Supermicro Announces Fourth Quarter and Full Year Fiscal Year 2021 Financial Results

Rhea-AI Summary

Super Micro Computer reported fourth quarter and fiscal year 2021 results, achieving net sales of $1.07 billion in Q4, up from $896 million year-over-year. Fiscal year net sales reached $3.56 billion, a 7% increase from the previous year, with net income of $112 million. Q4 diluted EPS was $0.74, up from $0.34 YoY. The company anticipates Q1 2022 sales between $900 million and $980 million, and a full-year forecast of $4.1 billion to $4.5 billion. Management highlights improved market share and strategic cost reductions.

Positive

• Fourth quarter net sales increased to $1.07 billion, up 19% YoY.
• Fiscal year revenue grew to $3.56 billion, a 7% increase from FY2020.
• Net income for FY2021 was $112 million, significantly up from $84 million in FY2020.
• Diluted EPS improved to $0.74 in Q4 2021, up from $0.34 YoY.
• Strong guidance for FY2022 with expected sales between $4.1 billion and $4.5 billion.

Negative

• Gross margin decreased slightly to 13.6% in Q4 from 13.8% YoY.
• Non-GAAP net income decreased from $150 million in FY2020 to $136 million in FY2021.

Super Micro Computer, Inc. (Nasdaq: SMCI), a global leader in high-performance, high-efficiency server and storage technology and green computing, today announced fourth quarter and full-year financial results for fiscal year 2021 ended June 30, 2021.

Fourth Quarter of Fiscal Year 2021 Highlights

• Net sales of $1.07 billion versus $896 million in the third quarter of fiscal year 2021 and $896 million in the same quarter of last year.

• Gross margin of 13.6% versus 13.7% in the third quarter of fiscal year 2021 and 13.8% in the same quarter of last year.

• Net income of $39 million versus $18 million in the third quarter of fiscal year 2021 and $18 million in the same quarter of last year.

• Diluted net income per common share of $0.74 versus $0.35 in the third quarter of fiscal year 2021 and $0.34 in the same quarter of last year.

• Non-GAAP diluted net income per common share of $0.81 versus $0.50 in the third quarter of fiscal year 2021 and $0.68 in the same quarter of last year.

• Cash flow generated from operations of $64 million and capital expenditures of $13 million.

Non-GAAP gross margin for the fourth quarter of fiscal year 2021 was 13.7%, which adds back stock-based compensation expense of $0.5 million. Non-GAAP diluted net income per common share for the fourth quarter of fiscal year 2021 was $0.81, which adds back stock-based compensation expense of $7.4 million, special performance bonuses of $0.7 million and controls remediation costs recovery of $0.2 million, less tax effects of $3.4 million.

As of June 30, 2021, total cash and cash equivalents was $232 million and bank debt was $98 million.

Fiscal Year 2021 Summary

Net sales for the fiscal year ended June 30, 2021, were $3.56 billion versus $3.34 billion for the fiscal year ended June 30, 2020. Net income for fiscal year 2021 was $112 million, or $2.09 per diluted share, versus $84 million, or $1.60 per diluted share, for fiscal year 2020. Non-GAAP net income for the fiscal year 2021 was $136 million, or $2.48 per diluted share, versus $150 million, or $2.77 per diluted share, for fiscal year 2020. Non-GAAP net income for the fiscal year 2021 adds back stock-based compensation expense of $28.5 million, special performance bonuses of $5.8 million, executive SEC settlement credit of $2.1 million, and controls remediation costs and other expenses of $1.3 million, less tax effects of $9.0 million.

