8-K

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): February 6, 2020

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))

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	SMCI	The NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02 Results of Operations and Financial Condition

On February 6, 2020, Super Micro Computer, Inc. (the “Company”) issued a press release (the “Press Release”) announcing preliminary financial information for the quarter ended December 31, 2019. A copy of the Press Release is attached as Exhibit 99.1 to this report and is incorporated herein by reference.

The information in, and the exhibit furnished pursuant to, Item 2.02 of this report, including Exhibit 99.1, are being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not to be incorporated by reference into any filing under the Securities Act of 1933, as amended, 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

(d) Exhibits
Exhibit Number	Description
99.1	Press Release, dated February 6, 2020

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: February 6, 2020	By:	/s/ Charles Liang
		President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)

EX-99.1

Exhibit 99.1

Supermicro Announces Second Quarter Fiscal 2020

Financial Results

SAN JOSE, Calif. -- February 6, 2020 (BUSINESS WIRE) -- Super Micro Computer, Inc. (Nasdaq: SMCI), a global leader in high-performance, high-efficiency server, storage technology and green computing, today announced financial results for its fiscal second quarter ended December 31, 2019.

Fiscal Second Quarter Highlights

• Net sales of $870.9 million versus $799.8 million in the first quarter of fiscal year 2020 and $931.5 million in the same quarter of last year.

• GAAP gross margin of 15.9% versus 16.4% in the first quarter of fiscal year 2020 and 13.7% in the same quarter of last year.

• GAAP net income of $23.7 million versus $26.3 million in the first quarter of fiscal year 2020 and $18.2 million in the same quarter of last year.

• GAAP fully diluted earnings per share of $0.46 versus $0.51 in the first quarter of fiscal year 2020 and $0.36 in the same quarter of last year.

• Non-GAAP fully diluted earnings per share of $0.57 versus $0.68 in the first quarter of fiscal year 2020 and $0.66 in the same quarter of last year.

• Cash flow from operations of $81.6 million and capital expenditures of $10.8 million.

Non-GAAP gross margin for the fiscal second quarter of 2020 was 15.9%, which excludes stock-based compensation expenses of $0.4 million. Non-GAAP fully diluted earnings per share was $0.57, which excludes stock-based compensation expenses of $5.0 million and consulting expenses related to regaining SEC compliance and other non-recurring expenses of $3.8 million less the related tax effects of both.

As of December 31, 2019, total cash, cash equivalents and short-term investments was $309.0 million and bank debt was $23.3 million.

“Over the last couple of years, Supermicro has been continuing our mission of becoming a strong global leader of server and storage solutions, especially the greenest and best TCO IT solutions. We have added many new product lines and dramatically increased our operational capacity worldwide. This quarter, our revenue exceeded the upper end of our original guidance which

marks the beginning of our business reacceleration.” said Charles Liang, Chairman and Chief Executive Officer. “We are the only server and storage solution provider with more than half of our engineering, product development and final assembly based in the USA. Our engineering and R&D strengths allow us to quickly deliver the most advanced technology with the broadest range of server and storage products in our industry. We are very excited by our product solutions targeting Artificial Intelligence, 5G / Edge, and the evolving needs of the Enterprise, which offer our company a substantial growth opportunity in a $100B market.”

Third Quarter Fiscal 2020 Guidance

The Company expects net sales in a range of $770 million to $830 million for the third quarter of fiscal year 2020 ending March 31, 2020. The Company expects non-GAAP earnings per diluted share of approximately $0.35 to $0.55 for the third quarter.

The Company expects to incur additional charges of $35 million to $40 million, which will be one-time in nature, in the third or fourth fiscal quarter of 2020. These one-time charges will address residual clean-up matters from our extended black-out period and have not been included in the above guidance.

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 guidance for the Company’s third quarter of fiscal year 2020, which ends March 31, 2020. 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) our quarterly operating results may fluctuate, which could cause rapid declines in our stock price, (ii) 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, (iii) if we fail to meet publicly announced financial guidance or other expectations about our business, our stock could decline in value, (iv) 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 (v) 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 our Annual Report on Form 10-K for our fiscal year ended June 30, 2019.

