SMART Global Holdings, Inc. (“SGH” or the “Company”) (Nasdaq: SGH) today reported financial results for the fourth quarter and full year fiscal 2021.
Fourth Quarter Fiscal 2021 Financial Highlights
- Net sales of $467.7 million, up 57% from the year ago quarter
- GAAP gross margin of 25.2%, up 620 basis points versus the year ago quarter
- Non-GAAP gross margin of 26.4%, up 690 basis points versus the year ago quarter
- GAAP EPS of $0.78, up 160% versus the year ago quarter
- Non-GAAP EPS of $2.16, up 163% versus the year ago quarter
Fiscal 2021 Highlights
- Net sales of $1.5 billion, up 34% versus the prior year
- GAAP gross margin of 20.5%, up 120 basis points versus the prior year
- Non-GAAP gross margin of 22.2%, up 240 basis points versus the prior year
- GAAP EPS of $0.83 compared with ($0.05) in the prior year
- Non-GAAP EPS of $5.22, up 102% versus the prior year
“Fiscal 2021 has been a transformative year for SGH. We are proud of the team’s many accomplishments across each of our lines of business, Intelligent Platform Solutions, Memory Solutions, and LED solutions,” commented SGH CEO Mark Adams. “As we enter fiscal 2022, we believe we have the right platform to continue to execute our growth and diversification strategy while increasing value for our stakeholders.”
Fourth Quarter Fiscal 2021 and Historical Financial Data
| Quarterly Financial Results | GAAP (1) | Non-GAAP (2) | ||||||
| (In millions, except per share amounts) | Q4 FY21 | Q3 FY21 | Q4 FY20 | Q4 FY21 | Q3 FY21 | Q4 FY20 | ||
| Net sales | $ 467.7 | $ 437.7 | $ 297.0 | $ 467.7 | $ 437.7 | $ 297.0 | ||
| Gross profit | $ 117.8 | $ 84.5 | $ 56.3 | $ 123.6 | $ 95.7 | $ 57.8 | ||
| Operating income | $ 31.7 | $ 2.9 | $ 17.2 | $ 66.6 | $ 43.3 | $ 28.4 | ||
| Net income (loss) (3) | $ 20.7 | $ (7.2 | ) | $ 7.5 | $ 55.1 | $ 35.5 | $ 20.4 | |
| Diluted earnings (loss) per share (EPS) | $ 0.78 | $ (0.30 | ) | $ 0.30 | $ 2.16 | $ 1.39 | $ 0.82 | |
| Annual Financial Results | GAAP (1) | Non-GAAP (2) | ||||
| (In millions, except per share amounts) | FY21 | FY20 | FY21 | FY20 | ||
| Net sales | $ 1,501.1 | $ 1,122.4 | $ 1,501.1 | $ 1,122.4 | ||
| Gross profit | $ 308.4 | $ 216.4 | $ 332.6 | $ 222.3 | ||
| Operating income | $ 55.2 | $ 41.3 | $ 160.8 | $ 84.2 | ||
| Net income (loss) (3) | $ 21.3 | $ (1.1 | ) | $ 132.2 | $ 63.7 | |
| Diluted earnings (loss) per share (EPS) | $ 0.83 | $ (0.05 | ) | $ 5.22 | $ 2.59 | |
(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
| GAAP | Non-GAAP | ||||||||
| Outlook | Adjustments | Outlook | |||||||
| Net sales | $440 to $480 million | – | $440 to $480 million | ||||||
| Gross Margin | 24% to 26% | 1% (A) | 25% to 27% | ||||||
| Diluted EPS | $1.20 ± $0.20 | $0.80 (A,B,C) | $2.00 ± $0.20 | ||||||
| Diluted shares | 27 million | (1) million | 26 million | ||||||
| Non-GAAP adjustments (in millions): | |||||||||
| (A) | Share-based compensation and amortization of intangible assets– cost of sales | $ 6 | |||||||
| (B) | Share-based compensation and amortization of intangible assets– R&D and SG&A | $ 11 | |||||||
| (C) | Convertible debt discount OID and fees, integration costs and other adjustments | $ 3 | |||||||
$ 20 | |||||||||
As of October 12, 2021, SGH is providing the following financial outlook for its first quarter of fiscal 2022:
Fourth Quarter 2021 Earnings Conference Call and Webcast Details
SGH will hold a conference call and webcast to discuss the Q4 and full year fiscal 2021 results and related matters at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Tuesday, October 12, 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 4873779. 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.
