Record GAAP and Non-GAAP Gross Margins for
FY2023
SMART Global Holdings, Inc. (“SGH” or the “Company”) (NASDAQ:
SGH) today reported financial results for the fourth quarter and
full year fiscal 2023.
On June 13, 2023, we entered into an agreement to sell an 81%
interest in our SMART Brazil operations. The transaction is
expected to close at the end of calendar 2023 or early 2024,
subject to required regulatory approvals and satisfaction of
customary closing conditions. Accordingly, our SMART Brazil
operations are classified as discontinued operations in the
accompanying financial statements for all periods presented.
The following discussion relates to our continuing operations,
which exclude SMART Brazil.
Fiscal 2023 Highlights for Continuing Operations
- Net sales of $1.44 billion, up 3.3% versus fiscal year
2022
- Record GAAP gross margin of 28.8%, up 80 basis points versus
fiscal year 2022
- Record Non-GAAP gross margin of 31.7%, up 250 basis points
versus fiscal year 2022
- GAAP EPS of $0.15 versus $0.41 in fiscal year 2022
- Non-GAAP EPS of $2.52 versus $2.65 in fiscal year 2022
Fourth Quarter Fiscal 2023 Highlights for Continuing
Operations
- Net sales of $316.7 million, down 12.6% versus the year-ago
quarter
- GAAP gross margin of 28.9%, up 290 basis points versus the
year-ago quarter
- Non-GAAP gross margin of 31.7%, up 460 basis points versus the
year-ago quarter
- GAAP EPS of $1.17 versus $0.18 in the year-ago quarter
- Non-GAAP EPS of $0.35 versus $0.63 in the year-ago quarter
“Throughout fiscal 2023 the team has made significant progress
in our transformational journey towards becoming an enterprise
solutions company focused on higher quality revenue and improving
gross margins. In the fourth quarter, in what remains a challenging
global economic environment, non-GAAP gross margin increased to
31.7%, an improvement of 460 basis points from the same period last
year, and non-GAAP earnings were $0.35 per share. In addition, we
exited the fourth quarter with a strong balance sheet, including
cash, cash equivalents and short term investments of $391 million,”
commented the Company’s CEO Mark Adams.
Annual Financial Results of Continuing
Operations
GAAP (1)
Non-GAAP (2)
(in thousands, except per share
amounts)
FY23
FY22
FY21
FY23
FY22
FY21
Net sales:
Memory Solutions
$
443,264
$
551,705
$
486,205
$
443,264
$
551,705
$
486,205
Intelligent Platform Solutions
749,708
440,986
344,757
749,708
440,986
344,757
LED Solutions
248,278
403,185
224,567
248,278
403,185
224,567
Total net sales
$
1,441,250
$
1,395,876
$
1,055,529
$
1,441,250
$
1,395,876
$
1,055,529
Gross profit
$
415,171
$
391,045
$
237,973
$
456,578
$
408,082
$
257,162
Operating income (loss)
8,745
67,176
(15,706
)
179,794
177,461
83,484
Net income (loss) attributable to SGH
7,858
22,372
(43,150
)
127,681
139,287
62,122
Diluted earnings (loss) per share
$
0.15
$
0.41
$
(0.89
)
$
2.52
$
2.65
$
1.23
Quarterly Financial Results of
Continuing Operations
GAAP (1)
Non-GAAP (2)
(in thousands, except per share
amounts)
Q4 FY23
Q3 FY23
Q4 FY22
Q4 FY23
Q3 FY23
Q4 FY22
Net sales:
Memory Solutions
$
105,181
$
109,458
$
134,611
$
105,181
$
109,458
$
134,611
Intelligent Platform Solutions
145,432
170,854
144,730
145,432
170,854
144,730
LED Solutions
66,045
64,106
83,118
66,045
64,106
83,118
Total net sales
$
316,658
$
344,418
$
362,459
$
316,658
$
344,418
$
362,459
Gross profit
$
91,585
$
100,480
$
94,420
$
100,300
$
108,990
$
98,356
Operating income (loss)
(1,639
)
(2,386
)
23,060
30,295
42,327
41,866
Net income (loss) attributable to SGH
64,841
(19,648
)
8,862
18,406
28,731
31,610
Diluted earnings (loss) per share
$
1.17
$
(0.40
)
$
0.18
$
0.35
$
0.57
$
0.63
(1)
GAAP represents U.S. Generally
Accepted Accounting Principles.
