GAAP (1) | Non-GAAP (2) | ||||||||||||||||||||||||||||||||||
(in millions, except per share amounts) | Q2 FY23 | Q1 FY23 | Q2 FY22 | Q2 FY23 | Q1 FY23 | Q2 FY22 | |||||||||||||||||||||||||||||
Net sales | $ | 429.2 | $ | 465.5 | $ | 449.2 | $ | 429.2 | $ | 465.5 | $ | 449.2 | |||||||||||||||||||||||
Gross profit | 110.4 | 118.4 | 112.7 | 123.9 | 129.2 | 116.9 | |||||||||||||||||||||||||||||
Operating income (loss) | (7.2) | 17.6 | 16.8 | 51.4 | 54.8 | 57.4 | |||||||||||||||||||||||||||||
Net income (loss) attributable to SGH | (27.2) | 5.0 | 2.5 | 37.6 | 39.5 | 47.6 | |||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | (0.55) | $ | 0.10 | $ | 0.04 | $ | 0.76 | $ | 0.79 | $ | 0.87 |
GAAP Outlook | Adjustments | Non-GAAP Outlook | ||||||||||||
Net sales | $375 million +/- $20 million | — | $375 million +/- $20 million | |||||||||||
Gross margin | 26% +/- 1% | 2% | (A) | 28% +/- 1% | ||||||||||
Operating expenses | $90 million +/- $3 million | $18 million | (B)(C) | $72 million +/- $3 million | ||||||||||
Diluted earnings (loss) per share | $(0.03) +/- $0.10 | $0.43 | (A)(B)(C)(D) | $0.40 +/- $0.10 | ||||||||||
Diluted shares | 50 million | — | 50 million |
Non-GAAP adjustments (in millions) | |||||
(A) Share-based compensation and amortization of acquisition-related intangibles included in cost of sales | $ | 8 | |||
(B) Share-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A | 13 | ||||
(C) Other adjustments | 5 | ||||
(D) Estimated tax effects | (5) | ||||
$ | 21 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
February 24, 2023 | November 25, 2022 | February 25, 2022 | February 24, 2023 | February 25, 2022 | |||||||||||||||||||||||||
Net sales: | |||||||||||||||||||||||||||||
Memory Solutions | $ | 151,136 | $ | 191,967 | $ | 260,081 | $ | 343,103 | $ | 499,482 | |||||||||||||||||||
Intelligent Platform Solutions | 222,451 | 210,971 | 82,257 | 433,422 | 200,911 | ||||||||||||||||||||||||
LED Solutions | 55,587 | 62,540 | 106,833 | 118,127 | 218,722 | ||||||||||||||||||||||||
Total net sales | 429,174 | 465,478 | 449,171 | 894,652 | 919,115 | ||||||||||||||||||||||||
Cost of sales | 318,793 | 347,068 | 336,458 | 665,861 | 684,201 | ||||||||||||||||||||||||
Gross profit | 110,381 | 118,410 | 112,713 | 228,791 | 234,914 | ||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Research and development | 26,665 | 24,056 | 18,794 | 50,721 | 36,451 | ||||||||||||||||||||||||
Selling, general and administrative | 62,771 | 71,022 | 53,114 | 133,793 | 105,664 | ||||||||||||||||||||||||
Impairment of goodwill | 17,558 | — | — | 17,558 | — | ||||||||||||||||||||||||
Change in fair value of contingent consideration | 6,400 | 3,700 | 24,000 | 10,100 | 41,200 | ||||||||||||||||||||||||
Other operating (income) expense | 4,154 | 2,041 | — | 6,195 | — | ||||||||||||||||||||||||
Total operating expenses | 117,548 | 100,819 | 95,908 | 218,367 | 183,315 | ||||||||||||||||||||||||
Operating income (loss) | (7,167) | 17,591 | 16,805 | 10,424 | 51,599 | ||||||||||||||||||||||||
Non-operating (income) expense: | |||||||||||||||||||||||||||||
Interest expense, net | 8,006 | 8,037 | 4,462 | 16,043 | 9,568 | ||||||||||||||||||||||||
Other non-operating (income) expense | 13,329 | (660) | 1,785 | 12,669 | 3,020 | ||||||||||||||||||||||||
Total non-operating (income) expense | 21,335 | 7,377 | 6,247 | 28,712 | 12,588 | ||||||||||||||||||||||||
Income (loss) before taxes | (28,502) | 10,214 | 10,558 | (18,288) | 39,011 | ||||||||||||||||||||||||