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.

Use of Non-GAAP Financial Measures

Non-GAAP gross margin and fully diluted earnings per share discussed in this press release exclude as applicable stock-based compensation expenses, consulting expenses related to regaining SEC compliance and other non-recurring expenses described above, 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, the reconciliation between the Company's GAAP gross margin and non-GAAP gross margin is stock-based compensation of $0.4 million and the reconciliation between the Company’s GAAP fully diluted earnings per share and non-GAAP fully diluted earnings per share is stock-based compensation of $5.0 million, and consulting expenses related to regaining SEC compliance and other non-recurring expenses of $3.8 million less related tax effect of $2.0 million. Refer to the associated tables below for further information.

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 Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded 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.

Investor Relations Contacts

Perry G. Hayes, SVP, Investor Relations

(408) 895-6570

James Kisner, Investor Relations

(669) 284-1259

email: ir@supermicro.com

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 (unaudited)

	December 31,			June 30,
	2019			2019
ASSETS
Current assets:
Cash and cash equivalents	$	309,038		$	248,164
Accounts receivable, net of allowances	360,172			393,624
Inventories	704,430			670,188
Prepaid expenses and other current assets	147,055			109,795
Total current assets	1,520,695			1,421,771
Investment in equity investee	1,060			1,701
Property, plant and equipment, net	220,551			207,337
Deferred income taxes, net	42,015			41,126
Other assets	22,718			10,659
Total assets	$	1,807,039		$	1,682,594
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	392,537		$	360,470
Accrued liabilities	137,365			114,678
Income taxes payable	3,529			13,021
Short-term debt	23,250			23,647
Deferred revenue	115,059			94,153
Total current liabilities	671,740			605,969
Deferred revenue, non-current	100,553			109,266
Other long-term liabilities	33,193			26,183
Total liabilities	805,486			741,418
Stockholders’ equity:
Common stock and additional paid-in capital, $0.001 par value
Authorized shares: 100,000,000
Issued shares: 51,923,260 and 51,289,413 at December 31, 2019 and June 30, 2019, respectively	360,060			349,683
Treasury stock (at cost), 1,333,125 shares at December 31, 2019 and June 30, 2019, respectively	(20,491		)	(20,491		)
Accumulated other comprehensive loss	(135		)	(80		)
Retained earnings	661,954			611,903
Total Super Micro Computer, Inc. stockholders’ equity	1,001,388			941,015
Noncontrolling interest	165			161
Total stockholders’ equity	1,001,553			941,176
Total liabilities and stockholders’ equity	$	1,807,039		$	1,682,594

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,
	2019			2018			2019			2018
Net sales	$	870,943		$	931,509		$	1,670,747		$	1,902,627
Cost of sales	732,539			803,587			1,401,414			1,651,466
Gross profit	138,404			127,922			269,333			251,161
Operating expenses:
Research and development	55,572			45,924			105,144			88,918
Sales and marketing	21,977			19,677			42,171			37,969
General and administrative	33,040			36,580			61,338			70,040
Total operating expenses	110,589			102,181			208,653			196,927
Income from operations	27,815			25,741			60,680			54,234
Other (expense) income, net	(416		)	624			1,173			793
Interest expense	(560		)	(1,831		)	(1,112		)	(4,209		)
Income before income tax provision	26,839			24,534			60,741			50,818
Income tax provision	(2,113		)	(4,520		)	(10,681		)	(10,043		)
Share of loss from equity investee, net of taxes	(1,020		)	(1,794		)	(9		)	(3,213		)
Net income	$	23,706		$	18,220		$	50,051		$	37,562
Net income per common share:
Basic	$	0.47		$	0.37		$	1.00		$	0.75
Diluted	$	0.46		$	0.36		$	0.97		$	0.73
Weighted-average shares used in calculation of net income per common share:
Basic	50,181			49,844			50,129			49,774
Diluted	52,009			50,810			51,758			51,508

