Super Micro Computer, Inc. (SMCI) has reported a 36.59 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $22 million, or $0.43 a share in the quarter, compared with $34.69 million, or $0.67 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $25.03 million, or $0.48 a share compared with $37.99 million or $0.73 a share, a year ago. Revenue during the quarter went up marginally by 2.03 percent to $651.95 million from $638.96 million in the previous year period. Gross margin for the quarter contracted 232 basis points over the previous year period to 14.32 percent. Total expenses were 95.13 percent of quarterly revenues, up from 92.31 percent for the same period last year. That has resulted in a contraction of 282 basis points in operating margin to 4.87 percent.
Operating income for the quarter was $31.76 million, compared with $49.13 million in the previous year period.
However, the adjusted operating income for the quarter stood at $36.47 million compared to $53.13 million in the prior year period. At the same time, adjusted operating margin contracted 272 basis points in the quarter to 5.59 percent from 8.32 percent in the last year period.
"We are pleased to report record second quarter revenues of $652.0 million that exceeded our guidance and outpaced a strong compare with last year. Contributing to this strong growth was our Twin family product line including our FatTwin, Storage, HPC, MicroBlade, and strong growth from enterprise cloud and Asia Pacific, particularly China. Component shortages and pricing, product and geographic mix adversely impacted gross margins while improved leverage allowed us to deliver stronger operating margins from last quarter," said Charles Liang, chairman and chief executive officer. "We expect to continue the growth of last quarter and be reflected in the year-over-year revenue growth in the March quarter based on an increasing number of sizable customer engagements demanding the performance and advantages of our leading product lines. In addition, we are well positioned to benefit from technology transitions in 2017 and have upgraded our product lines to optimize these new technologies."
For the third-quarter 2017, Super Micro Computer, Inc. expects revenue to be in the range of $570 million to $630 million. On an adjusted basis, the company projects diluted earnings per share to be in the range of $0.34 to $0.42.
Operating cash flow turns negative
Super Micro Computer, Inc. has spent $54.87 million cash to meet operating activities during the first half as against cash inflow of $86.92 million in the last year period. The company has spent $17.66 million cash to meet investing activities during the first six months as against cash outgo of $15.64 million in the last year period.
Cash flow from financing activities was $20.85 million for the first six months, up 534.45 percent or $17.56 million, when compared with the last year period.
Cash and cash equivalents stood at $128.75 million as on Dec. 31, 2016, down 24.22 percent or $41.14 million from $169.89 million on Dec. 31, 2015.
Working capital increases
Super Micro Computer, Inc. has recorded an increase in the working capital over the last year. It stood at $604.05 million as at Dec. 31, 2016, up 16.25 percent or $84.45 million from $519.60 million on Dec. 31, 2015. Current ratio was at 2.18 as on Dec. 31, 2016, up from 2.08 on Dec. 31, 2015.
Cash conversion cycle (CCC) has decreased to 46 days for the quarter from 75 days for the last year period. Days sales outstanding went up to 47 days for the quarter compared with 44 days for the same period last year.
Days inventory outstanding has decreased to 49 days for the quarter compared with 82 days for the previous year period. At the same time, days payable outstanding was almost stable at 50 days for the quarter, when compared with the previous year period.
Debt increases substantially
Super Micro Computer, Inc. has witnessed an increase in total debt over the last one year. It stood at $127.18 million as on Dec. 31, 2016, up 34.96 percent or $32.94 million from $94.23 million on Dec. 31, 2015. Long-term debt stood at $34.73 million as on Dec. 31, 2016. Total debt was 9.42 percent of total assets as on Dec. 31, 2016, compared with 7.90 percent on Dec. 31, 2015. Debt to equity ratio was at 0.17 as on Dec. 31, 2016, up from 0.14 as on Dec. 31, 2015. Interest coverage ratio deteriorated to 63.91 for the quarter from 122.81 for the same period last year.
Disclaimer: Please note that this is an auto-generated article. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website. For queries contact: [email protected]
