SAN JOSE, Calif., Apr 29, 2008 (BUSINESS WIRE) --
Super Micro Computer, Inc. (NASDAQ:SMCI), a leader in application optimized, high performance server solutions, today announced third quarter financial results for fiscal year 2008. The final results are in line with the preliminary results announced by the Company on April 9, 2008.
Q3 Fiscal Year 2008 Highlights
-- Quarterly net sales of $136.8 million, approximately flat with the second quarter fiscal year 2008 but up 29.4% from a year-ago third quarter in fiscal year 2007.
-- Net income of $5.0 million, down 35.1% from the second quarter fiscal year 2008 primarily due to business mix, high profile customer, seasonal factors and investment in engineering and up 23.4% from year-ago third quarter in fiscal year 2007.
-- Server Solutions accounted for 35.0% of net sales
-- SuperBlade(TM) and 1U-Twin(TM) servers
set performance-per-watt milestones in the world, enabling Supermicro customers to grow market share.
Q3 Fiscal Year 2008 Financial Results
Net sales for the third quarter ended March 31, 2008 totaled $136.8 million, up 29.4% from $105.7 million in the third quarter of fiscal year 2007. Net sales from server solutions comprised 35.0% of net sales, down from 36.7% in the third quarter of fiscal year 2007. No customer accounted for more than 10% of net sales during the quarter.
Net income for the third quarter of fiscal year 2008 was $5.0 million, or $0.13 per diluted share, a growth of 23.4% from the net income of $4.1 million, or $0.13 per diluted share, in the same period a year ago. Included in net income for the quarter was $1.0 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 $6.0 million, or $0.15 per diluted share, compared to non-GAAP net income of $4.5 million, or $0.14 per diluted share, in the same period a year ago. On a sequential basis, non-GAAP net income decreased from the second quarter of fiscal year 2008 by $2.6 million or $0.07 per diluted share.
Gross margin for the third quarter grew to 18.2%, compared to 17.1% in the same period a year ago. Non-GAAP gross margin for the third quarter was 18.2% compared to 17.2% in the same period a year ago. Third quarter of fiscal year 2008 gross margin was higher than the same period a year ago due to sales of new products such as the 1U Twin and Universal IO solutions offset in part by a lower percentage server solution revenue. On a sequential basis, non-GAAP gross margin decreased by 1.8% from 20.0% in the second quarter of fiscal year 2008.
The decrease was primarily due to lower product mix of server solutions, high profile customer and seasonality.
The Company ended the third quarter of fiscal year 2008 with $41.8 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. The reduction was primarily due to the reclassification of approximately $18.2 million of auction rated securities which had been previously classified as short-term investment.
9-Month Summary
Net sales for the nine months ended March 31, 2008 were $391.6 million, up 26.6% from $309.4 million for the first nine months of fiscal year 2007. Net income for the first nine months of fiscal year 2008 grew to $18.6 million or $0.48 per diluted share, a growth of 34.2% from $13.8 million or $0.43 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 nine months was $21.1 million or $0.54 per diluted share, compared to $15.3 million or $0.47 per diluted share in the same period a year ago.
Business Outlook & Management Commentary
The Company has historically seen seasonal net sales growth in our fiscal fourth quarter, which has typically resulted from new product introductions. We believe that this should continue this quarter as new products introduced during the prior quarters and historically seasonal strength of the server market should provide additional net sales during the fourth quarter of fiscal year 2008. The Company expects net sales at least to be in the range of $142 million to $147 million for the fourth quarter of fiscal year 2008 ending June 30, 2008 which will represent approximately 28% to 32% growth compared with last
year. In addition, we expect non-GAAP earnings per diluted share of approximately $0.17 to $0.18 for the fourth quarter of fiscal year 2008 ending June 30, 2008. 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.
"We continue to invest aggressively in research and development with the goal of building the Company for long term growth and profitability. We strongly believe that our technology foundation and leadership has been and will be the key for our and customers' success. Our high-efficiency building block architecture, incorporated with our expertise in technology and design is highly demanded by partners and customers, who are seeking for maximum optimization, performance
per watt, and cost effectiveness," said Charles Liang, President and Chief Executive Officer of Super Micro Computer. "For examples, our SuperBlade(TM), which is just in volume production, outperforms others in the x86 space in term of performance per watt, computing density, storage capacity and our 1U Twin(TM), a truly innovative product, is shipping in high volume today. I am confident that our revenue and net income will benefit from those investments. Our business has never been as strong as it is today."
Conference Call Information
Super Micro Computer will discuss these financial results and its outlook for the fourth quarter of fiscal year 2008 in a conference call at 2:00 p.m. PT, today. Those wishing to participate in the conference call should call 800-835-9927 (international callers dial 913-312-1464) 10 minutes prior to registering. A replay of the call will be
available until 11:59 p.m. ET on May 6, 2008 by dialing 888-203-1112 (international callers dial 719-457-0820) and entering replay PIN 9556654. 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 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.
