SMART Global Holdings, Inc. (“SGH” or the “Company”) (NASDAQ: SGH) today reported financial results for the third quarter of fiscal 2021.
Third Quarter Fiscal 2021 Financial Highlights
- GAAP net sales of $437.7 million, an increase of 56% compared to the same period last year.
- GAAP net income/(loss) of ($7.2) million, or ($0.30) per diluted share, compared to $0.8 million, or $0.03 per diluted share, for the same period last year.
- Non-GAAP net income of $35.5 million, or $1.39 per diluted share, up 107.6% and 98.6%, respectively, compared to the same period last year.
- Adjusted EBITDA of $51.4 million, up 102.3% compared to the same period last year.
“We are proud of our team’s execution in the third quarter of fiscal 2021; we set a quarterly revenue record for the company and surpassed our non-GAAP gross margin and EPS guidance,” said CEO Mark Adams. “In its first quarter as part of the SGH family, Cree LED achieved strong results. Coupled with continued top line growth in our Intelligent Platform Solutions Group and strong operating performance in our Memory Solutions Group, comprised of Specialty Memory and Brazil, these results reinforce the benefits of our growth and diversification strategy.”
Third Quarter Fiscal 2021 and Historical Financial Data
| Quarterly Financial Results | GAAP (1) | Non-GAAP (2) | ||||||||||||
| (In millions, except per share amounts) | Q3 FY21 | Q2 FY21 | Q3 FY20 | Q3 FY21 | Q2 FY21 | Q3 FY20 | ||||||||
| Net sales | $ | 437.7 | $ | 304.0 | $ | 281.3 | $ | 437.7 | $ | 304.0 | $ | 281.3 | ||
| Gross profit | $ | 84.5 | $ | 53.5 | $ | 54.2 | $ | 95.7 | $ | 59.3 | $ | 55.9 | ||
| Operating income | $ | 2.9 | $ | 12.9 | $ | 10.1 | $ | 43.3 | $ | 27.2 | $ | 20.3 | ||
| Net income (loss) (3) | $ | (7.2 | ) | $ | 5.8 | $ | 0.8 | $ | 35.5 | $ | 21.9 | $ | 17.1 | |
| Diluted earnings per share (EPS) | $ | (0.30 | ) | $ | 0.23 | $ | 0.03 | $ | 1.39 | $ | 0.87 | $ | 0.70 | |
(1) | GAAP represents U.S. Generally Accepted Accounting Principles. | |
(2) | Please refer to the “Non-GAAP Information” section and the "Reconciliation of Non-GAAP Financial Measures" tables below for further detail on the non-GAAP financial reporting referenced above and a reconciliation of such measures to our nearest GAAP measures. | |
(3) | Refers to net income (loss) attributable to SGH. | |
Business Outlook
As of July 6, 2021, SGH is providing the following financial outlook for its fourth quarter of fiscal 2021:
| Net Sales | $440 to $480 million |
| Gross Margin - GAAP / Non-GAAP | 22% to 24% |
| Diluted EPS - GAAP | $0.95 ± $0.15 |
| Share-based compensation per share | $0.33 |
| Intangible amortization per share | $0.24 |
| Convertible debt discount OID and fees per share | $0.08 |
| Diluted EPS - Non-GAAP | $1.60 ± $0.15 |
| Expected diluted share count - GAAP | 27 million |
| Capped call anti-dilution related to convertible | (1 million) |
| Expected diluted share count - Non-GAAP | 26 million |
Third Quarter 2021 Earnings Conference Call and Webcast Details
SGH will hold a conference call and webcast to discuss the Q3 2021 results and related matters at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Tuesday, July 6, 2021. Interested parties may access the call by dialing +1-844-912-3896 in the U.S. or +1-236-714-3344 from international locations using access code 4549154. The webcast link is located on the SGH Investor Relations website at https://ir.smartm.com/investors. 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 and statements made during the above-referenced conference call will contain "forward-looking statements," including, among other things, statements regarding future events and the future financial performance of SGH (including the business outlook for the next fiscal quarter) and statements regarding growth drivers in SGH’s industries and markets. These forward-looking statements are based on current expectations and preliminary assumptions that are subject to factors and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside SGH’s control, including, among others: business and economic conditions and growth trends in technology and lighting industries, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; disruptions in our operations, our supply chain or in global markets as a result of the outbreak of COVID-19 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 our strategic initiatives including additional investments in new products, additional capacity and acquisitions; the acquisition of other companies or technologies, the failure to successfully integrate and operate them, or customers’ negative reactions to them, including Cree LED, Inc.; limitations on or changes in the availability of supply of materials and components; fluctuations in material costs; 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; reduction in or termination of incentives for local manufacturing in Brazil; 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 other factors and risks detailed in SGH’s filings with the U.S. Securities and Exchange Commission, which include SGH’s most recent reports on Form 10-K and Form 10-Q, including SGH’s future filings.
