Silicom Reports Financial Results for the 3rd Quarter & 1st Nine Months of 2016
- Growth Phase Continues: Q3 Revenues Up 27% to $24.7M,
9-Month Revenues Up 30% to $72M -
Silicom Ltd. (NASDAQ:SILC), a leading provider of high-performance networking and data infrastructure solutions, today
reported its financial results for the third quarter and nine months ended September 30, 2016.
Financial Results
Third Quarter: Revenues for the third quarter of 2016 totalled $24.7 million, up 27% compared with $19.4
million in the third quarter of 2015.
On a GAAP basis, net income for the quarter totalled $3.2 million, or $0.43 per share (basic and diluted), compared with $7.1
million, or $0.96 per diluted share ($0.97 per basic share) for the third quarter of 2015. On a non-GAAP basis (as described and
reconciled below), net income totalled $4.0 million, or $0.53 per diluted share ($0.54 per basic share), compared with $4.2
million, or $0.57 per share (basic and diluted), for the third quarter of 2015.
First Nine Months: Revenues for the first nine months of 2016 totalled $72.0 million, a 30% increase compared
with $55.3 million in the first nine months of 2015.
On a GAAP basis, net income for the period totalled $8.6 million, or $1.16 per diluted share ($1.18 per basic share), compared
with $12.1 million, or $1.64 per diluted share ($1.67 per basic share), in the first nine months of 2015. On a non-GAAP basis (as
described and reconciled below), net income for the period totalled $11.7 million, or $1.58 per diluted share ($1.59 per basic
share), compared with $11.0 million, or $1.49 per diluted share ($1.51 per basic share), in the first nine months of 2015.
Comments of Management
Mr. Shaike Orbach, Silicom’s President and CEO, commented, “The third quarter was another period of progress for Silicom, with
important Design Wins from both new and existing customers confirming our favorable positioning in booming
Cloud/Virtualization-related markets as well as the Cyber Security and Network Monitoring/Analytics space. During the quarter, we
were proud to achieve a new Design Win with a strategic Cyber Security customer, and we have recently announced another important
Network Monitoring Design Win for our state-of-the-art new Time Stamping and Packet Processing cards.
“In addition, we are beginning to benefit from the momentum of SD-WAN (Software-Defined WAN), a ‘hot’ technology which is being
deployed broadly by both service providers and enterprises. After achieving our first SD-WAN Design Win last quarter, this quarter
we announced that our SD-WAN targeted Network EDGE/CPE appliances are now certified for Versa’s managed SD-WAN projects. These
state-of-the-art solutions are being marketed to many world-leading service providers and telecommunications industry giants, and
we firmly believe that SD-WAN will become a potent new revenue driver for us.”
Mr. Orbach concluded, “In short, with tailwinds behind us, a top-tier base of customers, a growing roster of Design Wins and
multiple exciting sales opportunities underway, we feel exceedingly well positioned as we approach 2017 and beyond.”
##
Conference Call Details
Silicom’s Management will host an interactive conference today, October 27th, at 9am Eastern Time (6am Pacific Time, 4pm
Israel Time) to review and discuss the results.
To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes
before the conference call commences. If you are unable to connect using the toll-free numbers, try the international dial-in
number.
US: 1 888 668 9141
UK: 0 800-917-5108
ISRAEL: 03 918 0609
INTERNATIONAL: +972 3 918 0609
At: 9:00am Eastern Time, 6:00am Pacific Time, 4:00pm Israel Time
For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call
under the investor relations section of Silicom’s website.
