EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Super Micro Computer, Inc. Announces 2nd Quarter Fiscal Year 2008 Financial Results

SAN JOSE, Calif., January 30, 2008 (BUSINESS WIRE) — Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced second quarter financial results for fiscal year 2008.

Q2 Fiscal Year 2008 Highlights

 

   

Record quarterly net sales of $136.9 million, up 16.1% and 20.5% from the first quarter fiscal year 2008 and year-ago second quarter in fiscal year 2007, respectively

 

   

Record net income of $7.7 million, or $0.20 per diluted share, up 33.3% and 56.1% from first quarter fiscal year 2008 and year-ago second quarter in fiscal year 2007, respectively

 

   

Server Solutions accounted for 42.4% of net sales

 

 

 

Introduction of Server/Workstation Product Line Based on Intel® 5100 (San Clemente) Chipset with minimum power consumption and whisper-quiet operation to as low as 28 dB

Q2 Fiscal 2008 Financial Results

Net sales for the second quarter ended December 31, 2007 were $136.9 million, up 20.5% from $113.6 million in the second quarter of fiscal year 2007. Net sales from server solutions comprised 42.4% of net sales, up from 35.4% in the second quarter of fiscal year 2007. On a sequential basis, net sales increased by 16.1% from $117.9 million in the first quarter of fiscal year 2008. The net sales growth was primarily due to growth in high efficiency power supply solutions and new products. No customer accounted for more than 10% of net sales during the quarter.

Net income for the second quarter of fiscal year 2008 was $7.7 million, or $0.20 per diluted share, compared to net income of $5.0 million, or $0.15 per diluted share, in the same period a year ago. Included in net income for the quarter was $0.9 million of stock-based compensation expense (pre-tax). Excluding stock-based compensation expense and the related tax effect, non-GAAP net income for the second quarter was $8.6 million, or $0.22 per diluted share, compared to non-GAAP net income of $5.3 million, or $0.16 per diluted share, in the same period a year ago. On a sequential basis, GAAP net income increased by $1.9 million, or $0.05 per diluted share and non-GAAP net income increased by $2.0 million, or $0.05 per diluted share.

Gross margin for the second quarter was 19.9%, compared to 16.7% in the same period a year ago. Non-GAAP gross margin for the second quarter was 20.0% compared to 16.8% in the same period a year ago. Second quarter of fiscal year 2008 gross margin was higher than the same period a year ago primarily due to higher revenue mix of server solutions and sales of new products. On a sequential basis, GAAP gross margin increased by 0.4% from 19.5% in the first quarter of fiscal 2008 and non-GAAP gross margin increased by 0.4% from 19.6% in the first quarter of fiscal 2008. The increase was primarily due to higher revenue from server solutions.

The Company ended the second quarter of fiscal year 2008 with $64.7 million in cash and cash equivalents and short-term investments compared to $65.9 million at the end of fourth quarter of fiscal year 2007.

6-Month Summary

Net sales for the six months ended December 31, 2007 were $254.9 million, up 25.1% from $203.8 million for the first six months of fiscal year 2007. Net income for the first six months of fiscal year 2008 was $13.5 million or $0.35 per diluted share, compared to $9.8 million or $0.30 per diluted share in the same period a year ago. Excluding stock based-compensation expense and related tax effect, non-GAAP net income for the first six months was $15.2 million or $0.39 per diluted share, compared to $10.6 million or $0.33 per diluted share in the same period a year ago.


Business Outlook & Management Commentary

The server industry has historically experienced seasonal revenue weakness in the quarters ending September 30 and March 31, our fiscal Q1 and Q3. However, the Company has also benefited from increased revenue traction following the introduction of new products. The Company expects that both trends will continue this quarter and that new products introduced during the prior quarters should offset in part the impact of seasonal weakness. As a result, the Company expects revenues to be in the range of $137 to $142 million for the third quarter of fiscal year 2008 ending March 31, 2008.

In addition, the Company re-confirms the guidance provided on November 14, 2007 regarding fiscal year 2008 revenue and net income. The Company continues to expect that as compared to fiscal 2007, for fiscal 2008, revenues from server products will grow by approximately 50%, total net sales will increase by a minimum of 30% and net income will increase by a minimum of 35%. 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.

“Supermicro had a great quarter with record revenue and net income. The broad base of products we offer and the ability to deliver application optimized solutions in an efficient and timely manner to our customers around the world drove these outstanding results,” said Charles Liang, President and Chief Executive Officer of Super Micro Computer. “We continue our global focus on optimizing our business through innovation and expansion.”

