SMART Global Holdings, Inc. Reports Fourth Quarter and Full Year Fiscal 2023 Financial Results

MILPITAS, Calif.--(BUSINESS WIRE)--SMART Global Holdings, Inc. ("SGH" or the "Company") (NASDAQ: SGH) today reported financial results for the fourth quarter and full year fiscal 2023.

On June 13, 2023, we entered into an agreement to sell an 81% interest in our SMART Brazil operations. The transaction is expected to close at the end of calendar 2023 or early 2024, subject to required regulatory approvals and satisfaction of customary closing conditions. Accordingly, our SMART Brazil operations are classified as discontinued operations in the accompanying financial statements for all periods presented.

The following discussion relates to our continuing operations, which exclude SMART Brazil.

Fiscal 2023 Highlights for Continuing Operations

• Net sales of $1.44 billion, up 3.3% versus fiscal year 2022
• Record GAAP gross margin of 28.8%, up 80 basis points versus fiscal year 2022
• Record Non-GAAP gross margin of 31.7%, up 250 basis points versus fiscal year 2022
• GAAP EPS of $0.15 versus $0.41 in fiscal year 2022
• Non-GAAP EPS of $2.52 versus $2.65 in fiscal year 2022

Fourth Quarter Fiscal 2023 Highlights for Continuing Operations

• Net sales of $316.7 million, down 12.6% versus the year-ago quarter
• GAAP gross margin of 28.9%, up 290 basis points versus the year-ago quarter
• Non-GAAP gross margin of 31.7%, up 460 basis points versus the year-ago quarter
• GAAP EPS of $1.17 versus $0.18 in the year-ago quarter
• Non-GAAP EPS of $0.35 versus $0.63 in the year-ago quarter

"Throughout fiscal 2023 the team has made significant progress in our transformational journey towards becoming an enterprise solutions company focused on higher quality revenue and improving gross margins. In the fourth quarter, in what remains a challenging global economic environment, non-GAAP gross margin increased to 31.7%, an improvement of 460 basis points from the same period last year, and non-GAAP earnings were $0.35 per share. In addition, we exited the fourth quarter with a strong balance sheet, including cash, cash equivalents and short term investments of $391 million," commented the Company's CEO Mark Adams.

Annual Financial Results of Continuing Operations
	GAAP (1)										Non-GAAP (2)
(in thousands, except per share amounts)	FY23			FY22			FY21				FY23			FY22			FY21
Net sales:
Memory Solutions	$	443,264		$	551,705		$	486,205			$	443,264		$	551,705		$	486,205
Intelligent Platform Solutions		749,708			440,986			344,757				749,708			440,986			344,757
LED Solutions		248,278			403,185			224,567				248,278			403,185			224,567
Total net sales	$	1,441,250		$	1,395,876		$	1,055,529			$	1,441,250		$	1,395,876		$	1,055,529
Gross profit	$	415,171		$	391,045		$	237,973			$	456,578		$	408,082		$	257,162
Operating income (loss)		8,745			67,176			(15,706	)			179,794			177,461			83,484
Net income (loss) attributable to SGH		7,858			22,372			(43,150	)			127,681			139,287			62,122
Diluted earnings (loss) per share	$	0.15		$	0.41		$	(0.89	)		$	2.52		$	2.65		$	1.23

Quarterly Financial Results of Continuing Operations
	GAAP (1)											Non-GAAP (2)
(in thousands, except per share amounts)	Q4 FY23				Q3 FY23				Q4 FY22			Q4 FY23			Q3 FY23			Q4 FY22
Net sales:
Memory Solutions	$	105,181			$	109,458			$	134,611		$	105,181		$	109,458		$	134,611
Intelligent Platform Solutions		145,432				170,854				144,730			145,432			170,854			144,730
LED Solutions		66,045				64,106				83,118			66,045			64,106			83,118
Total net sales	$	316,658			$	344,418			$	362,459		$	316,658		$	344,418		$	362,459
Gross profit	$	91,585			$	100,480			$	94,420		$	100,300		$	108,990		$	98,356
Operating income (loss)		(1,639	)			(2,386	)			23,060			30,295			42,327			41,866
Net income (loss) attributable to SGH		64,841				(19,648	)			8,862			18,406			28,731			31,610
Diluted earnings (loss) per share	$	1.17			$	(0.40	)		$	0.18		$	0.35		$	0.57		$	0.63

(1)		GAAP represents U.S. Generally Accepted Accounting Principles.
(2)		Non-GAAP represents GAAP excluding the impact of certain activities. Further information regarding the Company's use of non-GAAP measures and reconciliations between GAAP and non-GAAP measures is included within this press release.

