View all news

SGH Reports First Quarter Fiscal 2022 Financial Results

01/04/2022

Announces Two-for-One Share Split

7th Consecutive Quarter of Year-over-Year Revenue Growth

SMART Global Holdings, Inc. (“SGH” or the “Company”) (NASDAQ: SGH) today reported financial results for the first quarter of fiscal 2022.

First Quarter Fiscal 2022 Highlights

  • Net sales of $470 million, up 61% versus the year ago quarter
  • GAAP gross margin of 26.0%, up approximately 800 basis points versus the year ago quarter
  • Non-GAAP gross margin of 27.0%, up approximately 850 basis points versus the year ago quarter
  • GAAP EPS of $0.73, up 813% versus the year ago quarter
  • Non-GAAP EPS of $2.16, up 177% versus the year ago quarter

“We continued our strong momentum into the first quarter of fiscal 2022, achieving record revenue and non-GAAP gross margins, while delivering non-GAAP earnings per share at the upper end of our EPS guidance range,” said CEO Mark Adams.

The Company also announced a two-for-one share split in the form of a share dividend of one ordinary share for every one ordinary share owned. The share dividend will be paid on February 1, 2022, and the shares will begin trading on a post-split basis on February 2, 2022. Ordinary shares and per share data in this press release have not been adjusted for the impact of the share dividend.

”The two-for-one share split, which was approved by our board of directors, is a significant milestone for our Company and is intended to further improve our liquidity and broaden our shareholder base,” noted Adams.

Quarterly Financial Results

 

 

GAAP (1)

 

 

Non-GAAP (2)

 

(in millions, except per share amounts)

 

Q1 FY22

 

 

Q4 FY21

 

 

Q1 FY21

 

 

Q1 FY22

 

 

Q4 FY21

 

 

Q1 FY21

 

Net sales

 

$

469.9

 

 

$

467.7

 

 

$

291.7

 

 

$

469.9

 

 

$

467.7

 

 

$

291.7

 

Gross profit

 

 

122.2

 

 

 

117.8

 

 

 

52.6

 

 

 

127.0

 

 

 

123.6

 

 

 

54.1

 

Operating income

 

 

34.8

 

 

 

31.7

 

 

 

7.6

 

 

 

69.2

 

 

 

66.6

 

 

 

23.7

 

Net income attributable to SGH

 

 

20.0

 

 

 

20.7

 

 

 

2.0

 

 

 

56.3

 

 

 

55.1

 

 

 

19.6

 

Diluted earnings per share (3)

 

$

0.73

 

 

$

0.78

 

 

$

0.08

 

 

$

2.16

 

 

$

2.16

 

 

$

0.78

 

(1)

 

GAAP represents U.S. Generally Accepted Accounting Principles.

(2)

 

Non-GAAP represents GAAP excluding the impact of certain activities. Further information regarding our use of non-GAAP measures and reconciliations between GAAP and non-GAAP measures is included within this press release.

(3)

 

Diluted earnings per share amounts have not been adjusted for the impact of the share dividend.

Business Outlook

As of January 4, 2022, SGH is providing the following financial outlook for its second quarter of fiscal 2022:

 

 

GAAP

Outlook

 

Adjustments

 

 

Non-GAAP

Outlook

 

Net sales

 

$415 to $455 million

 

 

 

$415 to $455 million

 

Gross margin

 

23% to 25%

 

1% (A)

 

 

24% to 26%

 

Diluted earnings per share (1)

 

$0.70 ± $0.15

 

$0.75 (A)(B)(C)

 

 

$1.45 ± $0.15

 

Diluted shares (1)

 

29 million

 

(1) million

 

 

28 million

 

(1) Diluted earnings per share and diluted share amounts have not been adjusted for the impact of the share dividend.

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments: (in millions)

 

 

 

 

 

 

 

 

 

 

(A) Share-based compensation and amortization of acquisition-related intangibles included in cost of sales

 

 

$

5

 

(B) Share-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A

 

 

 

11

 

(C) Amortization of convertible debt discount and other costs

 

 

 

4

 

 

 

 

 

 

 

 

 

$

20

 

First Quarter Fiscal 2022 Earnings Conference Call and Webcast Details

SGH will hold a conference call and webcast to discuss the Q1 fiscal 2022 results and related matters at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on Tuesday, January 4, 2022. Interested parties may access the call by dialing +1-888-550-5584 in the U.S. or +1-646-960-0157 from international locations using access code 2316162. The webcast link is located on the SGH Investor Relations section of our website at https://sghcorp.com. We will also post the presentation to our website prior to the call.

Shortly after the conclusion of the conference call, a replay of the audio webcast will be available on the SGH Investor Relations website for approximately seven days.

