EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Super Micro Computer, Inc. Announces 3rd Quarter Fiscal 2010 Financial Results

SAN JOSE, Calif., April 27, 2010 (BUSINESS WIRE) — Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced third quarter fiscal 2010 financial results for the quarter ended March 31, 2010.

Fiscal 3rd Quarter Highlights

 

  •  

Quarterly net sales of $189.3 million, up 4.0% from the second quarter of fiscal year 2010 and up 72.8% from the same quarter of last year.

 

  •  

Net income of $7.7 million, up 1.7% from the second quarter of fiscal year 2010 and up 528.2% from the same quarter of last year.

 

  •  

Gross margin of 15.5%, down from 16.7% in the second quarter of fiscal year 2010 and up from 14.9% from the same quarter of last year.

 

  •  

Server Solutions accounted for 33.6% of net sales compared with 36.0% in the second quarter of fiscal year 2010 and 39.1% in the same quarter of last year.

Net sales for the third quarter ended March 31, 2010 totaled $189.3 million, up 72.8% from $109.5 million in the third quarter of fiscal year 2009. No customer accounted for more than 10% of net sales during the quarter.

Net income for the third quarter of fiscal year 2010 was $7.7 million or $0.18 per diluted share, an increase of 528.2% from the net income of $1.2 million, or $0.03 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 (pre-tax). Excluding stock-based compensation expense and the related tax effect, non-GAAP net income for the third quarter was $8.9 million, or $0.21 per diluted share, compared to non-GAAP net income of $2.4 million, or $0.06 per diluted share, in the same quarter of last year. On a sequential basis, non-GAAP net income decreased from the second quarter of fiscal year 2010 by $0.3 million or $0.01 per diluted share.

Gross margin for the third quarter was 15.5%, compared to 14.9% in the same period a year ago. Non-GAAP gross margin for the third quarter was 15.5% compared to 15.0% in the same period a year ago. Non-GAAP gross margin was 16.7% for the second quarter of fiscal year 2010.

The Company’s cash and cash equivalents, short and long term investments at March 31, 2010 were $73.2 million compared to $88.9 million at December 31, 2009. Free cash flow in the nine months ended March 31, 2010 was ($11.0) million. The Company used cash primarily to purchase inventory to support the growth of the Company.

Business Outlook & Management Commentary

The Company expects net sales of $192 million to $202 million for the fourth quarter of fiscal year 2010 ending June 30, 2010. This quarter we have a good boost because of the new product transition which started last quarter. In addition, this is historically a strong seasonal quarter; the Company expects non-GAAP earnings per diluted share of approximately $0.20 to $0.23 for the fourth quarter.

“We achieved another record high of quarterly revenues, which is the 4th straight quarter of increasing revenues, making the first 9 months of fiscal 2010 the strongest performance in our history. Supermicro has strong momentum going into the June quarter because of our growing brand strength, important OEM wins, new Westmere and G34 product launches, and growing revenue opportunities in Europe and Asia. Our global expansion to meet our worldwide demand now includes production capacity in Europe as well as our first production in Taiwan, which was added during the quarter. We expect our strong growth trend to continue into the June quarter and beyond,” said Charles Liang, CEO and President.

It is currently expected that the outlook will not be updated until the Company’s next quarterly earnings announcement, notwithstanding subsequent developments. 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 888-256-9119 (international callers dial 913-312-1489) 10 minutes prior. A recording of the conference will be available until 11:59 pm ET on Tuesday, May 11, 2010 by dialing 888-203-1112 (international callers dial 719-457-0820) and entering replay PIN4788740. 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. 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.

Supermicro, the leader in server technology innovation and green computing, provides customers around the world with application-optimized server, workstation, blade, storage and GPU systems. Based on its advanced Server Building Block Solutions, Supermicro offers the most optimized selection for IT, datacenter and HPC deployments. The company’s system architecture innovations include the Twin server, double-sided storage and SuperBlade® product families. Offering the most comprehensive product lines in the industry, Supermicro provides businesses of all sizes with energy-efficient, earth-friendly solutions that deliver unmatched performance and value. 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.

