EX-99.1 2 sgh-ex991_6.htm EX-99.1 sgh-ex991_6.htm

Exhibit 99.1

Press Release

FOR IMMEDIATE RELEASE

 

SMART Global Holdings Reports

Second Quarter Fiscal 2019 Financial Results

 

NEWARK, CA – March 28, 2019 – SMART Global Holdings, Inc. (“SMART”) (NASDAQ: SGH), parent company of SMART Modular Technologies, Inc., today reported financial results for the second quarter of fiscal 2019 ended March 1, 2019.

 

Second Quarter Fiscal 2019 Highlights:

 

•

Net sales of $304.1 million

 

•

GAAP operating income of $22.5 million

 

•

GAAP net income of $12.8 million

 

•

Adjusted EBITDA of $33.8 million

 

•

GAAP diluted earnings per share (EPS) of $0.55

 

•

Non-GAAP diluted EPS of $0.77

 

“SMART continues to execute well across all of our lines of business in a challenging environment. In our second fiscal quarter, our Specialty Products business and our Specialty Compute and Storage business performed well.  Our Brazil business where we supply commodity memory products to high volume requirements in smartphones and PCs, performed in line with expectations in a worsening pricing environment for such products,” said Ajay Shah, Chairman and Chief Executive Officer.  

 

“We have made good progress towards realizing synergies from our acquisition of Penguin Computing and remain focused on disciplined execution to drive our financial performance,” concluded Mr. Shah.

 

Quarterly Financial Results

GAAP (1)

 

 

Non-GAAP (2)

 

(In millions, except per share amounts)

Q2 FY19

 

Q1 FY19

 

Q2 FY18

 

 

Q2 FY19

 

Q1 FY19

 

Q2 FY18

 

Net sales

$

304.1

 

$

393.9

 

$

314.0

 

 

$

304.1

 

$

393.9

 

$

314.0

 

Gross profit

$

57.1

 

$

85.1

 

$

73.0

 

 

$

57.8

 

$

85.6

 

$

73.2

 

Operating income

$

22.5

 

$

47.8

 

$

45.1

 

 

$

27.7

 

$

54.4

 

$

48.5

 

Net income

$

12.8

 

$

31.0

 

$

36.8

 

 

$

18.0

 

$

40.6

 

$

37.7

 

Diluted earnings per share (EPS)

$

0.55

 

$

1.33

 

$

1.60

 

 

$

0.77

 

$

1.75

 

$

1.64

 

 

(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" table below for further detail on the non-GAAP financial reporting referenced above and a reconciliation of such measures to our nearest GAAP measures.

 

Business Outlook

The following statements are based upon management's current expectations for the third quarter of fiscal 2019 ending May 31, 2019. These statements are forward-looking, and actual results may differ materially. SMART undertakes no obligation to update these statements.

 

Net Sales

$260 to $270 million

Gross Margin - GAAP / Non-GAAP

17% to 19%

Diluted EPS - GAAP

$0.13 to $0.17

 

 

Share-based compensation per share

$0.17

Intangible amortization per share

$0.04

 

 

Diluted EPS - Non-GAAP

$0.34 to $0.38

 

 

Expected diluted share count

23.5 million

 

Conference Call Details

SMART will host a conference call today for analysts and investors at 1:30 p.m. Pacific time, 4:30 p.m. Eastern time. Dial-in US toll free +1-866-487-6452 using access code 8966306.

 

A replay of the conference call will be available for one week following today’s call through the Events section of the SMART website at www.smartgh.com or by calling US toll free +1-855-859-2056; Passcode: 8966306.

