Press release

SGH Reports First Quarter Fiscal 2024 Financial Results

0
Sponsored by Businesswire

SMART Global Holdings, Inc. (“SGH” or the “Company”) (NASDAQ: SGH) today reported financial results for the first quarter of fiscal 2024.

On November 29, 2023, we completed our previously announced divestiture of an 81% interest in our SMART Brazil operations. Our SMART Brazil operations are classified as discontinued operations in the accompanying financial information for all periods presented. The following discussion relates to our continuing operations, which exclude SMART Brazil.

First Quarter Fiscal 2024 Highlights for Continuing Operations

  • Net sales of $274.2 million, down 30.0% versus the year-ago quarter

  • Record GAAP gross margin of 30.2%, up 160 basis points versus the year-ago quarter

  • Record Non-GAAP gross margin of 33.3%, up 200 basis points versus the year-ago quarter

  • GAAP EPS of $(0.23) versus $(0.08) in the year-ago quarter

  • Non-GAAP EPS of $0.24 versus $0.75 in the year-ago quarter

“We are pleased with the progress we are making on our transformation journey, marked by the strategic divestiture of our Brazil business and another quarter of record non-GAAP gross margins reflecting the continued shift to higher value enterprise solutions,” commented CEO Mark Adams. “Additionally, we ended our first quarter with record cash and short term-investments of $553 million, allowing us to continue investing strategically in AI, developing products based on advanced memory technologies and strengthening CreeLED’s portfolio to enable future long term growth,” concluded Adams.

Share Repurchase Authorization

On January 8, 2024, the Audit Committee of the Board of Directors approved a $75 million share repurchase authorization, bringing total share repurchase authorizations over the last two years to $150 million. Under the share repurchase authorization, the Company may repurchase its outstanding ordinary shares from time to time through open market purchases, privately-negotiated transactions or otherwise. The share repurchase authorization has no expiration date, may be suspended or terminated by the Audit Committee at any time and does not obligate the Company to acquire any amount of ordinary shares.

Quarterly Financial Results of Continuing Operations

 

GAAP (1)

 

Non-GAAP (2)

(in thousands, except per share amounts)

Q1 FY24

 

Q4 FY23

 

Q1 FY23

 

Q1 FY24

 

Q4 FY23

 

Q1 FY23

Net sales:

 

 

 

 

 

 

 

 

 

 

 

Memory Solutions

$

85,668

 

 

$

105,181

 

 

$

118,286

 

 

$

85,668

 

$

105,181

 

$

118,286

Intelligent Platform Solutions

 

118,824

 

 

 

145,432

 

 

 

210,971

 

 

 

118,824

 

 

145,432

 

 

210,971

LED Solutions

 

69,755

 

 

 

66,045

 

 

 

62,540

 

 

 

69,755

 

 

66,045

 

 

62,540

Total net sales

$

274,247

 

 

$

316,658

 

 

$

391,797

 

 

$

274,247

 

$

316,658

 

$

391,797

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

82,850

 

 

$

91,585

 

 

$

112,098

 

 

$

91,277

 

$

100,300

 

$

122,805

Operating income (loss)

 

1,305

 

 

 

(1,639

)

 

 

14,847

 

 

 

26,679

 

 

30,295

 

 

51,388

Net income (loss) attributable to SGH

 

(11,773

)

 

 

64,841

 

 

 

(3,939

)

 

 

12,538

 

 

18,406

 

 

37,364

Diluted earnings (loss) per share

$

(0.23

)

 

$

1.17

 

 

$

(0.08

)

 

$

0.24

 

$

0.35

 

$

0.75

(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 January 9, 2024, SGH is providing the following financial outlook for its continuing operations for the second quarter of fiscal 2024:

 

GAAP

Outlook

Adjustments

Non-GAAP

Outlook

Net sales

$285 million +/- $25 million

$285 million +/- $25 million

Gross margin

29.5% +/- 1%

3%

(A)

32.5% +/- 1%

Operating expenses

$81 million +/- $3 million

($15) million

(B)(C)

$66 million +/- $3 million

Diluted earnings (loss) per share

$(0.15) +/- $0.10

$0.40

(A)(B)(C)(D)

$0.25 +/- $0.10

Diluted shares

52 million

1 million

53 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

 

(2

)

 

$

21

 

First Quarter Fiscal 2024 Earnings Conference Call and Webcast Details

SGH will hold a conference call and webcast to discuss the first quarter of fiscal 2024 results and related matters today, January 9, 2024, 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 064997. 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 of and expectations regarding SGH’s future revenues and expenses and customer demand; statements regarding SGH’s strategic investments and priorities; statements regarding long-term effective tax rates; 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, global business and economic conditions and growth trends in technology industries, our customer markets and various geographic regions; uncertainties in the geopolitical environment; the ability to manage our cost structure; disruptions in our operations or supply chain; 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 and the failure to successfully integrate and operate them or customers’ negative reactions to them; incurring unanticipated costs following the completion of the sale of our SMART Brazil business; issues, delays or complications in integrating the operations of Stratus Technologies; 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; our dependence on a select number of customers and the timing and volume of customer orders; 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 LED market; 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 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.

