-- Net Sales of $141.3 Million
-- Gross Profit of $26.3 Million
-- Adjusted EBITDA of $10.5 Million
-- GAAP EPS of ($0.11)
-- Non-GAAP Diluted EPS of $0.05
Net sales for the first quarter of fiscal 2009 were $141.3 million,
compared to $160.7 million for the fourth quarter of fiscal 2008, and
$177.4 million for the first quarter of fiscal 2008.
GAAP gross profit for the first quarter of fiscal 2009 was $26.3 million,
compared to $24.9 million in the fourth quarter of fiscal 2008, and $34.1
million in the first quarter of fiscal 2008.
GAAP net income (loss) for the first quarter of fiscal 2009 was ($6.6)
million, or ($0.11) per share, compared to ($3.5) million, or ($0.06) per
share in the fourth quarter of fiscal 2008, and $12.1 million, or $0.19 per
diluted share in the first quarter of fiscal 2008. The GAAP net loss for
the first quarter of fiscal 2009 was driven by a goodwill impairment charge
of $7.2 million, required by FAS 142.
Non-GAAP net income was $3.3 million or $0.05 per diluted share for the
first quarter of fiscal 2009, compared to $3.4 million, or $0.05 per
diluted share in the fourth quarter of fiscal 2008, and $13.7 million, or
$0.22 per diluted share in the first quarter of fiscal 2008. Non-GAAP net
income excludes charges related to restructuring, goodwill impairment, and
stock-based compensation. Please refer to the "Non-GAAP Information" below
for further detail.
Adjusted EBITDA for the first quarter of fiscal 2009 was $10.5 million,
unchanged from $10.5 million in the fourth quarter of fiscal 2008, and
$20.0 million in the first quarter of fiscal 2008.
"In light of continued challenges related to both the memory industry and
the global economy, we are pleased with our first quarter fiscal 2009
financial results. Despite these adverse conditions, we remained
profitable and generated cash flow from operations of $28.6 million, which
we believe demonstrates our leadership position, scale, diversification and
superior execution. Our balance sheet remains strong, giving us ability to
weather these challenging times," commented Iain MacKenzie, President and
CEO of SMART.
"During the first quarter of fiscal 2009, we continued our product and
technology focus with the introduction of several new solutions for our
customers which we believe will position us well once the market recovers.
In November, we expanded our relationship with Intel by unveiling our new
Z-U130 embedded USB (eUSB) SSD, which is a drop-in replacement for OEM
customers currently using the Intel Z-U130 Value SSD. We also announced in
November the latest addition to our Xceed embedded flash product line, our
iSATA SSD. This product, which features a four-channel flash interface, is
suited for mobile and embedded computing, medical, automotive and
industrial applications," continued Mr. MacKenzie.
"In our DRAM business, we are ready to take full advantage of the eventual
market recovery with our complete offering of DDR3 Registered DIMMs to
support Intel's Nehalem-based server platform, including an industry-unique
8GB 1333MHZ ultra low profile (ULP) RDIMM for advanced telecommunications
computing architecture (ATCA) blade platforms used in telecom, networking,
and embedded computing applications. As we look ahead to the remainder of
fiscal 2009, we are confident in our ability to continue executing our
growth and diversification plans while maintaining our leadership position
in the high end, high value memory module business," concluded Mr.
MacKenzie.
Business Outlook
The following statements are based upon management's current expectations.
These statements are forward-looking, and actual results may differ
materially. The Company undertakes no obligation to update these
statements.
For the second quarter of fiscal 2009, SMART estimates net sales will be in
the range of $120 million to $130 million, gross profit in the range of $21
million to $23 million, and net income (loss) per share will be in the
range of ($0.02) to ($0.01) on a GAAP basis. On a non-GAAP basis,
excluding charges related to stock-based compensation, and other
non-recurring items, if any, the Company expects net income per diluted
share will be in the range of $0.00 to $0.01.
Conference Call Details
SMART's first quarter, fiscal 2009 teleconference and webcast is scheduled
to begin at 1:30 p.m. Pacific Standard Time (PST), or 4:30 p.m. Eastern
Standard Time (EST), on Thursday, December 18, 2008. The call may be
accessed US toll free by calling (800) 218-8862 or US toll by calling (303)
205-0066. Please join the conference call at least ten minutes early in
order to register. The passcode for the call is "SMART." SMART will also
offer a live and archived webcast of the conference call, accessible from
the Company's website at http://www.smartm.com. A telephonic replay of the
conference call will be available through midnight PST, January 1, 2009, by
dialing (800) 405-2236 and entering passcode 11123091#. Callers outside the
U.S. and Canada may access the replay by dialing (303) 590-3000.
