SGH Reports Third Quarter Fiscal 2023 Financial Results
Strong Operating Results and Record Cash and Equivalents
MILPITAS, Calif., June 29, 2023--(BUSINESS WIRE)--SMART Global Holdings, Inc. ("SGH" or the "Company") (NASDAQ: SGH) today reported financial results for the third quarter of fiscal 2023.
Third Quarter Fiscal 2023 Highlights
Net sales of $383 million, down 17.1% versus the year-ago quarter
GAAP gross margin of 25.7%, up 100 basis points versus the year-ago quarter
Non-GAAP gross margin of 28.0%, up 230 basis points versus the year-ago quarter
GAAP EPS of $(0.50) versus $0.44 in the year-ago quarter
Non-GAAP EPS of $0.66 versus $0.87 in the year-ago quarter
Record cash and cash equivalents of $401 million
Announced agreement to sell an 81% interest in SMART Modular Technologies do Brasil – Indústria e Comércio de Componentes Ltda. ("SMART Brazil")
"The team achieved strong results for the third quarter in what remains a challenging global economic environment. Non-GAAP gross margin increased to 28.0%, an improvement of 230 basis points from the same period last year, and achieved non-GAAP earnings of $0.66 per share. In addition, we exited the third quarter with a strong balance sheet, including record cash and cash equivalents of $401 million," commented the Company’s CEO Mark Adams. "With the announced agreement to sell an 81% interest in SMART Brazil on June 13, we are continuing our transformation to a high-performance, high-availability enterprise solutions company, and believe we are positioned to benefit from emerging trends in AI, machine learning and data analytics," indicated Adams.
Quarterly Financial Results
GAAP (1) | Non-GAAP (2) | ||||||||||||||||||
(in millions, except per share amounts) | Q3 FY23 | Q2 FY23 | Q3 FY22 | Q3 FY23 | Q2 FY23 | Q3 FY22 | |||||||||||||
Net sales | $ | 383.3 | $ | 429.2 | $ | 462.5 | $ | 383.3 | $ | 429.2 | $ | 462.5 | |||||||
Gross profit | 98.6 | 110.4 | 114.5 | 107.2 | 123.9 | 118.9 | |||||||||||||
Operating income (loss) | (8.8 | ) | (7.2 | ) | 35.3 | 36.3 | 51.4 | 54.3 | |||||||||||
Net income (loss) attributable to SGH | (24.5 | ) | (27.2 | ) | 24.1 | 33.1 | 37.6 | 45.9 | |||||||||||
Diluted earnings (loss) per share | $ | (0.50 | ) | $ | (0.55 | ) | $ | 0.44 | $ | 0.66 | $ | 0.76 | $ | 0.87 | |||||
(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 June 29, 2023, SGH is providing the following financial outlook for its fourth quarter of fiscal 2023:
GAAP Outlook | Adjustments | Non-GAAP Outlook | ||
Net sales | $375 million +/- $25 million | — | $375 million +/- $25 million | |
Gross margin | 26% +/- 1% | 2% | (A) | 28% +/- 1% |
Operating expenses | $87 million +/- $2 million | ($16) million | (B)(C) | $71 million +/- $2 million |
Diluted earnings (loss) per share | $0.02 +/- $0.15 | $0.43 | (A)(B)(C)(D) | $0.45 +/- $0.15 |
Diluted shares | 54.5 million | (2) million | 52.5 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 | 3 | ||
(D) Estimated income tax effects | (3 | ) | |
$ | 21 | ||
Third Quarter Fiscal 2023 Earnings Conference Call and Webcast Details
SGH will hold a conference call and webcast to discuss the third quarter of fiscal 2023 results and related matters today, June 29, 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 177936. 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 SGH’s business strategies, investments and growth drivers in SGH’s industries and markets, 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 rapidly evolving nature of the COVID-19 pandemic; disruptions in SGH’s operations or supply chain as a result 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; 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; future cash flows of the Penguin Edge business; 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; 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, 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) (Unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