(2)
Non-GAAP represents GAAP
excluding the impact of certain activities. Further information
regarding the Company’s use of non-GAAP measures and
reconciliations between GAAP and non-GAAP measures is included
within this press release.
Business Outlook
As of October 12, 2023, SGH is providing the following financial
outlook for its continuing operations for the first quarter of
fiscal 2024:
GAAP
Outlook
Adjustments
Non-GAAP
Outlook
Net sales
$275 million +/- $25 million
—
$275 million +/- $25 million
Gross margin
28.5% +/- 1%
3%
(A)
31.5% +/- 1%
Operating expenses
$82 million +/- $1 million
($15) million
(B)(C)
$67 million +/- $1 million
Diluted earnings (loss) per share
$(0.16) +/- $0.15
$0.31
(A)(B)(C)(D)
$0.15 +/- $0.15
Diluted shares
55.6 million
(1.6) million
54 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 included in
operating expenses
2
(D) Estimated income tax effects
(6
)
$
17
Fourth Quarter Fiscal 2023 Earnings Conference Call and
Webcast Details
SGH will hold a conference call and webcast to discuss the
fourth quarter and full year fiscal 2023 results and related
matters today, October 12, 2023, at 1:30 p.m. Pacific Time (4:30
p.m. Eastern Time). Interested parties may access the call by
dialing +1-833-470-1428 in the U.S. or +1-929-526-1599 from
international locations, using the access code 759938. The earnings
presentation and a live webcast of the conference call can be
accessed from the Company’s investor relations website
(https://ir.smartm.com/investors/default.aspx) where they will
remain available for approximately one year.
Use of Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995.
These statements include, but are not limited to, statements
concerning or regarding future events and the future financial and
operating performance of SGH; statements regarding the extent and
timing or and expectations regarding SGH’s future revenues and
expenses and customer demand; statements regarding sale of the
Company’s SMART Brazil operations and expected closing timeline;
and statements regarding the business and financial outlook for the
next fiscal quarter described under “Business Outlook” above.
These statements can be identified by the fact that they do not
relate strictly to historical or current facts. Forward-looking
statements often use words such as “anticipate,” “target,”
“expect,” “estimate,” “intend,” “plan,” “goal,” “believe,” “could,”
and other words of similar meaning. Forward-looking statements
provide SGH’s current expectations or forecasts of future events,
circumstances, results or aspirations and are subject to a number
of significant risks, uncertainties and other factors, many of
which are outside of SGH’s control, including but not limited to,
issues, delays or complications in integrating the operations of
Stratus Technologies; global business and economic conditions and
growth trends in technology industries, SGH’s customer markets and
various geographic regions; uncertainties in the geopolitical
environment; the unpredictable nature of the COVID-19 pandemic;
disruptions in SGH’s operations or supply chain as a result of the
downstream effects of the COVID-19 pandemic or otherwise; the
ability to manage SGH’s cost structure, including SGH’s success in
implementing restructuring or other plans intended to improve SGH’s
operating efficiency; workforce reductions; uncertainties in the
global macro-economic environment; changes in demand for SGH’s
segments; changes in trade regulations or adverse developments in
international trade relations and agreements; changes in currency
exchange rates; availability of our cash and cash equivalents;
