SMART GLOBAL HOLDINGS, INC. 2 0 2 3 A N N U A L R E P O R T
ON THE OTHER SIDE OF TRANSFORMATION IS A WORLD BEYOND EXPECTATION
At SGH, we are continuing our journey to transform from a memory-focused company into an enterprise solutions company that helps our customers solve for the future.
With an unwavering focus on serving our customers, we act as a trusted advisor, in designing, building, deploying, and managing high performance and high availability enterprise solutions across compute, memory, and LED.
Our values inspire us to think creatively and execute deliberately, while leveraging our commitment to innovation, research and development, and the delivery of differentiated solutions that are built to last.
At SGH, we never stop empowering progress, because on the other side of transformation is a world beyond expectation.
SGH 2023 Annual Report | 1
CONTINUING OUR TRANSFORMATION JOURNEY
MEMORY MODULE COMPANY
Completed Acquisition of
Stratus Technologies
Adding high-availability, fault- tolerant capabilities, and zero-touch Edge computing solutions
Improved Revenue Mix w/
High Margin Services
$248M in FY23, or 17% of revenue
2
ENTERPRISE SOLUTIONS COMPANY
Announced Divestiture of | Continued Revenue |
SMART Brazil | Diversification |
Successfully closed at end of | 52% from IPS, |
calendar 2023 | 31% from Memory, |
17% from LED | |
Record Non-GAAP | Strong Balance Sheet |
Gross Margin | Cash, equivalents, and ST |
31.7% in FY23 | investments of $391M |
SGH 2023 Annual Report | 3
TO OUR VALUED SHAREHOLDERS,
In fiscal 2023, during challenging macroeconomic times, our team continued to execute on the transformation of SGH from a memory module company into an enterprise solutions company focused on delivering high-performance and high-availability solutions to our customers.
While executing our long-term plan, we also delivered strong financial results, positioning us for future success.
As part of our transformation, SGH undertook two major strategic transactions in fiscal 2023. First, we completed the acquisition of Stratus Technologies, a leading provider of high-availability,fault-tolerant computing platforms, software, and services, to expand our Intelligent Platform Solutions (IPS) offerings. Second, we announced an agreement to divest an 81 percent stake in SMART Brazil, our only consumer electronics- oriented business. We completed this divestiture in November 2023, shortly after the end of the fiscal year, strengthening our balance sheet and reaffirming our commitment to offering high-performance, high- availability enterprise solutions.
Our financial performance in fiscal 2023, from continuing operations, included:
Overall revenue of $1.44 billion, up approximately 3 percent from fiscal 2022,
Record Non-GAAP gross margin of 31.7%, driven by margin improvements from IPS and Memory Solutions,
And Non-GAAP diluted earnings per share of $2.52.
As we look ahead to fiscal 2024, we see a growing demand for enterprise solutions in High Performance Computing (HPC) and Artificial Intelligence (AI). We believe SGH is uniquely qualified to help our customers unlock the value of AI. With decades of experience as a comprehensive HPC and AI solutions provider, combined with deep experience in specialty memory, we can offer our customers the experience and expertise they need to design, build, deploy, and manage AI solutions at scale.
This dedication to and investment in forward-looking enterprise solutions spans our lines of business:
Within IPS, which is made up of our Penguin Solutions and Stratus offerings, we are expanding our capabilities in hardware, software, and managed services to offer comprehensive HPC and
4
Mark Adams
Chief Executive Officer
AI computing solutions on premise, at the edge, and in the Cloud.
Our Memory Solutions business, SMART Modular, provides high reliability memory products that support our customers advance computing requirements for higher bandwidth and increased availability to enable applications such as AI, machine learning, and data analytics.
In LED Solutions, our Cree LED team focuses on delivering high-power,high-quality LEDs to our enterprise customers, drawing upon our rich heritage of innovation and robust intellectual property portfolio.
SGH also continued to make significant progress towards our Environment, Social, and Governance goals. In our third annual ESG report released in October 2023, we underscored our commitment to achieving net zero carbon emissions by 2030 and outlined the steps we are taking to becoming a more sustainable and responsible company.
I would like to thank our dedicated team of over 3,000 employees for what we accomplished in fiscal 2023. I believe we are well positioned to deliver long-term value to you, our shareholders, and I thank you for your continued support.
Sincerely,
Mark Adams
Chief Executive Officer
SGH 2023 Annual Report | 5
BUILDING A WORLD
THAT IS ALWAYS
ADVANCING.
6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
-
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 25, 2023
OR
- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-38102
SMART GLOBAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Cayman Islands | 98-1013909 | ||
(State or other jurisdiction of | (I.R.S. Employer | ||
incorporation or organization) | Identification No.) | ||
c/o Walkers Corporate Limited | |||
190 Elgin Avenue | |||
George Town, Grand Cayman | |||
Cayman Islands | KY1-9008 | ||
(Address of Principal Executive Offices) | (Zip Code) | ||
Registrant's telephone number, including area code: (510) 623-1231 | |||
Securities registered pursuant to Section 12(b) of the Act: | |||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
Ordinary shares, $0.03 par value per share | SGH | Nasdaq Global Select Market |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company |
☒ | ☐ | ☐ | ☐ | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the ordinary shares on the Nasdaq Global Select Market on February 24, 2023 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately $0.83 billion. Ordinary shares held by each executive officer and director, and their affiliated holders, have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of October 9, 2023, the registrant had 51,918,790 ordinary shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Definitive Proxy Statement for the 2024 Annual General Meeting of Shareholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended August 25, 2023.
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Table of Contents
Page | ||
PART I | ||
Item 1 | Business | 4 |
Item 1A | Risk Factors | 15 |
Item 1B | Unresolved Staff Comments | 46 |
Item 2 | Properties | 46 |
Item 3 | Legal Proceedings | 47 |
Item 4 | Mine Safety Disclosures | 47 |
PART II | ||
Item 5 | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of | |
Equity Securities | 48 | |
Item 6 | [Reserved] | 49 |
Item 7 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 50 |
Item 7A | Quantitative and Qualitative Disclosures About Market Risk | 60 |
Item 8 | Financial Statements and Supplementary Data | 61 |
Item 9 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 102 |
Item 9A | Controls and Procedures | 102 |
Item 9B | Other Information | 104 |
Item 9C | Disclosure Regarding Foreign Jurisdictions That Prevent Inspections | 104 |
PART III | ||
Item 10 | Directors, Executive Officers and Corporate Governance | 105 |
Item 11 | Executive Compensation | 105 |
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder | |
Matters | 105 | |
Item 13 | Certain Relationships and Related Transactions, and Director Independence | 105 |
Item 14 | Principal Accountant Fees and Services | 105 |
PART IV | ||
Item 15 | Exhibits and Financial Statement Schedules | 106 |
Item 16 | Form 10-K Summary | 108 |
Signatures | 109 |
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SMART Global Holdings Inc. published this content on 19 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 December 2023 21:21:46 UTC.
