Super Micro Computer, Inc. Announces 3rd Quarter 2013 Financial Results

  Super Micro Computer, Inc. Announces 3rd Quarter 2013 Financial Results

Business Wire

SAN JOSE, Calif. -- April 23, 2013

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

Fiscal 3rd Quarter Highlights

  *Quarterly net sales of $278.0 million, down 4.6% from the second quarter
    of fiscal year 2013 and up 15.8% from the same quarter of last year.

  *Net income of $7.0 million, up 43.3% from the second quarter of fiscal
    year 2013 and down 0.5% from the same quarter of last year.
  *Gross margin of 14.0%, up from 13.8% in the second quarter of fiscal year
    2013 and down from 17.0% in the same quarter of last year.
  *Server solutions accounted for 41.8% of net sales compared with 43.3% in
    the second quarter of fiscal year 2013 and 48.5% in the same quarter of
    last year.

Net sales for the third quarter ended March 31, 2013 totaled $278.0 million,
down 4.6% from $291.5 million in the second quarter of fiscal year 2013. No
customer accounted for more than 10% of net sales during the quarter ended
March 31, 2013.

Net income for the third quarter of fiscal year 2013 was $7.0 million or $0.16
per diluted share, a decrease of 0.5% from the net income of $7.1 million, or
$0.16 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
third quarter was $10.0 million, or $0.23 per diluted share, compared to
non-GAAP net income of $8.8 million, or $0.19 per diluted share, in the same
quarter of the prior year. On a sequential basis, non-GAAP net income
increased from the second quarter of fiscal year 2013 by $2.2 million or $0.05
per diluted share. Net income and earnings per share for the third quarter of
fiscal 2013 included a tax benefit of approximately $2.3 million or $0.05 per
share as a result of the reinstatement of the U.S. federal R&D tax credit on
January 2, 2013 and a tax benefit of approximately $2.0 million or $0.05 per
share from a release of liability for taxes as a result of the resolution of a
tax audit during the quarter.

Gross margin for the third quarter was 14.0% compared to 17.0% in the same
period a year ago. Non-GAAP gross margin for the third quarter was 14.1%
compared to 17.0% in the same period a year ago. Gross margin and Non-GAAP
gross margin for the second quarter of fiscal year 2013 were each 13.8%.

The Company's cash and cash equivalents and short and long term investments at
March 31, 2013 were $96.7 million compared to $83.8 million at June 30, 2012.
Free cash flow in the nine months ended March 31, 2013 was $9.2 million
primarily due to a decrease in inventory for hard disk drives.

Business Outlook & Management Commentary

The Company expects net sales of $295 million to $315 million for the fourth
quarter of fiscal year 2013 ending June 30, 2013. The Company expects non-GAAP
earnings per diluted share of approximately $0.17 to $0.22 for the fourth
quarter.

“The typical March quarter seasonality was evident in the lower sequential
revenue. However, we are pleased that revenue for the quarter was up 15.8%
from last year. Our revenue growth this quarter outpaced the industry’s growth
and we expect this trend will continue,” said Charles Liang, CEO of
Supermicro. “Supermicro continues to take market share by providing the
industry’s most innovative products that feature the best performance per
watt, per dollar, and per square foot. Our servers’ system management software
has been consistently gaining customer acceptance which will continue to add
value to our complete solutions offering.”

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
1-888-395-3227 (international callers dial 1-719-785-1753) 10 minutes prior. A
recording of the conference will be available until 11:59 pm ET on Tuesday,
May 7, 2013 by dialing 1-877-870-5176 (international callers dial
1-858-384-5517) and entering replay PIN 2907442. 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)
                                                       March 31,  June 30,
                                                         2013       2012
ASSETS
Current assets:
Cash and cash equivalents                               $ 93,974    $ 80,826
Accounts receivable, net                                  122,339     102,014
Inventory                                                 257,341     276,599
Deferred income taxes – current                           15,448      12,638
Prepaid income taxes                                      4,191       3,478
Prepaid expenses and other current assets                6,512      6,357
Total current assets                                      499,805     481,912
Long-term investments                                     2,650       2,923
Property, plant and equipment, net                        95,442      97,419
Deferred income taxes – noncurrent                        6,843       3,459
Other assets                                             3,312      3,390
Total assets                                            $ 608,052   $ 589,103
                                                                    