Business Outlook

As of October 12, 2023, SGH is providing the following financial outlook for its continuing operations for the first quarter of fiscal 2024:

	GAAP Outlook	Adjustments		Non-GAAP Outlook
Net sales	$275 million +/- $25 million	-		$275 million +/- $25 million
Gross margin	28.5% +/- 1%	3%	(A)	31.5% +/- 1%
Operating expenses	$82 million +/- $1 million	($15) million	(B)(C)	$67 million +/- $1 million
Diluted earnings (loss) per share	$(0.16) +/- $0.15	$0.31	(A)(B)(C)(D)	$0.15 +/- $0.15
Diluted shares	55.6 million	(1.6) million		54 million

Non-GAAP adjustments (in millions)
(A) Share-based compensation and amortization of acquisition-related intangibles included in cost of sales	$	8
(B) Share-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A		13
(C) Other adjustments included in operating expenses		2
(D) Estimated income tax effects		(6	)
	$	17

Fourth Quarter Fiscal 2023 Earnings Conference Call and Webcast Details

SGH will hold a conference call and webcast to discuss the fourth quarter and full year fiscal 2023 results and related matters today, October 12, 2023, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Interested parties may access the call by dialing [phone] in the U.S. or [phone] from international locations, using the access code 759938. The earnings presentation and a live webcast of the conference call can be accessed from the Company's investor relations website (https://ir.smartm.com/investors/default.aspx) where they will remain available for approximately one year.

Use of Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements concerning or regarding future events and the future financial and operating performance of SGH; statements regarding the extent and timing or and expectations regarding SGH's future revenues and expenses and customer demand; statements regarding sale of the Company's SMART Brazil operations and expected closing timeline; and statements regarding the business and financial outlook for the next fiscal quarter described under "Business Outlook" above.

These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "anticipate," "target," "expect," "estimate," "intend," "plan," "goal," "believe," "could," and other words of similar meaning. Forward-looking statements provide SGH's current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of significant risks, uncertainties and other factors, many of which are outside of SGH's control, including but not limited to, issues, delays or complications in integrating the operations of Stratus Technologies; global business and economic conditions and growth trends in technology industries, SGH's customer markets and various geographic regions; uncertainties in the geopolitical environment; the unpredictable nature of the COVID-19 pandemic; disruptions in SGH's operations or supply chain as a result of the downstream effects of the COVID-19 pandemic or otherwise; the ability to manage SGH's cost structure, including SGH's success in implementing restructuring or other plans intended to improve SGH's operating efficiency; workforce reductions; uncertainties in the global macro-economic environment; changes in demand for SGH's segments; changes in trade regulations or adverse developments in international trade relations and agreements; changes in currency exchange rates; availability of our cash and cash equivalents; overall information technology spending; appropriations for government spending; the success of SGH's strategic initiatives including additional investments in new products and additional capacity; acquisitions of companies or technologies, the failure to successfully integrate and operate them or customers' negative reactions to them, including any resulting impairment of goodwill or gain (loss) on extinguishment of debt; the proposed divestiture of SMART Brazil, the failure to execute on the separation and transition of SMART Brazil and its business, the failure to satisfy all conditions to complete the proposed divestiture within the expected timeframe, and the failure to achieve the intended benefits of the sale of SMART Brazil and its business; limitations on, or changes in the availability of, supply of materials and components; fluctuations in material costs; the temporary or volatile nature of pricing trends in memory or elsewhere; deterioration in customer relationships; production or manufacturing difficulties; competitive factors; technological changes; difficulties with, or delays in, the introduction of new products; slowing or contraction of growth in the memory market in Brazil or in the LED market; reduction in, or termination of, incentives for local manufacturing in Brazil; changes to applicable tax regimes or rates; reversal of the valuation allowance for a significant portion of our deferred tax assets, including any potential inability to realize these assets in the future; prices for the end products of SGH's customers; strikes or labor disputes; deterioration in or loss of relations with any of SGH's limited number of key vendors; the inability to maintain or expand government business; and the continuing availability of borrowings under term loans and revolving lines of credit and our ability to raise capital through debt or equity financings. These and other risks, uncertainties and factors are described in greater detail under the sections titled "Risk Factors," "Critical Accounting Estimates," "Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and "Liquidity and Capital Resources" contained in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and the Company's other filings with the U.S. Securities and Exchange Commission. In addition, such risks, uncertainties and factors as outlined above and in such filings do not constitute all risks, uncertainties and factors that could cause actual results of SGH to be materially different from such forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements that the Company makes in this press release speak only as of the date of this press release. Except as required by law, SGH does not undertake to update the forward-looking statements contained in this press release to reflect the impact of circumstances or events that may arise after the date that the forward-looking statements were made.

