Allegro MicroSystems, Inc. (NASDAQ:ALGM) Q3 2023 Earnings Call Transcript

Alessandra Vecchi: I asked for the congratulations on the strong quarter, and Vijay took a couple of my questions on EV. So maybe, Derek, just one for you, a housekeeping question more so. Just on OpEx, you guys have done a tremendous job kind of getting OpEx down to that 27% to 28% of sales that you guys had alluded to at the beginning of the year, even with inflationary pressures. How should we think about that as we look forward to next year and maybe walk us through some of the puts and takes?

Derek D’Antilio: Yes. Thanks Aless. Good morning. The way to look at it is that 27% to 28% that we had in both Q3 and going into Q4 still includes some elevated variable compensation as well, which will reset at the beginning of our fiscal year on April 1st. So that will be a natural decrease in that, at the beginning of the year. And as I said before we expect to invest significantly in research and development particularly in these focus areas where we have leadership and want to maintain that leadership so the target is to invest about 15% of sales in research and development, and we were about there in Q3. SG&A came down to about 13% of sales, and I’d expect that as a percentage of sales to continue to come down as that won’t grow any more than inflation. What I mean by inflation is sort of normalized inflation. So that’s the way to look at OpEx.

Alessandra Vecchi: Perfect. That was very helpful. Thank you.

Operator: And I’m showing no further questions. I would now like to hand the conference back to Jalene Hoover for closing remarks.

Jalene Hoover: Thank you, Tanya. Before closing out the call, we are excited to announce that Allegro plans to host its inaugural Analyst Day event on March 14th at Convene Rockefeller Plaza in New York with virtual accessibility. Please stay tuned for additional information for this invitation-only event. We appreciate you taking the time to join us today. This concludes this morning’s conference call.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.