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8-K - CURRENT REPORT ON FORM 8-K - Super Micro Computer, Inc.d8k.htm
EX-99.2 - SLIDES FOR SUPER MICRO COMPUTER, INC.'S FIRST QUARTER EARNINGS PRESENTATION - Super Micro Computer, Inc.dex992.htm

Exhibit 99.1

Super Micro Computer, Inc. Announces 1st Quarter Fiscal 2010 Financial Results

SAN JOSE, Calif., October 27, 2009 (BUSINESS WIRE) — Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced first quarter fiscal 2010 financial results for the quarter ended September 30, 2009.

Fiscal 1st Quarter Highlights

 

   

Quarterly net sales of $148.5 million, up 20.3% from the fourth quarter of fiscal year 2009 and up 3.1% from the same quarter of last year.

 

   

Net income of $3.9 million, up 63.8% from the fourth quarter of fiscal year 2009 and down 46.1% from the same quarter of last year.

 

   

Gross margin of 16.5%, comparable to 16.6% in the fourth quarter of fiscal year 2009 and down from 19.3% from the same quarter of last year.

 

   

Server Solutions accounted for 34.5% of net sales compared with 36.7% in the fourth quarter of fiscal year 2009 and 38.7% in the same quarter of last year.

Net sales for the first quarter ended September 30, 2009 totaled $148.5 million, up 3.1% from $144.1 million in the first quarter of fiscal year 2009. No customer accounted for more than 10% of net sales during the quarter.

Net income for the first quarter of fiscal year 2010 was $3.9 million or $0.10 per diluted share, a decrease of 46.1% from the net income of $7.2 million, or $0.18 per diluted share in the same period a year ago. Included in net income for the quarter were $1.5 million of stock-based compensation expense and $1.1 million of a provision for litigation loss (both pre-tax). The litigation loss relates to an adverse judgment from the Paris Court of Appeals regarding the previously disclosed claim from Digitechnic. Excluding stock-based compensation expense, provision for litigation loss and the related tax effect, non-GAAP net income for the first quarter was $5.8 million, or $0.15 per diluted share, compared to non-GAAP net income of $8.3 million, or $0.21 per diluted share, in the same quarter of last year. On a sequential basis, non-GAAP net income increased from the fourth quarter of fiscal year 2009 by $2.0 million or $0.05 per diluted share.

Gross margin for the first quarter was 16.5%, compared to 19.3% in the same period a year ago. Non-GAAP gross margin for the first quarter was 16.6% compared to 19.4% in the same period a year ago. Non-GAAP gross margin was 16.7% for the fourth quarter of fiscal year 2009.

The Company’s cash and cash equivalents, short and long term investments at September 30, 2009 were $85.2 million compared to $85.0 million at June 30, 2009. The Company repaid $10.0 million of long term debt during the first quarter of fiscal 2010. Free cash flow in the three months ended September 30, 2009 was $9.0 million.

Business Outlook & Management Commentary

The Company expects net sales of $155 million to $165 million for the second quarter of fiscal year 2010 ending December 31, 2009. Supermicro has historically seen a seasonally higher rate of growth in net sales in the fiscal second quarter. This year we expect sequential growth, because of our very strong new product innovations, additional new market segment wins and a recovering economy. The Company expects non-GAAP earnings per diluted share of approximately $0.15 to $0.18 for the second quarter.

“In the first quarter of fiscal year 2010, we grew 20% from the quarter before, rebounding strongly with the global economic recovery, and our outstanding new product architectures have started high volume production, which include 2U Twin², multi-TeraFLOPS GPU systems and others. Our performance was based on our persistent R&D investment, continuing technology innovation, and the ability of providing customers with winning products that help them improve performance, power efficiency, and the total cost of ownership, allowing us to build our brand and grow our business.” said Charles Liang, President and Chief Executive Officer of Super Micro Computer. “We are proud of the brand that Supermicro has developed into a technology leader, and we are confident that our industry leading architecture designs for systems and for blades will keep us on a strong growth trend going forward.”

In addition to the outstanding technology achievements, Supermicro has increased the size of the logistics center and just established integration facilities in Europe. Expanding and establishing these capabilities allow the company to reduce its operation and shipping expenses and to grow European business by meeting customer requirements faster.

