MILPITAS, Calif.--(BUSINESS WIRE)--SMART Global Holdings, Inc. ("SGH" or the "Company") (NASDAQ: SGH) today reported financial results for the third quarter of fiscal 2024.
Third Quarter Fiscal 2024 Highlights
- Net sales of $300.6 million, up 5.5% versus the prior quarter
- GAAP gross margin of 29.6% versus 28.8% in the prior quarter
- Non-GAAP gross margin of 32.3% versus 31.5% in the prior quarter
- GAAP EPS of $0.10 versus $(0.26) in the prior quarter
- Non-GAAP EPS of $0.37 versus $0.27 in the prior quarter, up 37% quarter over quarter
"We are pleased with our Q3 operating results and continued progress in our transformation into a high-performance, high-availability enterprise solutions company," said Mark Adams, CEO of SGH. "Our customers are looking for a trusted deployment partner to help them solve the complexity of AI, and we feel we are well positioned with our portfolio of systems, software and managed services to enable their success," concluded Adams.
Quarterly Financial Results
GAAP (1) | Non-GAAP (2) | ||||||||||||||||||||||
(in thousands, except per share amounts) | Q3 FY24 | Q2 FY24 | Q3 FY23 | Q3 FY24 | Q2 FY24 | Q3 FY23 | |||||||||||||||||
Net sales: | |||||||||||||||||||||||
Memory Solutions | $ | 91,629 | $ | 83,297 | $ | 109,458 | $ | 91,629 | $ | 83,297 | $ | 109,458 | |||||||||||
Intelligent Platform Solutions | 144,968 | 141,405 | 170,854 | 144,968 | 141,405 | 170,854 | |||||||||||||||||
LED Solutions | 63,983 | 60,119 | 64,106 | 63,983 | 60,119 | 64,106 | |||||||||||||||||
Total net sales | $ | 300,580 | $ | 284,821 | $ | 344,418 | $ | 300,580 | $ | 284,821 | $ | 344,418 | |||||||||||
Gross profit | $ | 88,906 | $ | 81,934 | $ | 100,480 | $ | 96,962 | $ | 89,735 | $ | 108,990 | |||||||||||
Operating income (loss) | 11,511 | (3,312 | ) | (2,386 | ) | 33,325 | 26,514 | 42,327 | |||||||||||||||
Net income (loss) attributable to SGH | 5,616 | (13,620 | ) | (19,648 | ) | 20,221 | 14,141 | 28,731 | |||||||||||||||
Diluted earnings (loss) per share | $ | 0.10 | $ | (0.26 | ) | $ | (0.40 | ) | $ | 0.37 | $ | 0.27 | $ | 0.57 | |||||||||
(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 July 9, 2024, SGH is providing the following financial outlook for the fourth quarter of fiscal 2024:
GAAP Outlook | Adjustments | Non-GAAP Outlook | ||
Net sales | $325 million +/- $25 million | - | $325 million +/- $25 million | |
Gross margin | 29.5% +/- 1.5% | 2% | (A) | 31.5% +/- 1.5% |
Operating expenses | $81 million +/- $2 million | ($15) million | (B)(C) | $66 million +/- $2 million |
Diluted earnings (loss) per share | $0.03 +/- $0.15 | $0.37 | (A)(B)(C)(D) | $0.40 +/- $0.15 |
Diluted shares | 55.7 million | (1) million | 54.7 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 | 12 | ||
(C) Other adjustments | 3 | ||
(D) Estimated income tax effects | (2 | ) | |
$ | 21 | ||
Third Quarter Fiscal 2024 Earnings Conference Call and Webcast Details
SGH will hold a conference call and webcast to discuss the third quarter of fiscal 2024 results and related matters today, July 9, 2024, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Interested parties may access the call by dialing +1-833-470-1428 in the United States or +1-929-526-1599 from international locations, using the access code 829754. 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, including each of its lines of business; statements regarding the extent and timing of and expectations regarding SGH's future revenues and expenses and customer demand; statements regarding SGH's strategic investments and priorities; statements regarding long-term effective tax rates; 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: global business and economic conditions and growth trends in technology industries, our customer markets and various geographic regions; uncertainties in the geopolitical environment; the ability to manage our cost structure; disruptions in our operations or supply chain; changes in trade regulations or adverse developments in international trade relations and agreements; changes in currency exchange rates; overall information technology spending; appropriations for government spending; the success of our strategic initiatives including additional investments in new products and additional capacity; acquisitions of companies or technologies and the failure to successfully integrate and operate them or customers' negative reactions to them; incurring unanticipated costs related to the sale of our SMART Brazil business; issues, delays or complications in integrating the operations of Stratus Technologies; 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; our dependence on a select number of customers and the timing and volume of customer orders; 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 LED market; changes to applicable tax regimes or rates; prices for the end products of our customers; strikes or labor disputes; deterioration in or loss of relations with any of our 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; diligence, acquisition and integration expense; restructure charges; 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; diligence, acquisition and integration expense; restructure charges; impairment of goodwill; changes in the fair value of contingent consideration; gain (loss) on extinguishment of debt and other infrequent or unusual items.
