Thank you for standing by, and welcome to the SMART Global Holdings Second Quarter Fiscal 2021 Earnings Call. At this time, all participants' 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'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Suzanne Schmidt in Investor Relations. Thank you. Please go ahead. Thank you, operator. Good afternoon, thank you for joining us on today's Earnings Conference Call to discuss SMART Global Holdings' Second Quarter Fiscal 2021 Results. On the call with me today are Mark Adams, Chief Executive Officer, Jack Pacheco, Chief Operating Officer, and Ken Rizvi, Chief Financial Officer. This call is being webcast from our website at smartgh.com. In addition, our website contains an accompanying slide presentation and the earnings press release. We encourage you to go to our website 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 note that today's remarks and the answers to questions may include forward-looking statements. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections and future market conditions, is a forward-looking statement. Actual results may differ materially from those expressed in these forward-looking statements. For more information, please refer to the forward-looking statements disclosures in our earnings press releases, as well as the risk factors discussed in the documents we file from time to time with the SEC, including our most recent Form 10-K and Form 10-Q. We assume no obligation to update these forward-looking statements, which speak as of today. Additionally, during this call, non-GAAP financial measures will be discussed. Reconciliations to the comparable GAAP financial measures are included in today's earnings 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. Thanks to all of you on the call for joining us today. We've had a very successful second quarter of our fiscal year operationally, as well as strategically, where we continue to make significant strides on our growth and diversification initiatives. We believe we are set up for a great remainder of our fiscal year 2021 and beyond. During our last earnings call, I highlighted my personal philosophy that performance is driven by people, purpose, planning, and process. At SGH, we are continuing to invest in these pillars to drive a new chapter for the company and all of our key constituents, including our employees, customers, suppliers, and shareholders. We made significant progress in terms of strengthening our management team this past quarter with the addition of several key leaders. I'm very pleased with the level of talent we've been able to attract to the company. Since our last Earnings Call, we have hired Ken Rizvi as our CFO, allowing Jack to focus on the joint roles of Chief Operating Officer and President of the Memory Solutions Group. Thierry Pellegrino is President of Intelligent Platform Solutions group, formerly known as Specialty Compute and Storage Solutions. As you'll recall, Thierry comes to us from Dell, where he led their HPC and AI business. With the addition of Cree LED, we are pleased to have Claude Demby as President to lead that business. Claude brings more than 25 years of leadership experience at companies such as Procter & Gamble, GE, and L&L Products. In addition, three new leaders have joined us as of April 1st. Anne Kuykendall, is our new General Counsel for SGH. Anne was most recently General Counsel and VP of of HR for MariaDB Corporation, and before that, held various senior legal management roles with Cloudera and Cadence Design Systems. Bruce Goldberg, our former General Counsel, will now take on a new role as Chief of Staff, reporting to me, focused on building a winning culture and our overall human resource strategy. Joining us as VP of Marketing is Valerie Sassani, who comes to us after nearly two decades at Lam Research. Valerie will be instrumental in amplifying the SGH family of brands, leveraging her expertise in marketing and communications. Lastly, Jean McDaniel joins us as VP of the Office of Transformation. Jean most recently worked at Micron, where for 25 years she led teams focused on M&A and corporate integration. A major step in the next chapter of becoming a growing and diversified SGH is the completion of our acquisition of Cree LED, which closed at the beginning of March, just after the end of our fiscal second quarter. With Cree's outstanding customer relationships, industry-leading technology, new product development capabilities, and strong intellectual property portfolio, we are able to greatly expand our served addressable markets with differentiated offerings while leveraging our foundation of operational excellence. With the addition of Cree LED, we will now organize the company into three primary lines of business. First, Intelligent Platform Solutions, formerly called Specialty Compute and Storage Solutions, which consists of Penguin Computing and SMART Embedded and SMART Wireless. Next, Memory Solutions, which consists of SMART Modular Technologies, comprising our specialty memory business, largely operating in the U.S., and