Supermicro Announces Second Quarter Fiscal Year 2021 Financial Results, New Stock Repurchase Authorization, and Chief Financial Officer Transition

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 second quarter of fiscal year 2021 ended December 31, 2020.

Second Quarter Fiscal Year 2021 Highlights

  • Net sales of $830 million versus $762 million in the first quarter of fiscal year 2021 and $871 million in the same quarter of last year.
  • Gross margin of 16.4% versus 17.0% in the first quarter of fiscal year 2021 and 15.9% in the same quarter of last year.
  • Net income of $28 million versus $27 million in the first quarter of fiscal year 2021 and $24 million in the same quarter of last year.
  • Diluted net income per common share of $0.52 versus $0.49 in the first quarter of fiscal year 2021 and $0.46 in the same quarter of last year.
  • Non-GAAP diluted net income per common share of $0.63 versus $0.55 in the first quarter of fiscal year 2021 and $0.57 in the same quarter of last year.
  • Cash flow from operations of $63 million and capital expenditures of $14 million.

Non-GAAP gross margin for the second quarter of fiscal year 2021 was 16.4%, which adds back stock-based compensation expenses of $0.4 million. Non-GAAP diluted net income per common share for the second quarter of fiscal year 2021 was $0.63, which adds back stock-based compensation expenses of $6.5 million and special performance bonuses of $2.5 million, net of the related tax effects.

As of December 31, 2020, total cash, cash equivalents and restricted cash was $317 million and total bank debt was $45 million. Supermicro completed its previously announced $50 million share repurchase program on January 6, 2021.

“We were pleased to deliver Q2 revenue at the midpoint of our guidance range driven by strong sequential growth in sales to our international customers in a variety of countries, which demonstrates the breadth and strength of our channel partnerships around the world,” said Charles Liang, Chairman and CEO. “Recently strong bookings also give us confidence in our outlook to resume year-over-year growth in Q3. We are excited about our robust pipeline of innovative products and aim to continue to grow through the remainder of fiscal 2021 and drive further growth in fiscal 2022.”

Third Quarter Fiscal Year 2021 Guidance

The Company expects net sales of $790 million to $870 million, GAAP net income per diluted share of $0.22 to $0.42 and non-GAAP diluted net income per common share of $0.37 to $0.57 for the third quarter of fiscal year 2021 ending March 31, 2021. The Company’s projections for GAAP and non-GAAP diluted net income per common share both assume a tax rate of approximately 16% and a fully diluted share count of 54.5 million shares. The outlook for Q3 of fiscal year 2021 GAAP diluted net income per common share includes approximately $7.0 million in expected stock-based compensation expense and $2.5 million in special performance bonuses, both net of tax effects, that are excluded from non-GAAP diluted net income per common share.

Chief Financial Officer Transition

On January 29, 2021, Mr. Kevin Bauer, Senior Vice President, Chief Financial Officer, and Corporate Secretary of Supermicro, who serves as the Company’s principal financial officer and principal accounting officer, resigned from his positions with the Company to pursue other interests. Mr. David Weigand, currently Senior Vice President and Chief Compliance Officer, has been appointed as the Senior Vice President, Chief Financial Officer, and Corporate Secretary.

Mr. Bauer will remain at the company for a transition period through February 2021. Kevin Bauer commented, “I have enjoyed working with Charles and the very dedicated Supermicro team and helping the Company through challenging times over the last four years. I am most proud of our work enhancing our company’s finance function, providing a stronger foundation for the Company to continue to grow, as well as our focus on improving operations to generate cash, which enabled a return of capital to shareholders.”

“I am pleased to announce the appointment of David Weigand as Senior Vice President & Chief Financial Officer,” said Supermicro Chairman and CEO Charles Liang. “Kevin has made valuable contributions to Supermicro as a key member of our executive team. His diligent efforts have helped to lay the foundation for Supermicro’s next phase of growth. We wish Kevin well in his future endeavors.”

Mr. Weigand joined the company in May 2018 as Senior Vice President & Chief Compliance Officer. He previously held executive positions at HPE and at Renesas Electronics America, Inc, where he was Chief Financial Officer.”

Share Repurchase Authorization

The Company also announced today a new stock repurchase program pursuant to which the Company may repurchase up to $200 million of its common stock. The stock repurchase program is effective until July 31, 2022 or until the maximum amount of common stock is repurchased, whichever occurs first.

