SMART Global Holdings, Inc. (NASDAQ:SGH) Q2 2020 Earnings Conference Call - Final Transcript
Apr 07, 2020 • 04:30 pm ET
[Operator Instructions] Our first question comes from the line of Blayne Curtis with Barclays. Your line is now open.
Hey guys, thanks for taking my questions. Obviously, the backdrop here, I think most companies are lowering numbers, you had some good results. I'm curious kind of a couple of things on that front. One, if you can just talk about where you saw shortages, if there is any quantification as to kind how much that impact was and then I'm kind of just curious as you're looking forward here, you kind of have two opposing factors, it seems like you probably would benefit from some work from home, which could be a near-term boost, but then obviously you have a big consumer business in Brazil and I'm no expert on COVID exposures in Brazil, but I think most people assume that's going to get worse. I was just kind of curious how you're handicapping that?
As you know, Blayne, Jack and I are in different places. So we will try to give you a coordinated response. I will start and Jack can fill in. To come back to your question about -- let me start at the end with respect to Brazil. So Brazil has, by the way, many of the same restrictions in place today as we do in most of the United States. So in other words, we have stay at home restrictions as well as retail and travel are significantly limited and so effectively what you have is most of our staff are working from home except for manufacturing, which is not possible to do from home. We are seeing some of our customers have slowdowns and shutdowns for temporary maybe because they had a case of positive COVID and so it is an uneven environment and less predictable, but as you pointed out, some of the benefit we are seeing are from -- particularly the PC and the server market, PC laptop, server not as much in the mobile phone market. The mobile phone market, at least for now, we can see production levels are down and that was to some degree driven by component shortages, but now I think we are going to see a different effect which is factories are also slowing down because of shutdowns in some temporary situations at certain customers, not all customers. So it is a fluid situation, but we've been obviously looking at our backlog and what we've shipped already and as a result, we are pretty comfortable with where we are in terms of our Q3 estimate and obviously we have backlog by this stage for much of what we're talking about. Barring some significant incident which causes us to shut down operations or something like that, we're pretty confident in our estimates. Now to come back to the beginning of your question which is shortages from China, which was a little earlier in the quarter, we had shortages and they rippled through all the way through the supply