overall information technology spending; appropriations for
government spending; the success of SGH’s 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, including any resulting impairment of goodwill
or gain (loss) on extinguishment of debt; the proposed divestiture
of SMART Brazil, the failure to execute on the separation and
transition of SMART Brazil and its business, the failure to satisfy
all conditions to complete the proposed divestiture within the
expected timeframe, and the failure to achieve the intended
benefits of the sale of SMART Brazil and its business; 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 or in the LED market; reduction in, or termination of,
incentives for local manufacturing in Brazil; changes to applicable
tax regimes or rates; reversal of the valuation allowance for a
significant portion of our deferred tax assets, including any
potential inability to realize these assets in the future; prices
for the end products of SGH’s customers; strikes or labor disputes;
deterioration in or loss of relations with any of SGH’s limited
number of key vendors; the inability to maintain or expand
government business; and the continuing availability of borrowings
under term loans and revolving lines of credit and our ability to
raise capital through debt or equity financings. These and other
risks, uncertainties and factors are described in greater detail
under the sections titled “Risk Factors,” “Critical Accounting
Estimates,” “Results of Operations,” “Quantitative and Qualitative
Disclosures About Market Risk,” and “Liquidity and Capital
Resources” contained in the Company’s Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q and the Company’s other filings
with the U.S. Securities and Exchange Commission. In addition, such
risks, uncertainties and factors as outlined above and in such
filings do not constitute all risks, uncertainties and factors that
could cause actual results of SGH to be materially different from
such forward-looking statements. Accordingly, investors are
cautioned not to place undue reliance on any forward-looking
statements. Any forward-looking statements that the Company makes
in this press release speak only as of the date of this press
release. Except as required by law, SGH does not undertake to
update the forward-looking statements contained in this press
release to reflect the impact of circumstances or events that may
arise after the date that the forward-looking statements were
made.
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 (consisting
of amortization of developed technology, customer relationships,
trademarks/trade names and backlog acquired in connection with
business combinations), acquisition-related inventory adjustments,
acquisition-related expenses, restructure charges and integration
expenses, impairment of goodwill, changes in the fair value of
contingent consideration, gains (losses) from changes in currency
exchange rates, amortization of debt discount and other costs, gain
(loss) on extinguishment of debt, other infrequent or unusual items
and related tax effects and other tax adjustments. While
amortization of acquisition-related intangible assets is excluded,
the revenues from acquired companies is reflected in the Company’s
non-GAAP measures and these intangible assets contribute to revenue
generation. 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, impairment of goodwill, changes
in the fair value of contingent consideration, gain (loss) on
extinguishment of debt 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 SGH’s financial results, as noted above. The
presentation of these adjusted amounts varies from amounts