2022 Annual Meeting of Shareholders
SGH will hold its Annual Meeting of Shareholders on February 11, 2022 at 10:00 a.m. Pacific Time.
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: global business and economic conditions and growth trends in technology and lighting industries, our customer markets and various geographic regions; uncertainties in the geopolitical environment; disruptions in our operations or our supply chain as a result of 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 our 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; 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, do not constitute all factors and risks that could cause actual results of SGH to be materially different from our forward-looking statements.
Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. 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
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. The non-GAAP measures management uses include non-GAAP gross profit, operating income, net income/(loss) and earnings/(loss) per share. These non-GAAP measures exclude share-based compensation expense, amortization of intangible assets, contingent consideration fair value adjustment, acquisition-related inventory adjustment, integration and restructuring expenses, acquisition-related expenses, foreign currency gains/(losses), COVID-19 expenses, convertible debt OID and fees, transaction tax refunds 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 uses Adjusted EBITDA, which 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, out-of-period adjustments related to import taxes, loss on extinguishment of debt/revolver, capped call mark to market (MTM) adjustment, restructuring expenses, integration expenses, COVID-19 expenses, acquisition-related expenses, gain on settlements 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. In addition, 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 GAAP Results to Non-GAAP Financial Measures” and “Reconciliation of GAAP Net Income to Adjusted EBITDA” tables below for more detail on non-GAAP calculations.
About 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.
Learn more about us at SGHcorp.com.
| SMART Global Holdings, Inc. | ||||||||||||||||||
| Consolidated Income Statements | ||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||
| Three Months Ended | Fiscal Year Ended | |||||||||||||||||
| August 27, 2021 | May 28, 2021 | August 28, 2020 | August 27, 2021 | August 28, 2020 | ||||||||||||||
| Net sales: | ||||||||||||||||||
| Memory Solutions | $ 247,281 | $ 240,116 | $ 230,153 | $ 931,818 | $ 857,237 | |||||||||||||
| Intelligent Platform Solutions | 97,616 | 95,857 | 66,877 | 344,757 | 265,140 | |||||||||||||
| LED Solutions | 122,812 | 101,755 | — | 224,567 | — | |||||||||||||
| Total net sales | 467,709 | 437,728 | 297,030 | 1,501,142 | 1,122,377 | |||||||||||||
| Cost of sales | 349,915 | 353,241 | 240,693 | 1,192,762 | 905,981 | |||||||||||||
| Gross profit | 117,794 | 84,487 | 56,337 | 308,380 | 216,396 | |||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development | 16,740 | 16,718 | 8,032 | 49,274 | 52,056 | |||||||||||||
| Selling, general and administrative | 51,261 | 48,475 | 27,587 | 169,455 | 119,523 | |||||||||||||
| Change in fair value of contingent consideration | 16,000 | 16,400 | — | 32,400 | — | |||||||||||||
| Other operating expense | 2,054 | — | 3,487 | 2,054 | 3,487 | |||||||||||||
| Total operating expenses | 86,055 | 81,593 | 39,107 | 253,183 | 175,066 | |||||||||||||
