Super Micro Computer, Inc. Logo

Print Print page   Email Email page   PDF Download PDF
« Previous Release | Next Release »



Super Micro Computer, Inc. Announces 4th Quarter 2016 Financial Results

SAN JOSE, Calif.--(BUSINESS WIRE)-- Super Micro Computer, Inc. (NASDAQ:SMCI), a global leader in high-performance, high-efficiency server, storage technology and green computing, today announced fourth quarter and full-year financial results for the fiscal year ended June 30, 2016. The final results are in line with the preliminary results announced by the Company on July 18, 2016.

Fiscal 4th Quarter Highlights

Net sales for the fourth quarter ended June 30, 2016 totaled $524.3 million, down 1.6% from $532.7 million in the third quarter of fiscal year 2016. No customer accounted for more than 10% of net sales during the quarter ended June 30, 2016.

GAAP net income for the fourth quarter of fiscal year 2016 was $7.0 million or $0.13 per diluted share, a decrease of 73.9% from net income of $26.7 million, or $0.51 per diluted share in the same period a year ago. Included in net income for the quarter is $4.4 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the fourth quarter was $10.4 million, or $0.20 per diluted share, compared to non-GAAP net income of $30.0 million, or $0.57 per diluted share, in the same quarter of the prior year. On a sequential basis, non-GAAP net income decreased from the third quarter of fiscal year 2016 by $8.6 million or $0.16 per diluted share.

GAAP gross margin for the fourth quarter was 14.1% compared to 15.6% in the same period a year ago. Non-GAAP gross margin for the fourth quarter was 14.1% compared to 15.7% in the same period a year ago. GAAP and Non-GAAP gross margin for the third quarter of fiscal year 2016 were both 14.9%.

The GAAP income tax provision was $4.5 million or 39.0% of income before tax provision compared to $13.8 million or 34.1% in the same period a year ago and $7.4 million or 30.7% in the third quarter of fiscal year 2016. The effective tax rate for the fourth quarter of fiscal year 2016 was higher due to higher tax expenses associated with the implementation of the Company's new global corporate structure on May 1, 2016.

The Company's cash and cash equivalents and short and long term investments at June 30, 2016 were $183.7 million compared to $98.1 million at June 30, 2015. Free cash flow for the year ended June 30, 2016 was $73.4 million, primarily due to an increase in the Company's cash provided by operating activities and partially offset by the cash used in the development and construction of improvements on the Company's properties.

Fiscal Year 2016 Summary

Net sales for the fiscal year ended June 30, 2016 were $2,215.6 million, up 11.3% from $1,991.2 million for the fiscal year ended June 30, 2015. GAAP net income for fiscal year 2016 decreased to $72.0 million, or $1.39 per diluted share, a decrease of 29.3% from $101.9 million, or $2.03 per diluted share, for fiscal year 2015. Included in net income for the fiscal year ended June 30, 2016 is $16.1 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the fiscal year 2016 was $83.8 million or $1.59 per diluted share, a decrease of 24.9% compared to $111.6 million or $2.15 per diluted share for fiscal year 2015.

Business Outlook & Management Commentary

The Company expects net sales of $470 million to $550 million for the first quarter of fiscal year 2017 ending September 30, 2016. The Company expects non-GAAP earnings per diluted share of approximately $0.15 to $0.30 for the first quarter.

"As previously announced, this quarter our results were below expectations due to reduced demand from large datacenter customers and issues related to a global SAP and tax reorganization implementation that impacted our execution and pricing flexibility," said Charles Liang, Chairman and Chief Executive Officer. "Our core strategy will be to continue to grow our technology leadership by offering the broadest array of first to market innovations in server, storage, cloud and IoT, by delivering leading architectures that leverage our building block solutions and partner strategy to provide total solutions with software and service. At the same time, we will take actions to leverage our capacity and improve operational efficiency to become more flexible and competitive in winning new business. By offering the best value for innovation and emphasizing strategic customer relationships, we are confident that we can achieve stronger growth and improve financial performance."

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, please call 1-888-455-2263 (International callers dial 1-719-325-2177) 10 minutes prior. A recording of the conference will be available until 11:59 pm (Eastern Time) on Thursday, August 18, 2016, by dialing 1-877-870-5176 (International callers dial 1-858-384-5517) and entering replay PIN 1154709. 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 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®, a global leader in high-performance, high-efficiency server technology and innovation is a premier provider of end-to-end green computing solutions for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermicro's advanced Server Building Block Solutions® offer a vast array of components for building energy-efficient, application-optimized, computing solutions. Architecture innovations include Twin, TwinPro, FatTwin™, Ultra Series, MicroCloud, MicroBlade, SuperBlade®, Simply Double, Double-sided Storage®, Battery Backup Power (BBP®) modules and WIO/UIO. Products include servers, blades, GPU systems, workstations, motherboards, chassis, power supplies, storage, networking, server management software and SuperRack® cabinets/accessories delivering unrivaled performance and value.