“The stock repurchase program reflects our ongoing commitment to creating value for stockholders and our very positive long-term view of our business opportunities,” said Charles Liang, Chairman and CEO of the Company.

Stock repurchases may be made from time to time at prevailing prices in the open market including pursuant to a Rule 10b5-1 plan. There can be no assurance of how many shares will be repurchased, and the repurchase program may be suspended for periods or discontinued at any time. The timing and amount of any shares repurchased will be determined based on an evaluation of market conditions and other factors. Share repurchases will be funded with cash on hand.

The Company had approximately 50,651,054 shares of common stock outstanding on December 31, 2020.

Conference Call and Webcast Information

Those wishing to access the live webcast may use the following link:

https://event.on24.com/wcc/r/2948024/CEA438C854C8F5B97595A20EDCBF99CB

The conference call can be accessed by registering online at:

http://www.directeventreg.com/registration/event/9126449

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 third quarter of fiscal year 2021 guidance, our ability to grow through the remainder of fiscal 2021 and drive further growth in fiscal 2022, 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, 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)

 

December 31,

 

June 30,

 

2020

 

2020

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

315,610

 

 

$

210,533

 

 

Accounts receivable, net of allowances

323,021

 

 

403,745

 

 

Inventories

807,431

 

 

851,498

 

 

Prepaid expenses and other current assets

98,211

 

 

126,985

 

 

Total current assets

1,544,273

 

 

1,592,761

 

 

Investment in equity investee

3,862

 

 

2,703

 

 

Property, plant and equipment, net

255,406

 

 

233,785

 

 

Deferred income taxes, net

55,781

 

 

54,898

 

 

Other assets

34,750

 

 

34,499

 

 

Total assets

$

1,894,072

 

 

$

1,918,646

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

396,288

 

 

$

417,673

 

 

Accrued liabilities

141,698

 

 

155,401

 

 

Income taxes payable

10,555

 

 

4,700

 

 

Short-term debt

24,921

 

 

23,704

 

 

Deferred revenue

99,509

 

 

106,157

 

 

Total current liabilities

672,971

 

 

707,635

 

 

Deferred revenue, non-current

95,396

 

 

97,612

 

 

Long-term debt, net of debt issuance costs

20,577

 

 

5,697

 

 

Other long-term liabilities

40,908

 

 

41,995

 

 

Total liabilities

829,852

 

 

852,939

 

 

Stockholders’ equity:

 

 

 

Common stock and additional paid-in capital

410,522

 

 

389,972

 

 

Treasury stock

 

 

(20,491

)

 

Accumulated other comprehensive gain (loss)

396

 

 

(152

)

 

Retained earnings

653,129

 

 

696,211

 

 

Total Super Micro Computer, Inc. stockholders’ equity

1,064,047

 

 

1,065,540

 

 

Noncontrolling interest

173

 

 

167

 

 

Total stockholders’ equity

1,064,220

 

 

1,065,707

 

 

Total liabilities and stockholders’ equity

$

1,894,072

 

 

$

1,918,646

 

 

 

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended
December 31,

 

 

Six Months Ended
December 31,

 

 

2020

 

 

 

 

2019

 

 

 

 

2020

 

 

 

 

2019

 

 

Net sales

$

830,306

 

 

 

$

870,943

 

 

 

$

1,592,556

 

 

 

$

1,670,747

 

 

Cost of sales

 

694,211

 

 

 

 

732,539

 

 

 

 

1,326,546

 

 

 

 

1,401,414

 

 

Gross profit

 

136,095

 

 

 

 

138,404

 

 

 

 

266,010

 

 

 

 

269,333

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

52,729

 

 

 

 

55,572

 

 

 

 

107,527

 

 

 

 

105,144

 

 

Sales and marketing

 

20,740

 

 

 

 

21,977

 

 

 

 

41,032

 

 

 

 

42,171

 

 

General and administrative

 

25,261

 

 

 

 

33,040

 

 

 

 

49,640

 

 

 

 

61,338

 

 

Total operating expenses

 

98,730

 

 

 

 

110,589

 

 

 

 

198,199

 

 

 

 

208,653

 

 

Income from operations

 

37,365

 

 

 

 

27,815

 

 

 

 

67,811

 

 

 

 

60,680

 