Use of Forward-Looking Statements

This press release contains, 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; the temporary or volatile nature of pricing trends in memory or elsewhere; deterioration in customer relationships; production or manufacturing difficulties; competitive factors; technological changes; difficulties with or delays in the introduction of new products; slowing or contraction of growth in the memory market in Brazil; 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. These non-GAAP measures exclude certain items, such as share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related inventory adjustments, acquisition-related expenses, restructure charges and integration expenses, changes in the fair value of contingent consideration, (gains) losses from changes in currency exchange rates, COVID-19 expenses, amortization of convertible debt discount and other costs and other infrequent or unusual items. Management believes the presentation of operating results that exclude certain items provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also uses adjusted EBITDA, which represents GAAP net income (loss), adjusted for net interest expense, income tax expense, depreciation and amortization expense, share-based compensation expense, acquisition-related inventory adjustments, acquisition-related expenses, restructure charges and integration expenses, changes in the fair value of contingent consideration, COVID-19 expenses 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 to Non-GAAP Financial Measures” tables below.

About SMART Global Holdings – SGH

At SGH, our companies are united by a drive to raise the bar, execute with discipline and focus on what’s next for the technologies that support and advance the world. Across computing, memory and LED lighting solutions, we build long-term strategic partnerships with our customers.

Backed by a proven leadership team, we operate with excellence around the globe while unlocking new avenues of growth for our business and industry.

Learn more about us at SGHcorp.com.

SMART Global Holdings, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

 

 

 

Three months ended

 

 

 

November 26,

2021

 

 

August 27,

2021

 

 

November 27,

2020

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Memory Solutions

 

$

239,401

 

 

$

247,281

 

 

$

225,823

 

Intelligent Platform Solutions

 

 

118,654

 

 

 

97,616

 

 

 

65,874

 

LED Solutions

 

 

111,889

 

 

 

122,812

 

 

 

 

Total net sales

 

 

469,944

 

 

 

467,709

 

 

 

291,697

 

Cost of sales

 

 

347,743

 

 

 

349,915

 

 

 

239,053

 

Gross profit

 

 

122,201

 

 

 

117,794

 

 

 

52,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

17,657

 

 

 

16,740

 

 

 

6,964

 

Selling, general and administrative

 

 

52,550

 

 

 

51,261

 

 

 

38,056

 

Change in fair value of contingent consideration

 

 

17,200

 

 

 

16,000

 

 

 

 

Other operating (income) expense

 

 

 

 

 

2,054

 

 

 

 

Total operating expenses

 

 

87,407

 

 

 

86,055

 

 

 

45,020

 

Operating income

 

 

34,794

 

 

 

31,739

 

 

 

7,624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

5,106

 

 

 

5,031

 

 

 

3,154

 

Other non-operating (income) expense

 

 

1,235

 

 

 

(1,563

)

 

 

(832

)

Total non-operating (income) expense

 

 

6,341

 

 

 

3,468

 

 

 

2,322

 

Income before taxes

 

 

28,453

 

 

 

28,271

 

 

 

5,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

 

7,755

 

 

 

6,981

 

 

 

3,275

 

Net income

 

 

20,698

 

 

 

21,290

 

 

 

2,027

 

Net income attributable to noncontrolling interest

 

 

671

 

 

 

638

 

 

 

 

Net income attributable to SGH

 

$

20,027

 

 

$

20,652

 

 

$

2,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share: (1)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.82

 

 

$

0.85

 

 

$

0.08

 

Diluted

 

$

0.73

 

 

$

0.78

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations: (1)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,506

 

 

 

24,302

 

 

 

24,561

 

Diluted

 

 

27,318

 

 

 

26,417

 

 

 

25,103

 

 

(1) Earnings per share and shares used in per share calculations have not been adjusted for the impact of the share dividend.

SMART Global Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands, except per share amounts)

 

 

 

Three months ended

 

 

 

November 26,

2021

 

 

August 27,

2021

 

 

November 27,

2020

 

GAAP gross profit

 

$

122,201

 

 

$

117,794

 

 

$

52,644

 

Share-based compensation expense

 

 

1,731

 

 

 

1,785

 

 

 

838

 

Amortization of acquisition-related intangibles

 

 

3,096

 

 

 

3,997

 

 

 

647

 

Non-GAAP gross profit

 

$

127,028

 

 

$

123,576

 

 

$

54,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

$

87,407

 

 

$

86,055

 

 

$

45,020

 

Share-based compensation expense

 

 

(8,044

)

 

 

(7,225

)

 

 

(10,250

)

Amortization of acquisition-related intangibles

 

 

(3,247

)

 

 

(3,247

)

 