| Operating Income | 31,739 | 2,894 | 17,230 | 55,197 | 41,330 | |||||||||||||
| Non-operating (income) expense: | ||||||||||||||||||
| Interest expense, net | 5,031 | 5,049 | 3,265 | 17,600 | 15,000 | |||||||||||||
| Other non-operating (income) expense | (1,563 | ) | 489 | 299 | (375 | ) | 16,970 | |||||||||||
| Total other non-operating expense | 3,468 | 5,538 | 3,564 | 17,225 | 31,970 | |||||||||||||
| Income (loss) before taxes | 28,271 | (2,644 | ) | 13,666 | 37,972 | 9,360 | ||||||||||||
| Income tax provision | 6,981 | 4,010 | 6,139 | 15,466 | 10,503 | |||||||||||||
| Net income (loss) | 21,290 | (6,654 | ) | 7,527 | 22,506 | (1,143 | ) | |||||||||||
| Net income attributable to noncontrolling interest | 638 | 557 | — | 1,196 | — | |||||||||||||
| Net income (loss) attributable to SGH | $ 20,652 | $ (7,211 | ) | $ 7,527 | $ 21,310 | $ (1,143 | ) | |||||||||||
| Earnings (loss) per share: | ||||||||||||||||||
| Basic | $ 0.85 | $ (0.30 | ) | $ 0.31 | $ 0.88 | $ (0.05 | ) | |||||||||||
| Diluted | $ 0.78 | $ (0.30 | ) | $ 0.30 | $ 0.83 | $ (0.05 | ) | |||||||||||
| Shares used in per share calculations | ||||||||||||||||||
| Basic | 24,302 | 24,035 | 24,290 | 24,279 | 23,994 | |||||||||||||
| Diluted | 26,417 | 24,035 | 24,839 | 25,792 | 23,994 | |||||||||||||
| SMART Global Holdings, Inc. | ||||||||||||||
| Reconciliation of GAAP Results to Non-GAAP Financial Measures | ||||||||||||||
| (In thousands, except per share data) | ||||||||||||||
| Three Months Ended | Fiscal Year Ended | |||||||||||||
| August 27, 2021 | May 28, 2021 | August 28, 2020 | August 27, 2021 | August 28, 2020 | ||||||||||
| Reconciliation of gross profit: | ||||||||||||||
| GAAP gross profit | $ 117,794 | $ 84,487 | $ 56,337 | $ 308,380 | $ 216,396 | |||||||||
| GAAP gross margin | 25.2% | 19.3% | 19.0% | 20.5% | 19.3% | |||||||||
| Add: Share-based compensation included in cost of sales | 1,785 | 1,166 | 861 | 4,593 | 3,022 | |||||||||
| Add: Intangible amortization included in cost of sales | 3,997 | 2,937 | 647 | 8,228 | 2,588 | |||||||||
| Add: LED - Inventory adjustment | — | 7,090 | — | 7,090 | — | |||||||||
| Add: Import taxes - Out of period adjustment | — | — | — | 4,345 | — | |||||||||
| Add: COVID-19 expenses | — | — | — | — | 282 | |||||||||
| Non-GAAP gross profit | $ 123,576 | $ 95,680 | $ 57,845 | $ 332,636 | $ 222,288 | |||||||||
| Non-GAAP gross margin | 26.4% | 21.9% | 19.5% | 22.2% | 19.8% | |||||||||
| Reconciliation of operating expenses: | ||||||||||||||
| GAAP operating expenses | $ 86,055 | $ 81,593 | $ 39,107 | 253,183 | 175,066 | |||||||||
| Less: Share-based compensation expense included in opex | ||||||||||||||
| Research and development | 1,373 | 1,468 | 763 | 4,429 | 3,069 | |||||||||
| Selling, general and administrative | 5,852 | 5,747 | 1,582 | 24,855 | 12,625 | |||||||||
| Total | 7,225 | 7,215 | 2,345 | 29,284 | 15,694 | |||||||||
| Less: Amortization of intangible assets included in opex | ||||||||||||||
| Selling, general and administrative | 3,247 | 3,247 | 2,767 | 12,027 | 11,066 | |||||||||
| Total | 3,247 | 3,247 | 2,767 | 12,027 | 11,066 | |||||||||
| Less: Acquisition-related expenses | 542 | 2,355 | — | 5,578 | 946 | |||||||||
| Less: Integration/restructuring expenses | 2,054 | — | 4,548 | 2,054 | 9,072 | |||||||||
| Less: Change in fair value of contingent consideration | 16,000 | 16,400 | — | 32,400 | — | |||||||||
| Less: COVID-19 expenses | — | — | — | — | 228 | |||||||||
