Financial Performance - Total net sales for the three months ended November 28, 2025, were $343,071,000, a slight increase from $341,102,000 for the same period in 2024, representing a growth of 0.6%[18] - Gross profit for the three months ended November 28, 2025, was $96,109,000, compared to $97,812,000 in the prior year, indicating a decrease of 1.7%[18] - Operating income increased to $19,582,000 for the three months ended November 28, 2025, up from $17,356,000 in the same period of 2024, reflecting a growth of 12.8%[18] - Net income attributable to Penguin Solutions for the three months ended November 28, 2025, was $5,270,000, slightly higher than $5,217,000 for the same period in 2024, an increase of 1.0%[18] - Earnings per share (basic and diluted) for the three months ended November 28, 2025, were both $0.04, down from $0.10 in the prior year, a decrease of 60%[18] - Cash flows from operating activities for the three months ended November 28, 2025, were $31,058,000, significantly higher than $13,819,000 for the same period in 2024, an increase of 125.5%[23] - Total net sales for the three months ended November 28, 2025, were $343,071,000, a slight increase from $341,102,000 in the same period last year[18] - Net income attributable to common stockholders for Q1 2026 was $2.0 million, compared to $5.2 million in Q1 2025, a decrease of approximately 61.5%[103] - Basic earnings per share (EPS) for Q1 2026 was $0.04, down from $0.10 in Q1 2025, reflecting the decline in net income[103] Assets and Liabilities - As of November 28, 2025, total assets decreased to $1,598,195 thousand from $1,617,200 thousand as of August 29, 2025, reflecting a decline of approximately 1.5%[17] - Total current liabilities decreased to $458,110 thousand from $473,899 thousand, a decline of approximately 3.3%[17] - Total liabilities decreased to $993,726,000 as of November 28, 2025, from $1,008,973,000 as of August 29, 2025[17] - Long-term debt remained relatively stable at $442,333 thousand compared to $441,893 thousand, showing minimal change[17] - Long-term debt as of November 28, 2025, was $442.3 million, slightly up from $441.9 million as of August 29, 2025[46] - Accounts payable increased to $304.9 million as of November 28, 2025, from $267.5 million as of August 29, 2025, reflecting a rise in operational liabilities[45] Cash and Cash Equivalents - Cash and cash equivalents increased to $461,451 thousand from $453,754 thousand, showing a growth of about 1.5%[17] - Cash, cash equivalents, and restricted cash at the end of the period on November 28, 2025, totaled $461,767,000, compared to $370,611,000 at the end of the same period in 2024, an increase of 24.6%[23] - As of November 28, 2025, cash and cash equivalents totaled $434.3 million, an increase from $426.9 million as of August 29, 2025[33] Shareholder Activities - The company repurchased shares amounting to $20,193,000 during the three months ended November 28, 2025, compared to $11,123,000 in the same period of 2024, an increase of 81.5%[23] - The company declared and paid preferred cash dividends of $3.1 million in Q1 2026, with accrued preferred dividends of $0.4 million as of November 28, 2025[72] - The Board of Directors approved a total of $225.0 million in stock repurchase authorizations, with $96.5 million remaining available as of November 28, 2025[77] - In Q1 2026, the company repurchased 791 thousand shares for $15.0 million, and in Q1 2025, 467 thousand shares for $7.8 million under the current authorizations[77] Strategic Initiatives - The company is focusing on strategic initiatives, including rebranding and potential acquisitions, to enhance its market position and operational efficiency[8] - The company anticipates continued growth in technology industries, particularly in artificial intelligence, despite potential macroeconomic challenges[8] - The company expects to recognize $47.9 million of the deferred revenue balance in the next 12 months[90] - The company anticipates additional restructuring activities in future quarters, which may lead to further charges[94] Research and Development - Research and development expenses for the three months ended November 28, 2025, were $18,693,000, down from $19,811,000 in the prior year, a decrease of 5.6%[18] Impairments and Charges - The company reported a loss on impairment of non-marketable equity investment of $10,000,000 for the three months ended November 28, 2025, which was not present in the prior year[23] - The company recognized a full impairment charge of $10.0 million for a non-marketable equity investment during the quarter ended November 28, 2025, reducing the carrying amount of the investment to zero[38] - Restructuring charges amounted to $4.7 million in Q1 2026, significantly higher than $0.1 million in Q1 2025, reflecting a strategic shift in operations[94] Segment Performance - Advanced Computing segment sales decreased to $151.452 million from $177.426 million, a decline of 14.6% year-over-year[109] - Integrated Memory segment sales increased significantly to $136.521 million from $96.706 million, a growth of 41.2% year-over-year[109] - Total costs of goods sold rose to $240.150 million from $235.980 million, an increase of 1.0%[109] - Total operating expenses decreased to $61.393 million from $64.204 million, a reduction of 4.2%[109] - Segment operating income increased to $41.528 million from $40.918 million, a growth of 1.5%[109] Other Financial Metrics - The effective tax rate for Q1 2026 was 23.0%, down from 51.6% in Q1 2025, primarily due to changes in tax liabilities and operational adjustments[99] - The company recognized revenue of $32.2 million from AI hardware solutions and installation services during the quarter, with $15.1 million remaining in accounts receivable as of November 28, 2025[112] - The company is expected to sell its equity interest in Zilia Technologies for a gross cash purchase price of $46.1 million, with the transaction expected to close by March 30, 2026[114] - The carrying value of the investment in Zilia Technologies was $37.8 million as of November 28, 2025[115]

Financial Performance - Net sales for Q1 fiscal 2026 were $343 million, representing a 1% increase compared to the same quarter last year[5]. - GAAP gross margin decreased to 28.0%, down 70 basis points year-over-year, while non-GAAP gross margin fell to 30.0%, down 80 basis points[5]. - GAAP diluted EPS was $0.04, a decrease from $0.10 in the year-ago quarter, while non-GAAP diluted EPS remained stable at $0.49[5]. - The company expects net sales growth of 6% year-over-year for fiscal 2026, with a margin of +/-10%[8]. - Projected GAAP gross margin for fiscal 2026 is 27% +/- 1%, while non-GAAP gross margin is expected to be 29% +/- 1%[8]. - Operating expenses are forecasted at $307 million +/- $10 million for GAAP, and $250 million +/- $10 million for non-GAAP[8]. - Operating income for Q1 was $19.6 million, compared to $12.4 million in the previous quarter[6]. - Net income attributable to Penguin Solutions for Q1 was $5.3 million, down from $9.4 million in the year-ago quarter[6]. - Non-GAAP operating income was reported at $41.528 million, an increase from $39.170 million in the previous