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)
March 31, June 30,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $ 41,354 $ 50,864
Short-term investments 456 15,055
Accounts receivable, net 42,141 33,426
Inventories, net 93,378 66,772
Deferred income taxes - current 7,954 5,630
Prepaid expenses and other current assets 2,014 1,759
--------- ---------
Total current assets 187,297 173,506
--------- ---------
Long-term investments 17,564 -
Property, plant and equipment, net 45,564 31,089
Deferred income taxes - noncurrent 1,374 624
Restricted assets 1,727 57
Other assets 128 307
--------- ---------
Total assets $253,654 $205,583
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 79,756 $ 61,453
Accrued liabilities 14,038 14,074
Income tax payable - 1,489
Advances from receivable financing arrangements 1,379 982
Current portion of capital lease obligations 48 118
Current portion of long-term debt 294 304
Other current liabilities 257 -
--------- ---------
Total current liabilities 95,772 78,420
Long-term capital lease obligations-net of current
portion 30 40
Long-term debt-net of current portion 10,080 11,251
Other long-term liabilities 4,384 -
--------- ---------
Total liabilities 110,266 89,711
Stockholders' equity:
Common stock and additional paid-in capital 67,918 58,239
Deferred stock-based compensation (859) (1,500)
Accumulated other comprehensive loss (386) -
Retained earnings 76,715 59,133
--------- ---------
Total stockholders' equity 143,388 115,872
--------- ---------
Total liabilities and stockholders' equity $253,654 $205,583
========= =========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------------- -------------------------
March 31, March 31, March 31, March 31,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Net sales $ 136,755 $ 105,659 $ 391,637 $ 309,448
Cost of sales 111,929 87,592 316,511 254,381
------------ ------------ ------------ ------------
Gross profit 24,826 18,067 75,126 55,067
Operating
expenses:
Research and
development 8,050 5,143 21,743 15,637
Sales and
marketing 4,602 3,485 12,891 8,968
General and
administrative 3,903 3,278 10,799 8,789
Reversal of
litigation loss - - - (120)
------------ ------------ ------------ ------------
Total operating
expenses 16,555 11,906 45,433 33,274
Income from
operations 8,271 6,161 29,693 21,793
Interest income 327 69 1,319 190
Interest expense (248) (369) (748) (1,040)
------------ ------------ ------------ ------------
Income before
income taxes
provision 8,350 5,861 30,264 20,943
Income tax
provision 3,326 1,790 11,693 7,105
------------ ------------ ------------ ------------
Net income $ 5,024 $ 4,071 $ 18,571 $ 13,838
============ ============ ============ ============
Net income per
share:
Basic $ 0.16 $ 0.18 $ 0.60 $ 0.62
============ ============ ============ ============
Diluted $ 0.13 $ 0.13 $ 0.48 $ 0.43
============ ============ ============ ============
Shares used in per
share
calculation:
Basic 31,759,958 22,277,339 30,958,660 22,226,460
============ ============ ============ ============
Diluted 38,961,284 32,434,182 38,780,837 32,373,284
============ ============ ============ ============
Stock-based compensation is included in the
following cost and expense categories by
period (in thousands):
Three Months Ended Nine Months Ended
------------------------- -------------------------
March 31, March 31, March 31, March 31,
2008 2007 2008 2007
------------ ------------ ------------ ------------
Cost of sales $ 124 $ 84 $ 354 $ 168
Research and
development 465 304 1,220 785
Sales and
marketing 161 81 453 270
General and
administrative 291 215 822 450
SUPER MICRO COMPUTER, INC
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(In thousands)
(Unaudited)
Nine Months Ended
March 31,
-------------------
2008 2007
--------- ---------
OPERATING ACTIVITIES:
Net income $ 18,571 $ 13,838
Reconciliation of net income to net cash provided
by operating activities:
Depreciation and amortization 1,921 1,179
Stock-based compensation expense 2,849 1,673
Allowance for doubtful accounts 174 172
Allowance for sales returns 4,150 2,950
Loss on disposal of property, plant and
equipment - 2
Deferred income taxes (2,824) (98)
Gain on short-term investments (616) -
Changes in operating assets and liabilities:
Accounts receivable, net (13,039) (13,647)
Inventories, net (26,606) (15,384)
Prepaid expenses and other current assets (205) (715)
Other assets 89 -
Accounts payable 17,080 14,177
Income tax payable 3,565 538
