Super Micro Computer, Inc. Announces 2nd Quarter 2013 Financial Results

  Super Micro Computer, Inc. Announces 2nd Quarter 2013 Financial Results

Business Wire

SAN JOSE, Calif. -- January 22, 2013

Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized,
high performance server solutions, today announced second quarter fiscal 2013
financial results for the quarter ended December 31, 2012.

Fiscal 2nd Quarter Highlights

  * Quarterly net sales of $291.5 million, up 7.7% from the first quarter of
    fiscal year 2013 and up 16.6% from the same quarter of last year.

  * Net income of $4.9 million, up 446.6% from the first quarter of fiscal
    year 2013 and down 66.3% from the same quarter of last year.
  * Gross margin of 13.8%, up from 12.9% in the first quarter of fiscal year
    2013 and down from 17.1% in the same quarter of last year.
  * Server solutions accounted for 43.3% of net sales compared with 39.5% in
    the first quarter of fiscal year 2013 and 44.0% in the same quarter of
    last year.

Net sales for the second quarter ended December 31, 2012 totaled $291.5
million, up 7.7% from $270.7 million in the first quarter of fiscal year 2013.
No customer accounted for more than 10% of net sales during the quarter ended
December 31, 2012.

Net income for the second quarter of fiscal year 2013 was $4.9 million or
$0.11 per diluted share, a decrease of 44.0% from the net income of $8.8
million, or $0.20 per diluted share in the same period a year ago. Included in
net income for the quarter is $2.9 million of stock-based compensation expense
(pre-tax). Excluding this item and the related tax effect, non-GAAP net income
for the second quarter was $7.8 million, or $0.18 per diluted share, compared
to non-GAAP net income of $11.2 million, or $0.25 per diluted share, in the
same quarter of the prior year. On a sequential basis, non-GAAP net income
increased from the first quarter of fiscal year 2013 by $4.8 million or $0.11
per diluted share.

Gross margin and non-GAAP gross margin for the second quarter were each 13.8%
compared to 17.1% in the same period a year ago. Non-GAAP gross margin was
13.0% for the first quarter of fiscal year 2013.

The Company's cash and cash equivalents and short and long term investments at
December 31, 2012 were $91.1 million compared to $83.8 million at June 30,
2012. Free cash flow in the six months ended December 31, 2012 was $2.8
million primarily due to a decrease in inventory for hard disk drives.

Business Outlook & Management Commentary

The Company expects net sales of $275 million to $295 million for the third
quarter of fiscal year 2013 ending March 31, 2013. The Company expects
non-GAAP earnings per diluted share of approximately $0.17 to $0.21 for the
third quarter.

“Net sales were a record high this quarter as we achieved 16.6% growth over
last year, further demonstrating our ability to grow market share even during
uncertain economic times. Our rackmount servers, especially FatTwin solutions,
and our storage products were key drivers of our revenue this quarter.
Profitability improved due to slightly better margins and better operating
expense leverage. We remain focused on improving profitability.” said Charles
Liang, CEO of Supermicro. "With our new architecture products and
opportunities in new markets, as well as our diverse customer base, we look
forward to continuing our market share growth."

It is currently expected that the outlook will not be updated until the
Company’s next quarterly earnings announcement, notwithstanding subsequent
developments. However, the Company may update the outlook or any portion
thereof at any time. Such updates will take place only by way of a news
release or other broadly disseminated disclosure available to all interested
parties in accordance with Regulation FD.

Conference Call Information

Super Micro Computer will discuss these financial results in a conference call
at 2:00 p.m. PT, today. To participate the conference, please call
1-888-401-4668 (international callers dial 1-719-457-2627) 10 minutes prior. A
recording of the conference will be available until 11:59 pm ET on Tuesday,
February 5, 2013 by dialing 1-877-870-5176 (international callers dial
1-858-384-5517) and entering replay PIN 3074743. The live web cast and
recording of the call will be available on the Investor Relations section at
www.supermicro.com two hours after the conference conclusion. They will remain
available until the Company's next earnings call.

Cautionary Statement Regarding Forward Looking Statements

Statements contained in this press release that are not historical fact may be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements may relate, among other things, to our expected
financial and operating results, our ability to build and grow Super Micro
Computer, the benefits of our products and our ability to achieve our goals,
plans and objectives. Such forward-looking statements do not constitute
guarantees of future performance and are subject to a variety of risks and
uncertainties that could cause our actual results to differ materially from
those anticipated. These include, but are not limited to: our dependence on
continued growth in the markets for X86, blade servers and embedded
applications, increased competition, difficulties of predicting timing,
introduction and customer acceptance of new products, poor product sales,
difficulties in establishing and maintaining successful relationships with our
distributors and vendors, shortages or price fluctuations in our supply chain,
our ability to protect our intellectual property rights, our ability to
control the rate of expansion domestically and internationally, difficulty
managing rapid growth and general political, economic and market conditions
and events. Additional factors that could cause actual results to differ
materially from those projected or suggested in any forward-looking statements
are contained in our filings with the Securities and Exchange Commission,
including those factors discussed under the caption "Risk Factors" in such
filings.