Conference Call Information

Super Micro Computer will discuss these financial results and its outlook for the second quarter of fiscal 2008 in a conference call at 2:00 p.m. PT, today. Those wishing to participate in the conference call should call 1-888-737-3705 (international callers dial 1-913-312-1442) a few minutes prior to the call’s start to register. A replay of the call will be available through 11:59 p.m. (Eastern Time) on Wednesday, February 6, by dialing 1-888-203-1112 (international callers dial 1-719-457-0820) and entering replay PIN 4322983. 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 market for X86 and blade servers, 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 distribution partners, 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 (loss) and net income (loss) 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.

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)

 

     December 31,
2007
         June 30,     
2007
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 45,400     $ 50,864  

Short-term investments

     19,331       15,055  

Accounts receivable, net

     45,774       33,426  

Inventories, net

     92,665       66,772  

Deferred income taxes - current

     7,273       5,630  

Prepaid expenses and other current assets

     2,055       1,759  
                

Total current assets

     212,498       173,506  

Property, plant and equipment, net

     44,398       31,089  

Deferred income taxes - noncurrent

     992       624  

Other assets

     273       364  
                

Total assets

   $ 258,161     $ 205,583  
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 94,614     $ 61,453  

Accrued liabilities

     13,015       14,074  

Income tax payable

     1,191       1,489  

Advances from receivable financing arrangements

     896       982  

Current portion of capital lease obligations

     69       118  

Current portion of long-term debt

     290       304  
                

Total current liabilities

     110,075       78,420  

Long-term capital lease obligations-net of current portion

     18       40  

Long-term debt-net of current portion

     10,158       11,251  

Other long-term liabilities

     3,933       —    
                

Total liabilities

     124,184       89,711  

Stockholders’ equity:

    

Common stock and additional paid-in capital

     63,345       58,239  

Deferred stock-based compensation

     (1,059 )     (1,500 )

Retained earnings

     71,691       59,133  
                

Total stockholders’ equity

     133,977       115,872  
                

Total liabilities and stockholders’ equity

   $ 258,161     $ 205,583  
                


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three Months Ended     Six Months Ended  
     December 31,
2007
    December 31,
2006
    December 31,
2007
    December 31,
2006
 

Net sales

   $ 136,933     $ 113,602     $ 254,882     $ 203,789  

Cost of sales

     109,678       94,587       204,582       166,789  
                                

Gross profit

     27,255       19,015       50,300       37,000  

Operating expenses:

        

Research and development

     6,987       5,557       13,693       10,494  

Sales and marketing

     4,560       3,126       8,289       5,483  

General and administrative

     3,472       2,908       6,896       5,511  

Reversal of litigation loss

     —         —         —         (120 )
                                

Total operating expenses

     15,019       11,591       28,878       21,368  

Income from operations

     12,236       7,424       21,422       15,632  

Interest income

     454       67       992       121  

Interest expense

     (248 )     (344 )     (500 )     (671 )
                                

Income before income taxes provision

     12,442       7,147       21,914       15,082  

Income tax provision

     4,702       2,189       8,367       5,315  
                                

Net income

   $ 7,740     $ 4,958     $ 13,547     $ 9,767  
                                

Net income per share:

        

Basic

   $ 0.25     $ 0.22     $ 0.44     $ 0.44  
                                

Diluted

   $ 0.20     $ 0.15     $ 0.35     $ 0.30  
                                

Shares used in per share calculation:

        

Basic

     30,817,552       22,212,156       30,556,084       22,201,438  
                                

Diluted

     38,741,151       32,390,310       38,683,142       32,340,044  
                                

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

 

     Three Months Ended    Six Months Ended
     December 31,
2007
   December 31,
2006
   December 31,
2007
   December 31,
2006

Cost of sales

   $ 118    $ 68    $ 230    $ 84

Research and development

     406      361      755      481

Sales and marketing

     148      136      292      189

General and administrative

     266      167      531      236


SUPER MICRO COMPUTER, INC

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(In thousands)

(Unaudited)

 

     Six Months Ended
December 31,
2007
    Six Months Ended
December 31,
2006
 

OPERATING ACTIVITIES:

    

Net income

   $ 13,547     $ 9,767  

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

    

Depreciation and amortization

     1,137       747  

Stock-based compensation expense

     1,808       990  

Allowance for doubtful accounts

     196       150  

Allowance for sales returns

     2,631       2,328  

Loss on disposal of property, plant and equipment

     —         2  

Deferred income taxes

     (2,011 )     (44 )

Excess tax benefits from stock-based compensation

     (2,418 )     (67 )

Gain on short-term investments

     (418 )     (1 )

Changes in operating assets and liabilities:

    

Accounts receivable, net

     (15,175 )     (11,385 )

Inventories, net

     (25,893 )     (17,052 )

Prepaid expenses and other current assets

     (259 )     (2,227 )

Other assets

     89       —    

Accounts payable

     31,275       24,073  

Income tax payable

     2,121       1,051  

Accrued litigation loss

     —         (575 )