##
Non-GAAP Financial Measures
This release, including the financial tables below, presents other financial information that may be considered "non-GAAP
financial measures" under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission as
they apply to our company. These non-GAAP financial measures exclude compensation expenses in respect of options and RSUs granted
to directors, officers and employees, acquisition-related expenses, adjustment of inventory step up related to acquisition,
amortization of acquired intangible assets, changes in the fair value of contingent consideration from a business combination, as
well as taxes on amortization of acquired intangible assets. Non-GAAP financial measures should be evaluated in conjunction with,
and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most
comparable to the non-GAAP financial measures as well as reconciliation between the non-GAAP financial measures and the most
comparable GAAP financial measures. The non-GAAP financial information presented herein should not be considered in isolation from
or as a substitute for operating income, net income or per share data prepared in accordance with GAAP.
About Silicom
Silicom Ltd. is an industry-leading provider of high-performance networking and data infrastructure solutions. Designed
primarily to increase data center efficiency, Silicom’s solutions dramatically improve the performance and availability of
networking appliances and other server-based systems.
Silicom’s products are used by a large and growing base of OEM customers, many of whom are market leaders, as
performance-boosting solutions for their offerings in the Cyber Security, Network Monitoring and Analytics, Traffic Management,
Application Delivery, WAN Optimization, High Frequency Trading and other mission-critical segments within the fast-growing data
center, enterprise networking, virtualization, cloud computing and big data markets. Silicom’s product portfolio includes
multi-port 1/10/25/40/100 Gigabit Ethernet server adapters, Intelligent Bypass solutions, Encryption accelerators, Ultra Low
Latency solutions, Time Stamping and other innovative Smart adapters. These products are available for incorporation directly into
our OEM customers' systems, or provided as part of Silicom’s patented SETAC (Server To Appliance Converter), a unique approach to
the provision of high quality standard platforms with modular front connectivity.
For more information, please visit: www.silicom.co.il
Statements in this press release which are not historical data are forward-looking statements which involve
known and unknown risks, uncertainties, or other factors not under the Company's control, which may cause actual results,
performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied
by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic
filings with the Securities and Exchange Commission. The Company disclaims any duty to update such statements.
– FINANCIAL TABLES FOLLOW –
| Silicom Ltd. Consolidated Balance Sheets |
|
|
|
|
|
|
|
| (US$ thousands) |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
13,797 |
|
$ |
18,178 |
| Marketable securities |
|
|
18,768 |
|
|
8,636 |
| Accounts receivables: Trade, net |
|
|
18,105 |
|
|
23,768 |
| Accounts receivables: Other |
|
|
4,441 |
|
|
1,380 |
| Inventories |
|
|
45,059 |
|
|
26,321 |
| Deferred tax assets |
|
|
- |
|
|
950 |
| Total current assets |
|
|
100,170 |
|
|
79,233 |
|