Statement Regarding Use of Non-GAAP Financial Measures

SGH management uses non-GAAP measures to supplement SGH's financial results under GAAP. Management uses these measures to analyze its operations and make decisions as to future operational plans and believes that this supplemental non-GAAP information is useful to investors in analyzing and assessing the Company's past and future operating performance. These non-GAAP measures exclude certain items, such as share-based compensation expense, amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships, trademarks/trade names and backlog acquired in connection with business combinations), acquisition-related inventory adjustments, acquisition-related expenses, restructure charges and integration expenses, impairment of goodwill, changes in the fair value of contingent consideration, gains (losses) from changes in currency exchange rates, amortization of debt discount and other costs, gain (loss) on extinguishment of debt, other infrequent or unusual items and related tax effects and other tax adjustments. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in the Company's non-GAAP measures and these intangible assets contribute to revenue generation. Management believes the presentation of operating results that exclude certain items provides useful supplemental information to investors and facilitates the analysis of the Company's core operating results and comparison of operating results across reporting periods. Management also uses adjusted EBITDA, which represents GAAP net income (loss), adjusted for net interest expense, income tax expense, depreciation and amortization expense, share-based compensation expense, acquisition-related inventory adjustments, acquisition-related expenses, restructure charges and integration expenses, impairment of goodwill, changes in the fair value of contingent consideration, gain (loss) on extinguishment of debt and other infrequent or unusual items.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, as they exclude important information about SGH's financial results, as noted above. The presentation of these adjusted amounts varies from amounts presented in accordance with GAAP and therefore may not be comparable to amounts reported by other companies. In addition, adjusted EBITDA does not purport to represent cash flow provided by, or used for, operating activities in accordance with GAAP and should not be used as a measure of liquidity. Investors are encouraged to review the "Reconciliation of GAAP to Non-GAAP Measures" tables below.

About SMART Global Holdings - SGH

At SGH, we design and develop high-performance, high-availability, enterprise solutions that help our customers solve for the future. Across our computing, memory, and LED lines of business, we focus on serving our customers by providing deep technical knowledge and expertise, custom design engineering, build-to-order flexibility, and a commitment to best-in-class quality.

Learn more about us at SGHcorp.com.