our Brazil module business. Finally, LED Solutions, which consists of Cree LED. By focusing on these three business segments, each with outstanding leadership in place, we are even better positioned to align our people, purpose, planning, and processes and execute on our strategy to address the tremendous market opportunities ahead of us. At our upcoming Analyst Day on April 20th, you'll have the opportunity to hear from many of these leaders as we outline our growth initiatives in more detail. During fiscal Q2, we remain focused on our growth and diversification strategy while achieving another strong quarter of financial results. All key metrics came in better than expected. Both revenue and non-GAAP gross margin for the second fiscal quarter were at the high end of guidance range provided at our last call, coming in at $304 million and 19.5% respectively. Non-GAAP earnings per share of $0.87 exceeded the high end of our guidance range. Ken will cover these financials in more detail later in the call. Let me now turn to our second quarter business performance. Starting with our Intelligent Platform Solutions group. This group, which includes Penguin Computing, along with SMART Embedded and SMART Wireless, had a very strong quarter. Revenues grew approximately 30% sequentially to reach $85.4 million or 28% of total SGH revenues. Our performance has been driven by growth across high-performance computing, embedded computing, edge computing, and AI solutions. Demand continues to be fueled by key customers across vertical markets such as cloud service providers, financial services, energy, federal, and telecom. Gross margin in this group also improved in the quarter and reached 29.3% for the second fiscal quarter, up from 27.3% in the prior quarter. The Intelligent Platform Solutions team is making excellent progress on evolving and expanding software and services, which grew by more than 50% sequentially. We are proud of the recognition we continue to garner as a leader in HPC and embedded computing. One recent example was Penguin being named as one of the 10 hottest new enterprise servers of 2020 by CRN, a top technology news and information source, for its highly dense Tundra AP platform for HPC and AI workloads. The team is focused on a number of new platforms and solutions in the areas of edge and AI analytics, which are slated for introduction in the second half of fiscal year 2021. These platforms and solutions are targeted for military, retail, transportation, and 5G applications. We continue to have strong momentum heading into Q3 and the remainder of this fiscal year. Now turning to the Memory Solutions Group, which encompasses specialty memory and our module business in Brazil. Specialty memory revenues totaled $115.5 million in the quarter, down slightly from the previous quarter as expected, and up 4% as compared to the year-ago same quarter. As the market is showing optimism with regards to a potential COVID-19 recovery, we are seeing demand returning from industrial customers. In addition, we are making good progress expanding into new vertical end markets, such as hyperscale cloud, data centers, and transportation. Our NVDIMM controller-based memory products continue to gain traction in storage applications with customer applications such as cybersecurity and surveillance solutions. Our DDIMM solution, which is OpenCAPI-based memory module, is showing some early success in HPC applications. Emerging memory and storage technology, combined with growing computational demand from emerging workloads such as AI, are driving the need for high-performance server designs utilizing advanced memory technologies. We recently introduced a new high-density DIMM module solution aimed at maximizing network bandwidth and reliability, which is critical for data center networking applications. In our Brazil operations, revenue totaled $103.1 million and were approximately flat compared to last quarter. On a year-over-year basis, revenues grew approximately 6%, and if we exclude the end of the life of our battery business, revenue was up by 12% compared with last year due to increasing memory densities in mobile and stronger unit sales in notebook-related memory. We expect to generate higher revenues in Brazil in Q3, driven by increasing the units of both mobile and notebook memory. We continue to invest in capabilities to build SSDs in-country by leveraging our manufacturing know-how, our advanced packaging capabilities, and our strategic supplier relationships. We believe SSDs will be a growth catalyst for our Brazil business in fiscal year 2022. Turning to Cree LED. We are thrilled to formally welcome the Cree LED team to SGH. The acquisition closed on March 1st. The integration is off to a great start. The transition from using silicon carbide to sapphire wafers is progressing on plan, as well is the move to the outsourced wafer model. Over the next 18 months, we expect to substantially complete both of these transitions. We are excited about this manufacturing transformation to a sapphire-based fabless organization, which we