Beginning in 2024, for our non-GAAP reporting, we are utilizing a long-term projected non-GAAP effective tax rate of 28%, which includes the tax impact of pre-tax non-GAAP adjustments and reflects currently available information as well as other factors and assumptions. While we expect to use this normalized non-GAAP effective tax rate through 2024, this long-term non-GAAP effective tax rate may be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix or changes to our strategy or business operations. Our GAAP effective tax can vary significantly from quarter to quarter based on a variety of factors, including, but not limited to, discrete items which are recorded in the period they occur, the tax effects of certain items of income or expense, significant changes in our geographic earnings mix or changes to our strategy or business operations. We are unable to predict the timing and amounts of these items, which could significantly impact our GAAP effective tax rate, and therefore we are unable to reconcile our forward-looking non-GAAP effective tax rate measure to our GAAP effective tax rate.

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, build, deploy and manage 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

 

December 1,

2023

 

August 25,

2023

 

November 25,

2022

Net sales:

 

 

 

 

 

Memory Solutions

$

85,668

 

 

$

105,181

 

 

$

118,286

 

Intelligent Platform Solutions

 

118,824

 

 

 

145,432

 

 

 

210,971

 

LED Solutions

 

69,755

 

 

 

66,045

 

 

 

62,540

 

Total net sales

 

274,247

 

 

 

316,658

 

 

 

391,797

 

Cost of sales

 

191,397

 

 

 

225,073

 

 

 

279,699

 

Gross profit

 

82,850

 

 

 

91,585

 

 

 

112,098

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Research and development

 

21,389

 

 

 

20,883

 

 

 

24,072

 

Selling, general and administrative

 

57,217

 

 

 

65,026

 

 

 

67,708

 

Impairment of goodwill

 

 

 

 

1,534

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

4,100

 

 

 

3,700

 

Other operating (income) expense

 

2,939

 

 

 

1,681

 

 

 

1,771

 

Total operating expenses

 

81,545

 

 

 

93,224

 

 

 

97,251

 

Operating income (loss)

 

1,305

 

 

 

(1,639

)

 

 

14,847

 

 

 

 

 

 

 

Non-operating (income) expense:

 

 

 

 

 

Interest expense, net

 

9,559

 

 

 

9,183

 

 

 

8,494

 

Other non-operating (income) expense

 

(576

)

 

 

(462

)

 

 

(1,362

)

Total non-operating (income) expense

 

8,983

 

 

 

8,721

 

 

 

7,132

 

Income (loss) before taxes

 

(7,678

)

 

 

(10,360

)

 

 

7,715

 

 

 

 

 

 

 

Income tax provision (benefit)

 

3,534

 

 

 

(75,890

)

 

 

11,322

 

Net income (loss) from continuing operations

 

(11,212

)

 

 

65,530

 

 

 

(3,607

)

Net income (loss) from discontinued operations

 

(8,148

)

 

 

(205,685

)

 

 

8,931

 

Net income (loss)

 

(19,360

)

 

 

(140,155

)

 

 

5,324

 

Net income attributable to noncontrolling interest

 

561

 

 

 

689

 

 

 

332

 

Net income (loss) attributable to SGH

$

(19,921

)

 

$

(140,844

)

 

$

4,992

 

 

 

 

 

 

 

Basic earnings (loss) per share:

 

 

 

 

 

Continuing operations

$

(0.23

)

 

$

1.28

 

 

$

(0.08

)

Discontinued operations

 

(0.15

)

 

 

(4.05

)

 

 

0.18

 

 

$

(0.38

)

 

$

(2.77

)

 

$

0.10

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

Continuing operations

$

(0.23

)

 

$

1.17

 

 

$

(0.08

)

Discontinued operations

 

(0.15

)

 

 

(3.71

)

 

 

0.18

 

 

$

(0.38

)

 

$

(2.54

)

 

$

0.10

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

Basic

 

