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Thank you for standing by. Welcome to the Allegro MicroSystems Fourth Quarter Fiscal 2023 Financial Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Jalene Hoover, Vice President of Investor Relations and Communications. Please go ahead.

Thank you, Jonathan. Good morning and thank you for joining us today to discuss Allegro's fourth quarter and full fiscal year 2023 results. I'm joined today by Allegro's President and Chief Executive Officer, Vineet Nargolwala; and Allegro's Chief Financial Officer, Derek D’Antilio. They will provide highlights of our business, review our quarterly and full year financial performance, and share our first quarter outlook. We will follow our prepared remarks with a Q&A session. Our earnings release and the accompanying financial tables are available in the Investor Relations page of our Web site at www.allegromicro.com. This call is being webcast, and a replay will be available in the Events & Presentations section of our IR page shortly. Please note that comments other than statements of historical facts made during this conference call including forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections and other statements about future events that are based on current expectations and assumptions, and as a result are subject to risks and uncertainties that could cause actual results to differ materially from anticipated results or projections. Please refer to the earnings press release we issued yesterday and other documents filed by us with the SEC, including the risk factors discussed in detail in our most recent 10-K filed on May 18, 2022, as amended on Form 10-K/A filed on August 29, 2022, and updated and supplemented in our subsequent 10-Q filings. While we may elect to update forward-looking statements at some point in the future, the company assumes no obligation to update any forward-looking information presented even if our estimates or assumptions change. Also, unless otherwise noted during the conference call, all references to income stated-related financial measures other than sales will be to financial measures not prepared in accordance with generally accepted accounting principles, or GAAP. Please refer to the press release posted to our Web site for information regarding our non-GAAP financial results and a reconciliation of our GAAP to non-GAAP financial measures. The non-GAAP financial measures that are discussed today are not intended to replace or be a substitute for the presentation of Allegro's GAAP financial results and may be calculated differently than similar measures used by other companies. We are providing this information because it may enable investors to make more meaningful comparisons of core operating results and more clearly highlight the results of our core ongoing operations. It is now my pleasure to turn the call over to Allegro's President and CEO, Vineet Nargolwala. Vineet?

Thank you, Derek. This concludes management's prepared remarks. Before we open the call for your questions, I'd like to share our first fiscal quarter conference line up with you. We are attending Mizuho's 5th Annual Auto Technology conference on May 30 at their New York City office; TD Cowen's Technology, Media and Telecom conference on May 31 at the Lotte New York Palace Hotel; and NASDAQ's London conference on June 13th and 14th at Jefferies London office who is partnering in the event. We will now open the call for your questions. Jonathan, please review Q&A instructions.

Certainly. [Operator Instructions]. We'd like to ask that you please limit yourself to one question and one follow up. You may get back in the queue as time allows. Our first question comes from the line of Blayne Curtis from Barclays. Your question, please.

Hi. Good morning, guys. Thanks for letting me ask a question and great results. I had two questions. Maybe the first, I just wanted to talk about the step up in e-mobility if you can just wrap a little color? It's a huge step up obviously. You've been getting a lot of design wins. I'm kind of curious, is it -- if you have any color between EV and ADAS and any color as to what drove the big step up?

Hi, Blayne. This is Vineet. Thanks for the question. So as we've articulated at Analyst Day and in various discussions in earnings calls before, e-mobility is a really strong focus for us. We don't really break out the details between EV and ADAS. And increasingly, there's a high degree of convergence in the ship rate of our products related to that. I will tell you that we're really pleased with the momentum we're gaining in e-mobility. It's not just in the shipment rate but also in our design wins. And it's clear that our customers are pivoting their entire investment and capital focus to electrifying their fleets, making them more autonomous, adding more say safety features, and we believe we have the right portfolio to support them in this transition.

Thanks, guys.

Thank you. One moment for our next question. And our next question comes from the line of Gary Mobley from Wells Fargo. Your question, please.

Thanks, Derek. As a follow up, I just want to ask about your China-related business. Correct me if I'm wrong, but your automotive business may have a little bit about outsized exposure to China. And I'm just wondering how you guys are seeing trends there?

