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Supermicro Announces Third Quarter Fiscal Year 2021 Financial Results

05/04/2021

SAN JOSE, Calif.--(BUSINESS WIRE)-- Super Micro Computer, Inc. (Nasdaq: SMCI), a global leader in high-performance, high-efficiency server and storage technology and green computing, today announced financial results for its third quarter of fiscal year 2021 ended March 31, 2021.

Third Quarter Fiscal Year 2021 Highlights

  • Net sales of $896 million versus $830 million in the second quarter of fiscal year 2021 and $772 million in the same quarter of last year.
  • Gross margin of 13.7% versus 16.4% in the second quarter of fiscal year 2021 and 17.3% in the same quarter of last year.
  • Net income of $18 million versus $28 million in the second quarter of fiscal year 2021 and $16 million in the same quarter of last year.
  • Diluted net income per common share of $0.35 versus $0.52 in the second quarter of fiscal year 2021 and $0.29 in the same quarter of last year.
  • Non-GAAP diluted net income per common share of $0.50 versus $0.63 in the second quarter of fiscal year 2021 and $0.84 in the same quarter of last year.
  • Cash flow used in operations of $124 million and capital expenditures of $19 million.

Non-GAAP gross margin for the third quarter of fiscal year 2021 was 13.8%, which adds back stock-based compensation expenses of $0.4 million. Non-GAAP diluted net income per common share for the third quarter of fiscal year 2021 was $0.50, which adds back stock-based compensation expenses of $7.5 million, special performance bonuses of $2.5 million, and controls remediation expense of $1.2 million, net of the related tax effects.

As of March 31, 2021, total cash, cash equivalents and restricted cash was $179 million and total bank debt was $85 million.

“We are pleased to report Q3 revenue above the high end of our guidance range and deliver year-over-year growth of 16%, our strongest revenue growth rate in more than two years driven by high profile customer engagements. Notably, we strongly bucked seasonal trends in the March quarter." said Charles Liang, Chairman and CEO. "But we are not yet satisfied and aim to accelerate our growth with our robust pipeline of new products leveraging innovations from our key partners AMD, Intel, and NVIDIA. We are well positioned to capitalize on our numerous growth opportunities as we begin to benefit from our capacity expansion in Taiwan and the US.”

Fourth Quarter Fiscal Year 2021 Guidance

The Company expects net sales of $980 million to $1.08 billion, diluted net income per common share of $0.56 to $0.77 and non-GAAP diluted net income per common share of $0.70 to $0.90 for the fourth quarter of fiscal year 2021 ending June 30, 2021. The Company’s projections for GAAP and non-GAAP diluted net income per common share both assume a tax rate of approximately 13% and a fully diluted share count of 54 million shares. The outlook for Q4 of fiscal year 2021 GAAP diluted net income per common share includes approximately $7 million in expected stock-based compensation expense and $2 million in other expenses, net of tax effects, that are excluded from non-GAAP diluted net income per common share.

Conference Call and Webcast Information

Supermicro will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its third quarter of 2021. Those wishing to access the live webcast may use the following link:

https://event.on24.com/wcc/r/3081432/CECE06854537FC85B1C7606DDC8651FC

The conference call can be accessed by registering online at:

http://www.directeventreg.com/registration/event/4869958

After registering, a confirmation will be sent through email, including dial-in details and unique conference call codes for entry. Registration is open during the live call, but to ensure connectivity for the full call, it is recommended that participants register a day in advance and dial-in for the call at least 10 minutes before the start of the call.

A replay of the webcast will be available shortly after the call on the Company’s investor relations website (https://ir.supermicro.com) and will remain accessible for one year.

