SAN JOSE, Calif., Oct. 28 — Super Micro Computer, Inc. (NASDAQ: SMCI), a global leader in high-performance, high-efficiency server, storage technology and green computing, has announced first quarter fiscal 2017 financial results for the quarter ended September 30, 2016.

Fiscal 1st Quarter Highlights

• Quarterly net sales of $529.0 million, up 0.9% from the fourth quarter of fiscal year 2016 and up 1.8% from the same quarter of last year.
• GAAP net income of $13.5 million, up 94.1% from the fourth quarter of fiscal year 2016 and down 1.2% from the same quarter of last year.
• GAAP gross margin was 15.1%, up from 14.1% in the fourth quarter of fiscal year 2016 and up from 13.9% in the same quarter of last year.
• Server solutions accounted for 67.6% of net sales compared with 65.5% in the fourth quarter of fiscal year 2016 and 68.6% in the same quarter of last year.

Net sales for the first quarter ended September 30, 2016 totaled $529.0 million, up 0.9% from $524.3 million in the fourth quarter of fiscal year 2016. No customer accounted for more than 10% of net sales during the quarter ended September 30, 2016.

GAAP net income for the first quarter of fiscal year 2017 was $13.5 million or $0.26 per diluted share, a decrease of 1.2% from net income of $13.7 million, or $0.27 per diluted share in the same period a year ago. Included in net income for the quarter is $4.5 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the first quarter was $16.7 million, or $0.32 per diluted share, compared to non-GAAP net income of $16.5 million, or $0.32 per diluted share, in the same quarter of the prior year. On a sequential basis, non-GAAP net income increased from the fourth quarter of fiscal year 2016 by $6.3 million or $0.12 per diluted share.

GAAP gross margin for the first quarter of fiscal year 2017 was 15.1% compared to 13.9% in the same period a year ago. Non-GAAP gross margin for the first quarter was 15.2% compared to 13.9% in the same period a year ago. GAAP and Non-GAAP gross margin for the fourth quarter of fiscal year 2016 were both 14.1%.

The GAAP income tax provision for the first quarter of fiscal year 2017 was $6.4 million or 32.0% of income before tax provision compared to $7.5 million or 35.4% in the same period a year ago and $4.5 million or 39.0% in the fourth quarter of fiscal year 2016. The effective tax rates for the first quarter of fiscal year 2017 was lower primarily due to an increase in the domestic production activities deduction and U.S. federal research and development (“R&D”) tax credits.

The Company’s cash and cash equivalents and short and long term investments at September 30, 2016 were $149.4 million compared to $183.7 million at June 30, 2016. Free cash flow for the three months ended September 30, 2016 was $(22.7) million, primarily due to an increase in the Company’s cash used in the development and construction of improvements on the Company’s properties and the cash used in operating activities.

Share Repurchase Activity

On July 18, 2016, the Company announced that the Company’s Board of Directors has adopted a program to repurchase from time to time at management’s discretion up to $100 million dollars of the Company’s common stock in the open market or in private transactions during the next 12 months at prevailing market prices. During the quarter ended September 30, 2016, the Company repurchased 888,097 shares at a total cost of $18.5 million, reflecting an average price of $20.79 per share.

Business Outlook & Management Commentary

The Company expects net sales of $570 million to $640 million for the second quarter of fiscal year 2017 ending December 31, 2016. The Company expects non-GAAP earnings per diluted share of approximately $0.38 to $0.52 for the second quarter.

“We are pleased that Supermicro was able to report revenues and profits at the higher end of our expectations for the first quarter. Strong growth from storage, IoT Embedded, and accelerated computing contributed to our results. Although internet datacenter and cloud were lower than previous quarters and same quarter last year, we have many opportunities to win more business in the coming quarters to increase utilization of our current capacity,” said Charles Liang, President and Chief Executive Officer. “Technology is changing rapidly with several technology transitions coming soon and Supermicro is the best positioned company in IT infrastructure today to quickly adapt to the new technologies. We believe that we have opportunities for growth across all of our product lines and we will continue to focus on being first to market with the latest technology.”

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.

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Source: Supermicro