Form 8-K Super Micro Computer, For: Aug 04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 4, 2016
SUPER MICRO COMPUTER, INC.
(Exact name of registrant specified in its charter)
Delaware | 001-33383 | 77-0353939 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
980 Rock Avenue, San Jose, California 95131
(Address of principal executive offices, including Zip Code)
Registrant’s telephone, including area code: (408) 503-8000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On August 4, 2016, Super Micro Computer, Inc. issued a press release announcing its operating and financial results for the quarter and fiscal year ended June 30, 2016. A copy of the press release including consolidated financial statements for the quarter and fiscal year ended June 30, 2016 is being furnished as Exhibit 99.1. The slides for Super Micro Computer Inc.’s fourth quarter earnings presentation on August 4, 2016 are being furnished as Exhibit 99.2. The information in this report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), and is not to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language contained in such filing, unless otherwise expressly stated in such filing.
Item 9.01 | Financial Statements and Exhibits. |
Exhibit Number | Description | |
99.1 | Press Release of Super Micro Computer, Inc. dated August 4, 2016 announcing its operating and financial results for the quarter and fiscal year ended June 30, 2016. | |
99.2 | Slides for Super Micro Computer, Inc.’s fourth quarter earnings presentation on August 4, 2016. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SUPER MICRO COMPUTER, INC. | |||||||
Date: | August 4, 2016 | By: | /s/ Charles Liang | ||||
Charles Liang President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | |||||||
Exhibit Index
Exhibit Number | Description | |
99.1 | Press Release of Super Micro Computer, Inc. dated August 4, 2016 announcing its operating and financial results for the quarter and fiscal year ended June 30, 2016. | |
99.2 | Slides for Super Micro Computer, Inc.’s fourth quarter earnings presentation on August 4, 2016. | |
Exhibit 99.1
Super Micro Computer, Inc. Announces 4th Quarter 2016 Financial Results
SAN JOSE, Calif., August 4, 2016 (BUSINESS WIRE) -- Super Micro Computer, Inc. (NASDAQ: SMCI), a global leader in high-performance, high-efficiency server, storage technology and green computing, today announced fourth quarter and full-year financial results for the fiscal year ended June 30, 2016. The final results are in line with the preliminary results announced by the Company on July 18, 2016.
Fiscal 4th Quarter Highlights
• | Quarterly net sales of $524.3 million, down 1.6% from the third quarter of fiscal year 2016 and down 8.6% from the same quarter of last year. |
• | GAAP net income of $7.0 million, down 58.2% from the third quarter of fiscal year 2016 and down 73.9% from the same quarter of last year. |
• | GAAP gross margin was 14.1%, down from 14.9% in the third quarter of fiscal year 2016 and down from 15.6% in the same quarter of last year. |
• | Server solutions accounted for 65.5% of net sales compared with 69.9% in the third quarter of fiscal year 2016 and 61.7% in the same quarter of last year. |
Net sales for the fourth quarter ended June 30, 2016 totaled $524.3 million, down 1.6% from $532.7 million in the third quarter of fiscal year 2016. No customer accounted for more than 10% of net sales during the quarter ended June 30, 2016.
GAAP net income for the fourth quarter of fiscal year 2016 was $7.0 million or $0.13 per diluted share, a decrease of 73.9% from net income of $26.7 million, or $0.51 per diluted share in the same period a year ago. Included in net income for the quarter is $4.4 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the fourth quarter was $10.4 million, or $0.20 per diluted share, compared to non-GAAP net income of $30.0 million, or $0.57 per diluted share, in the same quarter of the prior year. On a sequential basis, non-GAAP net income decreased from the third quarter of fiscal year 2016 by $8.6 million or $0.16 per diluted share.
GAAP gross margin for the fourth quarter was 14.1% compared to 15.6% in the same period a year ago. Non-GAAP gross margin for the fourth quarter was 14.1% compared to 15.7% in the same period a year ago. GAAP and Non-GAAP gross margin for the third quarter of fiscal year 2016 were both 14.9%.