It is currently expected that the outlook will not be updated until the release of 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. Those wishing to participate in the conference call should call 888-791-4309 (international callers dial 913-312-0826) 10 minutes prior to registering. A replay of the call will be available until 11:59 pm ET on Tuesday, November 10, 2009 by dialing 888-203-1112 (international callers dial 719-457-0820) and entering replay PIN 7248744. The live web cast and replay of the call will be available on the Investor Relations section at www.supermicro.com, with the replay beginning approximately two hours after the conclusion of the call and 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, a provision for litigation loss 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.

Established in 1993, Supermicro emphasizes superior product design and uncompromising quality control to produce industry-leading serverboards, chassis and server systems. These mission-critical Server Building Block solutions provide benefits across many environments, including data center deployment, high-performance computing, high-end workstations, storage networks and standalone server installations. For more information on Supermicro’s complete line of advanced motherboards, SuperServers, and optimized chassis, visit www.Supermicro.com, email Marketing@Supermicro.com or call the San Jose, CA headquarters at
+1 408-503-8000.


SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     September 30,
2009
    June 30,
2009
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 73,598      $ 70,295   

Short-term investments

     444        347   

Accounts receivable, net

     50,102        45,709   

Inventories, net

     100,061        90,044   

Deferred income taxes – current

     9,102        8,644   

Prepaid income taxes

     2,121        3,256   

Prepaid expenses and other current assets

     1,748        1,723   
                

Total current assets

     237,176        220,018   

Long-term investments

     11,157        14,355   

Property, plant and equipment, net

     44,556        44,960   

Deferred income taxes – noncurrent

     1,548        1,917   

Restricted assets

     1,770        1,766   

Other assets

     146        119   
                

Total assets

   $ 296,353      $ 283,135   
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 86,349      $ 73,532   

Accrued liabilities

     15,344        13,918   

Accrued litigation loss

     1,089        —     

Advances from receivable financing arrangements

     1,401        1,220   

Current portion of capital lease obligations

     39        42   

Current portion of long-term debt

     —          319   
                

Total current liabilities

     104,222        89,031   

Long-term capital lease obligations-net of current portion

     59        66   

Long-term debt-net of current portion

     —          9,675   

Other long-term liabilities

     6,138        5,741   
                

Total liabilities

     110,419        104,513   

Stockholders’ equity:

    

Common stock and additional paid-in capital

     85,067        81,893   

Deferred stock-based compensation

     (40     (110

Treasury stock (at cost)

     (2,030     (2,030

Accumulated other comprehensive loss

     (596     (801

Retained earnings

     103,533        99,670   
                

Total stockholders’ equity

     185,934        178,622   
                

Total liabilities and stockholders’ equity

   $ 296,353      $ 283,135   
                


SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three Months Ended  
     September 30,
2009
    September 30,
2008
 

Net sales

   $ 148,521      $ 144,051   

Cost of sales

     124,012        116,215   
                

Gross profit

     24,509        27,836   

Operating expenses:

    

Research and development

     8,627        8,085   

Sales and marketing

     4,534        4,756   

General and administrative

     3,799        3,155   

Provision for litigation loss

     1,089        —     
                

Total operating expenses

     18,049        15,996   

Income from operations

     6,460        11,840   

Interest income

     32        218   

Interest expense

     (133     (237
                

Income before income tax provision

     6,359        11,821   

Income tax provision

     2,496        4,649   
                

Net income

   $ 3,863      $ 7,172   
                

Net income per share:

    

Basic

   $ 0.11      $ 0.22   
                

Diluted

   $ 0.10      $ 0.18   
                

Shares used in per share calculation:

    

Basic

     34,945,516        33,028,294   
                

Diluted

     39,875,696        39,298,993   
                

Stock-based compensation is included in the following cost and expense categories by period (in thousands):

 

  

     Three Months Ended  
     September 30,
2009
    September 30,
2008
 

Cost of sales

   $ 144      $ 133   

Research and development

     670        551   

Sales and marketing

     206        191   

General and administrative

     507        334   


SUPER MICRO COMPUTER, INC

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(In thousands)

(Unaudited)

 

     Three Months Ended
September 30,
 
     2009     2008  

OPERATING ACTIVITIES:

    

Net income

   $ 3,863      $ 7,172   

Reconciliation of net income to net cash provided by operating activities:

    

Depreciation and amortization

     1,121        812   

Stock-based compensation expense

     1,527        1,209   

Allowance for doubtful accounts

     41        3   

Allowance for sales returns

     931        1,569   

Provision for inventory

     266        575   

Deferred income taxes

     (223     15   

Changes in operating assets and liabilities:

    

Accounts receivable, net

     (5,365     1,729   

Inventories

     (10,283     (15,745

Prepaid expenses and other assets

     (156     210   

Accounts payable

     12,876        6,109   

Prepaid income taxes/income taxes payable

     2,150        4,450   

Accrued litigation loss

     1,089        —     

Accrued liabilities

     1,425        4,761   

Other long-term liabilities

     397        (163
                

Net cash provided by operating activities

     9,659        12,706   
                

INVESTING ACTIVITIES:

    

Proceeds from investments

     3,440        850   

Purchases of property, plant and equipment

     (672     (1,425

Restricted assets

     (4     (43
                

Net cash provided by (used in) investing activities

     2,764        (618
                

FINANCING ACTIVITIES:

    

Repayment of long-term debt

     (9,994     (74

Proceeds from exercise of stock options

     703        1,037   

Payment of obligations under capital leases

     (10     (23

Advances under receivable financing arrangements

     181        265   
                

Net cash provided by (used in) financing activities

     (9,120     1,205   
                

Net increase in cash and cash equivalents

     3,303        13,293   

Cash and cash equivalents at beginning of year

     70,295        51,481   
                

Cash and cash equivalents at end of year

   $ 73,598      $ 64,774   
                

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 133      $ 237   

Cash paid for taxes, net of refunds

   $ 413      $ 359   

Non-cash investing and financing activities:

    

Reversal of deferred stock-based compensation for cancellation of stock options

   $ —        $ 3   

Accrued costs for property, plant and equipment purchases

   $ 379      $ 456   

Changes in fair values of investments

   $ 339      $ (153


SUPER MICRO COMPUTER, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three Months Ended
September 30,
 
     2009     2008  

GAAP GROSS PROFIT

   $ 24,509      $ 27,836   

Add back stock-based compensation (a)

     144        133   
                

Non-GAAP GROSS PROFIT

   $ 24,653      $ 27,969   
                

GAAP GROSS MARGIN

     16.5     19.3

Add back stock-based compensation (a)

     0.1     0.1
                

Non-GAAP GROSS MARGIN

     16.6     19.4
                

GAAP INCOME FROM OPERATIONS

   $ 6,460      $ 11,840   

Add back stock-based compensation (a)

     1,527        1,209   

Add back provision for litigation loss (b)

     1,089        —     
                

Non-GAAP INCOME FROM OPERATIONS

   $ 9,076      $ 13,049   
                

GAAP NET INCOME

   $ 3,863      $ 7,172   

Add back stock-based compensation (a)

     1,527        1,209   

Add back provision for litigation loss (b)

     1,089        —     

Add back adjustments to tax provision (c)

     (650     (52
                

Non-GAAP NET INCOME

   $ 5,829      $ 8,329   
                

GAAP NET INCOME PER SHARE – BASIC

   $ 0.11      $ 0.22   

Add back stock-based compensation, provision for litigation loss and adjustments to tax provision (a) (b) (c)

     0.06        0.03   
                

Non-GAAP NET INCOME PER SHARE – BASIC

   $ 0.17      $ 0.25   
                

GAAP NET INCOME PER SHARE – DILUTED

   $ 0.10      $ 0.18   

Add back stock-based compensation, provision for litigation loss and adjustments to tax provision (a) (b) (c)

     0.05        0.03   
                

Non-GAAP NET INCOME PER SHARE – DILUTED

   $ 0.15      $ 0.21   
                

SHARES USED IN COMPUTING NET INCOME PER SHARE

    

BASIC – GAAP

     34,945,516        33,028,294   
                

BASIC – Non-GAAP

     34,945,516        33,028,294   
                

DILUTED – GAAP

     39,875,696        39,298,993   
                

DILUTED – Non-GAAP

     40,140,358        39,559,095   
                

 

(a) Amortization of SFAS No. 123R, APB 25 and SFAS No. 123 stock-based compensation for the three months ended September 30, 2009 and 2008.
(b) Provision for litigation loss related to a commercial lawsuit filed in 1999
(c) The provision of income taxes used in arriving at the non-GAAP net income was computed using an income tax rate of 35.1% and 36.1% for the three months ended September 30, 2009 and 2008, respectively.


SMCI-F

SOURCE: Super Micro Computer, Inc.

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