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                        $ 163,607   $ 173,991
Accrued liabilities                                       33,070      30,401
Income taxes payable                                      3,723       2,754
Short-term debt and current portion of long-term debt    28,745     13,362
Total current liabilities                                 229,145     220,508
Long term debt-net of current portion                     7,233       19,395
Other long-term liabilities                              9,507      10,849
Total liabilities                                         245,885     250,752
Stockholders' equity:
Common stock and additional paid-in capital               154,579     143,806
Treasury stock (at cost)                                  (2,030)     (2,030)
Accumulated other comprehensive loss                      (61)        (76)
Retained earnings                                        209,504   196,651
Total Super Micro Computer Inc. stockholders' equity      361,992     338,351
Noncontrolling interest                                  175        -
Total liabilities and stockholders' equity              $ 608,052   $ 589,103
                                                                    


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
                                                                
                                 Three Months Ended      Nine Months Ended
                                 March 31,   March 31,   March 31,   March 31,
                                  2013       2012      2013         2012
Net sales                        $ 278,034   $ 240,178   $ 840,228   $ 737,978
Cost of sales                     239,141    199,449   726,198      615,009
Gross profit                       38,893      40,729    114,030       122,969
Operating expenses:
Research and development           18,606      17,162    55,651        46,643
Sales and marketing                8,713       8,175     25,424        23,917
General and administrative        6,134      5,802     18,225       15,587
Total operating expenses          33,453     31,139    99,300       86,147
Income from operations             5,440       9,590     14,730        36,822
Interest and other income, net     2           9         24            46
Interest expense                  (142)      (189)     (449)        (556)
Income before income tax           5,300       9,410     14,305        36,312
provision
Income tax provision (benefit)    (1,740)    2,333     1,452        11,969
Net income                       $ 7,040     $ 7,077     $ 12,853    $ 24,343
Net income per common share:
Basic                            $ 0.17      $ 0.17      $ 0.31      $ 0.59
Diluted                          $ 0.16      $ 0.16      $ 0.29      $ 0.55
Weighted-average shares used
in calculation of net income
per common share:
Basic (a)                         42,147     41,126    41,901       40,679
Diluted (b)                       44,148     44,610    43,921       43,957
                                                                     
                                                                     
Stock-based compensation is included in the following cost and expense
categories by period (in thousands):
                                 Three Months Ended      Nine Months Ended
                                 March 31,   March 31,   March 31,   March 31,
                                  2013       2012      2013         2012
Cost of sales                    $ 232       $ 183       $  696    $ 591
Research and development           1,666       1,394        4,928   3,994
Sales and marketing                389         397          1,182   1,037
General and administrative         563         619          1,856   1,808
                                                                    


SUPER MICRO COMPUTER, INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(In thousands)
(Unaudited)
                                                       Nine Months Ended
                                                     
                                                       March 31,
                                                        2013       2012
OPERATING ACTIVITIES:
Net income                                             $ 12,853     $ 24,343
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and amortization                            5,900        5,114
Stock-based compensation expense                         8,662        7,430
Excess tax benefits from stock-based compensation        (844)        (1,907)
Allowance for doubtful accounts                          696          203
Provision for inventory                                  8,744        5,686
Exchange gain                                            (158)        -
Deferred income taxes, net                               (6,205)      (2,082)
Changes in operating assets and liabilities:
Accounts receivable, net                                 (21,021)     (16,178)
Inventory                                                10,514       (41,908)
Prepaid expenses and other assets                        169          (2,713)
Accounts payable                                         (9,602)      29,424
Income taxes payable, net                                1,943        6,704
Accrued liabilities                                      3,268        3,266
Other long-term liabilities                             (1,350)     1,646
Net cash provided by operating activities               13,569      19,028
                                                                    
INVESTING ACTIVITIES:
Proceeds from investments                                300          2,075
Purchases of property, plant and equipment               (4,346)      (21,710)
Restricted cash                                          (407)        (39)
Land deposit refund                                     -           2,868
Net cash used in investing activities                   (4,453)     (16,806)
                                                                    
FINANCING ACTIVITIES:
Proceeds from debt                                       20,641       32,696
Repayment of debt                                        (17,373)     (24,662)
Proceeds from exercise of stock options                  1,446        7,694
Excess tax benefits from stock-based compensation        844          1,907
Payment of obligations under capital leases              (31)         (26)
Payments under receivable financing arrangements         (586)        (194)
Contribution from noncontrolling interests               168          -
Minimum tax withholding paid on behalf of an officer    (1,022)     (1,109)
for restricted stock awards
Net cash provided by financing activities               4,087       16,306
Effect of exchange rate fluctuations on cash             (55)         390
Net increase in cash and cash equivalents                13,148       18,918
Cash and cash equivalents at beginning of period        80,826      69,943
Cash and cash equivalents at end of period             $ 93,974     $ 88,861
Supplemental disclosure of cash flow information:
Cash paid for interest                                 $ 551        $ 545
Cash paid for taxes, net of refunds                    $ 6,793      $ 6,301
Non-cash investing and financing activities:
Accrued costs for property, plant and equipment        $ 180        $ 874
purchases
Deposit applied to property acquisition                $ -          $ 5,867
Equipment purchased under capital leases               $ 26         $ 7
                                                                      