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 to, among other things, the fourth quarter of fiscal year 2021 guidance, the ability to accelerate sales growth, and the ability to execute on our company strategy during the global COVID-19 pandemic. 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, including: (i) the global COVID-19 pandemic continues to present significant uncertainties for all parts of our business including our supply chain, our production operations and customer demand, (ii) our quarterly operating results may fluctuate, which could cause rapid declines in our stock price, (iii) as we increasingly target larger customers and larger sales opportunities, our customer base may become more concentrated, our cost of sales may increase, our margins may be lower and our sales may be less predictable, (iv) if we fail to meet publicly announced financial guidance or other expectations about our business, our stock could decline in value, (v) the average sales prices for our server solutions could decline if customers do not continue to purchase our latest generation products or additional components, and (vi) adverse economic conditions may harm our business. 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, particularly in our Annual Report on Form 10-K for our fiscal year ended June 30, 2020.

Use of Non-GAAP Financial Measures

Non-GAAP gross margin discussed in this press release adds back stock-based compensation expenses and other expenses. Non-GAAP diluted net income per common share discussed in this press release adds back stock-based compensation expenses, special performance bonuses, controls remediation expenses, legal settlement costs and other non-recurring expenses, and excludes a credit from an executive SEC settlement, which are all adjusted for the related tax effects 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. A reconciliation of gross margin to non-GAAP gross margin and from diluted net income per common share to non-GAAP diluted net income per common share is included in the tables below.

About Super Micro Computer, Inc.

Supermicro (Nasdaq:SMCI), the leading innovator in high-performance, high-efficiency server and storage technology is a premier provider of advanced server Building Block Solutions® for Enterprise Data Center, Cloud Computing, Artificial Intelligence, and Edge Computing Systems worldwide. Supermicro is committed to protecting the environment through its “We Keep IT Green®” initiative and provides customers with the most energy-efficient, environmentally-friendly solutions available on the market.

Supermicro, Server 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)

 

 

March 31,

 

June 30,

 

2021

 

2020

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

177,894

 

 

$

210,533

 

Accounts receivable, net of allowances

407,365

 

 

403,745

 

Inventories

903,903

 

 

851,498

 

Prepaid expenses and other current assets

150,488

 

 

126,985

 

Total current assets

1,639,650

 

 

1,592,761

 

Investment in equity investee

3,637

 

 

2,703

 

Property, plant and equipment, net

265,566

 

 

233,785

 

Deferred income taxes, net

57,624

 

 

54,898

 

Other assets

32,363

 

 

34,499

 

Total assets

$

1,998,840

 

 

$

1,918,646

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

465,012

 

 

$

417,673

 

Accrued liabilities

153,742

 

 

155,401

 

Income taxes payable

9,616

 

 

4,700

 

Short-term debt

57,503

 

 

23,704

 

Deferred revenue

96,123

 

 

106,157

 

Total current liabilities

781,996

 

 

707,635

 

Deferred revenue, non-current

93,920

 

 

97,612

 

Long-term debt, net of debt issuance costs

27,867

 

 

5,697

 

Other long-term liabilities

41,109

 

 

41,995

 

Total liabilities

944,892

 

 

852,939

 

Stockholders’ equity:

 

 

 

Common stock and additional paid-in capital

425,489

 

 

389,972

 

Treasury stock

 

 

(20,491

)

Accumulated other comprehensive gain (loss)

362

 

 

(152

)

Retained earnings

627,929

 

 

696,211

 

Total Super Micro Computer, Inc. stockholders’ equity

1,053,780

 

 

1,065,540

 

Noncontrolling interest

168

 

 

167

 

Total stockholders’ equity

1,053,948

 

 

1,065,707

 

Total liabilities and stockholders’ equity

$

1,998,840

 

 

$

1,918,646

 

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

 

2021

 

2020

 

2021

 

2020

Net sales

$

895,881

 

 

$

772,408

 

 

$

2,488,437

 

 

$

2,443,155

 

Cost of sales

772,864

 

 

639,048

 

 

2,099,410

 

 

2,040,462

 

Gross profit

123,017

 

 

133,360

 

 

389,027

 

 

402,693

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

57,912

 

 

49,586

 

 

165,439

 

 

154,730

 

Sales and marketing

21,826

 

 

21,886

 

 

62,858

 

 

64,057

 

General and administrative

26,224

 

 

46,342

 

 

75,864

 

