SAN JOSE, Calif., Jan 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(R) 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, June 30,
2007 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 December December December
31, 31, 31, 31,
2007 2006 2007 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 December December December
31, 31, 31, 31,
2007 2006 2007 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 Six Months
Ended Ended
December 31, December 31,
2007 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 December December December
31, 31, 31, 31,
2007 2006 2007 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.
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
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