Beginning in 2024, for our non-GAAP reporting, we are utilizing a long-term projected non-GAAP effective tax rate of 28%, which includes the tax impact of pre-tax non-GAAP adjustments and reflects currently available information as well as other factors and assumptions. While we expect to use this normalized non-GAAP effective tax rate through 2024, this long-term non-GAAP effective tax rate may be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix or changes to our strategy or business operations. Our GAAP effective tax can vary significantly from quarter to quarter based on a variety of factors, including, but not limited to, discrete items which are recorded in the period they occur, the tax effects of certain items of income or expense, significant changes in our geographic earnings mix or changes to our strategy or business operations. We are unable to predict the timing and amounts of these items, which could significantly impact our GAAP effective tax rate, and therefore we are unable to reconcile our forward-looking non-GAAP effective tax rate measure to our GAAP effective tax rate.
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, build, deploy and manage 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 | Nine Months Ended | ||||||||||||||||||
May 31, 2024 | March 1, 2024 | May 26, 2023 | May 31, 2024 | May 26, 2023 | |||||||||||||||
Net sales: | |||||||||||||||||||
Memory Solutions | $ | 91,629 | $ | 83,297 | $ | 109,458 | $ | 260,594 | $ | 338,083 | |||||||||
Intelligent Platform Solutions | 144,968 | 141,405 | 170,854 | 405,197 | 604,276 | ||||||||||||||
LED Solutions | 63,983 | 60,119 | 64,106 | 193,857 | 182,233 | ||||||||||||||
Total net sales | 300,580 | 284,821 | 344,418 | 859,648 | 1,124,592 | ||||||||||||||
Cost of sales | 211,674 | 202,887 | 243,938 | 605,958 | 801,006 | ||||||||||||||
Gross profit | 88,906 | 81,934 | 100,480 | 253,690 | 323,586 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 19,681 | 20,526 | 20,338 | 61,596 | 69,682 | ||||||||||||||
Selling, general and administrative | 57,249 | 61,385 | 67,914 | 175,851 | 195,696 | ||||||||||||||
Impairment of goodwill | - | - | - | - | 17,558 | ||||||||||||||
Change in fair value of contingent consideration | - | - | 14,800 | - | 24,900 | ||||||||||||||
Other operating (income) expense | 465 | 3,335 | (186 | ) | 6,739 | 5,366 | |||||||||||||
Total operating expenses | 77,395 | 85,246 | 102,866 | 244,186 | 313,202 | ||||||||||||||
Operating income (loss) | 11,511 | (3,312 | ) | (2,386 | ) | 9,504 | 10,384 | ||||||||||||
Non-operating (income) expense: | |||||||||||||||||||
Interest expense, net | 6,167 | 7,249 | 9,314 | 22,975 | 27,238 | ||||||||||||||
Other non-operating (income) expense | 441 | 248 | 354 | 113 | 12,299 | ||||||||||||||
Total non-operating (income) expense | 6,608 | 7,497 | 9,668 | 23,088 | 39,537 | ||||||||||||||
Income (loss) before taxes | 4,903 | (10,809 | ) | (12,054 | ) | (13,584 | ) | (29,153 | ) | ||||||||||
Income tax provision (benefit) | (1,323 | ) | 2,198 | 7,216 | 4,409 | 26,687 | |||||||||||||