Forward-Looking Statements

This 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 SMART (including the business outlook for the next fiscal quarter) and statements regarding growth drivers in SMART’s industries and markets. These statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including but not limited to: business and economic conditions and growth trends in the technology industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; changes in seasonal impacts on our results; 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 DRAM market and the temporary and volatile nature of pricing trends; 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 local content requirements in Brazil;  changes to applicable tax regimes or rates; prices for the end products of our customers; fluctuations in material costs and availability; strikes or labor disputes; deterioration in or loss of relations with any of our limited number of key vendors;  changes in the availability of supply of materials, components or memory products; the inability of Penguin Computing to obtain and retain security clearances to expand its government business; and other factors and risks detailed in SMART’s filings with the Securities and Exchange Commission. Such factors and risks as outlined above and in such filings may not constitute all factors and risks that could cause actual results of SMART to be materially different from the historical results and/or from any future results or outcomes expressed or implied by such forward-looking statements. SMART and its subsidiaries operate in a continually changing business environment and new factors emerge from time to time. SMART cannot predict such factors, nor can it assess the impact, if any, from such factors on SMART 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 SMART 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.

 

Non-GAAP Information

Certain non-GAAP financial measures are contained in this press release or will be discussed on our conference call, including non-GAAP gross profit, non-GAAP operating income, Adjusted EBITDA, non-GAAP net income, non-GAAP net income per diluted share, and non-GAAP diluted EPS. We define Adjusted EBITDA as GAAP net income plus net interest expense, income tax expense, depreciation and amortization expense, share-based compensation expense, acquisition-related expenses and other infrequent or unusual items. Adjusted EBITDA is not a measure of financial performance calculated in accordance with U.S. GAAP and should be viewed as a supplement to, not a substitute for, our results of operations presented on the basis of U.S. GAAP. Adjusted EBITDA also does not purport to represent cash flow provided by, or used in, operating activities in accordance with U.S. GAAP and should not be used as a measure of liquidity.

 

The non-GAAP financial results presented herein exclude share-based compensation expense, intangible amortization expense, acquisition-related expenses, and other infrequent or unusual items, and with respect to non-GAAP diluted EPS, foreign currency gains (losses). These non-GAAP financial measures are provided to enhance the user's overall understanding of our financial performance. By excluding these charges, as well as any related tax effects, our non-GAAP results provide information to management and investors that is useful in assessing SMART's core operating performance and in evaluating and comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to evaluate financial results, to plan and forecast future periods, and to assess performance of certain executives for compensation purposes. The presentation of this additional information is not meant to be a substitute for the corresponding financial measures prepared in accordance with U.S. GAAP. In addition, similarly titled measures may not be used similarly by other companies and therefore may not be comparable between companies.

 

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

The SMART family of companies are global leaders in specialty memory, storage and hybrid solutions serving the electronics industry with standard and custom products for over 25 years. SMART delivers components, modules and solutions to a broad customer base, including OEMs in computing, networking, communications, storage, mobile and industrial markets. With the addition of Penguin Computing and the creation of a new business unit, SMART Specialty Compute & Storage Solutions (SCSS), SMART has expanded its serviceable markets into areas requiring specialized computing platforms in artificial intelligence and machine learning, advanced modeling and high performance computing. Customers rely on SMART as a strategic supplier with custom designs, product quality, technical support, a global footprint, and the ability to provide locally manufactured products in multiple geographies. See www.smartgh.com, www.smartm.com, www.smarth.com, or www.smartsscs.com for more information.

SMART Global Holdings, Inc.

and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 1,

2019

 

 

November 30,

2018

 

 

February 23,

2018

 

 

March 1,

2019

 

 

February 23,

2018

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brazil

 

$

147,111

 

 

$

199,279

 

 

$

208,633

 

 

$

346,390

 

 

$

366,483

 

Specialty Memory

 

 

115,608

 

 

 

139,949

 

 

 

105,332

 

 

 

255,557

 

 

 

212,891

 

Specialty Compute and Storage Solutions

 

 

41,344

 

 

 

54,651

 

 

 

—

 

 

 

95,995

 

 

 

—

 

Total net sales

 

 

304,063

 

 

 

393,879

 

 

 

313,965

 

 

 

697,942

 

 

 

579,374

 

Cost of sales (1)(2)

 

 

246,932

 

 

 

308,810

 

 

 

240,948

 

 

 

555,742

 

 

 

448,521

 

Gross profit

 

 

57,131

 

 

 