The GAAP income tax provision was $4.5 million or 39.0% of income before tax provision compared to $13.8 million or 34.1% in the same period a year ago and $7.4 million or 30.7% in the third quarter of fiscal year 2016. The effective tax rates for the fourth quarter of fiscal year 2016 was higher due to higher tax expenses associated with the implementation of the Company's new global corporate structure on May 1, 2016.
The Company's cash and cash equivalents and short and long term investments at June 30, 2016 were $183.7 million compared to $98.1 million at June 30, 2015. Free cash flow for the year ended June 30, 2016 was $73.4 million, primarily due to an increase in the Company's cash provided by operating activities and partially offset by the cash used in the development and construction of improvements on the Company's properties.
Fiscal Year 2016 Summary
Net sales for the fiscal year ended June 30, 2016 were $2,215.6 million, up 11.3% from $1,991.2 million for the fiscal year ended June 30, 2015. GAAP net income for fiscal year 2016 decreased to $72.0 million, or $1.39 per diluted share, a decrease of 29.3% from $101.9 million, or $2.03 per diluted share, for fiscal year 2015. Included in net income for the fiscal year ended June 30, 2016 is $16.1 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the fiscal year 2016 was $83.8 million or $1.59 per diluted share, a decrease of 24.9% compared to $111.6 million or $2.15 per diluted share for fiscal year 2015.
Business Outlook & Management Commentary
The Company expects net sales of $470 million to $550 million for the first quarter of fiscal year 2017 ending September 30, 2016. The Company expects non-GAAP earnings per diluted share of approximately $0.15 to $0.30 for the first quarter.
“As previously announced, this quarter our results were below expectations due to reduced demand from large datacenter customers and issues related to a global SAP and tax reorganization implementation that impacted our execution and pricing flexibility,” said Charles Liang, Chairman and Chief Executive Officer. “Our core strategy will be to continue to grow our technology leadership by offering the broadest array of first to market innovations in server, storage, cloud and IoT, by delivering leading architectures that leverage our building block solutions and partner strategy to provide total solutions with software and service. At the same time, we will take actions to leverage our capacity and improve operational efficiency to become more flexible and competitive in winning new business. By offering the best value for innovation and emphasizing strategic customer relationships, we are confident that we can achieve stronger growth and improve financial performance.”
It is currently expected that the outlook will not be updated until the Company’s next quarterly earnings announcement, notwithstanding subsequent developments. However, the Company may update the outlook or any portion thereof at any time. Such updates will take place only by way of a news release or other broadly disseminated disclosure available to all interested parties in accordance with Regulation FD.
Conference Call Information
Super Micro Computer will discuss these financial results in a conference call at 2:00 p.m. PT, today. To participate in the conference, please call 1-888-455-2263 (International callers dial 1-719-325-2177) 10 minutes prior. A recording of the conference will be available until 11:59 pm (Eastern Time) on Thursday, August 18, 2016, by dialing 1-877-870-5176 (International callers dial 1-858-384-5517) and entering replay PIN 1154709. The live web cast and recording of the call will be available on the Investor Relations section at www.supermicro.com two hours after the conference conclusion. They 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 markets for X86, blade servers and embedded applications, 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.
Supermicro®, a global leader in high-performance, high-efficiency server technology and innovation is a premier provider of end-to-end green computing solutions for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermicro's advanced Server Building Block Solutions® offer a vast array of components for building energy-efficient, application-optimized, computing solutions. Architecture innovations include Twin, TwinPro, FatTwin™, Ultra Series, MicroCloud, MicroBlade, SuperBlade®, Simply Double, Double-sided Storage®, Battery Backup Power (BBP®) modules and WIO/UIO. Products include servers, blades, GPU systems, workstations, motherboards, chassis, power supplies, storage, networking, server management software and SuperRack® cabinets/accessories delivering unrivaled performance and value.
Founded in 1993 and headquartered in San Jose, California, Supermicro is committed to protecting the environment through its "We Keep IT Green®" initiative. The Company has global logistics and operations centers in Silicon Valley (USA), the Netherlands (Europe) and its Science & Technology Park in Taiwan (Asia).