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     March 31,
2010		     June 30,
2009		  

ASSETS

     

Current assets:

     

Cash and cash equivalents

    $ 66,731      $ 70,295   

Short-term investments

      445        347   

Accounts receivable, net

      63,868        45,709   

Inventories, net

      144,412        90,044   

Deferred income taxes – current

      9,250        8,644   

Prepaid income taxes

      3,620        3,256   

Prepaid expenses and other current assets

      1,939        1,723   
                

Total current assets

      290,265        220,018   

Long-term investments

      6,004        14,355   

Property, plant and equipment, net

      44,396        44,960   

Deferred income taxes – noncurrent

      2,746        1,917   

Restricted assets

      222        1,766   

Other assets

      138        119   
                

Total assets

    $ 343,771      $ 283,135   
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

    $ 103,491      $ 73,532   

Accrued liabilities

      18,198        13,918   

Income taxes payable

      132        —     

Advances from receivable financing arrangements

      1,690        1,220   

Current portion of capital lease obligations

      35        42   

Current portion of long-term debt

      —          319   
                

Total current liabilities

      123,546        89,031   

Long-term capital lease obligations-net of current portion

      43        66   

Long-term debt-net of current portion

      —          9,675   

Other long-term liabilities

      7,753        5,741   
                

Total liabilities

      131,342        104,513   

Stockholders’ equity:

     

Common stock and additional paid-in capital

      95,974        81,893   

Deferred stock-based compensation

      —          (110 ) 

Treasury stock (at cost)

      (2,030 )      (2,030 ) 

Accumulated other comprehensive loss

      (385 )      (801 ) 

Retained earnings

      118,870        99,670   
                

Total stockholders’ equity

      212,429        178,622   
                

Total liabilities and stockholders’ equity

    $ 343,771      $ 283,135   
                

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     March 31,
2010		     March 31,
2009		     March 31,
2010		     March 31,
2009		  

Net sales

    $ 189,276      $ 109,540      $ 519,774      $ 382,156   

Cost of sales

      160,011        93,213        435,691        313,901   
                                

Gross profit

      29,265        16,327        84,083        68,255   

Operating expenses:

         

Research and development

      9,757        8,632        27,138        25,678   

Sales and marketing

      5,513        3,999        15,185        13,047   

General and administrative

      3,461        3,281        11,310        10,001   

Provision for litigation loss

      —          —          1,089        —     
                                

Total operating expenses

      18,731        15,912        54,722        48,726   

Income from operations

      10,534        415        29,361        19,529   

Interest income

      19        50        77        422   

Interest expense

      (66 )      (208 )      (289 )      (710 ) 
                                

Income before income tax provision

      10,487        257        29,149        19,241   

Income tax provision

      2,754        (974 )      9,949        5,492   
                                

Net income

    $ 7,733      $ 1,231      $ 19,200      $ 13,749   
                                

Net income per common share:

         

Basic

    $ 0.21      $ 0.03      $ 0.53      $ 0.39   
                                

Diluted

    $ 0.18      $ 0.03      $ 0.47      $ 0.35   
                                

Weighted-average shares used in calculation of net income per common share:

         

Basic (a)

      36,219,222        34,684,369        35,563,187        34,046,037   
                                

Diluted (b)

      41,733,900        38,125,658        40,212,441        38,651,542   
                                

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

 

  

     Three Months Ended     Nine Months Ended  
     March 31,
2010		     March 31,
2009		     March 31,
2010		     March 31,
2009		  

Cost of sales

    $ 108      $ 145      $ 410      $ 421   

Research and development

      901        675        2,327        1,871   

Sales and marketing

      172        201        625        589   

General and administrative

      359        412        1,416        1,097   

SUPER MICRO COMPUTER, INC

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(In thousands)

(Unaudited)

 

     Nine Months Ended
March 31,		  
     2010     2009  

OPERATING ACTIVITIES:

     

Net income

    $ 19,200      $ 13,749   

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

     

Depreciation and amortization

      3,416        2,643   

Stock-based compensation expense

      4,778        3,978   

Excess tax benefits from stock-based compensation

      (1,361 )      —     

Allowance for doubtful accounts

      426        276   

Allowance for sales returns

      3,875        3,343   

Provision for inventory

      1,809        815   

Loss on disposal of property and equipment

      1        18   

Deferred income taxes

      (1,705 )      (151 ) 

Gain on short-term investments

      (1 )      —     

Changes in operating assets and liabilities:

     

Accounts receivable, net

      (22,460 )      3,111   

Inventories

      (56,177 )      1,939   

Prepaid expenses and other assets

      (339 )      352   

Accounts payable

      29,995        (20,212 ) 

Prepaid income taxes/income taxes payable

      4,069        2,290   

Accrued liabilities

      4,280        1,494   

Other long-term liabilities

      2,012        (197 ) 
                

Net cash provided by (used in) operating activities

      (8,182 )      13,448   
                

INVESTING ACTIVITIES:

     

Proceeds from investments

      8,940        885   

Purchases of property, plant and equipment

      (2,785 )      (2,759 ) 

Restricted assets

      1,544        (32 ) 
                

Net cash provided by (used in) investing activities

      7,699        (1,906 ) 
                

FINANCING ACTIVITIES:

     

Repayment of long-term debt

      (9,994 )      (209 ) 

Proceeds from exercise of stock options

      5,112        1,935   

Excess tax benefits from stock-based compensation

      1,361        —     

Payment of obligations under capital leases

      (30 )      (46 ) 