85,069

 

 

 

73,017

 

 

 

142,200

 

 

 

130,853

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (1) (2)

 

 

11,238

 

 

 

11,816

 

 

 

9,852

 

 

 

23,054

 

 

 

18,402

 

Selling, general and administrative (1) (2)

 

 

23,442

 

 

 

25,454

 

 

 

18,087

 

 

 

48,896

 

 

 

35,905

 

Total operating expenses

 

 

34,680

 

 

 

37,270

 

 

 

27,939

 

 

 

71,950

 

 

 

54,307

 

Income from operations

 

 

22,451

 

 

 

47,799

 

 

 

45,078

 

 

 

70,250

 

 

 

76,546

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(5,273

)

 

 

(5,875

)

 

 

(4,230

)

 

 

(11,148

)

 

 

(8,829

)

Other income (expense):

 

 

252

 

 

 

(3,329

)

 

 

2,548

 

 

 

(3,077

)

 

 

(167

)

Total other expense

 

 

(5,021

)

 

 

(9,204

)

 

 

(1,682

)

 

 

(14,225

)

 

 

(8,996

)

Income before income taxes

 

 

17,430

 

 

 

38,595

 

 

 

43,396

 

 

 

56,025

 

 

 

67,550

 

Provision for income taxes

 

 

4,644

 

 

 

7,619

 

 

 

6,602

 

 

 

12,263

 

 

 

9,751

 

Net income

 

$

12,786

 

 

$

30,976

 

 

$

36,794

 

 

$

43,762

 

 

$

57,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.56

 

 

$

1.37

 

 

$

1.68

 

 

$

1.93

 

 

$

2.65

 

Diluted

 

$

0.55

 

 

$

1.33

 

 

$

1.60

 

 

$

1.88

 

 

$

2.53

 

Shares used in computing per-share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

22,872

 

 

 

22,595

 

 

 

21,915

 

 

 

22,733

 

 

 

21,794

 

Diluted

 

 

23,359

 

 

 

23,257

 

 

 

23,038

 

 

 

23,314

 

 

 

22,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes share-based compensation expense as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

607

 

 

$

545

 

 

$

227

 

 

$

1,152

 

 

$

445

 

Research and development

 

 

660

 

 

 

634

 

 

 

288

 

 

 

1,294

 

 

$

562

 

Selling, general and administrative

 

 

2,881

 

 

 

2,876

 

 

 

1,182

 

 

 

5,757

 

 

$

2,295

 

Total stock-based compensation expense

 

$

4,148

 

 

$

4,055

 

 

$

1,697

 

 

$

8,203

 

 

$

3,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Includes amortization of intangible assets expense as

   follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

98

 

 

$

16

 

 

$

—

 

 

$

114

 

 

$

—

 

Research and development

 

 

—

 

 

 

—

 

 

 

245

 

 

 

—

 

 

 

490

 

Selling, general and administrative

 

 

961

 

 

 

961

 

 

 

993

 

 

 

1,922

 

 

 

2,016

 

Total amortization expense

 

$

1,059

 

 

$

977

 

 

$

1,238

 

 

$

2,036

 

 

$

2,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SMART Global Holdings, Inc.

and Subsidiaries

Reconciliation of Non-GAAP Financial Measures to GAAP Results

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 1,

2019

 

 

November 30,

2018

 

 

February 23,

2018

 

 

March 1,

2019

 

 

February 23,

2018

 

Reconciliation of gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

57,131

 

 

$

85,069

 

 

$

73,017

 

 

$

142,200

 

 

$

130,853

 

GAAP gross margin

 

 

18.8

%

 

 

21.6

%

 

 

23.3

%

 

 

20.4

%

 

 

22.6

%

Add: Share-based compensation included in cost of sales

 

 

607

 

 

 

545

 

 

 

227

 

 

 

1,152

 

 

 

445

 

Add: Amortization of intangible assets

 

 

98

 

 

 

16

 

 

 

—

 

 

 

114

 

 

 

—

 

Non-GAAP gross profit

 