Business Outlook and Management Commentary

The Company expects net sales of $900 million to $980 million, GAAP net income per diluted share of $0.16 to $0.36 and non-GAAP net income per diluted share of $0.28 to $0.48 for the first quarter of fiscal year 2022 ending September 30, 2021. The Company’s projections for GAAP and non-GAAP net income per diluted share both assume a tax rate of approximately 16% and a fully diluted share count of 53.7 million shares for GAAP and fully diluted share count of 55.0 million shares for non-GAAP. The outlook for Q1 of fiscal year 2022 GAAP net income per diluted share includes approximately $8 million in expected stock-based compensation expense and other expenses that are excluded from non-GAAP net income per diluted share. The Company expects net sales of $4.1 billion to $4.5 billion, GAAP net income per diluted share of at least $2.60 and non-GAAP net income per diluted share of at least $3.00 for fiscal year 2022 ending June 30, 2022. The Company’s projections for GAAP and non-GAAP net income per diluted share both assume a tax rate of approximately 16% and a fully diluted share count of 55.3 million shares for GAAP and fully diluted share count of 56.5 million shares for non-GAAP. The outlook for fiscal year 2022 GAAP net income per diluted share includes approximately $30 million in expected stock-based compensation expense and other expenses that are excluded from non-GAAP net income per diluted share.

“I am pleased to announce that for the first time our quarterly revenue has exceeded one billion dollars. For fiscal Q4 2021, we delivered year-over-year revenue growth of 19%. For fiscal year 2021, our revenue grew 7%. We are gaining market share and finally resumed fast growth starting from the March quarter this year,” said Charles Liang, Chairman and Chief Executive Officer. “We also delivered strong Q4 non-GAAP EPS year-on-year growth of 19% despite elevated operating costs due to the impact of COVID-19. We are shifting a greater portion of our operations and R&D investment to our Taiwan campus, which will result in lower costs. While our Q1 outlook reflects continued pressure from COVID-19 and global shortage headwinds, we are very optimistic about our future. We are committed to accelerating our revenue growth, our products have traction with top-tier customers, we are penetrating key markets, and we are continuing our long history of market share gains.”

Conference Call and Webcast Information

Supermicro will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its fourth quarter and full-year fiscal 2021 financial results. Those wishing to access the live webcast may use the following link:

https://event.on24.com/wcc/r/3195684/8DCDB8BCDC914B20C703A18392CAE17B

The conference call can be accessed by registering online at:

http://www.directeventreg.com/registration/event/5254758

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 first quarter of the fiscal year 2022 and full fiscal year 2022 guidance, the ability to lower costs, accelerate revenue growth, penetrate key markets and gain market share, and the ability to execute on the Company's 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 expense, special performance bonuses and other expenses. Non-GAAP operating expenses discussed in this press release adds back stock-based compensation expense, legal settlement costs, special performance bonuses , other expenses, controls remediation, and executive SEC settlement credit. Non-GAAP income from operations discussed in this press release adds back stock-based compensation expense, legal settlement costs, special performance bonuses, other expenses, controls remediation and executive SEC settlement credit. Non-GAAP diluted net income and non-GAAP net income per common share discussed in this press release adds back stock-based compensation expense, special performance bonuses, legal settlement costs, other expenses, controls remediation, executive SEC settlement credit and less 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 each of the foregoing non-GAAP measures to the corresponding GAAP metric is included in the tables below.

About Super Micro Computer, Inc.

Supermicro (Nasdaq: SMCI), the leading innovator in high-performance, high-efficiency server 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.