52,068

 

 

 

50,807

 

 

 

48,962

 

Diluted

 

52,068

 

 

 

55,523

 

 

 

48,962

 

SMART Global Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

December 1,

2023

 

August 25,

2023

 

November 25,

2022

GAAP gross profit

$

82,850

 

 

$

91,585

 

 

$

112,098

 

Share-based compensation expense

 

1,815

 

 

 

1,789

 

 

 

1,642

 

Amortization of acquisition-related intangibles

 

5,944

 

 

 

5,876

 

 

 

6,466

 

Flow-through of inventory step up

 

 

 

 

 

 

 

2,599

 

Cost of sales-related restructure

 

668

 

 

 

1,050

 

 

 

 

Non-GAAP gross profit

$

91,277

 

 

$

100,300

 

 

$

122,805

 

 

 

 

 

 

 

GAAP gross margin

 

30.2

%

 

 

28.9

%

 

 

28.6

%

Effect of adjustments

 

3.1

%

 

 

2.8

%

 

 

2.7

%

Non-GAAP gross margin

 

33.3

%

 

 

31.7

%

 

 

31.3

%

 

 

 

 

 

 

GAAP operating expenses

$

81,545

 

 

$

93,224

 

 

$

97,251

 

Share-based compensation expense

 

(9,155

)

 

 

(7,785

)

 

 

(8,339

)

Amortization of acquisition-related intangibles

 

(4,064

)

 

 

(5,443

)

 

 

(4,392

)

Acquisition and integration expenses

 

(789

)

 

 

(2,676

)

 

 

(6,732

)

Impairment of goodwill

 

 

 

 

(1,534

)

 

 

 

Change in fair value of contingent consideration

 

 

 

 

(4,100

)

 

 

(3,700

)

Restructure charge

 

(2,939

)

 

 

(1,681

)

 

 

(1,771

)

Other

 

 

 

 

 

 

 

(900

)

Non-GAAP operating expenses

$

64,598

 

 

$

70,005

 

 

$

71,417

 

 

 

 

 

 

 

GAAP operating income (loss)

$

1,305

 

 

$

(1,639

)

 

$

14,847

 

Share-based compensation expense

 

10,970

 

 

 

9,574

 

 

 

9,981

 

Amortization of acquisition-related intangibles

 

10,008

 

 

 

11,319

 

 

 

10,858

 

Flow-through of inventory step up

 

 

 

 

 

 

 

2,599

 

Cost of sales-related restructure

 

668

 

 

 

1,050

 

 

 

 

Acquisition and integration expenses

 

789

 

 

 

2,676

 

 

 

6,732

 

Impairment of goodwill

 

 

 

 

1,534

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

4,100

 

 

 

3,700

 

Restructure charge

 

2,939

 

 

 

1,681

 

 

 

1,771

 

Other

 

 

 

 

 

 

 

900

 

Non-GAAP operating income

$

26,679

 

 

$

30,295

 

 

$

51,388

 

SMART Global Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Measures

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

December 1,

2023

 

August 25,

2023

 

November 25,

2022

GAAP net income (loss) attributable to SGH

$

(11,773

)

 

$

64,841

 

 

$

(3,939

)

Share-based compensation expense

 

10,970

 

 

 

9,574

 

 

 

9,981

 

Amortization of acquisition-related intangibles

 

10,008

 

 

 

11,319

 

 

 

10,858

 

Flow-through of inventory step up

 

 

 

 

 

 

 

2,599

 

Cost of sales-related restructure

 

668

 

 

 

1,050

 

 

 

 

Acquisition and integration expenses

 

789

 

 

 

2,676

 

 

 

6,732

 

Impairment of goodwill

 

 

 

 

1,534

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

4,100

 

 

 

3,700

 

Restructure charge

 

2,939

 

 

 

1,681

 

 

 

1,771

 

Amortization of debt discount and other costs

 

1,042

 

 

 

1,010

 

 

 

1,069

 

Loss (gain) on extinguishment of debt

 

 

 

 

 

 

 

(767

)

Foreign currency (gains) losses

 

(546

)

 

 

(276

)

 

 

(520

)

Other

 

 

 

 

 

 

 

900

 

Income tax effects

 

(1,559

)

 

 

(79,103

)

 

 

4,980

 

Non-GAAP net income attributable to SGH

$

12,538

 

 

$

18,406

 

 

$

37,364

 

 

 

 

 

 

 

Weighted-average shares outstanding – Diluted:

 

 

 

 

 

GAAP weighted-average shares outstanding

 