presented in accordance with GAAP and therefore may not be
comparable to amounts reported by other companies. In addition,
adjusted EBITDA does not purport to represent cash flow provided
by, or used for, 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
Measures” tables below.
About SMART Global Holdings – SGH
At SGH, we design and develop high-performance,
high-availability, enterprise solutions that help our customers
solve for the future. Across our computing, memory, and LED lines
of business, we focus on serving our customers by providing deep
technical knowledge and expertise, custom design engineering,
build-to-order flexibility, and a commitment to best-in-class
quality.
Learn more about us at SGHcorp.com.
SMART Global Holdings, Inc.
Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
Year Ended
August 25, 2023
May 26, 2023
August 26, 2022
August 25, 2023
August 26, 2022
August 27, 2021
Net sales:
Memory Solutions
$
105,181
$
109,458
$
134,611
$
443,264
$
551,705
$
486,205
Intelligent Platform Solutions
145,432
170,854
144,730
749,708
440,986
344,757
LED Solutions
66,045
64,106
83,118
248,278
403,185
224,567
Total net sales
316,658
344,418
362,459
1,441,250
1,395,876
1,055,529
Cost of sales
225,073
243,938
268,039
1,026,079
1,004,831
817,556
Gross profit
91,585
100,480
94,420
415,171
391,045
237,973
Operating expenses:
Research and development
20,883
20,338
19,160
90,565
77,472
59,933
Selling, general and administrative
65,026
67,914
52,215
260,722
204,839
158,174
Impairment of goodwill
1,534
—
—
19,092
—
—
Change in fair value of contingent
consideration
4,100
14,800
—
29,000
41,324
32,400
Other operating (income) expense
1,681
(186
)
(15
)
7,047
234
3,172
Total operating expenses
93,224
102,866
71,360
406,426
323,869
253,679
Operating income (loss)
(1,639
)
(2,386
)
23,060
8,745
67,176
(15,706
)
Non-operating (income) expense:
Interest expense, net
9,183
9,314
7,485
36,421
24,345
17,141
Other non-operating (income) expense
(462
)
354
170
11,837
350
(582
)
Total non-operating (income) expense
8,721
9,668
7,655
48,258
24,695
16,559
Income (loss) before taxes
(10,360
)
(12,054
)
15,405
(39,513
)
42,481
(32,265
)
Income tax provision (benefit)
(75,890
)
7,216
6,075
(49,203
)
18,074
9,689
Net income (loss) from continuing
operations
65,530
(19,270
)
9,330
9,690
24,407
(41,954
)
Net income (loss) from discontinued
operations, net of tax
(205,685
)
(4,807
)
11,097
(195,384
)
44,185
64,460
Net income (loss)
(140,155
)
(24,077
)
20,427
(185,694
)
68,592
22,506
Net income attributable to noncontrolling
interest
689
378
468
1,832
2,035
1,196
Net income (loss) attributable to SGH
$
(140,844
)
$
(24,455
)
$
19,959
$
(187,526
)
$
66,557
$
21,310
Basic earnings (loss) per share:
Continuing operations
$
1.28
$
(0.40
)
$
0.18
$
0.16
$
0.45
$
(0.89
)
Discontinued operations
(4.05
)
(0.10
)
0.23
(3.94
)
0.90
1.33
$
(2.77
)
$
(0.50
)
$
0.41
$
(3.78
)
$
1.35
$
0.44
Diluted earnings (loss) per share:
Continuing operations
$
1.17
$
(0.40
)
$
0.18
$
0.15
$
0.41
$
(0.89
)
Discontinued operations
(3.71
)
(0.10
)
0.22
(3.80
)
0.81
1.33
$
(2.54
)
$
(0.50
)
$
0.40
$
(3.65
)
$
1.22
$
0.44
Shares used in per share calculations:
Basic
50,807
49,380
49,238
49,566
49,467
48,558
Diluted
55,523
49,380
50,504
51,322
54,443
48,558
SMART Global Holdings, Inc.
Reconciliation of GAAP to Non-GAAP
Measures
(In thousands)
(Unaudited)
Three Months Ended
Year Ended
August 25, 2023
May 26, 2023
August 26, 2022
August 25, 2023
August 26, 2022
August 27, 2021
GAAP gross profit
$
91,585
$
100,480
$
94,420
$
415,171
$
391,045
$
237,973
Share-based compensation expense
1,789
1,595
1,569
6,334
6,296
3,871