 

Other income (expense), net

 

(2,539

)

 

 

 

(416

)

 

 

 

(3,380

)

 

 

 

1,173

 

 

Interest expense

 

(569

)

 

 

 

(560

)

 

 

 

(1,243

)

 

 

 

(1,112

)

 

Income before income tax provision

 

34,257

 

 

 

 

26,839

 

 

 

 

63,188

 

 

 

 

60,741

 

 

Income tax provision

 

(5,108

)

 

 

 

(2,113

)

 

 

 

(8,768

)

 

 

 

(10,681

)

 

Share of income from equity investee, net of taxes

 

(1,475

)

 

 

 

(1,020

)

 

 

 

(145

)

 

 

 

(9

)

 

Net income

$

27,674

 

 

 

$

23,706

 

 

 

$

54,275

 

 

 

$

50,051

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

Basic

$

0.54

 

 

 

$

0.47

 

 

 

$

1.05

 

 

 

$

1.00

 

 

Diluted

$

0.52

 

 

 

$

0.46

 

 

 

$

1.00

 

 

 

$

0.97

 

 

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

 

 

 

 

 

 

 

 

 

 

Basic

 

51,499

 

 

 

 

50,181

 

 

 

 

51,914

 

 

 

 

50,129

 

 

Diluted

 

53,584

 

 

 

 

52,009

 

 

 

 

54,005

 

 

 

 

51,758

 

 

 

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

 

 

Three Months Ended
December 31,

 

 

Six Months Ended
December 31,

 

 

2020

 

 

 

 

2019

 

 

 

 

2020

 

 

 

 

2019

 

 

Cost of sales

$

407

 

 

 

$

384

 

 

 

$

910

 

 

 

$

779

 

 

Research and development

 

3,339

 

 

 

 

3,126

 

 

 

 

7,041

 

 

 

 

6,256

 

 

Sales and marketing

 

497

 

 

 

 

423

 

 

 

 

1,014

 

 

 

 

859

 

 

General and administrative

 

2,210

 

 

 

 

1,031

 

 

 

 

4,658

 

 

 

 

2,124

 

 

Stock-based compensation expense

$

6,453

 

 

 

$

4,964

 

 

 

$

13,623

 

 

 

$

10,018

 

 

 

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

(unaudited)

 

Six Months Ended
December 31,

 

2020

 

2019

Net cash provided by operating activities

$

183,802

 

 

 

$

87,153

 

 

Net cash used in investing activities

(25,551

)

 

 

(23,339

)

 

Net cash used in financing activities

(53,697

)

 

 

(2,076

)

 

Effect of exchange rate fluctuations on cash

540

 

 

 

175

 

 

Net increase in cash, cash equivalents and restricted cash

105,094

 

 

 

61,913

 

 

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

$

317,484

 

 

 

$

324,053

 

 

 

SUPER MICRO COMPUTER, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended

December 31,

Six Months Ended
December 31,

 

2020

 

2019

 

2020

 

2019

GAAP GROSS PROFIT

$

136,095

 

 

 

$

138,404

 

 

 

$

266,010

 

 

 

$

269,333

 

 

Stock-based compensation

407

 

 

 

384

 

 

 

910

 

 

 

779

 

 

Other expenses

 

 

 

 

 

 

20

 

 

 

 

 

Non-GAAP GROSS PROFIT

$

136,502

 

 

 

$

138,788

 

 

 

$

266,940

 

 

 

$

270,112

 

 

 

 

 

 

 

 

 

 

GAAP GROSS MARGIN

16.4

 

%

 

15.9

 

%

 

16.7

 

%

 

16.1

 

%

Stock-based compensation expenses

 

%

 

 

%

 

0.1

 

%

 

0.1

 

%

Other expenses

 

%

 

 

%

 

 

%

 

 

%

Non-GAAP GROSS MARGIN

16.4

 

%

 

15.9

 

%

 

16.8

 

%

 

16.2

 

%

 

 

 

 

 

 

 

 

GAAP OPERATING EXPENSE

$

98,730

 

 

 

$

110,589

 

 

 

$

198,199

 

 

 

$

208,653

 

 

Stock-based compensation

(6,046

)

 

 

(4,580

)

 

 

(12,713

)

 

 

(9,239

)

 

Executive SEC settlement

 

 

 

 

 

 

2,122

 

