SMART Global Holdings Reports Second Quarter Fiscal 2020 Financial Results
NEWARK, Calif., April 07, 2020 (GLOBE NEWSWIRE) -- SMART Global Holdings, Inc. (“SMART” or the “Company”) (NASDAQ: SGH), today reported financial results for the second quarter of fiscal 2020 ended February 28, 2020.
Second Quarter Fiscal 2020 Highlights:
- Net sales of $272.0 million
- GAAP net income (loss) of ($9.7) million, or ($0.41) per share
- Non-GAAP net income of $12.8 million, or $0.52 per share
- Adjusted EBITDA of $22.3 million
- Increased cash and equivalents to $141.9 million
“In the second quarter of fiscal 2020, we generated financial results above the midpoint of our guidance range driven by excellent performance from our team members along with better than expected performance from both our Specialty Memory and Brazil businesses,” commented Ajay Shah, Chairman and CEO. “Despite the challenges we all face during the COVID-19 crisis, we remain optimistic about the longer-term positioning of our businesses.”
“During the quarter we significantly improved our capital structure through the issuance of $250 million of convertible senior notes in a private placement, the majority of the proceeds of which we used to pay down our existing, higher interest rate debt, thereby recapitalizing our balance sheet, lowering our interest expense, eliminating quarterly principal payments and extending the debt maturity,” added Jack Pacheco, COO and CFO.
| Quarterly Financial Results | GAAP (1) | Non-GAAP (2) | ||||||||||||
| (In millions, except per share amounts) | Q2 FY20 | Q1 FY20 | Q2 FY19 | Q2 FY20 | Q1 FY20 | Q2 FY19 | ||||||||
| Net sales | $ | 272.0 | $ | 272.0 | $ | 304.1 | $ | 272.0 | $ | 272.0 | $ | 304.1 | ||
| Gross profit | $ | 51.5 | $ | 54.3 | $ | 57.1 | $ | 52.9 | $ | 55.7 | $ | 57.8 | ||
| Operating income | $ | 8.2 | $ | 5.9 | $ | 22.5 | $ | 17.3 | $ | 18.2 | $ | 27.7 | ||
| Net income (loss) | $ | (9.7 | ) | $ | 0.2 | $ | 12.8 | $ | 12.8 | $ | 13.4 | $ | 18.0 | |
| Diluted earnings per share (EPS) | $ | (0.41 | ) | $ | 0.01 | $ | 0.55 | $ | 0.52 | $ | 0.55 | $ | 0.77 | |
| (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" tables below for further detail on the non-GAAP financial reporting referenced above and a reconciliation of such measures to our nearest GAAP measures. | ||||||||||||||
Business OutlookThe following statements are based upon management's current expectations for the third quarter of fiscal 2020 ending May 29, 2020. These statements are forward-looking and actual results may differ materially. SMART undertakes no obligation to update these statements.
| Net Sales | $270 to $300 million | ||
| Gross Margin - GAAP / Non-GAAP | 20% to 22% | ||
| Diluted EPS - GAAP* | $0.33 ± $0.05 | ||
| Share-based compensation per share | $0.20 | ||
| Intangible amortization per share | $0.15 | ||
| Diluted EPS - Non-GAAP* | $0.68 ± $0.05 | ||
| Expected diluted share count | 24.6 million | ||
| *EPS does not include any potential loss from the mark to market of the capped call. | |||
Conference Call DetailsSMART 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 5089819.
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: 5089819.
Forward-Looking StatementsThis 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; disruptions in our operations or in global markets as a result of the outbreak of COVID-19; trade regulations and relations; 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 InformationCertain 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, and non-GAAP net income per diluted share. We define Adjusted EBITDA as GAAP net income (loss) plus net interest expense, income tax expense, depreciation and amortization expense, share-based compensation expense, loss on extinguishment of debt, capped call mark to market (MTM) adjustment, integration expenses, 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, loss on extinguishment of debt, capped call MTM adjustment, convertible debt original issue discount (OID), integration expenses, acquisition-related expenses and other infrequent or unusual expenses, 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, these 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 (Loss) to Adjusted EBITDA” tables below for more detail on non-GAAP calculations.