52,068

 

 

 

55,523

 

 

 

48,962

 

Adjustment for dilutive securities and capped calls

 

1,213

 

 

 

(2,233

)

 

 

829

 

Non-GAAP weighted-average shares outstanding

 

53,281

 

 

 

53,290

 

 

 

49,791

 

 

 

 

 

 

 

Diluted earnings (loss) per share from continuing operations:

 

 

 

 

 

GAAP diluted earnings (loss) per share

$

(0.23

)

 

$

1.17

 

 

$

(0.08

)

Effect of adjustments

 

0.47

 

 

 

(0.82

)

 

 

0.83

 

Non-GAAP diluted earnings per share

$

0.24

 

 

$

0.35

 

 

$

0.75

 

 

 

 

 

 

 

Net income (loss) attributable to SGH

$

(11,773

)

 

$

64,841

 

 

$

(3,939

)

Interest expense, net

 

9,559

 

 

 

9,183

 

 

 

8,494

 

Income tax provision (benefit)

 

3,534

 

 

 

(75,890

)

 

 

11,322

 

Depreciation expense and amortization of intangible assets

 

17,654

 

 

 

18,830

 

 

 

17,049

 

Share-based compensation expense

 

10,970

 

 

 

9,574

 

 

 

9,981

 

Flow-through of inventory step up

 

 

 

 

 

 

 

2,599

 

Cost of sales-related restructure

 

668

 

 

 

1,050

 

 

 

 

Acquisition and integration expenses

 

789

 

 

 

2,676

 

 

 

6,732

 

Impairment of goodwill

 

 

 

 

1,534

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

4,100

 

 

 

3,700

 

Restructure charge

 

2,939

 

 

 

1,681

 

 

 

1,771

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

(767

)

Other

 

 

 

 

 

 

 

900

 

Adjusted EBITDA

$

34,340

 

 

$

37,579

 

 

$

57,842

 

SMART Global Holdings, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

As of

December 1,

2023

 

August 25,

2023

Assets

 

 

 

Cash and cash equivalents

$

529,059

 

 

$

365,563

 

Short-term investments

 

24,385

 

 

 

25,251

 

Accounts receivable, net

 

170,590

 

 

 

219,247

 

Inventories

 

208,441

 

 

 

174,977

 

Other current assets

 

54,373

 

 

 

51,790

 

Current assets of discontinued operations

 

 

 

 

70,574

 

Total current assets

 

986,848

 

 

 

907,402

 

Property and equipment, net

 

112,328

 

 

 

118,734

 

Operating lease right-of-use assets

 

64,637

 

 

 

68,444

 

Intangible assets, net

 

150,283

 

 

 

160,185

 

Goodwill

 

161,958

 

 

 

161,958

 

Deferred tax assets

 

74,365

 

 

 

74,085

 

Other noncurrent assets

 

80,446

 

 

 

15,150

 

Total assets

$

1,630,865

 

 

$

1,505,958

 

 

 

 

 

Liabilities and Equity

 

 

 

Accounts payable and accrued expenses

$

219,082

 

 

$

182,035

 

Current debt

 

28,511

 

 

 

35,618

 

Deferred revenue

 

39,096

 

 

 

48,096

 

Other current liabilities

 

32,115

 

 

 

32,731

 

Acquisition-related contingent consideration

 

50,000

 

 

 

50,000

 

Current liabilities of discontinued operations

 

 

 

 

77,770

 

Total current liabilities

 

368,804

 

 

 

426,250

 

Long-term debt

 

748,299

 

 

 

754,820

 

Noncurrent operating lease liabilities

 

64,407

 

 

 

66,407

 

Other noncurrent liabilities

 

33,346

 

 

 

29,248

 

Total liabilities

 

1,214,856

 

 

 

1,276,725

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

SMART Global Holdings shareholders’ equity:

 

 

 

Ordinary shares

 

1,753

 

 

 

1,726

 

Additional paid-in capital

 

491,145

 

 

 

476,703

 

Retained earnings

 

62,536

 

 

 

82,457

 

Treasury shares

 

(145,577

)

 

 

(132,447

)

Accumulated other comprehensive income (loss)

 

303

 

 

 

(205,964

)

Total SGH shareholders’ equity

 

410,160

 

 

 

222,475

 

Noncontrolling interest in subsidiary

 

5,849

 

 

 

6,758

 

Total equity

 

416,009

 

 

 

229,233

 

Total liabilities and equity

$

1,630,865

 

 

$

1,505,958

 

SMART Global Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

December 1,

2023

 