quarter and $40.918 million year-over-year[25]. - The GAAP operating margin for the latest quarter was 5.7%, compared to 3.7% in the previous quarter and 5.1% year-over-year[25]. Segment Performance - Advanced Computing segment net sales were $151.5 million, Integrated Memory segment sales were $136.5 million, and Optimized LED segment sales were $55.1 million in Q1[6]. - Advanced Computing segment sales reached $151.452 million, up from $138.336 million in the previous quarter but down from $177.426 million year-over-year[24]. - Integrated Memory segment sales increased to $136.521 million from $132.159 million quarter-over-quarter and significantly up from $96.706 million year-over-year[24]. Cash Flow and Assets - Net cash provided by operating activities was $31,058,000 for the three months ended November 28, 2025, compared to a net cash used of $70,432,000 in the previous quarter[28]. - Total current assets as of November 28, 2025, were $1,067,014,000, slightly up from $1,064,227,000 as of August 29, 2025[27]. - Cash and cash equivalents increased to $461,451,000 as of November 28, 2025, from $453,754,000 as of August 29, 2025[27]. - Total liabilities decreased to $993,726,000 as of November 28, 2025, from $1,008,973,000 as of August 29, 2025[27]. - Inventories decreased to $213,205,000 as of November 28, 2025, from $255,182,000 as of August 29, 2025[27]. Equity and Earnings - Total stockholders' equity decreased to $401,759,000 as of November 28, 2025, from $405,517,000 as of August 29, 2025[27]. - Non-GAAP net income attributable to Penguin Solutions increased to $32,391,000 for the three months ended November 28, 2025, up from $28,843,000 in the previous quarter[26]. - GAAP net income for the three months ended November 28, 2025, was $5,270,000, compared to $9,431,000 for the previous quarter[26]. - Adjusted EBITDA for the three months ended November 28, 2025, was $45,236,000, compared to $43,419,000 in the previous quarter[26]. Corporate Actions - The company plans to divest its remaining 19% interest in Zilia Technologies for $46.08 million, expected to close by April 28, 2026[3]. - The company completed the redomiciliation from the Cayman Islands to Delaware on June 30, 2025, resulting in a change of its publicly traded parent company[21].

Overview - SGH Ltd has submitted a Non-Binding Indicative Offer (NBIO) to acquire 100% of BlueScope Steel Ltd (BSL) in partnership with Steel Dynamics, Inc. (SDI) [1] Proposal Details - The acquisition proposal includes a cash consideration of AUD$30.00 (USD$20.04) per share, representing a total equity value of AUD$13.2 billion (USD$8.8 billion) for BSL [3][6] - SGH and SDI plan to sell BSL's North American operations to SDI while retaining BSL's Australian and other international operations [2] - The proposal is subject to customary conditions, including due diligence and regulatory approvals [4] Strategic Rationale - SGH and SDI believe that BSL's operations in Australia and North America are not strategically compatible and would benefit from being standalone businesses [5] - The acquisition is expected to provide significant value for BSL's shareholders and other stakeholders, including team members and local communities [7] Financial Aspects - The proposal offers a 27% premium to BSL's closing share price at the time of the NBIO submission and a 33% premium to both the 3-month and 52-week volume-weighted average share prices [6] - SGH and SDI will fund the transaction through existing cash reserves and debt financing, with no equity required to be raised [11] Management and Governance - SGH intends to offer one or two board positions to current BSL directors to ensure continuity and effective knowledge transfer [8] - Key management from BSL will be retained to support the Australian and North American operations [8] Next Steps - SGH and SDI are committed to conducting confirmatory due diligence and have engaged financial and legal advisors to assist in the process [13]

PART I [Business Overview](index=5&type=section&id=Item%201%20Business) Penguin Solutions, formerly SMART Global Holdings, Inc., is an end-to-end technology company specializing in computing, memory, and LED solutions, strategically focused on AI, U.S. Domestication, and key acquisitions and divestitures [Company Overview](index=5&type=section&id=Overview) Penguin Solutions is an end-to-end technology company with over two decades of experience in computing, memory, and LED solutions - Penguin Solutions is an end-to-end technology company with over two decades of experience in computing, memory, and LED solutions[19](index=19&type=chunk) - The company rebranded from 'SMART Global Holdings, Inc.' to **'Penguin Solutions, Inc.' on October 15, 2024**, and changed its Nasdaq ticker symbol from 'SGH' to 'PENG'[22](index=22&type=chunk) - The U.S. Domestication of the parent company from the Cayman Islands to Delaware was consummated on **June 30, 2025**[23](index=23&type=chunk) [Business Segments](index=5&type=section&id=Business%20Segments) The company has transformed its business to focus on delivering leading-edge solutions for AI complexity across three segments - The company has transformed its business to focus on delivering leading-edge solutions for AI complexity[26](index=26&type=chunk) - Current business segments are Advanced Computing, Integrated Memory, and Optimized LED[26](index=26&type=chunk) [Divestiture of SMART Brazil](index=5&type=section&id=Divestiture%20of%20SMART%20Brazil) The company completed the divestiture of an 81% interest in SMART Brazil, which is now presented as discontinued operations - Completed the divestiture of an **81% interest in SMART Modular Technologies do Brasil ('SMART Brazil') on November 29, 2023**[27](index=27&type=chunk) - SMART Brazil operations are presented as discontinued operations for all periods in the financial reports[28](index=28&type=chunk) [Acquisition of Stratus Technologies](index=6&type=section&id=Acquisition%20of%20Stratus%20Technologies) Stratus Technologies was acquired for $225.0 million cash plus a contingent earnout, enhancing the company's portfolio - Acquired Stratus Technologies on **August 29, 2022**, for a cash purchase price of **$225.0 million**, plus a contingent earnout of up to **$50.0 million** (paid in Q2 2024)[29](index=29&type=chunk) [Our Products and Services](index=6&type=section&id=Our%20Products%20and%20Services) Penguin Solutions offers a diverse range of products and services across Advanced Computing, Integrated Memory, and Optimized LED segments Advanced Computing Net Sales | Year | Net Sales (Millions USD) | | :--- | :--- | | 2025 | $648.4 | | 2024 | $554.6 | | 2023 | $749.7 | - Advanced Computing offers HPC and AI solutions under Penguin Solutions, Penguin Computing, Stratus, and Penguin Edge brands[30](index=30&type=chunk) - The Penguin Edge product portfolio is expected to be fully discontinued by approximately the end of calendar 2025 due to obsolescence[36](index=36&type=chunk) Integrated Memory Net Sales | Year | Net Sales (Millions USD) | | :--- | :--- | | 2025 | $464.2 | | 2024 | $356.4 | | 2023 | $443.3 | - Integrated Memory provides specialty DRAM modules (including CXL Memory) and flash