believe will drive greater agility, resiliency, and create a platform accelerating technology leadership, all of which will contribute to profitable growth. Longer term, Cree LED will focus on markets such as high power and mid-power lighting, specialty lighting, and video screens, targeting key applications where we deliver a differentiated value proposition. Some specific examples of these applications include stadium and outdoor lighting, fine-pitch video, horticulture, and architectural applications, as well as applications in the invisible spectra, including infrared and ultraviolet. You'll hear about these plans and more from Claude at our Analyst Day. Now I'd like to introduce you to Ken Rizvi, our new CFO, for a closer look at the financials and guidance for Q3. Ken? Thanks, Mark. First, let me begin by saying how excited I am to take on the CFO role at such a pivotal time at SGH. I'm grateful for Jack's continued guidance and look forward to working with Mark, Jack, and the rest of the team at SGH as we execute on our growth and diversification strategy. As Mark mentioned earlier, we reported a strong quarter with all key metrics at the high end of our guidance range. Net sales for the second fiscal quarter of 2021 were $304 million, an increase of approximately 12% year-over-year from the second quarter of fiscal 2020. In addition, non-GAAP gross margin came in at 19.5%, and non-GAAP earnings per share was $0.87 for the second fiscal quarter of 2021. Our year-over-year revenue growth was driven primarily by high sales from our Intelligent Platform Solutions, formerly known as Specialty Compute and Storage Solutions, which saw 36% year-over-year growth to $85 million in the second fiscal quarter of 2021 from $62.9 million in the second fiscal quarter of 2020. In addition, our Memory Solutions Group revenue, which includes specialty memory and Brazil, increased by approximately 5% on a year-over-year basis. Specialty memory reported revenues of approximately $116 million in the second fiscal quarter of 2021, which was an increase of approximately 4% year-over-year, while Brazil reported revenues of $103 million in the second fiscal quarter of 2021, which was an increase of approximately 6% year-over-year. Our acquisition of Cree LED closed on the 1st of March, and we will begin reporting Cree LED results from the third fiscal quarter of 2021. Non-GAAP gross margins for the second fiscal quarter of 2021 was 19.5% and flat with the second quarter of 2020. Non-GAAP operating expenses for the second fiscal quarter of 2021 was approximately $32.1 million, down from $35.6 million in the second fiscal quarter of 2020. Operating expenses were lower and benefited from $6.2 million in financial credits in Brazil. This helped offset our Brazil R&D spending, which is required to benefit from this credit. The current law related to these specific financial credits is expected to expire in the beginning of calendar year 2022. We plan to offset the vast majority of the expected decrease in financial credits through cost reductions, including our move to Manaus, reduced spending in Brazil R&D, along with other cost savings programs. In addition, we plan to modify our pricing as the supply chain adjusts to the expected reduced credits. Non-GAAP diluted earnings per share for the second fiscal quarter of 2021 was $0.87 per share, up approximately 67% year-over-year compared to $0.52 per share in the second fiscal quarter of 2020. Adjusted EBITDA for the second fiscal quarter of 2021 was $31 million, or approximately 10% of sales, compared to $22.3 million, or approximately 8% of sales in the second fiscal quarter of 2020. Our breakdown of net sales by end market for the second fiscal quarter were as follows: mobile and PC was 31%, network and telecom was 21%, servers and storage was 13%, and industrial, defense, and other was approximately 35%. Strength from server and storage drove most of the growth on a year-over-year basis. Please note that for the third fiscal quarter, with the addition of Cree LED's business, we will be revising these categories to more accurately reflect the new mix of our business. As Mark mentioned earlier, beginning in the third quarter, with the addition of Cree LED, we will be recasting the way we discuss our business into three main areas. Intelligent Platform Solutions, which is comprised of Penguin, SMART Embedded, and Wireless businesses, Memory Solutions, which is a combination of specialty memory in Brazil, and LED Solutions. Turning to working capital, our net account receivables totaled $203.4 million compared with $212.9 million last quarter, and our day sales outstanding came in at 41 days, compared with 46 days last quarter. Inventory totaled $189.3 million at the end of the second fiscal quarter compared with $147.2 million at the end of the prior quarter, as we added strategic inventory ahead of a more challenging global supply environment, and as we prepare for a higher revenue ramp in our third fiscal quarter. Inventory turns were 8.3 x in the second fiscal quarter versus 10.1 x in the prior