May 26, | February 24, | May 27, | May 26, | May 27, | |||||||||||||
Net sales: | |||||||||||||||||
Memory Solutions | $ | 148,370 | $ | 151,136 | $ | 265,850 | $ | 491,473 | $ | 765,332 | |||||||
Intelligent Platform Solutions | 170,854 | 222,451 | 95,345 | 604,276 | 296,256 | ||||||||||||
LED Solutions | 64,106 | 55,587 | 101,345 | 182,233 | 320,067 | ||||||||||||
Total net sales | 383,330 | 429,174 | 462,540 | 1,277,982 | 1,381,655 | ||||||||||||
Cost of sales | 284,687 | 318,793 | 348,077 | 950,548 | 1,032,278 | ||||||||||||
Gross profit | 98,643 | 110,381 | 114,463 | 327,434 | 349,377 | ||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 22,235 | 26,665 | 20,298 | 72,956 | 56,749 | ||||||||||||
Selling, general and administrative | 70,596 | 62,771 | 58,483 | 204,389 | 164,147 | ||||||||||||
Impairment of goodwill | — | 17,558 | — | 17,558 | — | ||||||||||||
Change in fair value of contingent consideration | 14,800 | 6,400 | 124 | 24,900 | 41,324 | ||||||||||||
Other operating (income) expense | (186 | ) | 4,154 | 249 | 6,009 | 249 | |||||||||||
Total operating expenses | 107,445 | 117,548 | 79,154 | 325,812 | 262,469 | ||||||||||||
Operating income (loss) | (8,802 | ) | (7,167 | ) | 35,309 | 1,622 | 86,908 | ||||||||||
Non-operating (income) expense: | |||||||||||||||||
Interest expense, net | 8,059 | 8,006 | 5,110 | 24,102 | 14,678 | ||||||||||||
Other non-operating (income) expense | 514 | 13,329 | 550 | 13,183 | 3,570 | ||||||||||||
Total non-operating (income) expense | 8,573 | 21,335 | 5,660 | 37,285 | 18,248 | ||||||||||||
Income (loss) before taxes | (17,375 | ) | (28,502 | ) | 29,649 | (35,663 | ) | 68,660 | |||||||||
Income tax provision (benefit) | 6,702 | (1,716 | ) | 5,154 | 9,876 | 20,495 | |||||||||||
Net income (loss) | (24,077 | ) | (26,786 | ) | 24,495 | (45,539 | ) | 48,165 | |||||||||
Net income attributable to noncontrolling interest | 378 | 433 | 382 | 1,143 | 1,567 | ||||||||||||
Net income (loss) attributable to SGH | $ | (24,455 | ) | $ | (27,219 | ) | $ | 24,113 | $ | (46,682 | ) | $ | 46,598 | ||||
Earnings (loss) per share: | |||||||||||||||||
Basic | $ | (0.50 | ) | $ | (0.55 | ) | $ | 0.48 | $ | (0.95 | ) | $ | 0.94 | ||||
Diluted | $ | (0.50 | ) | $ | (0.55 | ) | $ | 0.44 | $ | (0.95 | ) | $ | 0.84 | ||||
Shares used in per share calculations: | |||||||||||||||||
Basic | 49,380 | 49,116 | 50,095 | 49,152 | 49,543 | ||||||||||||
Diluted | 49,380 | 49,116 | 54,998 | 49,152 | 55,756 | ||||||||||||
SMART Global Holdings, Inc. Reconciliation of GAAP to Non-GAAP Measures (In thousands) (Unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
May 26, | February 24, | May 27, | May 26, | May 27, | |||||||||||||||
GAAP gross profit | $ | 98,643 | $ | 110,381 | $ | 114,463 | $ | 327,434 | $ | 349,377 | |||||||||
Share-based compensation expense | 1,655 | 1,369 | 1,724 | 4,732 | 5,103 | ||||||||||||||
Amortization of acquisition-related intangibles | 6,704 | 6,615 | 2,696 | 19,785 | 8,374 | ||||||||||||||
Flow-through of inventory step up | — | — | — | 2,599 | — | ||||||||||||||
Cost of sales-related restructure | 211 | 5,552 | — | 5,763 | — | ||||||||||||||
Non-GAAP gross profit | $ | 107,213 | $ | 123,917 | $ | 118,883 | $ | 360,313 | $ | 362,854 | |||||||||
GAAP gross margin | 25.7 | % | 25.7 | % | 24.7 | % | 25.6 | % | 25.3 | % | |||||||||
Effect of adjustments | 2.3 | % | 3.2 | % | 1.0 | % | 2.6 | % | 1.0 | % | |||||||||
Non-GAAP gross margin | 28.0 | % | 28.9 | % | 25.7 | % | 28.2 | % | 26.3 | % | |||||||||
GAAP operating expenses | $ | 107,445 | $ | 117,548 | $ | 79,154 | $ | 325,812 | $ | 262,469 | |||||||||