$

57,836

 

 

$

85,630

 

 

$

73,244

 

 

$

143,466

 

 

$

131,298

 

Non-GAAP gross margin

 

 

19.0

%

 

 

21.7

%

 

 

23.3

%

 

 

20.6

%

 

 

22.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

$

34,680

 

 

$

37,270

 

 

$

27,939

 

 

$

71,950

 

 

$

54,307

 

Less: Share-based compensation expense included in opex

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

660

 

 

 

634

 

 

 

288

 

 

 

1,294

 

 

 

562

 

Selling, general and administrative

 

 

2,881

 

 

 

2,876

 

 

 

1,182

 

 

 

5,757

 

 

 

2,295

 

Total

 

 

3,541

 

 

 

3,510

 

 

 

1,470

 

 

 

7,051

 

 

 

2,857

 

Less: Amortization of intangible assets included in opex

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

—

 

 

 

—

 

 

 

245

 

 

 

—

 

 

 

490

 

Selling, general and administrative

 

 

961

 

 

 

961

 

 

 

993

 

 

 

1,922

 

 

 

2,016

 

Total

 

 

961

 

 

 

961

 

 

 

1,238

 

 

 

1,922

 

 

 

2,506

 

Less: S-1 related costs

 

 

—

 

 

 

—

 

 

 

513

 

 

 

—

 

 

 

813

 

Less: Legal fees - term loan (payment holiday)

 

 

—

 

 

 

126

 

 

 

—

 

 

 

126

 

 

 

—

 

Less: Acquisition-related expenses

 

 

—

 

 

 

1,423

 

 

 

—

 

 

 

1,423

 

 

 

—

 

Non-GAAP operating expenses

 

$

30,178

 

 

$

31,250

 

 

$

24,718

 

 

$

61,428

 

 

$

48,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income from operations

 

$

22,451

 

 

$

47,799

 

 

$

45,078

 

 

$

70,250

 

 

$

76,546

 

GAAP operating margin

 

 

7.4

%

 

 

12.1

%

 

 

14.4

%

 

 

10.1

%

 

 

13.2

%

Add: Share-based compensation expense

 

 

4,148

 

 

 

4,055

 

 

 

1,697

 

 

 

8,203

 

 

 

3,302

 

Add: Amortization of intangible assets

 

 

1,059

 

 

 

977

 

 

 

1,238

 

 

 

2,036

 

 

 

2,506

 

Add: S-1 related costs

 

 

—

 

 

 

—

 

 

 

513

 

 

 

—

 

 

 

813

 

Add: Legal fees - term loan (payment holiday)

 

 

—

 

 

 

126

 

 

 

—

 

 

 

126

 

 

 

—

 

Add: Acquisition-related expenses

 

 

—

 

 

 

1,423

 

 

 

—

 

 

 

1,423

 

 

 

—

 

Non-GAAP income from operations

 

$

27,658

 

 

$

54,380

 

 

$

48,526

 

 

$

82,038

 

 

$

83,167

 

Non-GAAP operating margin

 

 

9.1

%

 

 

13.8

%

 

 

15.5

%

 

 

11.8

%

 

 

14.4

%

 

SMART Global Holdings, Inc.

and Subsidiaries

Reconciliation of Non-GAAP Financial Measures to GAAP Results (continued)

(In thousands, except per share data)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 1,

2019

 

 

November 30,

2018

 

 

February 23,

2018

 

 

March 1,

2019

 

 

February 23,

2018

 

Reconciliation of income before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income before income taxes

 

$

17,430

 

 

$

38,595

 

 

$

43,396

 

 

$

56,025

 

 

$

67,550

 

Add: Share-based compensation expense

 

 

4,148

 

 

 

4,055

 

 

 

1,697

 

 

 

8,203

 

 

 

3,302

 

Add: Amortization of intangible assets

 

 

1,059

 

 

 

977

 

 

 

1,238

 

 

 

2,036

 

 

 

2,506

 

Add: S-1 related costs

 

 

—

 

 

 

—

 

 

 

513

 

 

