACOM’s common stock; the risk
that a portion of the shares of MACOM common stock are forfeited by
Wolfspeed in the event that the transfer of the RTP fab is not
completed within four years following the closing date; issues,
delays or complications in completing required carve-out activities
to allow Wolfspeed RF to operate as part of MACOM after the
closing, including incurring unanticipated costs to complete such
activities; risks associated with integration or transition of the
operations, systems and personnel of Wolfspeed RF, each, as
applicable, within the term of the post-closing transition services
agreement between MACOM and Wolfspeed; unfavorable reaction to the
sale by customers, competitors, suppliers and employees; the risk
that costs associated with the transaction will be greater than
Wolfspeed expects; ongoing uncertainty in global economic and
geopolitical conditions, including the ongoing military conflict
between Russia and Ukraine, infrastructure development or customer
or industrial demand that could negatively affect product demand,
including as a result of an economic slowdown or recession,
collectability of receivables and other related matters as
consumers and businesses may defer purchases or payments, or
default on payments; risks associated with Wolfspeed’s expansion
plans, including design and construction delays and cost overruns,
timing and amount of government incentives actually received,
issues in installing and qualifying new equipment and ramping
production, poor production process yields and quality control, and
potential increases to Wolfspeed’s restructuring costs; the risk
that Wolfspeed does not meet its production commitments to those
customers who provide it with capacity reservation deposits or
similar payments; the risk that Wolfspeed may experience production
difficulties that preclude it from shipping sufficient quantities
to meet customer orders or that result in higher production costs,
lower yields and lower margins; Wolfspeed’s ability to lower costs;
the risk that Wolfspeed’s results will suffer if it is unable to
balance fluctuations in customer demand and capacity, including
bringing on additional capacity on a timely basis to meet customer
demand; the risk that longer manufacturing lead times may cause
customers to fulfill their orders with a competitor's products
instead; product mix; risks associated with the ramp-up of
production of new products, and Wolfspeed’s entry into new business
channels different from those in which it has historically
operated; Wolfspeed’s ability to convert customer design-ins to
sales of significant volume, and, if customer design-in activity
does result in such sales, when such sales will ultimately occur
and what the amount of such sales will be; the risk that the
economic and political uncertainty caused by the tariffs imposed by
the United States on Chinese goods, and corresponding Chinese
tariffs and currency devaluation in response, may negatively impact
demand for Wolfspeed’s products; the risk that Wolfspeed or its
channel partners are not able to develop and expand customer bases
and accurately anticipate demand from end customers, which can
result in increased inventory and reduced orders as Wolfspeed
experiences wide fluctuations in supply and demand; risks related
to international sales and purchases; risks resulting from the
concentration of business among few customers, including the risk
that customers may reduce or cancel orders or fail to honor
purchase commitments; the risk that Wolfspeed’s investments may
experience periods of significant market value and interest rate
volatility causing it to recognize fair value losses on its
investment; the risk posed by managing an increasingly complex
supply chain (including managing the impacts of ongoing supply
constraints in the semiconductor industry and meeting purchase
commitments under take-or-pay arrangements with certain suppliers)
that has the ability to supply a sufficient quantity of raw
materials, subsystems and finished products with the required
specifications and quality; risks relating to the ongoing COVID-19
pandemic, including the risk of disruptions to Wolfspeed’s
operations, supply chain, including our contract manufacturers, or
customer demand; the risk Wolfspeed may be required to record a
significant charge to earnings if its remaining goodwill or
amortizable assets become impaired; risks relating to confidential
information theft or misuse, including through cyber-attacks or
cyber intrusion; Wolfspeed’s ability to complete development and
commercialization of products under development; the rapid
development of new technology and competing products that may
impair demand or render Wolfspeed’s products obsolete; the
potential lack of customer acceptance for Wolfspeed’s products;
risks associated with ongoing litigation; the risk that customers
do not maintain their favorable perception of Wolfspeed’s brand and
products, resulting in lower demand for its products; the risk that
Wolfspeed’s products fail to perform or fail to meet customer
requirements or expectations, resulting in significant additional
costs; risks associated with strategic transactions; and other
factors discussed in Wolfspeed’s filings with the Securities and
Exchange Commission (SEC), including Wolfspeed report on Form 10-K
for the fiscal year ended June 26, 2022, and subsequent reports
filed with the SEC. These forward-looking statements represent
Wolfspeed's judgment as of the date of this release. Except as
required under the U.S. federal securities laws and the rules and
regulations of the SEC, Wolfspeed disclaims any intent or
obligation to update any forward-looking statements after the date
of this release, whether as a result of new information, future
events, developments, changes in assumptions or otherwise.
WOLFSPEED, INC.
Business Outlook Unaudited
GAAP to Non-GAAP Reconciliation
Three Months Ended
(in millions of U.S. Dollars)
September 24, 2023
GAAP net loss from continuing
operations outlook range
($163) to ($138)
Adjustments:
Stock-based compensation expense
18
Amortization of debt issuance costs, net
of capitalized interest
8
Project, transformation and transaction
costs
8
Loss on Wafer Supply Agreement
6
Total adjustments to GAAP net loss from
continuing operations before provision for income taxes
40
Income tax adjustment
29 to 23
Non-GAAP net loss from continuing
operations outlook range
($94) to ($75)
Wolfspeed® is a registered trademark of Wolfspeed, Inc.
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version on businesswire.com: https://www.businesswire.com/news/home/20230822071507/en/
Wolfspeed Investor Relations Contact: Tyler Gronbach Wolfspeed,
Inc. VP, External Affairs Phone: 919-407-4820
investorrelations@wolfspeed.com
Wolfspeed Media Contact: Melinda Walker Wolfspeed, Inc.
Director, Corporate Communications Phone: 818-261-4585
media@wolfspeed.com
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