Such factors and risks as outlined above and in such filings may not constitute all factors and risks that could cause actual results of SGH to be materially different from the historical results and/or from any future results or outcomes expressed or implied by such forward-looking statements. SGH and its subsidiaries operate in a continually changing business environment and new factors emerge from time to time. SGH cannot predict such factors, nor can it assess the impact, if any, from such factors on SGH or its subsidiaries’ results.
Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements should not be relied upon as a prediction of actual results. These forward-looking statements are made as of today, and SGH does not intend, and has no obligation, to update or revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this press release, except as required by law.
Statement Regarding Use of Non-GAAP Financial Measures
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP.
SGH management uses non-GAAP measures to supplement SGH’s financial results under GAAP, which include share-based compensation expense, amortization of intangible assets, contingent consideration fair value adjustment, acquisition-related inventory adjustment, foreign currency gain/(losses) and other expenses that are nonrecurring. Management believes the presentation of operating results that exclude these 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 believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the Company’s past and future operating performance.
Adjusted EBITDA is calculated as GAAP net income (loss) plus net interest expense, income tax expense, depreciation and amortization expense, share-based compensation expense, contingent consideration fair value adjustment, acquisition-related inventory adjustment and other expenses that are nonrecurring. Adjusted EBITDA does not purport to represent cash flow provided by, or used in, operating activities in accordance with GAAP and should not be used as a measure of liquidity.
Investors are encouraged to review the “Reconciliation of Non-GAAP Financial Measures to GAAP Results” and “Reconciliation of GAAP Net Income to Adjusted EBITDA” tables below for more detail on non-GAAP calculations.
About SMART Global Holdings – SGH
SGH businesses are leading designers and manufacturers of electronics for computing, memory and specialty LED solutions. Our businesses specialize in application-specific product development and support for customers in enterprise, government and OEM sales channels.
As a strategic partner, customers rely on SGH for the highest quality technology products, customer service, technical support, and worldwide supply chain and logistics excellence.
For more information about SGH businesses, visit: SMART Modular Technologies; SMART Embedded Computing; SMART Wireless Computing; SMART Supply Chain Services; Penguin Computing; Cree LED.