| Non-GAAP operating expenses | $ 56,987 | $ 52,376 | $ 29,447 | $ 171,841 | $ 138,060 | |||||||||
| Reconciliation of operating income: | ||||||||||||||
| GAAP operating income | $ 31,739 | $ 2,894 | $ 17,230 | $ 55,197 | $ 41,330 | |||||||||
| GAAP operating margin | 6.8% | 0.7% | 5.8% | 3.7% | 3.7% | |||||||||
| Add: Share-based compensation expense | 9,010 | 8,381 | 3,206 | 33,877 | 18,716 | |||||||||
| Add: Amortization of intangible assets | 7,244 | 6,184 | 3,414 | 20,255 | 13,654 | |||||||||
| Add: Change in fair value of contingent consideration | 16,000 | 16,400 | — | 32,400 | — | |||||||||
| Add: Acquisition-related expenses | 542 | 2,355 | — | 5,578 | 946 | |||||||||
| Add: LED - Inventory adjustment | — | 7,090 | — | 7,090 | — | |||||||||
| Add: Integration/restructuring expenses | 2,054 | — | 4,548 | 2,054 | 9,072 | |||||||||
| Add: Import taxes - Out of period adjustment | — | — | — | 4,345 | — | |||||||||
| Add: COVID-19 expenses | — | — | — | — | 510 | |||||||||
| Non-GAAP operating income | $ 66,589 | $ 43,304 | $ 28,398 | $ 160,796 | $ 84,228 | |||||||||
| Non-GAAP operating margin | 14.2% | 9.9% | 9.6% | 10.7% | 7.5% | |||||||||
| SMART Global Holdings, Inc. | |||||||||||||||||||
| Reconciliation of GAAP Results to Non-GAAP Financial Measures | |||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||
| Three Months Ended | Fiscal Year Ended | ||||||||||||||||||
| August 27, 2021 | May 28, 2021 | August 28, 2020 | August 27, 2021 | August 28, 2020 | |||||||||||||||
| Reconciliation of income (loss) before income taxes: | |||||||||||||||||||
| GAAP income/loss before income taxes | $ 28,271 | $ (2,644 | ) | $ 13,666 | $ 37,972 | $ 9,360 | |||||||||||||
| Add: Share-based compensation expense | 9,010 | 8,381 | 3,206 | 33,877 | 18,716 | ||||||||||||||
| Add: Amortization of intangible assets | 7,244 | 6,184 | 3,414 | 20,255 | 13,654 | ||||||||||||||
| Add: Acquisition-related expenses | 542 | 2,355 | — | 5,578 | 946 | ||||||||||||||
| Add: LED - Inventory adjustment | — | 7,090 | — | 7,090 | — | ||||||||||||||
| Add: Integration/restructuring expenses | 2,054 | — | 4,548 | 2,054 | 9,072 | ||||||||||||||
| Add: COVID-19 expenses | — | — | — | — | 510 | ||||||||||||||
| Add: Gain on settlement of indemnity claim | — | — | (364 | ) | — | (364 | ) | ||||||||||||
| Add: Extinguishment of term loan | — | — | — | — | 6,822 | ||||||||||||||
| Add: Import taxes - Out of period adjustment | — | — | — | 5,085 | — | ||||||||||||||
| Add: Capped call MTM adjustment | — | — | — | — | 7,719 | ||||||||||||||
| Add: Convertible debt discount OID and fees | 2,172 | 2,088 | 2,026 | 8,420 | 4,385 | ||||||||||||||
| Add: Change in fair value of contingent consideration | 16,000 | 16,400 | — | 32,400 | — | ||||||||||||||
| Add: Foreign currency (gains)/losses | (477 | ) | 994 | 822 | 718 | 3,408 | |||||||||||||
| Add: Transaction tax refund | (1,002 | ) | — | — | (1,002 | ) | — | ||||||||||||
| Non-GAAP income before income taxes | $ 63,814 | $ 40,849 | $ 27,318 | $ 152,447 | $ 74,228 | ||||||||||||||
| Reconciliation of income tax provision: | |||||||||||||||||||
| GAAP income tax provision | $ 6,981 | $ 4,010 | $ 6,139 | $ 15,466 | $ 10,503 | ||||||||||||||
| GAAP effective tax rate | 24.7 | % | -151.7 | % | 44.9 | % | 40.7 | % | 112.2 | % | |||||||||
| Less: Goodwill tax credit | — | — | (673 | ) | — | 295 | |||||||||||||
| Add: Import taxes - Out of period adjustment | — | — | — | 1,727 | — | ||||||||||||||
| Tax effect of adjustments to GAAP results | (1,057 | ) | (767 | ) | (82 | ) | (1,844 | ) | (340 | ) | |||||||||
