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SGH Announces Fiscal Year and Fourth Quarter 2022 Results

SMART Global Holdings, Inc. reported financial results for the fourth quarter and full year fiscal 2022. Per share measures for all periods reflect the effect of the February 2022 two-for-one share split.

“SGH delivered solid operating performance in the fourth quarter of fiscal 2022, capping off a record year of revenue, gross margins, adjusted EBITDA and non-GAAP earnings per share, as we continue our transformation into a diversified and growth-oriented company,” commented CEO Mark Adams. “As we enter fiscal 2023, we remain focused on execution as we manage through macroeconomic uncertainties. As evidenced by our acquisition of Stratus Technologies, we continue to invest in our future, and with multiple secular growth trends, we are positioned to drive attractive long-term returns for our shareholders.”

Annual Financial Results

GAAP (1)

Non-GAAP (2)

(in millions, except per share amounts)

FY22

FY21

FY22

FY21

Net sales

$ 1,819.4

$ 1,501.1

$ 1,819.4

$ 1,501.1

Gross profit

453.2

308.4

470.7

332.6

Operating income

114.5

55.2

227.6

160.8

Net income attributable to SGH

66.6

21.3

190.2

132.2

Diluted earnings per share (3)

$ 1.22

$ 0.41

$ 3.62

$ 2.61

Quarterly Financial Results

GAAP (1)

Non-GAAP (2)

(in millions, except per share amounts)

Q4 FY22

Q3 FY22

Q4 FY21

Q4 FY22

Q3 FY22

Q4 FY21

Net sales

$ 437.7

$ 462.5

$ 467.7

$ 437.7

$ 462.5

$ 467.7

Gross profit

103.8

114.5

117.8

107.8

118.9

123.6

Operating income

27.6

35.3

31.7

46.8

54.3

66.6

Net income attributable to SGH

20.0

24.1

20.7

40.4

45.9

55.1

Diluted earnings per share (3)

$ 0.40

$ 0.44

$ 0.39

$ 0.80

$ 0.87

$ 1.08

(1)

GAAP represents U.S. Generally Accepted Accounting Principles.

(2)

Non-GAAP represents GAAP excluding the impact of certain activities. Further information regarding our use of non-GAAP measures and reconciliations between GAAP and non-GAAP measures is included within this press release.

(3)

Diluted earnings per share reflect the impact of the share dividend paid in February 2022.

Business Outlook

As of October 4, 2022, SGH is providing the following financial outlook for its first quarter of fiscal 2023:

GAAP

Outlook

Adjustments

Non-GAAP

Outlook

Net sales

$425 to $475 million

$425 to $475 million

Gross margin

24.5% to 26.5%

1%

(A)

25.5% to 27.5%

Diluted earnings per share

$0.14 +/- $0.15

$0.46

(A)(B)(C)

$0.60 +/- $0.15

Diluted shares

51 million

51 million

Non-GAAP adjustments (in millions)

(A) Share-based compensation and amortization of acquisition-related intangibles included in cost of sales

$

4

(B) Share-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A

11

(C) Amortization of debt discount and other costs

8

$

23

Our outlook incorporates the effects of the Company’s recent acquisition of Stratus Technologies, Inc. (“Stratus”). However, the Company has not completed its assessment of the provisional fair values of the assets and liabilities, and therefore, our GAAP outlook does not reflect the impact of any differences between the carrying values and fair values of Stratus’ assets or liabilities, including the impact of amortization of any identifiable intangible assets.

Fiscal 2022 Highlights

  • Net sales of $1.82 billion, up 21% versus fiscal 2021
  • GAAP gross margin of 24.9%, up 440 basis points versus fiscal 2021
  • Non-GAAP gross margin of 25.9%, up 370 basis points versus fiscal 2021
  • GAAP EPS of $1.22 versus GAAP EPS of $0.41 for fiscal 2021
  • Non-GAAP EPS of $3.62 versus non-GAAP EPS of $2.61 for fiscal 2021
  • Repurchased 2.63 million shares for $50.0 million in cash

Fourth Quarter Fiscal 2022 Highlights

  • Net sales of $438 million, down 6% versus the year-ago quarter
  • GAAP gross margin of 23.7%, down 150 basis points versus the year-ago quarter
  • Non-GAAP gross margin of 24.6%, down 180 basis points versus the year-ago quarter
  • GAAP EPS of $0.40 versus $0.39 in the year-ago quarter
  • Non-GAAP EPS of $0.80 versus $1.08 in the year-ago quarter
  • Repurchased 2.18 million shares for $39.8 million in cash
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