About SMART Global Holdings
The SMART lines of business are leading designers and manufacturers of electronic products focused on memory and computing technology areas. The Company specializes in application specific product development and support for customers in enterprise, government and OEM sales channels. Customers rely on SMART as a strategic supplier with top tier customer service, product quality, and technical support with engineering, sales, manufacturing, supply chain and logistics capabilities worldwide. The Company targets customers in markets such as communications, storage, networking, mobile, industrial automation, industrial internet of things, government, military, edge computing and high performance computing. SMART operates in three primary product areas: Specialty Memory products, Brazil products and Specialty Compute and Storage Solutions.
See www.smartgh.com, www.smartm.com, www.smartembedded.com, www.smartsscs.com and www.penguincomputing.com for more information.
| SMART Global Holdings, Inc. | |||||||||||||||||||
| and Subsidiaries | |||||||||||||||||||
| Consolidated Income Statements | |||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| February 28, 2020 | November 29, 2019 | March 1, 2019 | February 28, 2020 | March 1, 2019 | |||||||||||||||
| Net sales: | |||||||||||||||||||
| Specialty Memory Products | $ | 111,455 | $ | 103,529 | $ | 115,608 | $ | 214,984 | $ | 255,557 | |||||||||
| Brazil Products | 97,700 | 93,999 | 147,111 | 191,699 | 346,390 | ||||||||||||||
| Specialty Compute and Storage Solutions | 62,887 | 74,490 | 41,344 | 137,377 | 95,995 | ||||||||||||||
| Total net sales | 272,042 | 272,018 | 304,063 | 544,060 | 697,942 | ||||||||||||||
| Cost of sales (1) (2) | 220,536 | 217,698 | 246,932 | 438,234 | 555,742 | ||||||||||||||
| Gross profit | 51,506 | 54,320 | 57,131 | 105,826 | 142,200 | ||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Research and development (1) | 14,702 | 14,886 | 11,238 | 29,588 | 23,054 | ||||||||||||||
| Selling, general and administrative (1) (2) | 28,648 | 33,553 | 23,442 | 62,201 | 48,896 | ||||||||||||||
| Total operating expenses | 43,350 | 48,439 | 34,680 | 91,789 | 71,950 | ||||||||||||||
| Income from operations | 8,156 | 5,881 | 22,451 | 14,037 | 70,250 | ||||||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest expense, net | (4,150 | ) | (4,492 | ) | (5,273 | ) | (8,642 | ) | (11,148 | ) | |||||||||
| Other income (expense), net | (12,386 | ) | (840 | ) | 252 | (13,226 | ) | (3,077 | ) | ||||||||||
| Total other expense | (16,536 | ) | (5,332 | ) | (5,021 | ) | (21,868 | ) | (14,225 | ) | |||||||||
| Income (loss) before income taxes | (8,380 | ) | 549 | 17,430 | (7,831 | ) | 56,025 | ||||||||||||
| Provision for income taxes | 1,340 | 325 | 4,644 | 1,665 | 12,263 | ||||||||||||||
| Net income (loss) | $ | (9,720 | ) | $ | 224 | $ | 12,786 | $ | (9,496 | ) | $ | 43,762 | |||||||
| Earnings per share: | |||||||||||||||||||
| Basic | $ | (0.41 | ) | $ | 0.01 | $ | 0.56 | $ | (0.40 | ) | $ | 1.93 | |||||||
| Diluted | $ | (0.41 | ) | $ | 0.01 | $ | 0.55 | $ | (0.40 | ) | $ | 1.88 | |||||||
| Shares used in computing earnings per share: | |||||||||||||||||||
| Basic | 23,906 | 23,713 | 22,872 | 23,809 | 22,733 | ||||||||||||||
| Diluted | 23,906 | 24,286 | 23,359 | 23,809 | 23,314 | ||||||||||||||
| (1) Includes share-based compensation expense as follows: | |||||||||||||||||||
| Cost of sales | $ | 731 | $ | 730 | $ | 607 | $ | 1,461 | $ | 1,152 | |||||||||
| Research and development | 783 | 744 | 660 | 1,527 | 1,294 | ||||||||||||||