Founded in 1993 and headquartered in San Jose, California, Supermicro is committed to protecting the environment through its "We Keep IT Green®" initiative. The Company has global logistics and operations centers in Silicon Valley (USA), the Netherlands (Europe) and its Science & Technology Park in Taiwan (Asia).

Supermicro, FatTwin, TwinPro, SuperBlade, Double-Sided Storage, BBP, SuperRack, 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)
    June 30,     June 30,
2016 2015
ASSETS
Current assets:
Cash and cash equivalents $ 180,964 $ 95,442
Accounts receivable, net 288,941 322,594
Inventory 448,980 463,493
Deferred income taxes - current

17,863
Prepaid income taxes 5,682 7,507
Prepaid expenses and other current assets   13,435     7,516  
Total current assets

938,002

914,415
Long-term investments 2,643 2,633
Property, plant and equipment, net 187,949 163,038
Deferred income taxes - noncurrent

28,460

4,497
Other assets   8,546     5,226  
Total assets $ 1,165,600   $ 1,089,809  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 249,239 $ 299,774
Accrued liabilities 55,618 46,743
Income taxes payable 5,172 14,111
Short-term debt and current portion of long-term debt   53,589     93,479  
Total current liabilities 363,618 454,107
Long term debt, net of current portion 40,000 933
Other long-term liabilities   40,603     15,684  
Total liabilities 444,221 470,724
Stockholders' equity:
Common stock and additional paid-in capital 277,339 247,081
Treasury stock (at cost) (2,030 ) (2,030 )
Accumulated other comprehensive loss (85 ) (80 )
Retained earnings   445,971     373,950  
Total Super Micro Computer Inc. stockholders' equity 721,195 618,921
Noncontrolling interest   184     164  
Total stockholders' equity   721,379     619,085  
Total liabilities and stockholders' equity $ 1,165,600   $ 1,089,809  
 
 
SUPER MICRO COMPUTER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
    Three Months Ended     Fiscal Year Ended
June 30, June 30,
2016     2015 2016     2015
Net sales $ 524,270 $ 573,594 $ 2,215,573 $ 1,991,155
Cost of sales   450,474     483,828     1,884,048     1,670,924  
Gross profit 73,796 89,766 331,525 320,231
Operating expenses:
Research and development 34,148 27,741 123,994 100,257
Sales and marketing 17,664 14,195 62,841 48,851
General and administrative   10,145     7,043     37,840     24,377  
Total operating expenses   61,957     48,979     224,675     173,485  
Income from operations 11,839 40,787 106,850 146,746
Interest and other income, net 40 23 171 115
Interest expense   (453 )   (309 )   (1,594 )   (965 )
Income before income tax provision 11,426 40,501 105,427 145,896
Income tax provision   4,455     13,799     33,406     44,033  
Net income $ 6,971   $ 26,702   $ 72,021   $ 101,863  
Net income per common share:
Basic $ 0.14   $ 0.56   $ 1.50   $ 2.19  
Diluted $ 0.13   $ 0.51   $ 1.39   $ 2.03  
Weighted-average shares used in calculation of net income per common share:
Basic   48,463     47,327     47,917     46,434  
Diluted   52,274     51,990     51,836     50,094  
 
 
Stock-based compensation is included in the following cost and expense categories by period (in thousands):
 
Three Months Ended Fiscal Year Ended
June 30, June 30,
2016 2015 2016 2015
Cost of sales $ 306 $ 250 $ 1,098 $ 901
Research and development 2,755 2,495 10,178 8,643
Sales and marketing 511 405 1,841 1,553
General and administrative 791 822 3,014 2,602
 
 
SUPER MICRO COMPUTER, INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(In thousands)
(Unaudited)
    Fiscal Year Ended
June 30,
2016     2015
OPERATING ACTIVITIES:
Net income $ 72,021 $ 101,863
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization 13,282 8,133
Stock-based compensation expense 16,131 13,699
Excess tax benefits from stock-based compensation (2,855 ) (8,089 )
Allowance for doubtful accounts 1,278 326
Provision for inventory 9,313 5,928
Exchange gain (1,233 ) (675 )
Deferred income taxes, net (6,133 ) 632
Changes in operating assets and liabilities:
Accounts receivable, net 32,375 (110,182 )
Inventory 5,200 (153,584 )
Prepaid expenses and other assets (8,210 ) (2,741 )
Accounts payable (54,301 ) 75,520
Income taxes payable, net (3,260 ) 11,951
Accrued liabilities 9,027 9,551
Other long-term liabilities   24,874     3,032  
Net cash provided by (used in) operating activities   107,509     (44,636 )
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (34,108 ) (35,100 )
Restricted cash (1,020 ) (416 )
Investment in a privately held company  