Income tax provision (benefit) | (1,716) | 4,890 | 7,586 | 3,174 | 15,341 | ||||||||||||||||||||||||
Net income (loss) | (26,786) | 5,324 | 2,972 | (21,462) | 23,670 | ||||||||||||||||||||||||
Net income attributable to noncontrolling interest | 433 | 332 | 514 | 765 | 1,185 | ||||||||||||||||||||||||
Net income (loss) attributable to SGH | $ | (27,219) | $ | 4,992 | $ | 2,458 | $ | (22,227) | $ | 22,485 | |||||||||||||||||||
Earnings (loss) per share: | |||||||||||||||||||||||||||||
Basic | $ | (0.55) | $ | 0.10 | $ | 0.05 | $ | (0.45) | $ | 0.46 | |||||||||||||||||||
Diluted | $ | (0.55) | $ | 0.10 | $ | 0.04 | $ | (0.45) | $ | 0.40 | |||||||||||||||||||
Shares used in per share calculations: | |||||||||||||||||||||||||||||
Basic | 49,116 | 48,962 | 49,522 | 49,039 | 49,267 | ||||||||||||||||||||||||
Diluted | 49,116 | 49,791 | 57,636 | 49,039 | 56,135 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
February 24, 2023 | November 25, 2022 | February 25, 2022 | February 24, 2023 | February 25, 2022 | |||||||||||||||||||||||||
GAAP gross profit | $ | 110,381 | $ | 118,410 | $ | 112,713 | $ | 228,791 | $ | 234,914 | |||||||||||||||||||
Share-based compensation expense | 1,369 | 1,708 | 1,648 | 3,077 | 3,379 | ||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 6,615 | 6,466 | 2,582 | 13,081 | 5,678 | ||||||||||||||||||||||||
Flow-through of inventory step up | — | 2,599 | — | 2,599 | — | ||||||||||||||||||||||||
Cost of sales related restructure | 5,552 | — | — | 5,552 | — | ||||||||||||||||||||||||
Non-GAAP gross profit | $ | 123,917 | $ | 129,183 | $ | 116,943 | $ | 253,100 | $ | 243,971 | |||||||||||||||||||
GAAP gross margin | 25.7 | % | 25.4 | % | 25.1 | % | 25.6 | % | 25.6 | % | |||||||||||||||||||
Effect of adjustments | 3.2 | % | 2.4 | % | 0.9 | % | 2.7 | % | 1.0 | % | |||||||||||||||||||
Non-GAAP gross margin | 28.9 | % | 27.8 | % | 26.0 | % | 28.3 | % | 26.5 | % | |||||||||||||||||||
GAAP operating expenses | $ | 117,548 | $ | 100,819 | $ | 95,908 | $ | 218,367 | $ | 183,315 | |||||||||||||||||||
Share-based compensation expense | (9,026) | (8,704) | (8,325) | (17,730) | (16,369) | ||||||||||||||||||||||||
Amortization of acquisition-related intangibles | (4,200) | (4,392) | (3,247) | (8,592) | (6,494) | ||||||||||||||||||||||||
Acquisition and integration expenses | (2,824) | (6,732) | (252) | (9,556) | (1,289) | ||||||||||||||||||||||||
Impairment of goodwill | (17,558) | — | — | (17,558) | — | ||||||||||||||||||||||||
Change in fair value of contingent consideration | (6,400) | (3,700) | (24,000) | (10,100) | (41,200) | ||||||||||||||||||||||||
Restructure charge | (4,154) | (2,041) | — | (6,195) | — | ||||||||||||||||||||||||
Other | (900) | (900) | (576) | (1,800) | (577) | ||||||||||||||||||||||||
Non-GAAP operating expenses | $ | 72,486 | $ | 74,350 | $ | 59,508 | $ | 146,836 | $ | 117,386 | |||||||||||||||||||
GAAP operating income (loss) | $ | (7,167) | $ | 17,591 | $ | 16,805 | $ | 10,424 | $ | 51,599 | |||||||||||||||||||
Share-based compensation expense | 10,395 | 10,412 | 9,973 | 20,807 | 19,748 | ||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 10,815 | 10,858 | 5,829 | 21,673 | 12,172 | ||||||||||||||||||||||||
Flow-through of inventory step up | — | 2,599 | — | 2,599 | — | ||||||||||||||||||||||||
Cost of sales related restructure | 5,552 | — | — | 5,552 | — | ||||||||||||||||||||||||
Acquisition and integration expenses | 2,824 | 6,732 | 252 | 9,556 | 1,289 | ||||||||||||||||||||||||
Impairment of goodwill | 17,558 | — | — | 17,558 | — | ||||||||||||||||||||||||