| Selling, general and administrative | 3,133 | 4,482 | 2,881 | 7,615 | 5,757 | ||||||||||||||
| Total stock-based compensation expense | $ | 4,647 | $ | 5,956 | $ | 4,148 | $ | 10,603 | $ | 8,203 | |||||||||
| (2) Includes amortization of intangible assets expense as follows: | |||||||||||||||||||
| Cost of sales | $ | 647 | $ | 647 | $ | 98 | $ | 1,294 | $ | 114 | |||||||||
| Selling, general and administrative | 2,766 | 2,766 | 961 | 5,533 | 1,922 | ||||||||||||||
| Total amortization expense | $ | 3,413 | $ | 3,413 | $ | 1,059 | $ | 6,827 | $ | 2,036 | |||||||||
| 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 | ||||||||||||||||||
| February 28, 2020 | November 29, 2019 | March 1, 2019 | February 28, 2020 | March 1, 2019 | |||||||||||||||
| Reconciliation of gross profit: | |||||||||||||||||||
| GAAP gross profit | $ | 51,506 | $ | 54,320 | $ | 57,131 | $ | 105,826 | $ | 142,200 | |||||||||
| GAAP gross margin | 18.9 | % | 20.0 | % | 18.8 | % | 19.5 | % | 20.4 | % | |||||||||
| Add: Share-based compensation included in cost of sales | 731 | 730 | 607 | 1,461 | 1,152 | ||||||||||||||
| Add: Intangible amortization included in cost of sales | 647 | 647 | 98 | 1,294 | 114 | ||||||||||||||
| Non-GAAP gross profit | $ | 52,884 | $ | 55,697 | $ | 57,836 | $ | 108,581 | $ | 143,466 | |||||||||
| Non-GAAP gross margin | 19.4 | % | 20.5 | % | 19.0 | % | 20.0 | % | 20.6 | % | |||||||||
| Reconciliation of operating expenses: | |||||||||||||||||||
| GAAP operating expenses | $ | 43,350 | $ | 48,439 | $ | 34,680 | $ | 91,789 | $ | 71,950 | |||||||||
| Less: Share-based compensation expense included in opex | |||||||||||||||||||
| Research and development | 783 | 744 | 660 | 1,527 | 1,294 | ||||||||||||||
| Selling, general and administrative | 3,133 | 4,482 | 2,881 | 7,615 | 5,757 | ||||||||||||||
| Total | 3,916 | - | 5,226 | - | 3,541 | - | 9,142 | - | 7,051 | ||||||||||
| Less: Amortization of intangible assets included in opex | |||||||||||||||||||
| Selling, general and administrative | 2,766 | 2,766 | 961 | 5,532 | 1,922 | ||||||||||||||
| Total | 2,766 | 2,766 | 961 | 5,532 | 1,922 | ||||||||||||||
| Less: Legal fees - term loan (payment holiday) | — | — | — | — | 126 | ||||||||||||||
| Less: Acquisition-related expenses | — | 946 | — | 946 | 1,423 | ||||||||||||||
| Less: Integration expenses | 1,040 | 2,052 | — | 3,092 | — | ||||||||||||||
| Non-GAAP operating expenses | $ | 35,628 | $ | 37,449 | $ | 30,178 | $ | 73,077 | $ | 61,428 | |||||||||
| Reconciliation of income from operations: | |||||||||||||||||||
| GAAP income from operations | $ | 8,156 | $ | 5,881 | $ | 22,451 | $ | 14,037 | $ | 70,250 | |||||||||
| GAAP operating margin | 3.0 | % | 2.2 | % | 7.4 | % | 2.6 | % | 10.1 | % | |||||||||
| Add: Share-based compensation expense | 4,647 | 5,956 | 4,148 | 10,603 | 8,203 | ||||||||||||||
| Add: Amortization of intangible assets | 3,413 | 3,413 | 1,059 | 6,826 | 2,036 | ||||||||||||||
| Add: Legal fees - term loan (payment holiday) | — | — | — | — | 126 | ||||||||||||||
| Add: Acquisition-related expenses | — | 946 | — | 946 | 1,423 | ||||||||||||||
| Add: Integration expenses | 1,040 | 2,052 | — | 3,092 | — | ||||||||||||||
| Non-GAAP income from operations | $ | 17,256 | $ | 18,248 | $ | 27,658 | $ | 35,504 | $ | 82,038 | |||||||||
| Non-GAAP operating margin | 6.3 | % | 6.7 | % | 9.1 | % | 6.5 | % | 11.8 | % | |||||||||
| 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 | |||||||||||||||||||
| February 28, 2020 | November 29, 2019 | March 1, 2019 | February 28, 2020 | March 1, 2019 | ||||||||||||||||
