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SEC filingWolfspeed's Q3 FY2026 results reflect a 19% revenue decline driven by materials weakness and automotive pricing pressure, with gross losses widening due to underutilization costs following the Siler City fab ramp.
For the third quarter of fiscal 2026, Wolfspeed reported a net loss of $119.9 million on revenue of $150.2 million, a 19.0% decline compared to the prior year period. The operating loss was $114.3 million, a significant improvement from the $194.5 million loss in Q3 FY2025, primarily due to the elimination of factory start-up costs and a sharp reduction in restructuring expenses. The gross loss widened by $17.5 million to $40.0 million, resulting in a negative gross margin of 26.6%, compared to a negative 12.1% margin a year ago. This deterioration was driven by a $19 million increase in underutilization costs following the production readiness of the Siler City Fab and lower factory loadings, which more than offset a $35 million decrease in depreciation expense from fresh start accounting. Non-operating income swung to a $46.2 million gain from a $5.5 million expense, largely due to a $28.7 million gain on derivative remeasurement and a $10.0 million gain on contingent cash.
Revenue declines were broad-based. Power Products revenue fell 6.9% to $100.1 million, pressured by reduced automotive demand and ongoing pricing headwinds. Approximately 90% of this revenue now comes from the Mohawk Valley Fab following the shutdown of the 150mm Durham Fab. Materials Products revenue experienced a steeper 35.7% decline to $50.1 million, as substrate customers continued to rebalance their supply chains in response to weaker end-market demand. The revenue mix shifted, with Power Products representing 66.6% of total revenue, up from 58.0% in the prior year. The increase in gross loss was attributed to unfavorable product mix, pricing pressure, and significant underutilization costs, partially offset by lower restructuring-related charges.
Management is focused on three key priorities: advancing technology leadership, demonstrating strict financial discipline, and driving operational excellence. The company expects mid- and long-term demand growth from applications like AI data centers, grid modernization, and renewable energy, though the timing remains uncertain. Following its emergence from Chapter 11, Wolfspeed reduced total debt by approximately 70% and expects a significant decrease in capital expenditures as major expansion projects are substantially complete. The company anticipates continued underutilization costs until market demand meets production capacity. It is also actively pursuing federal funding opportunities, including those from the CHIPS Act.
Wolfspeed's emergence from Chapter 11 bankruptcy on September 29, 2025, fundamentally reset its financial position. The Successor balance sheet as of March 29, 2026, shows total assets of $3,147.3 million, a significant decrease from the Predecessor's $6,854.4 million as of June 29, 2025, primarily due to fresh start accounting adjustments that reduced property and equipment, net, by approximately $3.0 billion. Total liabilities were reduced to $2,125.6 million from $7,301.5 million. The Company's liquidity position is strong, with $1,164.8 million in total cash, cash equivalents, and short-term investments. The Company has concluded it has sufficient liquidity to meet its obligations for at least one year. Stockholders' equity swung to a positive $1,021.7 million from a deficit of $447.1 million, driven by the extinguishment of pre-petition liabilities and the issuance of new equity.
The Company has significant purchase commitments. A take-or-pay supply agreement, amended in fiscal 2025, requires minimum purchases of $200.0 million through December 2029, with $147.9 million remaining as of March 29, 2026. Another supplier agreement requires $86.4 million in minimum purchases, with $16.8 million remaining. Additionally, long-term electricity supply agreements for facilities in Siler City and Durham, North Carolina, have minimum commitments of $57.1 million over 4 years and $23.4 million over 8 years, respectively. The Company also has a contractual obligation for equipment not yet delivered, requiring monthly payments of $0.2 million for 184 months starting April 2026.
The capital structure was comprehensively restructured. Total debt was reduced by approximately 70%. The Successor's long-term debt includes New Senior Secured Notes ($688.4 million), New 2L Non-Convertible Notes ($233.8 million), New 2L Non-Renesas Convertible Notes ($306.0 million), New 2L Renesas Convertible Notes ($126.9 million), and 1.5L Convertible Notes ($365.4 million). During the period, the Company repurchased $629.7 million of New Senior Secured Notes and issued $379.0 million in 1.5L Convertible Notes. Capital expenditures for property and equipment totaled $171.8 million for the nine-month Successor/Predecessor period, representing 33.3% of total revenue of $515.5 million. No dividends or share buybacks were reported.
Wolfspeed operates as one reportable segment. Revenue is disaggregated by product line and geography. For the three months ended March 29, 2026, Power Products revenue was $100.1 million and Materials Products revenue was $50.1 million. Geographically, the United States accounted for 34.1% of revenue, followed by Europe (18.2%), Hong Kong (18.1%), and Asia Pacific (17.3%).
Data Availability Issue: The provided document excerpt for Wolfspeed, Inc.'s 10-Q filing does not include the actual Consolidated Statements of Cash Flows. The table of contents references the statements on page 10, but the content provided only includes the Balance Sheets, Statements of Operations, Comprehensive Loss, and Stockholders' Equity. Therefore, a direct analysis of operating, investing, or financing cash flows is impossible based on the given text.
Inferred Financial Position: While cash flow specifics are absent, the balance sheet indicates a strong liquidity position with total cash, equivalents, and short-term investments of $1,164.8 million as of March 29, 2026. The income statement shows a net loss of $119.9 million for the quarter, driven by a gross loss of $40.0 million and operating expenses of $74.3 million. Without the cash flow statement, it is impossible to assess the quality of earnings, non-cash charges, working capital changes, or capital expenditure intensity. No data on share repurchases, dividends, or specific capex outlays is available in the excerpt.