Net income (loss) from continuing operations | 6,226 | (13,007 | ) | (19,270 | ) | (17,993 | ) | (55,840 | ) | ||||||||||
Net income (loss) from discontinued operations | - | - | (4,807 | ) | (8,148 | ) | 10,301 | ||||||||||||
Net income (loss) | 6,226 | (13,007 | ) | (24,077 | ) | (26,141 | ) | (45,539 | ) | ||||||||||
Net income attributable to noncontrolling interest | 610 | 613 | 378 | 1,784 | 1,143 | ||||||||||||||
Net income (loss) attributable to SGH | $ | 5,616 | $ | (13,620 | ) | $ | (24,455 | ) | $ | (27,925 | ) | $ | (46,682 | ) | |||||
Basic earnings (loss) per share: | |||||||||||||||||||
Continuing operations | $ | 0.11 | $ | (0.26 | ) | $ | (0.40 | ) | $ | (0.38 | ) | $ | (1.16 | ) | |||||
Discontinued operations | - | - | (0.10 | ) | (0.15 | ) | 0.21 | ||||||||||||
$ | 0.11 | $ | (0.26 | ) | $ | (0.50 | ) | $ | (0.53 | ) | $ | (0.95 | ) | ||||||
Diluted earnings (loss) per share: | |||||||||||||||||||
Continuing operations | $ | 0.10 | $ | (0.26 | ) | $ | (0.40 | ) | $ | (0.38 | ) | $ | (1.16 | ) | |||||
Discontinued operations | - | - | (0.10 | ) | (0.15 | ) | 0.21 | ||||||||||||
$ | 0.10 | $ | (0.26 | ) | $ | (0.50 | ) | $ | (0.53 | ) | $ | (0.95 | ) | ||||||
Shares used in per share calculations: | |||||||||||||||||||
Basic | 52,570 | 52,031 | 49,380 | 52,219 | 49,152 | ||||||||||||||
Diluted | 54,283 | 52,031 | 49,380 | 52,219 | 49,152 | ||||||||||||||
SMART Global Holdings, Inc. Reconciliation of GAAP to Non-GAAP Measures (In thousands, except percentages) (Unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
May 31, 2024 | March 1, 2024 | May 26, 2023 | May 31, 2024 | May 26, 2023 | |||||||||||||||
GAAP gross profit | $ | 88,906 | $ | 81,934 | $ | 100,480 | $ | 253,690 | $ | 323,586 | |||||||||
Share-based compensation expense | 1,760 | 1,691 | 1,595 | 5,266 | 4,545 | ||||||||||||||
Amortization of acquisition-related intangibles | 5,909 | 5,894 | 6,704 | 17,747 | 19,785 | ||||||||||||||
Flow-through of inventory step up | - | - | - | - | 2,599 | ||||||||||||||
Cost of sales-related restructure | 387 | 216 | 211 | 1,271 | 5,763 | ||||||||||||||
Non-GAAP gross profit | $ | 96,962 | $ | 89,735 | $ | 108,990 | $ | 277,974 | $ | 356,278 | |||||||||
GAAP gross margin | 29.6 | % | 28.8 | % | 29.2 | % | 29.5 | % | 28.8 | % | |||||||||
Effect of adjustments | 2.7 | % | 2.7 | % | 2.4 | % | 2.8 | % | 2.9 | % | |||||||||
Non-GAAP gross margin | 32.3 | % | 31.5 | % | 31.6 | % | 32.3 | % | 31.7 | % | |||||||||
GAAP operating expenses | $ | 77,395 | $ | 85,246 | $ | 102,866 | $ | 244,186 | $ | 313,202 | |||||||||
Share-based compensation expense | (9,432 | ) | (8,948 | ) | (8,047 | ) | (27,535 | ) | (25,109 | ) | |||||||||
Amortization of acquisition-related intangibles | (3,857 | ) | (3,857 | ) | (4,905 | ) | (11,778 | ) | (13,497 | ) | |||||||||
Diligence, acquisition and integration expense | (4 | ) | (5,885 | ) | (8,637 | ) | (6,678 | ) | (18,193 | ) | |||||||||
Impairment of goodwill | - | - | - | - | (17,558 | ) | |||||||||||||
Change in fair value of contingent consideration | - | - | (14,800 | ) | - | (24,900 | ) | ||||||||||||
Restructure charge | (465 | ) | (3,335 | ) | 186 | (6,739 | ) | (5,366 | ) | ||||||||||
