SMART Global Holdings(SGH) - 2025 Q4 - Annual Results

Executive Summary & Fiscal 2025 Highlights Company Overview & Strategic Direction 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] Fiscal Year 2025 Key Financial Highlights 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 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 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] - 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] Detailed Financial Results Annual Financial Results (GAAP & Non-GAAP) 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) 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 Fiscal Year 2026 Financial Outlook 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 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 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] - 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] Use of Forward-Looking Statements 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] - 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][13] - 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] Statement Regarding Use of Non-GAAP Financial Measures 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] - 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] - 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] Explanatory Note on U.S. Domestication 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] - 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] About Penguin Solutions Company Description 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] - The company leverages expert skills, experience, and partnerships to transform complex technological challenges into compelling opportunities[21] Unaudited Consolidated Financial Statements Consolidated Statements of Operations 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 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 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 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 Investor and PR Contacts 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] - PR Contact: Maureen O'Lea, pr@penguinsolutions.com, +1-602-330-6846[28]