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Silicom Reports All-time Record Revenues for 2nd Quarter & 1st Half 2017
[July 24, 2017]

Silicom Reports All-time Record Revenues for 2nd Quarter & 1st Half 2017


KFAR SAVA, Israel, July 24, 2017 /PRNewswire/ --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.

Silicom Ltd.

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.

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.

 

-- FINANCIAL TABLES FOLLOW –





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


 

 

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

 

 

 

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))

Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail:
[email protected]

Investor Relations Contact:
Ehud Helft
GK Investor Relations
Tel: +1-646-201-9246
E-mail:
[email protected]

View original content:http://www.prnewswire.com/news-releases/silicom-reports-all-time-record-revenues-for-2nd-quarter--1st-half-2017-300492713.html

SOURCE Silicom Ltd.


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