| SMART Global Holdings, Inc. | ||||||||||||||||||||
| and Subsidiaries | ||||||||||||||||||||
| Consolidated Income Statements | ||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| May 28, 2021 | February 26, 2021 | May 29, 2020 | May 28, 2021 | May 29, 2020 | ||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Specialty Memory Products | $ | 121,620 | $ | 115,452 | $ | 127,700 | $ | 357,729 | $ | 342,685 | ||||||||||
| Brazil Products | 118,496 | 103,145 | 92,701 | 326,808 | 284,400 | |||||||||||||||
| Intelligent Platform Solutions | 95,857 | 85,411 | 60,886 | 247,141 | 198,262 | |||||||||||||||
| LED Solutions | 101,755 | — | — | 101,755 | — | |||||||||||||||
| Total net sales | 437,728 | 304,009 | 281,287 | 1,033,433 | 825,347 | |||||||||||||||
| Cost of sales (1) (2) | 353,241 | 250,553 | 227,054 | 842,847 | 665,288 | |||||||||||||||
| Gross profit | 84,487 | 53,456 | 54,233 | 190,586 | 160,059 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development (1) | 16,718 | 8,852 | 14,436 | 32,534 | 44,023 | |||||||||||||||
| Selling, general and administrative (1) (2) | 48,475 | 31,664 | 29,733 | 118,195 | 91,935 | |||||||||||||||
| Change in estimated fair value of acquisition-related contingent consideration | 16,400 | — | — | 16,400 | — | |||||||||||||||
| Total operating expenses | 81,593 | 40,516 | 44,169 | 167,129 | 135,958 | |||||||||||||||
| Income from operations | 2,894 | 12,940 | 10,064 | 23,457 | 24,101 | |||||||||||||||
| Other expense, net: | ||||||||||||||||||||
| Interest expense, net | (5,049 | ) | (4,365 | ) | (3,094 | ) | (12,568 | ) | (11,736 | ) | ||||||||||
| Other expense, net | (489 | ) | (1,531 | ) | (3,445 | ) | (1,187 | ) | (16,671 | ) | ||||||||||
| Total other expense | (5,538 | ) | (5,896 | ) | (6,539 | ) | (13,755 | ) | (28,407 | ) | ||||||||||
| Income (loss) before income taxes | (2,644 | ) | 7,044 | 3,525 | 9,702 | (4,306 | ) | |||||||||||||
| Provision for income taxes | 4,010 | 1,200 | 2,700 | 8,485 | 4,365 | |||||||||||||||
| Net income (loss) | (6,654 | ) | 5,844 | 825 | 1,217 | (8,671 | ) | |||||||||||||
| Net income attributable to noncontrolling interest | 557 | — | — | 557 | — | |||||||||||||||
| Net income (loss) attributable to SGH | $ | (7,211 | ) | $ | 5,844 | $ | 825 | $ | 660 | $ | (8,671 | ) | ||||||||
| Earnings per share: | ||||||||||||||||||||
| Basic | $ | (0.30 | ) | $ | 0.24 | $ | 0.03 | $ | 0.03 | $ | (0.36 | ) | ||||||||
| Diluted | $ | (0.30 | ) | $ | 0.23 | $ | 0.03 | $ | 0.03 | $ | (0.36 | ) | ||||||||
| Shares used in computing earnings per share: | ||||||||||||||||||||
| Basic | 24,035 | 24,217 | 24,066 | 24,843 | 23,895 | |||||||||||||||
| Diluted | 24,035 | 25,203 | 24,431 | 25,902 | 23,895 | |||||||||||||||
| (1) Includes share-based compensation expense as follows: | ||||||||||||||||||||
| Cost of sales | $ | 1,166 | $ | 804 | $ | 699 | $ | 2,807 | $ | 2,161 | ||||||||||
| Research and development | 1,468 | 810 | 780 | 3,056 | 2,306 | |||||||||||||||
| Selling, general and administrative | 5,747 | 3,784 | 3,428 | 19,004 | 11,043 | |||||||||||||||
| Total share-based compensation expense | $ | 8,381 | $ | 5,398 | $ | 4,907 | $ | 24,867 | $ | 15,510 | ||||||||||
| (2) Includes amortization of intangible assets expense as follows: | ||||||||||||||||||||
