01—Abstract
Summary
Summary of the 10-K filed August 27, 2021. Cited figures are marked; the original filing is the authoritative source.
Super Micro Computer, Inc. (Nasdaq: SMCI) reported fiscal 2021 (year ended June 30, 2021) net sales of $3,557.4 milliona, up 6.5% from $3,339.3 million in fiscal 2020, with net income of $111.9 million versus $84.3 million.
Gross margin declined to 15.0% from 15.8%, primarily due to product and customer mix and increased logistics costs, while operating expenses fell 6.8% to $410.6 millionb, largely due to lower special performance bonuses and the prior-year SEC settlement accrual. Income from operations rose to $123.9 million from $85.7 million. Cash flow and balance sheet items improved: cash and cash equivalents rose to $232.3 million, and operating cash flow was $123.0 million, compared with negative $30.3 million in fiscal 2020.
The company repurchased $130.0 millionc of common stock during the year and had $150.0 million remaining under its $200.0 million program, which runs through July 31, 2022. Total debt was $98.2 million, and inventories increased to $1,040.964 million from $851.5 million, with noncancelable purchase commitments of $569.8 million.
The filing states that management concluded internal control over financial reporting was effective as of June 30, 2021, that prior material weaknesses have been remediated, and that the company is subject to ongoing securities class actions and derivative suits. Key risks include concentration of supplier purchases (one supplier at 20.3%d of purchases), related-party dealings with Ablecom and Compuware (7.8% of cost of sales), and CEO Charles Liang's performance-based option award tied to revenue and stock price goals.
02—Key points
Key Highlights
- Net sales of $3,557.4 million, up 6.5% from $3,339.3 million in fiscal 2020.
- Net income of $111.9 million, compared with $84.3 million in fiscal 2020; diluted EPS of $2.09 versus $1.60.
- Gross margin declined to 15.0% from 15.8%, attributed to product and customer mix and increased logistics costs.
- Operating expenses declined 6.8% to $410.6 million, mainly reflecting lower special performance bonuses and the fiscal 2020 SEC settlement accrual.
- Operating cash flow of $123.0 million, versus negative $30.3 million in fiscal 2020; cash and cash equivalents of $232.3 million at year-end.
- Repurchased $130.0 million of common stock in fiscal 2021, with $150.0 million remaining under the $200.0 million program ending July 31, 2022.
- Concentration and related-party exposure: one supplier accounted for 20.3% of purchases, and Ablecom and Compuware (related parties) for 7.8% of cost of sales.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Super Micro Computer kept $0.03.
- Revenue$3.56B100.0%
- Cost of revenue−$3.02B85.0%
- Gross profit$534.5M15.0%
- Operating costs−$410.6M11.5%
- Operating income$123.9M3.5%
- Interest, other & tax−$12.1M0.3%
- Net income$111.9M3.1%
Where FY2021 revenue went
$3.56B- Cost of revenue: $3.02B, 85% of revenue
- Net income: $111.9M, 3.1% of revenue
- R&D: $224.4M, 6.3% of revenue
- Other operating costs: $186.2M, 5.2% of revenue
Kept 3.1% as net incomeNet income $111.9M · 3.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed August 27, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $3.56B$3.34B | +6.5% |
| Cost of Revenue | $3.02B$2.81B | +7.5% |
| Gross Profit | $534.54M$526.21M | +1.6% |
| R&D Expenses | $224.37M$221.48M | +1.3% |
| Operating Expenses | $410.59M$440.56M | −6.8% |
| Operating Income | $123.95M$85.65M | +44.7% |
| Interest Expense | $2.48M$2.24M | +11.1% |
| Net Income | $111.86M$84.31M | +32.7% |
| EPS (Basic) | $2.19$1.65 | +32.7% |
| EPS (Diluted) | $2.09$1.60 | +30.6% |
| Shares Outstanding (Basic) | 51.16M50.99M | +0.3% |
| Shares Outstanding (Diluted) | 53.51M52.84M | +1.3% |
05—Questions
Frequently Asked Questions
How did Super Micro Computer perform financially in fiscal 2021?
Net sales rose 6.5% to $3,557.4 million, and net income increased to $111.9 million from $84.3 million. Income from operations was $123.9 million, compared with $85.7 million in fiscal 2020, helped by lower operating expenses.
Why did gross margin decline?
The filing attributes the decline from 15.8% to 15.0% primarily to product and customer mix and increased logistics costs. It also notes that sales prices rose more slowly than component costs.
How much did the company return to shareholders?
The company repurchased and retired 4,209,211 shares for $130.0 million during fiscal 2021. As of June 30, 2021, $150.0 million remained available under the January 2021 $200.0 million program, which runs until July 31, 2022.
What are the main risks highlighted in the filing?
Key risks include dependence on a limited number of suppliers (one accounted for 20.3% of purchases), related-party relationships with Ablecom and Compuware, COVID-19 disruptions, intense competition, and ongoing securities class actions and derivative lawsuits related to revenue recognition and internal controls.
Did the company have internal control problems?
Management concluded that internal control over financial reporting was effective as of June 30, 2021, and states that it has remediated the IT general controls material weakness reported in the prior year. Deloitte & Touche LLP issued an unqualified opinion on internal control.
06—Continue