| Reconciliation of income (loss) before income taxes: | ||||||||||||||||||||
| GAAP income (loss) before income taxes | $ | (8,380 | ) | $ | 549 | $ | 17,430 | $ | (7,831 | ) | $ | 56,025 | ||||||||
| Add: Share-based compensation expense | 4,647 | 5,956 | 4,148 | 10,603 | 8,203 | |||||||||||||||
| Add: Amortization of intangible assets | 3,413 | 3,413 | 1,059 | 6,826 | 2,036 | |||||||||||||||
| Add: Legal fees - term loan (payment holiday) | — | — | — | — | 126 | |||||||||||||||
| Add: Acquisition-related expenses | - | 946 | — | 946 | 1,423 | |||||||||||||||
| Add: Integration expenses | 1,040 | 2,052 | — | 3,092 | — | |||||||||||||||
| Add: Extinguishment of term loan | 6,630 | — | — | 6,630 | — | |||||||||||||||
| Add: Capped call MTM adjustment | 4,795 | — | — | 4,795 | — | |||||||||||||||
| Add: Convertible debt discount OID | 399 | — | — | 399 | — | |||||||||||||||
| Add: Foreign currency (gains)/losses | 1,191 | 911 | (47 | ) | 2,102 | 3,337 | ||||||||||||||
| Non-GAAP income before income taxes | $ | 13,735 | $ | 13,827 | $ | 22,590 | $ | 27,562 | $ | 71,150 | ||||||||||
| Reconciliation of provision for income taxes: | ||||||||||||||||||||
| GAAP provision for income taxes | $ | 1,340 | $ | 325 | $ | 4,644 | $ | 1,665 | $ | 12,263 | ||||||||||
| GAAP effective tax rate | -16.0 | % | 59.2 | % | 26.6 | % | -21.3 | % | 21.9 | % | ||||||||||
| Less: Goodwill tax credit | 484 | — | — | 484 | — | |||||||||||||||
| Tax effect of adjustments to GAAP results | (119 | ) | (91 | ) | 5 | (210 | ) | (333 | ) | |||||||||||
| Non-GAAP provision for income taxes | $ | 975 | $ | 416 | $ | 4,639 | $ | 1,391 | $ | 12,596 | ||||||||||
| Non-GAAP effective tax rate | 7.1 | % | 3.0 | % | 20.5 | % | 5.0 | % | 17.7 | % | ||||||||||
| Reconciliation of net income (loss) and earnings per share (diluted): | ||||||||||||||||||||
| GAAP net income (loss) | $ | (9,720 | ) | $ | 224 | $ | 12,786 | $ | (9,496 | ) | $ | 43,762 | ||||||||
| Adjustments to GAAP net income (loss): | ||||||||||||||||||||
| Share-based compensation | 4,647 | 5,956 | 4,148 | 10,603 | 8,203 | |||||||||||||||
| Amortization of intangible assets | 3,413 | 3,413 | 1,059 | 6,826 | 2,036 | |||||||||||||||
| Legal fees - term loan (payment holiday) | — | — | — | — | 126 | |||||||||||||||
| Acquisition related expenses | — | 946 | — | 946 | 1,423 | |||||||||||||||
| Integration expenses | 1,040 | 2,052 | — | 3,092 | — | |||||||||||||||
| Extinguishment of term loan | 6,630 | — | — | 6,630 | — | |||||||||||||||
| Capped call MTM adjustment | 4,795 | — | — | 4,795 | — | |||||||||||||||
| Convertible debt discount OID | 399 | — | — | 399 | — | |||||||||||||||
| Goodwill tax credit | 484 | — | — | 484 | — | |||||||||||||||
| Foreign currency (gains)/losses | 1,191 | 911 | (47 | ) | 2,102 | 3,337 | ||||||||||||||
| Tax effect of items excluded from non-GAAP results | (119 | ) | (91 | ) | 5 | (210 | ) | (333 | ) | |||||||||||
| Non-GAAP net income | $ | 12,760 | $ | 13,411 | $ | 17,951 | $ | 26,171 | $ | 58,554 | ||||||||||
| Shares used in computing earnings per share (diluted) | 24,567 | 24,286 | 23,359 | 24,440 | 23,314 | |||||||||||||||
| Non-GAAP earnings per share (diluted) | $ | 0.52 | $ | 0.55 | $ | 0.77 | $ | 1.07 | $ | 2.51 | ||||||||||
| GAAP earnings per share (diluted) | $ | (0.41 | ) | $ | 0.01 | $ | 0.55 | $ | (0.40 | ) | $ | 1.88 | ||||||||
| SMART Global Holdings, Inc. | |||||||||||||||||
| and Subsidiaries | |||||||||||||||||
| Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| February 28, 2020 | November 29, 2019 | March 1, 2019 | February 28, 2020 | March 1, 2019 | |||||||||||||