 

(2,766

)

Change in fair value of contingent consideration

 

 

(17,200

)

 

 

(16,000

)

 

 

 

Restructure charges

 

 

 

 

 

(2,054

)

 

 

 

Other

 

 

(1,038

)

 

 

(542

)

 

 

(1,617

)

Non-GAAP operating expenses

 

$

57,878

 

 

$

56,987

 

 

$

30,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

34,794

 

 

$

31,739

 

 

$

7,624

 

Share-based compensation expense

 

 

9,775

 

 

 

9,010

 

 

 

11,088

 

Amortization of acquisition-related intangibles

 

 

6,343

 

 

 

7,244

 

 

 

3,413

 

Change in fair value of contingent consideration

 

 

17,200

 

 

 

16,000

 

 

 

 

Restructure charges

 

 

 

 

 

2,054

 

 

 

 

Other

 

 

1,038

 

 

 

542

 

 

 

1,617

 

Non-GAAP operating income

 

$

69,150

 

 

$

66,589

 

 

$

23,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to SGH

 

$

20,027

 

 

$

20,652

 

 

$

2,027

 

Share-based compensation expense

 

 

9,775

 

 

 

9,010

 

 

 

11,088

 

Amortization of acquisition-related intangibles

 

 

6,343

 

 

 

7,244

 

 

 

3,413

 

Change in fair value of contingent consideration

 

 

17,200

 

 

 

16,000

 

 

 

 

Restructure charges

 

 

 

 

 

2,054

 

 

 

 

Amortization of convertible debt discount and other costs

 

 

2,210

 

 

 

2,172

 

 

 

2,062

 

Foreign currency (gains) losses

 

 

1,467

 

 

 

(477

)

 

 

(642

)

Other

 

 

1,038

 

 

 

(460

)

 

 

1,617

 

Tax effects of non-GAAP adjustments

 

 

(1,752

)

 

 

(1,057

)

 

 

64

 

Non-GAAP net income attributable to SGH

 

$

56,308

 

 

$

55,138

 

 

$

19,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding - Diluted: (1)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares outstanding - Diluted

 

 

27,318

 

 

 

26,417

 

 

 

25,103

 

Adjustment for capped calls

 

 

(1,292

)

 

 

(867

)

 

 

 

Non-GAAP weighted-average shares outstanding - Diluted

 

 

26,026

 

 

 

25,550

 

 

 

25,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share: (1)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share

 

$

0.73

 

 

$

0.78

 

 

$

0.08

 

Effect of above adjustments

 

 

1.43

 

 

 

1.38

 

 

 

0.70

 

Non-GAAP diluted earnings per share

 

$

2.16

 

 

$

2.16

 

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Share data and diluted earnings per share have not been adjusted for the impact of the share dividend.

SMART Global Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands)

 

 

 

Three months ended

 

 

 

November 26,

2021

 

 

August 27,

2021

 

 

November 27,

2020

 

Net income attributable to SGH

 

$

20,027

 

 

$

20,652

 

 

$

2,027

 

Interest expense, net

 

 

5,106

 

 

 

5,031

 

 

 

3,154

 

Income tax provision

 

 

7,755

 

 

 

6,981

 

 

 

3,275

 

Depreciation expense and amortization of intangible assets

 

 

15,813

 

 

 

16,642

 

 

 

8,367

 

Share-based compensation expense

 

 

9,775

 

 

 

9,010

 

 

 

11,088

 

Change in fair value of contingent consideration

 

 

17,200

 

 

 

16,000

 

 

 

 

Restructure charges

 

 

 

 

 

2,054

 

 

 

 

Other

 

 

1,038

 

 

 

(460

)

 

 

1,617

 

Adjusted EBITDA

 

$

76,714

 

 

$

75,910

 

 

$

29,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SMART Global Holdings, Inc.

Consolidated Balance Sheets

(In thousands)

 

As of

 

November 26,

2021

 

 

August 27,

2021

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

233,050

 

 

$

222,986

 

Accounts receivable, net

 

 

344,107

 

 

 

313,393

 

Inventories

 

 

317,851

 

 

 

363,601

 

Other current assets

 

 

48,829

 

 

 

50,838

 

Total current assets

 

 

943,837

 

 

 

950,818

 

Property and equipment, net

 

 

148,897

 

 

 

156,266

 

Operating lease right-of-use assets

 

 

37,723

 

 

 

40,869

 

Intangible assets, net

 

 

95,331

 

 

 

101,073

 

Goodwill

 

 

72,487

 

 

 

74,255

 

Other noncurrent assets

 

 

25,423

 

 

 

21,517

 

Total assets

 

$

1,323,698

 

 

