Penguin Solutions, Inc. · NASDAQ:PENG
Penguin Solutions — SMART Global Holdings — Merger or Acquisition (October 2020)
18 slides from Penguin Solutions's merger presentation, Oct 19, 2020
Slide 1: SMART to Acquire Cree LED Business
OCTOBER 19, 2020 SMART to Acquire Cree LED Business
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation and oral communications made during the course of this presentation contain statements that Such factors and risks as outlined above and in such filings may not constitute all factors and risks that could cause constitute forward-looking statements. Many
Slide 3: Cree LED Transaction Overview
Cree LED Transaction Overview Mark Adams, President and CEO
Slide 4: Transaction overview
Transaction overview • Initial purchase price of $175M • $50M cash payment upon closing Terms & • Transaction valued at • $125M in a seller-financed note payable interest only with principle due August 2023 Financing up to $300 million • Additional potential earnout of up to $125M Financial • Expect
Slide 5: Compelling strategic and financial benefits
Compelling strategic and financial benefits Advances our growth Adds new strengths Provides access to new Immediate financial Provides significant and diversification and complements our market opportunities, benefits expected and upside potential strategy, while building existing capabilities inclu
Slide 6: Significant strategic step forward on diversifying our portfolio and enhancing our revenue streams
Significant strategic step forward on diversifying our portfolio and enhancing our revenue streams FY ‘18 FY ‘19 FY ‘20 Pro Forma1 4% 18% 17% 23% 28% 35% 34% 44% 62% 30% 38% 42% 25% Continued diversification strategy beyond Memory Brazil Specialty Memory Specialty Compute & Storage Cree LED and Br
Slide 7: Proven Operating System
Our proven operating system is a sustainable competitive advantage… IT Optimization Supply Chain/ Inventory Control Proven Operating System Customer Global Relationship Manufacturing Management Centers of Excellence (Finance / HR) 7
Slide 8: Resulting in a strong track record of successful acquisitions
…Resulting in a strong track record of successful acquisitions Just Announced SMART Global Holdings Strategy Date Jun 2018 Jul 2019 Jul 2019 Oct 2020 Invest in and Expand Strategic Benefits from shared Advanced engineering Entry into embedded Diversifies revenue base Existing Lines of Benefit infras
Slide 9: Cree LED: A global leader in the LED lighting market
Cree LED: A global leader in the LED lighting market Founded / HQ 1987 / Durham, NC FY’20 Key Financial Metrics Global Employees ~2,000 Revenue Gross Profit Gross Profit Margin Facilities 3 (Durham, NC; Huizhou, China and Hong Kong) $433M $91M 21.0% Customers 1,000+ LED Chips LED Components IP 2,000
Slide 10: Large total addressable market opportunity
Large total addressable market opportunity End 2019 Revenue Market Contribution Applications End Uses Tunnels, parking, garages, TAM $11 billion General Space illumination or outdoor retail displays, roadway 58% Lighting ambient effects, display and street illumination, area/stadium lighting Tailore
Slide 11: Significant opportunity to capture value as we execute our proven operating system
Significant opportunity to capture value as we execute our proven operating system Integration Imperatives IT Optimization Transition to outsourced production • Accelerate transition from silicon carbide to sapphire model driving • Moving to capex-light foundry model with the shift to outsourcing Su
Slide 12: Cree LED Transaction Financial Overview
Cree LED Transaction Financial Overview Jack Pacheco, COO and CFO
Slide 13: Cree LED aligns with our acquisition framework
Cree LED aligns with our acquisition framework… Strategic Filters Leadership positions in high-value niches, attractive end Financial Criteria markets and/or high-growth geographies, where we can differentiate through specialty products and solutions • Revenue Growth Ability to apply our proven oper
Slide 14: And significantly enhances SMART's financial profile
…And significantly enhances SMART’s financial profile FY 2020 Actuals Year 1 Targets (SMART Global Holdings) (12 months post close) Revenue $1.1B $1.5B – $1.6B Gross Margin1 19.8% 200 – 400 bps improvement Operating Margin1 7.5% 150 – 250 bps improvement EPS1 $2.59 $4.00 – $4.25 FCF $55M $25M – 35M
Slide 15: Closing Comments
Closing Comments Mark Adams, President and CEO
Slide 16: Invest with us as we continue to transform SMART Global Holdings
Invest with us as we continue to transform SMART Global Holdings Addition of Cree LED Executing our growth Successful acquisition is expected to be and diversification Strong cash track record enabled immediately strategy, while generation capability by disciplined accretive, strengthens building on
Slide 17: Appendix
Appendix SMART GLOBAL HOLDINGS
Slide 18: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation SMART Global Holdings. Inc. (In thousands, except per share data) Fiscal Year Ended Fiscal Year Ended August 28, 2020 August 28, 2020 Reconciliation of gross profit: GAAP gross profit $ 216,396 Reconciliation of net income (loss) and earnings per share (diluted): GAAP
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