Other | - | - | - | - | (1,800 | ) | |||||||||||||
Non-GAAP operating expenses | $ | 63,637 | $ | 63,221 | $ | 66,663 | $ | 191,456 | $ | 206,779 | |||||||||
GAAP operating income (loss) | $ | 11,511 | $ | (3,312 | ) | $ | (2,386 | ) | $ | 9,504 | $ | 10,384 | |||||||
Share-based compensation expense | 11,192 | 10,639 | 9,642 | 32,801 | 29,654 | ||||||||||||||
Amortization of acquisition-related intangibles | 9,766 | 9,751 | 11,609 | 29,525 | 33,282 | ||||||||||||||
Flow-through of inventory step up | - | - | - | - | 2,599 | ||||||||||||||
Cost of sales-related restructure | 387 | 216 | 211 | 1,271 | 5,763 | ||||||||||||||
Diligence, acquisition and integration expense | 4 | 5,885 | 8,637 | 6,678 | 18,193 | ||||||||||||||
Impairment of goodwill | - | - | - | - | 17,558 | ||||||||||||||
Change in fair value of contingent consideration | - | - | 14,800 | - | 24,900 | ||||||||||||||
Restructure charge | 465 | 3,335 | (186 | ) | 6,739 | 5,366 | |||||||||||||
Other | - | - | - | - | 1,800 | ||||||||||||||
Non-GAAP operating income | $ | 33,325 | $ | 26,514 | $ | 42,327 | $ | 86,518 | $ | 149,499 | |||||||||
SMART Global Holdings, Inc. Reconciliation of GAAP to Non-GAAP Measures (In thousands, except per share amounts) (Unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
May 31, 2024 | March 1, 2024 | May 26, 2023 | May 31, 2024 | May 26, 2023 | |||||||||||||||
GAAP net income (loss) attributable to SGH | $ | 5,616 | $ | (13,620 | ) | $ | (19,648 | ) | $ | (19,777 | ) | $ | (56,983 | ) | |||||
Share-based compensation expense | 11,192 | 10,639 | 9,642 | 32,801 | 29,654 | ||||||||||||||
Amortization of acquisition-related intangibles | 9,766 | 9,751 | 11,609 | 29,525 | 33,282 | ||||||||||||||
Flow-through of inventory step up | - | - | - | - | 2,599 | ||||||||||||||
Cost of sales-related restructure | 387 | 216 | 211 | 1,271 | 5,763 | ||||||||||||||
Diligence, acquisition and integration expense | 4 | 5,885 | 8,637 | 6,678 | 18,193 | ||||||||||||||
Impairment of goodwill | - | - | - | - | 17,558 | ||||||||||||||
Change in fair value of contingent consideration | - | - | 14,800 | - | 24,900 | ||||||||||||||
Restructure charge | 465 | 3,335 | (186 | ) | 6,739 | 5,366 | |||||||||||||
Amortization of debt discount and other costs | 817 | 968 | 937 | 2,827 | 3,054 | ||||||||||||||
Loss (gain) on extinguishment or prepayment of debt | 792 | 325 | - | 1,117 | 15,924 | ||||||||||||||
Foreign currency (gains) losses | 606 | 182 | 410 | 242 | 55 | ||||||||||||||
Other | - | - | - | - | 1,800 | ||||||||||||||
Income tax effects | (9,424 | ) | (3,540 | ) | 2,319 | (14,523 | ) | 8,110 | |||||||||||
Non-GAAP net income attributable to SGH | $ | 20,221 | $ | 14,141 | $ | 28,731 | $ | 46,900 | $ | 109,275 | |||||||||
Weighted-average shares outstanding - Diluted: | |||||||||||||||||||
GAAP weighted-average shares outstanding | 54,283 | 52,031 | 49,380 | 52,219 | 49,152 | ||||||||||||||
Adjustment for dilutive securities and capped calls | (333 | ) | 1,043 | 754 | 1,216 | 770 | |||||||||||||
Non-GAAP weighted-average shares outstanding | 53,950 | 53,074 | 50,134 | 53,435 | 49,922 | ||||||||||||||