storage solutions under the SMART Modular Technologies brand, along with SMART Supply Chain Services[37](index=37&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) Optimized LED Net Sales | Year | Net Sales (Millions USD) | | :--- | :--- | | 2025 | $256.1 | | 2024 | $259.8 | | 2023 | $248.3 | - Optimized LED, under the Cree LED brand, offers application-optimized LED chips and packaged components for various lighting and display applications[44](index=44&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [Manufacturing and Test](index=9&type=section&id=Manufacturing%20and%20Test) The company's manufacturing and testing facilities are globally located and certified, utilizing third-party contract manufacturers and extensive product testing - Manufacturing and testing facilities are primarily located in the United States, Malaysia, and China, with certifications including ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, and IATF16949:2016[48](index=48&type=chunk) - The company utilizes third-party contract manufacturers, builds products to order, and configures products to order, with extensive product testing capabilities[50](index=50&type=chunk)[49](index=49&type=chunk) [Customers](index=10&type=section&id=Customers) Penguin Solutions serves a diversified global customer base, with a significant portion of net sales from its top ten end customers - Serves a diversified base of global OEM, enterprise, and government customers directly and through third-party channels[56](index=56&type=chunk) - Sales to the ten largest end customers accounted for **66% of total net sales in 2025**, 58% in 2024, and 60% in 2023[60](index=60&type=chunk) [Suppliers](index=10&type=section&id=Suppliers) The company maintains relationships with leading global suppliers, but faces supply constraints and increased material costs due to macroeconomic headwinds - Maintains relationships with leading suppliers and contract manufacturers in Asia, Europe, and the Americas, including major memory manufacturers (Samsung, Micron, SK hynix) and computing/graphics providers (Intel, AMD)[61](index=61&type=chunk)[62](index=62&type=chunk) - Global macroeconomic headwinds and industry dynamics have led to supply constraints, increased material costs, and affected delivery timelines[64](index=64&type=chunk) [Sales, Support and Marketing](index=11&type=section&id=Sales,%20Support%20and%20Marketing) Sales and marketing efforts are integrated, leveraging a direct sales force, e-commerce, and a network of partners - Sales and marketing efforts are integrated, utilizing a direct sales force, e-commerce, customer service, field application engineers (FAEs), and a network of independent sales representatives, distributors, integrators, and resellers[65](index=65&type=chunk) [Research and Development](index=11&type=section&id=Research%20and%20Development) R&D activities are conducted globally, focusing on innovation across Advanced Computing, Integrated Memory, and Optimized LED segments R&D Expenses | Year | R&D Expenses (Millions USD) | | :--- | :--- | | 2025 | $79.8 | | 2024 | $81.5 | | 2023 | $90.6 | - R&D activities are conducted globally, focusing on innovation in Advanced Computing (HPC, AI, high-availability servers), Integrated Memory (next-gen DRAM, CXL, flash products), and Optimized LED (next-gen LED products)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - Approximately **430 R&D personnel** worldwide as of August 29, 2025[73](index=73&type=chunk) [Competition](index=12&type=section&id=Competition) The company operates in highly competitive markets against numerous global and local firms, with key competitive factors including product quality and technical support - The company competes in highly competitive markets with numerous global and local companies, including large international firms with greater resources[74](index=74&type=chunk)[78](index=78&type=chunk) - Principal competitive factors include meeting customer-specific requirements, product quality, strong technical support, and technologically advanced products[74](index=74&type=chunk) [Intellectual Property](index=13&type=section&id=Intellectual%20Property) Penguin Solutions protects its intellectual property through a combination of patents, copyrights, trade secrets, trademarks, and contractual restrictions - Owns or exclusively licenses approximately **1,650 patents** and has **442 pending patent applications** as of August 29, 2025[79](index=79&type=chunk) - Relies on a combination of patent, copyright, trade secret, and trademark laws, along with contractual restrictions, to protect intellectual property[80](index=80&type=chunk) [Human Capital](index=13&type=section&id=Human%20Capital) The company prioritizes a "people first" culture, focusing on employee engagement, development, and competitive compensation for its global workforce - Focuses on a 'people first' culture, emphasizing employee engagement, development, inclusion, belonging, wellness, health, safety, and competitive compensation and benefits[82](index=82&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - Had approximately **2,900 full-time employees** worldwide as of August 29, 2025[83](index=83&type=chunk) [Environmental Regulations](index=14&type=section&id=Environmental%20Regulations) Operations are subject to various environmental laws and regulations, with potential for substantial costs and liabilities from non-compliance - Operations are subject to various federal, state, local, foreign, and international environmental laws and regulations[89](index=89&type=chunk) - Non-compliance or unforeseen environmental conditions could lead to substantial costs and liabilities[90](index=90&type=chunk) [Available Information](index=15&type=section&id=Available%20Information) Annual, Quarterly, and Current Reports are publicly available on the company's and SEC's websites - Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K are available free of charge on the company's website (www.penguinsolutions.com) and the

[Executive Summary & Fiscal 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Fiscal%202025%20Highlights) [Company Overview & Strategic Direction](index=1&type=section&id=Company%20Overview%20%26%20Strategic%20Direction) Penguin Solutions is actively transforming from a holding company structure into an enterprise AI infrastructure solutions provider, demonstrating strong momentum in its core businesses and establishing itself as a leader in enterprise AI implementations - Penguin Solutions is transforming from a holding company structure to an enterprise AI infrastructure solutions company, demonstrating **momentum in core businesses** and emerging as a leader in designing, building, deploying, and managing enterprise AI implementations[3](index=3&type=chunk) [Fiscal Year 2025 Key Financial Highlights](index=1&type=section&id=Fiscal%20Year%202025%20Key%20Financial%20Highlights) For fiscal year 2025, Penguin Solutions reported a 17% increase in net sales, a significant improvement in GAAP diluted EPS from a loss to a profit, and a 53% rise in Non-GAAP diluted EPS. Gross margins saw a slight decrease | Metric | FY2025 | FY2024 | Change | | :----------------------- | :------- | :------- | :----- | | Net