SMART Global Holdings Reports Fourth Quarter and Full Year Fiscal 2017 Financial Results

NEWARK, CA, September 28, 2017SMART Global Holdings, Inc. ("SMART") (NASDAQ: SGH), parent company of SMART Modular Technologies, Inc., today reported financial results for the fourth quarter and full year fiscal 2017 ended August 25, 2017.

Fourth Quarter Fiscal 2017 Highlights:

  • Net sales 53% higher than year ago quarter
  • Net sales of $223.0 million
  • GAAP operating income $20.6 million
  • GAAP net loss of $(10.2) million
  • Adjusted EBITDA of $31.3 million
  • GAAP EPS of $(0.48)
  • Non-GAAP diluted EPS of $0.79


Full Year Fiscal 2017 Highlights:

  • Net sales 42% higher than prior fiscal year
  • Net sales of $761.3 million
  • GAAP operating income $53.9 million
  • GAAP net loss of $(7.8) million
  • Adjusted EBITDA of $99.4 million
  • GAAP EPS of $(0.49)
  • Non-GAAP diluted EPS of $2.26

"We completed fiscal 2017 on a strong note, having accomplished a number of key milestones that set the foundation for continued momentum as we enter fiscal 2018," commented Iain MacKenzie, President and Chief Executive Officer of SMART Global Holdings. "The strength of the global memory market contributed to all of our businesses across the board. In SMART Brazil we are also benefitting from the improving economy and the introduction of new products. Increasing demand from our networking and storage customers is driving healthy growth in our Specialty Memory business as well. We also recently paid off a portion of our term loan with the proceeds of our IPO, as well as completing an important debt refinancing that clears the path for improved operating leverage in our financial model, enabling us to drive increasing returns for our shareholders."

Quarterly Financial Results
(In millions, except per share amounts)
  Q4 FY17 Q3 FY17 Q4 FY16 Q4 FY17 Q3 FY17 Q4 FY16
Net Sales $ 223.0 $ 207.0 $ 146.2 $ 223.0 $ 207.0 $ 146.2
Gross Profit $ 48.0 $ 47.4 $ 29.9 $ 48.2 $47.6 $ 30.0
Operating Income $ 20.6 $ 20.4 $ 4.0 $ 25.4 $ 24.8 $ 8.3
Net Income (Loss) $ (10.2) $ 8.0 $ (1.5) $ 17.4 $ 13.7 $ 2.5
Earnings (Loss) Per Share $ (0.48) $ 0.50 $ (0.11) $ 0.79 $ 0.62* $ 0.18

Annual Financial Results
(In millions, except per share amounts)
  FY17 FY16 FY17 FY16
Net Sales $ 761.3 $ 534.4 $ 761.3 $ 534.4
Gross Profit $ 162.3 $ 106.9 $ 162.9 $ 107.4
Operating Income $ 53.9 $ 6.2 $ 71.2 $ 23.4
Net Income (Loss) $ (7.8) $ (20.0) $ 36.6 $ (4.1)
Earnings (Loss) Per Share $ (0.49) $ (1.44) $ 2.26 $ (0.30)

(1) GAAP represents U.S. Generally Accepted Accounting Principles.

(2) Please refer to the "Non-GAAP Information" section and the "Reconciliation of Non-GAAP Financial Measures" table below for further detail on the non-GAAP financial reporting referenced above and a reconciliation of such measures to our nearest GAAP measures.

* Represents pro forma non-GAAP earnings per diluted share. The pro forma weighted average diluted shares outstanding used in the computation includes the pro forma effect of the 6,095,000 shares issued in our IPO on May 30, 2017 as if they were outstanding for the entire third quarter.

Other Highlights
Paid down $61.1 million of our term loan with proceeds from the IPO and then completed a refinancing transaction that extended the maturity date of the term loan; both transactions contributed to significantly reduce interest expense.

Business Outlook
The following statements are based upon management's current expectations for the first quarter of fiscal 2018 ending November 24, 2017. These statements are forward-looking, and actual results may differ materially. SMART undertakes no obligation to update these statements.

Net Sales -GAAP/Non-GAAP $225 to $240 Million
Gross Margin - GAAP/Non-GAAP 21% to 22%
Earnings Per Share - GAAP $0.66 to $0.70
Intangible Amortization Per Share $0.06
Stock-Based Compensation Per Share $0.07
Earnings Per Share - Non-GAAP $0.79 to $0.83
Expected Dilute Share Count 22.3 Million

Conference Call Details
SMART will host a conference call today for analysts and investors at 1:30 p.m. Pacific time, 4:30 p.m. Eastern time. Dial-in US toll free +1-866-487-6452 using access code 79446792.