Share-based compensation expense | (8,376 | ) | (9,026 | ) | (8,823 | ) | (26,106 | ) | (25,192 | ) | |||||||||
Amortization of acquisition-related intangibles | (4,905 | ) | (4,200 | ) | (3,247 | ) | (13,497 | ) | (9,741 | ) | |||||||||
Acquisition and integration expenses | (8,637 | ) | (2,824 | ) | (2,181 | ) | (18,193 | ) | (3,470 | ) | |||||||||
Impairment of goodwill | — | (17,558 | ) | — | (17,558 | ) | — | ||||||||||||
Change in fair value of contingent consideration | (14,800 | ) | (6,400 | ) | (124 | ) | (24,900 | ) | (41,324 | ) | |||||||||
Restructure charge | 186 | (4,154 | ) | (249 | ) | (6,009 | ) | (249 | ) | ||||||||||
Other | — | (900 | ) | 81 | (1,800 | ) | (496 | ) | |||||||||||
Non-GAAP operating expenses | $ | 70,913 | $ | 72,486 | $ | 64,611 | $ | 217,749 | $ | 181,997 | |||||||||
GAAP operating income (loss) | $ | (8,802 | ) | $ | (7,167 | ) | $ | 35,309 | $ | 1,622 | $ | 86,908 | |||||||
Share-based compensation expense | 10,031 | 10,395 | 10,547 | 30,838 | 30,295 | ||||||||||||||
Amortization of acquisition-related intangibles | 11,609 | 10,815 | 5,943 | 33,282 | 18,115 | ||||||||||||||
Flow-through of inventory step up | — | — | — | 2,599 | — | ||||||||||||||
Cost of sales-related restructure | 211 | 5,552 | — | 5,763 | — | ||||||||||||||
Acquisition and integration expenses | 8,637 | 2,824 | 2,181 | 18,193 | 3,470 | ||||||||||||||
Impairment of goodwill | — | 17,558 | — | 17,558 | — | ||||||||||||||
Change in fair value of contingent consideration | 14,800 | 6,400 | 124 | 24,900 | 41,324 | ||||||||||||||
Restructure charge | (186 | ) | 4,154 | 249 | 6,009 | 249 | |||||||||||||
Other | — | 900 | (81 | ) | 1,800 | 496 | |||||||||||||
Non-GAAP operating income | $ | 36,300 | $ | 51,431 | $ | 54,272 | $ | 142,564 | $ | 180,857 | |||||||||
SMART Global Holdings, Inc. Reconciliation of GAAP to Non-GAAP Measures (In thousands, except per share amounts) (Unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
May 26, | February 24, | May 27, | May 26, | May 27, | |||||||||||||||
GAAP net income (loss) attributable to SGH | $ | (24,455 | ) | $ | (27,219 | ) | $ | 24,113 | $ | (46,682 | ) | $ | 46,598 | ||||||
Share-based compensation expense | 10,031 | 10,395 | 10,547 | 30,838 | 30,295 | ||||||||||||||
Amortization of acquisition-related intangibles | 11,609 | 10,815 | 5,943 | 33,282 | 18,115 | ||||||||||||||
Flow-through of inventory step up | — | — | — | 2,599 | — | ||||||||||||||
Cost of sales-related restructure | 211 | 5,552 | — | 5,763 | — | ||||||||||||||
Acquisition and integration expenses | 8,637 | 2,824 | 2,181 | 18,193 | 3,470 | ||||||||||||||
Impairment of goodwill | — | 17,558 | — | 17,558 | — | ||||||||||||||
Change in fair value of contingent consideration | 14,800 | 6,400 | 124 | 24,900 | 41,324 | ||||||||||||||
Restructure charge | (186 | ) | 4,154 | 249 | 6,009 | 249 | ... | ||||||||||||
Amortization of debt discount and other costs | 937 | 1,048 | 2,705 | 3,054 | 7,211 | ||||||||||||||
Loss on extinguishment of debt | — | 16,691 | — | 15,924 | 653 | ||||||||||||||
Foreign currency (gains) losses | 590 | 281 | 641 | 1,113 | 3,516 | ||||||||||||||
Other | — | 900 | (81 | ) | 1,800 | 496 | |||||||||||||
Income tax effects | 10,900 | (11,753 | ) | (513 | ) | (4,153 | ) | (2,139 | ) | ||||||||||
Non-GAAP net income attributable to SGH | $ | 33,074 | $ | 37,646 | $ | 45,909 | $ | 110,198 | $ | 149,788 | |||||||||
Weighted-average shares outstanding - Diluted: | |||||||||||||||||||
GAAP weighted-average shares outstanding | 49,380 | 49,116 | 54,998 | 49,152 | 55,756 | ||||||||||||||
Adjustment for dilutive securities and capped calls | 754 | 726 | (2,063 | ) | 770 | (2,468 | ) | ||||||||||||
Non-GAAP weighted-average shares outstanding | 50,134 | 49,842 | 52,935 | 49,922 | 53,288 | ||||||||||||||
Diluted earnings (loss) per share: | |||||||||||||||||||