sales | $1.37 billion | $1.17 billion | Up 17% | | GAAP gross margin | 28.8% | 29.1% | Down 30 bps | | Non-GAAP gross margin | 31.0% | 31.9% | Down 90 bps | | GAAP diluted EPS | $0.28 | $(0.85) | Up from loss | | Non-GAAP diluted EPS | $1.90 | $1.25 | Up 53% | [Fourth Quarter Fiscal 2025 Key Financial Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Key%20Financial%20Highlights) In Q4 fiscal 2025, net sales grew 9% year-over-year, GAAP gross margin improved by 60 basis points, and GAAP diluted EPS turned positive from a prior-year loss. Non-GAAP diluted EPS also increased | Metric | Q4-25 | Q4-24 | Change | | :----------------------- | :------ | :------ | :----- | | Net sales | $338 million | $311 million | Up 9% | | GAAP gross margin | 28.6% | 28.0% | Up 60 bps | | Non-GAAP gross margin | 30.9% | 30.9% | Flat | | GAAP diluted EPS | $0.11 | $(0.46) | Up from loss | | Non-GAAP diluted EPS | $0.43 | $0.37 | Up 16.2% | [Common Stock Repurchase Authorization](index=1&type=section&id=Common%20Stock%20Repurchase%20Authorization) The Audit Committee approved a new $75 million common stock repurchase authorization on October 6, 2025, bringing the total authorizations over the last four years to $225 million. The program has no expiration date and is discretionary - On October 6, 2025, the Audit Committee approved a **$75 million common stock repurchase authorization**, increasing total authorizations over the last four years to **$225 million**[3](index=3&type=chunk) - The stock repurchase authorization has no expiration date, may be suspended or terminated at any time, and does not obligate the Company to acquire any specific amount of common stock[3](index=3&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Annual Financial Results (GAAP & Non-GAAP)](index=2&type=section&id=Annual%20Financial%20Results%20%28GAAP%20%26%20Non-GAAP%29) For fiscal year 2025, total net sales reached $1.37 billion (GAAP & Non-GAAP), a 17% increase from FY2024. Advanced Computing and Integrated Memory segments showed strong growth, while Optimized LED sales slightly decreased. Both GAAP and Non-GAAP net income and diluted EPS significantly improved from the prior year | Metric (in thousands) | FY25 (GAAP) | FY24 (GAAP) | FY25 (Non-GAAP) | FY24 (Non-GAAP) | | :-------------------- | :---------- | :---------- | :-------------- | :-------------- | | **Net sales:** | | | | | | Advanced Computing | $648,417 | $554,552 | $648,417 | $554,552 | | Integrated Memory | $464,249 | $356,426 | $464,249 | $356,426 | | Optimized LED | $256,128 | $259,818 | $256,128 | $259,818 | | **Total net sales** | **$1,368,794** | **$1,170,796** | **$1,368,794** | **$1,170,796** | | Gross profit | $394,274 | $340,776 | $424,600 | $373,981 | | Operating income | $58,135 | $18,295 | $167,652 | $120,257 | | Net income (loss) attributable to Penguin Solutions | $25,391 | $(44,324) | $120,325 | $66,907 | | Diluted earnings (loss) per share | $0.28 | $(0.85) | $1.90 | $1.25 | [Quarterly Financial Results (GAAP & Non-GAAP)](index=2&type=section&id=Quarterly%20Financial%20Results%20%28GAAP%20%26%20Non-GAAP%29) In Q4 fiscal 2025, total net sales were $337.9 million, an increase from $311.1 million in Q4 fiscal 2024. Integrated Memory showed significant year-over-year growth. Both GAAP and Non-GAAP net income and diluted EPS improved substantially compared to the prior year's fourth quarter | Metric (in thousands) | Q4-25 (GAAP) | Q4-24 (GAAP) | Q4-25 (Non-GAAP) | Q4-24 (Non-GAAP) | | :-------------------- | :----------- | :----------- | :--------------- | :--------------- | | **Net sales:** | | | | | | Advanced Computing | $138,336 | $149,355 | $138,336 | $149,355 | | Integrated Memory | $132,159 | $95,832 | $132,159 | $95,832 | | Optimized LED | $67,427 | $65,961 | $67,427 | $65,961 | | **Total net sales** | **$337,922** | **$311,148** | **$337,922** | **$311,148** | | Gross profit | $96,731 | $87,086 | $104,317 | $96,007 | | Operating income (loss) | $12,448 | $8,791 | $39,170 | $33,739 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $(24,547) | $28,843 | $20,007 | | Diluted earnings (loss) per share | $0.11 | $(0.46) | $0.43 | $0.37 | [Business Outlook & Forward-Looking Information](index=3&type=section&id=Business%20Outlook%20%26%20Forward-Looking%20Information) [Fiscal Year 2026 Financial Outlook](index=3&type=section&id=Fiscal%20Year%202026%20Financial%20Outlook) For fiscal year 2026, Penguin Solutions projects 6% YoY net sales growth (with a +/-10% range), GAAP gross margin of 27.5% (+/-1%), and Non-GAAP gross margin of 29.5% (+/-1%). Diluted EPS is expected to be $0.89 (+/-$0.25) GAAP and $2.00 (+/-$0.25) Non-GAAP, based on 55 million diluted shares | Metric | GAAP Outlook (FY26) | Non-GAAP Outlook (FY26) | | :-------------------- | :-------------------- | :---------------------- | | Net sales YoY Growth | 6% +/-10% | 6% +/-10% | | Gross margin | 27.5% +/- 1% | 29.5% +/- 1% | | Operating expenses | $312 million +/- $10 million | $255 million +/- $10 million | | Diluted earnings per share | $0.89 +/- $0.25 | $2.00 +/- $0.25 | | Diluted shares | 55 million | 55 million | [Non-GAAP Adjustments for Outlook](index=3&type=section&id=Non-GAAP%20Adjustments%20for%20Outlook) The non-GAAP adjustments for the fiscal year 2026 outlook total $61 million, primarily comprising stock-based compensation, amortization of acquisition-related intangibles, and other adjustments, with estimated income tax and participating securities effects | Non-GAAP Adjustment (in millions) | Amount | | :-------------------------------------------------------------------- | :----- | | Stock-based compensation and amortization of acquisition-related intangibles (cost of sales) | $30 | | Stock-based compensation and amortization of acquisition-related intangibles (R&D and SG&A) | $49 | | Other adjustments | $8 | | Estimated income tax effects | $(19) | | Estimated effect of allocation of earnings to participating securities | $(7) | | **Total Adjustments** | **$61** | [Earnings Conference Call Details](index=3&type=section&id=Earnings%20Conference%20Call%20Details) Penguin Solutions hosted a conference call and webcast on October 7, 2025, at 1:30 p.m. Pacific Time to discuss its Q4 and full year fiscal 2025 results. Access details were provided for interested parties - Penguin Solutions held a conference call and webcast on **October 7, 2025**, at **1:30 p.m. Pacific Time** to discuss its fourth quarter and full year fiscal 2025 results[10](index=10&type=chunk) - Interested parties could access the call via dialing +1-833-470-1428 (US) or +1-404-975-4839 (international) using access code **561265**, or via the Company's investor relations website[10](index=10&type=chunk) [Use of Forward-Looking Statements](index=3&type=section&id=Use%20of%20Forward-Looking%20Statements) The press release contains forward-looking statements regarding future financial performance, strategic transformation, and business outlook, which are subject to significant risks and uncertainties, including global economic conditions, geopolitical environment, supply chain disruptions, and market trends. Investors are cautioned not to place undue reliance on these statements - This press