Accrued litigation loss - (575)
Accrued liabilities 241 5,457
Other long-term liabilities 3,395 -
--------- ---------
Net cash provided by operating activities 8,745 9,567
--------- ---------
INVESTING ACTIVITIES:
Proceeds from investments 19,390 53
Purchases of investments (22,425) -
Purchases of property and equipment (15,056) (2,642)
Restricted assets (1,670) (43)
--------- ---------
Net cash used in investing activities (19,761) (2,632)
--------- ---------
FINANCING ACTIVITIES:
Repayment of long-term debt (1,181) (458)
Proceeds from exercise of stock options 2,417 1,157
Payment of obligations under capital leases (107) (137)
Advances under receivable financing arrangements 397 144
Payment of offering costs (20) (3,322)
--------- ---------
Net cash provided by (used in) financing
activities 1,506 (2,616)
--------- ---------
Net increase (decrease) in cash and cash
equivalents (9,510) 4,319
Cash and cash equivalents at beginning of year 50,864 16,509
--------- ---------
Cash and cash equivalents at end of year $ 41,354 $ 20,828
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 748 $ 852
Cash paid for taxes $ 7,685 $ 6,665
Non-cash investing and financing activities:
Equipment purchased under capital leases $ 27 $ 109
Reversals of deferred stock-based compensation
for cancellation of stock options $ 22 $ 133
Accrued costs for property, plant and equipment
purchases $ 1,223 $ 112
Accrued offering costs $ - $ 706
Changes in fair values of investments $ 636 $ -
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, March 31, March 31, March 31,
2008 2007 2008 2007
------------ ------------ ------------ ------------
GAAP GROSS PROFIT $ 24,826 $ 18,067 $ 75,126 $ 55,067
Add back stock-
based
compensation
(a) 124 84 354 168
------------ ------------ ------------ ------------
Non-GAAP GROSS
PROFIT $ 24,950 $ 18,151 $ 75,480 $ 55,235
============ ============ ============ ============
GAAP GROSS MARGIN 18.2% 17.1% 19.2% 17.8%
Add back stock-
based
compensation
(a) 0.0% 0.1% 0.1% 0.0%
------------ ------------ ------------ ------------
Non-GAAP GROSS
MARGIN 18.2% 17.2% 19.3% 17.8%
============ ============ ============ ============
GAAP INCOME FROM
OPERATIONS $ 8,271 $ 6,161 $ 29,693 $ 21,793
Add back stock-
based
compensation
(a) 1,041 684 2,849 1,673
------------ ------------ ------------ ------------
Non-GAAP INCOME
FROM OPERATIONS $ 9,312 $ 6,845 $ 32,542 $ 23,466
============ ============ ============ ============
GAAP NET INCOME $ 5,024 $ 4,071 $ 18,571 $ 13,838
Add back stock-
based
compensation
(a) 1,041 684 2,849 1,673
Add back
adjustments to
tax provision
(b) (94) (219) (334) (175)
------------ ------------ ------------ ------------
Non-GAAP NET
INCOME $ 5,971 $ 4,536 $ 21,086 $ 15,336
============ ============ ============ ============
GAAP NET INCOME
PER SHARE - BASIC $ 0.16 $ 0.18 $ 0.60 $ 0.62
Add back stock-
based
compensation
and adjustments
to tax
provision (a)
(b) 0.03 0.02 0.08 0.07
------------ ------------ ------------ ------------
Non-GAAP NET
INCOME PER SHARE
- BASIC $ 0.19 $ 0.20 $ 0.68 $ 0.69
============ ============ ============ ============
GAAP NET INCOME
PER SHARE -
DILUTED $ 0.13 $ 0.13 $ 0.48 $ 0.43
Add back stock-
based
compensation
and adjustments
to tax
provision (a)
(b) 0.02 0.01 0.06 0.04
------------ ------------ ------------ ------------
Non-GAAP NET
INCOME PER SHARE
- DILUTED $ 0.15 $ 0.14 $ 0.54 $ 0.47
============ ============ ============ ============
SHARES USED IN
COMPUTING NET
INCOME PER SHARE
BASIC - GAAP 31,759,958 22,277,339 30,958,660 22,226,460
============ ============ ============ ============
BASIC - Non-GAAP 31,759,958 22,277,339 30,958,660 22,226,460
============ ============ ============ ============
DILUTED - GAAP 38,961,284 32,434,182 38,780,837 32,373,284
============ ============ ============ ============
DILUTED - Non-
GAAP 39,136,112 32,570,359 38,984,024 32,533,713
============ ============ ============ ============
(a) Amortization of SFAS No. 123R, APB 25 and SFAS No. 123 stock-based
compensation for the three and nine months ended March 31, 2008 and
2007.
(b) The provision of income taxes used in arriving at the non-GAAP net
income was computed using an income tax rate of 36.4% and 30.7% for
the three months ended March 31, 2008 and 2007, respectively and
36.3% and 32.2% for the nine months ended March 31, 2008 and 2007,
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 2008
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