quarter. Consistent with past practices, our accounts receivables, days outstanding, and inventory turnover are calculated on a gross sales and cost of goods sold basis, which were $448.1 million and $394.7 million, respectively, for the second fiscal quarter. As a reminder, the difference between gross revenue and net sales is related to our supply chain services business, which is accounted for on an agency basis, meaning that we only recognize as net sales and the net profit on the supply chain services are transacted. Cash and equivalents totaled $139.8 million at the end of the second fiscal quarter, which was $24.3 million lower than the previous quarter, and reflects the $44 million of share repurchases in the quarter. Second quarter cash flow from operations totaled $20.4 million compared with $35.6 million in the prior quarter, and was down sequentially from the first quarter, primarily due to changes in our working capital, including incremental strategic purchases of inventory. On a trailing 12-month basis, cash flow from operations totaled $94.6 million. For those of you tracking CapEx and depreciation, CapEx was $20 million for the quarter, and depreciation was $5.4 million. Now turning to our fiscal Q3 2021 guidance. We believe our net sales for the third quarter of 2021 will grow to approximately $400 million-$430 million, an increase of approximately 48% year-over-year at the midpoint of our guidance. Of this amount, we currently expect Cree LED to contribute approximately $90 million-$95 million of our sales in our third fiscal quarter of 2021. Note that due to the timing of the Cree LED transaction close in March, we only have 12 weeks from Cree LED in our third fiscal quarter of 2021 instead of a normal 13 weeks. Our non-GAAP gross margins for the third quarter of 2021 are expected to be approximately 20%, ±1%. Our non-GAAP operating expenses are expected to be in the range of $48 million-$53 million in the third quarter of 2021, an increase driven primarily by the addition of Cree LED from the beginning of our third quarter, as well as additional investments to support the growth in our Intelligent Platform Solutions. A reminder for folks that Cree LED will have one additional week of costs for the fourth fiscal quarter as compared to our third fiscal quarter. GAAP earnings per diluted share is expected to be approximately $0.64, ± $0.10. On a non-GAAP basis, excluding share-based compensation expense, intangible asset amortization expense, convertible debt discount, and other infrequent or unusual items, we expect non-GAAP earnings per diluted share will be in the range of $1.10, ± $0.10. The guidance for the third fiscal quarter does not include any view on foreign exchange gains or losses and includes an income tax provision expected to be in the range of 12%-15%. Cash capital expenditures for the third fiscal quarter are expected to be in the range of $10 million-$12 million and include approximately $2 million of capital expenditures for Cree LED. Our GAAP diluted share count for the third quarter of 2021 is expected to be approximately 27 million shares based on our current stock price. Our non-GAAP diluted share count for the third quarter of 2021 is expected to be approximately 26 million shares and includes the benefit of our convertible note capped calls. Our forecast for the third fiscal quarter is based on the current environment. It contemplates the constraints in the global supply chain, as well as the potential impact due to the COVID-19 pandemic. Consistent with US GAAP guidelines, we will finalize the purchase accounting, which requires us to fair value Cree LED's opening balance sheet. The fair value assessment may impact areas such as the value of property, plant, and equipment, inventory, and intangibles, among other items, which should not have any impact to our operating cash flows and the adjusted EBITDA from this business. These factors have been contemplated in our Q3 guidance. We will provide further details on this on our next Earnings Call for the third quarter of 2021. Please refer to the non-GAAP financial information section and the reconciliation of non-GAAP financial measures to GAAP results and reconciliation of GAAP net income to adjusted EBITDA tables in our earnings press release for further details. Operator, please open the line to Q&A. Thank you, presenters. As a reminder, to ask a question, you'll need to press star one on your telephone, and to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Thomas O'Malley with Barclays. Your line is open. Good afternoon, guys, and congrats on the really nice results, and welcome, Ken. I just wanted to ask on the segments heading into Q3 here, I think you gave us some great color on the Cree contribution. On the two other segments, the Memory Solutions and the Intelligent Platform Solutions, could you give us a little more color on where you're seeing strength? You're obviously indicating a pretty strong guide here with the midpoint of the range being at 415. Well, primarily, we've seen strengths. I've been pretty bullish in