Super Micro Computer Inc (SMCI) has reported a marginal increase of a 0.02 percent in profit for the quarter ended Mar. 31, 2017. The company has earned $16.67 million, or $0.32 a share, compared with $16.66 million or $0.32 a share, a year ago. On the other hand, adjusted net income for the quarter stood at $20.32 million, or $0.38 a share compared with $18.99 million or $0.36 a share, a year ago. Revenue during the quarter grew 18.47 percent to $631.12 million from $532.72 million in the previous year period. Gross margin for the quarter contracted 86 basis points over the previous year period to 14 percent. Total expenses were 96.45 percent of quarterly revenues, up from 95.41 percent for the same period last year. That has resulted in a contraction of 104 basis points in operating margin to 3.55 percent.
Operating income for the quarter was $22.42 million, compared with $24.44 million in the previous year period.
However, the adjusted operating income for the quarter stood at $27.25 million compared to $28.33 million in the prior year period. At the same time, adjusted operating margin contracted 100 basis points in the quarter to 4.32 percent from 5.32 percent in the last year period.
“We are pleased to report third quarter revenues that exceeded our guidance in a quarter complicated by shortages in memory and SSD. Our resurgent revenue growth and market share gains are a result of our strategy of developing vertical markets that expand our TAMs. Storage, IOT, Accelerated Computing, Enterprise and Asia contributed to the 18.5% growth from last year,” said Charles Liang, chairman and chief executive officer. “Supermicro’s preparation for the upcoming new Xeon processor launches has never been stronger and our traction with new customer engagement for seeding and early deployment has been outstanding. We expect to lead the industry with the most innovative platform architectures, the broadest product array and total solutions during the upcoming technology transitions.”
For the fourth-quarter, Super Micro Computer expects revenue to be in the range of $655 million to $715 million. On an adjusted basis, the company projects diluted earnings per share to be in the range of $0.40 to $0.50 for the fourth-quarter.
Operating cash flow turns negative
Super Micro Computer Inc has spent $90.27 million cash to meet operating activities during the nine month period as against cash inflow of $92.83 million in the last year period. The company has spent $23.56 million cash to meet investing activities during the nine month period as against cash outgo of $26.14 million in the last year period.
Cash flow from financing activities was $40.46 million for the nine month period, up 207.45 percent or $27.30 million, when compared with the last year period.
Cash and cash equivalents stood at $107.78 million as on Mar. 31, 2017, down 38.90 percent or $68.63 million from $176.41 million on Mar. 31, 2016.
Working capital increases
Super Micro Computer Inc has recorded an increase in the working capital over the last year. It stood at $622.18 million as at Mar. 31, 2017, up 13.31 percent or $73.06 million from $549.11 million on Mar. 31, 2016. Current ratio was at 2.16 as on Mar. 31, 2017, down from 2.26 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 48 days for the quarter from 88 days for the last year period. Days sales outstanding were almost stable at 50 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 53 days for the quarter compared with 97 days for the previous year period. At the same time, days payable outstanding went down to 56 days for the quarter from 60 for the same period last year.
Debt increases substantially
Super Micro Computer Inc has witnessed an increase in total debt over the last one year. It stood at $145.51 million as on Mar. 31, 2017, up 55.14 percent or $51.72 million from $93.80 million on Mar. 31, 2016. Long-term debt stood at $32.25 million as on Mar. 31, 2017. Total debt was 10.36 percent of total assets as on Mar. 31, 2017, compared with 7.94 percent on Mar. 31, 2016. Debt to equity ratio was at 0.19 as on Mar. 31, 2017, up from 0.13 as on Mar. 31, 2016. Interest coverage ratio deteriorated to 40.17 for the quarter from 58.62 for the same period last year.
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