August 25,

2023

 

November 25,

2022

Cash flows from operating activities

 

 

 

 

 

Net income (loss)

$

(19,360

)

 

$

(140,155

)

 

$

5,324

 

Net income (loss) from discontinued operations

 

(8,148

)

 

 

(205,685

)

 

 

8,931

 

Net income (loss) from continuing operations

 

(11,212

)

 

 

65,530

 

 

 

(3,607

)

Adjustments to reconcile net income (loss) from continuing operations to cash provided by (used for) operating activities

 

 

 

 

 

Depreciation expense and amortization of intangible assets

 

17,654

 

 

 

18,830

 

 

 

17,049

 

Amortization of debt discount and issuance costs

 

1,042

 

 

 

1,010

 

 

 

1,069

 

Share-based compensation expense

 

10,970

 

 

 

9,574

 

 

 

9,981

 

Impairment of goodwill and other assets

 

 

 

 

1,534

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

4,100

 

 

 

3,700

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

(767

)

Deferred income taxes, net

 

(282

)

 

 

(65,228

)

 

 

1,718

 

Other

 

664

 

 

 

701

 

 

 

357

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

48,658

 

 

 

3,007

 

 

 

123,097

 

Inventories

 

(33,464

)

 

 

28,564

 

 

 

(102,047

)

Other assets

 

2,102

 

 

 

(290

)

 

 

(6,828

)

Accounts payable and accrued expenses and other liabilities

 

23,581

 

 

 

(29,776

)

 

 

(54,749

)

Payment of acquisition-related contingent consideration

 

 

 

 

 

 

 

(73,724

)

Net cash provided by (used for) operating activities from continuing operations

 

59,713

 

 

 

37,556

 

 

 

(84,751

)

Net cash provided by (used for) operating activities from discontinued operations

 

(28,235

)

 

 

(757

)

 

 

10,766

 

Net cash provided by (used for) operating activities

 

31,478

 

 

 

36,799

 

 

 

(73,985

)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Capital expenditures and deposits on equipment

 

(4,648

)

 

 

(7,747

)

 

 

(7,991

)

Acquisition of business, net of cash acquired

 

 

 

 

 

 

 

(210,273

)

Proceeds from maturities of investment securities

 

9,665

 

 

 

 

 

 

 

Purchases of held-to-maturity investment securities

 

(8,469

)

 

 

(25,015

)

 

 

 

Other

 

(188

)

 

 

(4,345

)

 

 

(1,759

)

Net cash used for investing activities from continuing operations

 

(3,640

)

 

 

(37,107

)

 

 

(220,023

)

Net cash provided by (used for) investing activities from discontinued operations

 

118,938

 

 

 

(11,640

)

 

 

(3,620

)

Net cash provided by (used for) investing activities

$

115,298

 

 

$

(48,747

)

 

$

(223,643

)

SMART Global Holdings, Inc.

Consolidated Statements of Cash Flows, Continued

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

December 1,

2023

 

August 25,

2023

 

November 25,

2022

Cash flows from financing activities

 

 

 

 

 

Proceeds from debt

$

 

 

$

 

 

$

295,287

 

Proceeds from issuance of ordinary shares

 

3,455

 

 

 

34,615

 

 

 

3,942

 

Payment of acquisition-related contingent consideration

 

 

 

 

 

 

 

(28,100

)

Payments to acquire ordinary shares

 

(13,130

)

 

 

(7,788

)

 

 

(4,659

)

Repayments of debt

 

(14,423

)

 

 

(7,212

)

 

 

(3,606

)

Distribution to noncontrolling interest

 

(1,470

)

 

 

 

 

 

 

Other

 

(582

)

 

 

(487

)

 

 

(788

)

Net cash provided by (used for) financing activities from continuing operations

 

(26,150

)

 

 

19,128

 

 

 

262,076

 

Net cash used for financing activities from discontinued operations

 

(606

)

 

 

(426

)

 

 

(97

)

Net cash provided by (used for) financing activities

 

(26,756

)

 

 

18,702

 

 

 

261,979

 

 

 

 

 

 

 

Effect of changes in currency exchange rates

 

(1,025

)

 

 

2,035

 

 

 

205

 

Net increase (decrease) in cash and cash equivalents

 

118,995

 

 

 

8,789

 

 

 

(35,444

)

Cash and cash equivalents at beginning of period

 

410,064

 

 

 

401,275

 

 

 

363,065

 

Cash and cash equivalents at end of period

$

529,059

 

 

$

410,064

 

 

$

327,621