EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1
 

FOR IMMEDIATE RELEASE
 
EARNINGS RELEASE

SILICOM REPORTS ALL-TIME RECORD REVENUES FOR
2nd QUARTER & 1st HALF 2017

-  Major Cloud Design Win & Cyber Security-Driven Success
Build Revenues to $30.3M for Q2, $55.6M for H1  - 
-  EPS Reaches $0.69 for Q2, $1.21 for H1  - 
 
KFAR SAVA, Israel, July 24, 2017 - Silicom Ltd. (NASDAQ: SILC), a leading provider of high-performance networking and data infrastructure solutions, today reported all-time record revenues for the second quarter and six months ended June 30, 2017.
 
Financial Results
 
Second Quarter: Silicom’s revenues for the second quarter of 2017 totalled $30.3 million, up 16% from $26.0 million for the second quarter of 2016 and 19% compared sequentially with the first quarter of 2017. These are the Company’s highest-ever quarterly revenues.
 
On a GAAP basis, net income for the quarter totalled $4.2 million, or $0.55 per diluted share ($0.57 per basic share), up 19% compared with $3.5 million, or $0.48 per share (basic and diluted), for the second quarter of 2016.
 
On a non-GAAP basis (as described and reconciled below), net income for the quarter totalled $5.2 million, or $0.69 per diluted share ($0.71 per basic share), up 12% compared with $4.7 million, or $0.63 per diluted share ($0.64 per basic share), for the second quarter of 2016.
 
First Six Months: Silicom’s revenues for the first half of 2017 totalled $55.6 million, up 17% compared with $47.4 million for the first half of 2016. These are the Company’s highest-ever revenues for a six-month period.
 
On a GAAP basis, net income for the period totalled $6.8 million, or $0.90 per diluted share ($0.92 per basic share), up 25% compared with $5.4 million, or $0.73 per diluted share ($0.74 per basic share), for the first half of 2016.
 
On a non-GAAP basis (as described and reconciled below), net income for the period totalled $9.1 million, or $1.21 per diluted share ($1.23 per basic share), up 18% compared with $7.7 million, or $1.04 per diluted share ($1.05 per basic share), for the first half of 2016.
 
Comments of Management
 
“We are excited to report the strongest quarter and six-month period in our history, confirming that our business has reached an important inflection point,” commented Mr. Shaike Orbach, Silicom’s President & CEO. “The recognition that we have received for our technologies and performance-boosting solutions, coupled with the strong demand being created by today’s booming Cloud and Cyber Security markets, is empowering us to build our business to a new level.
 
“During the first quarter, this recognition helped us achieve our largest-ever Design Win. To date, we have made significant progress with this Design Win, recording revenues that surpassed the $10 million mark during the first six months of the year. We continue delivering products, the customer continues placing new orders, and we overcome more and more of the challenges that remain along the way. As such, we feel increasingly confident that we will soon reach a stable deployment status, leading to a run rate above $30 million per year. Equally exciting, the trusting relationship that has developed with this mega-customer is enabling us to identify expansion possibilities for both the current Design Win, and for new opportunities.”
 
Mr. Orbach continued, “In parallel, we continue to win significant opportunities with Cloud, Cyber Security and other clients – both new and existing customers - as demonstrated by our recent Design Wins for encryption hardware acceleration cards, bypass solutions and a proprietary front-loading compression module. As such, we believe that we are better positioned than ever to achieve growth in the quarters to come. With Cloud and Cyber Security tailwinds driving demand for our products, a crystal reputation and a growing pipeline of opportunities, we are moving ahead rapidly and building the Company to the next stage.”
 
##
 
Conference Call Details
Silicom’s Management will host an interactive conference today, July 24th, 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.
 
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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, difficulty in commercializing and marketing of Silicom's products and services, maintaining and protecting brand recognition, protection of intellectual property, competition and other factors detailed in the company's periodic filings with the Securities and Exchange Commission. These forward-looking statements can generally be identified as such because the context of the statement will include words, such as “expects,” “should,” “believes,” “anticipates” or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. In light of significant risks and uncertainties inherent in forward-looking statements, the inclusion of such statements should not be regarded as a representation by the company that it will achieve such forward-looking statements. The company disclaims any duty to update such statements, whether as a result of new information, future events, or otherwise.
 
Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail: erang@silicom.co.il
Investor Relations Contact:
Ehud Helft
GK Investor Relations
Tel: +1 646 201 9246
E-mail: silicom@gkir.com
 
-- FINANCIAL TABLES FOLLOW –
 
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Silicom Ltd. Consolidated Balance Sheets
 
(US$ thousands) 
 
   
June 30,
    
December 31,
  
   
2017
    
2016
  
             
Assets
            
             
Current assets
            
Cash and cash equivalents
  
$
17,285
    
$
11,917
  
Marketable securities
    
13,477
      
16,263
  
Accounts receivables: Trade, net
    
33,465
      
27,722
  
Accounts receivables: Other
    
6,707
      
3,113
  
Inventories
    
51,359
      
44,280
  
Total current assets
    
122,293
      
103,295
  
                 
Marketable securities
    
-
      
7,769
  
Assets held for employees’ severance benefits
    
1,594
      
1,436
  
Deferred tax assets
    
1,556
      
1,537
  
Property, plant and equipment, net
    
4,242
      
3,915
  
Intangible assets, net
    
1,975
      
2,924
  
Goodwill
    
25,561
      
25,561
  
                 
Total assets
  
$
157,221
    
$
146,437
  
                 
Liabilities and shareholders' equity
                
                 
Current liabilities
                
Trade accounts payable
  
$
19,196
    
$
10,480
  
Other accounts payable and accrued expenses
    
8,039
      
7,484
  
                 
Total current liabilities
    
27,235
      
17,964
  
                 
Contingent consideration
    
4,760
      
4,642
  
Liability for employees’ severance benefits
    
2,722
      
2,439
  
                 
Total liabilities
    
34,717
      
25,045
  
                 
Shareholders' equity
                
Ordinary shares and additional paid-in capital
    
48,559
      
46,855
  
Treasury shares
    
(38
)
    
