SMART Global Holdings, Inc. (“SGH” or the “Company”) (NASDAQ: SGH) today reported financial results for the first quarter of fiscal 2023. Per share measures for all periods reflect the effect of the February 2022 two-for-one share split
MILPITAS, Calif.--(BUSINESS WIRE)--Jan 3, 2023--
SMART Global Holdings, Inc. (“SGH” or the “Company”) (NASDAQ: SGH) today reported financial results for the first quarter of fiscal 2023. Per share measures for all periods reflect the effect of the February 2022 two-for-one share split.
First Quarter Fiscal 2023 Highlights
“We are pleased with our financial results for the first quarter of fiscal 2023, highlighted by record non-GAAP gross margins of 27.8%, reflecting our focus on higher quality revenue, combined with the hard work of our dedicated employees,” commented CEO Mark Adams. “Looking ahead, we expect to continue to strategically invest in our business while managing our operations in a prudent manner as we navigate a challenging economic environment,” concluded Adams.
Quarterly Financial Results
(in millions, except per share amounts)
Net income attributable to SGH
Diluted earnings per share (3)
1.08(1)GAAP represents U.S. Generally Accepted Accounting Principles.(2)Non-GAAP represents GAAP excluding the impact of certain activities. Further information regarding our use of non-GAAP measures and reconciliations between GAAP and non-GAAP measures is included within this press release.(3)Diluted earnings per share reflect the impact of the share dividend paid in February 2022.
As of January 3, 2023, SGH is providing the following financial outlook for its second quarter of fiscal 2023:
Diluted earnings per share
Non-GAAP adjustments (in millions)
(A) Share-based compensation and amortization of acquisition-related intangibles included in cost of sales
(B) Share-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A
(C) Amortization of debt discount and other costs
(D) Estimated tax effects
First Quarter Fiscal 2023 Earnings Conference Call and Webcast Details
SGH will hold a conference call and webcast to discuss the first quarter of fiscal 2023 results and related matters today, January 3, 2023, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Interested parties may access the call by dialing +1-844-200-6205 in the U.S. or +1-929-526-1599 from international locations using access code 821417. The webcast link is located on the SGH Investor Relations section of the website at https://sghcorp.com. We will also post the presentation to our website prior to the call.
Shortly after the conclusion of the conference call, a replay of the audio webcast will be available on the SGH Investor Relations website for approximately seven days.
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, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to, statements concerning or regarding future events and the future financial performance of SGH (including the business and financial outlook for the next fiscal quarter), SGH’s investment in its business and growth drivers in SGH’s industries and markets.
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; uncertainties in the global macroeconomic environment; disruptions in SGH’s operations or its supply chain as a result of the COVID-19 pandemic or otherwise; 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 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; 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; 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; and the inability to maintain or expand government business. These risks, uncertainties and factors could cause SGH’s actual results to differ materially from those set forth in such forward-looking statements. These and other risks, uncertainties and factors are described in greater detail under the section titled “Risk Factors” 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 are made pursuant to the Private Securities Litigation Reform Act of 1995, as amended, and 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, changes in the fair value of contingent consideration, (gains) losses from changes in currency exchange rates, amortization of debt discount and other costs, 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 our 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, changes in the fair value of contingent consideration 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 our 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, our companies are united by a drive to raise the bar, execute with discipline and focus on what’s next for the technologies that support and advance the world. Across computing, memory and LED lighting solutions, we build long-term strategic partnerships with our customers.
Backed by a proven leadership team, we operate with excellence around the globe while unlocking new avenues of growth for our business and industry.
SMART Global Holdings, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Intelligent Platform Solutions
Selling, general and administrative
Change in fair value of contingent consideration
Other operating (income) expense
Non-operating (income) expense:
Other non-operating (income) expense
Total non-operating (income) expense
Income tax provision (benefit)
Net income attributable to noncontrolling interest
Net income attributable to SGH
Shares used in per share calculations:
SMART Global Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
Share-based compensation expense
Amortization of acquisition-related intangibles
Flow-through of inventory step up
Share-based compensation expense
Amortization of acquisition-related intangibles
Acquisition and integration expenses
Change in fair value of contingent consideration
Non-GAAP operating expenses
Share-based compensation expense
Amortization of acquisition-related intangibles
Flow-through of inventory step up
Acquisition and integration expenses
Change in fair value of contingent consideration
Non-GAAP operating income
GAAP net income attributable to SGH
Share-based compensation expense
Amortization of acquisition-related intangibles
Flow-through of inventory step up
Acquisition and integration expenses
Change in fair value of contingent consideration
Amortization of debt discount and other costs
Foreign currency (gains) losses
Tax effects of above, other tax adjustments and the tax effect of capitalization of R&D expense
Non-GAAP net income attributable to SGH
SMART Global Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands, except per share amounts)
Weighted-average shares outstanding - Diluted:
GAAP weighted-average shares outstanding
Adjustment for capped calls
Non-GAAP weighted-average shares outstanding
Diluted earnings per share:
GAAP diluted earnings per share
Non-GAAP diluted earnings per share
Net income attributable to SGH
Income tax provision (benefit)
Depreciation expense and amortization of intangible assets
Share-based compensation expense
Flow-through of inventory step up
Acquisition and integration expenses
Change in fair value of contingent consideration
SMART Global Holdings, Inc.
Consolidated Balance Sheets
Cash and cash equivalents
Property and equipment, net
Operating lease right-of-use assets
Accounts payable and accrued expenses
Acquisition-related contingent consideration
Other current liabilities
Total current liabilities
Noncurrent operating lease liabilities
Other noncurrent liabilities
Commitments and contingencies
SMART Global Holdings shareholders’ equity:
Additional paid-in capital
Accumulated other comprehensive income (loss)
Total SGH shareholders’ equity
Noncontrolling interest in subsidiary
Total liabilities and equity
SMART Global Holdings, Inc.
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation expense and amortization of intangible assets
Amortization of debt discount and issuance costs
Share-based compensation expense
Change in fair value of contingent consideration
Changes in operating assets and liabilities:
Accounts payable and accrued expenses and other liabilities
Payment of acquisition-related contingent consideration
Deferred income taxes, net
Net cash provided by (used for) operating activities
Cash flows from investing activities:
Capital expenditures and deposits on equipment
Acquisition of business, net of cash acquired
Net cash used for investing activities
Cash flows from financing activities:
Proceeds from issuance of ordinary shares
Proceeds from borrowing under line of credit
Payment of acquisition-related contingent consideration
Payments to acquire ordinary shares
Repayments of borrowings under line of credit
Net cash provided by (used for) financing activities
Effect of changes in currency exchange rates on cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
CONTACT: Investor Contact:
ir@sghcorp.comPR Contact:
VP of Marketing and Communications
KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: TECHNOLOGY HARDWARE SEMICONDUCTOR
SOURCE: SMART Global Holdings, Inc.
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PUB: 01/03/2023 04:05 PM/DISC: 01/03/2023 04:06 PM
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