SMART Global Shares Plummet After Q3 Results, Guides Q4 Below Consensus

  • SMART Global Holdings Inc. SGH reported third-quarter sales growth of 5.7% year-over-year to $463 million, beating the consensus of $455.17 million.
  • Adjusted EPS of $0.87 (+24% Y/Y) beat the consensus of $0.75.
  • The gross margin expanded by 540 bps to 24.7%, and the adjusted gross margin was up 380 bps to 25.7%.
  • Adjusted operating margin expanded by 185 bps to 11.7%.
  • Adjusted EBITDA was $63.97 million (+24.5% Y/Y), and the margin was 13.8, up 210 bps.
  • During the quarter, the company repurchased ~450 thousand shares for $10.2 million in cash.
  • Net cash provided by operating activities year-to-date totaled $84.03 million, compared to $105.33 million a year ago.
  • The company held cash and cash equivalents of $387.33 million as of May 27, 2022.
  • Separately, SGH announced that it has agreed to acquire Stratus Technologies, a global leader in simplified, protected, and autonomous computing solutions in the data center and at the Edge, for $225 million in cash at closing and an earn-out payment of up to $50 million.
  • 4Q22 Outlook: SMART Global expects net sales of $420 million to $460 million, vs. consensus of $478.77 million, gross margin of 22.5% to 24.5%, and EPS of $0.22 +/- $.10.
  • It expects an adjusted gross margin of 23.5% to 25.5%; and an Adjusted EPS of $0.55-$0.75, vs. a consensus of $0.84.
  • Price Action: SGH shares are trading lower by 12.57% at $17.73 during the post-market session on Wednesday.

Posted In: BriefsM&ANewsGuidanceSmall Cap

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