|
|
|
|
|
|
| Marketable securities |
|
|
7,773 |
|
|
24,246 |
| Assets held for employees’ severance benefits |
|
|
1,471 |
|
|
1,374 |
| Deferred tax assets |
|
|
1,510 |
|
|
595 |
| Property, plant and equipment, net |
|
|
3,931 |
|
|
3,825 |
| Intangible assets, net |
|
|
3,834 |
|
|
5,164 |
| Goodwill |
|
|
25,561 |
|
|
25,561 |
|
|
|
|
|
|
|
| Total assets |
|
$ |
144,250 |
|
$ |
139,998 |
|
|
|
|
|
|
|
| Liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
| Trade accounts payable |
|
$ |
13,195 |
|
$ |
8,556 |
| Other accounts payable and accrued expenses |
|
|
6,946 |
|
|
11,147 |
| Deferred tax liabilities |
|
|
- |
|
|
111 |
|
|
|
|
|
|
|
| Total current liabilities |
|
|
20,141 |
|
|
19,814 |
|
|
|
|
|
|
|
| Contingent consideration |
|
|
5,054 |
|
|
4,942 |
| Liability for employees’ severance benefits |
|
|
2,517 |
|
|
2,251 |
| Deferred tax liabilities |
|
|
52 |
|
|
157 |
|
|
|
|
|
|
|
| Total liabilities |
|
|
27,764 |
|
|
27,164 |
|
|
|
|
|
|
|
| Shareholders' equity |
|
|
|
|
|
|
| Ordinary shares and additional paid-in capital |
|
|
46,449 |
|
|
44,122 |
| Treasury shares |
|
|
(38) |
|
|
(38) |
| Retained earnings |
|
|
70,075 |
|
|
68,750 |
| Total shareholders' equity |
|
|
116,486 |
|
|
112,834 |
|
|
|
|
|
|
|
| Total liabilities and shareholders' equity |
|
$ |
144,250 |
|
$ |
139,998 |
| |
| |
| Silicom Ltd. Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (US$ thousands, except for share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period |
|
Nine-month period |
|
ended September 30, |
|
ended September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| Sales |
$ |
24,661 |
|
$ |
19,413 |
|
$ |
72,019 |
|
$ |
55,297 |
| Cost of sales |
|
15,119 |
|
|
11,298 |
|
|
44,694 |
|
|
32,265 |
| Gross profit |
|
9,542 |
|
|
8,115 |
|
|
27,325 |
|
|
23,032 |
|
|
|
|
|
|
|
|
|
|
|
|
| Research and development expenses |
|
3,137 |
|
|
2,181 |
|
|
9,034 |
|
|
6,762 |
| Selling and marketing expenses |
|
1,622 |
|
|
1,338 |
|
|
4,797 |
|
|
4,027 |
| General and administrative expenses |
|
1,069 |
|
|
(2,916) |
|
|
3,085 |
|
|
(1,007) |
| Total operating expenses |
|
5,828 |
|
|
603 |
|
|
16,916 |
|
|
9,782 |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
3,714 |
|
|
7,512 |
|
|
10,409 |
|
|
13,250 |
|
|
|
|
|
|
|
|
|
|
|
|
| Financial income (expenses), net |
|
(60) |
|
|
39 |
|
|
(35) |
|
|
152 |
| Income before income taxes |
|
3,654 |
|
|
7,551 |
|
|
10,374 |
|
|
13,402 |
| Income taxes |
|
458 |
|
|
492 |
|
|
1,737 |
|
|
1,302 |
| Net income |
$ |
3,196 |
|
$ |
7,059 |
|
$ |
8,637 |
|
$ |
12,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic income per ordinary share (US$) |
$ |
0.43 |
|
$ |
0.97 |
|
$ |
1.18 |
|
$ |
1.67 |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of ordinary shares used to compute basic income per
share (in thousands) |
|
7,362 |
|
|
7,275 |
|
|
7,332 |
|
|
7,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted income per ordinary share (US$) |
$ |
0.43 |
|
$ |
0.96 |
|
$ |
1.16 |
|
$ |
1.64 |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of ordinary shares used to compute diluted income per
share (in thousands) |
|
7,455 |
|
|
7,352 |
|
|
7,420 |
|
|
7,366 |
| |
| |
| Silicom Ltd. Reconciliation of Non-GAAP Financial Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (US$ thousands, except for share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period |
|
Nine-month period |
|
ended September 30, |
|
