SMART Global Holdings(US:SGH)2024-07-09 21:13Financial Performance - Total net sales for the three months ended May 31, 2024, were $300.58 million, a decrease of 12.7% compared to $344.42 million for the same period in 2023[13] - Gross profit for the three months ended May 31, 2024, was $88.91 million, down from $100.48 million in the prior year, reflecting a gross margin of 29.6%[13] - Operating income for the three months ended May 31, 2024, was $11.51 million, compared to an operating loss of $2.39 million in the same period last year[13] - Net income attributable to SMART Global Holdings for the three months ended May 31, 2024, was $5.62 million, a significant improvement from a net loss of $24.46 million in the prior year[13] - The company reported a basic earnings per share of $0.11 for the three months ended May 31, 2024, compared to a loss of $0.50 in the prior year[13] - For the three months ended May 31, 2024, SMART Global Holdings reported a net income of $6,226 thousand, a significant improvement compared to a net loss of $24,077 thousand for the same period in 2023[14] - The comprehensive income attributable to SMART Global Holdings for the nine months ended May 31, 2024, was $178,056 thousand, compared to a loss of $39,412 thousand for the same period in 2023[14] - For the nine months ended May 31, 2024, the company reported comprehensive income of $179,840 thousand, compared to a loss of $38,269 thousand for the same period in 2023[14] - The net income for the nine months ended May 31, 2024, was $5,616 thousand, compared to a loss of $26,141 thousand for the same period in 2023[14] - The effective tax rate for the third quarter of 2024 was (27.0)%, influenced by losses in jurisdictions where no tax benefit can be recognized[90] Cash and Liquidity - Cash and cash equivalents increased to $453.79 million as of May 31, 2024, up from $365.56 million as of August 25, 2023[12] - The cash and cash equivalents at the end of the period increased to $453,791,000 from $401,275,000 year-over-year, marking a 13.1% growth[19] - The company generated net cash provided by operating activities of $89,341,000 for the nine months ended May 31, 2024, compared to $67,588,000 for the same period in 2023, reflecting a positive cash flow trend[19] - Net cash provided by operating activities from continuing operations was $117,677,000, significantly up from $26,121,000 in the prior year, indicating a 350.5% increase[19] - The net cash used for investing activities from continuing operations was $(3,526,000) for the nine months ended May 31, 2024, compared to $(244,077,000) for the same period in 2023, indicating a reduction in cash outflows for investments[19] Assets and Liabilities - Total assets as of May 31, 2024, were $1.55 billion, compared to $1.51 billion as of August 25, 2023[12] - Total liabilities decreased to $1.12 billion as of May 31, 2024, from $1.28 billion as of August 25, 2023[12] - Total current liabilities decreased to $25,471 million as of November 29, 2023, from $30,903 million on August 25, 2023[34] - As of May 31, 2024, total debt was $667.042 million, a decrease from $790.438 million as of August 25, 2023[53] - The effective interest rate for the Amended 2027 TLA was 8.72% as of May 31, 2024[55] Shareholder Equity and Repurchases - As of May 31, 2024, total shareholders' equity was reported at $430,521 thousand, reflecting an increase from $324,166 thousand as of May 26, 2023[15] - The company issued 704 shares under equity plans, resulting in an increase of $3,817 thousand in additional paid-in capital for the three months ended May 31, 2024[15] - SMART Global Holdings repurchased ordinary shares worth $2,129 thousand during the three months ended May 31, 2024[15] - In the first nine months of 2024, the company repurchased 931 thousand ordinary shares for $13.9 million under the share repurchase authorization[67] - The company has $77.7 million remaining available for share repurchase as of May 31, 2024[67] Research and Development - Research and development expenses for the three months ended May 31, 2024, were $19.68 million, slightly down from $20.34 million in the same period last year[13] - The company recognized share-based compensation expense of $33.1 million for continuing operations in the first nine months of 2024[77] - The company recorded restructure charges of $6.7 million in the first nine months of 2024, primarily for employee severance costs[86] Strategic Initiatives and Market Outlook - The company anticipates continued investment in new products and market expansion as part of its strategic initiatives moving forward[6] - The company is focused on strategic initiatives, including investments in new products and potential acquisitions to enhance growth opportunities[6] - The company anticipates continued challenges in the market, including potential disruptions in operations and supply chain issues, which may impact future performance[6] Segment Performance - Memory Solutions segment reported net sales of $91,629 for the three months ended May 31, 2024, down 16.3% from $109,458 in the prior year[96] - Intelligent Platform Solutions segment net sales decreased by 15.2% to $144,968 for the three months ended May 31, 2024, from $170,854 in the same period of 2023[96] - LED Solutions segment reported net sales of $63,983 for the three months ended May 31, 2024, slightly down from $64,106 in the same period of 2023[96] - Total segment operating income for the three months ended May 31, 2024, was $33,325, a decrease of 21.3% from $42,327 in the same period of 2023[96] Divestiture and Impairment - SMART Global Holdings completed the divestiture of an 81% interest in SMART Brazil on November 29, 2023, for a total enterprise value of $205,000,000, with cash received at closing amounting to $164,487,000[29] - The loss from the divestiture of an 81% interest in SMART Brazil was calculated at $190,504 million, including a pre-tax loss of $163,924 million[36] - The company recognized an impairment charge of $153,000,000 related to the net assets of SMART Brazil as of August 25, 2023, reflecting a strategic shift in operations[33] - The carrying value of the remaining 19% interest in SMART Brazil was $37.8 million as of May 31, 2024, classified as a non-marketable equity investment[37] Accounting and Compliance - The company is evaluating the impact of recently issued accounting standards on its financial disclosures, effective in 2025 and 2026[39][40]