Amortization of acquisition-related
intangibles
5,876
6,704
2,367
25,661
10,741
8,228
Flow-through of inventory step up
—
—
—
2,599
—
7,090
Cost of sales-related restructure
1,050
211
—
6,813
—
—
Non-GAAP gross profit
$
100,300
$
108,990
$
98,356
$
456,578
$
408,082
$
257,162
GAAP gross margin
28.9
%
29.2
%
26.0
%
28.8
%
28.0
%
22.5
%
Effect of adjustments
2.8
%
2.4
%
1.1
%
2.9
%
1.2
%
1.9
%
Non-GAAP gross margin
31.7
%
31.6
%
27.1
%
31.7
%
29.2
%
24.4
%
GAAP operating expenses
$
93,224
$
102,866
$
71,360
$
406,426
$
323,869
$
253,679
Share-based compensation expense
(7,785
)
(8,047
)
(7,890
)
(32,894
)
(30,988
)
(27,090
)
Amortization of acquisition-related
intangibles
(5,443
)
(4,905
)
(3,247
)
(18,940
)
(12,988
)
(12,027
)
Acquisition and integration expenses
(2,676
)
(8,637
)
(3,620
)
(20,869
)
(7,090
)
(5,314
)
Impairment of goodwill
(1,534
)
—
—
(19,092
)
—
—
Change in fair value of contingent
consideration
(4,100
)
(14,800
)
—
(29,000
)
(41,324
)
(32,400
)
Restructure charge
(1,681
)
186
15
(7,047
)
(234
)
(3,172
)
Other
—
—
(128
)
(1,800
)
(624
)
2
Non-GAAP operating expenses
$
70,005
$
66,663
$
56,490
$
276,784
$
230,621
$
173,678
GAAP operating income (loss)
$
(1,639
)
$
(2,386
)
$
23,060
$
8,745
$
67,176
$
(15,706
)
Share-based compensation expense
9,574
9,642
9,459
39,228
37,284
30,961
Amortization of acquisition-related
intangibles
11,319
11,609
5,614
44,601
23,729
20,255
Flow-through of inventory step up
—
—
—
2,599
—
7,090
Cost of sales-related restructure
1,050
211
—
6,813
—
—
Acquisition and integration expenses
2,676
8,637
3,620
20,869
7,090
5,314
Impairment of goodwill
1,534
—
—
19,092
—
—
Change in fair value of contingent
consideration
4,100
14,800
—
29,000
41,324
32,400
Restructure charge
1,681
(186
)
(15
)
7,047
234
3,172
Other
—
—
128
1,800
624
(2
)
Non-GAAP operating income
$
30,295
$
42,327
$
41,866
$
179,794
$
177,461
$
83,484
SMART Global Holdings, Inc.
Reconciliation of GAAP to Non-GAAP
Measures
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
Year Ended
August 25, 2023
May 26, 2023
August 26, 2022
August 25, 2023
August 26, 2022
August 27, 2021
GAAP net income (loss) attributable to
SGH
$
64,841
$
(19,648
)
$
8,862
$
7,858
$
22,372
$
(43,150
)
Share-based compensation expense
9,574
9,642
9,459
39,228
37,284
30,961
Amortization of acquisition-related
intangibles
11,319
11,609
5,614
44,601
23,729
20,255
Flow-through of inventory step up
—
—
—
2,599
—
7,090
Cost of sales-related restructure
1,050
211
—
6,813
—
—
Acquisition and integration expenses
2,676
8,637
3,620
20,869
7,090
5,314
Impairment of goodwill
1,534
—
—
19,092
—
—
Change in fair value of contingent
consideration
4,100
14,800
—
29,000
41,324
32,400
Restructure charge
1,681
(186
)
(15
)
7,047
234
3,172
Amortization of debt discount and other
costs
1,010
937
2,788
4,064
9,999
8,419
Loss on extinguishment of debt
—
—
—
15,924
653
—
Foreign currency (gains) losses
(276
)
410
97
(221
)
9
389
Other
—
—
128
1,800
624
(1,004
)
Income tax effects
(79,103
)
2,319
1,057
(70,993
)
(4,031
)
(1,724
)
Non-GAAP net income attributable to
SGH
$
18,406
$
28,731
$
31,610
$
127,681
$
139,287
$
62,122
Weighted-average shares outstanding -
Diluted:
GAAP weighted-average shares
outstanding
55,523
49,380
50,504
51,322
54,443
48,558
Adjustment for dilutive securities and
capped calls
(2,233
)
754
—
(558
)
(1,851
)
2,129
Non-GAAP weighted-average shares
outstanding
53,290
50,134
50,504
50,764
52,592
50,687
Diluted earnings (loss) per share from
continuing operations:
GAAP diluted earnings (loss) per share
$
1.17
$
(0.40
)
$
0.18
$
0.15
$
0.41
$
(0.89
)
Effect of adjustments
(0.82
)
0.97
0.45
2.37
2.24
2.12
Non-GAAP diluted earnings per share
