Penguin Solutions, Inc.

Good day and thank you for standing by. Welcome to the SGH fourth quarter and full year fiscal 2021 results conference call. At this time, all participant lines are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero to speak with an operator. I would now like to hand the conference over to your speaker today, Suzanne Schmidt, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us on today's earnings conference call and webcast to discuss SGH's fourth quarter and full year fiscal 2021 results. Joining me on the call today are Mark Adams, Chief Executive Officer, Jack Pacheco, Chief Operating Officer, and Ken Risby, Chief Financial Officer. We open the webcast today with a corporate video that highlights our newly launched SGH brand. To learn more about our new identity, visit sghcorp.com. In addition, you can find the accompanying slide presentation and earnings press release for this call on this new website. We encourage you to go to this site throughout the quarter for the most current information on the company including information on the various financial conferences we will be attending. Before we begin the call, I would like to remind everyone to read the forward-looking statements information that we have included in the earnings press release and the earnings call presentation. Please note that certain of the statements made today may constitute forward-looking statements and that these statements are our present expectations and that actual events or results may differ materially. We also discussed both GAAP and non-GAAP financial measures. Non-GAAP measures should not be considered in isolation from, as a substitute for, or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance. A reconciliation of GAAP to non-GAAP measures is included in today's press release. We will begin the call with CEO Mark Adams, who will provide a business update, and then Ken Rizvi, CFO, will review the financials and forward guidance, after which we will take questions. Mark?

Thank you, Suzanne, and to all of you for joining us today. I am pleased to report that we completed fiscal 2021 with outstanding fourth quarter results and are entering fiscal 2022 with strong momentum. In many ways, fiscal 2021 was a milestone year for SGH. We closed the acquisition of Cree LED, and with that, reorganized the company into three lines of business. Intelligent platform solutions under the Penguin brand, memory solutions under the Smart Modular brand, and LED solutions under the Cree LED brand. Our three businesses share a common operating model. and that they all deliver custom solutions that address the requirements of the niche markets they serve, leveraging core capabilities in engineering, manufacturing, managed services, and quality. I couldn't be more proud of our team that in a year of unprecedented macro challenges from the COVID pandemic to micro electronic supply chain constraints, our businesses rose to the challenge and were able to deliver outstanding results. Let me share a few highlights from the fourth quarter and our fiscal year 2021. Total revenue was $1.5 billion in fiscal 2021, an increase of 34% year over year. Non-GAAP gross margins reached 22%, up 240 basis points from the prior year. And in Q4, we recorded gross margins of 26.4%. We achieved a more diversified mix of business with memory solutions accounting for just 53% of Q4 revenue, down from 77% in the prior year same quarter. Each of our individual businesses achieved outstanding results, from record revenues at Penguin, to new customer wins in new vertical markets at Smart Modular, to significant gross margin expansion at Cree LED. On the governance side, in the midst of our longtime largest shareholder, Silverlake, divesting of their ownership position, we appointed Sandeep Nayyar as lead independent director on the board. In addition, with the recent announcement of Penny Herscher joining the SGH board, we are reinforcing the company's commitment to greater independence, diversity, and public company board experience. We've also made great progress on our ESG initiatives and released our inaugural ESG report for 2020, highlighting what we've accomplished to date and our long-term commitment to creating a sustainable future. And as some of you may have noticed, we've launched our new SGH brand and website to more accurately reflect our mission of powering growth and expanding possibilities in everything we do. We made great progress in the execution of our growth and diversification strategy in 2021 and believe our go forward investment thesis is compelling. We have built an outstanding leadership team and we are well positioned across each of our lines of business by driving innovation and the specialty markets we serve. We are pleased by the progress to date, but even more excited by the tremendous opportunities for profitable growth that lie ahead. I will now provide some more detail of our Q4 performance from each line of business. Starting with Intelligent Platform Solutions Group, or IPS, which turned in another strong quarter and record revenue of approximately $98 million, 46% higher than the same quarter a year ago. Gross margins were up sequentially due primarily to a higher mix of managed services. As a reminder, We previously discussed the potential variability of IPS revenues and gross margin percentages due to the timing of deployments quarter over quarter. The IPS team continues to make progress on its managed service growth initiatives with total software and managed services revenue growing by 40% in Q4 fiscal 2021 versus Q4 of last year. Turning to customer highlights, We received two awards from the Department of Defense High Performance Computing Modernization Program totaling $68 million for the Navy and Air Force Supercomputing Resource Centers. For both awards, we will deliver Penguin