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Super Micro Computer, Inc. Announces Fiscal Year 2007 and 4th Quarter Financial Results

08/07/2007

SAN JOSE, Calif., Aug 07, 2007 (BUSINESS WIRE) --

Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced fourth quarter and full-year financial results for fiscal year 2007.

Q4 Fiscal 2007 Highlights

-- Quarterly revenue of $110.9 million, up 5.0% and 23.3% from the third quarter fiscal year 2007 and year-ago quarter in fiscal year 2006, respectively

-- Net income of $5.5 million, or $0.14 per diluted share, up 35.1% and down 13.4% from third quarter fiscal year 2007 and year-ago quarter in fiscal year 2006, respectively

-- Server Solutions accounted for 37.6% of revenues

-- Introductions of new products including Blade Servers

Q4 Fiscal 2007 Financial Results

Net revenue for the fourth quarter ended June 30, 2007 was $110.9 million, up 23.3% from $90.0 million in the fourth quarter of fiscal year 2006. Net revenue from server solutions comprised 37.6% of net revenues, up from 36.7% in the fourth quarter of fiscal year 2006. No customer accounted for more than 10% of net revenues during the quarter. On a sequential basis, net revenue was up 5.0% from $105.7 million in the third quarter of fiscal year 2007.

Net income for the fourth quarter of fiscal year 2007 was $5.5 million or $0.14 per diluted share compared to net income of $6.4 million, or $0.19 per diluted share in the same period a year ago. Included in net income for the quarter was $0.8 million of stock-based compensation expense (pre-tax). Excluding stock-based compensation expense and the related tax effect, non-GAAP net income for the fourth quarter was $6.1 million, or $0.16 per diluted share, compared to non-GAAP net income of $6.4 million, or $0.19 per diluted share, in the same period a year ago. On a sequential basis, non-GAAP net income was up $1.5 million or $0.02 per diluted share.

Gross margin for the fourth quarter was 18.0%, compared to 21.5% in the same period a year ago. Non-GAAP gross margin for the fourth quarter was 18.1% compared to 21.5% in the same period a year ago. Fourth quarter of fiscal year 2007 gross margin was lower than the same period a year ago due to higher inventory reserves in the fourth quarter of fiscal 2007 and delivery of new products based on new processor introductions, which benefited gross margins in Q4 of fiscal year 2006. On a sequential basis, non-GAAP gross margin was up 0.9% from 17.2% in the third quarter of fiscal 2007. The increase was primarily due to cost reductions on existing products and higher gross margins on new products such as 1U Twin and UIO offset in part by higher inventory reserves.

Full Fiscal 2007 Financial Results

Net revenue for the fiscal year ended June 30, 2007 was $420.4 million, up 39.0% from $302.5 million for the fiscal year ended June 30, 2006. Net income for fiscal year 2007 was $19.3 million or $0.57 per diluted share, compared to $16.9 million or $0.53 per diluted share in the fiscal year 2006. Excluding stock based-compensation expense and the related tax effect, non-GAAP net income for the fiscal year 2007 was $21.4 million or $0.63 per diluted share, compared to $17.6 million or $0.55 per diluted share for the fiscal year 2006.

The Company ended the fiscal year with $65.9 million in cash and cash equivalents and short term investments compared to $16.6 million at the end of fiscal year 2006.

In the first quarter of fiscal 2007, Super Micro Computer adopted Statement of Financial Accounting Standards No. 123R, Share-Based Payments (FAS 123R), which requires that stock-based compensation be recorded in its financial statements. The Company's non-GAAP financial measures exclude the stock-based compensation expense and the related tax effect of the applicable items. The reconciliation between GAAP and non-GAAP net income, gross margin and net income per share is provided in the financial tables accompanying this press release.

Business Outlook & Management Commentary

Super Micro Computer expects net revenue to be in the range of $117 million to $120 million for the first quarter ending September 30, 2007 in the new fiscal year 2008.