SMCI-F

SUPER MICRO COMPUTER, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)
	June 30,				June 30,
	2021				2020
ASSETS
Current assets:
Cash and cash equivalents	$	232,266			$	210,533
Accounts receivable, net of allowances	463,834				403,745
Inventories	1,040,964				851,498
Prepaid expenses and other current assets	130,195				126,985
Total current assets	1,867,259				1,592,761
Investment in equity investee	4,578				2,703
Property, plant and equipment, net	274,713				233,785
Deferred income taxes, net	63,288				54,898
Other assets	32,126				34,499
Total assets	$	2,241,964			$	1,918,646
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	612,336			$	417,673
Accrued liabilities	178,850				155,401
Income taxes payable	12,741				4,700
Short-term debt	63,490				23,704
Deferred revenue	101,479				106,157
Total current liabilities	968,896				707,635
Deferred revenue, non-current	100,838				97,612
Long-term debt	34,700				5,697
Other long-term liabilities	41,132				41,995
Total liabilities	1,145,566				852,939
Stockholders’ equity:
Common stock and Additional Paid In Capital	438,012				389,972
Treasury stock	—				(20,491		)
Accumulated other comprehensive loss	453				(152		)
Retained earnings	657,760				696,211
Total Super Micro Computer, Inc. stockholders’ equity	1,096,225				1,065,540
Noncontrolling interest	173				167
Total stockholders’ equity	1,096,398				1,065,707
Total liabilities and stockholders’ equity	$	2,241,964			$	1,918,646

SUPER MICRO COMPUTER, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited)
	Three Months Ended June 30,										Years Ended June 30,
	2021					2020					2021					2020
Net sales	$	1,068,985				$	896,126				$	3,557,422				$	3,339,281
Cost of sales	923,474					772,609					3,022,884					2,813,071
Gross profit	145,511					123,517					534,538					526,210
Operating expenses:
Research and development	58,930					66,748					224,369					221,478
Sales and marketing	22,825					21,080					85,683					85,137
General and administrative	24,675					26,261					100,539					133,941
Total operating expenses	106,430					114,089					410,591					440,556
Income from operations	39,081					9,428					123,947					85,654
Other income (expense), net	(1,471		)			(700		)			(2,834		)			1,410
Interest expense	(635		)			(606		)			(2,485		)			(2,236		)
Income before income tax	36,975					8,122					118,628					84,828
Income tax benefit (provision)	1,605					6,860					(6,936		)			(2,922		)
Share of income (loss) from equity investee, net of taxes	582					3,468					173					2,402
Net income	$	39,162				$	18,450				$	111,865				$	84,308
Net income per common share:
Basic	$	0.78				$	0.35				$	2.19				$	1.65
Diluted	$	0.74				$	0.34				$	2.09				$	1.60
Weighted-average shares used in calculation of net income per common share:
Basic	50,230					52,240					51,157					50,987
Diluted	52,782					54,218					53,507					52,838
Stock-based compensation is included in the following cost and expense categories by period (in thousands):
	Three Months Ended June 30,										Years Ended June 30,
	2021					2020					2021					2020
Cost of sales	$	450				$	355				$	1,762				$	1,504
Research and development	3,661					2,903					14,030					12,202
Sales and marketing	505					404					2,022					1,680
General and administrative	2,816					1,704					10,735					4,803
Stock-based compensation expense	$	7,432				$	5,366				$	28,549				$	20,189

SUPER MICRO COMPUTER, INC. SELECTED CASH FLOW INFORMATION (in thousands) (unaudited)
	Years Ended June 30,
	2021					2020
Net cash provided by (used in) operating activities	$	122,955				$	(30,334	)
Net cash used in investing activities	(58,016		)			(43,588		)
Net cash (used in) provided by financing activities	(44,440		)			23,796
Effect of exchange rate fluctuations on cash	560					376
Net change in cash equivalents and restricted cash	21,059					(49,750		)
Cash, cash equivalents and restricted cash at the beginning of the year	212,390					262,140
Cash, cash equivalents and restricted cash at the end of the year	$	233,449				$	212,390

