SMART GLOBAL HOLDINGS, INC.

(SGH)
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SMART Global : Third Quarter Fiscal 2022 Earnings Call Presentation

06/29/2022 | 04:42pm EDT

Q3 FY2022

SGH FINANCIAL RESULTS

JUNE 29, 2022

Disclaimer

This presentation and oral communications made during the course of this presentation will contain "forward-looking statements," including, among other things, statements regarding future events and the future financial performance of SGH (including the business outlook for the next fiscal quarter) and statements regarding growth drivers in SGH's industries and markets. These forward-looking statements are based on current expectations and preliminary assumptions that are subject to factors and uncertainties that could cause actual results to differ materially from those described in these forward- looking statements. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside SGH's control, including, among others: inability to obtain or delays in obtaining regulatory approvals and otherwise completing all steps required to close on the acquisition of Stratus; issues, delays or complications in completing the acquisition of Stratus; incurring unanticipated costs in completing the acquisition of Stratus; the ability of Stratus to generate anticipated revenue and profits post-transaction close; risks associated with integration or transition of the operations, assets, systems, and personnel of Stratus; unfavorable reaction to the sale by customers, competitors, suppliers and employees of Stratus, global business and economic conditions and growth trends in technology industries, SGH's or Stratus' customer markets and various geographic regions; uncertainties in the geopolitical environment; disruptions in our operations or our supply chain as a result of COVID-19 pandemic or otherwise; 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, the failure to successfully integrate and operate them, or customers' negative reactions to them; limitations on or changes in the availability of supply of materials and components; fluctuations in material costs; 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; reduction in or termination of incentives for local manufacturing in Brazil; 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 other factors and risks detailed in SGH's filings with the U.S. Securities and Exchange Commission, which include SGH's most recent reports on Form 10-K and Form 10-Q, including SGH's future filings.

Such factors and risks as outlined above and in such filings do not constitute all factors and risks that could cause actual results of SGH to be materially different from our forward-looking statements.

Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements are made as of today, and SGH 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 presentation, except as required by law.

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, acquisition-related inventory adjustments, acquisition-related expenses, restructure charges and integration expenses, changes in the fair value of contingent consideration, (gains) losses from changes in currency exchange rates, COVID-19 expenses, amortization of convertible debt discount and other costs and other infrequent or unusual items. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in our 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, changes in the fair value of contingent consideration, COVID-19 expenses 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 our financial results, as noted above. 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 "GAAP to Non-GAAP Reconciliations" in the appendix at the end of this presentation.

Fiscal year ends in August.

© 2022 SGH | 2

SPEAKERS

Mark Adams

President and CEO

SMART Global Holdings

Ken Rizvi

SVP and CFO

SMART Global Holdings

SGH Q3 FY22 Highlights

9th Consecutive Quarter of YoY Revenue Growth

  • Revenue of $463M
  • Up 6% vs. year-ago quarter

Strong Gross Margin

  • GAAP gross margin of 25%, up ~540 bp YoY
  • Non-GAAPgross margin of 26%, up ~380 bp YoY

Non-GAAP EPS Up Significantly YoY

  • GAAP EPS of $0.44, vs. GAAP loss of $(0.15) per share
  • Non-GAAPEPS of $0.87, up 24% YoY

Announced Acquisition of Stratus Technologies

  • $150M+ in annual revenue, including $80M+ of higher- margin services revenue
  • Expected to close by calendar year-end 2022

Note: all per share measures reflect the February 2022 two-for-one share split See appendix for GAAP to non-GAAP reconciliation

SGH Transformation Highlights

In less than two years we have:

  • Grown revenue from $1.1 billion to > $1.8 billion
  • Expanded non-GAAP gross margins from 19.8% to 25+%
  • Diversified revenue with organic growth and acquisition of Cree LED
  • Strengthened the balance sheet, leveraging strong cash flow generation, and
  • Continued to invest in our long-term success, as demonstrated by our announcement today of the planned acquisition of Stratus Technologies

© 2022 SGH | 5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

SMART Global Holdings Inc. published this content on 29 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 June 2022 20:41:05 UTC.


© Publicnow 2022
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Financials (USD)
Sales 2022 1 822 M - -
Net income 2022 54,9 M - -
Net Debt 2022 74,3 M - -
P/E ratio 2022 19,2x
Yield 2022 -
Capitalization 980 M 980 M -
EV / Sales 2022 0,58x
EV / Sales 2023 0,56x
Nbr of Employees 3 800
Free-Float 92,7%
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Managers and Directors
Mark W. Adams President, Chief Executive Officer & Director
Kenneth Rizvi Chief Financial Officer & Senior Vice President
Penelope A. Herscher Chairman
Jack A. Pacheco COO & President-Smart Memory Solutions
Sandeep Nayyar Lead Independent Director
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