SMART Global Holdings Reports Third Quarter Fiscal 2021 Financial Results

Record Quarterly Net Sales of $438M, up 44% Sequentially

NEWARK, Calif.–(BUSINESS WIRE)–$SGH #IR–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,

2020

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

 

Contacts

Investor Contact:
Suzanne Schmidt

Investor Relations

(510) 360-8596

[email protected]

PR Contact:
Valerie Sassani

VP of Marketing and Communications

(510) 941-8921

[email protected]

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