Super Micro Computer, Inc. Announces 1st Quarter 2014 Financial Results

  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
ir@supermicro.com
or
Perry G. Hayes
SVP, Investor Relations
ir@supermicro.com
 
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