SMART Global Holdings, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended												Year Ended
	August 25, 2023				May 26, 2023				August 26, 2022				August 25, 2023				August 26, 2022			August 27, 2021
Net sales:
Memory Solutions	$	105,181			$	109,458			$	134,611			$	443,264			$	551,705		$	486,205
Intelligent Platform Solutions		145,432				170,854				144,730				749,708				440,986			344,757
LED Solutions		66,045				64,106				83,118				248,278				403,185			224,567
Total net sales		316,658				344,418				362,459				1,441,250				1,395,876			1,055,529
Cost of sales		225,073				243,938				268,039				1,026,079				1,004,831			817,556
Gross profit		91,585				100,480				94,420				415,171				391,045			237,973
Operating expenses:
Research and development		20,883				20,338				19,160				90,565				77,472			59,933
Selling, general and administrative		65,026				67,914				52,215				260,722				204,839			158,174
Impairment of goodwill		1,534				-				-				19,092				-			-
Change in fair value of contingent consideration		4,100				14,800				-				29,000				41,324			32,400
Other operating (income) expense		1,681				(186	)			(15	)			7,047				234			3,172
Total operating expenses		93,224				102,866				71,360				406,426				323,869			253,679
Operating income (loss)		(1,639	)			(2,386	)			23,060				8,745				67,176			(15,706	)
Non-operating (income) expense:
Interest expense, net		9,183				9,314				7,485				36,421				24,345			17,141
Other non-operating (income) expense		(462	)			354				170				11,837				350			(582	)
Total non-operating (income) expense		8,721				9,668				7,655				48,258				24,695			16,559
Income (loss) before taxes		(10,360	)			(12,054	)			15,405				(39,513	)			42,481			(32,265	)
Income tax provision (benefit)		(75,890	)			7,216				6,075				(49,203	)			18,074			9,689
Net income (loss) from continuing operations		65,530				(19,270	)			9,330				9,690				24,407			(41,954	)
Net income (loss) from discontinued operations, net of tax		(205,685	)			(4,807	)			11,097				(195,384	)			44,185			64,460
Net income (loss)		(140,155	)			(24,077	)			20,427				(185,694	)			68,592			22,506
Net income attributable to noncontrolling interest		689				378				468				1,832				2,035			1,196
Net income (loss) attributable to SGH	$	(140,844	)		$	(24,455	)		$	19,959			$	(187,526	)		$	66,557		$	21,310
Basic earnings (loss) per share:
Continuing operations	$	1.28			$	(0.40	)		$	0.18			$	0.16			$	0.45		$	(0.89	)
Discontinued operations		(4.05	)			(0.10	)			0.23				(3.94	)			0.90			1.33
	$	(2.77	)		$	(0.50	)		$	0.41			$	(3.78	)		$	1.35		$	0.44
Diluted earnings (loss) per share:
Continuing operations	$	1.17			$	(0.40	)		$	0.18			$	0.15			$	0.41		$	(0.89	)
Discontinued operations		(3.71	)			(0.10	)			0.22				(3.80	)			0.81			1.33
	$	(2.54	)		$	(0.50	)		$	0.40			$	(3.65	)		$	1.22		$	0.44
Shares used in per share calculations:
Basic		50,807				49,380				49,238				49,566				49,467			48,558
Diluted		55,523				49,380				50,504				51,322				54,443			48,558

SMART Global Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands)
(Unaudited)
	Three Months Ended												Year Ended
	August 25, 2023				May 26, 2023				August 26, 2022				August 25, 2023				August 26, 2022				August 27, 2021
GAAP gross profit	$	91,585			$	100,480			$	94,420			$	415,171			$	391,045			$	237,973
Share-based compensation expense		1,789				1,595				1,569				6,334				6,296				3,871
Amortization of acquisition-related intangibles		5,876				6,704				2,367				25,661				10,741				8,228
Flow-through of inventory step up		-				-				-				2,599				-				7,090
Cost of sales-related restructure		1,050				211				-				6,813				-				-
Non-GAAP gross profit	$	100,300			$	108,990			$	98,356			$	456,578			$	408,082			$	257,162
GAAP gross margin		28.9	%			29.2	%			26.0	%			28.8	%			28.0	%			22.5	%
Effect of adjustments		2.8	%			2.4	%			1.1	%			2.9	%			1.2	%			1.9	%
Non-GAAP gross margin		31.7	%			31.6	%			27.1	%			31.7	%			29.2	%			24.4	%
GAAP operating expenses	$	93,224			$	102,866			$	71,360			$	406,426			$	323,869			$	253,679
Share-based compensation expense		(7,785	)			(8,047	)			(7,890	)			(32,894	)			(30,988	)			(27,090	)
Amortization of acquisition-related intangibles		(5,443	)			(4,905	)			(3,247	)			(18,940	)			(12,988	)			(12,027	)
Acquisition and integration expenses		(2,676	)			(8,637	)			(3,620	)			(20,869	)			(7,090	)			(5,314	)
Impairment of goodwill		(1,534	)			-				-				(19,092	)			-				-
Change in fair value of contingent consideration		(4,100	)			(14,800	)			-				(29,000	)			(41,324	)			(32,400	)
Restructure charge		(1,681	)			186				15				(7,047	)			(234	)			(3,172	)
Other		-				-				(128	)			(1,800	)			(624	)			2
Non-GAAP operating expenses	$	70,005			$	66,663			$	56,490			$	276,784			$	230,621			$	173,678
GAAP operating income (loss)	$	(1,639	)		$	(2,386	)		$	23,060			$	8,745			$	67,176			$	(15,706	)
Share-based compensation expense		9,574				9,642				9,459				39,228				37,284				30,961
Amortization of acquisition-related intangibles		11,319				11,609				5,614				44,601				23,729				20,255
Flow-through of inventory step up		-				-				-				2,599				-				7,090
Cost of sales-related restructure		1,050				211				-				6,813				-				-
Acquisition and integration expenses		2,676				8,637				3,620				20,869				7,090				5,314
Impairment of goodwill		1,534				-				-				19,092				-				-
Change in fair value of contingent consideration		4,100				14,800				-				29,000				41,324				32,400
Restructure charge		1,681				(186	)			(15	)			7,047				234				3,172
Other		-				-				128				1,800				624				(2	)
Non-GAAP operating income	$	30,295			$	42,327			$	41,866			$	179,794			$	177,461			$	83,484