Supermicro, FatTwin, TwinPro, SuperBlade, Double-Sided Storage, BBP, SuperRack, 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) | |||||||||||
June 30, | June 30, | ||||||||||
2016 | 2015 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 180,964 | $ | 95,442 | |||||||
Accounts receivable, net | 288,941 | 322,594 | |||||||||
Inventory | 448,980 | 463,493 | |||||||||
Deferred income taxes – current | — | 17,863 | |||||||||
Prepaid income taxes | 5,682 | 7,507 | |||||||||
Prepaid expenses and other current assets | 13,435 | 7,516 | |||||||||
Total current assets | 938,002 | 914,415 | |||||||||
Long-term investments | 2,643 | 2,633 | |||||||||
Property, plant and equipment, net | 187,949 | 163,038 | |||||||||
Deferred income taxes – noncurrent | 28,460 | 4,497 | |||||||||
Other assets | 8,546 | 5,226 | |||||||||
Total assets | $ | 1,165,600 | $ | 1,089,809 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 249,239 | $ | 299,774 | |||||||
Accrued liabilities | 55,618 | 46,743 | |||||||||
Income taxes payable | 5,172 | 14,111 | |||||||||
Short-term debt and current portion of long-term debt | 53,589 | 93,479 | |||||||||
Total current liabilities | 363,618 | 454,107 | |||||||||
Long term debt, net of current portion | 40,000 | 933 | |||||||||
Other long-term liabilities | 40,603 | 15,684 | |||||||||
Total liabilities | 444,221 | 470,724 | |||||||||
Stockholders' equity: | |||||||||||
Common stock and additional paid-in capital | 277,339 | 247,081 | |||||||||
Treasury stock (at cost) | (2,030 | ) | (2,030 | ) | |||||||
Accumulated other comprehensive loss | (85 | ) | (80 | ) | |||||||
Retained earnings | 445,971 | 373,950 | |||||||||
Total Super Micro Computer Inc. stockholders' equity | 721,195 | 618,921 | |||||||||
Noncontrolling interest | 184 | 164 | |||||||||
Total stockholders' equity | 721,379 | 619,085 | |||||||||
Total liabilities and stockholders' equity | $ | 1,165,600 | $ | 1,089,809 | |||||||
SUPER MICRO COMPUTER, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 524,270 | $ | 573,594 | $ | 2,215,573 | $ | 1,991,155 | |||||||
Cost of sales | 450,474 | 483,828 | 1,884,048 | 1,670,924 | |||||||||||
Gross profit | 73,796 | 89,766 | 331,525 | 320,231 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 34,148 | 27,741 | 123,994 | 100,257 | |||||||||||
Sales and marketing | 17,664 | 14,195 | 62,841 | 48,851 | |||||||||||
General and administrative | 10,145 | 7,043 | 37,840 | 24,377 | |||||||||||
Total operating expenses | 61,957 | 48,979 | 224,675 | 173,485 | |||||||||||
Income from operations | 11,839 | 40,787 | 106,850 | 146,746 | |||||||||||
Interest and other income, net | 40 | 23 | 171 | 115 | |||||||||||
Interest expense | (453 | ) | (309 | ) | (1,594 | ) | (965 | ) | |||||||
Income before income tax provision | 11,426 | 40,501 | 105,427 | 145,896 | |||||||||||
Income tax provision | 4,455 | 13,799 | 33,406 | 44,033 | |||||||||||
Net income | $ | 6,971 | $ | 26,702 | $ | 72,021 | $ | 101,863 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.14 | $ | 0.56 | $ | 1.50 | $ | 2.19 | |||||||
Diluted | $ | 0.13 | $ | 0.51 | $ | 1.39 | $ | 2.03 | |||||||
Weighted-average shares used in calculation of net income per common share: | |||||||||||||||
Basic | 48,463 | 47,327 | 47,917 | 46,434 | |||||||||||
Diluted | 52,274 | 51,990 | 51,836 | 50,094 | |||||||||||
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, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Cost of sales | $ | 306 | $ | 250 | $ | 1,098 | $ | 901 | |||||||