Diluted earnings (loss) per share from continuing operations: | |||||||||||||||||||
GAAP diluted earnings (loss) per share | $ | 0.10 | $ | (0.26 | ) | $ | (0.40 | ) | $ | (0.38 | ) | $ | (1.16 | ) | |||||
Effect of adjustments | 0.27 | 0.53 | 0.97 | 1.26 | 3.35 | ||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.37 | $ | 0.27 | $ | 0.57 | $ | 0.88 | $ | 2.19 | |||||||||
Net income (loss) attributable to SGH | $ | 5,616 | $ | (13,620 | ) | $ | (19,648 | ) | $ | (19,777 | ) | $ | (56,983 | ) | |||||
Interest expense, net | 6,167 | 7,249 | 9,314 | 22,975 | 27,238 | ||||||||||||||
Income tax provision (benefit) | (1,323 | ) | 2,198 | 7,216 | 4,409 | 26,687 | |||||||||||||
Depreciation expense and amortization of intangible assets | 15,525 | 17,156 | 18,554 | 50,335 | 52,802 | ||||||||||||||
Share-based compensation expense | 11,192 | 10,639 | 9,642 | 32,801 | 29,654 | ||||||||||||||
Flow-through of inventory step up | - | - | - | - | 2,599 | ||||||||||||||
Cost of sales-related restructure | 387 | 216 | 211 | 1,271 | 5,763 | ||||||||||||||
Diligence, acquisition and integration expense | 4 | 5,885 | 8,637 | 6,678 | 18,193 | ||||||||||||||
Impairment of goodwill | - | - | - | - | 17,558 | ||||||||||||||
Change in fair value of contingent consideration | - | - | 14,800 | - | 24,900 | ||||||||||||||
Restructure charge | 465 | 3,335 | (186 | ) | 6,739 | 5,366 | |||||||||||||
Loss on extinguishment of debt | 792 | 325 | - | 1,117 | 15,924 | ||||||||||||||
Other | - | - | - | - | 1,800 | ||||||||||||||
Adjusted EBITDA | $ | 38,825 | $ | 33,383 | $ | 48,540 | $ | 106,548 | $ | 171,501 | |||||||||
SMART Global Holdings, Inc. Consolidated Balance Sheets (In thousands) (Unaudited) | |||||||
As of | May 31, 2024 | August 25, 2023 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 453,791 | $ | 365,563 | |||
Short-term investments | 13,746 | 25,251 | |||||
Accounts receivable, net | 211,842 | 219,247 | |||||
Inventories | 177,299 | 174,977 | |||||
Other current assets | 85,649 | 51,790 | |||||
Current assets of discontinued operations | - | 70,574 | |||||
Total current assets | 942,327 | 907,402 | |||||
Property and equipment, net | 107,646 | 118,734 | |||||
Operating lease right-of-use assets | 61,729 | 68,444 | |||||
Intangible assets, net | 131,380 | 160,185 | |||||
Goodwill | 161,958 | 161,958 | |||||
Deferred tax assets | 77,903 | 74,085 | |||||
Other noncurrent assets | 63,190 | 15,150 | |||||
Total assets | $ | 1,546,133 | $ | 1,505,958 | |||
Liabilities and Equity | |||||||
Accounts payable and accrued expenses | $ | 230,646 | $ | 182,035 | |||
Current debt | - | 35,618 | |||||
Deferred revenue | 88,719 | 48,096 | |||||
Other current liabilities | 31,777 | 32,731 | |||||
Acquisition-related contingent consideration | - | 50,000 | |||||
Current liabilities of discontinued operations | - | 77,770 | |||||
Total current liabilities | 351,142 | 426,250 | |||||
Long-term debt | 667,042 | 754,820 | |||||
Noncurrent operating lease liabilities | 62,054 | 66,407 | |||||
Other noncurrent liabilities | 35,374 | 29,248 | |||||