Advances under receivable financing arrangements

      470        29   

Payment to acquire treasury stock

      —          (2,030 ) 
                

Net cash used in financing activities

      (3,081 )      (321 ) 
                

Net increase (decrease) in cash and cash equivalents

      (3,564 )      11,221   

Cash and cash equivalents at beginning of period

      70,295        51,481   
                

Cash and cash equivalents at end of period

    $ 66,731      $ 62,702   
                

Supplemental disclosure of cash flow information:

     

Cash paid for interest

    $ 290      $ 691   

Cash paid for taxes, net of refunds

    $ 6,036      $ 3,826   

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

    $ 411      $ 720   

Changes in fair values of investments

    $ 686      $ (577 ) 

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,
2010		     March 31,
2009		     March 31,
2010		     March 31,
2009		  

GAAP GROSS PROFIT

    $ 29,265      $ 16,327      $ 84,083      $ 68,255   

Add back stock-based compensation (c)

      108        145        410        421   
                                

Non-GAAP GROSS PROFIT

    $ 29,373      $ 16,472      $ 84,493      $ 68,676   
                                

GAAP GROSS MARGIN

      15.5 %      14.9 %      16.2 %      17.9 % 

Add back stock-based compensation (c)

      0.0 %      0.1 %      0.1 %      0.1 % 
                                

Non-GAAP GROSS MARGIN

      15.5 %      15.0 %      16.3 %      18.0 % 
                                

GAAP INCOME FROM OPERATIONS

    $ 10,534      $ 415      $ 29,361      $ 19,529   

Add back stock-based compensation (c)

      1,540        1,433        4,778        3,978   

Add back provision for litigation loss (d)

      —          —          1,089        —     
                                

Non-GAAP INCOME FROM OPERATIONS

    $ 12,074      $ 1,848      $ 35,228      $ 23,507   
                                

GAAP NET INCOME

    $ 7,733      $ 1,231      $ 19,200      $ 13,749   

Add back stock-based compensation (c)

      1,540        1,433        4,778        3,978   

Add back provision for litigation loss (d)

      —          —          1,089        —     

Add back adjustments to tax provision (e)

      (339 )      (226 )      (1,073 )      (232 ) 
                                

Non-GAAP NET INCOME

    $ 8,934      $ 2,438      $ 23,994      $ 17,495   
                                

GAAP NET INCOME PER COMMON SHARE – BASIC (a)

    $ 0.21      $ 0.03      $ 0.53      $ 0.39   

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

      0.03        0.04        0.13        0.12   
                                

Non-GAAP NET INCOME PER COMMON SHARE – BASIC (f)

    $ 0.24      $ 0.07      $ 0.66      $ 0.51   
                                

GAAP NET INCOME PER COMMON SHARE – DILUTED (b)

    $ 0.18      $ 0.03      $ 0.47      $ 0.35   

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

      0.03        0.03        0.10        0.10   
                                

Non-GAAP NET INCOME PER COMMON SHARE – DILUTED (g)

    $ 0.21      $ 0.06      $ 0.57      $ 0.45   
                                

WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE

         

BASIC – GAAP

      36,219,222        34,684,369        35,563,187        34,046,037   
                                

BASIC – Non-GAAP

      36,219,222        34,684,369        35,563,187        34,046,037   
                                

DILUTED – GAAP

      41,733,900        38,125,658        40,212,441        38,651,542   
                                

DILUTED – Non-GAAP

      42,452,248        38,893,519        40,901,106        39,292,542   
                                

 

(a) Approximately $178,000 and $451,000 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, 2010, respectively, and approximately $40,000 and $331,000 for the three and nine months ended March 31, 2009, respectively.
(b) Approximately $155,000 and $400,000 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, 2010, respectively, and approximately $37,000 and $293,000 for the three and nine months ended March 31, 2009, respectively.
(c) Amortization of SFAS No. 123R, APB 25 and SFAS No. 123 stock-based compensation for the three and nine months ended March 31, 2010 and 2009.
(d) Provision for litigation loss related to a commercial lawsuit filed in 1999.
(e) The provision (benefits) of income taxes used in arriving at the non-GAAP net income was computed using an income tax rate of 25.7% and (44.3)% for the three months ended March 31, 2010 and 2009, respectively, and 31.5% and 24.7% for the nine months ended March 31, 2010 and 2009, respectively.
(f) Approximately $206,000 and $564,000 of undistributed earnings allocated to participating securities were not included in the determination of Non-GAAP basic net income per common share for the three and nine months ended March 31, 2010, respectively.
(g) Approximately $176,000 and $492,000 of undistributed earnings allocated to participating securities were not included in the determination of Non-GAAP diluted net income per common share for the three and nine months ended March 31, 2010, 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