A replay of the conference call will be available until October 22, 2017 through the Events section of the SMART website at or until October 5, 2017 by calling US toll free +1-855-859-2056; Passcode: 79446792.

Forward-Looking Statements
This release contains, and statements made during the above-referenced conference call will contain "forward-looking statements" including among other things, statements regarding future events and the future financial performance of SMART (including the business outlook for the next fiscal quarter) and statements regarding growth drivers in SMART's industry and markets. These statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including but not limited to: business and economic conditions and growth trends in the technology industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the success of our strategic initiatives including additional investments in new products and additional capacity; the DRAM market and the temporary and volatile nature of pricing trends; deterioration in customer relationships; production or manufacturing difficulties; competitive factors; technological changes; difficulties with or delays in the introduction of new products; slowing or contraction of growth in the memory market in Brazil; reduction in or termination of local content requirements in Brazil; changes to applicable tax regimes or rates; prices for the end products of our customers; fluctuations in material costs and availability; deterioration in or loss of relations with any of our limited number of key vendors; and other factors and risks detailed in SMART's filings with the Securities and Exchange Commission. Such factors and risks as outlined above and in such filings may not constitute all factors and risks that could cause actual results of SMART to be materially different from the historical results and/or from any future results or outcomes expressed or implied by such forward-looking statements. SMART operates in a continually changing business environment and new factors emerge from time to time. SMART cannot predict such factors, nor can it assess the impact, if any, from such factors on SMART or its results. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements should not be relied upon as a prediction of actual results. These forward-looking statements are made as of today, and SMART does not intend, and has no obligation, to update or revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this press release, except as required by law.

Non-GAAP Information
The following non-GAAP financial measures are included in this press release, including Adjusted EBITDA, non-GAAP net income, non-GAAP net income per diluted share, non-GAAP diluted EPS and pro forma non-GAAP diluted EPS. We define Adjusted EBITDA as GAAP net income plus net interest expense, income tax expense, depreciation and amortization expense, stock-based compensation expense, restructuring charges, non-cash charges in connection with refinancing and other infrequent or unusual items. Adjusted EBITDA is not a measure of financial performance calculated in accordance with U.S. GAAP, and should be viewed as a supplement to, not a substitute for, our results of operations presented on the basis of U.S. GAAP. Adjusted EBITDA also does not purport to represent cash flow provided by, or used in, operating activities in accordance with U.S. GAAP and should not be used as a measure of liquidity.

The non-GAAP financial results presented herein do not include stock-based compensation expense, intangible amortization expense, amortization of non-cash debt discount related to warrants and non-cash charges in connection with refinancing. These non-GAAP financial measures are provided to enhance the user's overall understanding of our financial performance. By excluding these charges and gains, as well as any related tax effects, our non-GAAP results provide information to management and investors that is useful in assessing SMART's core operating performance and in evaluating and comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to evaluate financial results, to plan and forecast future periods, and to assess performance of certain executives for compensation purposes. The presentation of this additional information is not meant to be a substitute for the corresponding financial measures prepared in accordance with U.S. GAAP. In addition, these measures may not be used similarly by other companies and therefore may not be comparable between companies.

Investors are encouraged to review the "Reconciliation of Non-GAAP Financial Measures to GAAP Results" and "Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA" tables below for more detail on Adjusted EBITDA and non-GAAP calculations.

About SMART Global Holdings
The SMART family of companies are global leaders in specialty memory, storage and hybrid solutions serving the electronics industry with standard and custom products for over 25 years. SMART delivers components, modules and solutions to a broad customer base, including OEMs in computing, networking, communications, storage, mobile and industrial markets. Customers rely on SMART as a strategic supplier with custom designs, product quality, technical support, a global footprint, and the ability to provide locally manufactured memory products in multiple geographies. See,, or for more information.


Consolidated Statements of Income

Reconcilliation of Non-GAAP Financial Measures to GAAP Results

Reconcilliation of GAAP Net Income (Loss) to Adjusted EBITDA

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

# # #

Investor Contact:
Suzanne Schmidt
Investor Relations for SMART Global Holdings, Inc.
(510) 360-8596