 

—

 

 

 

813

 

Add: Legal fees - term loan (payment holiday)

 

 

—

 

 

 

126

 

 

 

—

 

 

 

126

 

 

 

—

 

Add: Acquisition-related expenses

 

 

—

 

 

 

1,423

 

 

 

—

 

 

 

1,423

 

 

 

—

 

Add: Foreign currency (gains)/losses

 

 

(47

)

 

 

3,384

 

 

 

(2,415

)

 

 

3,337

 

 

 

327

 

Non-GAAP income before income taxes

 

$

22,590

 

 

$

48,560

 

 

$

44,429

 

 

$

71,150

 

 

$

74,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of provision for income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP provision for income taxes

 

$

4,644

 

 

$

7,619

 

 

$

6,602

 

 

$

12,263

 

 

$

9,751

 

GAAP effective tax rate

 

 

26.6

%

 

 

19.7

%

 

 

15.2

%

 

 

21.9

%

 

 

14.4

%

Tax effect of adjustments to GAAP results

 

 

5

 

 

 

(338

)

 

 

(97

)

 

 

(333

)

 

 

(719

)

Non-GAAP provision for income taxes

 

$

4,639

 

 

$

7,957

 

 

$

6,699

 

 

$

12,596

 

 

$

10,470

 

Non-GAAP effective tax rate

 

 

20.5

%

 

 

16.4

%

 

 

15.1

%

 

 

17.7

%

 

 

14.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income and earnings per share (diluted):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

12,786

 

 

$

30,976

 

 

$

36,794

 

 

$

43,762

 

 

$

57,799

 

Adjustments to GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

4,148

 

 

 

4,055

 

 

 

1,697

 

 

 

8,203

 

 

 

3,302

 

Amortization of intangible assets

 

 

1,059

 

 

 

977

 

 

 

1,238

 

 

 

2,036

 

 

 

2,506

 

S-1 related costs

 

 

—

 

 

 

—

 

 

 

513

 

 

 

—

 

 

 

813

 

Legal fees - term loan (payment holiday)

 

 

—

 

 

 

126

 

 

 

—

 

 

 

126

 

 

 

—

 

Acquisition-related expenses

 

 

—

 

 

 

1,423

 

 

 

—

 

 

 

1,423

 

 

 

—

 

Foreign currency (gains)/losses

 

 

(47

)

 

 

3,384

 

 

 

(2,415

)

 

 

3,337

 

 

 

327

 

Tax effect of items excluded from non-GAAP results

 

 

5

 

 

 

(338

)

 

 

(97

)

 

 

(333

)

 

 

(719

)

Non-GAAP net income

 

$

17,951

 

 

$

40,603

 

 

$

37,730

 

 

$

58,554

 

 

$

64,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share (diluted)

 

 

23,359

 

 

 

23,257

 

 

 

23,038

 

 

 

23,314

 

 

 

22,877

 

Non-GAAP earnings per share (diluted)

 

$

0.77

 

 

$

1.75

 

 

$

1.64

 

 

$

2.51

 

 

$

2.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per share (diluted)

 

$

0.55

 

 

$

1.33

 

 

$

1.60

 

 

$

1.88

 

 

$

2.53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SMART Global Holdings, Inc.

and Subsidiaries

Reconciliation of GAAP Net Income to Adjusted EBITDA

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 1,

2019

 

 

November 30,

2018

 

 

February 23,

2018

 

 

March 1,

2019

 

 

February 23,

2018

 

GAAP net income

 

$

12,786

 

 

$

30,976

 

 

$

36,794

 

 

$

43,762

 

 

$

57,799

 

Share-based compensation expense

 

 

4,148

 

 

 

4,055

 

 

 

1,697

 

 

 

8,203

 

 

 

3,302

 

Amortization of intangible assets

 

 

1,059

 

 

 

977

 

 

 

1,238

 

 

 

2,036

 

 

 

2,506

 

Interest expense, net

 

 

5,273

 

 

 

5,875

 

 

 

4,230

 

 

 

11,148

 

 

