Slide 1: First Quarter FY23 SGH Financial Results
FIRST QUARTER FY23 SGH FINANCIAL RESULTS JANUARY 3, 2023
Slide 2: Disclaimer
Disclaimer This presentation and the oral communications made during the course of this presentation contain forward-looking the Company makes in this presentation and the oral communications made during the course of this presentation are made statements within the meaning of Section 27A of the Sec
Slide 3: Speakers
Mark Adams President and CEO SGH SPEAKERS Ken Rizvi SVP and CFO SGH
Slide 4: Q1 FY23 Highlights
Q1 FY23 Highlights ▪ Revenue of $465 million ▪ Above midpoint of guidance range and up 6% vs Q4 FY22 ▪ Services ~16% of total SGH revenue, reflects consolidation of Stratus Technologies ▪ Record Non-GAAP Gross Margin of 27.8%* ▪ GAAP gross margin of 25.4%, up 170 bp vs Q4 FY22 ▪ Non-GAAP gross margi
Slide 5: Our Business Lines
OUR BUSINESS LINES © 2023 SGH | 5
Slide 6: Intelligent Platform Solutions
Intelligent Platform Solutions ▪ Revenue of $211 million − Record revenue performance up 46% sequentially; up 78% vs year ago − Record services revenue; 32% of IPS Q1 revenue ▪ New Technologies and Partnerships − Launched a new cloud control plane for on-premises and cloud-based HPC/AI clusters − Pa
Slide 7: LED Solutions
LED Solutions ▪ Revenue of $63 million − Headwinds from China’s COVID-related policies impacting supply chain and industry-wide demand − Expect near-term challenging demand and further channel inventory reductions − Proactively containing costs and adjusting ongoing operating expenses ▪ New Technolo
Slide 8: Memory Solutions
Memory Solutions ▪ Revenue of $192 million − Core Specialty Memory business remains stable − Brazil business impacted by global weakness in consumer electronics ▪ New Technologies − Continued growing interest in SMART Modular’s new family of DuraFlash PCIe NVMe and SATA products − Expanded DDR5 modu
Slide 9: Financial Review
FINANCIAL REVIEW Ken Rizvi, SVP and CFO © 2023 SGH | 9
Slide 10: Strong Non-GAAP Quarterly Results
Non-GAAP Non-GAAP Revenue Gross Margin EPS Strong Non-GAAP Quarterly Results Q1 FY23 $465M 27.8% $0.79 Results Key financial metrics above midpoint of guidance range Q1 FY23 $425-$475M 25.5-27.5% $0.60 +/- $0.15 Guidance • Guidance provided on Q4 FY22 earnings call which, took place on October 4, 20
Slide 11: Q1 FY23 Revenue Detail
Q1 FY23 Revenue Detail Revenue Breakdown – Total $465M Revenue Mix by Business Product Revenue 13% $390M 45% 42% Service Revenue $75M LED Solutions Memory Solutions Intelligent Platform Solutions © 2023 SGH | 12
Slide 12: Q1 FY23 Non-GAAP Operating Results
Q1 FY23 Non-GAAP Operating Results ($M) Q1 FY23 Q4 FY22 Q1 FY22 Revenue $465.5 $437.7 $469.9 Intelligent Platform Solutions $211.0 $144.7 $118.7 Memory Solutions $192.0 $209.8 $239.4 LED Solutions $62.5 $83.1 $111.9 Non-GAAP Gross profit* $129.2 $107.8 $127.0 Non-GAAP Operating expenses* $74.4 $61.1
Slide 13: Q1 FY23 Balance Sheet Highlights
Q1 FY23 Balance Sheet Highlights Working Cash Capital Q4 FY22 Q1 FY23 Q4 FY22 Q1 FY23 Q4 FY22 Q1 FY23 Capital Flow Expenditures Net Accounts Cash & $410M $306M $363M $325M CapEx $8.9M $11.6M Receivable Equivalents (at period end) Days Sales 47 days 33 days CF from Depreciation $10.8M $8.9M Outstandi
Slide 14: Our Guidance
OUR GUIDANCE © 2023 SGH | 14
Slide 15: Q2 FY 2023 Guidance
Q2 FY 2023 Guidance GAAP Non-GAAP Outlook Adjustments Outlook Net Sales $410 to $460 million ‒ $410 to $460 million Gross Margin 25.0% to 27.0% 1% (A) 26.0% to 28.0% Diluted EPS $0.13 +/- $0.15 $0.47 (A,B,C,D) $0.60 +/- $0.15 Diluted Shares 50 million ‒ 50 million © 2023 SGH | 15
Slide 16: Powering Growth. Expanding Possibilities.
POWERING GROWTH. EXPANDING POSSIBILITIES. © 2023 SGH | 16
Slide 17: Appendix
APPENDIX © 2023 SGH | 17
Slide 18: GAAP to Non-GAAP Reconciliations
Three Months Ended November 25, August 26, November 26, (dollars in thousands) 2022 2022 2021 GAAP gross profit $ 118,410 $ 103,843 $ 122,201 Share-based compensation expense 1,708 1,637 1,731 Amortization of acquisition-related intangibles 6,466 2,367 3,096 Flow-through of inventory step up 2,599 —
Slide 19: GAAP to Non-GAAP Reconciliations
Three Months Ended November 25, August 26, November 26, (dollars in thousands, except per share data) 2022 2022 2021 GAAP net income attributable to SGH $ 4,992 $ 19,959 $ 20,027 GAAP to Share-based compensation expense 10,412 9,824 9,775 Amortization of acquisition-related intangibles 10,858 5,614
Slide 20: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Three Months Ended November 25, August 26, November 26, (dollars in thousands) 2022 2022 2021 Net income attributable to SGH $ 4,992 $ 19,959 $ 20,027 Interest expense, net 8,037 6,491 5,106 Income tax provision (benefit) 4,890 (584) 7,755 Depreciation expense and am
Slide 21: Convertible Dilution
Convertible Dilution Convertible Net Share Stock Price Share Dilution Capped Call Dilution to SGH $16 — — — $17 — — — $18 — — — $19 — — — $20 — — — $21 0.41 (0.41) — $22 0.95 (0.95) — $23 1.44 (1.44) — $24 1.90 (1.90) — $25 2.31 (2.31) — • Note: Dilution in millions of shares © 2023 SGH | 21