I last wrote about SMART Global Holdings (SGH – Free Report) in early January after they delivered another earnings “trifecta” of sales and profit beats and raised guidance.

In that report, I compared the small-cap to its giant peer in the computer and mobile DRAM and NAND flash memory industry, Micron (MU – Free Report). I’ll make some fresh comparisons later in today’s report, right after we talk about what happened last week.

Because SGH just did it again and on a day when the market melted down over 2% due to trade war fears, SMART was up 11% on Friday.

SMART gave faithful investors who kept accumulating shares under $35 during the correction in February another blow-out quarter with a 20% to 30% EPS beat (GAAP vs. Non-GAAP) and an 8.25% beat on the top line!

There was 10-cents of beneficial currency tailwinds that most analysts will mentally back-out of the beat.
Guidance was also very strong…
SGH sees ?Q3 of fiscal 2018 (ends August) net sales of $320 TO $340 million vs the Zacks consensus of $294 million.

SGH sees Q3 adjusted EPS of $1.74 TO $1.82 (GAAP $1.61-69) vs. the Zacks consensus of $1.28.
Second Quarter Fiscal 2018 Highlights

  • Net sales of $314.0 million, 83% higher than prior year quarter
  • GAAP operating income of $45.1 million
  • GAAP net income of $36.8 million
  • Adjusted EBITDA of $56.2 million
  • GAAP diluted EPS of $1.60*
  • Non-GAAP diluted EPS of $1.73*
  • *(GAAP and Non-GAAP diluted EPS include $0.10 of EPS due to FX gains)

    Iain MacKenzie, President, and Co-CEO of SMART Global had this to say about the company’s performance…
    “The second quarter of fiscal 2018 came in above expectations as we benefited from multiple growth drivers. The overall memory industry supply and demand dynamics remained favorable with respect to increasing memory densities and pricing. Additionally, in Brazil, the economy continued to improve and we benefited from local content requirements. Lastly, we once again demonstrated exceptional operating expense control and operating leverage in our financial model.”

    “We remain confident in our ability to drive additional growth and improvement in both SMART Brazil and our Specialty Memory businesses as the global memory market and economic trends in Brazil remain positive, and we see increasing demand from our OEM customers, particularly in the storage and networking end markets,” added Mr. MacKenzie.
    “As we announced on March 14, 2018, I am very pleased that Ajay Shah has agreed to accept the role of President and CEO. Ajay’s extensive industry knowledge and long history with SMART make him the ideal executive to lead SMART through this next phase of growth. I look forward to working closely with Ajay through this transition,” concluded Mr. MacKenzie.
    (end of SGH press release excerpts)

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