GAAP diluted earnings (loss) per share | $ | (0.50 | ) | $ | (0.55 | ) | $ | 0.44 | $ | (0.95 | ) | $ | 0.84 | ||||||
Effect of adjustments | 1.16 | 1.31 | 0.43 | 3.16 | 1.97 | ||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.66 | $ | 0.76 | $ | 0.87 | $ | 2.21 | $ | 2.81 | |||||||||
Net income (loss) attributable to SGH | $ | (24,455 | ) | $ | (27,219 | ) | $ | 24,113 | $ | (46,682 | ) | $ | 46,598 | ||||||
Interest expense, net | 8,059 | 8,006 | 5,110 | 24,102 | 14,678 | ||||||||||||||
Income tax provision (benefit) | 6,702 | (1,716 | ) | 5,154 | 9,876 | 20,495 | |||||||||||||
Depreciation expense and amortization of intangible assets | 21,300 | 19,931 | 16,571 | 61,020 | 48,461 | ||||||||||||||
Share-based compensation expense | 10,031 | 10,395 | 10,547 | 30,838 | 30,295 | ||||||||||||||
Flow-through of inventory step up | — | — | — | 2,599 | — | ||||||||||||||
Cost of sales-related restructure | 211 | 5,552 | — | 5,763 | — | ||||||||||||||
Acquisition and integration expenses | 8,637 | 2,824 | 2,181 | 18,193 | 3,470 | ||||||||||||||
Impairment of goodwill | — | 17,558 | — | 17,558 | — | ||||||||||||||
Change in fair value of contingent consideration | 14,800 | 6,400 | 124 | 24,900 | 41,324 | ||||||||||||||
Restructure charge | (186 | ) | 4,154 | 249 | 6,009 | 249 | |||||||||||||
Loss on extinguishment of debt | — | 16,691 | — | 15,924 | 653 | ||||||||||||||
Other | — | 900 | (81 | ) | 1,800 | 496 | |||||||||||||
Adjusted EBITDA | $ | 45,099 | $ | 63,476 | $ | 63,968 | $ | 171,900 | $ | 206,719 | |||||||||
The non-GAAP adjustment for income tax effects for the three months ended May 26, 2023 includes a reduction in taxes of $4.0 million, or $0.08 per diluted share, for the retroactive effect of a revision in the amount of U.S. net operating losses expected to be utilized in 2023.
SMART Global Holdings, Inc. Consolidated Balance Sheets (In thousands) (Unaudited) | |||||||
As of | May 26, | August 26, | |||||
Assets | |||||||
Cash and cash equivalents | $ | 401,275 | $ | 363,065 | |||
Accounts receivable, net | 243,571 | 410,323 | |||||
Inventories | 226,051 | 323,084 | |||||
Other current assets | 68,014 | 55,393 | |||||
Total current assets | 938,911 | 1,151,865 | |||||
Property and equipment, net | 177,751 | 153,935 | |||||
Operating lease right-of-use assets | 77,789 | 77,399 | |||||
Intangible assets, net | 171,415 | 77,812 | |||||
Goodwill | 183,089 | 74,009 | |||||
Other noncurrent assets | 42,233 | 37,044 | |||||
Total assets | $ | 1,591,188 | $ | 1,572,064 | |||
Liabilities and Equity | |||||||
Accounts payable and accrued expenses | $ | 210,125 | $ | 413,354 | |||
Current debt | 32,253 | 12,025 | |||||
Acquisition-related contingent consideration | 45,700 | — | |||||
Other current liabilities | 96,227 | 90,161 | |||||
Total current liabilities | 384,305 | 515,540 | |||||
Long-term debt | 782,258 | 591,389 | |||||
Noncurrent operating lease liabilities | 73,421 | 71,754 | |||||
Other noncurrent liabilities | 27,038 | 14,835 | |||||
Total liabilities | 1,267,022 | 1,193,518 | |||||
Commitments and contingencies | |||||||
SMART Global Holdings shareholders’ equity: | |||||||
Ordinary shares | 1,655 | 1,586 | |||||
Additional paid-in capital | 432,185 | 448,112 | |||||
Retained earnings | 223,301 | 251,344 | |||||
Treasury shares | (124,659 | ) | (107,776 | ) | |||
Accumulated other comprehensive income (loss) | (214,385 | ) | (221,655 | ) | |||
Total SGH shareholders’ equity | 318,097 | 371,611 | |||||
Noncontrolling interest in subsidiary | 6,069 | 6,935 | |||||
Total equity | 324,166 | 378,546 | |||||
Total liabilities and equity | $ | 1,591,188 | $ | 1,572,064 | |||
SMART Global Holdings, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