| Cost of sales | $ | 2,937 | $ | 647 | $ | 647 | $ | 4,231 | $ | 1,941 | ||||||||||
| Selling, general and administrative | 3,247 | 2,766 | 2,767 | 8,780 | 8,299 | |||||||||||||||
| Total amortization expense | $ | 6,184 | $ | 3,413 | $ | 3,414 | $ | 13,011 | $ | 10,240 | ||||||||||
| SMART Global Holdings, Inc. | ||||||||||||||||||||
| and Subsidiaries | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures to GAAP Results | ||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| May 28, 2021 | February 26, 2021 | May 29, 2020 | May 28, 2021 | May 29, 2020 | ||||||||||||||||
| Reconciliation of gross profit: | ||||||||||||||||||||
| GAAP gross profit | $ | 84,487 | $ | 53,456 | $ | 54,233 | $ | 190,586 | $ | 160,059 | ||||||||||
| GAAP gross margin | 19.3 | % | 17.6 | % | 19.3 | % | 18.4 | % | 19.4 | % | ||||||||||
| Add: Share-based compensation included in cost of sales | 1,166 | 804 | 699 | 2,807 | 2,161 | |||||||||||||||
| Add: Intangible amortization included in cost of sales | 2,937 | 647 | 647 | 4,231 | 1,941 | |||||||||||||||
| Add: LED - Inventory adjustment | 7,090 | — | — | 7,090 | — | |||||||||||||||
| Add: Import taxes - Out of period adjustment | — | 4,345 | — | 4,345 | — | |||||||||||||||
| Add: COVID-19 expenses | — | — | 282 | — | 282 | |||||||||||||||
| Non-GAAP gross profit | $ | 95,680 | $ | 59,252 | $ | 55,861 | $ | 209,059 | $ | 164,443 | ||||||||||
| Non-GAAP gross margin | 21.9 | % | 19.5 | % | 19.9 | % | 20.2 | % | 19.9 | % | ||||||||||
| Reconciliation of operating expenses: | ||||||||||||||||||||
| GAAP operating expenses | $ | 81,593 | $ | 40,516 | $ | 44,169 | $ | 167,129 | 135,958 | |||||||||||
| Less: Share-based compensation expense included in opex | ||||||||||||||||||||
| Research and development | 1,468 | 810 | 780 | 3,056 | 2,306 | |||||||||||||||
| Selling, general and administrative | 5,747 | 3,784 | 3,428 | 19,004 | 11,043 | |||||||||||||||
| Total | 7,215 | 4,594 | 4,208 | 22,060 | 13,349 | |||||||||||||||
| Less: Amortization of intangible assets included in opex | ||||||||||||||||||||
| Selling, general and administrative | 3,247 | 2,766 | 2,767 | 8,780 | 8,299 | |||||||||||||||
| Total | 3,247 | 2,766 | 2,767 | 8,780 | 8,299 | |||||||||||||||
| Less: Acquisition-related expenses | 2,355 | 1,064 | — | 5,036 | 946 | |||||||||||||||
| Less: Integration/restructuring expenses | — | — | 1,432 | — | 4,524 | |||||||||||||||
| Less: COVID-19 expenses | — | — | 228 | — | 228 | |||||||||||||||
| Less: Contingent consideration fair value adjustment | 16,400 | — | — | 16,400 | — | |||||||||||||||
| Non-GAAP operating expenses | $ | 52,376 | $ | 32,092 | $ | 35,534 | $ | 114,853 | $ | 108,612 | ||||||||||
| Reconciliation of income from operations: | ||||||||||||||||||||
| GAAP income from operations | $ | 2,894 | $ | 12,940 | $ | 10,064 | $ | 23,457 | $ | 24,101 | ||||||||||
| GAAP operating margin | 0.7 | % | 4.3 | % | 3.6 | % | 2.3 | % | 2.9 | % | ||||||||||
| Add: Share-based compensation expense | 8,381 | 5,398 | 4,907 | 24,867 | 15,510 | |||||||||||||||
| Add: Amortization of intangible assets | 6,184 | 3,413 | 3,414 | 13,011 | 10,240 | |||||||||||||||
| Add: Acquisition-related expenses | 2,355 | 1,064 | — | 5,036 | 946 | |||||||||||||||
| Add: LED - Inventory adjustment | 7,090 | — | — | 7,090 | — | |||||||||||||||