$
0.35
$
0.57
$
0.63
$
2.52
$
2.65
$
1.23
Net income (loss) attributable to
SGH
$
64,841
$
(19,648
)
$
8,862
$
7,858
$
22,372
$
(43,150
)
Interest expense, net
9,183
9,314
7,485
36,421
24,345
17,141
Income tax provision (benefit)
(75,890
)
7,216
6,075
(49,203
)
18,074
9,689
Depreciation expense and amortization of
intangible assets
18,830
18,554
11,646
71,632
46,665
34,937
Share-based compensation expense
9,574
9,642
9,459
39,228
37,284
30,961
Flow-through of inventory step up
—
—
—
2,599
—
7,090
Cost of sales-related restructure
1,050
211
—
6,813
—
—
Acquisition and integration expenses
2,676
8,637
3,620
20,869
7,090
5,314
Impairment of goodwill
1,534
—
—
19,092
—
—
Change in fair value of contingent
consideration
4,100
14,800
—
29,000
41,324
32,400
Restructure charge
1,681
(186
)
(15
)
7,047
234
3,172
Loss on extinguishment of debt
—
—
—
15,924
653
—
Other
—
—
128
1,800
624
(1,004
)
Adjusted EBITDA
$
37,579
$
48,540
$
47,260
$
209,080
$
198,665
$
96,550
SMART Global Holdings, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
As of
August 25, 2023
August 26, 2022
Assets
Cash and cash equivalents
$
365,563
$
313,328
Short-term investments
25,251
—
Accounts receivable, net
219,247
355,002
Inventories
174,977
263,768
Other current assets
51,790
33,486
Current assets from discontinued
operations
70,574
186,281
Total current assets
907,402
1,151,865
Property and equipment, net
118,734
96,708
Operating lease right-of-use assets
68,444
71,823
Intangible assets, net
160,185
77,812
Goodwill
161,958
55,121
Deferred tax assets
74,085
4,576
Other noncurrent assets
15,150
15,014
Noncurrent assets from discontinued
operations
—
99,145
Total assets
$
1,505,958
$
1,572,064
Liabilities and Equity
Accounts payable and accrued expenses
$
182,035
$
354,098
Current debt
35,618
8,469
Deferred revenue
48,096
30,780
Other current liabilities
32,731
57,880
Acquisition-related contingent
consideration
50,000
—
Current liabilities from discontinued
operations
77,770
64,313
Total current liabilities
426,250
515,540
Long-term debt
754,820
575,682
Noncurrent operating lease liabilities
66,407
66,990
Other noncurrent liabilities
29,248
14,835
Noncurrent liabilities from discontinued
operations
—
20,471
Total liabilities
1,276,725
1,193,518
Commitments and contingencies
SMART Global Holdings shareholders’
equity:
Ordinary shares
1,726
1,586
Additional paid-in capital
476,703
448,112
Retained earnings
82,457
251,344
Treasury shares
(132,447
)
(107,776
)
Accumulated other comprehensive income
(loss)
(205,964
)
(221,655
)
Total SGH shareholders’ equity
222,475
371,611
Noncontrolling interest in subsidiary
6,758
6,935
Total equity
229,233
378,546
Total liabilities and equity
$
1,505,958
$
1,572,064
SMART Global Holdings, Inc.
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Three Months Ended
Year Ended
August 25, 2023
May 26, 2023
August 26, 2022
August 25, 2023
August 26, 2022
August 27, 2021
Cash flows from operating
activities
Net income (loss)
$
(140,155
)
$
(24,077
)
$
20,427
$
(185,694
)
$
68,592
$
22,506
Net income (loss) from discontinued
operations
(205,685
)
(4,807
)
11,097
(195,384
)
44,185
64,460
Net income (loss) from continuing
operations
65,530
(19,270
)
9,330
9,690
24,407
(41,954
)
Adjustments to reconcile net income (loss)
from continuing operations to cash provided by operating
activities
Depreciation expense and amortization of
intangible assets
18,830
18,554
11,646
71,632
46,665
34,937
Amortization of debt discount and issuance
costs
1,010
937
2,787
4,064
10,263
8,798
Share-based compensation expense
9,574
9,642
9,459
39,228
37,284
30,961
Impairment of goodwill
1,534
—
—
19,092
—
—