the past calls on what now we're calling Intelligent Platform Solutions. Primarily driven by strength in our Penguin business, as well as the embedded space. The end markets really are around AI-driven workloads, and the cloud data center segments, as well as oil and gas, energy, and our federal business. Between those three segments, they're driving a lot of the upside growth. As mentioned in our pre-recorded scripts, that segment was up 30% quarter-over-quarter, and margins were up, and we remain bullish in Q3 and Q4. On the memory side, we're slightly ahead of our forecast for the quarter in our specialty business, and we're starting to see some return from our industrial customers in the telecommunications and network space, as well as we're getting some design wins in very much of the same type of segments that I mentioned relative to the computing environment. HPC, AI, and compute-intensive workloads, where memory is taking on a different role. On the Brazil front, as we mentioned, the mobile memory as the density, we benefit from increasing densities down in Brazil, in that environment, and also notebook memory unit sales are growing. The combination of that, if you excluded our end of life of the battery business, was up about 12%. If you sum all that together, all three right now of the business units are operating in a growth environment. Great. That's helpful. I guess my follow-up was around the LED business. Obviously, in the deck you guys put out, you talked about 200 to 400 basis points of margin improvement. Could you talk about the transition? You mentioned 18 months was the timeframe for what you saw as the initial transition. Could you give us a little more color on the gross margin profile there? How quickly can you ramp that up to the high 20%, low 30%? Could you give us just a little extra color on the timeframe that you think you can get there? Of course. If you go back to Cree's last report on Cree LED, which wasn't their December call, it was actually their September call because it was not classified as a reporting unit in December. If you go back to September, I believe the gross margins were roughly 22%. I articulated at the time of the acquisition, and I reinforced on our last call, that we expect over the next 18 months or so, in the area of 400 to 500 basis points improvement in gross margin. You're going to start to see some of that in Q2, and I'm going to let Ken discuss this in a second. A lot of it is dependent on a number of factors, including the silicon carbide to sapphire transition, the transition to an outsourced manufacturing partner, and other efficiencies the team is driving in their manufacturing transformation. Specific to the short term, I'm going to let Ken just talk a little bit about the gross margin outlook in the short term. Sure. Thanks, Mark. If we look at the gross margins for Cree in the near term, as Mark had mentioned, we're probably looking at somewhere in the mid-20% range on a non-GAAP basis. The reason I say non-GAAP is that as part of the purchase price accounting, we will expect to step up the inventories on day one of Cree's opening balance sheet. That will go through the P&L. That should go through in the Q3 timeframe. On a non-GAAP basis, those margins should be in that 25% range, plus or minus a bit, and then we will work to try to improve those over time. Great. Thanks, guys, and congrats again. Thank you. Your next question comes from the line of Brian Chin with Stifel. Your line is open. Hi there. Good afternoon. Welcome to the call, Ken, and thanks for letting us ask a few questions. Sure. Thank you. Hi. Maybe first to follow up on the last question about LED. Thanks again for the revenue breakout and then I guess the gross margin in the fiscal third quarter. Also curious what sort of, at a starting point, the OpEx might look like against that and how you can maybe lean that out over time or a certain timeframe. As we discussed, Brian, earlier on the call, we're going to have a shorter week, or we'll be one week short here in Q3 for Cree LED, and then for Q4, we'll have the normal 13-week quarter. For this quarter, for Q3, I would expect that non-GAAP OpEx to be in the neighborhood of $18 million for that Cree business. Going forward, we will not break out the OpEx for each of the businesses, but just to give people some context, in terms of the starting point, given this is the first quarter with Cree LED. That's where we're expecting it. In Q4, that will uptick given that there's an additional one week for Cree LED. Okay. Yeah, thanks. That's very helpful. Maybe to circle back to Brazil for a moment. There was a recent announcement that one of the larger handset companies, LG, is exiting the handset market. They have a big base in Brazil, obviously. I'm just curious, are you seeing any discernible impact from that in your fiscal third quarter guidance? This does seem more like a temporary effect. Do you ultimately just view this as washing out in another quarter or two as other OEMs like Samsung absorb that market share? Correct. I think your assumption's