 

107,680

 

Total operating expenses

105,962

 

 

117,814

 

 

304,161

 

 

326,467

 

Income from operations

17,055

 

 

15,546

 

 

84,866

 

 

76,226

 

Other income (expense), net

2,017

 

 

937

 

 

(1,363

)

 

2,110

 

Interest expense

(607

)

 

(518

)

 

(1,850

)

 

(1,630

)

Income before income tax provision

18,465

 

 

15,965

 

 

81,653

 

 

76,706

 

Income tax provision

227

 

 

899

 

 

(8,541

)

 

(9,782

)

Share of loss from equity investee, net of taxes

(264

)

 

(1,057

)

 

(409

)

 

(1,066

)

Net income

$

18,428

 

 

$

15,807

 

 

$

72,703

 

 

$

65,858

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

0.36

 

 

$

0.31

 

 

$

1.41

 

 

$

1.30

 

Diluted

$

0.35

 

 

$

0.29

 

 

$

1.35

 

 

$

1.26

 

Weighted-average shares used in calculation of net income per common share:

 

 

 

 

 

 

 

Basic

50,553

 

 

51,526

 

 

51,465

 

 

50,591

 

Diluted

53,218

 

 

53,693

 

 

53,747

 

 

52,399

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

 

2021

 

2020

 

2021

 

2020

Cost of sales

$

402

 

 

$

370

 

 

$

1,312

 

 

$

1,149

 

Research and development

3,328

 

 

3,043

 

 

10,369

 

 

9,299

 

Sales and marketing

503

 

 

417

 

 

1,517

 

 

1,276

 

General and administrative

3,261

 

 

975

 

 

7,919

 

 

3,099

 

Stock-based compensation expense

$

7,494

 

 

$

4,805

 

 

$

21,117

 

 

$

14,823

 

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

(unaudited)

 

 

Nine Months Ended
March 31,

 

2021

 

2020

Net cash provided by operating activities

$

59,392

 

 

$

65,716

 

Net cash used in investing activities

(44,627

)

 

(34,136

)

Net cash (used in) provided by financing activities

(48,445

)

 

25,381

 

Effect of exchange rate fluctuations on cash

362

 

 

163

 

Net (decrease) increase in cash, cash equivalents and restricted cash

(33,318

)

 

57,124

 

Cash, cash equivalents and restricted cash at the beginning of the period

212,390

 

 

262,140

 

Cash, cash equivalents and restricted cash at the end of the period

$

179,072

 

 

$

319,264

 

SUPER MICRO COMPUTER, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended
March 31,

Nine Months Ended
March 31,

 

2021

 

2020

 

2021

 

2020

GAAP GROSS PROFIT

$

123,017

 

 

$

133,360

 

 

$

389,027

 

 

$

402,693

 

Stock-based compensation

402

 

 

370

 

 

1,312

 

 

1,149

 

Special performance bonuses

 

 

2,871

 

 

 

 

2,871

 

Other expenses

 

 

 

 

20

 

 

 

NON-GAAP GROSS PROFIT

$

123,419

 

 

$

136,601

 

 

$

390,359

 

 

$

406,713

 

 

 

 

 

 

 

 

 

GAAP GROSS MARGIN

13.7

%

 

17.3

%

 

15.6

%

 

16.5

%

Stock-based compensation expenses

0.1

%

 

%

 

0.1

%

 

%

Special performance bonuses

%

 

0.4

%

 

%

 

0.1

%

Other expenses

%

 

%

 

%

 

%

NON-GAAP GROSS MARGIN

13.8

%

 

17.7

%

 

15.7

%

 

16.6

%

 

 

 

 

 

 

 

 

GAAP OPERATING EXPENSE

$

105,962

 

 

$

117,814

 

 

$

304,161

 

 

$

326,467

 

Stock-based compensation

(7,092

)

 

(4,435

)

 

(19,805

)

 

(13,674

)

Legal settlement costs

 

 

(17,500

)

 

 

 

(17,500

)

Executive SEC settlement

 