SMART Global Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended												Year Ended
	August 25, 2023				May 26, 2023				August 26, 2022				August 25, 2023				August 26, 2022				August 27, 2021
GAAP net income (loss) attributable to SGH	$	64,841			$	(19,648	)		$	8,862			$	7,858			$	22,372			$	(43,150	)
Share-based compensation expense		9,574				9,642				9,459				39,228				37,284				30,961
Amortization of acquisition-related intangibles		11,319				11,609				5,614				44,601				23,729				20,255
Flow-through of inventory step up		-				-				-				2,599				-				7,090
Cost of sales-related restructure		1,050				211				-				6,813				-				-
Acquisition and integration expenses		2,676				8,637				3,620				20,869				7,090				5,314
Impairment of goodwill		1,534				-				-				19,092				-				-
Change in fair value of contingent consideration		4,100				14,800				-				29,000				41,324				32,400
Restructure charge		1,681				(186	)			(15	)			7,047				234				3,172
Amortization of debt discount and other costs		1,010				937				2,788				4,064				9,999				8,419
Loss on extinguishment of debt		-				-				-				15,924				653				-
Foreign currency (gains) losses		(276	)			410				97				(221	)			9				389
Other		-				-				128				1,800				624				(1,004	)
Income tax effects		(79,103	)			2,319				1,057				(70,993	)			(4,031	)			(1,724	)
Non-GAAP net income attributable to SGH	$	18,406			$	28,731			$	31,610			$	127,681			$	139,287			$	62,122
Weighted-average shares outstanding - Diluted:
GAAP weighted-average shares outstanding		55,523				49,380				50,504				51,322				54,443				48,558
Adjustment for dilutive securities and capped calls		(2,233	)			754				-				(558	)			(1,851	)			2,129
Non-GAAP weighted-average shares outstanding		53,290				50,134				50,504				50,764				52,592				50,687
Diluted earnings (loss) per share from continuing operations:
GAAP diluted earnings (loss) per share	$	1.17			$	(0.40	)		$	0.18			$	0.15			$	0.41			$	(0.89	)
Effect of adjustments		(0.82	)			0.97				0.45				2.37				2.24				2.12
Non-GAAP diluted earnings per share	$	0.35			$	0.57			$	0.63			$	2.52			$	2.65			$	1.23
Net income (loss) attributable to SGH	$	64,841			$	(19,648	)		$	8,862			$	7,858			$	22,372			$	(43,150	)
Interest expense, net		9,183				9,314				7,485				36,421				24,345				17,141
Income tax provision (benefit)		(75,890	)			7,216				6,075				(49,203	)			18,074				9,689
Depreciation expense and amortization of intangible assets		18,830				18,554				11,646				71,632				46,665				34,937
Share-based compensation expense		9,574				9,642				9,459				39,228				37,284				30,961
Flow-through of inventory step up		-				-				-				2,599				-				7,090
Cost of sales-related restructure		1,050				211				-				6,813				-				-
Acquisition and integration expenses		2,676				8,637				3,620				20,869				7,090				5,314
Impairment of goodwill		1,534				-				-				19,092				-				-
Change in fair value of contingent consideration		4,100				14,800				-				29,000				41,324				32,400
Restructure charge		1,681				(186	)			(15	)			7,047				234				3,172
Loss on extinguishment of debt		-				-				-				15,924				653				-
Other		-				-				128				1,800				624				(1,004	)
Adjusted EBITDA	$	37,579			$	48,540			$	47,260			$	209,080			$	198,665			$	96,550