"In the fourth quarter of fiscal 2007, after more than 2 years of development, we were proud to launch our new SuperBlade(TM) product line. Utilizing the Supermicro's Server Building Block Solutions(R) approach which has made us successful in the rackmount server business, we are able to provide SuperBlades(TM) in versatile configuration flexibility for the enterprise, datacenter, high performance computing (HPC), and office computing markets," said Charles Liang, President and Chief Executive Officer of Super Micro Computer. "Our SuperBlade(TM) designs implement the very latest advancements in server technology, making them not only perfect for enterprise applications, but also ideal for HPC, data centers and office computing environments."

"As we enter fiscal year 2008, we expect to see continued growth in the company, our overseas operations and our products lines. All these will help support the continued growth in revenues and being profitable every year for 13 years of the Company."

Conference Call Information

Super Micro Computer will discuss these financial results and its outlook for the first 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 866-293-8972 (international callers dial 913-312-1232) 10 minutes prior to registering. A replay of the call will be available until 11:59 pm ET on August 14, by dialing 888-203-1112 (international callers dial 719-457-0820) and entering replay PIN 4071883. 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 server, 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)

                                                   June 30,  June 30,
                                                     2007      2006
ASSETS
Current assets:
 Cash and cash equivalents                         $ 50,864  $ 16,509
 Short-term investments                              15,055        53
 Accounts receivable, net                            33,426    22,252
 Inventories, net                                    66,772    57,612
 Deferred income taxes - current                      5,630     3,440
 Prepaid expenses and other current assets            1,759     1,311
                                                  ---------- ---------
  Total current assets                              173,506   101,177
Property, plant, and equipment, net                  31,089    29,605
Deferred income taxes - noncurrent                      624         -
Other assets                                            364       219
                                                  ---------- ---------
  Total assets                                     $205,583  $131,001
                                                  ========== =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                  $ 61,453  $ 52,019
 Accrued liabilities                                 14,074     8,891
 Income tax payable                                   1,489     1,085
 Accrued litigation loss                                  -       575
 Advances from receivable financing arrangements        982       800
 Current portion of capital lease obligations           118       165
 Current portion of long-term debt                      304       616
                                                  ---------- ---------
  Total current liabilities                          78,420    64,151

Deferred income taxes-noncurrent                          -       398
Long-term capital lease obligations-net of
 current portion                                         40        64
Long-term debt-net of current portion                11,251    18,621
                                                  ---------- ---------
  Total liabilities                                  89,711    83,234
Stockholders' equity:
 Common stock                                        58,239    10,536
 Deferred stock-based compensation                   (1,500)   (2,563)
 Retained earnings                                   59,133    39,794
                                                  ---------- ---------
  Total stockholders' equity                        115,872    47,767
                                                  ---------- ---------
  Total liabilities and stockholders' equity       $205,583  $131,001
                                                  ========== =========

                      SUPER MICRO COMPUTER, INC
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands, except share and per share amounts)
                             (Unaudited)

                      Three Months Ended         Fiscal Year Ended
                   ------------------------- -------------------------
                     June 30,     June 30,     June 30,     June 30,
                       2007         2006         2007         2006
                   ------------ ------------ ------------ ------------
Net sales          $   110,945  $    90,013  $   420,393  $   302,541
Cost of sales           91,003       70,678      345,384      242,235
                   ------------ ------------ ------------ ------------
Gross profit            19,942       19,335       75,009       60,306
Operating
 expenses:
  Research and
   development           5,534        4,501       21,171       15,814
  Sales and
   marketing             3,618        2,293       12,586        9,363
  General and
   administrative        2,678        2,228       11,467        6,931
  Provision for
   (reversal of)
   litigation loss           -            -         (120)         575
                   ------------ ------------ ------------ ------------
Total operating
 expenses               11,830        9,022       45,104       32,683
Income from
 operations              8,112       10,313       29,905       27,623
Interest income            575           75          765          254
Interest expense          (292)        (342)      (1,332)      (1,257)
Other income, net            -            -            -            2
                   ------------ ------------ ------------ ------------
Income before
 income taxes
 provision               8,395       10,046       29,338       26,622
Income tax
 provision               2,894        3,696        9,999        9,675
                   ------------ ------------ ------------ ------------
Net income         $     5,501  $     6,350  $    19,339  $    16,947
                   ============ ============ ============ ============
Net income per
 share:
  Basic            $      0.18  $      0.29  $      0.80  $      0.77
                   ============ ============ ============ ============
  Diluted          $      0.14  $      0.19  $      0.57  $      0.53
                   ============ ============ ============ ============
Shares used in per
 share
 calculation:
  Basic             29,931,695   22,149,689   24,152,769   22,010,586
                   ============ ============ ============ ============
  Diluted           38,570,651   32,850,665   33,946,074   31,846,864
                   ============ ============ ============ ============