Forward-Looking Statements
Statements contained in this press release, including the quotations
attributed to Mr. MacKenzie, that are not statements of historical fact,
including any statements that use the words "will," "believes,"
"anticipates," "estimates," "expects," "intends" or similar words that
describe the Company's or its management's future expectations, plans,
objectives, or goals, are "forward-looking statements" and are made
pursuant to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include projections
regarding the Company's financial performance, costs and benefits
associated with restructuring, the timing of such costs and benefits, the
DRAM and SSD markets, new product introductions, and customer demand for
its products.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause the actual results of the
company to be materially different from the historical results and/or from
any future results or outcomes expressed or implied by such forward-looking
statements. Factors that would cause or contribute to such differences
include, but are not limited to, the post-closing integration of the
businesses and product lines of SMART and Adtron, production or
manufacturing difficulties, competitive factors, new products and
technological changes, fluctuations in product prices and raw material
costs, dependence upon third-party vendors, customer demand, changes in
industry standards or release plans, fluctuations in the quarterly
effective tax rate, possible increases in the estimated restructuring
charges, lower than anticipated cash savings from the restructuring,
changes in foreign currency exchange rates and other risks detailed in the
Company's periodic report filings with the Securities and Exchange
Commission including the Company's Form 10-K for the fiscal year ended
August 29, 2008. Such risk factors as outlined in this report may not
constitute all factors that could cause actual results to differ materially
from those discussed in any forward-looking statement. The Company operates
in a continually changing business environment and new factors emerge from
time to time. The Company cannot predict such factors, nor can it assess
the impact, if any, from such factors on the Company or its results.
Accordingly, forward-looking statements should not be relied upon as a
prediction of actual results. The Company is not obligated to revise or
update any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this press release.
Non-GAAP Information
Certain non-GAAP financial measures are included in this press release,
including EBITDA, non-GAAP net income and non-GAAP net income per diluted
share. We define EBITDA as GAAP net income plus income tax expense, net
interest expense, and depreciation and amortization expense. Non-GAAP net
income and net income per share do not include stock-based compensation
expense, in-process research and development charges, restructuring costs,
impairment charges and other infrequent or unusual items. These non-GAAP
financial measures are provided to enhance the user's overall understanding
of our financial performance. By excluding these charges, as well as the
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 and to plan and
forecast future periods. The presentation of this additional information is
not meant to be a substitute for the corresponding financial measures
prepared in accordance with generally accepted accounting principles.
Investors are encouraged to review the reconciliations of GAAP to non-GAAP
financial measures, which are included below:
SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data; unaudited)
Three Three Three
Months Months Months
Ended Ended Ended
November 28, November 30, August 29,
2008 2007 2008
----------- ------------ -----------
Net income (loss) $ (6,612) $ 12,065 $ (3,528)
Add:
Impairment of goodwill 7,210 - 3,187
Restructuring charges, net of tax 886 - 1,795
Stock-based compensation expense
charged to operating expense, net
of tax 1,775 1,628 1,899
----------- ------------ -----------
Non-GAAP net income $ 3,259 $ 13,693 $ 3,353
=========== ============ ===========
Non-GAAP net income per diluted
share $ 0.05 $ 0.22 $ 0.05
=========== ============ ===========
Shares used in computing net income
per diluted share 63,330 63,656 63,403
=========== ============ ===========
----------- ------------ -----------
Net income (loss) $ (6,612) $ 12,065 $ (3,528)
Interest expense, net 1,752 1,024 1,536
Taxes 2,177 2,681 1,810
Depreciation and amortization 3,330 2,617 3,646
----------- ------------ -----------
EBITDA $ 647 $ 18,387 $ 3,464
Adjustments:
Impairment of goodwill 7,210 - 3,187
Restructuring charges 886 - 1,938
Stock-based compensation expense
charged to operating expense 1,787 1,639 1,911
----------- ------------ -----------
Adjusted EBITDA $ 10,530 $ 20,026 $ 10,500
=========== ============ ===========
RECONCILIATION OF GUIDANCE FOR NON-GAAP FINANCIAL MEASURES
(In $ million, except per share data; unaudited)
Three Months Ending February 27, 2009
-----------------------------------------------------------
Non-GAAP Range of
Estimate GAAP Range of Estimate
----------------------- ----------------------
From To Adjustments From To
-----------
Net income
(loss) $ 0.2 $ 0.8 $ 1.7 (a) $ (1.5) $ (0.9)
=========== =========== ========== ==========
Net income
(loss) per
share $ 0.00 $ 0.01 $ (0.02) $ (0.01)
=========== =========== ========== ==========
Shares used in
computing net
income per
diluted share 64.0 64.0 61.5 61.5
=========== =========== ========== ==========
(a) Reflects estimated adjustment for stock-based compensation expense.