 

8,829

 

Provision for income tax

 

 

4,644

 

 

 

7,619

 

 

 

6,602

 

 

 

12,263

 

 

 

9,751

 

Depreciation

 

 

5,868

 

 

 

5,431

 

 

 

5,120

 

 

 

11,299

 

 

 

10,122

 

S-1 related costs

 

 

—

 

 

 

—

 

 

 

513

 

 

 

—

 

 

 

813

 

Legal fees - term loan (payment holiday)

 

 

—

 

 

 

126

 

 

 

—

 

 

 

126

 

 

 

—

 

Acquisition-related expenses

 

 

—

 

 

 

1,423

 

 

 

—

 

 

 

1,423

 

 

 

—

 

Adjusted EBITDA

 

$

33,778

 

 

$

56,482

 

 

$

56,194

 

 

$

90,260

 

 

$

93,122

 

 

(1)

Amounts in Q119 are related to acquisition of Penguin Computing in June 2018.

SMART Global Holdings, Inc.

and Subsidiaries

Consolidated Balance Sheets

(In thousands)

 

 

March 1,

 

 

August 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,174

 

 

$

31,375

 

Accounts receivable, net

 

 

326,470

 

 

 

237,212

 

Inventories

 

 

171,843

 

 

 

221,419

 

Prepaid expenses and other current assets

 

 

27,927

 

 

 

32,043

 

Total current assets

 

 

621,414

 

 

 

522,049

 

Property and equipment, net

 

 

66,860

 

 

 

56,615

 

Other noncurrent assets

 

 

17,702

 

 

 

22,449

 

Intangible assets, net

 

 

24,302

 

 

 

26,255

 

Goodwill

 

 

46,130

 

 

 

45,394

 

Total assets

 

$

776,408

 

 

$

672,762

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

257,316

 

 

$

223,186

 

Accrued liabilities

 

 

52,008

 

 

 

45,190

 

Current portion of long-term debt

 

 

14,694

 

 

 

27,409

 

Total current liabilities

 

 

324,018

 

 

 

295,785

 

Long-term debt

 

 

194,537

 

 

 

184,190

 

Other long-term liabilities

 

 

7,563

 

 

 

5,659

 

Total liabilities

 

 

526,118

 

 

 

485,634

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Ordinary shares

 

 

691

 

 

 

678

 

Additional paid-in capital

 

 

262,603

 

 

 

250,191

 

Accumulated other comprehensive loss

 

 

(170,054

)

 

 

(175,995

)

Retained earnings

 

 

157,050

 

 

 

112,254

 

Total shareholders’ equity

 

 

250,290

 

 

 

187,128

 

Total liabilities and shareholders’ equity

 

$

776,408

 

 

$

672,762

 

 

 

 

 

 

 

 

 

 

SMART Global Holdings, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 1,

2019

 

 

November 30,

2018

 

 

February 23,

2018

 

 

March 1,

2019

 

 

February 23,

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,786

 

 

$

30,976

 

 

$

36,794

 

 

$

43,762

 

 

$

57,799

 

Adjustments to reconcile net income to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,927

 

 

 

6,408

 

 

 

6,358

 

 

 

13,335

 

 

 

12,628

 

Share-based compensation

 

 

4,148

 

 

 

4,055

 

 

 

1,697

 

 

 

8,203

 

 

 

3,302

 

Provision for doubtful accounts receivable and sales

   returns

 

 

34

 

 

 

(104

)

 

 

39

 

 

 

(70

)

 

 

67

 

Deferred income tax benefit

 

 

(650

)

 

 

403

 

 

 

(734

)

 

 

(247

)

 

 

(954

)

(Gain) loss on disposal of property and equipment

 

 

(4

)

 

 

3

 

 

 

244

 

 

 

(1

)

 

 

244

 

Amortization of debt discounts and issuance costs

 

 

694

 

 

 

685

 

 

 

722

 

 

 

1,379

 

 

 

1,451

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

5,669

 

 

 

(89,441

)

 

 

14,894

 

 

 

(83,772

)