Research and development | 2,755 | 2,495 | 10,178 | 8,643 | |||||||||||
Sales and marketing | 511 | 405 | 1,841 | 1,553 | |||||||||||
General and administrative | 791 | 822 | 3,014 | 2,602 | |||||||||||
Stock-based compensation expense before taxes | $ | 4,363 | $ | 3,972 | $ | 16,131 | $ | 13,699 | |||||||
SUPER MICRO COMPUTER, INC. | |||||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Fiscal Year Ended | |||||||
June 30, | |||||||
2016 | 2015 | ||||||
OPERATING ACTIVITIES: | |||||||
Net income | $ | 72,021 | $ | 101,863 | |||
Reconciliation of net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 13,282 | 8,133 | |||||
Stock-based compensation expense | 16,131 | 13,699 | |||||
Excess tax benefits from stock-based compensation | (2,855 | ) | (8,089 | ) | |||
Allowance for doubtful accounts | 1,278 | 326 | |||||
Provision for inventory | 9,313 | 5,928 | |||||
Exchange gain | (1,233 | ) | (675 | ) | |||
Deferred income taxes, net | (6,133 | ) | 632 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 32,375 | (110,182 | ) | ||||
Inventory | 5,200 | (153,584 | ) | ||||
Prepaid expenses and other assets | (8,210 | ) | (2,741 | ) | |||
Accounts payable | (54,301 | ) | 75,520 | ||||
Income taxes payable, net | (3,260 | ) | 11,951 | ||||
Accrued liabilities | 9,027 | 9,551 | |||||
Other long-term liabilities | 24,874 | 3,032 | |||||
Net cash provided by (used in) operating activities | 107,509 | (44,636 | ) | ||||
INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (34,108 | ) | (35,100 | ) | |||
Restricted cash | (1,020 | ) | (416 | ) | |||
Investment in a privately held company | — | (661 | ) | ||||
Net cash used in investing activities | (35,128 | ) | (36,177 | ) | |||
FINANCING ACTIVITIES: | |||||||
Proceeds from debt | 34,200 | 84,900 | |||||
Repayment of debt | (34,100 | ) | (36,000 | ) | |||
Proceeds from exercise of stock options | 12,186 | 23,338 | |||||
Excess tax benefits from stock-based compensation | 2,855 | 8,089 | |||||
Payment of obligations under capital leases | (189 | ) | (134 | ) | |||
Advances under receivable financing arrangements | (21 | ) | 33 | ||||
Minimum tax withholding paid on behalf of employees for restricted stock units | (1,786 | ) | (175 | ) | |||
Net cash provided by financing activities | 13,145 | 80,051 | |||||
Effect of exchange rate fluctuations on cash | (4 | ) | (668 | ) | |||
Net increase (decrease) in cash and cash equivalents | 85,522 | (1,430 | ) | ||||
Cash and cash equivalents at beginning of period | 95,442 | 96,872 | |||||
Cash and cash equivalents at end of period | 180,964 | 95,442 | |||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | 1,632 | 933 | |||||
Cash paid for taxes, net of refunds | 36,951 | 30,671 | |||||
Non-cash investing and financing activities: | |||||||
Equipment purchased under capital leases | 299 | 442 | |||||
Accrued costs for property, plant and equipment purchases | 10,888 | 6,826 | |||||
SUPER MICRO COMPUTER, INC. | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Fiscal Year Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
GAAP GROSS PROFIT | $ | 73,796 | $ | 89,766 | $ | 331,525 | $ | 320,231 | ||||||||
Add back stock-based compensation (a) | 306 | 250 | 1,098 | 901 | ||||||||||||
Non-GAAP GROSS PROFIT | $ | 74,102 | $ | 90,016 | $ | 332,623 | $ | 321,132 | ||||||||