Accrued liabilities

     (1,039 )     2,035  

Other long-term liabilities

     2,944       —    
                

Net cash provided by operating activities

     8,535       9,792  
                

INVESTING ACTIVITIES:

    

Proceeds from short-term investments

     17,480       —    

Purchases of short-term investments

     (21,375 )     —    

Purchases of property, plant and equipment

     (12,550 )     (1,884 )

Other assets

     (4 )     9  
                

Net cash used in investing activities

     (16,449 )     (1,875 )
                

FINANCING ACTIVITIES:

    

Repayment of long-term debt

     (1,107 )     (299 )

Proceeds from exercise of stock options

     1,320       77  

Excess tax benefits from stock-based compensation

     2,418       67  

Payment of obligations under capital leases

     (75 )     (86 )

Advances under receivable financing arrangements

     (86 )     146  

Payment of offering costs

     (20 )     (2,699 )
                

Net cash provided by (used in) financing activities

     2,450       (2,794 )
                

Net increase (decrease) in cash and cash equivalents

     (5,464 )     5,123  

Cash and cash equivalents at beginning of year

     50,864       16,509  
                

Cash and cash equivalents at end of year

   $ 45,400     $ 21,632  
                

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 500     $ 671  

Cash paid for taxes

   $ 5,054     $ 4,307  

Non-cash investing and financing activities:

    

Equipment purchased under capital leases

   $ 4     $ 109  

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

   $ 21     $ 106  

Accrued costs for property and equipment purchases

   $ 1,964     $ 459  

Accrued offering costs

   $ 297     $ 400  


SUPER MICRO COMPUTER, INC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three Months Ended     Six Months Ended  
     December 31,
2007
    December 31,
2006
    December 31,
2007
    December 31,
2006
 

GAAP GROSS PROFIT

   $ 27,255     $ 19,015     $ 50,300     $ 37,000  

Add back stock-based compensation (a)

     118       68       230       84  
                                

Non-GAAP GROSS PROFIT

   $ 27,373     $ 19,083     $ 50,530     $ 37,084  
                                

GAAP GROSS MARGIN

     19.9 %     16.7 %     19.7 %     18.2 %

Add back stock-based compensation (a)

     0.1 %     0.1 %     0.1 %     0.0 %
                                

Non-GAAP GROSS MARGIN

     20.0 %     16.8 %     19.8 %     18.2 %
                                

GAAP INCOME FROM OPERATIONS

   $ 12,236     $ 7,424     $ 21,422     $ 15,632  

Add back stock-based compensation (a)

     938       732       1,808       990  
                                

Non-GAAP INCOME FROM OPERATIONS

   $ 13,174     $ 8,156     $ 23,230     $ 16, 622  
                                

GAAP NET INCOME

   $ 7,740     $ 4,958     $ 13,547     $ 9,767  

Add back stock-based compensation (a)

     938       732       1,808       990  

Add back adjustments to tax provision (b)

     (120 )     (357 )     (168 )     (151 )
                                

Non-GAAP NET INCOME

   $ 8,558     $ 5,333     $ 15,187     $ 10,606  
                                

GAAP NET INCOME PER SHARE - BASIC

   $ 0.25     $ 0.22     $ 0.44     $ 0.44  

Add back stock-based compensation and adjustments to tax provision (a) (b)

     0.03       0.02       0.06       0.04  
                                

Non-GAAP NET INCOME PER SHARE - BASIC

   $ 0.28     $ 0.24     $ 0.50     $ 0.48  
                                

GAAP NET INCOME PER SHARE - DILUTED

   $ 0.20     $ 0.15     $ 0.35     $ 0.30  

Add back stock-based compensation and adjustments to tax provision (a) (b)

     0.02       0.01       0.04       0.03  
                                

Non-GAAP NET INCOME PER SHARE - DILUTED

   $ 0.22     $ 0.16     $ 0.39     $ 0.33  
                                

SHARES USED IN COMPUTING NET INCOME PER SHARE

        

BASIC - GAAP

     30,817,552       22,212,156       30,556,084       22,201,438  
                                

BASIC - Non-GAAP

     30,817,552       22,212,156       30,556,084       22,201,438  
                                

DILUTED - GAAP

     38,741,151       32,390,310       38,683,142       32,340,044  
                                

DILUTED - Non-GAAP

     38,942,446       32,548,155       38,899,565       32,515,063  
                                

 

(a) Amortization of SFAS No. 123R, APB 25 and SFAS No. 123 stock-based compensation for the three and six months ended December 31, 2007 and December 31, 2006.
(b) The provision of income taxes used in arriving at the non-GAAP net income was computed using an income tax rate of 36.0% and 32.3% for the three months ended December 31, 2007 and 2006, respectively and 36.0% and 34.0% for the six months ended December 31, 2007 and 2006, respectively.