release contains forward-looking statements concerning future financial and operating performance, strategic transformation, business momentum, and the fiscal year 2026 outlook[11](index=11&type=chunk) - These statements are subject to significant risks and uncertainties, including global business and economic conditions, geopolitical environment, supply chain disruptions, changes in trade regulations, and growth trends in technology industries (including AI)[12](index=12&type=chunk)[13](index=13&type=chunk) - Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of the press release and are not updated unless required by law[14](index=14&type=chunk) [Statement Regarding Use of Non-GAAP Financial Measures](index=4&type=section&id=Statement%20Regarding%20Use%20of%20Non-GAAP%20Financial%20Measures) Penguin Solutions uses non-GAAP financial measures to supplement GAAP results, believing they provide useful supplemental information for analyzing core operating results and comparisons. These measures exclude items like stock-based compensation, amortization of acquisition-related intangibles, and restructuring charges. The long-term non-GAAP effective tax rate was reduced to 25% in Q3 FY25 and further to 22% for FY26 due to changes in geographic earnings mix and U.S. Domestication - Penguin Solutions uses non-GAAP measures to supplement GAAP financial results, believing they are useful for investors in analyzing past and future operating performance by excluding certain items[15](index=15&type=chunk) - Excluded items include stock-based compensation, amortization of acquisition-related intangible assets, cost of sales-related restructuring, diligence, acquisition and integration expense, redomiciliation costs, restructuring charges, impairment of goodwill, and other infrequent or unusual items[15](index=15&type=chunk) - The long-term projected non-GAAP effective tax rate was reduced from **28% to 25% in Q3 FY25** due to changes in geographic earnings mix, and further to **22% for FY26** as a result of the U.S. Domestication[17](index=17&type=chunk) [Explanatory Note on U.S. Domestication](index=5&type=section&id=Explanatory%20Note%20on%20U.S.%20Domestication) On June 30, 2025, Penguin Solutions completed its redomiciliation from the Cayman Islands to Delaware, making Penguin Solutions, Inc., a Delaware corporation, the new publicly traded parent company. This U.S. Domestication was approved by shareholders and involved exchanging Cayman Islands shares for Delaware common stock - Penguin Solutions completed its redomiciliation from the Cayman Islands to the State of Delaware on **June 30, 2025**, with Penguin Solutions, Inc., a Delaware corporation, becoming the publicly traded parent company[19](index=19&type=chunk) - The U.S. Domestication was approved by shareholders and involved exchanging ordinary shares of Penguin Solutions Cayman for common stock of Penguin Solutions Delaware[19](index=19&type=chunk) [About Penguin Solutions](index=6&type=section&id=About%20Penguin%20Solutions) [Company Description](index=6&type=section&id=Company%20Description) Penguin Solutions assists customers in adopting advanced technological advancements across its Advanced Computing, Integrated Memory, and Optimized LED business lines, leveraging expert skills and partnerships to convert complex challenges into opportunities - Penguin Solutions supports customers in achieving ambitions across its Advanced Computing, Integrated Memory, and Optimized LED lines of business[21](index=21&type=chunk) - The company leverages expert skills, experience, and partnerships to transform complex technological challenges into compelling opportunities[21](index=21&type=chunk) [Unaudited Consolidated Financial Statements](index=7&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a significant improvement in net income for both the fourth quarter and full fiscal year 2025 compared to the prior year, driven by increased net sales, particularly in Integrated Memory and Advanced Computing | Metric (in thousands) | Q4-25 | Q4-24 | FY25 | FY24 | | :------------------------------------ | :------ | :------ | :--------- | :--------- | | Total net sales | $337,922 | $311,148 | $1,368,794 | $1,170,796 | | Gross profit | $96,731 | $87,086 | $394,274 | $340,776 | | Operating income | $12,448 | $8,791 | $58,135 | $18,295 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $(24,547) | $25,391 | $(52,472) | | Diluted earnings (loss) per share | $0.11 | $(0.46) | $0.28 | $(1.00) | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations from GAAP to Non-GAAP figures for gross profit, operating expenses, operating income, net income, diluted EPS, and Adjusted EBITDA, highlighting the specific adjustments made for items like stock-based compensation, amortization of intangibles, and redomiciliation costs | Metric (in thousands) | Q4-25 GAAP | Q4-25 Non-GAAP | FY25 GAAP | FY25 Non-GAAP | | :------------------------------------ | :--------- | :----------- | :---------- | :------------ | | Gross profit | $96,731 | $104,317 | $394,274 | $424,600 | | Operating expenses | $84,283 | $65,147 | $336,139 | $256,948 | | Operating income | $12,448 | $39,170 | $58,135 | $167,652 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $28,843 | $25,391 | $120,325 | | Diluted earnings (loss) per share | $0.11 | $0.43 | $0.28 | $1.90 | | Adjusted EBITDA | $43,419 | $43,419 | $186,565 | $186,565 | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) As of August 29, 2025, Penguin Solutions reported an increase in total assets to $1.62 billion from $1.47 billion in FY2024, primarily driven by higher cash and cash equivalents, accounts receivable, and inventories. Total liabilities decreased, while total stockholders' equity increased | Metric (in thousands) | August 29, 2025 | August 30, 2024 | | :-------------------- | :-------------- | :-------------- | | Total current assets | $1,064,227 | $867,704 | | Total assets | $1,617,200 | $1,474,506 | | Total current liabilities | $473,899 | $327,596 | | Total liabilities | $1,008,973 | $1,075,298 | | Total stockholders' equity | $405,517 | $399,208 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For fiscal year 2025, net cash provided by operating activities from continuing operations was $113.18 million, a slight increase from FY2024. Net cash used for financing activities decreased significantly, while net cash provided by investing activities turned positive | Cash Flow Activity (in thousands) | FY25 | FY24 | | :------------------------------------------ | :--------- | :--------- | | Net cash provided by (used for) operating activities | $109,084 | $77,185 | | Net cash provided by (used for) investing activities | $24,973 | $107,585 | | Net cash used for financing activities | $(63,464) | $(210,101) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $70,593 | $(26,587) | | Cash, cash equivalents and restricted cash at end of period | $454,070 | $383,477 | [Contact Information](index=13&type=section&id=Contact%20Information) [Investor and PR Contacts](index=13&type=section&id=Investor%20and%20PR%20Contacts) Contact information for Penguin Solutions' Investor Relations and Corporate Communications departments is provided for inquiries - Investor Relations contact: Suzanne Schmidt, **ir@penguinsolutions.com**, **+1-510-360-8596**[28](index=28&type=chunk) - PR Contact: Maureen O'Lea, **pr@penguinsolutions.com**, **+1-602-330-6846**[28](index=28&type=chunk)