Total liabilities | 1,115,612 | 1,276,725 | |||||
Commitments and contingencies | |||||||
SMART Global Holdings shareholders' equity: | |||||||
Ordinary shares | 1,790 | 1,726 | |||||
Additional paid-in capital | 517,548 | 476,703 | |||||
Retained earnings | 54,532 | 82,457 | |||||
Treasury shares | (150,438 | ) | (132,447 | ) | |||
Accumulated other comprehensive income (loss) | 17 | (205,964 | ) | ||||
Total SGH shareholders' equity | 423,449 | 222,475 | |||||
Noncontrolling interest in subsidiary | 7,072 | 6,758 | |||||
Total equity | 430,521 | 229,233 | |||||
Total liabilities and equity | $ | 1,546,133 | $ | 1,505,958 | |||
SMART Global Holdings, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
May 31, 2024 | March 1, 2024 | May 26, 2023 | May 31, 2024 | May 26, 2023 | |||||||||||||||
Cash flows from operating activities | |||||||||||||||||||
Net income (loss) | $ | 6,226 | $ | (13,007 | ) | $ | (24,077 | ) | $ | (26,141 | ) | $ | (45,539 | ) | |||||
Net income (loss) from discontinued operations | - | - | (4,807 | ) | (8,148 | ) | 10,301 | ||||||||||||
Net income (loss) from continuing operations | 6,226 | (13,007 | ) | (19,270 | ) | (17,993 | ) | (55,840 | ) | ||||||||||
Adjustments to reconcile net income (loss) from continuing operations to cash provided by (used for) operating activities | |||||||||||||||||||
Depreciation expense and amortization of intangible assets | 15,525 | 17,156 | 18,554 | 50,335 | 52,802 | ||||||||||||||
Amortization of debt discount and issuance costs | 817 | 968 | 937 | 2,827 | 3,054 | ||||||||||||||
Share-based compensation expense | 11,192 | 10,639 | 9,642 | 32,801 | 29,654 | ||||||||||||||
Impairment of goodwill | - | - | - | - | 17,558 | ||||||||||||||
Change in fair value of contingent consideration | - | - | 14,800 | - | 24,900 | ||||||||||||||
(Gain) loss on extinguishment or prepayment of debt | 792 | 325 | - | 1,117 | 15,924 | ||||||||||||||
Deferred income taxes, net | (3,840 | ) | 476 | (5 | ) | (3,646 | ) | 1,625 | |||||||||||
Other | (3,228 | ) | (208 | ) | (809 | ) | (2,772 | ) | 3,307 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | (42,124 | ) | 872 | (12,525 | ) | 7,406 | 159,508 | ||||||||||||
Inventories | (4,535 | ) | 35,678 | 56,413 | (2,321 | ) | 66,653 | ||||||||||||
Other assets | 15,424 | (23,229 | ) | 16,950 | (5,703 | ) | 7,057 | ||||||||||||
Accounts payable and accrued expenses and other liabilities | 83,632 | (22,587 | ) | (51,612 | ) | 84,626 | (226,357 | ) | |||||||||||
Payment of acquisition-related contingent consideration | - | (29,000 | ) | - | (29,000 | ) | (73,724 | ) | |||||||||||
Net cash provided by (used for) operating activities from continuing operations | 79,881 | (21,917 | ) | 33,075 | 117,677 | 26,121 | |||||||||||||
Net cash provided by (used for) operating activities from discontinued operations | (101 | ) | - | 7,963 | (28,336 | ) | 41,467 | ||||||||||||
Net cash provided by (used for) operating activities | 79,780 | (21,917 | ) | 41,038 | 89,341 | 67,588 | |||||||||||||
Cash flows from investing activities | |||||||||||||||||||