Change in fair value of contingent consideration | 6,400 | 3,700 | 24,000 | 10,100 | 41,200 | ||||||||||||||||||||||||
Restructure charge | 4,154 | 2,041 | — | 6,195 | — | ||||||||||||||||||||||||
Other | 900 | 900 | 576 | 1,800 | 577 | ||||||||||||||||||||||||
Non-GAAP operating income | $ | 51,431 | $ | 54,833 | $ | 57,435 | $ | 106,264 | $ | 126,585 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
February 24, 2023 | November 25, 2022 | February 25, 2022 | February 24, 2023 | February 25, 2022 | |||||||||||||||||||||||||
GAAP net income (loss) attributable to SGH | $ | (27,219) | $ | 4,992 | $ | 2,458 | $ | (22,227) | $ | 22,485 | |||||||||||||||||||
Share-based compensation expense | 10,395 | 10,412 | 9,973 | 20,807 | 19,748 | ||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 10,815 | 10,858 | 5,829 | 21,673 | 12,172 | ||||||||||||||||||||||||
Flow-through of inventory step up | — | 2,599 | — | 2,599 | — | ||||||||||||||||||||||||
Cost of sales related restructure | 5,552 | — | — | 5,552 | — | ||||||||||||||||||||||||
Acquisition and integration expenses | 2,824 | 6,732 | 252 | 9,556 | 1,289 | ||||||||||||||||||||||||
Impairment of goodwill | 17,558 | — | — | 17,558 | — | ||||||||||||||||||||||||
Change in fair value of contingent consideration | 6,400 | 3,700 | 24,000 | 10,100 | 41,200 | ||||||||||||||||||||||||
Restructure charge | 4,154 | 2,041 | — | 6,195 | — | ||||||||||||||||||||||||
Amortization of debt discount and other costs | 1,048 | 1,069 | 2,296 | 2,117 | 4,506 | ||||||||||||||||||||||||
(Gain) loss on extinguishment of debt | 16,691 | (767) | 653 | 15,924 | 653 | ||||||||||||||||||||||||
Foreign currency (gains) losses | 281 | 242 | 1,408 | 523 | 2,875 | ||||||||||||||||||||||||
Other | 900 | 900 | 576 | 1,800 | 577 | ||||||||||||||||||||||||
Tax effects of above, other tax adjustments and the tax effect of capitalization of R&D expense | (11,753) | (3,300) | 126 | (15,053) | (1,626) | ||||||||||||||||||||||||
Non-GAAP net income attributable to SGH | $ | 37,646 | $ | 39,478 | $ | 47,571 | $ | 77,124 | $ | 103,879 | |||||||||||||||||||
Weighted-average shares outstanding - Diluted: | |||||||||||||||||||||||||||||
GAAP weighted-average shares outstanding | 49,116 | 49,791 | 57,636 | 49,039 | 56,135 | ||||||||||||||||||||||||
Adjustment for dilutive securities and capped calls | 726 | — | (2,759) | 777 | (2,670) | ||||||||||||||||||||||||
Non-GAAP weighted-average shares outstanding | 49,842 | 49,791 | 54,877 | 49,816 | 53,465 | ||||||||||||||||||||||||
Diluted earnings (loss) per share: | |||||||||||||||||||||||||||||
GAAP diluted earnings (loss) per share | $ | (0.55) | $ | 0.10 | $ | 0.04 | $ | (0.45) | $ | 0.40 | |||||||||||||||||||
Effect of adjustments | 1.31 | 0.69 | 0.83 | 2.00 | 1.55 | ||||||||||||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.76 | $ | 0.79 | $ | 0.87 | $ | 1.55 | $ | 1.95 | |||||||||||||||||||
Net income (loss) attributable to SGH | $ | (27,219) | $ | 4,992 | $ | 2,458 | $ | (22,227) | $ | 22,485 | |||||||||||||||||||
Interest expense, net | 8,006 | 8,037 | 4,462 | 16,043 | 9,568 | ||||||||||||||||||||||||
Income tax provision (benefit) | (1,716) | 4,890 | 7,586 | 3,174 | 15,341 | ||||||||||||||||||||||||
Depreciation expense and amortization of intangible assets | 19,931 | 19,789 | 16,077 | 39,720 | 31,890 | ||||||||||||||||||||||||
Share-based compensation expense | 10,395 | 10,412 | 9,973 | 20,807 | 19,748 | ||||||||||||||||||||||||
Flow-through of inventory step up | — | 2,599 | — | 2,599 | — | ||||||||||||||||||||||||