Industry Overview - The Australian construction and materials sector is experiencing a divergence, with public investment booming while private building activity is declining [1][5] - The overall construction market is projected to grow at a CAGR of 4.31% from 2025 to 2030, driven by varying factors [1] Public Investment - Public infrastructure and energy spending are significant growth drivers, with record funding committed for major projects [2][7] - Deloitte estimates that the total value of investment projects under construction rose by 13.6% to $473.8 billion as of March 2025, with major transport initiatives leading the way [3][4] Private Sector Challenges - The private construction sector is facing challenges due to high interest rates, rising material costs, and builder administrations, leading to a 9% decline in total building activity in FY24 [5][6] - Companies heavily reliant on private work are encountering a more difficult environment, contrasting sharply with the public sector's stability [5] Labor Market and Cost Pressures - The construction sector is experiencing a skilled labor shortage, needing an additional 90,000 workers by the end of 2025, which could rise to 130,000 by 2029 [11] - Building construction prices have increased by 31.1% from September 2020 to June 2024, while house construction costs rose by 40.8%, impacting private sector confidence [4][5] Decarbonization and Technology - Decarbonization and the energy transition are creating long-term growth opportunities, insulated from the volatility of private construction [13] - Adoption of digital solutions like Building Information Modelling (BIM) and modular construction is enhancing efficiency and reducing reliance on scarce labor [14] Company-Specific Insights - **Downer EDI (ASX: DOW)**: Transitioning to urban services with a strong backlog of government contracts, FY25 results showed an 81.6% increase in NPAT and a 46.5% dividend increase, indicating a stable growth outlook [20][21][23] - **Lendlease Group (ASX: LLC)**: Undergoing a strategic overhaul, the company reported a return to profitability but faces a challenging market, with a "Sell" rating due to elevated risks and execution uncertainty [26][30] - **Seven Group Holdings (ASX: SGH)**: The acquisition of Boral has strengthened its position in construction materials, with FY25 results showing revenue growth and improved cash generation, making it a stock to watch [32][34] - **Maas Group Holdings (ASX: MGH)**: Achieved a 38% EBITDA growth in its Construction Materials division, supported by strong demand in infrastructure and renewable energy sectors, rated as a "Buy" [36][39][40] - **James Hardie Industries (ASX: JHX)**: Facing a credibility crisis with a 12% decline in North American sales volumes, the company is rated as a "Sell" due to operational fragility and legal investigations [43][44][47] - **Fletcher Building (ASX: FBU)**: In a multi-year strategic reset, the company reported a 9% revenue decline and a net loss, but is making progress on legacy issues, rated as a "Hold" [50][52][54] - **Reliance Worldwide Corporation (ASX: RWC)**: Despite a 5.5% increase in net sales, profitability is under pressure, leading to a "Hold" rating as the company navigates a slower growth environment [57][59]

Financial Data and Key Metrics Changes - SGH reported revenue of $10.7 billion, up 1% year-on-year, with EBIT increasing by 8% to $1.54 billion, aligning with high single-digit EBIT growth guidance [3][26] - NPAT rose by 9% to $924 million, while operating cash flow surged by 49% to $1.95 billion, reflecting strong cash conversion across the business [4][5] - EBITDA margins expanded to 19% and EBIT margins to 14.3%, driven by increased profitability at Boral and higher contributions from equity-accounted earnings [4][26] Business Line Data and Key Metrics Changes - Westrac's revenue increased by 4% to $6.1 billion, with EBIT rising by 2% to $639 million, supported by strong capital sales [11][12] - Boral's revenue was up 1% to $3.6 billion, with EBIT growing by 26% to $468 million, reflecting pricing discipline and operational efficiencies [13][14] - Coats experienced a 9% decline in revenue to $1 billion, with EBIT down 9% on a normalized basis, impacted by lower customer activity in the South [17][18] - Beach's production increased by 9% to 19.7 million BOEs, with revenue rising by 13% to $2 billion, and NPAT up 32% to $451 million [21][22] Market Data and Key Metrics Changes - Australian commodity export volumes increased by 3% in FY 2025, with iron ore exports expected to grow in the medium term [13] - Construction activity remained elevated, supporting customer demand into FY 2026, particularly in infrastructure projects [16][39] Company Strategy and Development Direction - SGH's strategy focuses on sectors with long-duration demand tailwinds, including mining, infrastructure, and energy, aiming for sustainable value creation and TSR outperformance [2][39] - The company plans to enhance sales effectiveness, operating leverage, and innovation to drive performance in FY 2026 [37][39] Management's Comments on Operating Environment and Future Outlook - Management noted mixed market conditions but expressed confidence in strong customer activity and demand, particularly in Westrac and Boral [48][50] - The outlook for Coats remains positive in the medium term, supported by macroeconomic settings and the execution of the Grow30 strategy [39][40] Other Important Information - SGH completed the acquisition of the remainder of Boral, further solidifying its position as a leading diversified operating company [5] - The company achieved a 27% uplift in cash conversion to 95%, supporting a 10% deleveraging of the business [5][30] Q&A Session Summary Question: Westrak and parts pricing dynamics - Management indicated a mid-single-digit price increase expected for July, with a potential slight reduction in the second half due to currency mix [42] Question: Coats' time utilization improvement - Management noted gradual improvement in time utilization, tracking closer to the target of 60% [43][44] Question: Westrak's service revenue performance - Management acknowledged strong customer activity but noted some work deferment impacting service revenue in the second half [48][49] Question: Boral's margin targets - Management expressed confidence in achieving mid-teen margin targets despite flat volume expectations, focusing on operational efficiencies [56][57] Question: Coats' southern region performance - Management observed stabilization in southern regions, with expectations for recovery in the second half of FY 2026 [55] Question: LNG cargo marketing plans - Management outlined plans to market LNG cargoes starting in FY 2026, with expected significant earnings contributions from the Krux project [90][92]