| Add: Integration/restructuring expenses | — | — | 1,432 | — | 4,524 | |||||||||||||||
| Add: Import taxes - Out of period adjustment | — | 4,345 | — | 4,345 | — | |||||||||||||||
| Add: COVID-19 expenses | — | — | 510 | — | 510 | |||||||||||||||
| Add: Contingent consideration fair value adjustment | 16,400 | — | — | 16,400 | — | |||||||||||||||
| Non-GAAP income from operations | $ | 43,304 | $ | 27,160 | $ | 20,327 | $ | 94,206 | $ | 55,831 | ||||||||||
| Non-GAAP operating margin | 9.9 | % | 8.9 | % | 7.2 | % | 9.1 | % | 6.8 | % | ||||||||||
| SMART Global Holdings, Inc. | ||||||||||||||||||||
| and Subsidiaries | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures to GAAP Results | ||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| May 28, 2021 | February 26, 2021 | May 29, 2020 | May 28, 2021 | May 29, 2020 | ||||||||||||||||
| Reconciliation of income/loss before income taxes: | ||||||||||||||||||||
| GAAP income/loss before income taxes | $ | (2,644 | ) | $ | 7,044 | $ | 3,525 | $ | 9,702 | $ | (4,306 | ) | ||||||||
| Add: Share-based compensation expense | 8,381 | 5,398 | 4,907 | 24,867 | 15,510 | |||||||||||||||
| Add: Amortization of intangible assets | 6,184 | 3,413 | 3,414 | 13,011 | 10,240 | |||||||||||||||
| Add: Acquisition-related expenses | 2,355 | 1,064 | — | 5,036 | 946 | |||||||||||||||
| Add: LED - Inventory adjustment | 7,090 | — | — | 7,090 | — | |||||||||||||||
| Add: Integration/restructuring expenses | — | — | 1,432 | — | 4,524 | |||||||||||||||
| Add: COVID-19 expenses | — | — | 510 | — | 510 | |||||||||||||||
| Add: Extinguishment of term loan | — | — | 192 | — | 6,822 | |||||||||||||||
| Add: Import taxes - Out of period adjustment | — | 5,085 | — | 5,085 | — | |||||||||||||||
| Add: Capped call MTM adjustment | — | — | 2,924 | — | 7,719 | |||||||||||||||
| Add: Convertible debt discount OID and fees | 2,088 | 2,098 | 1,960 | 6,248 | 2,359 | |||||||||||||||
| Add: Contingent consideration fair value adjustment | 16,400 | — | — | 16,400 | — | |||||||||||||||
| Add: Foreign currency (gains)/losses | 994 | 843 | 484 | 1,195 | 2,586 | |||||||||||||||
| Non-GAAP income before income taxes | 40,848 | $ | 24,945 | $ | 19,348 | $ | 88,634 | $ | 46,910 | |||||||||||
| Reconciliation of provision for income taxes: | ||||||||||||||||||||
| GAAP provision for income taxes | $ | 4,010 | $ | 1,200 | $ | 2,700 | $ | 8,485 | $ | 4,365 | ||||||||||
| GAAP effective tax rate | -151.7 | % | 17.0 | % | 76.6 | % | 87.5 | % | -101.4 | % | ||||||||||
| Less: Goodwill tax credit | — | — | 484 | — | 968 | |||||||||||||||
| Add: Import taxes - Out of period adjustment | — | 1,727 | — | 1,727 | — | |||||||||||||||
| Tax effect of adjustments to GAAP results | (767 | ) | (84 | ) | (48 | ) | (787 | ) | (258 | ) | ||||||||||
| Non-GAAP provision for income taxes | $ | 4,777 | $ | 3,011 | $ | 2,264 | $ | 10,999 | $ | 3,655 | ||||||||||
| Non-GAAP effective tax rate | 11.7 | % | 12.1 | % | 11.7 | % | 12.4 | % | 7.8 | % | ||||||||||
| Reconciliation of net income (loss) and earnings per share (diluted): | ||||||||||||||||||||
| GAAP net income (loss) | $ | (7,211 | ) | $ | 5,844 | $ | 825 | $ | 660 | $ | (8,671 | ) | ||||||||
| Adjustments to GAAP net income (loss): | ||||||||||||||||||||
| Share-based compensation | 8,381 | 5,398 | 4,907 | 24,867 | 15,510 | |||||||||||||||
