Super Micro Computer, Inc. Announces 1st Quarter 2014 Financial Results Business Wire SAN JOSE, Calif. -- October 22, 2013 Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced first quarter fiscal 2014 financial results for the quarter ended September 30, 2013. Fiscal 1st Quarter Highlights *Quarterly net sales of $309.0 million, down 4.1% from the fourth quarter of fiscal year 2013 and up 14.2% from the same quarter of last year. *GAAP net income of $7.7 million, down 8.6% from the fourth quarter of fiscal year 2013 and up 756.4% from the same quarter of last year. *GAAP gross margin of 15.1%, up from 14.3% in the fourth quarter of fiscal year 2013 and up from 12.9% in the same quarter of last year. *Server solutions accounted for 46.4% of net sales compared with 47.4% in the fourth quarter of fiscal year 2013 and 39.5% in the same quarter of last year. Net sales for the first quarter ended September 30, 2013 totaled $309.0 million, down 4.1% from $322.3 million in the fourth quarter of fiscal year 2013. No customer accounted for more than 10% of net sales during the quarter ended September 30, 2013. GAAP net income for the first quarter of fiscal year 2014 was $7.7 million or $0.17 per diluted share, an increase of 756.4% from the net income of $0.9 million, or $0.02 per diluted share in the same period a year ago. Included in net income for the quarter is $2.6 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the first quarter was $9.9 million, or $0.22 per diluted share, compared to non-GAAP net income of $3.1 million, or $0.07 per diluted share, in the same quarter of the prior year. On a sequential basis, non-GAAP net income decreased from the fourth quarter of fiscal year 2013 by $1.4 million or $0.04 per diluted share. GAAP gross margin for the first quarter was 15.1% compared to 12.9% in the same period a year ago. Non-GAAP gross margin for the first quarter was 15.2% compared to 13.0% in the same period a year ago. GAAP gross margin and Non-GAAP gross margin for the fourth quarter of fiscal year 2013 were 14.3% and 14.4%, respectively. The Company's cash and cash equivalents and short and long term investments at September 30, 2013 were $114.2 million compared to $95.7 million at June 30, 2013. Free cash flow for the three months ended September 30, 2013 was $16.4 million, primarily due to a decrease in accounts receivable. Business Outlook & Management Commentary The Company expects net sales of $320 million to $350 million for the second quarter of fiscal year 2014 ending December 31, 2013. The Company expects non-GAAP earnings per diluted share of approximately $0.25 to $0.31 for the second quarter. “Our first quarter results continued our growth momentum for the start of this new fiscal year by growing revenue 14.2% year over year. Our FatTwin and MicroCloud solutions for data centers were in strong demand and our GPU, Xeon Phi and storage solutions continue to outperform the industry. We are pleased with our performance given the transition period ahead of new technology. We are also pleased that we are making good progress toward reaching our margin goals,” said Charles Liang, Chairman and CEO. “Looking ahead, we are again first to market with the broadest array of new Ivy Bridge solutions in the industry and we will use this position together with our global foundation to take full advantage of the market share opportunities.” 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 in the conference call, please call 1-888-378-0320 (international callers dial 1-719-325-2435) 10 minutes prior. A recording of the conference call will be available until 11:59 pm ET on Tuesday, November 5, 2013 by dialing 1-877-870-5176 (international callers dial 1-858-384-5517) and entering replay PIN 6100108. 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 call 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. 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 advanced server Building Block Solutions^® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. 