| GAAP net income (loss) | $ | (9,720 | ) | $ | 224 | $ | 12,786 | $ | (9,496 | ) | $ | 43,762 | |||||
| Share-based compensation expense | 4,647 | 5,956 | 4,148 | 10,603 | 8,203 | ||||||||||||
| Amortization of intangible assets | 3,413 | 3,413 | 1,059 | 6,826 | 2,036 | ||||||||||||
| Interest expense, net | 4,150 | 4,492 | 5,273 | 8,642 | 11,148 | ||||||||||||
| Provision for income tax | 1,340 | 325 | 4,644 | 1,665 | 12,263 | ||||||||||||
| Depreciation | 6,021 | 6,131 | 5,868 | 12,152 | 11,299 | ||||||||||||
| Legal fees - term loan (payment holiday) | — | — | — | — | 126 | ||||||||||||
| Acquisition-related expenses(1) | — | 946 | — | 946 | 1,423 | ||||||||||||
| Integration expenses | 1,040 | 2,052 | — | 3,092 | — | ||||||||||||
| Extinguishment of term loan | 6,630 | — | — | 6,630 | — | ||||||||||||
| Capped call MTM adjustment | 4,795 | — | — | 4,795 | — | ||||||||||||
| Adjusted EBITDA | $ | 22,316 | $ | 23,539 | $ | 33,778 | $ | 45,855 | $ | 90,260 | |||||||
| (1) Amounts in FY20 & FY19 related to acquisitions of new businesses, SMART EC & Wireless (July 2019) | |||||||||||||||||
| SMART Global Holdings, Inc. | ||||||||
| and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| February 28, | August 30, | |||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 141,860 | $ | 98,139 | ||||
| Accounts receivable, net | 217,361 | 217,433 | ||||||
| 161,407 | 118,738 | |||||||
| Prepaid expenses and other current assets | 29,279 | 37,950 | ||||||
| Total current assets | 549,907 | 472,260 | ||||||
| Property and equipment, net | 59,029 | 68,345 | ||||||
| Operating lease right-of-use assets | 28,665 | — | ||||||
| Other noncurrent assets | 29,991 | 12,784 | ||||||
| Intangible assets, net | 62,498 | 69,325 | ||||||
| 78,347 | 81,423 | |||||||
| Total assets | $ | 808,437 | $ | 704,137 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 217,256 | $ | 164,866 | ||||
| Accrued liabilities | 58,425 | 48,980 | ||||||
| Current portion of long-term debt | 1,546 | 24,054 | ||||||
| Total current liabilities | 277,227 | 237,900 | ||||||
| Long-term debt | 191,593 | 182,450 | ||||||
| Long-term operating lease liabilities | 24,440 | — | ||||||
| Other long-term liabilities | 8,126 | 10,327 | ||||||
| Total liabilities | 501,386 | 430,677 | ||||||
| Shareholders’ equity: | ||||||||
| Ordinary shares | 723 | 712 | ||||||
| Additional paid-in capital | 350,086 | 285,994 | ||||||
| Accumulated other comprehensive loss | (198,882 | ) | (177,866 | ) | ||||
| Retained earnings | 155,124 | 164,620 | ||||||
| Total shareholders’ equity | 307,051 | 273,460 | ||||||
| Total liabilities and shareholders’ equity | $ | 808,437 | $ | 704,137 | ||||
| SMART Global Holdings, Inc. | ||||||||||||||||||||
| and Subsidiaries | ||||||||||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| February 28, 2020 | November 29, 2019 | March 1, 2019 | February 28, 2020 | March 1, 2019 | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income (loss) | $ | (9,720 | ) | $ | 224 | $ | 12,786 | $ | (9,496 | ) | $ | 43,762 | ||||||||
| Adjustments to reconcile net income (loss) to net cash | ||||||||||||||||||||
| provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | 9,435 | 9,544 | 6,927 | 18,979 | 13,335 | |||||||||||||||
| Share-based compensation | 4,647 | 5,956 | 4,148 | 10,603 | 8,203 | |||||||||||||||
| Provision for doubtful accounts receivable and sales returns | (100 | ) | 73 | 34 | (27 | ) | (70 | ) | ||||||||||||
| Deferred income tax benefit | 610 | (970 | ) | (650 | ) | (360 | ) | (247 | ) | |||||||||||