Cost of sales related restructure | 5,552 | — | — | 5,552 | — | ||||||||||||||||||||||||
Acquisition and integration expenses | 2,824 | 6,732 | 252 | 9,556 | 1,289 | ||||||||||||||||||||||||
Impairment of goodwill | 17,558 | — | — | 17,558 | — | ||||||||||||||||||||||||
Change in fair value of contingent consideration | 6,400 | 3,700 | 24,000 | 10,100 | 41,200 | ||||||||||||||||||||||||
Restructure charge | 4,154 | 2,041 | — | 6,195 | — | ||||||||||||||||||||||||
(Gain) loss on extinguishment of debt | 16,691 | (767) | 653 | 15,924 | 653 | ||||||||||||||||||||||||
Other | 900 | 900 | 576 | 1,800 | 577 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 63,476 | $ | 63,325 | $ | 66,037 | $ | 126,801 | $ | 142,751 |
As of | February 24, 2023 | August 26, 2022 | |||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 375,854 | $ | 363,065 | |||||||
Accounts receivable, net | 229,474 | 410,323 | |||||||||
Inventories | 294,367 | 323,084 | |||||||||
Other current assets | 78,475 | 55,393 | |||||||||
Total current assets | 978,170 | 1,151,865 | |||||||||
Property and equipment, net | 171,798 | 153,935 | |||||||||
Operating lease right-of-use assets | 80,468 | 77,399 | |||||||||
Intangible assets, net | 182,894 | 77,812 | |||||||||
Goodwill | 182,710 | 74,009 | |||||||||
Other noncurrent assets | 44,043 | 37,044 | |||||||||
Total assets | $ | 1,640,083 | $ | 1,572,064 | |||||||
Liabilities and Equity | |||||||||||
Accounts payable and accrued expenses | $ | 226,289 | $ | 413,354 | |||||||
Current debt | 32,141 | 12,025 | |||||||||
Acquisition-related contingent consideration | 30,900 | — | |||||||||
Other current liabilities | 131,117 | 90,161 | |||||||||
Total current liabilities | 420,447 | 515,540 | |||||||||
Long-term debt | 789,364 | 591,389 | |||||||||
Noncurrent operating lease liabilities | 76,092 | 71,754 | |||||||||
Other noncurrent liabilities | 22,660 | 14,835 | |||||||||
Total liabilities | 1,308,563 | 1,193,518 | |||||||||
Commitments and contingencies | |||||||||||
SMART Global Holdings shareholders’ equity: | |||||||||||
Ordinary shares | 1,631 | 1,586 | |||||||||
Additional paid-in capital | 417,998 | 448,112 | |||||||||
Retained earnings | 247,756 | 251,344 | |||||||||
Treasury shares | (123,999) | (107,776) | |||||||||
Accumulated other comprehensive income (loss) | (217,557) | (221,655) | |||||||||
Total SGH shareholders’ equity | 325,829 | 371,611 | |||||||||
Noncontrolling interest in subsidiary | 5,691 | 6,935 | |||||||||
Total equity | 331,520 | 378,546 | |||||||||
Total liabilities and equity | $ | 1,640,083 | $ | 1,572,064 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
February 24, 2023 | November 25, 2022 | February 25, 2022 | February 24, 2023 | February 25, 2022 | |||||||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||||||||
Net income (loss) | $ | (26,786) | $ | 5,324 | $ | 2,972 | $ | (21,462) | $ | 23,670 | |||||||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||||||||||||||||||||
Depreciation expense and amortization of intangible assets | 19,931 | 19,789 | 16,077 | 39,720 | 31,890 | ||||||||||||||||||||||||
Amortization of debt discount and issuance costs | 1,048 | 1,069 | 2,438 | 2,117 | 4,770 | ||||||||||||||||||||||||
Share-based compensation expense | 10,395 | 10,412 | 9,973 | 20,807 | 19,748 | ||||||||||||||||||||||||
Impairment of goodwill | 17,558 | — | — | 17,558 | — | ||||||||||||||||||||||||
Change in fair value of contingent consideration | 6,400 | 3,700 | 24,000 | 10,100 | 41,200 | ||||||||||||||||||||||||