ended September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP gross profit |
$ |
9,542 |
|
$ |
8,115 |
|
$ |
27,325 |
|
$ |
23,032 |
| (1) Share-based compensation (*) |
|
52 |
|
|
37 |
|
|
129 |
|
|
90 |
| (2) Adjustment of inventory step up related to acquisition |
|
- |
|
|
174 |
|
|
- |
|
|
442 |
| (3) Acquisition-related expenses |
|
93 |
|
|
- |
|
|
93 |
|
|
- |
| (4)Amortization of acquired intangible assets |
|
- |
|
|
- |
|
|
274 |
|
|
- |
| Non-GAAP gross profit |
$ |
9,687 |
|
$ |
8,326 |
|
$ |
27,821 |
|
$ |
23,564 |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP operating income |
$ |
3,714 |
|
$ |
7,512 |
|
$ |
10,409 |
|
$ |
13,250 |
| Gross profit adjustments |
|
145 |
|
|
211 |
|
|
496 |
|
|
532 |
| (1) Share-based compensation (*) |
|
287 |
|
|
393 |
|
|
1,074 |
|
|
1,074 |
| (3) Acquisition-related expenses |
|
- |
|
|
42 |
|
|
- |
|
|
172 |
| (4) Amortization of acquired intangible assets |
|
493 |
|
|
180 |
|
|
1,480 |
|
|
541 |
| (5) Changes in the fair value of contingent consideration |
|
63 |
|
|
(3,634) |
|
|
78 |
|
|
(3,230) |
| Non-GAAP operating income |
$ |
4,702 |
|
$ |
4,704 |
|
$ |
13,537 |
|
$ |
12,339 |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP net income |
$ |
3,196 |
|
$ |
7,059 |
|
$ |
8,637 |
|
$ |
12,100 |
| Operating income adjustments |
|
988 |
|
|
(2,808) |
|
|
3,128 |
|
|
(911) |
| (6) Taxes on amortization of acquired intangible assets |
|
(212) |
|
|
(80) |
|
|
(77) |
|
|
(221) |
| Non-GAAP net income |
$ |
3,972 |
|
$ |
4,171 |
|
$ |
11,688 |
|
$ |
10,968 |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP net income |
$ |
3,196 |
|
$ |
7,059 |
|
$ |
8,637 |
|
$ |
12,100 |
| Adjustments for Non-GAAP cost of sales |
|
145 |
|
|
211 |
|
|
496 |
|
|
532 |
| Adjustments for Non-GAAP Research and development expenses |
|
432 |
|
|
284 |
|
|
1,392 |
|
|
855 |
| Adjustments for Non-GAAP Selling and marketing expenses |
|
237 |
|
|
177 |
|
|
774 |
|
|
505 |
| Adjustments for Non-GAAP General and administrative expenses |
|
174 |
|
|
(3,480) |
|
|
466 |
|
|
(2,803) |
| Adjustments for Non-GAAP Income taxes |
|
(212) |
|
|
(80) |
|
|
(77) |
|
|
(221) |
| Non-GAAP net income |
$ |
3,972 |
|
$ |
4,171 |
|
$ |
11,688 |
|
$ |
10,968 |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP basic income per ordinary share (US$) |
$ |
0.43 |
|
$ |
0.97 |
|
$ |
1.18 |
|
$ |
1.67 |
| (1) Share-based compensation (*) |
|
0.05 |
|
|
0.06 |
|
|
0.16 |
|
|
0.16 |
| (2-6) Acquisition-related adjustments |
|
0.06 |
|
|
(0.46) |
|
|
0.25 |
|
|
(0.32) |
| Non-GAAP basic income per ordinary share (US$) |
$ |
0.54 |
|
$ |
0.57 |
|
$ |
1.59 |
|
$ |
1.51 |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP diluted income per ordinary share (US$) |
$ |
0.43 |
|
$ |
0.96 |
|
$ |
1.16 |
|
$ |
1.64 |
| (1) Share-based compensation (*) |
|
0.05 |
|
|
0.06 |
|
|
0.16 |
|
|
0.16 |
| (2-6) Acquisition-related adjustments |
|
0.05 |
|
|
(0.45) |
|
|
0.26 |
|
|
(0.31) |
| Non-GAAP diluted income per ordinary share (US$) |
$ |
0.53 |
|
$ |
0.57 |
|
$ |
1.58 |
|
$ |
1.49 |
|
|
|
|
|
|
|
|
|
|
|
|
| (*) Adjustments related to share-based compensation expenses according
to ASC topic 718 (SFAS 123 (R)) |
Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail: erang@silicom.co.il
or
Investor Relations Contact:
Ehud Helft, Tel: +1 646 201 9246
GK Investor Relations
E-mail: silicom@gkir.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20161027005758/en/