SUPER MICRO COMPUTER, INC
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share amounts)
(Unaudited)
                                                                
                                 Three Months Ended      Nine Months Ended
                                 March 31,   March 31,   March 31,   March 31,
                                   2013       2012      2013       2012
GAAP GROSS PROFIT                $  38,893   $  40,729   $ 114,030   $ 122,969
Add back stock-based               232        183       696        591
compensation (c)
Non-GAAP GROSS PROFIT            $  39,125   $  40,912   $ 114,726   $ 123,560
                                                                     
GAAP GROSS MARGIN                   14.0%       17.0%      13.6%       16.7%
Add back stock-based               0.1%       0.0%      0.1%       0.0%
compensation (c)
Non-GAAP GROSS MARGIN              14.1%      17.0%     13.7%      16.7%
                                                                     
GAAP INCOME FROM OPERATIONS      $  5,440    $  9,590    $ 14,730    $ 36,822
Add back stock-based               2,850      2,593     8,662      7,430
compensation (c)
Non-GAAP INCOME FROM             $  8,290    $  12,183   $ 23,392    $ 44,252
OPERATIONS
                                                                     
GAAP NET INCOME                  $  7,040    $  7,077    $ 12,853    $ 24,343
Add back stock-based                2,850       2,593      8,662       7,430
compensation (c)
Add back adjustments to tax        139        (860)     (607)      (1,313)
benefit (provision) (d)
Non-GAAP NET INCOME              $  10,029   $  8,810    $ 20,908    $ 30,460
                                                                     
GAAP NET INCOME PER COMMON       $  0.17     $  0.17     $ 0.31      $ 0.59
SHARE – BASIC (a)
Add back stock-based
compensation and adjustments       0.07       0.04      0.19       0.15
to tax provision (c) (d)
Non-GAAP NET INCOME PER COMMON   $  0.24     $  0.21     $ 0.50      $ 0.74
SHARE – BASIC (e)
                                                                     
                                                                     
GAAP NET INCOME PER COMMON       $  0.16     $  0.16     $ 0.29      $ 0.55
SHARE – DILUTED (b)
Add back stock-based
compensation and adjustments       0.07       0.03      0.18       0.13
to tax provision (c) (d)
Non-GAAP NET INCOME PER COMMON   $  0.23     $  0.19     $ 0.47      $ 0.68
SHARE – DILUTED (f)
                                                                     
WEIGHTED-AVERAGE SHARES USED
IN COMPUTING NET INCOME PER
COMMON SHARE
BASIC –GAAP (g)                    42,147     41,126    41,901     40,679
BASIC - Non-GAAP (h)               42,330     41,486    42,121     41,075
                                                                     
DILUTED – GAAP (g)                 44,148     44,610    43,921     43,957
DILUTED - Non-GAAP (h)             44,498     45,501    44,279     44,824
                                                                     


(a) Approximately $30,000 and $67,000 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 nine months ended March 31,
2013, respectively, and approximately $61,000 and $235,000 for the three and
nine months ended March 31, 2012, respectively.

(b) Approximately $29,000 and $64,000 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 nine months ended March
31, 2013, respectively, and approximately $57,000 and $217,000 for the three
and nine months ended March 31, 2012, respectively.

(c) Amortization of ASC Topic 718 stock-based compensation for the three and
nine months ended March 31, 2013 and 2012.

(d) The provision of (benefit from) income taxes used in arriving at the
non-GAAP net income was computed using an income tax rate of (23.1)% and 9.0%
for the three and nine months ended March 31, 2013, respectively, and 26.6%
and 30.4% for the three and nine months ended March 31, 2012, respectively.

(e) Approximately $43,000 and $109,000 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 nine months ended March 31,
2013, respectively, and approximately $76,000 and $294,000 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
nine months ended March 31, 2012, respectively.

(f) Approximately $41,000 and $104,000 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 nine months ended March
31, 2013, respectively, and approximately $70,000 and $269,000 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 nine months ended March 31, 2012, respectively.

(g) 183,141 and 219,856 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 nine months ended March 31, 2013, respectively.
359,282 and 395,863 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 nine months ended March 31, 2012, respectively.

(h) 183,141 and 219,856 shares of unvested restricted stock awards were
included in the determination of Non-GAAP basic and diluted net income per
common share for the three and nine months ended March 31, 2013, respectively.
359,282 and 395,863 shares of unvested restricted stock awards were included
in the determination of Non-GAAP basic and diluted net income per common share
for the three and nine months ended March 31, 2012, 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
 
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