Computing's TrueHPC platform plus managed services and high performance storage. TrueHPC systems are complete solutions equipped with the most advanced processing technology coupled with the latest memory solutions making them ideal for HPC simulation applications and tech research. Our systems will be among the most powerful supercomputers in the DoD's portfolio. This win is an example of the progress we continue to make in expanding our engagements with existing and new customers in the federal, ultra-scale financial and oil and gas sectors. In Q4, Penguin Computing released major updates to skilled clusterware, skilled cloud manager, and skilled cloud workstation software solutions. These software enhancements focus on performance scaling and security to deploy and manage complex HPC solutions. We are seeing customer demand continue to grow with a bias towards complete solutions. IPS is well positioned to meet this demand with our hardware and software expertise, 20 years of experience in HPC and AI, and our cloud and service offerings. We are excited about the solid performance of IPS and continue to strengthen our new business funnel to drive more growth potential going forward. In our memory solutions group, revenue grew by 7% Q4 fiscal 21 versus Q4 fiscal 2020 to reach $247 million. Excluding the impact due to the customer revenue reclassification from the gross to net basis that we discussed on the Q3 call, revenues would have been up approximately 23% from a year ago quarter on an apples to apples basis. The team continues to make progress expanding our customer base and developing new vertical market solutions. One such success is the work we are doing for a large hyperscale data center customer where memory requirements are becoming more critical to overall system performance. The specific design requirements from large data center companies play to our strengths stemming from our long history of developing highly focused engineering driven and application specific solutions. In this instance, we delivered a high performance accelerator card that provides memory expansion and offloads selected algorithms from any host CPU by moving the compute processing near the data, enabling parallel execution with very low latency. We continue to invest in new memory-based products and technology. In Q4, we delivered first samples of memory modules based on the new CCIX standard to a leading server manufacturer. CCIX is an emerging standard that improves performance by offloading certain compute functions to the memory module. The CCIX module is designed for emerging applications such as AI and machine learning. In our Brazil business, We successfully concluded our internal Gen 4 SSD qualification and began our Gen 5 SSD qualification process. In addition, we launched our high density UMCP solution for 5G smartphones, which is our first product in Brazil utilizing the UFS interface for low power and greatest storage capacity. Now turning to our LED solutions group, which had an outstanding quarter. Revenues grew to $123 million in Q4 in what is historically a strong quarter for the LED business. Gross margins were higher in the quarter as we were able to both meet the increased demand in the specialty markets we serve, as well as advance on the execution of our manufacturing transformation, moving from silicon carbide to sapphire wafers, and from a captive manufacturing model to an outsourced capital light model. Cree's LED technology portfolio is a key competitive advantage. Our focus on the high-performance and specialized portions of the LED market, including the high and mid-power general lighting segment, video, and specialty lighting segments, reinforces our market leadership position. We are investing in new technology areas where tomorrow's growth will come from. Examples of emerging trends we are following include improving lumen density, human-centric or natural lighting, and UVC LEDs for disinfection and purification. On the product front, the team continues to deliver innovative application optimized LEDs enabling a variety of lighting designs while achieving the best system value. Recent highlights of these efforts include the launch of our third generation extreme high power or XHP products with improved optical performance. Next, The introduction of our brighter XPG3 white S line products, which are optimized for directional high lumen lighting applications such as roadway and horticulture. And finally, the expansion of our J series line to deliver application specific horticulture and architectural solutions. As this is our first full quarter of Cree LED as part of SGH, I would like to congratulate Claude, his team, and all of the Cree LED employees worldwide on these great results. The complexity of a carve-out acquisition, while in the midst of a transformation in manufacturing at the scale we are talking, makes their performance even more impressive. In closing, fiscal 2021 was indeed a milestone year for SGH. Our top line grew both in our existing businesses and our recently acquired Cree LED business. Our gross margins improved dramatically with contributions from each of our businesses. We also demonstrated good financial discipline at the operating expense level, all of which led to outstanding bottom line results. As strong as fiscal year 2021 was in terms of overall performance, we are even more excited about fiscal year 2022. We are developing and attracting outstanding talent. We are investing in new capabilities to provide more value for our customers. And we are targeting high growth market segments such as AI, machine learning, data analytics, in-memory compute, edge computing, and advanced LED lighting technologies. Clearly, our future at SGH is bright. At this time, I'll hand it over to Ken for a more detailed review of the financials and our guidance for next quarter. Ken?