Hi, Gary. This is Vineet. I'll take that one. So China is a really important region for us. It is one of our fastest growing regions. And it's no surprise considering the already strong EV presence that continues to grow. We are watching the China market very carefully. I will tell you that we're seeing really consistent ordering patterns as well as design win performance in our China market. So we don't really see any major signs of slowdown in China. But obviously the macro continues to be a topic that everybody is focused on.

Thanks, Vineet.

Thank you. One moment for our next question. And our next question comes from the line of Vijay Rakesh from Mizuho. Your question, please.

Yes. Hi, Vineet and Derek, solid guide here. Just a quick couple of questions on the EV side. It looks like you're talking about fiscal '24 EVs continuing to grow 30% year-on-year. Wondering if your market share and design pipeline, how you see that, the magnetic sensors and that whole automotive group growing next fiscal '24?

Yes, Vijay, you were cutting out a little bit, but I think I got the gist of your questions. So we have said in the past that we are now really pivoting our R&D investment towards e-mobility, clean energy and automation. And more than two-thirds of our investment is now focused there. And that mirrors what we're seeing in our design performance. So we haven't really provided market share figures by automotive and so on. On Analyst Day we provided what we thought our magnetic sensor IC share was. And we believe that our exposure to EVs, to economists and safety-related feature sets, continues to be really strong, continues to grow. And we're really pleased with our design pipeline and the design win performance we've seen in fiscal 2023, where more than two thirds of our pipeline is now in the e-mobility space, especially for automotive. So we expect that to continue to grow, consistent with where we see our customers investing.

Got it. Thanks.

Thank you. One moment for our next question. Our next question comes from the line of Joshua Buchalter from TD Cowen. Your question, please.

Hi, guys. Thanks for taking my question and congrats on the results. I wanted to kind of follow up on Gary's question regarding China. There's been some well documented slowdowns there. But it seems like from your vantage, it's consistent. Was that a function of your customers doing better within that market, because they're just -- the backlog and unit situation doesn't matter, because it's so extended the amount of backlog you have. I'm just trying to get comfort with the volatility that we've seen in that market specifically. Thank you.

Yes, Josh, this is Vineet. I'll take that. So when we look at the China market, roughly about 26 million units of production, and that is expected to stay flat year-over-year going into calendar 2023. But when you look at specifically the EV production, that is predicted to grow about 18%. So I think if you parse the China automotive environment, there is still continued growth and strength in EV production and EVs are continuing to gain share. Within that, and it's hard for us to comment on other people's situation. For us, we have really strong relationships not just with the global OEMs, but also the local OEMs in China, as well as the major tiers. And so we feel really good about our design win pipeline, our design win performance and a resulting orders rate.

Understood. Thank you.

Thank you. [Operator Instructions]. And our next question comes from the line of Quinn Bolton from Needham. Your question, please.

Awesome, very helpful. And when you're looking at demand in general [indiscernible] China, have there been any indications that order patterns are beginning to change at all? And related to this, what do you make of TSMC's comments about auto demand potentially slowing in the second half?

Yes. Hi, Trevor. This is Vineet. I'll take that question. So I think to your earlier question, as we come out of the supply shortages, obviously we will expect to see a normalization of order patterns. Having said that, we're actually not seeing any abatement of the high demand that we had seen for our products and solutions. I can't really speak to what TSMC is saying. They potentially have a much broader exposure across multiple product lines within the automotive space. I think from where we sit, and our auto patterns, our design win pipeline, it continues to be really strong. And as we've said before, we are focused on long-term growth here. Quarter-to-quarter, I think we might see a few ups and downs, but we're not really concerned with that. We're really focused on making sure that we're serving our customers in this transition to e-mobility and to clean energy over the next decade.

Awesome. So is it fair to assume that there were no auto-related cancellations within the quarter?

Yes. So, Trevor, I didn't say that. So cancellations, pull-ins, push-outs are a normal part of auto management. So if I said they were no cancellations, that wouldn't be a true statement. Of course, they were cancellations. But when you look at the auto coverage versus our forecast, when we look at the health of the order book, it continues to be very strong.

Awesome. Thanks, guys.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Jalene Hoover for any further remarks.

Thank you, Jonathan. And thank you all for joining us this morning. This concludes this morning's call.