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WI

WOLFSPEED, INC. (WOLF)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $185.4M was essentially in line with consensus and guidance; non-GAAP gross margin was 2% and non-GAAP EPS was a loss of $0.72, helped by Mohawk Valley Fab ramp to $78M revenue (+50% q/q) .
  • Operational simplification to pure-play 200mm continues, with workforce reductions (25%) and facility closures; restructuring charges projected at $400–$450M FY25, with $57M in Q3, supporting a lower EBITDA breakeven ($800M annual revenue) and FY26 unlevered operating cash flow target of ~$200M .
  • Liquidity strengthened via $200M ATM and $192M Section 48D cash tax refunds; cash, cash equivalents and short-term investments were $1.33B at quarter-end, with ~>$600M additional 48D cash refunds expected in FY26 .
  • A key stock catalyst: management disclosed contemplation of in-court options and going concern language in the upcoming 10-Q footnotes amid active lender negotiations; near-term narrative will hinge on capital structure resolution and CHIPS funding progress .

What Went Well and What Went Wrong

  • What Went Well

    • Mohawk Valley Fab delivered $78M revenue (+50% q/q; >175% y/y), evidencing ramp and contribution to margins; “continued our strong execution at Mohawk Valley” .
    • Strategic focus on 200mm footprint: “fully automated 200-millimeter manufacturing footprint… sets us apart,” with new leadership moves to drive execution and quality .
    • Liquidity actions: $200M ATM and $192M Section 48D cash tax refunds; reaffirmed Q3 guidance and multiyear capex downshift, supporting cash runway and breakeven path .

  • What Went Wrong

    • Gross margin pressure persisted (GAAP -12%; non-GAAP 2%) due to underutilization and lower materials utilization; underutilization costs were $26.3M .
    • Materials revenue declined to $77.9M (from $98.6M y/y) on device market demand softness; Durham 150mm device fab showed lower utilization .
    • Capital structure overhang: management may include going concern language in 10-Q and is evaluating in-/out-of-court options; restructuring charges continue ($57M in Q3; $400–$450M FY25) .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$194.7 $180.5 $185.4
GAAP Gross Margin %(19)% (21)% (12)%
Non-GAAP Gross Margin %3% 2% 2%
GAAP Diluted EPS (Continuing Ops)($2.23) ($2.88) ($1.86)
Non-GAAP Diluted EPS($0.91) ($0.95) ($0.72)
MetricQ3 2024
Revenue ($USD Millions)$200.7
GAAP Gross Margin %11%
Non-GAAP Gross Margin %15%
GAAP Diluted EPS (Continuing Ops)($1.18)
Non-GAAP Diluted EPS($0.62)

Actual vs SPGI Consensus (Revenue and EBITDA)

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD)$200.37M*$179.89M*$185.77M*
Revenue Actual ($USD)$194.7M $180.5M $185.4M
EBITDA Consensus Mean ($USD)($78.61)M*($41.47)M*($21.03)M*
Adjusted EBITDA (Non-GAAP) Actual ($USD)($61.2)M ($57.7)M ($45.2)M

Values retrieved from S&P Global.*

Segment Breakdown (Revenue)

Segment ($USD Millions)Q1 2025Q2 2025Q3 2025
Power Products$97.1 $90.8 $107.5
Materials Products$97.6 $89.7 $77.9
Total$194.7 $180.5 $185.4