| Non-GAAP income tax provision | $ 8,038 | $ 4,777 | $ 6,894 | $ 19,036 | $ 10,548 | ||||||||||||||
| Non-GAAP effective tax rate | 12.6 | % | 11.7 | % | 25.2 | % | 12.5 | % | 14.2 | % | |||||||||
| Reconciliation of net income (loss) and earnings per share (diluted): | |||||||||||||||||||
| GAAP net income (loss) | $ 20,652 | $ (7,211 | ) | $ 7,527 | $ 21,310 | $ (1,143 | ) | ||||||||||||
| Adjustments to GAAP net income (loss): | |||||||||||||||||||
| Share-based compensation | 9,010 | 8,381 | 3,206 | 33,877 | 18,716 | ||||||||||||||
| Amortization of intangible assets | 7,244 | 6,184 | 3,414 | 20,255 | 13,654 | ||||||||||||||
| Acquisition related expenses | 542 | 2,355 | — | 5,578 | 946 | ||||||||||||||
| LED - Inventory adjustment | — | 7,090 | — | 7,090 | — | ||||||||||||||
| Integration/restructuring expenses | 2,054 | — | 4,548 | 2,054 | 9,072 | ||||||||||||||
| Import taxes - Out of period adjustment | — | — | — | 3,358 | — | ||||||||||||||
| Convertible debt discount OID and fees | 2,172 | 2,088 | 2,026 | 8,420 | 4,385 | ||||||||||||||
| Change in fair value of contingent consideration | 16,000 | 16,400 | — | 32,400 | — | ||||||||||||||
| Foreign currency (gains)/losses | (477 | ) | 994 | 822 | 718 | 3,408 | |||||||||||||
| Tax effect of items excluded from non-GAAP results | (1,057 | ) | (767 | ) | (82 | ) | (1,844 | ) | (340 | ) | |||||||||
| Transaction tax refund | (1,002 | ) | — | — | (1,002 | ) | — | ||||||||||||
| COVID-19 expenses | — | — | — | — | 510 | ||||||||||||||
| Extinguishment of term loan | — | — | — | — | 6,822 | ||||||||||||||
| Capped call MTM adjustment | — | — | — | — | 7,719 | ||||||||||||||
| Gain on settlement of indemnity claim | — | — | (364 | ) | — | (364 | ) | ||||||||||||
| Goodwill tax credit | — | — | (673 | ) | — | 295 | |||||||||||||
| Non-GAAP net income | $ 55,138 | $ 35,513 | $ 20,424 | $ 132,214 | $ 63,680 | ||||||||||||||
| Diluted shares outstanding reconciliation: | |||||||||||||||||||
| GAAP weighted average outstanding shares - diluted* | 26,417 | 26,444 | 24,839 | 25,792 | 24,566 | ||||||||||||||
| Dilution offset from convertible note hedge transactions | (867 | ) | (928 | ) | — | (449 | ) | — | |||||||||||
| Non-GAAP diluted weighted average shares outstanding | 25,551 | 25,516 | 24,839 | 25,343 | 24,566 | ||||||||||||||
| GAAP earnings per share (diluted) | $ 0.78 | $ (0.30 | ) | $ 0.30 | $ 0.83 | $ (0.05 | ) | ||||||||||||
| Non-GAAP earnings per share (diluted) | $ 2.16 | $ 1.39 | $ 0.82 | $ 5.22 | $ 2.59 | ||||||||||||||
| *Q3'21 & FY'20: represents what GAAP diluted shares would have been had there been GAAP income. | |||||||||||||||||||
| SMART Global Holdings, Inc. | ||||||||||||||||||
| Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| Three Months Ended | Fiscal Year Ended | |||||||||||||||||
| August 27, 2021 | May 28, 2021 | August 28, 2020 | August 27, 2021 | August 28, 2020 | ||||||||||||||
| GAAP net income (loss) | $ 20,652 | $ (7,211 | ) | $ 7,527 | $ 21,310 | $ (1,143 | ) | |||||||||||
| Share-based compensation expense | 9,010 | 8,381 | 3,206 | 33,877 | 18,716 | |||||||||||||
| Amortization of intangible assets | 7,244 | 6,184 | 3,414 | 20,255 | 13,654 | |||||||||||||
| Interest expense, net | 5,031 | 5,049 | 3,265 | 17,600 | 15,000 | |||||||||||||
| Provision for income tax | 6,981 | 4,010 | 6,139 | 15,466 | 10,503 | |||||||||||||
| Depreciation | 9,399 | 9,124 | 5,219 | 28,856 | 22,776 | |||||||||||||