spot on. Remember, we're the largest memory manufacturer down in Brazil. As we supply many of the largest handset makers in the country, whether the share shift is from A to B to C to D, we anticipate very little impact. It's also, any of that would be contemplated in the guidance that Ken provided. Okay, great. Maybe one more question, maybe towards the balance sheet and maybe towards Ken. Accounting for your cash after the March 1st close of the Cree acquisition, can you just remind us what minimum cash on hand is needed to run the business? If we look at the business itself, the minimum cash that we need to run the business is probably in that $80 million range, if you look on a normalized basis. We exited Q2 with about $140 million of cash on the balance sheet, just as a reminder. Okay, great. Thank you. Your next question comes from the line of Kevin Cassidy with Rosenblatt. Your line is open. Yeah, thanks for taking my question, and congratulations on the great results. I'll also welcome Ken. Good to talk to you again, Ken. Good talking to you. In this environment, I see your inventories are up quarter-over-quarter, so that seems like that's a very good accomplishment. Can you talk about how you're handling the shortage that's so well-publicized and the long lead times, and also what kind of visibility you're getting from your customers? Yeah. If we look at our inventories, Kevin, you're spot on. As we looked at Q1 to Q2, we did grow inventories strategically, in part due to the constrained supply environment. Also, we are seeing a nice uplift in demand, not only Q1 to Q2, but as you can see by our guidance into Q3. The supply chain team has done a great job under Jack and the overall team to secure that supply for those projects. We are working with our customers who are fairly large in size and have a good footprint and are able to help us in terms of securing that supply, especially as we move into Q3 and Q4 of this year. Maybe I was a bit surprised when you talked about the Brazil market. You're seeing the growth is going to come from units, and we've been talking about it for a few quarters of the memory content increasing per phone. There wasn't any mention of average selling price increases. I was just a bit surprised that that's not a factor in part of the growth. Can you discuss that? Is that going to happen later in the year? Sure, Kevin. Hey, this is Jack. How are you doing? Good, Jack. No, the ASP for Q3 for Brazil is probably still around $20. We think we finished Q2 at around 19-something. Still fairly flat. We're still not seeing a huge growth yet in the content of memory on the phones that we expected, and part of it is the Real weakening. The phone's a little more expensive. We would expect to see the density start to go up a little bit more as we probably get into early next year for phones in Brazil. Right now, it's just units are driving the growth in Brazil. Okay. DRAM prices going up isn't helping in the PC market? Q3, we're just starting to see some price increase. Remember, Brazil for Q2, we didn't see anything. ASPs were up a little bit in Q3 for DRAM. It's still more of a unit-based growth down there than it is anything from DRAM on the ASP front. Okay, great. Thanks for clarifying that. Just one other clarification. Remember, the accounting for the Brazil business is one month earlier in the quarter. Any of that pricing that you're implying probably wouldn't show up in Brazil in the Q2 numbers. Okay, thank you. Thank you. Your next question comes from the line of Raji Gill with Needham & Company. Your line is open. Yes, thanks for taking my question, and congrats and welcome, Ken. Question, Ken, on the LED business. You indicated that for the May quarter, it will be about $92.5 million, and you talked about the different timing. How do we think about kind of a normalized quarterly LED business going forward, particularly with some of the piece parts of LED, some areas I think you've talked about that you might want to exit out of, some areas you might want to keep. How do we think about kind of the normalized quarterly kind of run rate for LED? Sure. Happy to provide a little context and color, although we will not be guiding on a long-term basis for any one of our business segments. If we look at that business for Q3, as I mentioned, $90 million-$95 million in terms of the range, and that's based on a 12-week quarter here in Q3. Our expectation as we head into Q4, is we should be more closer to a $100 million normalized run rate, plus or minus a bit. As we get into the end of Q3 and on our next earnings call, we'll provide a fuller guidance on the Cree business and in terms of both the revenue and outlook. Okay. That's helpful. In terms of kind of the gross margins by segments, could you just highlight again the gross margin by segment? I think you said Intelligent Platform Solutions or the former SCSS business was 29% gross margin. What was the Brazil gross margin, the specialty margin, and how do we think about the gross margin drivers for those three segments? Yeah, sure. No problem. If