Financial Data and Key Metrics Changes - SGH reported revenue of $10.7 billion, up 1% year-on-year, with EBIT increasing by 8% to $1.54 billion, aligning with guidance for high single-digit EBIT growth [3][26] - NPAT rose by 9% to $924 million, while operating cash flow surged by 49% to $1.95 billion, reflecting strong cash conversion [4][5] - EBITDA margin expanded to 19% and EBIT margin to 14.3%, driven by increased profits at Boral and higher equity accounted earnings [4][26] Business Line Data and Key Metrics Changes - Westrac's revenue increased by 4% to $6.1 billion, with EBIT rising 2% to $639 million, supported by strong capital sales [11][12] - Boral's revenue was $3.6 billion, up 1%, with EBIT growing 26% to $468 million, reflecting pricing discipline and operational efficiencies [13][14] - Coats experienced a 9% decline in revenue to $1 billion, with EBIT down 9% to $290 million due to lower customer activity [17][19] - Beach's production increased by 9% to 19.7 million BOEs, with revenue rising 13% to $2 billion, and NPAT up 32% to $451 million [21][22] Market Data and Key Metrics Changes - Australian commodity export volumes increased by 3% in FY 2025, with iron ore exports expected to grow in the medium term [13] - Construction activity remained elevated, supporting customer demand into FY 2026 [13][40] - The advertising market for Seven West Media declined by 4%, but digital performance improved significantly with a 26% increase in revenue [24] Company Strategy and Development Direction - SGH's strategy focuses on owning and operating leading businesses in sectors with long-duration demand tailwinds, including mining, infrastructure, and energy [2] - The company aims for TSR outperformance and sustainable value creation through disciplined capital allocation and execution [2][38] - The "Grow30" strategy at Coats targets incremental share of the $1.7 trillion infrastructure and construction pipeline, focusing on renewables and utilities [20][91] Management's Comments on Operating Environment and Future Outlook - Management noted mixed market conditions but expressed confidence in continued growth, particularly in Westrac and Boral, while expecting normalization in capital sales [40] - The outlook for Coats is positive in the medium term, supported by macro settings and the execution of the Grow30 strategy [40] - SGH anticipates low to mid-single-digit EBIT growth for FY 2026, supported by margin expansion and core sector exposure [41] Other Important Information - SGH completed the acquisition of the remainder of Boral, further solidifying its position as a leading diversified operating company [5] - The company achieved a 27% uplift in cash conversion to 95%, supporting a 10% deleveraging of the business [5][34] - Safety remains a core priority, with significant improvements in safety metrics reported [9] Q&A Session Summary Question: Westrak and parts pricing dynamics - Management indicated a mid-single-digit price increase expected for July, with a potential slight reduction in the second half due to currency mix [44] Question: Coats' time utilization improvement - Management noted gradual improvement in time utilization, tracking closer to the target of 60% [46] Question: Westrak's service revenue and volume expectations - Management acknowledged strong macro demand but noted customer focus on costs leading to work deferment, impacting service revenue [51][52] Question: Boral's mid-teen margin target - Management expressed confidence in achieving margin improvements through operational efficiencies despite flat volume expectations [59][60] Question: Coats' southern regions stabilization - Management observed stabilization in southern regions, with expectations for recovery in the second half of the year [58] Question: LNG cargo marketing plans - Management plans to market LNG cargoes in 2026, expecting significant EBIT contributions from the Krux project [94][96]

Financial Performance - SGH's revenue increased by 1% to $10744 million[12] - EBIT increased by 8% to $1537 million[12] - NPAT increased by 9% to $924 million[12] - Operating cash flow increased significantly by 49% to $1951 million[12] - The company's final dividend increased by 17% to 62cps[22] Business Unit Performance - WesTrac's revenue increased by 4% to $6100 million[39] - Boral's revenue increased by 1% to $3603 million, with EBIT up by 26% to $468 million[57] - Coates' revenue decreased by 9% to $1041 million[76] - Beach Energy's revenue increased by 13% to $1997 million, with production up by 9% to 197 million barrels of oil equivalent (mmboe)[93] Safety and Sustainability - Lost Time Injury Frequency Rate (LTIFR) and Total Recordable Injury Frequency Rate (TRIFR) improved by 38% and 31% respectively[35] Capital Management - Adjusted Net Debt to EBITDA (Leverage) decreased by 10% year-over-year, falling below 2x[22]

[PART I. Financial Information](index=5&type=section&id=PART%20I.%20Financial%20Information) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Financial statements for May 30, 2025, reflect increased assets, cash, and net income, driven by preferred share issuance and sales growth [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows significant increases in cash, total assets, and equity, primarily due to a preferred share issuance Consolidated Balance Sheet Highlights (in thousands) | Account | May 30, 2025 | August 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $709,871 | $383,147 | | Total current assets | $1,249,896 | $867,704 | | Goodwill | $150,585 | $161,958 | | Total assets | $1,802,782 | $1,474,506 | | **Liabilities & Equity** | | | | Total current liabilities | $476,744 | $327,596 | | Long-term debt | $639,562 | $657,347 | | Total liabilities | $1,207,859 | $1,075,298 | | Total equity | $594,923 | $399,208 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) The statement of operations shows a significant increase in net sales and a return to net income from continuing operations Statement of Operations Summary (in thousands, except per share data) | Metric | Nine Months Ended May 30, 2025 | Nine Months Ended May 31, 2024 | | :--- | :--- | :--- | | Total net sales | $1,030,872 | $859,648 | | Gross profit | $297,543 | $253,690 | | Operating income | $45,687 | $9,504 | | Net income (loss) from continuing operations | $18,285 | $(17,993) | | Net income (loss) attributable to Penguin Solutions | $15,960 | $(27,925) | | Diluted EPS from continuing operations | $0.18 | $(0.38) | - The company recorded a goodwill impairment charge of **$5.3 million** in Q3 2025 and **$11.4 million** in the first nine months of 2025, compared to zero in the prior year periods[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show a substantial increase in operating and financing cash, driven by preferred share issuance and improved net income Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended May 30, 2025 | Nine Months Ended May 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $179,517 | $89,341 | | Net cash provided by investing activities | $2,606 | $115,863 | | Net cash provided by (used for) financing activities | $144,587 | $(160,221) | | Net increase in cash, cash equivalents and restricted cash | $326,710 | $43,727 | - Financing activities in the first nine months of 2025 were primarily driven by **$191.2 million** in