| Change in fair value of contingent consideration(1) | 16,000 | 16,400 | — | 32,400 | — | |||||||||||||
| Integration/restructuring expenses | 2,054 | — | 4,548 | 2,054 | 9,072 | |||||||||||||
| Acquisition-related expenses(1) | 542 | 2,355 | — | 5,578 | 946 | |||||||||||||
| Transaction tax refund | (1,002 | ) | — | — | (1,002 | ) | — | |||||||||||
| LED - Inventory adjustment(2) | — | 7,090 | — | 7,090 | — | |||||||||||||
| Import taxes - Out of period adjustment | — | — | — | 4,345 | — | |||||||||||||
| Capped call MTM adjustment | — | — | — | — | 7,719 | |||||||||||||
| Extinguishment of term loan | — | — | — | — | 6,822 | |||||||||||||
| COVID-19 expenses | — | — | — | — | 510 | |||||||||||||
| Gain on settlement of indemnity claim | — | — | (364 | ) | — | (364 | ) | |||||||||||
| Adjusted EBITDA | $ 75,910 | $ 51,382 | $ 32,954 | $ 187,828 | $ 104,211 | |||||||||||||
| _________________________________ | ||||||||||||||||
(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. | ||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| (In thousands) | ||||||||||||
August 27, | August 28, | |||||||||||
| As of | 2021 | 2020 | ||||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ 222,986 | $ 150,811 | ||||||||||
| Accounts receivable | 313,393 | 215,918 | ||||||||||
| Inventories | 363,601 | 162,991 | ||||||||||
| Other current assets | 50,838 | 26,990 | ||||||||||
| Total current assets | 950,818 | 556,710 | ||||||||||
| Property and equipment | 156,266 | 54,705 | ||||||||||
| Operating lease right-of-use assets | 40,869 | 25,013 | ||||||||||
| Intangible assets | 101,073 | 55,671 | ||||||||||
| Goodwill | 74,255 | 73,955 | ||||||||||
| Other noncurrent assets | 21,517 | 20,554 | ||||||||||
| Total assets | $ 1,344,798 | $ 786,608 | ||||||||||
| Liabilities and Equity | ||||||||||||
| Accounts payable and accrued expenses | $ 484,107 | $ 253,363 | ||||||||||
| Current debt | 25,354 | — | ||||||||||
| Other current liabilities | 74,337 | 29,126 | ||||||||||
| Total current liabilities | 583,798 | 282,489 | ||||||||||
| Long-term debt | 340,484 | 195,573 | ||||||||||
| Acquisiton-related contingent consideration | 60,500 | — | ||||||||||
| Noncurrent operating lease liabilities | 32,419 | 20,829 | ||||||||||
| Other noncurrent liabilities | 8,673 | 5,613 | ||||||||||
| Total liabilities | 1,025,874 | 504,504 | ||||||||||
| SMART Global Holdings shareholders’ equity: | ||||||||||||
| Ordinary shares | 773 | 737 | ||||||||||
| Additional paid-in capital | 396,851 | 348,163 | ||||||||||
| Retained earnings | 184,787 | 163,477 | ||||||||||
| Treasury shares | (50,545 | ) | (2,032 | ) | ||||||||
| Accumulated other comprehensive income (loss) | (221,615 | ) | (228,241 | ) | ||||||||
| Total SGH shareholders’ equity | 310,251 | 282,104 | ||||||||||
| Noncontrolling interest in subsidiary | 8,673 | — | ||||||||||
| Total equity | 318,924 | 282,104 | ||||||||||
| Total liabilities and equity | $ 1,344,798 | $ 786,608 | ||||||||||
| SMART Global Holdings, Inc. | |||||||||||||||||||||
| Consolidated Statements of Cash Flows | |||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||
| Three Months Ended | Fiscal Year Ended | ||||||||||||||||||||
| August 27, 2021 | May 28, 2021 | August 28, 2020 | August 27, 2021 | August 28, 2020 | |||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||
| Net income (loss) | $ 21,290 | $ (6,654 | ) | $ 7,527 | $ 22,506 | $ (1,143 | ) | ||||||||||||||
| Adjustments to reconcile net income (loss) to net cash | |||||||||||||||||||||