    (661 )
Net cash used in investing activities   (35,128 )   (36,177 )
FINANCING ACTIVITIES:
Proceeds from debt 34,200 84,900
Repayment of debt (34,100 ) (36,000 )
Proceeds from exercise of stock options 12,186 23,338
Excess tax benefits from stock-based compensation 2,855 8,089
Payment of obligations under capital leases (189 ) (134 )
Advances under receivable financing arrangements (21 ) 33
Minimum tax withholding paid on behalf of employees for restricted stock units   (1,786 )   (175 )
Net cash provided by financing activities   13,145     80,051  
Effect of exchange rate fluctuations on cash (4 ) (668 )
Net increase (decrease) in cash and cash equivalents 85,522 (1,430 )
Cash and cash equivalents at beginning of period   95,442     96,872  
Cash and cash equivalents at end of period   180,964     95,442  
Supplemental disclosure of cash flow information:
Cash paid for interest 1,632 933
Cash paid for taxes, net of refunds 36,951 30,671
Non-cash investing and financing activities:
Equipment purchased under capital leases 299 442
Accrued costs for property, plant and equipment purchases 10,888 6,826
 
 
SUPER MICRO COMPUTER, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
               
Three Months Ended Fiscal Year Ended
June 30, June 30,
2016 2015 2016 2015
GAAP GROSS PROFIT $ 73,796 $ 89,766 $ 331,525 $ 320,231
Add back stock-based compensation (a)   306     250     1,098     901  
Non-GAAP GROSS PROFIT $ 74,102   $ 90,016   $ 332,623   $ 321,132  
 
GAAP GROSS MARGIN 14.1 % 15.6 % 15.0 % 16.1 %
Add back stock-based compensation (a)   0.0 %   0.1 %   0.0 %   0.0 %
Non-GAAP GROSS MARGIN   14.1 %   15.7 %   15.0 %   16.1 %
 
GAAP INCOME FROM OPERATIONS $ 11,839 $ 40,787 $ 106,850 $ 146,746
Add back stock-based compensation (a)   4,363     3,972     16,131     13,699  
Non-GAAP INCOME FROM OPERATIONS $ 16,202   $ 44,759   $ 122,981   $ 160,445  
 
GAAP NET INCOME $ 6,971 $ 26,702 $ 72,021 $ 101,863
Add back stock-based compensation (a) 4,363 3,972 16,131 13,699
Add back adjustments to tax provision (b)   (971 )   (681 )   (4,312 )   (3,955 )
Non-GAAP NET INCOME $ 10,363   $ 29,993   $ 83,840   $ 111,607  
 
GAAP NET INCOME PER COMMON SHARE - BASIC $ 0.14 $ 0.56 $ 1.50 $ 2.19
Add back stock-based compensation and adjustments to tax provision (a) (b)   0.07     0.07     0.25     0.21  
Non-GAAP NET INCOME PER COMMON SHARE - BASIC $ 0.21   $ 0.63   $ 1.75   $ 2.40  
 
GAAP NET INCOME PER COMMON SHARE - DILUTED $ 0.13 $ 0.51 $ 1.39 $ 2.03
Add back stock-based compensation and adjustments to tax provision (a) (b)   0.07     0.06     0.20     0.12  
Non-GAAP NET INCOME PER COMMON SHARE - DILUTED $ 0.20   $ 0.57   $ 1.59   $ 2.15  
 
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE

BASIC - GAAP

  48,463     47,327     47,917     46,434  

BASIC - Non-GAAP

  48,463     47,327     47,917     46,434  
 
DILUTED - GAAP   52,274     51,990     51,836     50,094  

DILUTED - Non-GAAP

  52,955     52,609     52,666     51,930  
 

(a) Amortization of Financial Accounting Standards Board Accounting Standards Codification Topic 718 stock-based compensation for the three months and fiscal years ended June 30, 2016 and 2015.

(b) The provision of income taxes used in arriving at the non-GAAP net income was computed using an income tax rate of 34.4% and 31.0% for the three months and fiscal year ended June 30, 2016, respectively, and 32.6% and 30.1% for the three months and fiscal year ended June 30, 2015, respectively.

SMCI-F

Super Micro Computer, Inc.
Howard Hideshima, 408-503-8000
SVP, Chief Financial Officer
ir@supermicro.com
or
Perry G. Hayes
SVP, Investor Relations
ir@supermicro.com

Source: Super Micro Computer, Inc.

News Provided by Acquire Media

Close window | Back to top