Use of Non-GAAP Financial Measures

Non-GAAP gross margin discussed in this press release excludes stock-based
compensation expense for prior periods. Non-GAAP net income and net income per
share discussed in this press release exclude stock-based compensation expense
and the related tax effect of the applicable items. Management presents
non-GAAP financial measures because it considers them to be important
supplemental measures of performance. Management uses the non-GAAP financial
measures for planning purposes, including analysis of the Company's
performance against prior periods, the preparation of operating budgets and to
determine appropriate levels of operating and capital investments. Management
also believes that the non-GAAP financial measures provide additional insight
for analysts and investors in evaluating the Company's financial and
operational performance. However, these non-GAAP financial measures have
limitations as an analytical tool, and are not intended to be an alternative
to financial measures prepared in accordance with GAAP. Pursuant to the
requirements of SEC Regulation G, detailed reconciliations between the
Company's GAAP and non-GAAP financial results is provided at the end of this
press release. Investors are advised to carefully review and consider this
information as well as the GAAP financial results that are disclosed in the
Company's SEC filings.

About Super Micro Computer, Inc.

Supermicro^® (NASDAQ: SMCI), a global leader in high-performance,
high-efficiency server technology innovation is a premier provider of
end-to-end green computing solutions for Enterprise IT, Datacenter, Cloud
Computing, HPC and Embedded Systems worldwide. Supermicro’s advanced server
Building Block Solutions^® offers a vast array of modular, interoperable
components for building energy-efficient, application-optimized computing
solutions. This broad line of products includes servers, blades, GPU systems,
workstations, motherboards, chassis, power supplies, storage technologies,
networking solutions and SuperRack^® cabinets/accessories. Architecture
innovations include Twin Architecture, SuperServer^®, SuperBlade^®,
MicroCloud, Super Storage Bridge Bay (SBB), Double-Sided Storage^™, Universal
I/O (UIO) and WIO expansion technology all of which deliver unrivaled
performance and value. Supermicro is committed to protecting the environment
through its “We Keep IT Green^®” initiative by providing customers with the
most energy-efficient, environmentally-friendly solutions available on the
market. Founded in 1993, Supermicro is headquartered in Silicon Valley with
worldwide operations and manufacturing centers in Europe and Asia. For more
information, visit www.supermicro.com.

Supermicro, Building Block Solutions, SuperServer, SuperBlade, SuperRack,
Double-Sided Storage and We Keep IT Green are trademarks and/or registered
trademarks of Super Micro Computer, Inc.

                                                                  
SUPER MICRO COMPUTER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                                    
                                                    December 31,   June 30,
                                                    2012           2012
ASSETS
Current assets:
Cash and cash equivalents                           $  88,398      $ 80,826
Accounts receivable, net                               118,912       102,014
Inventory, net                                         243,597       276,599
Deferred income taxes – current                        14,361        12,638
Prepaid income taxes                                   4,338         3,478
Prepaid expenses and other current assets              5,889         6,357    
Total current assets                                   475,495       481,912
Long-term investments                                  2,650         2,923
Property, plant and equipment, net                     96,712        97,419
Deferred income taxes – noncurrent                     5,707         3,459
Other assets                                           3,003         3,390    
Total assets                                        $  583,567     $ 589,103  
                                                                    
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                    $  149,441     $ 173,991
Accrued liabilities                                    32,015        30,401
Income taxes payable                                   2,799         2,754
Short-term debt and current portion of long-term       29,195        13,362   
debt
Total current liabilities                              213,450       220,508
Long term debt-net of current portion                  7,933         19,395
Other long-term liabilities                            10,764        10,849   
Total liabilities                                      232,147       250,752
Stockholders' equity:
Common stock and additional paid-in capital            150,870       143,806
Treasury stock (at cost)                               (2,030  )     (2,030  )
Accumulated other comprehensive loss                   (52     )     (76     )
Retained earnings                                      202,464       196,651  
Total Super Micro Computer Inc. stockholders'          351,252       338,351
equity
Noncontrolling interest                                168           -        
Total liabilities and stockholders' equity          $  583,567     $ 589,103  
                                                                              