$

1,344,798

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

426,883

 

 

$

484,107

 

Current debt

 

 

35,802

 

 

 

25,354

 

Other current liabilities

 

 

72,434

 

 

 

74,337

 

Total current liabilities

 

 

535,119

 

 

 

583,798

 

Long-term debt

 

 

341,150

 

 

 

340,484

 

Acquisition-related contingent consideration

 

 

77,700

 

 

 

60,500

 

Noncurrent operating lease liabilities

 

 

29,396

 

 

 

32,419

 

Other noncurrent liabilities

 

 

8,049

 

 

 

8,673

 

Total liabilities

 

 

991,414

 

 

 

1,025,874

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SMART Global Holdings shareholders’ equity:

 

 

 

 

 

 

 

 

Ordinary shares

 

 

784

 

 

 

773

 

Additional paid-in-capital

 

 

411,608

 

 

 

396,851

 

Retained earnings

 

 

204,814

 

 

 

184,787

 

Treasury shares

 

 

(53,211

)

 

 

(50,545

)

Accumulated other comprehensive income (loss)

 

 

(241,055

)

 

 

(221,615

)

Total SGH shareholders’ equity

 

 

322,940

 

 

 

310,251

 

Noncontrolling interest in subsidiary

 

 

9,344

 

 

 

8,673

 

Total equity

 

 

332,284

 

 

 

318,924

 

Total liabilities and equity

 

$

1,323,698

 

 

$

1,344,798

 

 

 

 

 

 

 

 

 

 

SMART Global Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Three months ended

 

 

 

November 26,

2021

 

 

August 27,

2021

 

 

November 27,

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

20,698

 

 

$

21,290

 

 

$

2,027

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense and amortization of intangible assets

 

 

15,813

 

 

 

16,642

 

 

 

8,367

 

Amortization of debt discounts and issuance costs

 

 

2,332

 

 

 

2,295

 

 

 

2,116

 

Share-based compensation expense

 

 

9,775

 

 

 

9,010

 

 

 

11,088

 

Change in fair value of contingent consideration

 

 

17,200

 

 

 

16,000

 

 

 

 

Amortization of operating lease right-of-use assets

 

 

2,548

 

 

 

2,593

 

 

 

1,413

 

Other

 

 

(192

)

 

 

342

 

 

 

(14

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(36,053

)

 

 

(35,985

)

 

 

(1,930

)

Inventories

 

 

39,640

 

 

 

(71,396

)

 

 

12,919

 

Other current assets

 

 

(932

)

 

 

(3,317

)

 

 

(9,277

)

Accounts payable and accrued expenses

 

 

(53,751

)

 

 

92,865

 

 

 

10,142

 

Operating lease liabilities

 

 

(2,141

)

 

 

(2,391

)

 

 

(1,504

)

Deferred income taxes, net

 

 

209

 

 

 

76

 

 

 

222

 

Net cash provided by operating activities

 

 

15,146

 

 

 

48,024

 

 

 

35,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures and deposits on equipment

 

 

(12,766

)

 

 

(7,563

)

 

 

(14,644

)

Acquisition of business, net of cash acquired

 

 

 

 

 

(7,064

)

 

 

 

Other

 

 

(611

)

 

 

(1,143

)

 

 

16

 

Net cash used for investing activities

 

 

(13,377

)

 

 

(15,770

)

 

 

(14,628

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from borrowing under line of credit

 

 

60,000

 

 

 

50,000

 

 

 

19,500

 

Proceeds from issuance of ordinary shares

 

 

5,029

 

 

 

1,765

 

 

 

3,105

 

Repayments of borrowings under line of credit

 

 

(50,000

)

 

 

(50,000

)

 

 

(19,500

)

Payments to acquire ordinary shares

 

 

(2,666

)

 

 

(212

)

 

 

(3,483

)

Net cash provided by (used for) financing activities

 

 

12,363

 

 

 

1,553

 

 

 

(378

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of changes in currency exchange rates on cash and cash equivalents

 

 

(4,068

)

 

 

187

 

 

 

(7,277

)

Net increase in cash and cash equivalents

 

 

10,064

 

 

 

33,994

 

 

 

13,286

 

Cash and cash equivalents at beginning of period

 

 

222,986

 

 

 

188,992

 

 

 

150,811

 

Cash and cash equivalents at end of period

 

$

233,050

 

 

$

222,986

 

 

$

164,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Contact:
Suzanne Schmidt
Investor Relations
+1-510-360-8596
ir@sghcorp.com

PR Contact:
Valerie Sassani
VP of Marketing and Communications
+1-510-941-8921
pr@sghcorp.com

Source: SMART Global Holdings, Inc.

Multimedia Files:

View all news