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SGH Reports 2Q Fiscal 2023 Results

SGH Reports 2Q Fiscal 2023 Results

MILPITAS, Calif. — SMART Global Holdings, Inc. today reported financial results for the second quarter of fiscal 2023.

Second Quarter Fiscal 2023 Highlights

  • Net sales of $429 million, down 4.5% versus the year-ago quarter
  • GAAP gross margin of 25.7%, up 60 basis points versus the year-ago quarter
  • Non-GAAP gross margin of 28.9%, up 290 basis points versus the year-ago quarter
  • GAAP EPS of $(0.55) versus $0.04 in the year-ago quarter
  • Non-GAAP EPS of $0.76 versus $0.87 in the year-ago quarter
  • Cash and cash equivalents of $376 million

“Our second quarter fiscal 2023 results demonstrate the resilience of our business, highlighted by strong non-GAAP gross margin of 28.9% and non-GAAP EPS of $0.76, which was above the high end of our guidance range. We exited Q2 with a strong balance sheet, including $376 million in cash and cash equivalents,” commented CEO Mark Adams. “We remain disciplined in managing our expenses given the continued challenging economic environment, while maintaining strategic investments to capitalize on the tailwinds of AI, machine learning, data analytics, networking and specialty lighting, which we believe will drive long-term growth for SGH and create value for our shareholders,” concluded Adams.

Quarterly Financial Results

GAAP (1)

Non-GAAP (2)

(in millions, except per share amounts)

Q2 FY23

Q1 FY23

Q2 FY22

Q2 FY23

Q1 FY23

Q2 FY22

Net sales

$

429.2

$

465.5

$

449.2

$

429.2

$

465.5

$

449.2

Gross profit

110.4

118.4

112.7

123.9

129.2

116.9

Operating income (loss)

(7.2

)

17.6

16.8

51.4

54.8

57.4

Net income (loss) attributable to SGH

(27.2

)

5.0

2.5

37.6

39.5

47.6

Diluted earnings (loss) per share

$

(0.55

)

$

0.10

$

0.04

$

0.76

$

0.79

$

0.87

¹ GAAP represents U.S. Generally Accepted Accounting Principles.
² Non-GAAP represents GAAP excluding the impact of certain activities. Further information regarding the Company’s use of non-GAAP measures and reconciliations between GAAP and non-GAAP measures is included within this press release.

Business Outlook

As of April 4, 2023, SGH is providing the following financial outlook for its third quarter of fiscal 2023:

GAAP

Outlook

Adjustments

Non-GAAP

Outlook

Net sales

$375 million +/- $20 million

$375 million +/- $20 million

Gross margin

26% +/- 1%

2%

(A)

28% +/- 1%

Operating expenses

$90 million +/- $3 million

$18 million

(B)(C)

$72 million +/- $3 million

Diluted earnings (loss) per share

$(0.03) +/- $0.10

$0.43

(A)(B)(C)(D)

$0.40 +/- $0.10

Diluted shares

50 million

50 million

Non-GAAP adjustments (in millions)
(A) Share-based compensation and amortization of acquisition-related intangibles included in cost of sales
$
8
(B) Share-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A
13
(C) Other adjustments
5
(D) Estimated tax effects
(5
)
$
21
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