GAAP GROSS MARGIN | 14.1 | % | 15.6 | % | 15.0 | % | 16.1 | % | ||||||||
Add back stock-based compensation (a) | 0.0 | % | 0.1 | % | 0.0 | % | 0.0 | % | ||||||||
Non-GAAP GROSS MARGIN | 14.1 | % | 15.7 | % | 15.0 | % | 16.1 | % | ||||||||
GAAP INCOME FROM OPERATIONS | $ | 11,839 | $ | 40,787 | $ | 106,850 | $ | 146,746 | ||||||||
Add back stock-based compensation (a) | 4,363 | 3,972 | 16,131 | 13,699 | ||||||||||||
Non-GAAP INCOME FROM OPERATIONS | $ | 16,202 | $ | 44,759 | $ | 122,981 | $ | 160,445 | ||||||||
GAAP NET INCOME | $ | 6,971 | $ | 26,702 | $ | 72,021 | $ | 101,863 | ||||||||
Add back stock-based compensation (a) | 4,363 | 3,972 | 16,131 | 13,699 | ||||||||||||
Add back adjustments to tax provision (b) | (971 | ) | (681 | ) | (4,312 | ) | (3,955 | ) | ||||||||
Non-GAAP NET INCOME | $ | 10,363 | $ | 29,993 | $ | 83,840 | $ | 111,607 | ||||||||
GAAP NET INCOME PER COMMON SHARE – BASIC | $ | 0.14 | $ | 0.56 | $ | 1.50 | $ | 2.19 | ||||||||
Add back stock-based compensation and adjustments to tax provision (a) (b) | 0.07 | 0.07 | 0.25 | 0.21 | ||||||||||||
Non-GAAP NET INCOME PER COMMON SHARE – BASIC | $ | 0.21 | $ | 0.63 | $ | 1.75 | $ | 2.40 | ||||||||
GAAP NET INCOME PER COMMON SHARE – DILUTED | $ | 0.13 | $ | 0.51 | $ | 1.39 | $ | 2.03 | ||||||||
Add back stock-based compensation and adjustments to tax provision (a) (b) | 0.07 | 0.06 | 0.20 | 0.12 | ||||||||||||
Non-GAAP NET INCOME PER COMMON SHARE – DILUTED | $ | 0.20 | $ | 0.57 | $ | 1.59 | $ | 2.15 | ||||||||
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE | ||||||||||||||||
BASIC –GAAP | 48,463 | 47,327 | 47,917 | 46,434 | ||||||||||||
BASIC - Non-GAAP | 48,463 | 47,327 | 47,917 | 46,434 | ||||||||||||
DILUTED – GAAP | 52,274 | 51,990 | 51,836 | 50,094 | ||||||||||||
DILUTED - Non-GAAP | 52,955 | 52,609 | 52,666 | 51,930 | ||||||||||||
(a) Amortization of Financial Accounting Standards Board Accounting Standards Codification Topic 718 stock-based compensation for the three months and fiscal years ended June 30, 2016 and 2015.
(b) The provision of income taxes used in arriving at the non-GAAP net income was computed using an income tax rate of 34.4% and 31.0% for the three months and fiscal year ended June 30, 2016, respectively, and 32.6% and 30.1% for the three months and fiscal year ended June 30, 2015, respectively.
SOURCE: Super Micro Computer, Inc.
Super Micro Computer, Inc.
Howard Hideshima, 408-503-8000
SVP, Chief Financial Officer
or
Perry G. Hayes
SVP, Investor Relations
SMCI-F
Confidential
© 2016 Supermicro
Fourth Quarter Fiscal 2016
Earnings Conference
Presentation
August 4, 2016
Confidential
CY’ Q1’ Q4’
2
Safe Harbor Statement
This presentation contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements may relate, among other things, to our expected
financial and operating results, our ability to build and grow Supermicro, the benefit 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 markets
for X86 based servers, blade servers and embedded applications, increased competition, difficulties
of predicting timing of new product introductions, 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.
For a further list and description of risks and uncertainties, see the reports filed by Supermicro with
the Securities and Exchange Commission. Supermicro disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or
otherwise. Supplemental information, condensed balance sheets and statements of operations follow.