net proceeds from the issuance of preferred shares, partially offset by **$49.2 million** in share repurchases. This is a significant shift from the prior year, which saw **$126.6 million** in debt repayments[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail redomiciliation to Delaware, SMART Brazil divestiture, a **$200 million** SKT investment, and a **$11.4 million** goodwill impairment - On June 30, 2025, the company completed its redomiciliation from the Cayman Islands to Delaware, with Penguin Solutions, Inc. (Delaware) becoming the publicly traded parent company[23](index=23&type=chunk)[119](index=119&type=chunk) - The company completed the divestiture of an **81%** interest in SMART Brazil on November 29, 2023. The results of SMART Brazil are now presented as discontinued operations for all periods[26](index=26&type=chunk)[32](index=32&type=chunk) - On December 13, 2024, the company received a **$200 million** investment from an affiliate of SK Telecom Co., Ltd. through the sale of **200,000** convertible preferred shares[29](index=29&type=chunk)[71](index=71&type=chunk) - Goodwill for the Penguin Edge business was impaired by **$5.3 million** in Q3 2025 and **$11.4 million** in the first nine months of 2025 due to the planned wind-down of the business. The remaining **$4.7 million** of goodwill is expected to be fully impaired by the end of calendar 2025[53](index=53&type=chunk)[56](index=56&type=chunk) - Subsequent to the quarter end, on June 24, 2025, the company entered into a new **$400 million** revolving credit facility and used a **$100 million** draw plus cash on hand to repay its **$300 million** term loan A facility[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **19.9%** revenue growth driven by AI and memory demand, a slight gross margin decrease, and enhanced liquidity from the SKT investment [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Results show **19.9%** total net sales growth, primarily from Advanced Computing and Integrated Memory, with a slight gross margin decline Net Sales by Segment (in thousands) | Segment | Nine Months Ended May 30, 2025 | Nine Months Ended May 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Advanced Computing | $510,081 | $405,197 | +25.9% | | Integrated Memory | $332,090 | $260,594 | +27.4% | | Optimized LED | $188,701 | $193,857 | -2.7% | | **Total net sales** | **$1,030,872** | **$859,648** | **+19.9%** | - Gross margin for the first nine months of 2025 decreased to **28.9%** from **29.5%** in the prior year, primarily due to an unfavorable product mix from higher product revenue in the Advanced Computing business[147](index=147&type=chunk) - A goodwill impairment charge of **$11.4 million** was recorded in the first nine months of 2025 related to the planned wind-down of the Penguin Edge business within the Advanced Computing segment[155](index=155&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly improved with **$735.5 million** in cash and increased operating cash flow, supported by the SKT investment and new credit facility - As of May 30, 2025, the company had cash, cash equivalents, and short-term investments of **$735.5 million**[162](index=162&type=chunk) - Operating cash flow from continuing operations for the first nine months of 2025 was **$183.6 million**, a significant increase from **$117.7 million** in the prior-year period, driven by higher net income and favorable changes in working capital[182](index=182&type=chunk)[183](index=183&type=chunk) - On June 24, 2025, the company entered a new **$400 million** revolving credit facility and used proceeds to repay its **$300 million** Amended 2022 TLA, which is expected to result in a loss on extinguishment of debt of **$3.3 million**[166](index=166&type=chunk)[168](index=168&type=chunk) - The company received **$191.2 million** in net proceeds from the SKT convertible preferred share investment in December 2024[177](index=177&type=chunk)[187](index=187&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency and interest rate fluctuations, with potential impacts of **$2.2 million** and **$4.0 million** respectively - A **10%** adverse change in foreign currency exchange rates versus the U.S. dollar would result in a revaluation loss of approximately **$2.2 million** based on monetary assets and liabilities as of May 30, 2025[194](index=194&type=chunk) - Following the refinancing on June 24, 2025, the company is subject to interest rate risk on its new **$400 million** variable-rate 2025 Credit Facility. A **1.0%** increase in interest rates would increase annual interest expense by **$4.0 million**, assuming the facility is fully drawn[195](index=195&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of May 30, 2025, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of May 30, 2025[197](index=197&type=chunk) - No changes in internal control over financial reporting occurred during the third quarter of 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[198](index=198&type=chunk) [PART II. Other Information](index=52&type=section&id=PART%20II.%20Other%20Information) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) New and updated risks include those from U.S. Domestication, anti-takeover provisions, trade restrictions, and restrictive covenants in the new credit agreement - The company may not realize the anticipated benefits of its U.S. Domestication, and the process could have a material adverse effect on business, results, or financial condition[201](index=201&type=chunk) - As a Delaware corporation, the company is now subject to anti-takeover provisions, including a classified board and provisions of Delaware General Corporation Law Section 203, which could delay or prevent a change in control[206](index=206&type=chunk)[208](index=208&type=chunk) - The new 2025 Credit Agreement contains restrictive covenants that limit the company's ability to, among other things, incur additional debt, sell assets, pay dividends, and make certain acquisitions[220](index=220&type=chunk)[222](index=222&type=chunk) - The company faces risks from tariffs and trade restrictions, particularly in its LED business, which could increase costs, reduce demand, and adversely impact financial results[219](index=219&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **1,822,300** shares for **$29.8 million** in Q3 2025, with **$36.8 million** remaining for future repurchases Issuer Purchases of Equity Securities (Q3 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 1 - March 28, 2025 | — | $— | | March 29 - April 25, 2025 | 1,425,200 | $16.03 | | April 26 - May 30, 2025 | 397,100 | $17.53 | | **Total** | **1,822,300** | **$16.36** | - As of May 30, 2025, **$36.8 million** remained available for repurchase under the company's share repurchase authorization[224](index=224&type=chunk) [Other Information](index=56&type=section&id=Item%205.%20Other%20Information) Executive Vice President Jack Pacheco adopted a Rule 10b5-1 trading plan for the potential sale of up to **63,447** shares - Executive Vice President Jack Pacheco adopted a Rule 10b5-1 trading plan on April 21, 2025, for the sale of up to **63,447** shares, starting July 21, 2025[228](index=228&type=chunk)