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

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

SAN JOSE, Calif.--(BUSINESS WIRE)-- Super Micro Computer, Inc. (NAS: 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® (NAS: 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 debt

29,195

13,362

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' equity

351,252

338,351

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 development

18,824

15,657

37,045

29,481

Sales and marketing

7,945

8,032

16,711

15,742

General and administrative

5,745

5,207

12,091

9,785

Total operating expenses

32,514

28,896

65,847

55,008

Income from operations

7,608

13,718

9,290

27,232

Interest and other income, net

7

20

22

37

Interest expense

(152

)

(173

)

(307

)

(367

)

Income before income tax provision

7,463

13,565

9,005

26,902

Income tax provision

2,549

4,791

3,192

9,636

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 31,

December 31,

2012

2011

2012

2011

Cost of sales

$

224

$

200

$

464

$ 408

Research and development

1,632

1,328

3,262

2,600

Sales and marketing

389

362

793

640

General and administrative

664

617

1,293

1,189

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

)