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,     June 30,     June 30,
                       2007         2006         2007         2006
                   ------------ ------------ ------------ ------------
  Cost of sales    $       133  $        24  $       300  $       102
  Research and
   development             273          105        1,058          441
  Sales and
   marketing                92           43          362          236
  General and
   administrative          260           74          710          317

                      SUPER MICRO COMPUTER, INC
             CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
                            (In thousands)
                             (Unaudited)

                                   Fiscal Year Ended Fiscal Year Ended
                                     June 30, 2007     June 30, 2006
                                   ----------------- -----------------

OPERATING ACTIVITIES:
Net income                          $        19,339   $        16,947
Reconciliation of net income to
 net cash provided by operating
 activities:
     Depreciation and amortization            1,640             1,214
     Stock-based compensation
      expense                                 2,430             1,096
     Allowance for doubtful
      accounts                                  240                18
     Allowance for sales returns              4,408             2,497
     Loss on disposal of property
      and equipment                              16                13
     Deferred income taxes                   (3,212)             (819)
     Gain on short-term
      investments                               (93)               (9)
     Changes in operating assets
      and liabilities:
         Accounts receivable, net           (15,822)          (11,244)
         Inventories, net                    (9,160)          (17,087)
         Prepaid expenses and
          other current assets                 (866)             (523)
         Accounts payable                     9,487            14,224
         Income tax payable                   1,936            (1,018)
         Accrued litigation loss               (575)              575
         Accrued liabilities                  5,221             2,322
                                   ----------------- -----------------
Net cash provided by operating
 activities                                  14,989             8,206
                                   ----------------- -----------------
INVESTING ACTIVITIES:
Proceeds from short-term
 investments                                    145             1,826
Purchases of property and
 equipment                                   (3,042)          (11,452)
Purchases of short-term
 investments                                (15,054)             (103)
Other assets                                   (157)              (63)
                                   ----------------- -----------------
Net cash used in investing
 activities                                 (18,108)           (9,792)
                                   ----------------- -----------------
FINANCING ACTIVITIES:
Proceeds from long-term debt                      -             8,939
Proceeds from exercise of stock
 options                                      1,823               377
Repayment of long-term debt                  (7,682)           (2,668)
Payment of obligations under
 capital leases                                (210)              (97)
Advances under receivable
 financing arrangements                         182               437
Proceeds from initial public
 offering of common stock, net of
 offering costs                              43,361                 -
Payment of deferred offering costs                -               (63)
                                   ----------------- -----------------
Net cash provided by financing
 activities                                  37,474             6,925
                                   ----------------- -----------------
Net increase in cash and cash
 equivalents                                 34,355             5,339
Cash and cash equivalents at
 beginning of year                           16,509            11,170
                                   ----------------- -----------------
Cash and cash equivalents at end
 of year                            $        50,864   $        16,509
                                   ================= =================

Supplemental disclosure of cash
 flow information:
   Cash paid for interest           $         1,332   $         1,255
   Cash paid for taxes              $        11,275   $        11,510

Non-cash investing and financing
 activities:
   Equipment purchased under
    capital leases                  $           139   $           216
   Deferred stock-based
    compensation related to stock
    option grants                   $             -   $         2,345
  Reversals of deferred stock-
   based compensation for
   cancellation of stock options    $           164   $            77
   Accrued costs for property and
    equipment purchases             $            78   $           131
   Accrued offering costs           $           317   $           355

                      SUPER MICRO COMPUTER, INC
        RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
          (In thousands, except share and per share amounts)
                             (Unaudited)