 

 

(40,907

)

Inventories

 

 

17,084

 

 

 

30,576

 

 

 

(17,810

)

 

 

47,660

 

 

 

(21,556

)

Prepaid expenses and other assets

 

 

7,424

 

 

 

(3,182

)

 

 

(67

)

 

 

4,242

 

 

 

1,691

 

Accounts payable

 

 

(17,017

)

 

 

48,574

 

 

 

(10,145

)

 

 

31,557

 

 

 

37,347

 

Accrued expenses and other liabilities

 

 

1,959

 

 

 

6,399

 

 

 

2,705

 

 

 

8,358

 

 

 

(2,158

)

Net cash provided by operating activities

 

 

39,054

 

 

 

35,352

 

 

 

34,697

 

 

 

74,406

 

 

 

48,954

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures and deposits on equipment

 

 

(6,232

)

 

 

(13,384

)

 

 

(4,418

)

 

 

(19,616

)

 

 

(10,457

)

Proceeds from sale of property and equipment

 

 

32

 

 

 

21

 

 

 

66

 

 

 

53

 

 

 

66

 

Acquisition of business, net of cash acquired

 

 

(148

)

 

 

—

 

 

 

—

 

 

 

(148

)

 

 

—

 

Net cash used in investing activities

 

 

(6,348

)

 

 

(13,363

)

 

 

(4,352

)

 

 

(19,711

)

 

 

(10,391

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt payment

 

 

(1,712

)

 

 

(1,657

)

 

 

(6,125

)

 

 

(3,369

)

 

 

(12,309

)

Fees paid for revolving line of credit refinancing

 

 

—

 

 

 

—

 

 

 

(469

)

 

 

—

 

 

 

(768

)

Payment of costs related to initial public offering

 

 

—

 

 

 

—

 

 

 

(302

)

 

 

—

 

 

 

(1,591

)

Proceeds from borrowings under revolving line of credit

 

 

64,000

 

 

 

104,000

 

 

 

103,000

 

 

 

168,000

 

 

 

208,500

 

Repayments of borrowings under revolving line of credit

 

 

(64,000

)

 

 

(104,000

)

 

 

(103,000

)

 

 

(168,000

)

 

 

(208,500

)

Proceeds from issuance of ordinary shares from share option

   exercise

 

 

1,071

 

 

 

2,402

 

 

 

3,638

 

 

 

3,473

 

 

 

4,177

 

Proceeds from issuance of ordinary shares from ESPP

 

 

—

 

 

 

968

 

 

 

—

 

 

 

968

 

 

 

—

 

Withholding tax on restricted stock units

 

 

(219

)

 

 

—

 

 

 

—

 

 

 

(219

)

 

 

—

 

Net cash provided by (used in) financing activities

 

 

(860

)

 

 

1,713

 

 

 

(3,258

)

 

 

853

 

 

 

(10,491

)

Effect of exchange rate changes on cash, cash equivalents and

   restricted cash *

 

 

374

 

 

 

2,018

 

 

 

1,468

 

 

 

2,392

 

 

 

1,237

 

Net increase in cash, cash equivalents and

   restricted cash *

 

 

32,220

 

 

 

25,720

 

 

 

28,555

 

 

 

57,940

 

 

 

29,309

 

Cash, cash equivalents and restricted cash at beginning of period *

 

 

62,954

 

 

 

37,234

 

 

 

30,217

 

 

 

37,234

 

 

 

29,463

 

Cash, cash equivalents and restricted cash at end of period *

 

$

95,174

 

 

$

62,954

 

 

$

58,772

 

 

$

95,174

 

 

$

58,772

 

 

*

Cash balance was adjusted to include restricted cash upon adoption of ASU 2016-18 in fiscal 2019.

# # #

 

Investor Contacts:

Karl Motey

Vice President

Strategic Marketing and Communications

(510) 624-8213

Karl.motey@smartm.com

 

Suzanne Schmidt

Investor Relations for SMART Global Holdings, Inc.

(510) 360-8596

ir@smartm.com