 

 

 

2,122

 

 

 

Special performance bonuses

(2,508

)

 

(7,458

)

 

(5,129

)

 

(7,458

)

Other expenses

 

 

 

 

(221

)

 

 

Controls remediation

(1,239

)

 

(1,440

)

 

(1,239

)

 

(12,859

)

NON-GAAP OPERATING EXPENSE

$

95,123

 

 

$

86,981

 

 

$

279,889

 

 

$

274,976

 

 

 

 

 

 

 

 

 

GAAP INCOME FROM OPERATIONS

$

17,055

 

 

$

15,546

 

 

$

84,866

 

 

$

76,226

 

Stock-based compensation

7,494

 

 

4,805

 

 

21,117

 

 

14,823

 

Legal settlement costs

 

 

17,500

 

 

 

 

17,500

 

Executive SEC settlement

 

 

 

 

(2,122

)

 

 

Special performance bonuses

2,508

 

 

10,329

 

 

5,129

 

 

10,329

 

Other expenses

 

 

 

 

241

 

 

 

Controls remediation

1,239

 

 

1,440

 

 

1,239

 

 

12,859

 

NON-GAAP INCOME FROM OPERATIONS

$

28,296

 

 

$

49,620

 

 

$

110,470

 

 

$

131,737

 

 

 

 

 

 

 

 

 

GAAP TAX EXPENSE

$

(227

)

 

$

(899

)

 

$

8,541

 

 

$

9,782

 

Adjustments to tax provision

2,473

 

 

3,812

 

 

5,633

 

 

8,868

 

NON-GAAP TAX EXPENSE

$

2,246

 

 

$

2,913

 

 

$

14,174

 

 

$

18,650

 

 

 

 

 

 

 

 

 

GAAP NET INCOME

$

18,428

 

 

$

15,807

 

 

$

72,703

 

 

$

65,858

 

Stock-based compensation

7,494

 

 

4,805

 

 

21,117

 

 

14,823

 

Legal settlement costs

 

 

17,500

 

 

 

 

17,500

 

Executive SEC settlement

 

 

 

 

(2,122

)

 

 

Special performance bonuses

2,508

 

 

10,329

 

 

5,129

 

 

10,329

 

Other expenses

 

 

 

 

241

 

 

 

Controls remediation

1,239

 

 

1,440

 

 

1,239

 

 

12,859

 

Adjustments to tax provision

(2,473

)

 

(3,812

)

 

(5,633

)

 

(8,868

)

NON-GAAP NET INCOME

$

27,196

 

 

$

46,069

 

 

$

92,674

 

 

$

112,501

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – BASIC

$

0.36

 

 

$

0.31

 

 

$

1.41

 

 

$

1.30

 

Impact of Non-GAAP adjustments

0.18

 

 

0.58

 

 

0.39

 

 

0.92

 

NON-GAAP NET INCOME PER COMMON SHARE – BASIC

$

0.54

 

 

$

0.89

 

 

$

1.80

 

 

$

2.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – DILUTED

$

0.35

 

 

$

0.29

 

 

$

1.35

 

 

$

1.26

 

Impact of Non-GAAP adjustments

0.15

 

 

0.55

 

 

0.33

 

 

0.83

 

NON-GAAP NET INCOME PER COMMON SHARE – DILUTED

$

0.50

 

 

$

0.84

 

 

$

1.68

 

 

$

2.09

 

 

 

 

 

 

 

 

 

WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC – GAAP

50,553

 

 

51,526

 

 

51,465

 

 

50,591

 

BASIC - NON-GAAP

50,553

 

 

51,526

 

 

51,465

 

 

50,591

 

 

 

 

 

 

 

 

 

DILUTED – GAAP

53,218

 

 

53,693

 

 

53,747

 

 

52,399

 

DILUTED - NON-GAAP

54,525

 

 

55,050

 

 

55,185

 

 

53,913

 

 

Investor Relations Contact
Nicole Noutsios
email: ir@supermicro.com

Source: Super Micro Computer, Inc.

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