May 26, | February 24, | May 27, | May 26, | May 27, | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | (24,077 | ) | $ | (26,786 | ) | $ | 24,495 | $ | (45,539 | ) | $ | 48,165 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | |||||||||||||||||||
Depreciation expense and amortization of intangible assets | 21,300 | 19,931 | 16,571 | 61,020 | 48,461 | ||||||||||||||
Amortization of debt discount and issuance costs | 937 | 1,048 | 2,706 | 3,054 | 7,476 | ||||||||||||||
Share-based compensation expense | 10,031 | 10,395 | 10,547 | 30,838 | 30,295 | ||||||||||||||
Impairment of goodwill | — | 17,558 | — | 17,558 | — | ||||||||||||||
Change in fair value of contingent consideration | 14,800 | 6,400 | 124 | 24,900 | 41,324 | ||||||||||||||
(Gain) loss on extinguishment of debt | — | 16,691 | — | 15,924 | 653 | ||||||||||||||
Other | (811 | ) | 3,705 | (48 | ) | 3,213 | 640 | ||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | (13,746 | ) | 78,529 | 34,089 | 194,478 | (41,490 | ) | ||||||||||||
Inventories | 67,952 | 119,491 | (26,531 | ) | 104,561 | (116 | ) | ||||||||||||
Other assets | 15,391 | (1,525 | ) | (8,375 | ) | 8,667 | 2,070 | ||||||||||||
Accounts payable and accrued expenses and other liabilities | (49,907 | ) | (145,951 | ) | (18,032 | ) | (278,888 | ) | (54,174 | ) | |||||||||
Payment of acquisition-related contingent consideration | — | — | — | (73,724 | ) | — | |||||||||||||
Deferred income taxes, net | (832 | ) | 1,049 | 1,168 | 1,526 | 721 | |||||||||||||
Net cash provided by operating activities | 41,038 | 100,535 | 36,714 | 67,588 | 84,025 | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures and deposits on equipment | (13,260 | ) | (12,613 | ) | (9,156 | ) | (37,522 | ) | (29,298 | ) | |||||||||
Acquisition of business, net of cash acquired | — | (2,800 | ) | — | (213,073 | ) | — | ||||||||||||
Other | 434 | 2,060 | (54 | ) | 773 | (746 | ) | ||||||||||||
Net cash used for investing activities | (12,826 | ) | (13,353 | ) | (9,210 | ) | (249,822 | ) | (30,044 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||||
Proceeds from debt | — | — | — | 295,287 | 270,775 | ||||||||||||||
Proceeds from issuance of ordinary shares | 4,180 | 308 | 4,389 | 8,430 | 11,849 | ||||||||||||||
Proceeds from borrowing under line of credit | — | — | — | — | 84,000 | ||||||||||||||
Payment of acquisition-related contingent consideration | — | — | — | (28,100 | ) | — | |||||||||||||
Payments to acquire ordinary shares | (660 | ) | (11,564 | ) | (13,905 | ) | (16,883 | ) | (16,800 | ) | |||||||||
Payment of premium in connection with convertible note exchange | — | (14,141 | ) | — | (14,141 | ) | — | ||||||||||||
Repayments of debt | (8,153 | ) | (4,507 | ) | — | (17,149 | ) | (125,000 | ) | ||||||||||
Net cash paid for settlement and purchase of Capped Calls | — | (4,304 | ) | — | (4,304 | ) | — | ||||||||||||
Distribution to noncontrolling interest | — | (2,009 | ) | — | (2,009 | ) | (3,773 | ) | |||||||||||
Repayments of borrowings under line of credit | — | — | — | — | (109,000 | ) | |||||||||||||
Other | (1 | ) | (3,414 | ) | — | (3,417 | ) | (3,841 | ) | ||||||||||
Net cash provided by (used for) financing activities | (4,634 | ) | (39,631 | ) | (9,516 | ) | 217,714 | 108,210 | |||||||||||
Effect of changes in currency exchange rates on cash and cash equivalents | 813 | 1,712 | 3,570 | 2,730 | 2,149 | ||||||||||||||
Net increase in cash and cash equivalents | 24,391 | 49,263 | 21,558 | 38,210 | 164,340 | ||||||||||||||
Cash and cash equivalents at beginning of period | 376,884 | 327,621 | 365,768 | 363,065 | 222,986 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 401,275 | $ | 376,884 | $ | 387,326 | $ | 401,275 | $ | 387,326 | |||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230629137591/en/
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