Change in fair value of contingent
consideration
4,100
14,800
—
29,000
41,324
32,400
Loss on extinguishment of debt
—
—
—
15,924
653
—
Deferred income taxes, net
(65,228
)
(5
)
(9
)
(63,603
)
(20
)
(1,982
)
Other
701
(809
)
51
4,008
582
(598
)
Changes in operating assets and
liabilities:
Accounts receivable
3,007
(12,525
)
(59,249
)
162,515
(97,801
)
(47,773
)
Inventories
28,564
56,413
55,411
95,217
30,733
(99,906
)
Other assets
(290
)
16,950
(5,926
)
6,767
(10,321
)
15,415
Accounts payable and accrued expenses and
other liabilities
(29,776
)
(51,612
)
(15,368
)
(256,133
)
(44,907
)
192,542
Payment of acquisition-related contingent
consideration
—
—
—
(73,724
)
—
—
Net cash provided by operating activities
from continuing operations
37,556
33,075
8,132
63,677
38,862
122,840
Net cash provided by (used for) operating
activities from discontinued operations
(757
)
7,963
12,774
40,710
66,069
30,510
Net cash provided by operating
activities
36,799
41,038
20,906
104,387
104,931
153,350
Cash flows from investing
activities
Capital expenditures and deposits on
equipment
(7,747
)
(11,984
)
(5,858
)
(39,421
)
(20,359
)
(16,669
)
Acquisition of business, net of cash
acquired
—
—
—
(213,073
)
—
(35,677
)
Purchases of held-to-maturity investment
securities
(25,015
)
—
—
(25,015
)
—
—
Other
(4,345
)
431
(71
)
(3,675
)
(875
)
(1,121
)
Net cash used for investing activities
from continuing operations
(37,107
)
(11,553
)
(5,929
)
(281,184
)
(21,234
)
(53,467
)
Net cash used for investing activities
from discontinued operations
(11,640
)
(1,273
)
(2,997
)
(17,385
)
(17,736
)
(30,711
)
Net cash used for investing activities
$
(48,747
)
$
(12,826
)
$
(8,926
)
$
(298,569
)
$
(38,970
)
$
(84,178
)
SMART Global Holdings, Inc.
Consolidated Statements of Cash Flows,
Continued
(In thousands)
(Unaudited)
Three Months Ended
Year Ended
August 25, 2023
May 26, 2023
August 26, 2022
August 25, 2023
August 26, 2022
August 27, 2021
Cash flows from financing
activities
Proceeds from debt
$
—
$
—
$
—
$
295,287
$
270,775
$
—
Proceeds from issuance of ordinary
shares
34,615
4,180
291
43,045
12,140
14,923
Proceeds from borrowing under line of
credit
—
—
—
—
84,000
172,500
Payment of acquisition-related contingent
consideration
—
—
—
(28,100
)
—
—
Payments to acquire ordinary shares
(7,788
)
(660
)
(40,431
)
(24,671
)
(57,231
)
(48,513
)
Repayments of debt
(7,212
)
(7,211
)
(1,719
)
(21,634
)
(126,719
)
—
Payment of premium in connection with
convertible note exchange
—
—
—
(14,141
)
—
—
Net cash paid for settlement and purchase
of Capped Calls
—
—
—
(4,304
)
—
—
Distribution to noncontrolling
interest
—
—
—
(2,009
)
(3,773
)
—
Repayments of borrowings under line of
credit
—
—
—
—
(109,000
)
(147,500
)
Other
(487
)
(688
)
(1,242
)
(6,252
)
(9,547
)
(6,138
)
Net cash provided by (used for) financing
activities from continuing operations
19,128
(4,379
)
(43,101
)
237,221
60,645
(14,728
)
Net cash provided by (used for) financing
activities from discontinued operations
(426
)
(255
)
8,770
(805
)
13,234
17,577
Net cash provided by (used for) financing
activities
18,702
(4,634
)
(34,331
)
236,416
73,879
2,849
Effect of changes in currency exchange
rates
2,035
813
(1,910
)
4,765
239
154
Net increase (decrease) in cash and cash
equivalents
8,789
24,391
(24,261
)
46,999
140,079
72,175
Cash and cash equivalents at beginning of
period
401,275
376,884
387,326
363,065
222,986
150,811
Cash and cash equivalents at end of
period
$
410,064
$
401,275
$
363,065
$
410,064
$
363,065
$
222,986
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231012804448/en/
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
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