 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
                                                                  
                      Three Months Ended            Six Months Ended
                      December 31,   December 31,   December 31,   December
                                                                   31,
                      2012           2011           2012           2011
Net sales             $  291,487     $  249,915     $ 562,194      $ 497,800
Cost of sales            251,365        207,301     487,057          415,560  
Gross profit             40,122         42,614      75,137           82,240
Operating
expenses:
Research and             18,824         15,657      37,045           29,481
development
Sales and                7,945          8,032       16,711           15,742
marketing
General and              5,745          5,207       12,091           9,785    
administrative
Total operating          32,514         28,896      65,847           55,008   
expenses
Income from              7,608          13,718      9,290            27,232
operations
Interest and other       7              20          22               37
income, net
Interest expense         (152    )      (173    )   (307       )     (367    )
Income before
income tax               7,463          13,565      9,005            26,902
provision
Income tax               2,549          4,791       3,192            9,636    
provision
Net income            $  4,914       $  8,774       $ 5,813        $ 17,266   
Net income per
common share:
Basic                 $  0.12        $  0.21        $ 0.14         $ 0.42     
Diluted               $  0.11        $  0.20        $ 0.13         $ 0.39     
Weighted-average
shares used in
calculation of net
income per common
share:
Basic (a)                41,893         40,555      41,780           40,456   
Diluted (b)              43,431         43,816      43,819           43,603   
                                                                    
                                                                    
Stock-based compensation is included in the
following cost and expense categories by period
(in thousands):
                      Three Months Ended            Six Months Ended
                      December 31,   December 31,   December      December 31,
                                                    31,
                      2012           2011           2012          2011
Cost of sales         $  224         $  200         $   464       $ 408
Research and             1,632          1,328           3,262     2,600
development
Sales and                389            362             793       640
marketing
General and              664            617             1,293     1,189
administrative
                                                                   

 
SUPER MICRO COMPUTER, INC
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(In thousands)
(Unaudited)
 
                                                     Six Months Ended
                                                    
                                                     December 31,
                                                     2012          2011
OPERATING ACTIVITIES:
Net income                                           $ 5,813       $ 17,266
Reconciliation of net income to net cash provided
by operating activities:
Depreciation and amortization                          3,974         3,147
Stock-based compensation expense                       5,812         4,837
Excess tax benefits from stock-based compensation      (785    )     (1,084  )
Allowance for doubtful accounts                        75            25
Provision for inventory                                6,313         3,902
Exchange loss                                          278           -
Deferred income taxes, net                             (3,982  )     (421    )
Changes in operating assets and liabilities:
Accounts receivable, net                               (16,973 )     4,880
Inventory                                              26,689        (4,551  )
Prepaid expenses and other assets                      699           (813    )
Accounts payable                                       (25,094 )     1,887
Income taxes payable, net                              679           5,962
Accrued liabilities                                    2,203         1,345
Other long-term liabilities                            (98     )     508      
Net cash provided by operating activities              5,603         36,890   
                                                                    
INVESTING ACTIVITIES:
Proceeds from investments                              300           1,675
Purchases of property, plant and equipment             (2,790  )     (18,260 )
Restricted cash                                        (12     )     (29     )
Land deposit refund                                    -             2,868    
Net cash used in investing activities                  (2,502  )     (13,746 )
                                                                    
FINANCING ACTIVITIES:
Proceeds from debt                                     20,641        31,021
Repayment of debt                                      (16,673 )     (23,962 )
Proceeds from exercise of stock options                780           1,926
Excess tax benefits from stock-based compensation      785           1,084
Payment of obligations under capital leases            (18     )     (18     )
Advances (payments) under receivable financing         (584    )     441
arrangements
Contribution from noncontrolling interests             168           -
Minimum tax withholding paid on behalf of an           (1,022  )     (1,109  )
officer for restricted stock awards
Net cash provided by financing activities              4,077         9,383    
Effect of exchange rate fluctuations on cash           394           (93     )
Net increase in cash and cash equivalents              7,572         32,434
Cash and cash equivalents at beginning of period       80,826        69,943   
Cash and cash equivalents at end of period           $ 88,398      $ 102,377  
Supplemental disclosure of cash flow information:
Cash paid for interest                               $ 409         $ 376
Cash paid for taxes, net of refunds                  $ 6,448       $ 3,485
Non-cash investing and financing activities:
Accrued costs for property, plant and equipment      $ 1,080       $ 2,114
purchases
Deposit applied to property acquisition              $ -           $ 5,867
                                                                              

SUPER MICRO COMPUTER, INC
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share amounts)
(Unaudited)
                                                                   
                     Three Months Ended                Six Months Ended
                     December 31,     December 31,     December     December
                                                       31,          31,
                     2012             2011             2012         2011
GAAP GROSS PROFIT    $  40,122        $  42,614        $ 75,137     $ 82,240
Add back
stock-based             224              200             464          408     
compensation (c)
Non-GAAP GROSS       $  40,346        $  42,814        $ 75,601     $ 82,648  
PROFIT
                                                                     