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 and We Keep IT Green are trademarks and/or registered trademarks of Super Micro Computer, Inc. All other brands, names and trademarks are the property of their respective owners. SUPER MICRO COMPUTER, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 30, June 30, 2013 2013 ASSETS Current assets: Cash and cash equivalents $ 111,458 $ 93,038 Accounts receivable, net 134,056 149,340 Inventory 254,310 254,170 Deferred income taxes – current 14,982 15,786 Prepaid income taxes 4,493 4,039 Prepaid expenses and other current assets 4,923 6,819 Total current assets 524,222 523,192 Long-term investments 2,637 2,637 Property, plant and equipment, net 96,767 95,912 Deferred income taxes – noncurrent 7,988 7,275 Other assets 4,185 3,241 Total assets $ 635,799 $ 632,257 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 165,660 $ 172,855 Accrued liabilities 31,650 34,122 Income taxes payable 7,274 6,049 Short-term debt and current portion of long-term 28,916 28,638 debt Total current liabilities 233,500 241,664 Long term debt-net of current portion 5,833 6,533 Other long-term liabilities 10,502 10,336 Total liabilities 249,835 258,533 Stockholders' equity: Common stock and additional paid-in capital 162,255 157,712 Treasury stock (at cost) (2,030 ) (2,030 ) Accumulated other comprehensive loss (65 ) (69 ) Retained earnings 225,629 217,930 Total Super Micro Computer Inc. stockholders' 385,789 373,543 equity Noncontrolling interest 175 181 Total liabilities and stockholders' equity $ 635,799 $ 632,257 SUPER MICRO COMPUTER, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended September 30, September 30, 2013 2012 Net sales $ 309,016 $ 270,707 Cost of sales 262,224 235,692 Gross profit 46,792 35,015 Operating expenses: Research and development 20,236 18,221 Sales and marketing 8,865 8,766 General and administrative 5,648 6,346 Total operating expenses 34,749 33,333 Income from operations 12,043 1,682 Interest and other income, net 17 15 Interest expense (195 ) (155 ) Income before income tax provision 11,865 1,542 Income tax provision 4,166 643 Net income $ 7,699 $ 899 Net income per common share: Basic $ 0.18 $ 0.02 Diluted $ 0.17 $ 0.02 Weighted-average shares used in calculation of net income per common share: Basic (a) 42,496 41,667 Diluted (b) 44,602 44,174 Stock-based compensation is included in the following cost and expense categories by period (in thousands): Three Months Ended September 30, September 30, 2013 2012 Cost of sales $ 235 $ 240 Research and development 1,561 1,630 Sales and marketing 314 404 General and administrative 479 629 SUPER MICRO COMPUTER, INC CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (In thousands) (Unaudited) Three Months Ended September 30, 2013 2012 OPERATING ACTIVITIES: Net income $ 7,699 $ 899 Reconciliation of net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,393 1,955 Stock-based compensation expense 2,589 2,903 Excess tax benefits from stock-based compensation (882 ) (784 ) Allowance for doubtful accounts 849 137 Provision for inventory 4 2,910 Exchange loss 241 202 Deferred income taxes, net 91 (2,870 ) Changes in operating assets and liabilities: Accounts receivable, net 14,435 (10,910 ) Inventory (144 ) 10,537 Prepaid expenses and other assets 960 297 Accounts payable (7,732 ) (34,688 ) Income taxes payable, net 1,841 1,250 Accrued liabilities (3,207 ) 1,436 Other long-term liabilities 170 172 Net cash provided by (used in) operating activities 18,307 (26,554 ) INVESTING ACTIVITIES: Purchases of property, plant and equipment (1,948 ) (919 ) Restricted cash (14 ) (1 ) Net cash used in investing activities (1,962 ) (920 ) FINANCING ACTIVITIES: Proceeds from debt — 20,641 Repayment of debt (700 ) (15,573 ) Proceeds from exercise of stock options 1,535 359 Excess tax benefits from stock-based compensation 882 784 Payment of obligations under capital leases (5 ) (9 ) Advances (payments) under receivable financing 736 (599 ) arrangements Contribution from noncontrolling interests — 168 Minimum tax withholding paid on behalf of an officer (651 ) (1,022 ) for restricted stock awards Net cash provided by financing activities 1,797 4,749 Effect of exchange rate fluctuations on cash 278 222 Net increase (decrease) in cash and cash equivalents 18,420 (22,503 ) Cash and cash equivalents at beginning of period 93,038 80,826 Cash and cash equivalents at end of period 111,458 58,323 Supplemental disclosure of cash flow information: Cash paid for interest 200 257 Cash paid for taxes, net of refunds 1,807 1,974 Non-cash investing and financing activities: Accrued costs for property, plant and equipment 1,836 1,166 purchases SUPER MICRO COMPUTER, INC RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share amounts) (Unaudited) Three Months Ended September 30, September 30, 2013 2012 GAAP GROSS PROFIT $ 46,792 $ 35,015 Add back stock-based compensation (c) 235 240 Non-GAAP GROSS PROFIT $ 47,027 $ 35,255 GAAP GROSS MARGIN 15.1 % 12.9 % Add back stock-based compensation (c) 0.1 % 0.1 % Non-GAAP GROSS MARGIN 15.2 % 13.0 % GAAP INCOME FROM OPERATIONS $ 12,043 $ 1,682 Add back stock-based compensation (c) 2,589 2,903 Non-GAAP INCOME FROM OPERATIONS $ 14,632 $ 4,585 GAAP NET INCOME $ 7,699 $ 899 Add back stock-based compensation (c) 2,589 2,903 Add back adjustments to tax benefit (414 ) (749 ) (provision) (d) Non-GAAP NET INCOME $ 9,874 $ 3,053 GAAP NET INCOME PER COMMON SHARE – BASIC (a) $ 0.18 $ 0.02 Add back stock-based compensation and 0.05 0.05 adjustments to tax provision (c) (d) Non-GAAP NET INCOME PER COMMON SHARE – BASIC $ 0.23 $ 0.07 (e) GAAP NET INCOME PER COMMON SHARE – DILUTED (b) $ 0.17 $ 0.02 Add back stock-based compensation and 0.05 0.05 adjustments to tax provision (c) (d) Non-GAAP NET INCOME PER COMMON SHARE – DILUTED $ 0.22 $ 0.07 (f) WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE BASIC –GAAP (g) 42,496 41,667 BASIC - Non-GAAP (h) 42,605 41,960 DILUTED – GAAP (g) 44,602 44,174 DILUTED - Non-GAAP (h) 44,984 44,638 (a) Approximately $20,000 and $6,000 of undistributed earnings allocated to participating securities were not included in the determination of GAAP basic net income per common share for the three months ended September 30, 2013 and 2012, respectively. (b) Approximately $19,000 and $6,000 of undistributed earnings allocated to participating securities were not included in the determination of GAAP diluted net income per common share for the three months ended September 30, 2013 and 2012, respectively. (c) Amortization of ASC Topic 718 stock-based compensation for the three months ended September 30, 2013 and 2012. (d) The provision of income taxes used in arriving at the non-GAAP net income was computed using an income tax rate of 31.7% and 31.3% the three months ended September 30, 2013 and 2012, respectively. (e) Approximately $25,000 and $21,000 of undistributed earnings allocated to participating securities were included in the determination of Non-GAAP basic net income per common share for the three months ended September 30, 2013 and 2012, respectively. (f) Approximately $24,000 and $20,000 of undistributed earnings allocated to participating securities were included in the determination of Non-GAAP diluted net income per common share for the three months ended September 30, 2013 and 2012, respectively. (g) 109,347 and 292,488 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 months ended September 30, 2013 and 2012, respectively. (h) 109,347 and 292,488 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 months ended September 30, 2013 and 2012, respectively. SMCI-F Contact: Super Micro Computer, Inc. Howard Hideshima, 408-503-8000 Chief Financial Officer email@example.com or Perry G. Hayes SVP, Investor Relations firstname.lastname@example.org
Super Micro Computer, Inc. Announces 1st Quarter 2014 Financial Results
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