| (Gain) Loss on disposal of property and equipment | (18 | ) | (42 | ) | (4 | ) | (60 | ) | (1 | ) | ||||||||||
| Loss on mark-to-market derivatives | 4,795 | — | — | 4,795 | — | |||||||||||||||
| Loss on extinguishment of debt | 6,630 | — | — | 6,630 | — | |||||||||||||||
| Amortization of debt discounts and issuance costs | 1,047 | 734 | 694 | 1,781 | 1,379 | |||||||||||||||
| Amortization of operating lease right-of-use assets | 1,168 | 1,114 | — | 2,282 | — | |||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Accounts receivable | 9,198 | (13,688 | ) | 5,669 | (4,490 | ) | (83,772 | ) | ||||||||||||
| Inventories | (3,343 | ) | (42,206 | ) | 17,084 | (45,549 | ) | 47,660 | ||||||||||||
| Prepaid expenses and other assets | 1,386 | 5,110 | 7,424 | 6,496 | 4,242 | |||||||||||||||
| Accounts payable | (3,782 | ) | 60,438 | (17,017 | ) | 56,656 | 31,557 | |||||||||||||
| Operating lease liabilities | (1,058 | ) | (1,082 | ) | — | (2,140 | ) | — | ||||||||||||
| Accrued expenses and other liabilities | 2,439 | 62 | 1,959 | 2,501 | 8,358 | |||||||||||||||
| Net cash provided by operating activities | 23,334 | 25,267 | 39,054 | 48,601 | 74,406 | |||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Capital expenditures and deposits on equipment | (4,210 | ) | (5,158 | ) | (6,232 | ) | (9,368 | ) | (19,616 | ) | ||||||||||
| Proceeds from sale of property and equipment | 54 | 42 | 32 | 96 | 53 | |||||||||||||||
| Acquisitions of business, net of cash acquired | — | — | (148 | ) | — | (148 | ) | |||||||||||||
| Net cash used in investing activities | (4,156 | ) | (5,116 | ) | (6,348 | ) | (9,272 | ) | (19,711 | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Long-term debt payments | (797 | ) | (6,435 | ) | (1,712 | ) | (7,232 | ) | (3,369 | ) | ||||||||||
| Purchase of capped call | (21,825 | ) | — | — | (21,825 | ) | — | |||||||||||||
| Proceeds from convertible notes due 2026, net of discount | 243,125 | — | — | 243,125 | — | |||||||||||||||
| Payment for extinguishment of long-term debt | (204,904 | ) | — | — | (204,904 | ) | — | |||||||||||||
| Proceeds from borrowings under revolving line of credit | 6,000 | 12,500 | 64,000 | 18,500 | 168,000 | |||||||||||||||
| Repayments of borrowings under revolving line of credit | (6,000 | ) | (12,500 | ) | (64,000 | ) | (18,500 | ) | (168,000 | ) | ||||||||||
| Proceeds from issuance of ordinary shares from share option exercises | 641 | 1,166 | 1,071 | 1,807 | 3,473 | |||||||||||||||
| Proceeds from issuance of ordinary shares from ESPP | — | 1,242 | — | 1,242 | 968 | |||||||||||||||
| Withholding tax on restricted stock units | (351 | ) | (20 | ) | (219 | ) | (371 | ) | (219 | ) | ||||||||||
| Net cash provided by (used in) financing activities | 15,889 | (4,047 | ) | (860 | ) | 11,842 | 853 | |||||||||||||
| Effect of exchange rate changes on the cash, cash equivalents | ||||||||||||||||||||
| and restricted cash * | (4,596 | ) | (2,854 | ) | 374 | (7,450 | ) | 2,392 | ||||||||||||
| Net increase in cash and cash equivalents | ||||||||||||||||||||
| and restricted cash * | 30,471 | 13,250 | 32,220 | 43,721 | 57,940 | |||||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period * | 111,389 | 98,139 | 62,954 | 98,139 | 37,234 | |||||||||||||||
| Cash, cash equivalents, and restricted cash at end of period * | $ | 141,860 | $ | 111,389 | $ | 95,174 | $ | 141,860 | $ | 95,174 | ||||||||||
| * Cash balance was adjusted to include restricted cash upon adoption of ASU 2016-18 in fiscal 2019. | ||||||||||||||||||||
Investor Contact: Suzanne SchmidtInvestor Relations for SMART Global Holdings, Inc. (510) 360-8596[email protected]