we look at Brazil in Q2 was about 15.2% on a gross margin basis. specialty memory was about 16.1% in terms of gross margins. As you mentioned earlier, the Intelligent Platform Solutions group had about 29.3% in Q2 of 2021. I would give you some ranges and context on a go-forward basis. For both the specialty business, or sorry, specialty memory and Brazil, I would think those margins will be reasonably flattish, plus or minus a bit, Q2 to Q3. The range I would provide for Intelligent Platform Solutions would be in the mid to high 20% range. Now, just to put into context for the Intelligent Platform Solutions, there is a bit of lumpiness based on the services component that we can see in any given quarter. That may move around a bit. That's why I gave you a broader range there. That's really helpful. Thank you. Mark, if you're looking at kind of the last quarter, you talked about kind of a 40% increase in backlog driven by oil and gas, cloud, some of these other markets. How do we think about the backlog as we go into May, as we go into the back half of the summer and the year? How is that backlog being converted over to revenue and kind of what's driving those end markets? Thank you. Well, I think it's the same drivers that I've mentioned either early on the call, and I'm happy to repeat them again. In high-performance computing, the key segments for us today are cloud, federal, and energy with oil and gas. That's not exclusive, but those are the big three contributors for us in high-performance computing. In the embedded space, it's primarily federal plus transportation and telecommunications. For us, the drivers continue. Our backlog is actually healthier going into Q3. Really the back half of the year looks very strong in that business, which is why we guided as such. I think Ken referenced, and if he didn't reference it, let me just clarify that coming off a 30% sequential growth Q2 over Q1, we're continuing to forecast an increase in that business in the area of high single digits, low double digits off of that quarter. We remain very confident in the back half of the year in the top-line growth for the Intelligent Solutions business. All right. Thank you. Your next question comes from the line of Sidney Ho with Deutsche Bank. Your line is open. Great. Thanks for taking my questions and welcome, Ken, as well. Maybe start off with the Cree business. Not trying to steal any thunder from your Analyst Day, but Mark, can you talk about your general philosophy related to that business? What are your priorities there? Is that mostly the two technology transitions that you talk about in your prepared remarks. Kind of related to that, you talk about the gross margin goal in the near term, maybe a little longer term, but at the operating margin level, that line, fiscal Q3 will be more like mid-single digit range, just based on numbers you gave. How are you thinking about that operating margin line over time? Great question. Thank you for asking. There's a couple of things. In addition to the manufacturing transformation we've discussed, we see improvements in demand. We see more of a more focused initiative in the top-line growth on strategic projects out 12 to 18 months. The team is now not limited by the manufacturing capacity in their captive environment in North Carolina. We have the ability to grow from just a sheer capacity perspective. I think you'll see better opportunities in terms of these differentiated markets that the team is driving. In addition to the go-to-market piece, we see the opportunity for, as I mentioned on the earlier calls, somewhere in the area of 10%-12% operating synergies over the next 18 months. If I look at gross margins, I would suggest that this 400 or 500 basis points over the next 12 to 18 months also fits in well. The culmination of that, I think would drive significantly better operating results than you're referring to in your question. Okay. That's helpful. Thanks. Maybe my follow-up question is related to the supply shortage that was discussed in the Q&A. You talk about building strategic inventory for yourself, but are you assuming any kind of chip shortages impacting your revenue guidance in the near term? Have you seen any changes in your customers' buying behavior in anticipation of memory component pricing going up? That's a good question. I think we've contemplated that in our guidance as we look at Q3. I think the reality is there could have been, or there could be some upside if we're able to get all of the supply that we want for specific chips and parts. In general, we are comfortable in terms of the supply we need to meet our Q3 guidance in the range we've provided. I would say as well, given that lead times have moved out a bit, customers are placing backlog further out. We are starting to see a bit more visibility, especially as it relates to the specialty memory business, and to some extent in Brazil. Great. Thank you. Thank you once again. Your next question comes from the line of Mark Lipacis with Jefferies. Hi. Thanks for taking my question. Ken, good to talk to you again. First