| provided by operating activities: | |||||||||||||||||||||
| Depreciation and amortization of intangible assets | 16,642 | 15,308 | 8,633 | 49,111 | 36,430 | ||||||||||||||||
| Amortization of debt discounts and issuance costs | 2,295 | 2,196 | 2,080 | 8,798 | 5,866 | ||||||||||||||||
| Share-based compensation expense | 9,010 | 8,381 | 3,206 | 33,877 | 18,716 | ||||||||||||||||
| Loss from change in fair value of contingent consideration | 16,000 | 16,400 | — | 32,400 | — | ||||||||||||||||
| Amortization of operating lease right-of-use assets | 2,593 | 2,031 | 1,491 | 7,537 | 5,060 | ||||||||||||||||
| Loss on remeasurement of capped calls | — | — | — | — | 7,719 | ||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | 6,822 | ||||||||||||||||
| Other | 342 | (493 | ) | 2,447 | 829 | 2,471 | |||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||
| Accounts receivable | (35,985 | ) | (25,537 | ) | 5,537 | (51,440 | ) | (12,348 | ) | ||||||||||||
| Inventories | (71,396 | ) | (38,359 | ) | 20,641 | (137,889 | ) | (51,840 | ) | ||||||||||||
| Other current assets | (3,317 | ) | 4,963 | 6,879 | (17,480 | ) | 5,760 | ||||||||||||||
| Accounts payable and accrued expenses | 92,865 | 76,173 | (30,020 | ) | 214,959 | 70,570 | |||||||||||||||
| Operating lease liabilities | (2,391 | ) | (1,718 | ) | (1,260 | ) | (6,851 | ) | (4,763 | ) | |||||||||||
| Deferred income taxes, net | 76 | (3,353 | ) | (2,181 | ) | (3,007 | ) | (2,115 | ) | ||||||||||||
| Net cash provided by operating activities | 48,024 | 49,338 | 24,981 | 153,350 | 87,205 | ||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||
| Capital expenditures and deposits on equipment | (7,563 | ) | (5,222 | ) | (15,556 | ) | (47,580 | ) | (32,445 | ) | |||||||||||
| Acquisitions of business, net of cash acquired | (7,064 | ) | (28,613 | ) | — | (35,677 | ) | — | |||||||||||||
| Other | (1,143 | ) | 56 | 250 | (921 | ) | 404 | ||||||||||||||
| Net cash used for investing activities | (15,770 | ) | (33,779 | ) | (15,306 | ) | (84,178 | ) | (32,041 | ) | |||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||
| Proceeds from borrowings under line of credit | 50,000 | 80,000 | 42,500 | 172,500 | 103,000 | ||||||||||||||||
| Proceeds from issuance of ordinary shares | 1,765 | 7,506 | 554 | 14,923 | 5,479 | ||||||||||||||||
| Proceeds from issuance of debt | — | — | — | 11,439 | 243,125 | ||||||||||||||||
| Repayments of borrowings under line of credit | (50,000 | ) | (55,000 | ) | (42,500 | ) | (147,500 | ) | (103,000 | ) | |||||||||||
| Payments to acquire ordinary shares | (212 | ) | (337 | ) | (96 | ) | (48,513 | ) | (749 | ) | |||||||||||
| Repayments of debt | — | — | (615 | ) | — | (213,436 | ) | ||||||||||||||
| Purchase of capped calls | — | — | — | — | (21,825 | ) | |||||||||||||||
| Net cash provided by (used for) financing activities | 1,553 | 32,169 | (157 | ) | 2,849 | 12,594 | |||||||||||||||
| Effect of exchange rate changes on the cash and cash equivalents | 187 | 1,461 | 9,448 | 154 | (15,086 | ) | |||||||||||||||
| Net increase in cash and cash equivalents | 33,995 | 49,189 | 18,966 | 72,175 | 52,672 | ||||||||||||||||
| Cash and cash equivalents at beginning of period | 188,992 | 139,803 | 131,845 | 150,811 | 98,139 | ||||||||||||||||
| Cash and cash equivalents at end of period | $ 222,986 | $ 188,992 | $ 150,811 | $ 222,986 | $ 150,811 | ||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20211012006131/en/
Contacts:
Suzanne Schmidt
Investor Relations
(510) 360-8596
ir@sghcorp.com