About SMART
SMART is a leading independent designer, manufacturer and supplier of
electronic subsystems to original equipment manufacturers, or OEMs. SMART
offers more than 500 standard and custom products to OEMs engaged in the
computer, industrial, networking, gaming, telecommunications, and embedded
application markets. Taking innovations from the design stage through
manufacturing and delivery, SMART has developed a comprehensive memory
product line that includes DRAM, SRAM, and Flash memory in various form
factors. Through its subsidiary, Adtron Corporation, SMART offers high
performance, high capacity solid state drives for enterprise,
defense/aerospace, industrial automation, medical, and transportation
markets. Its Embedded Products Division develops embedded computing
subsystems, backed by design and manufacturing, for markets supporting test
equipment, 3G infrastructure, and network processing applications. SMART's
Display Products Group designs, manufactures, and sells thin film
transistors (TFT) liquid crystal display (LCD) solutions to customers
developing casino gaming systems as well as embedded applications such as
kiosk, ATM, point-of-service, and industrial control systems. SMART's
presence in the U.S., Europe, Asia, and Latin America enables it to provide
its customers with proven expertise in international logistics, asset
management, and supply-chain management worldwide. See www.smartm.com for
more information.
SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Three
Months Months
Ended Ended
November 28, November 30,
2008 2007
----------- -----------
(In thousands)
Net sales $ 141,294 $ 177,373
Cost of sales 115,039 143,279
----------- -----------
Gross profit 26,255 34,094
----------- -----------
Research and development 5,436 4,685
Selling, general and administrative 14,640 15,061
Restructuring charges 886 --
Impairment of goodwill 7,210 --
----------- -----------
Total operating expenses 28,172 19,746
----------- -----------
Income (loss) from operations (1,917) 14,348
Interest expense, net (1,752) (1,024)
Other income (expense), net (766) 1,422
----------- -----------
Total other income (expense), net (2,518) 398
----------- -----------
Income (loss) before provision for income taxes (4,435) 14,746
Provision for income taxes 2,177 2,681
----------- -----------
Net income (loss) $ (6,612) $ 12,065
=========== ===========
Net income (loss) per share, basic $ (0.11) $ 0.20
=========== ===========
Shares used in computing net income (loss) per
ordinary share 61,507 60,695
=========== ===========
Net income (loss) per share, diluted $ (0.11) $ 0.19
=========== ===========
Shares used in computing net income (loss) per
diluted share 61,507 63,656
=========== ===========
SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
November 28, August 29,
2008 2008
----------- -----------
(In thousands)
ASSETS
Cash and cash equivalents $ 137,261 $ 115,994
Accounts receivable, net of allowances of $1,585
and $1,517 as of November 28, 2008 and August
29, 2008, respectively 149,764 193,736
Inventories 78,453 62,430
Prepaid expenses and other current assets 12,151 14,973
----------- -----------
Total current assets 377,629 387,133
Property and equipment, net 32,549 39,317
Goodwill -- 7,210
Other intangible assets, net 8,296 8,545
Other non-current assets 4,806 4,943
----------- -----------
Total assets $ 423,280 $ 447,148
=========== ===========
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable $ 94,752 $ 93,482
Accrued expenses and other current liabilities 21,096 23,942
----------- -----------
Total current liabilities 115,848 117,424
Long-term debt 81,250 81,250
Other long-term liabilities 1,915 1,568
----------- -----------
Total liabilities 199,013 200,242
----------- -----------
Shareholders’ equity:
Ordinary shares 10 10
Additional paid-in capital 102,427 100,234
Deferred stock-based compensation (58) (91)
Accumulated other comprehensive income (loss) (4,121) 14,132
Retained earnings 126,009 132,621
----------- -----------
Total shareholders’ equity 224,267 246,906
----------- -----------
Total liabilities and shareholders’ equity $ 423,280 $ 447,148
=========== ===========
SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES
SUMMARY CASH FLOW INFORMATION
(Unaudited)
Three Months Three Months
Ended Ended
November 28, November 30,
2008 2007
------------ ------------
(In thousands)
Net cash provided by (used in) operating
activities $ 28,639 $ (26,902)
Net cash used in investing activities $ (4,508) $ (5,139)
Net cash provided by financing activities $ 439 $ 157
Contact Information: For More Information Investor Contacts: Suzanne Craig The Blueshirt Group for SMART Modular Technologies 415-217-7722 Barry Zwarenstein CFO, Senior Vice President SMART Modular Technologies 510-624-8134