| Amortization of intangible assets | 6,184 | 3,413 | 3,414 | 13,011 | 10,240 | |||||||||||||||
| Acquisition related expenses | 2,355 | 1,064 | — | 5,036 | 946 | |||||||||||||||
| LED - Inventory adjustment | 7,090 | — | — | 7,090 | — | |||||||||||||||
| Integration/restructuring expenses | — | — | 1,432 | — | 4,524 | |||||||||||||||
| COVID-19 expenses | — | — | 510 | — | 510 | |||||||||||||||
| Extinguishment of term loan | — | — | 192 | — | 6,822 | |||||||||||||||
| Capped call MTM adjustment | — | — | 2,924 | — | 7,719 | |||||||||||||||
| Import taxes - Out of period adjustment | — | 3,358 | — | 3,358 | — | |||||||||||||||
| Convertible debt discount OID and fees | 2,088 | 2,098 | 1,960 | 6,248 | 2,359 | |||||||||||||||
| Goodwill tax credit | — | — | 484 | — | 968 | |||||||||||||||
| Contingent consideration fair value adjustment | 16,400 | — | — | 16,400 | — | |||||||||||||||
| Foreign currency (gains)/losses | 994 | 843 | 484 | 1,195 | 2,586 | |||||||||||||||
| Tax effect of items excluded from non-GAAP results | (767 | ) | (84 | ) | (48 | ) | (787 | ) | (258 | ) | ||||||||||
| Non-GAAP net income | $ | 35,514 | $ | 21,934 | $ | 17,084 | $ | 77,078 | $ | 43,255 | ||||||||||
| Diluted shares outstanding reconciliation: | ||||||||||||||||||||
| GAAP weighted average outstanding shares - diluted* | 26,444 | 25,203 | 24,431 | 25,902 | 24,450 | |||||||||||||||
| Dilution offset from convertible note hedge transactions | (928 | ) | — | — | — | — | ||||||||||||||
| Non-GAAP diluted weighted average shares outstanding | 25,516 | 25,203 | 24,431 | 25,902 | 24,450 | |||||||||||||||
| Non-GAAP earnings per share (diluted) | $ | 1.39 | $ | 0.87 | $ | 0.70 | $ | 2.98 | $ | 1.77 | ||||||||||
| GAAP earnings per share (diluted) | $ | (0.30 | ) | $ | 0.23 | $ | 0.03 | $ | 0.03 | $ | (0.36 | ) | ||||||||
| *Q3'21: represents what GAAP diluted shares would have been had there been GAAP income. | ||||||||||||||||||||
| SMART Global Holdings, Inc. | ||||||||||||||||||
| and Subsidiaries | ||||||||||||||||||
| Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| May 28, 2021 | February 26, 2021 | May 29, 2020 | May 28, 2021 | May 29, 2020 | ||||||||||||||
| GAAP net income (loss) | $ | (7,211 | ) | $ | 5,844 | $ | 825 | $ | 660 | $ | (8,671 | ) | ||||||
| Share-based compensation expense | 8,381 | 5,398 | 4,907 | 24,867 | 15,510 | |||||||||||||
| Amortization of intangible assets | 6,184 | 3,413 | 3,414 | 13,011 | 10,240 | |||||||||||||
| Interest expense, net | 5,049 | 4,365 | 3,094 | 12,568 | 11,736 | |||||||||||||
| Provision for income tax | 4,010 | 1,200 | 2,700 | 8,485 | 4,365 | |||||||||||||
| Depreciation | 9,124 | 5,378 | 5,405 | 19,456 | 17,557 | |||||||||||||
| Acquisition-related expenses(1) | 2,355 | 1,064 | — | 5,035 | 946 | |||||||||||||
| LED - Inventory adjustment(2) | 7,090 | — | — | 7,090 | — | |||||||||||||
| Contingent consideration fair value adjustment(1) | 16,400 | — | — | 16,400 | — | |||||||||||||
| Integration/restructuring expenses | — | — | 1,432 | — | 4,524 | |||||||||||||
| COVID-19 expenses | — | — | 510 | — | 510 | |||||||||||||
| Import taxes - Out of period adjustment | — | 4,345 | — | 4,345 | — | |||||||||||||
| Extinguishment of term loan | — | — | 192 | — | 6,822 | |||||||||||||
| Capped call MTM adjustment | — | — | 2,924 | — | 7,719 | |||||||||||||