                      Three Months Ended         Fiscal Year Ended
                   ------------------------- -------------------------
                     June 30,     June 30,     June 30,     June 30,
                       2007         2006         2007         2006
                   ------------ ------------ ------------ ------------
GAAP GROSS PROFIT  $    19,942  $    19,335  $    75,009  $    60,306
 Add back stock-
  based
  compensation (a)         133           24          300          102
                   ------------ ------------ ------------ ------------
Non-GAAP GROSS
 PROFIT            $    20,075  $    19,359  $    75,309  $    60,408
                   ============ ============ ============ ============

GAAP GROSS MARGIN         18.0%        21.5%        17.8%        19.9%
 Add back stock-
  based
  compensation (a)         0.1%         0.0%         0.1%         0.1%
                   ------------ ------------ ------------ ------------
Non-GAAP GROSS
 MARGIN                   18.1%        21.5%        17.9%        20.0%
                   ============ ============ ============ ============

GAAP INCOME FROM
 OPERATIONS        $     8,112  $    10,313  $    29,905  $    27,623
 Add back stock-
  based
  compensation (a)         758          246        2,430        1,096
                   ------------ ------------ ------------ ------------
Non-GAAP INCOME
 FROM OPERATIONS   $     8,870  $    10,559  $    32,335  $    28,719
                   ============ ============ ============ ============

GAAP NET INCOME    $     5,501  $     6,350  $    19,339  $    16,947
 Add back stock-
  based
  compensation (a)         758          246        2,430        1,096
 Add back
  adjustments to
  tax provision
  (b)                     (190)        (162)        (365)        (399)
                   ------------ ------------ ------------ ------------
Non-GAAP NET
 INCOME            $     6,069  $     6,434  $    21,404  $    17,644
                   ============ ============ ============ ============

GAAP NET INCOME
 PER SHARE - BASIC $      0.18  $      0.29  $      0.80  $      0.77
 Add back stock-
  based
  compensation and
  adjustments to
  tax provision
  (a) (b)                 0.02         0.00         0.09         0.03
                   ------------ ------------ ------------ ------------
Non-GAAP NET
 INCOME PER SHARE
 - BASIC           $      0.20  $      0.29  $      0.89  $      0.80
                   ============ ============ ============ ============


GAAP NET INCOME
 PER SHARE -
 DILUTED           $      0.14  $      0.19  $      0.57  $      0.53
 Add back stock-
  based
  compensation and
  adjustments to
  tax provision
  (a) (b)                 0.02         0.00         0.06         0.02
                   ------------ ------------ ------------ ------------
Non-GAAP NET
 INCOME PER SHARE
 - DILUTED         $      0.16  $      0.19  $      0.63  $      0.55
                   ============ ============ ============ ============

SHARES USED IN
 COMPUTING NET
 INCOME PER SHARE
 BASIC -GAAP        29,931,695   22,149,689   24,152,769   22,010,586
                   ============ ============ ============ ============
 BASIC - Non-GAAP   29,931,695   22,149,689   24,152,769   22,010,586
                   ============ ============ ============ ============

 DILUTED - GAAP     38,570,651   32,850,665   33,946,074   31,846,864
                   ============ ============ ============ ============
 DILUTED - Non-
  GAAP              38,868,832   33,068,971   34,148,251   32,076,460
                   ============ ============ ============ ============

(a) Amortization of SFAS No. 123R, APB 25 and SFAS No. 123 stock-based
 compensation for the three and twelve months ended June 30, 2007 and
 June 30, 2006.
(b) The provision of income taxes used in arriving at the non-GAAP net
 income was computed using an income tax rate of 32.6% and 36.3% for
 the fiscal years ended June 30, 2007 and 2006, respectively.

SMCI-F

SOURCE: Super Micro Computer, Inc.

Super Micro Computer, Inc.
Howard Hideshima, 408-503-8000
Chief Financial Officer
ir@supermicro.com
or
Kalt Rosen Group/Ruder Finn
Howard Kalt, 415-317-0092
Investor Relations
ir@supermicro.com

Copyright Business Wire 2007

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