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,
	2019		2018		2019		2018
Cost of sales	$	384	$	428	$	779	$	866
Research and development	3,126		3,212		6,256		6,708
Sales and marketing	423		436		859		941
General and administrative	1,031		1,171		2,124		2,606
Stock-based compensation expense before taxes	$	4,964	$	5,247	$	10,018	$	11,121

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

 (unaudited)

	Six Months Ended December 31,
	2019			2018
Net cash provided by operating activities	$	87,153		$	81,102
Net cash used in investing activities	(23,339		)	(9,306		)
Net cash used in financing activities	(2,076		)	(69,324		)
Effect of exchange rate fluctuations on cash	175			(101		)
Net increase in cash, cash equivalents and restricted cash	61,913			2,371
Cash, cash equivalents and restricted cash at the beginning of the period	262,140			120,382
Cash, cash equivalents and restricted cash at the end of the period	$	324,053		$	122,753

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,
	2019			2018			2019			2018
GAAP GROSS PROFIT	$	138,404		$	127,922		$	269,333		$	251,161
Add back stock-based compensation	384			428			779			866
Non-GAAP GROSS PROFIT	$	138,788		$	128,350		$	270,112		$	252,027
GAAP GROSS MARGIN	15.9		%	13.7		%	16.1		%	13.2		%
Add back stock-based compensation	0.0		%	0.1		%	0.1		%	0.0		%
Non-GAAP GROSS MARGIN	15.9		%	13.8		%	16.2		%	13.2		%
GAAP INCOME FROM OPERATIONS	$	27,815		$	25,741		$	60,680		$	54,234
Add back stock-based compensation	4,964			5,247			10,018			11,121
Add back consulting and other non-recurring expenses	3,759			16,395			11,417			32,410
Non-GAAP INCOME FROM OPERATIONS	$	36,538		$	47,383		$	82,115		$	97,765
GAAP NET INCOME	$	23,706		$	18,220		$	50,051		$	37,562
Add back stock-based compensation	4,964			5,247			10,018			11,121
Add back consulting and other non-recurring expenses	3,759			16,395			11,417			32,410
Less adjustments to tax provision	(2,007		)	(5,120		)	(5,058		)	(10,299		)
Non-GAAP NET INCOME	$	30,422		$	34,742		$	66,428		$	70,794
GAAP NET INCOME PER COMMON SHARE – BASIC	$	0.47		$	0.37		$	1.00		$	0.75
Add back stock-based compensation, consulting, and adjustments to tax provision	0.14			0.33			0.33			0.67
Non-GAAP NET INCOME PER COMMON SHARE – BASIC	$	0.61		$	0.70		$	1.33		$	1.42
GAAP NET INCOME PER COMMON SHARE – DILUTED	$	0.46		$	0.36		$	0.97		$	0.73
Add back stock-based compensation, consulting, and adjustments to tax provision	0.11			0.30			0.28			0.61
Non-GAAP NET INCOME PER COMMON SHARE – DILUTED	$	0.57		$	0.66		$	1.25		$	1.34
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE
BASIC – GAAP	50,181			49,844			50,129			49,774
BASIC - Non-GAAP	50,181			49,844			50,129			49,774
DILUTED – GAAP	52,009			50,810			51,758			51,508
DILUTED - Non-GAAP	53,572			52,398			53,350			53,002

XML

Cover	Feb. 06, 2020
Cover page.
Document Type	8-K
Document Period End Date	Feb. 06, 2020
Entity Registrant Name	SUPER MICRO COMPUTER, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-33383
Entity Tax Identification Number	77-0353939
Entity Address, Address Line One	980 Rock Avenue
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95131
City Area Code	408
Local Phone Number	503-8000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	SMCI
Entity Emerging Growth Company	false
Entity Central Index Key	0001375365
Amendment Flag	false