| Adjusted EBITDA | $ | 51,382 | $ | 31,007 | $ | 25,403 | $ | 111,917 | $ | 71,258 | ||||||||
| (1) Amounts related to acquisitions of LED (March 2021) and SMART EC & Wireless (July 2019). | ||||||||||||||||||
| (2) Amounts related to flow through of inventory fair value step up, net of the inventoried impact of other non-GAAP adjustments. | ||||||||||||||||||
| SMART Global Holdings, Inc. | ||||||||
| and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| May 28, | August 28, | |||||||
2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 188,992 | $ | 150,811 | ||||
| Accounts receivable, net | 274,950 | 215,918 | ||||||
| Inventories | 288,962 | 162,991 | ||||||
| Prepaid expenses and other current assets | 53,341 | 26,990 | ||||||
| Total current assets | 806,246 | 556,710 | ||||||
| Property and equipment, net | 153,261 | 54,705 | ||||||
| Operating lease right-of-use assets | 35,307 | 25,013 | ||||||
| Other noncurrent assets | 13,827 | 20,554 | ||||||
| Intangible assets, net | 107,160 | 55,671 | ||||||
| Goodwill | 73,257 | 73,955 | ||||||
| Total assets | $ | 1,189,057 | $ | 786,608 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 354,210 | $ | 224,660 | ||||
| Other current liabilities | 138,008 | 57,829 | ||||||
| Total current liabilities | 492,218 | 282,489 | ||||||
| Long-term debt | 338,047 | 195,573 | ||||||
| Long-term operating lease liabilities | 28,363 | 20,829 | ||||||
| Other long-term liabilities | 52,961 | 5,613 | ||||||
| Total liabilities | 911,589 | 504,504 | ||||||
| Shareholders’ equity: | ||||||||
| Ordinary shares | 769 | 737 | ||||||
| Additional paid-in capital | 335,785 | 346,131 | ||||||
| Accumulated other comprehensive loss | (231,258 | ) | (228,241 | ) | ||||
| Retained earnings | 164,137 | 163,477 | ||||||
| Total SGH shareholders’ equity | 269,433 | 282,104 | ||||||
| Noncontrolling interest in subsidiary | 8,035 | — | ||||||
| Total equity | 277,468 | 282,104 | ||||||
| Total liabilities and shareholders’ equity | $ | 1,189,057 | $ | 786,608 | ||||
| SMART Global Holdings, Inc. | ||||||||||||||||||||
| and Subsidiaries | ||||||||||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| May 28, 2021 | February 26, 2021 | May 29, 2020 | May 28, 2021 | May 29,
| ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income (loss) | $ | (6,654 | ) | $ | 5,844 | $ | 825 | $ | 1,217 | $ | (8,671 | ) | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | 15,308 | 8,793 | 8,818 | 32,468 | 27,797 | |||||||||||||||
| Share-based compensation | 8,381 | 5,398 | 4,907 | 24,867 | 15,510 | |||||||||||||||
| Provision for doubtful accounts receivable and sales returns | 524 | 6 | 74 | 522 | 47 | |||||||||||||||
| Deferred income tax benefit | (3,353 | ) | 49 | 425 | (3,083 | ) | 65 | |||||||||||||
| (Gain) Loss on disposal of property and equipment | (1,017 | ) | 988 | 41 | (34 | ) | (19 | ) | ||||||||||||
| Loss on mark-to-market adjustment of the capped call | — | — | 2,924 | — | 7,719 | |||||||||||||||
| Loss on extinguishment of debt | — | — | 192 | — | 6,822 | |||||||||||||||
| Amortization of debt discounts and issuance costs | 2,196 | 2,191 | 2,005 | 6,503 | 3,786 | |||||||||||||||
| Amortization of operating lease right-of-use assets | 2,031 | 1,500 | 1,287 | 4,944 | 3,569 | |||||||||||||||
