SMART Global Holdings(SGH) - 2025 Q1 - Quarterly Results

Performance Highlights Penguin Solutions achieved strong Q1 FY2025 results with a 24.4% net sales increase, driven by a 49% surge in Advanced Computing - The CEO highlighted that the 49% YoY growth in Advanced Computing revenue is a direct result of the company's strategy to assist customers with the complexities of AI infrastructure implementation[2] Q1 FY2025 Key Financial Metrics vs. Prior Year Quarter (Q1 FY24) | Metric | Q1 FY2025 | Q1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $341.1M | $274.2M | +24.4% | | GAAP Gross Margin | 28.7% | 30.2% | -150 bps | | Non-GAAP Gross Margin | 30.8% | 33.3% | -250 bps | | GAAP Diluted EPS | $0.10 | $(0.23) | +$0.33 | | Non-GAAP Diluted EPS | $0.49 | $0.24 | +104.2% | Financial Results The company achieved $341.1 million in net sales and returned to GAAP profitability with $5.2 million net income in Q1 FY2025 Key Financial Metrics (Q1 FY2025) Quarterly Financial Results (in thousands, except per share amounts) | Metric | Q1 FY25 (GAAP) | Q1 FY24 (GAAP) | Q1 FY25 (Non-GAAP) | Q1 FY24 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Total Net Sales | $341,102 | $274,247 | $341,102 | $274,247 | | Gross Profit | $97,812 | $82,850 | $105,122 | $91,277 | | Operating Income | $17,356 | $1,305 | $40,918 | $26,679 | | Net Income (Loss) | $5,217 | $(11,773) | $26,518 | $12,538 | | Diluted EPS (Loss) | $0.10 | $(0.23) | $0.49 | $0.24 | Segment Performance Net Sales by Segment (in thousands) | Segment | Q1 FY25 | Q1 FY24 | YoY Change | | :--- | :--- | :--- | :--- | | Advanced Computing | $177,426 | $118,824 | +49.3% | | Integrated Memory | $96,706 | $85,668 | +12.9% | | Optimized LED | $66,970 | $69,755 | -4.0% | Business Outlook (FY2025) Penguin Solutions projects 15% YoY net sales growth and Non-GAAP diluted EPS of $1.50 +/- $0.20 for FY2025 Fiscal Year 2025 Financial Outlook | Metric | GAAP Outlook | Non-GAAP Outlook | | :--- | :--- | :--- | | Net Sales | 15% YoY Growth +/- 5% | 15% YoY Growth +/- 5% | | Gross Margin | 30% +/- 1% | 32% +/- 1% | | Operating Expenses | $335M +/- $15M | $275M +/- $15M | | Diluted EPS | $0.10 +/- $0.20 | $1.50 +/- $0.20 | | Diluted Shares | 56.3 million | 56.3 million | - The total projected Non-GAAP adjustments for FY2025 amount to approximately $79 million, primarily consisting of share-based compensation, amortization of acquisition-related intangibles, and other adjustments, offset by estimated income tax effects[7] Financial Statements The unaudited consolidated financial statements detail the company's financial position, performance, and cash flows, showing a return to profitability Consolidated Statements of Operations Q1 FY2025 Income Statement Highlights (in thousands) | Line Item | Three Months Ended Nov 29, 2024 | | :--- | :--- | | Total net sales | $341,102 | | Gross profit | $97,812 | | Total operating expenses | $80,456 | | Operating income | $17,356 | | Net income attributable to Penguin Solutions | $5,217 | Consolidated Balance Sheets Key Balance Sheet Items (in thousands) | As of | Nov 29, 2024 | Aug 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $370,295 | $383,147 | | Inventories | $246,952 | $151,213 | | Total current assets | $995,579 | $867,704 | | Total assets | $1,583,015 | $1,474,506 | | Long-term debt | $658,070 | $657,347 | | Total liabilities | $1,174,066 | $1,075,298 | | Total equity | $408,949 | $399,208 | Consolidated Statements of Cash Flows Q1 FY2025 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Nov 29, 2024 | | :--- | :--- | | Net cash provided by operating activities | $13,819 | | Net cash used for investing activities | $(18,922) | | Net cash used for financing activities | $(7,763) | | Net decrease in cash | $(12,866) | Reconciliation of GAAP to Non-GAAP Measures The company reconciles GAAP to non-GAAP measures, with significant adjustments for share-based compensation and amortization of intangibles Q1 FY2025 Reconciliation of GAAP to Non-GAAP Operating Income (in thousands) | Description | Amount | | :--- | :--- | | GAAP operating income | $17,356 | | Share-based compensation expense | $11,531 | | Amortization of acquisition-related intangibles | $9,755 | | Other adjustments | $1,376 | | Non-GAAP operating income | $40,918 | Q1 FY2025 Reconciliation of GAAP to Non-GAAP Net Income (in thousands) | Description | Amount | | :--- | :--- | | GAAP net income (loss) attributable to Penguin Solutions | $5,217 | | Share-based compensation expense | $11,531 | | Amortization of acquisition-related intangibles | $9,755 | | Other adjustments (net) | $3,257 | | Income tax effects | $(4,242) | | Non-GAAP net income attributable to Penguin Solutions | $26,518 | Supplementary Information This section provides supplementary details including conference call information, forward-looking statements, and non-GAAP measure explanations Conference Call Information - Penguin Solutions will host a conference call and webcast to discuss Q1 FY2025 results on January 8, 2025, at 1:30 p.m. Pacific Time[8] Forward-Looking Statements - The press release includes forward-looking statements concerning future financial performance, strategic priorities, and business outlook. These statements are subject to significant risks and uncertainties, including global economic conditions, supply chain disruptions, and competitive factors[9][10][11] Statement Regarding Use of Non-GAAP Financial Measures - The company uses non-GAAP measures to supplement GAAP results, believing they provide useful information for analyzing core operating performance. These measures exclude items such as share-based compensation, amortization of acquisition-related intangibles, and restructuring charges[13] - For non-GAAP reporting, the company utilizes a long-term projected non-GAAP effective tax rate of 28%, which it expects to use through fiscal 2025[14]