SMART Global Holdings, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
As of	August 25, 2023				August 26, 2022
Assets
Cash and cash equivalents	$	365,563			$	313,328
Short-term investments		25,251				-
Accounts receivable, net		219,247				355,002
Inventories		174,977				263,768
Other current assets		51,790				33,486
Current assets from discontinued operations		70,574				186,281
Total current assets		907,402				1,151,865
Property and equipment, net		118,734				96,708
Operating lease right-of-use assets		68,444				71,823
Intangible assets, net		160,185				77,812
Goodwill		161,958				55,121
Deferred tax assets		74,085				4,576
Other noncurrent assets		15,150				15,014
Noncurrent assets from discontinued operations		-				99,145
Total assets	$	1,505,958			$	1,572,064
Liabilities and Equity
Accounts payable and accrued expenses	$	182,035			$	354,098
Current debt		35,618				8,469
Deferred revenue		48,096				30,780
Other current liabilities		32,731				57,880
Acquisition-related contingent consideration		50,000				-
Current liabilities from discontinued operations		77,770				64,313
Total current liabilities		426,250				515,540
Long-term debt		754,820				575,682
Noncurrent operating lease liabilities		66,407				66,990
Other noncurrent liabilities		29,248				14,835
Noncurrent liabilities from discontinued operations		-				20,471
Total liabilities		1,276,725				1,193,518
Commitments and contingencies
SMART Global Holdings shareholders' equity:
Ordinary shares		1,726				1,586
Additional paid-in capital		476,703				448,112
Retained earnings		82,457				251,344
Treasury shares		(132,447	)			(107,776	)
Accumulated other comprehensive income (loss)		(205,964	)			(221,655	)
Total SGH shareholders' equity		222,475				371,611
Noncontrolling interest in subsidiary		6,758				6,935
Total equity		229,233				378,546
Total liabilities and equity	$	1,505,958			$	1,572,064