(38
)
Retained earnings
    
73,983
      
74,575
  
Total shareholders' equity
    
122,504
      
121,392
  
                 
Total liabilities and shareholders' equity
  
$
157,221
    
$
146,437
  

4
Silicom Ltd. Consolidated Statements of Operations
 
(US$ thousands, except for share and per share data)
 
   
Three-month period
    
Six-month period
  
   
ended June 30,
    
ended June 30,
  
   
2017
    
2016
    
2017
    
2016
  
Sales
  
$
30,266
    
$
26,001
    
$
55,608
    
$
47,358
  
Cost of sales
    
19,142
      
16,150
      
34,899
      
29,575
  
Gross profit
    
11,124
      
9,851
      
20,709
      
17,783
  
                                 
Research and development expenses
    
3,328
      
2,869
      
6,842
      
5,897
  
Selling and marketing expenses
    
1,593
      
1,648
      
3,235
      
3,175
  
General and administrative expenses
    
1,109
      
1,048
      
2,298
      
2,016
  
Total operating expenses
    
6,030
      
5,565
      
12,375
      
11,088
  
                                 
Operating income
    
5,094
      
4,286
      
8,334
      
6,695
  
                                 
Financial income (expenses), net
    
13
      
90
      
43
      
25
  
Income before income taxes
    
5,107
      
4,376
      
8,377
      
6,720
  
Income taxes
    
914
      
843
      
1,587
      
1,279
  
Net income
  
$
4,193
    
$
3,533
    
$
6,790
    
$
5,441
  
                                 
Basic income per ordinary share (US$)
  
$
0.57
    
$
0.48
    
$
0.92
    
$
0.74
  
                                 
Weighted average number of ordinary shares used to compute basic income per share (in thousands)
    
7,420
      
7,335
      
7,401
      
7,316
  
                                 
Diluted income per ordinary share (US$)
  
$
0.55
    
$
0.48
    
$
0.90
    
$
0.73
  
                                 
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)
    
7,573
      
7,414
      
7,536
      
7,404
  

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Silicom Ltd. Reconciliation of Non-GAAP Financial Results
                       
(US$ thousands, except for share and per share data)
 
   
Three-month period
    
Six-month period
  
   
ended June 30,
    
ended June 30,
  
   
2017
    
2016
    
2017
    
2016
  
                         
GAAP gross profit
  
$
11,124
    
$
9,851
    
$
20,709
    
$
17,783
  
(1) Share-based compensation (*)
    
83
      
39
      
176
      
77
  
(2)Amortization of acquired intangible assets
    
-
      
-
      
-
      
274
  
Non-GAAP gross profit
  
$
11,207
    
$
9,890
    
$
20,885
    
$
18,134
  
                                 
GAAP operating income
  
$
5,094
    
$
4,286
    
$
8,334
    
$
6,695
  
Gross profit adjustments
    
83
      
39
      
176
      
351
  
(1) Share-based compensation (*)
    
457
      
381
      
1,125
      
787
  
(2) Amortization of acquired intangible assets
    
479
      
495
      
955
      
987
  
(3) Changes in the fair value of contingent consideration
    
60
      
62
      
118
      
15
  
Non-GAAP operating income
  
$
6,173
    
$
5,263
    
$
10,708
    
$
8,835
  
                                 
GAAP net income
  
$
4,193
    
$
3,533
    
$
6,790
    
$
5,441
  
Operating income adjustments
    
1,079
      
977
      
2,374
      
2,140
  
(4) Taxes on amortization of acquired intangible assets
    
(27
)
    
174
      
(53
)
    
135
  
Non-GAAP net income
  
$
5,245
    
$
4,684
    
$
9,111
    
$
7,716
  
                                 
GAAP net income
  
$
4,193
    
$
3,533
    
$
6,790
    
$
5,441
  
Adjustments for Non-GAAP cost of sales
    
83
      
39
      
176
      
351
  
Adjustments for Non-GAAP Research and development expenses
    
512
      
492
      
1,054
      
960
  
Adjustments for Non-GAAP Selling and marketing expenses
    
272
      
258
      
620
      
537
  
Adjustments for Non-GAAP General and administrative expenses
    
212
      
188
      
524
      
292
  
Adjustments for Non-GAAP Income taxes
    
(27
)
    
174
      
(53
)
    
135
  
Non-GAAP net income
  
$
5,245
    
$
4,684
    
$
9,111
    
$
7,716
  
                                 
GAAP basic income per ordinary share (US$)
  
$
0.57
    
$
0.48
    
$
0.92
    
$
0.74
  
(1) Share-based compensation (*)
    
0.07
      
0.06
      
0.18
      
0.12
  
(2-4) Acquisition-related adjustments
    
0.07
      
0.10
      
0.13
      
0.19
  
Non-GAAP basic income per ordinary share (US$)
  
$
0.71
    
$
0.64
    
$
1.23
    
$
1.05
  
                                 
GAAP diluted income per ordinary share (US$)
  
$
0.55
    
$
0.48
    
$
0.90
    
$
0.73
  
(1) Share-based compensation (*)
    
0.07
      
0.06
      
0.17
      
0.12
  
(2-4) Acquisition-related adjustments
    
0.07
      
0.09
      
0.14
      
0.19
  
Non-GAAP diluted income per ordinary share (US$)
  
$
0.69
    
$
0.63
    
$
1.21
    
$
1.04
  
                                 
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))
  

 
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