Inside Advanced Scale Challenges|Monday, December 10, 2018
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Penguin Computing Acquired by SMART Global Holdings for $85 Million 

NEWARK, Calif., June 11, 2018 -- SMART Global Holdings, Inc. ("SMART") (NASDAQ:SGH) today announced that it has acquired Penguin Computing, Inc. ("Penguin"), a privately held company and a leader in specialty compute and storage solutions targeting applications in Artificial Intelligence (AI), Machine Learning (ML) and High-Performance Computing (HPC) using state-of-the-art, open technologies and advanced industry architectures. Penguin's compute and storage solutions are also available on a secure cloud infrastructure.

Penguin will continue as a standalone operation being the first part of a new business unit, SMART Specialty Compute & Storage Solutions (SCSS), which will benefit from shared infrastructure and the ability to leverage the products and capabilities of SMART's Specialty Memory business unit into the emerging AI and ML markets. The acquisition of Penguin and the creation of SMART SCSS will serve as a broad platform on which SGH can further build.

"We are pleased to be embarking on the first acquisition of our strategy to broaden the reach and capabilities of SMART into new technologies, markets and channels that leverage our proven platform of integrating and growing businesses," commented Ajay Shah, Chairman and CEO of SMART Global Holdings. "Penguin brings an outstanding customer base, solid products and strong supplier relationships to SMART in the specialty compute, storage and networking markets."

Tom Coull, CEO of Penguin, stated, "We are looking forward to becoming a part of the SMART family of global companies and will continue to deliver Penguin branded high quality, cost effective, purpose-built servers, storage and networking solutions for our customers. With this new platform, Penguin will have substantially improved access to capital to drive additional investment in, and further development and growth of our product and services offerings. Based on all of the benefits that we anticipate from this transaction, we expect that our customers and suppliers will be supportive of the transaction."

SMART has agreed to acquire Penguin for up to $85 million, which includes up to $25 million of performance-based payments that are made only if certain agreed-upon targets are achieved.

KKR Credit provided the debt financing for this transaction. Needham & Company, LLC acted as financial advisor to SMART.

Selected financial information on Penguin Computing is provided below. This financial information is subject to adjustments as the Company completes its review.

SMART will be hosting a conference call to discuss the acquisition at 1:30pm Pacific Time (PT), 4:30pm Eastern Time (ET) on Monday, June 11, 2018. Details are shown below:

Penguin Acquisition Conference Call Details

Date:                           Monday, June 11, 2018

Time:                          1:30pm Pacific Time (PT) / 4:30pm Eastern Time (ET)

Dial-in US toll free:   +1-866-487-6452

Passcode:                    5685225

Webcast:                    www.smartgh.com

A replay of the conference call will be accessible for one week following the call as follows:

Replay:  +1-855-859-2056; Passcode: 5685225; or through the Investors section of the SMART website at www.smartgh.com.

(amounts in millions) Penguin Computing, Inc.
Q1'FY18 Q1'FY17 FY'17
(unaudited)  (audited)
Net sales $ 48.5 $ 26.9 $ 166.5
Gross profit $ 10.3 $ 5.8 $ 30.4
Adjusted EBITDA(1) $ 3.5 $ 0.9 $ 8.1
(1)Reconciliation:
Net Income $ 2.0 $ 0.4 $ 5.9
Interest & fees 0.3 0.1 0.9
Taxes 0.6 0.0 0.1
Depreciation 0.6 0.3 1.2
Adjusted EBITDA $ 3.5 $ 0.9 $ 8.1
Note: Fiscal year ended December 31, 2017

About SMART Global Holdings

The SMART family of companies are global leaders in specialty memory, storage and hybrid solutions serving the electronics industry with standard and custom products for over 25 years. SMART delivers components, modules and solutions to a broad customer base, including OEMs in computing, networking, communications, storage, mobile and industrial markets. Customers rely on SMART as a strategic supplier with custom designs, product quality, technical support, a global footprint, and the ability to provide locally manufactured memory products in multiple geographies. See www.smartgh.comwww.smartm.comwww.smarth.com or www.smartsscs.com for more information.

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