 

 

 

 

Special performance bonuses

(2,531

)

 

 

 

 

 

(2,621

)

 

 

 

 

Other expenses

 

 

 

 

 

 

(221

)

 

 

 

 

Controls remediation

 

 

 

(3,759

)

 

 

 

 

 

(11,419

)

 

Non-GAAP OPERATING EXPENSE

$

90,153

 

 

 

$

102,250

 

 

 

$

184,766

 

 

 

$

187,995

 

 

 

 

 

 

 

 

 

 

GAAP INCOME FROM OPERATIONS

$

37,365

 

 

 

$

27,815

 

 

 

$

67,811

 

 

 

$

60,680

 

 

Stock-based compensation

6,453

 

 

 

4,964

 

 

 

13,623

 

 

 

10,018

 

 

Executive SEC settlement

 

 

 

 

 

 

(2,122

)

 

 

 

 

Special performance bonuses

2,531

 

 

 

 

 

 

2,621

 

 

 

 

 

Other expenses

 

 

 

 

 

 

241

 

 

 

 

 

Controls remediation

 

 

 

3,759

 

 

 

 

 

 

11,419

 

 

Non-GAAP INCOME FROM OPERATIONS

$

46,349

 

 

 

$

36,538

 

 

 

$

82,174

 

 

 

$

82,117

 

 

 

 

 

 

 

 

 

 

GAAP TAX EXPENSE

$

5,108

 

 

 

$

2,113

 

 

 

$

8,768

 

 

 

$

10,681

 

 

Adjustments to tax provision

1,977

 

 

 

2,007

 

 

 

3,160

 

 

 

5,056

 

 

Non-GAAP TAX EXPENSE

$

7,085

 

 

 

$

4,120

 

 

 

$

11,928

 

 

 

$

15,737

 

 

 

 

 

 

 

 

 

 

GAAP NET INCOME

$

27,674

 

 

 

$

23,706

 

 

 

$

54,275

 

 

 

$

50,051

 

 

Stock-based compensation

6,453

 

 

 

4,964

 

 

 

13,623

 

 

 

10,018

 

 

Executive SEC settlement

 

 

 

 

 

 

(2,122

)

 

 

 

 

Special performance bonuses

2,531

 

 

 

 

 

 

2,621

 

 

 

 

 

Other expenses

 

 

 

 

 

 

241

 

 

 

 

 

Controls remediation

 

 

 

3,759

 

 

 

 

 

 

11,419

 

 

Adjustments to tax provision

(1,977

)

 

 

(2,007

)

 

 

(3,160

)

 

 

(5,056

)

 

Non-GAAP NET INCOME

$

34,681

 

 

 

$

30,422

 

 

 

$

65,478

 

 

 

$

66,432

 

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – BASIC

$

0.54

 

 

 

$

0.47

 

 

 

$

1.05

 

 

 

$

1.00

 

 

Impact of Non-GAAP adjustments

0.13

 

 

 

0.14

 

 

 

0.21

 

 

 

0.33

 

 

Non-GAAP NET INCOME PER COMMON SHARE – BASIC

$

0.67

 

 

 

$

0.61

 

 

 

$

1.26

 

 

 

$

1.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – DILUTED

$

0.52

 

 

 

$

0.46

 

 

 

$

1.00

 

 

 

$

0.97

 

 

Impact of Non-GAAP adjustments

0.11

 

 

 

0.11

 

 

 

0.18

 

 

 

0.28

 

 

Non-GAAP NET INCOME PER COMMON SHARE – DILUTED

$

0.63

 

 

 

$

0.57

 

 

 

$

1.18

 

 

 

$

1.25

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC – GAAP

51,499

 

 

 

50,181

 

 

 

51,914

 

 

 

50,129

 

 

BASIC – Non-GAAP

51,499

 

 

 

50,181

 

 

 

51,914

 

 

 

50,129

 

 

 

 

 

 

 

 

 

 

DILUTED – GAAP

53,584

 

 

 

52,009

 

 

 

54,005

 

 

 

51,758

 

 

DILUTED – Non-GAAP

55,133

 

 

 

53.572

 

 

 

55,508

 

 

 

53,350

 

 

 

Contacts

Investor Relations Contact
James Kisner, CFA

Vice President, Investor Relations

(669) 284-1259

email: ir@supermicro.com