Capital expenditures and deposits on equipment | (3,777 | ) | (5,204 | ) | (11,984 | ) | (13,629 | ) | (31,674 | ) | |||||||||
Acquisition of business, net of cash acquired | - | - | - | - | (213,073 | ) | |||||||||||||
Proceeds from maturities of investment securities | 9,915 | 12,290 | - | 31,870 | - | ||||||||||||||
Purchases of held-to-maturity investment securities | (1,000 | ) | (11,034 | ) | - | (20,503 | ) | - | |||||||||||
Other | (518 | ) | (558 | ) | 431 | (1,264 | ) | 670 | |||||||||||
Net cash provided by (used for) investing activities from continuing operations | 4,620 | (4,506 | ) | (11,553 | ) | (3,526 | ) | (244,077 | ) | ||||||||||
Net cash provided by (used for) investing activities from discontinued operations | 451 | - | (1,273 | ) | 119,389 | (5,745 | ) | ||||||||||||
Net cash provided by (used for) investing activities | $ | 5,071 | $ | (4,506 | ) | $ | (12,826 | ) | $ | 115,863 | $ | (249,822 | ) | ||||||
SMART Global Holdings, Inc. Consolidated Statements of Cash Flows, Continued (In thousands) (Unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
May 31, 2024 | March 1, 2024 | May 26, 2023 | May 31, 2024 | May 26, 2023 | |||||||||||||||
Cash flows from financing activities | |||||||||||||||||||
Repayments of debt | $ | (75,000 | ) | $ | (37,211 | ) | $ | (7,211 | ) | $ | (126,634 | ) | $ | (14,422 | ) | ||||
Payment of acquisition-related contingent consideration | - | (21,000 | ) | - | (21,000 | ) | (28,100 | ) | |||||||||||
Payments to acquire ordinary shares | (2,129 | ) | (2,732 | ) | (660 | ) | (17,991 | ) | (16,883 | ) | |||||||||
Distribution to noncontrolling interest | - | - | - | (1,470 | ) | (2,009 | ) | ||||||||||||
Proceeds from issuance of ordinary shares | 3,817 | 792 | 4,180 | 8,064 | 8,430 | ||||||||||||||
Proceeds from debt | - | - | - | - | 295,287 | ||||||||||||||
Payment of premium in connection with convertible note exchange | - | - | - | - | (14,141 | ) | |||||||||||||
Net cash paid for settlement and purchase of Capped Calls | - | - | - | - | (4,304 | ) | |||||||||||||
Other | (1 | ) | (1 | ) | (688 | ) | (584 | ) | (5,765 | ) | |||||||||
Net cash used for financing activities from continuing operations | (73,313 | ) | (60,152 | ) | (4,379 | ) | (159,615 | ) | 218,093 | ||||||||||
Net cash used for financing activities from discontinued operations | - | - | (255 | ) | (606 | ) | (379 | ) | |||||||||||
Net cash provided by (used for) financing activities | (73,313 | ) | (60,152 | ) | (4,634 | ) | (160,221 | ) | 217,714 | ||||||||||
Effect of changes in currency exchange rates | (76 | ) | (155 | ) | 813 | (1,256 | ) | 2,730 | |||||||||||
Net increase (decrease) in cash and cash equivalents | 11,462 | (86,730 | ) | 24,391 | 43,727 | 38,210 | |||||||||||||
Cash and cash equivalents at beginning of period | 442,329 | 529,059 | 376,884 | 410,064 | 363,065 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 453,791 | $ | 442,329 | $ | 401,275 | $ | 453,791 | $ | 401,275 | |||||||||
Contacts
Investor Contact
Suzanne Schmidt
Investor Relations
+1-510-360-8596
ir@sghcorp.com
PR Contact
Maureen O'Leary
Director Communications
+1-602-330-6846
pr@sghcorp.com