All monetary amounts are stated in U.S. dollars.
Confidential
CY’ Q1’ Q4’
3
Non-GAAP Financial Measures
Non-GAAP gross margin in this presentation excludes stock-based compensation expense. Non-
GAAP net income and net income per share in this presentation 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 operating 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 the press release that was issued
announcing the Company’s operating and financial results for the quarter ended June 30, 2016. In
addition, a reconciliation from GAAP to non-GAAP results is contained in the financial summary
attached to today’s presentation and is available in the Investor Relations section of our website at
www.supermicro.com in the Events and Presentations section. 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.
Confidential
CY’ Q1’ Q4’
4
Q4’FY2016 Non-GAAP Financial Highlights
(in millions, except per share data)
Direct business was 53.2% of total revenues
System business was 65.5% of total revenues
Change
Q4'16 YoY Sequential
Revenue $524.3 -8.6% -1.6%
Profit after Tax $10.4 -65.4% -45.4%
EPS $0.20 -64.9% -44.4%
Confidential
CY’ Q1’ Q4’
Q4’FY2016 Major Markets
Datacenter/Cloud
18.1% of Total Revenue
6% YoY Growth
Storage
19.1% of Total Revenue
-15% YoY Growth
5
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Q4’FY2016 Revenue by Geography
Other – 4.5%
United States
62.2%
Europe
17.5%
Asia
15.8%
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The Ultra 1U and 2U Broadwell Product Lines
24 DIMM, 160W Xeon CPU, Flexible I/O, NVMe support
3 to 15% less power consumption than competition
The 1U/2U TwinPro and 4U FatTwin
Most optimized for Hyper-converged Applications
Best performance/watt and price/performance ratio
SuperBlade, MicroBlade and MicroCloud
Densest computing nodes, 0.05U/0.1U/0.2U per node
95% less cable, easy maintenance, and cost effectiveness
GPU and Xeon Phi/KNL Product lines
KNL optimized platforms with 100G OPA connectivity
Non-blocking, direct connect 4 GPUs in 1U. Pascal solutions
Highest computing density and power efficiency
90 Bay/60 Bay, JBOD, Storage Server & 2U All-Flash Storage Array
24 DIMM DP redundant node and 200W+ CPU support
Up to 48 hot-swap NVMe/SAS3 in 2U
Big Data and Software Defined Storage Solutions
Embedded /IoT Product lines
Supermicro Rack Scale Design (SRSD)
Management Software and Switch
World’s Best Server/Storage Product Lines
NEW!
NEW!
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NEW!
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Growth in IoT Embedded
30% Revenue Growth YoY, $200M and 10% of Total Revenue.
More than 3 Years of R&D Investment
Target Double Digit Growth in FY17
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Revenue Trend
Q4'15 Q1'16 Q2'16 Q3'16 Q4'16
$574
$520
$639
$533 $524
$'s millions
Supermicro Revenue Trend
Y/Y 34.0% 17.2% 27.0% 13.1% -8.6%
Seq. 21.7% -9.4% 23.0% -16.6% -1.6%
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Revenue Analysis
Q4'15 Q1'16 Q2'16 Q3'16 Q4'16
$220
$163 $185 $160 $181
$354
$356
$454
$372 $343
$'s millions
Supermicro Subsystems/System Revenue
Subsystems Systems
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Non-GAAP Gross Margins
Q4'15 Q1'16 Q2'16 Q3'16 Q4'16
15.7%
13.9%
16.7%
14.9% 14.1%
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Non-GAAP Operating Margins
Q4'15 Q1'16 Q2'16 Q3'16 Q4'16
7.8%
4.9%
8.3%
5.3%
3.1%
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Summary P&L non-GAAP