SMART Global Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Three Months Ended												Year Ended
	August 25, 2023				May 26, 2023				August 26, 2022				August 25, 2023				August 26, 2022				August 27, 2021
Cash flows from operating activities
Net income (loss)	$	(140,155	)		$	(24,077	)		$	20,427			$	(185,694	)		$	68,592			$	22,506
Net income (loss) from discontinued operations		(205,685	)			(4,807	)			11,097				(195,384	)			44,185				64,460
Net income (loss) from continuing operations		65,530				(19,270	)			9,330				9,690				24,407				(41,954	)
Adjustments to reconcile net income (loss) from continuing operations to cash provided by operating activities
Depreciation expense and amortization of intangible assets		18,830				18,554				11,646				71,632				46,665				34,937
Amortization of debt discount and issuance costs		1,010				937				2,787				4,064				10,263				8,798
Share-based compensation expense		9,574				9,642				9,459				39,228				37,284				30,961
Impairment of goodwill		1,534				-				-				19,092				-				-
Change in fair value of contingent consideration		4,100				14,800				-				29,000				41,324				32,400
Loss on extinguishment of debt		-				-				-				15,924				653				-
Deferred income taxes, net		(65,228	)			(5	)			(9	)			(63,603	)			(20	)			(1,982	)
Other		701				(809	)			51				4,008				582				(598	)
Changes in operating assets and liabilities:
Accounts receivable		3,007				(12,525	)			(59,249	)			162,515				(97,801	)			(47,773	)
Inventories		28,564				56,413				55,411				95,217				30,733				(99,906	)
Other assets		(290	)			16,950				(5,926	)			6,767				(10,321	)			15,415
Accounts payable and accrued expenses and other liabilities		(29,776	)			(51,612	)			(15,368	)			(256,133	)			(44,907	)			192,542
Payment of acquisition-related contingent consideration		-				-				-				(73,724	)			-				-
Net cash provided by operating activities from continuing operations		37,556				33,075				8,132				63,677				38,862				122,840
Net cash provided by (used for) operating activities from discontinued operations		(757	)			7,963				12,774				40,710				66,069				30,510
Net cash provided by operating activities		36,799				41,038				20,906				104,387				104,931				153,350
Cash flows from investing activities
Capital expenditures and deposits on equipment		(7,747	)			(11,984	)			(5,858	)			(39,421	)			(20,359	)			(16,669	)
Acquisition of business, net of cash acquired		-				-				-				(213,073	)			-				(35,677	)
Purchases of held-to-maturity investment securities		(25,015	)			-				-				(25,015	)			-				-
Other		(4,345	)			431				(71	)			(3,675	)			(875	)			(1,121	)
Net cash used for investing activities from continuing operations		(37,107	)			(11,553	)			(5,929	)			(281,184	)			(21,234	)			(53,467	)
Net cash used for investing activities from discontinued operations		(11,640	)			(1,273	)			(2,997	)			(17,385	)			(17,736	)			(30,711	)
Net cash used for investing activities	$	(48,747	)		$	(12,826	)		$	(8,926	)		$	(298,569	)		$	(38,970	)		$	(84,178	)

SMART Global Holdings, Inc.
Consolidated Statements of Cash Flows, Continued
(In thousands)
(Unaudited)
	Three Months Ended												Year Ended
	August 25, 2023				May 26, 2023				August 26, 2022				August 25, 2023				August 26, 2022				August 27, 2021
Cash flows from financing activities
Proceeds from debt	$	-			$	-			$	-			$	295,287			$	270,775			$	-
Proceeds from issuance of ordinary shares		34,615				4,180				291				43,045				12,140				14,923
Proceeds from borrowing under line of credit		-				-				-				-				84,000				172,500
Payment of acquisition-related contingent consideration		-				-				-				(28,100	)			-				-
Payments to acquire ordinary shares		(7,788	)			(660	)			(40,431	)			(24,671	)			(57,231	)			(48,513	)
Repayments of debt		(7,212	)			(7,211	)			(1,719	)			(21,634	)			(126,719	)			-
Payment of premium in connection with convertible note exchange		-				-				-				(14,141	)			-				-
Net cash paid for settlement and purchase of Capped Calls		-				-				-				(4,304	)			-				-
Distribution to noncontrolling interest		-				-				-				(2,009	)			(3,773	)			-
Repayments of borrowings under line of credit		-				-				-				-				(109,000	)			(147,500	)
Other		(487	)			(688	)			(1,242	)			(6,252	)			(9,547	)			(6,138	)
Net cash provided by (used for) financing activities from continuing operations		19,128				(4,379	)			(43,101	)			237,221				60,645				(14,728	)
Net cash provided by (used for) financing activities from discontinued operations		(426	)			(255	)			8,770				(805	)			13,234				17,577
Net cash provided by (used for) financing activities		18,702				(4,634	)			(34,331	)			236,416				73,879				2,849
Effect of changes in currency exchange rates		2,035				813				(1,910	)			4,765				239				154
Net increase (decrease) in cash and cash equivalents		8,789				24,391				(24,261	)			46,999				140,079				72,175
Cash and cash equivalents at beginning of period		401,275				376,884				387,326				363,065				222,986				150,811
Cash and cash equivalents at end of period	$	410,064			$	401,275			$	363,065			$	410,064			$	363,065			$	222,986

Contacts

Investor Contact
Suzanne Schmidt
Investor Relations
[phone]
[e-mail]

PR Contact
Valerie Sassani
VP of Marketing and Communications
[phone]
[e-mail]