SMART Global Holdings(US:SGH)2021-04-06 20:08Financial Performance - Net sales for the three months ended February 26, 2021, were $304,009,000, an increase of 11.8% compared to $272,042,000 for the same period in 2020[14] - Gross profit for the six months ended February 26, 2021, was $106,099,000, slightly up from $105,826,000 for the same period in 2020[14] - Net income for the three months ended February 26, 2021, was $5,844,000, compared to a net loss of $9,720,000 for the same period in 2020[14] - Basic earnings per share for the three months ended February 26, 2021, was $0.24, a significant improvement from a loss of $0.41 per share in the same period of 2020[14] - Net income for the six months ended February 26, 2021, was $7.871 million, compared to a net loss of $9.496 million for the same period in 2020, representing a significant turnaround[23] Expenses and Cost Management - Research and development expenses decreased to $8,852,000 for the three months ended February 26, 2021, from $14,702,000 in the same period of 2020, representing a reduction of 39.0%[14] - The company paid $2.955 million in interest during the period, a decrease from $9.754 million in the same period last year, suggesting lower debt servicing costs[23] - Share-based compensation expense for the three months ended February 26, 2021, was $5.398 million, compared to $4.647 million for the same period in 2020[82] Assets and Liabilities - Total assets increased to $820,807,000 as of February 26, 2021, compared to $786,608,000 as of August 28, 2020, reflecting a growth of 4.3%[12] - Total liabilities rose to $562,248,000 as of February 26, 2021, up from $504,504,000 as of August 28, 2020, indicating an increase of 11.4%[12] - Total shareholders' equity decreased to $258,559,000 as of February 26, 2021, from $282,104,000 as of August 28, 2020[12] Cash Flow and Investments - Net cash provided by operating activities increased to $55.990 million, up from $48.601 million year-over-year, indicating improved operational efficiency[23] - Capital expenditures for the six months ended February 26, 2021, were $34.795 million, compared to $9.368 million in the prior year, reflecting increased investment in growth[23] - Cash and cash equivalents decreased to $139,803,000 as of February 26, 2021, from $150,811,000 as of August 28, 2020[12] Market Presence and Operations - The company has operations in multiple countries, including the United States, Brazil, and several Asian and European nations, indicating a broad market presence[27] - The company operates in three segments: Specialty Memory Products, Brazil Products, and Specialty Compute and Storage Solutions, diversifying its revenue streams[27] Revenue Recognition and Deferred Revenue - Gross billings to customers for the six months ended February 26, 2021, were $871,338 thousand, up 3.9% from $838,949 thousand for the same period in 2020[46] - Deferred revenue increased by $4,724 thousand from $20,124 thousand as of August 28, 2020, to $24,848 thousand as of February 26, 2021[48] - Remaining performance obligations expected to be recognized within one year amount to $20,400 thousand[51] Acquisitions and Divestitures - The Company completed the divestiture of its LED Business for a total purchase price of $50 million in cash and a $125 million promissory note, with potential earn-out payments of up to $125 million based on future performance[97] - The acquisition of SMART Embedded Computing, Inc. was completed for a base purchase price of approximately $75 million, with potential earn-out payments of up to $10 million based on revenue targets[100] - SMART Global Holdings acquired SMART Wireless Computing for a total purchase price of approximately $14.6 million, which included $3.2 million in cash and $9.1 million in shares[109] Debt and Financing - The Company recognized a loss on extinguishment of debt in other expense, net of $6.6 million due to early repayment of term loans[168] - The Amended Credit Agreement provides for $165 million of initial term loans with a maturity date of August 9, 2022, and $50 million of revolving loans with a maturity date of February 9, 2021[155] - The FINEP Credit Agreement provides a total of R$102.2 million (approximately $18.7 million) for technology innovation projects in Brazil[185] Stock Options and Compensation - The expected volatility for stock options granted was 52.07% for the six months ended February 26, 2021, compared to 46.10% for the same period in 2020[204] - The total intrinsic value of employee stock options exercised was $2.0 million for the three months ended February 26, 2021, and $2.4 million for the six months ended February 26, 2021[206] - The share-based compensation expense related to RSAs, RSUs, and PSUs was approximately $3.2 million for the three months ended February 26, 2021, and $12.2 million for the six months ended February 26, 2021[210]