SUPER MICRO COMPUTER, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except share and per share amounts) (unaudited)
	Three Months Ended June 30,										Twelve Months Ended June 30,
	2021					2020					2021					2020
GAAP GROSS PROFIT	$	145,511				$	123,517				$	534,538				$	526,210
Stock-based compensation	450					355					1,762					1,504
Special performance bonuses	—					1,201					—					4,072
Other expenses	—					39					20					39
NON-GAAP GROSS PROFIT	$	145,961				$	125,112				$	536,320				$	531,825
GAAP GROSS MARGIN	13.6			%		13.8			%		15.0			%		15.8			%
Stock-based compensation	0.1			%		0.0			%		0.1			%		0.0			%
Special performance bonuses	0.0			%		0.2			%		0.0			%		0.1			%
Other expenses	0.0			%		0.0			%		0.0			%		0.0			%
NON-GAAP GROSS MARGIN	13.7			%		14.0			%		15.1			%		15.9			%
GAAP OPERATING EXPENSES	$	106,430				$	114,089				$	410,591				$	440,556
Stock-based compensation	(6,982		)			(5,011		)			(26,787		)			(18,685		)
Legal settlement costs	—					—					—					(17,500		)
Executive SEC settlement	—					—					2,122					—
Special performance bonuses	(672		)			(16,224		)			(5,801		)			(23,682		)
Other expenses	—					(638		)			(221		)			(638		)
Controls remediation	163					(1,004		)			(1,076		)			(13,863		)
NON-GAAP OPERATING EXPENSES	$	98,939				$	91,212				$	378,828				$	366,188
GAAP INCOME FROM OPERATIONS	$	39,081				$	9,428				$	123,947				$	85,654
Stock-based compensation	7,432					5,366					28,549					20,189
Legal settlement costs	—					—					—					17,500
Executive SEC settlement	—					—					(2,122		)			—
Special performance bonuses	672					17,425					5,801					27,754
Other expenses	—					677					241					677
Controls remediation	(163		)			1,004					1,076					13,863
NON-GAAP INCOME FROM OPERATIONS	$	47,022				$	33,900				$	157,492				$	165,637
GAAP NET INCOME	$	39,162				$	18,450				111,865					84,308
Stock-based compensation	7,432					5,366					28,549					20,189
Legal settlement costs	—					—					—					17,500
Executive SEC settlement	—					—					(2,122		)			—
Special performance bonuses	672					17,425					5,801					27,754
Other expenses	—					677					241					677
Controls remediation	(163		)			1,004					1,076					13,863
Adjustments to tax provision	(3,373		)			(5,101		)			(9,006		)			(13,969		)
NON-GAAP NET INCOME	$	43,730				$	37,821				$	136,404				$	150,322
GAAP NET INCOME PER COMMON SHARE – BASIC	$	0.78				$	0.35				$	2.19				$	1.65
Impact of NON-GAAP adjustments	0.09					0.37					0.48					1.30
NON-GAAP NET INCOME PER COMMON SHARE – BASIC	$	0.87				$	0.72				$	2.67				$	2.95
GAAP NET INCOME PER COMMON SHARE – DILUTED	$	0.74				$	0.34				$	2.09				$	1.60
Impact of NON-GAAP adjustments	0.07					0.34					0.39					1.17
NON-GAAP NET INCOME PER COMMON SHARE – DILUTED	$	0.81				$	0.68				$	2.48				$	2.77
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE
BASIC – GAAP	50,230					52,240					51,157					50,987
BASIC – NON-GAAP	50,230					52,240					51,157					50,987
DILUTED – GAAP	52,782					54,218					53,507					52,838
DILUTED – NON-GAAP	54,082					55,595					54,910					54,317

 

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FAQ

What were Super Micro Computer's earnings for Q4 2021?

Super Micro Computer reported net sales of $1.07 billion and diluted EPS of $0.74 for Q4 2021.

What is the financial outlook for Super Micro Computer in Q1 2022?

The company expects Q1 2022 net sales between $900 million and $980 million with GAAP diluted EPS between $0.16 and $0.36.

How did Super Micro Computer perform in fiscal year 2021?

In FY2021, Super Micro Computer achieved $3.56 billion in net sales and a net income of $112 million.

What are the projections for Super Micro Computer for FY2022?

For FY2022, Super Micro expects net sales of $4.1 billion to $4.5 billion and GAAP diluted EPS of at least $2.60.