(in millions, except per share data)
Change
Q4'16 YoY Sequential Q4'15 Q3'16
Operating Expense $57.9 $12.6 $6.8 $45.3 $51.1
Operating Expense Ratio 11.0% 3.1% 1.4% 7.9% 9.6%
Operating Income $16.2 -$28.6 -$12.1 $44.8 $28.3
Net Income $10.4 -$19.6 -$8.6 $30.0 $19.0
EPS $0.20 -$0.37 -$0.16 $0.57 $0.36
Diluted Common Share Count 53.0 52.6 53.1
Effective Quarterly
Tax Rate 34.4% 32.6% 32.0%
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Q4 FY2016 YTD Summary Statement of Cash Flows
($’s millions)
12 Months Ended 12 Months Ended
30-Jun-16 30-Jun-15
Net Income $72.0 $101.9
Depreciation and amortization $13.3 $8.1
Stock-based comp expense $16.1 $13.7
Other reserves $0.4 -$1.9
Net change in AR, Inventory, AP -$16.7 -$188.2
Other prepaids and liabilities $22.4 $21.8
Cash flow from operations $107.5 -$44.6
Capital expenditures -$34.1 -$35.1
Free cash flow $73.4 -$79.7
Net cash - investing activities -$1.0 -$1.1
Net cash - financing activities $13.1 $80.1
Effect of exchange rate fluctuation
on cash and cash equivalents $0.0 -$0.7
Net change in cash $85.5 -$1.4
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Q4 FY2016 Summary of Balance Sheet Metrics
($’s millions)
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Q4'16 Q3'16 Change
Cash Equivalents & Investments $183.7 $179.1 $4.6
Accounts Receivable $288.9 $285.7 $3.2
Inventory $449.0 $479.3 $(30.3)
Accounts Payable $249.2 $277.3 $(28.0)
DSO 50 51 -1
DIO 94 97 -3
DPO 53 60 -7
Cash Cycle Days 91 88 3
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Supplemental Financials
Fourth Quarter Fiscal 2016
Ended June 30, 2016
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Prior Period Net Income Comparisons
(in millions, except per share data)
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
Q4'16 Q3'16 Q4'15
Net Income (GAAP) $7.0 $16.7 $26.7
Stock-based Compensation Expense (tax affected)* $3.4 $2.3 $3.3
Net Income (Non-GAAP)* $10.4 $19.0 $30.0
Diluted Net Income per common share (GAAP) $0.13 $0.32 $0.51
Stock-based Compensation Expense (tax affected)* $0.07 $0.04 $0.06
Diluted Net Income per share (Non-GAAP)* $0.20 $0.36 $0.57
Shares used in diluted EPS calculation (Non-GAAP) * 53.0 53.1 52.6
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Non-GAAP Financial Summary
(in millions, except per share data)
Q4'16 Q3'16 Q4'15
Net Sales $524.3 $532.7 $573.6
Non-GAAP Gross Margin 14.1% 14.9% 15.7%
Non-GAAP Operating Expenses $57.9 $51.1 $45.3
Non-GAAP Operating Income $16.2 $28.3 $44.8
Non-GAAP Net Income $10.4 $19.0 $30.0
Non-GAAP Net Income per share $0.20 $0.36 $0.57
Fully diluted shares for calculation 53.0 53.1 52.6
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Quarterly Net Income (Loss)
GAAP to Non-GAAP Reconciliation
(in millions, except per share data)
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
Q4'16 Q3'16 Q2'16 Q1'16 Q4'15
Net income (GAAP) $7.0 $16.7 $34.7 $13.7 $26.7
Adjustments:
Stock-based compensation expense $4.4 $3.9 $4.0 $3.9 $4.0
Income tax effects of adjustments $(1.0) $(1.6) $(0.7) $(1.1) $(0.7)
Net income (Non-GAAP)* $10.4 $19.0 $38.0 $16.5 $30.0
Diluted Net Income per share (GAAP) $0.13 $0.32 $0.67 $0.27 $0.51
Adjustments: $0.07 $0.04 $0.06 $0.05 $0.06
Diluted Net Income per share (Non-GAAP)* $0.20 $0.36 $0.73 $0.32 $0.57
Diluted shares used in GAAP per share calculation
52.3 52.2 51.5 51.4 52.0
Diluted shares used in Non-GAAP per share calculation 53.0 53.1 52.1 52.0 52.6