(Gain) loss on extinguishment of debt | 16,691 | (767) | 653 | 15,924 | 653 | ||||||||||||||||||||||||
Other | 3,705 | 319 | 880 | 4,024 | 688 | ||||||||||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||||||||||
Accounts receivable | 78,529 | 129,695 | (39,526) | 208,224 | (75,579) | ||||||||||||||||||||||||
Inventories | 119,491 | (82,882) | (13,225) | 36,609 | 26,415 | ||||||||||||||||||||||||
Other assets | (1,525) | (5,199) | 8,829 | (6,724) | 10,445 | ||||||||||||||||||||||||
Accounts payable and accrued expenses and other liabilities | (145,951) | (83,030) | 19,750 | (228,981) | (36,142) | ||||||||||||||||||||||||
Payment of acquisition-related contingent consideration | — | (73,724) | — | (73,724) | — | ||||||||||||||||||||||||
Deferred income taxes, net | 1,049 | 1,309 | (656) | 2,358 | (447) | ||||||||||||||||||||||||
Net cash provided by (used for) operating activities | 100,535 | (73,985) | 32,165 | 26,550 | 47,311 | ||||||||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||||||||
Capital expenditures and deposits on equipment | (12,613) | (11,649) | (7,376) | (24,262) | (20,142) | ||||||||||||||||||||||||
Acquisition of business, net of cash acquired | (2,800) | (210,273) | — | (213,073) | — | ||||||||||||||||||||||||
Other | 2,060 | (1,721) | (81) | 339 | (692) | ||||||||||||||||||||||||
Net cash used for investing activities | (13,353) | (223,643) | (7,457) | (236,996) | (20,834) | ||||||||||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||||||||
Proceeds from debt | — | 295,287 | 270,775 | 295,287 | 270,775 | ||||||||||||||||||||||||
Proceeds from issuance of ordinary shares | 308 | 3,942 | 2,431 | 4,250 | 7,460 | ||||||||||||||||||||||||
Proceeds from borrowing under line of credit | — | — | 24,000 | — | 84,000 | ||||||||||||||||||||||||
Payment of acquisition-related contingent consideration | — | (28,100) | — | (28,100) | — | ||||||||||||||||||||||||
Payments to acquire ordinary shares | (11,564) | (4,659) | (229) | (16,223) | (2,895) | ||||||||||||||||||||||||
Payment of premium in connection with convertible note exchange | (14,141) | — | — | (14,141) | — | ||||||||||||||||||||||||
Repayments of debt | (4,507) | (4,489) | (125,000) | (8,996) | (125,000) | ||||||||||||||||||||||||
Net cash paid for settlement and purchase of Capped Calls | (4,304) | — | — | (4,304) | — | ||||||||||||||||||||||||
Distribution to noncontrolling interest | (2,009) | — | (3,773) | (2,009) | (3,773) | ||||||||||||||||||||||||
Repayments of borrowings under line of credit | — | — | (59,000) | — | (109,000) | ||||||||||||||||||||||||
Other | (3,414) | (2) | (3,841) | (3,416) | (3,841) | ||||||||||||||||||||||||
Net cash provided by (used for) financing activities | (39,631) | 261,979 | 105,363 | 222,348 | 117,726 | ||||||||||||||||||||||||
Effect of changes in currency exchange rates on cash, cash equivalents and restricted cash | 1,712 | 205 | 2,647 | 1,917 | (1,421) | ||||||||||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 49,263 | (35,444) | 132,718 | 13,819 | 142,782 | ||||||||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 327,621 | 363,065 | 233,050 | 363,065 | 222,986 | ||||||||||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 376,884 | $ | 327,621 | $ | 365,768 | $ | 376,884 | $ | 365,768 |
Investor Contact: | PR Contact: | ||||
Suzanne Schmidt | Valerie Sassani | ||||
Investor Relations | VP of Marketing and Communications | ||||
+1-510-360-8596 | +1-510-941-8921 | ||||
ir@sghcorp.com | pr@sghcorp.com |