GAAP GROSS MARGIN       13.8    %        17.1    %       13.4   %     16.5   %
Add back
stock-based             0.0     %        0.0     %       0.0    %     0.1    %
compensation (c)
Non-GAAP GROSS          13.8    %        17.1    %       13.4   %     16.6   %
MARGIN
                                                                     
GAAP INCOME FROM     $  7,608         $  13,718        $ 9,290      $ 27,232
OPERATIONS
Add back
stock-based             2,909            2,507           5,812        4,837   
compensation (c)
Non-GAAP INCOME      $  10,517        $  16,225        $ 15,102     $ 32,069  
FROM OPERATIONS
                                                                     
GAAP NET INCOME      $  4,914         $  8,774         $ 5,813      $ 17,266
Add back
stock-based             2,909            2,507           5,812        4,837
compensation (c)
Add back
adjustments to          3                (116    )       (746   )     (453   )
tax provision (d)
Non-GAAP NET         $  7,826         $  11,165        $ 10,879     $ 21,650  
INCOME
                                                                     
GAAP NET INCOME
PER COMMON SHARE     $  0.12          $  0.21          $ 0.14       $ 0.42
– BASIC (a)
Add back
stock-based
compensation and        0.07             0.06            0.12         0.11    
adjustments to
tax provision (c)
(d)
Non-GAAP NET
INCOME PER COMMON    $  0.19          $  0.27          $ 0.26       $ 0.53    
SHARE – BASIC (e)
                                                                     
                                                                     
GAAP NET INCOME
PER COMMON SHARE     $  0.11          $  0.20          $ 0.13       $ 0.39
– DILUTED (b)
Add back
stock-based
compensation and        0.07             0.05            0.12         0.10    
adjustments to
tax provision (c)
(d)
Non-GAAP NET
INCOME PER COMMON    $  0.18          $  0.25          $ 0.25       $ 0.49    
SHARE – DILUTED
(f)
                                                                     
WEIGHTED-AVERAGE
SHARES USED IN
COMPUTING NET
INCOME PER COMMON
SHARE
BASIC – GAAP (g)        41,893           40,555          41,780       40,456  
BASIC - Non-GAAP        42,076           40,915          42,018       40,869  
(g)
                                                                     
DILUTED – GAAP          43,431           43,816          43,819       43,603  
(g)
DILUTED -               43,666           44,625          44,176       44,472  
Non-GAAP (g)
                                                                     
                                                        
                                                                     
(a) Approximately $21,000 and $33,000 of undistributed earnings allocated to
participating securities were not included in the determination of GAAP basic
net income per common share for the three and six months ended December 31,
2012, respectively, and approximately $77,000 and $175,000 for the three and
six months ended December 31, 2011, respectively.
 
(b) Approximately $21,000 and $31,000 of undistributed earnings allocated to
participating securities were not included in the determination of GAAP
diluted net income per common share for the three and six months ended
December 31, 2012, respectively, and approximately $71,000 and $162,000 for
the three and six months ended December 31, 2011, respectively.
 
(c) Amortization of ASC Topic 718 (SFAS No. 123R, APB 25 and SFAS No. 123)
stock-based compensation for the three and six months ended December 31, 2012
and 2011.
 
(d) The provision of income taxes used in arriving at the non-GAAP net income
was computed using an income tax rate of 24.6% and 26.6% for the three and six
months ended December 31, 2012, respectively, and 30.5% and 31.8% for the
three and six months ended December 31, 2011, respectively.
 
(e) Approximately $34,000 and $62,000 of undistributed earnings allocated to
participating securities were included in the determination of Non-GAAP basic
net income per common share for the three and six months ended December 31,
2012, respectively, and approximately $98,000 and $219,000 of undistributed
earnings allocated to participating securities were included in the
determination of Non-GAAP basic net income per common share for the three and
six months ended December 31, 2011, respectively.
 
(f) Approximately $33,000 and $59,000 of undistributed earnings allocated to
participating securities were included in the determination of Non-GAAP
diluted net income per common share for the three and six months ended
December 31, 2012, respectively, and approximately $90,000 and $202,000 of
undistributed earnings allocated to participating securities were included in
the determination of Non-GAAP diluted net income per common share for the
three and six months ended December 31, 2011, respectively.
 
(g) 183,141 and 237,814 shares of unvested restricted stock awards were not
included in the determination of GAAP basic and diluted net income per common
share for the three and six months ended December 31, 2012, respectively.
359,282 and 413,955 shares of unvested restricted stock awards were not
included in the determination of GAAP basic and diluted net income per common
share for the three and six months ended December 31, 2011, respectively.
 

SMCI-F

Contact:

Super Micro Computer, Inc.
Howard Hideshima, 408-503-8000
Chief Financial Officer
ir@supermicro.com
or
Perry G. Hayes
SVP, Investor Relations
ir@supermicro.com