| Loss from mark-to-market of contingent consideration | 16,400 | — | — | 16,400 | — | |||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Accounts receivable | (25,537 | ) | 12,012 | (13,395 | ) | (15,455 | ) | (17,885 | ) | |||||||||||
| Inventories | (38,359 | ) | (41,053 | ) | (26,932 | ) | (66,493 | ) | (72,481 | ) | ||||||||||
| Prepaid expenses and other assets | 4,963 | (9,849 | ) | (7,615 | ) | (14,163 | ) | (1,119 | ) | |||||||||||
| Accounts payable | 76,537 | 21,607 | 39,031 | 116,166 | 95,687 | |||||||||||||||
| Operating lease liabilities | (1,718 | ) | (1,238 | ) | (1,363 | ) | (4,460 | ) | (3,503 | ) | ||||||||||
| Other current and long-term liabilities | (364 | ) | 14,173 | 2,402 | 5,929 | 4,903 | ||||||||||||||
| Net cash provided by operating activities | 49,338 | 20,421 | 13,626 | 105,328 | 62,227 | |||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Capital expenditures and deposits on equipment | (5,222 | ) | (20,151 | ) | (7,521 | ) | (40,017 | ) | (16,889 | ) | ||||||||||
| Proceeds from sale of property and equipment | 56 | 151 | 58 | 222 | 154 | |||||||||||||||
| Acquisitions of business, net of cash acquired | (28,613 | ) | — | — | (28,613 | ) | — | |||||||||||||
| Net cash used in investing activities | (33,779 | ) | (20,000 | ) | (7,463 | ) | (68,408 | ) | (16,735 | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Repurchase of ordinary shares | — | (44,330 | ) | — | (44,330 | ) | — | |||||||||||||
| Proceeds from FINEP loan | — | 11,439 | — | 11,439 | — | |||||||||||||||
| Proceeds from borrowings under revolving line of credit | 72,000 | 23,000 | 42,000 | 114,500 | 60,500 | |||||||||||||||
| Repayments of borrowings under revolving line of credit | (47,000 | ) | (23,000 | ) | (42,000 | ) | (89,500 | ) | (60,500 | ) | ||||||||||
| Proceeds from issuance of ordinary shares from share option exercises | 5,659 | 2,546 | 134 | 9,542 | 1,941 | |||||||||||||||
| Proceeds from issuance of ordinary shares from ESPP | 1,847 | — | 1,742 | 3,615 | 2,984 | |||||||||||||||
| Tax payments due upon issuance of ordinary shares for release of RSUs | (337 | ) | (151 | ) | (282 | ) | (3,971 | ) | (653 | ) | ||||||||||
| Long-term debt payment - term loan | — | — | — | — | (5,625 | ) | ||||||||||||||
| Long-term debt payment - BNDES | — | — | (685 | ) | — | (2,292 | ) | |||||||||||||
| Purchase of capped call | — | — | — | — | (21,825 | ) | ||||||||||||||
| Proceeds from convertible notes due 2026, net of discount | — | — | — | — | 243,125 | |||||||||||||||
| Payment for extinguishment of long-term debt | — | — | — | — | (204,904 | ) | ||||||||||||||
| Net cash provided by (used in) financing activities | 32,169 | (30,496 | ) | 909 | 1,295 | 12,751 | ||||||||||||||
| Effect of exchange rate changes on the cash and cash equivalents | 1,461 | 5,781 | (17,087 | ) | (34 | ) | (24,537 | ) | ||||||||||||
| Net increase (decrease) in cash and cash equivalents | 49,189 | (24,294 | ) | (10,014 | ) | 38,181 | 33,706 | |||||||||||||
| Cash and cash equivalents at beginning of period | 139,803 | 164,097 | 141,860 | 150,811 | 98,139 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 188,992 | $ | 139,803 | $ | 131,845 | $ | 188,992 | $ | 131,845 | ||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210706005772/en/
Contacts:
Suzanne Schmidt
Investor Relations
(510) 360-8596
ir@smartm.com