question on the Intelligent Platform. Really nice high sequential growth. You shared a little bit of this, but I understand that a lot of it's from software and services. To what extent is that the big jump in the sequential growth from pent-up demand versus a new trajectory? I appreciate you're saying high single, low double digits is kind of how you're thinking about it near term. Maybe if you could just share a little color on the capacity of that business. I guess software has unlimited upside potentially, but on the services side or the product side, how should we think about any kind of capacity constraints you might have there? I have a follow-up. Thank you. Great. Yeah. Notwithstanding Ken's commentary around some of the mix issues we'll see guiding the gross margin between mid to high 20% gross margins on the software and services, implying that there's a mix sometimes, because depending on the amount of hardware we ship in a quarter versus how much of the software and services we sell in that period. Notwithstanding all that, we see significant upside in the business, and we are a little bit constrained, as Ken noted, relative to some of the key components in Q3. We'll get a better handle on Q4. That's all contemplated in his guidance. These workloads that we're working on in the different segments I've identified, and the top three in HPC are primarily in our cloud service providers, in terms of federal business as well as oil and gas. Those represent some of our largest customer engagements. I tried to describe this in our last call. I'll give it another shot here. What happens in some of these installations is that we begin with a development platform that is in development to work on a specific application at a given customer. Oftentimes, once we get through the development phase, it goes into production phase, and that represents a pretty attractive rollout opportunity for us with the customer. That is what you're starting to see in some of our larger customers are add-on opportunities as well as new customer development, but add-on opportunities at an increased scale. Coming off of a 30% growth in the business in Q2, Q3 and Q4 Still represent some upside growth from where we are today, and we're pretty excited about the opportunity. Great. That's very helpful. Thank you, Mark. I had a follow-up for Ken and then maybe for Jack. Ken, on the capacity constraints, can you describe the extent that the constraints are more on the material side or is there support services that you guys look to? Then a question for Jack, I think. Jack, you had, I think, previously described that SMART did not have a lot of exposure between the time that you purchase raw materials from memory modules and the time you sell them. I believe there was some exposure. I don't know if it was three or five days or something like that. Could you just remind us of that? I guess my understanding that pricing is going higher during that time, then that accrues to a slight benefit to your profitability, and if it is going lower, it hurts a little bit. If you could just remind us of those dynamics and how they hit your profitability. That is all I had. Thank you very much. Sure. Let me start and then Jack will chime in here. If we look, just to be clear, we're not constrained from a capacity standpoint. Even as we look at our Q3 guidance and the range we've provided, we feel very comfortable based on the inventory we have on hand and inventory that we will receive, we can achieve that guidance range as of today. We feel comfortable from that standpoint. As it relates to specifics around inventory and the second part of the question, maybe I'll turn it over to Jack to answer that. Sure. Thanks, Ken. Yeah. I think Brazil market is where we have the most risk of the inventory. In Brazil, we will own the inventory anywhere from four to six weeks as we process it into either a module into a multi-chip package. When pricing starts going down, we can shore that up to four weeks, and now we're probably a little bit longer. We don't see any issue in Brazil. The inventory is ample for what we're trying to do. As pricing is going up, that will benefit us a little bit in Brazil. On the specialty business, we typically don't take a risk on the inventory. The inventory we have, we pretty much have sold it at the price we need to sell it at. We really don't have a risk on it when you look at it from a specialty standpoint. Great. Thank you very much. No problem. There are no further questions at this time. I would now like to hand the conference over to Mark Adams, Chief Executive Officer, for closing remarks. Thank you, operator. Thank you again to all of you on the call, as well as to our global team at SGH for their outstanding contributions to our second quarter results. Given the strong momentum in our business, we remain confident in our growth and diversification strategy as we embark on this exciting new chapter at SGH. Thank you. This concludes today's conference call. Thank you for participating. 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