KPIs and Operating Items

KPIQ1 2025Q2 2025Q3 2025
Mohawk Valley Fab Revenue ($USD Millions)~$49 $52 $78
Underutilization Costs ($USD Millions)$26.4 $28.9 $26.3
Free Cash Flow ($USD Millions)($528.2) ($598.1) ($167.7)
Cash, Cash Equivalents & ST Investments ($USD Millions)$1,687.6 $1,404.8 $1,329.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 FY25$170M–$200M $170M–$200M Maintained
GAAP Net LossQ3 FY25$(295)M–$(270)M; ($1.89)–($1.73) EPS $(295)M–$(270)M; ($1.89)–($1.73) EPS Maintained
Non-GAAP Net LossQ3 FY25$(138)M–$(119)M; ($0.88)–($0.76) EPS $(138)M–$(119)M; ($0.88)–($0.76) EPS Maintained
Non-GAAP Gross MarginQ3 FY25—(3)%–7% Initiated/Reaffirmed
Non-GAAP OpExQ3 FY25—$99M–$104M Initiated/Reaffirmed
Factory Start-up CostsQ3 FY25~$26M —Maintained (operating plan detail)
Underutilization CostsQ3 FY25~$31M —Maintained (cost of revenue detail)
CapexFY26$150M–$200M (reaffirmed) $150M–$200M Maintained
CapexFY27$30M–$50M (reaffirmed) $30M–$50M Maintained
Adjusted EBITDA BreakevenAnnual revenue~$800M ~$800M Maintained
Unlevered Op Cash FlowFY26~$200M target ~$200M target Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
200mm manufacturing transitionAnnounced closure plan for 150mm Durham; restructuring initiated; Q1/Q2 underutilization/start-up detail “Fully automated 200mm footprint” as core differentiation; exiting 150mm device markets; organizational alignment Intensifying focus and execution
Mohawk Valley rampMV revenue $49M (Q1) → $52M (Q2) $78M, +50% q/q; strong execution; margin contribution Accelerating ramp
Capital structure & funding (CHIPS, lenders)$200M ATM underway; preliminary CHIPS memorandum; liquidity plan $200M ATM completed; $192M 48D refunds; active lender talks; possible going concern language Progress with elevated risk disclosures
End-market dynamics (EV, industrial/energy)EV growth cited; mixed industrial/energy Power revenue strength via automotive; materials softness on device demand Mixed; auto improving, materials softer
Restructuring & cost savings$400–$450M total costs; $200M annual savings target Workforce reductions (~25%); FY25 charges $400–$450M; EBITDA breakeven lowered Executing; benefits targeted FY26–27

Management Commentary

  • CEO Robert Feurle: “Wolfspeed’s silicon carbide technology is second to none… fully automated 200-millimeter manufacturing footprint poised to deliver… I am aligning the organization to drive innovation… in strategic verticals… AI data centers, energy storage, EVs and aerospace and defense” .
  • Chairman Tom Werner: “Q3 met or exceeded the midpoint of guidance… Mohawk Valley posted $78 million in revenue and sequential growth of 50%... 200-millimeter products demonstrate industry-leading quality… actively engaged on new 200mm wafer contracts” .
  • CFO Neill Reynolds: “Non-GAAP gross margin was 2.2%… Adjusted EPS -$0.72… Restructuring charges for FY25 projected at $400–$450 million… ended the quarter with over $1.3 billion of cash and liquidity… may include going concern language in upcoming 10-Q” .

Q&A Highlights

  • The company did not take questions on this call; management focused remarks on operational progress, capital structure, guidance reaffirmation, and leadership changes .
  • Guidance clarifications: reaffirmed Q3 ranges for revenue and losses; provided multiyear capex and breakeven targets (FY26/FY27) .

Estimates Context

  • Revenue: Q3 actual $185.4M vs consensus $185.77M* (essentially in line); Q2 actual $180.5M vs $179.89M* (slight beat); Q1 actual $194.7M vs $200.37M* (miss). Values retrieved from S&P Global.
  • EBITDA: Adjusted EBITDA losses were larger than consensus in Q2 and Q3 (actual -$57.7M and -$45.2M vs -$41.47M* and -$21.03M*); Q1 actual -$61.2M vs -$78.61M* (better than feared). Values retrieved from S&P Global.
  • EPS: S&P Global EPS consensus data was unavailable in this fetch; comparison anchored to company-reported non-GAAP EPS of -$0.72 (Q3), -$0.95 (Q2), -$0.91 (Q1) .

Key Takeaways for Investors

  • Execution at Mohawk Valley is the bright spot; sequential ramp and contribution underpin the path to improving margins even as materials demand is soft .
  • Liquidity improved with $200M ATM and $192M 48D refunds; more >$600M refunds expected FY26, and capex sharply reduced beyond FY26, but capital structure remains the swing factor given contemplated in-court options and going concern language .
  • The pivot to pure-play 200mm and exiting 150mm devices should lower cost structure; management targets EBITDA breakeven at ~$800M revenue and FY26 unlevered operating cash flow of ~$200M, with positive levered FCF in FY27 .
  • Near-term print was “in line” on revenue with persistent margin drag; watch utilization and mix (power/auto strength vs materials softness) as key drivers for upcoming quarters .
  • Stock narrative will track lender negotiations/CHIPS funding, upcoming 10-Q disclosures, and leadership’s operational cadence; absence of Q&A limits visibility, but guidance was reaffirmed .
  • Risk monitoring: restructuring execution, underutilization costs, and device market demand recovery; any slippage could pressure gross margin and cash burn .
  • For trading, catalysts include formal capital structure actions and government funding milestones; for medium-term, the 200mm moat and auto design-win momentum frame the thesis if financing risk is resolved .