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

FOR IMMEDIATE RELEASE

EARNINGS RELEASE
 
Silicom Reports Record Revenues and Operating
Income for Full Year 2014

- Strong Q4 With $22.8M Revenues & $6.2M Operating Income (Non-GAAP)
Returns Company to Growth Trajectory; Positioned for Faster-Than-Market Growth in 2015 -
 
KFAR SAVA, Israel, January 29, 2015 - Silicom Ltd. (NASDAQ: SILC, TASE: SILC), an industry-leading provider of high-performance networking and data infrastructure solutions, today reported its financial results for the fourth quarter and full year ended December 31, 2014.
 
Financial Results
 
Q4 2014: Revenues for the fourth quarter totalled $22.8 million, up 44% compared sequentially with $15.9 million for the third quarter of 2014. For the fourth quarter of 2013 revenues totalled $25.4 million.
 
On a GAAP basis, operating income for the quarter totalled $5.5 million, up 78% compared sequentially with $3.1 million for Q3 2014. Net income for the quarter totalled $4.7 million, or $0.65 per diluted share ($0.66 per basic share) up 88% compared sequentially with $2.5 million, or $0.34 per diluted share ($0.35 per basic share) for the third quarter of 2014. For the fourth quarter of 2013, net income was $6.7 million, or $0.91 per diluted share ($0.94 per basic share).
 
On a non-GAAP basis (as described and reconciled below), operating income for the quarter totalled $6.2 million, up 76% compared sequentially with $3.5 million for the third quarter of 2014. Net income for the period totalled $5.4 million, or $0.74 per diluted share ($0.75 per basic share), up 83% compared sequentially with $3.0 million, or $0.41 per basic and diluted share, in the third quarter of 2014. For the fourth quarter of 2013, non-GAAP net income totalled $6.8 million, or $0.94 per diluted share ($0.96 per basic share).
 
Full Year 2014: Revenues for 2014 increased to $75.6 million from $73.3 million in 2013.
 
On a GAAP basis, operating income for the year totalled $17.0 million compared with $17.6 million in 2013. Net income for the year totalled $14.6 million, or $2.00 per diluted share ($2.03 per basic share), compared with $17.1 million, or $2.36 per diluted share ($2.40 per basic share), in 2013.
 
On a non-GAAP basis (as described and reconciled below), operating income for the period totalled $18.7 million compared with $18.3 million in 2013. Net income for the year totalled $16.3 million, or $2.22 per diluted share ($2.26 per basic share), compared with $17.8 million, or $2.45 per diluted share ($2.50 per basic share), in 2013.
 
 
 
 
 
Comments of Management
 
Commenting on the results, Shaike Orbach, President and CEO, said, “The fourth quarter was a period of strong sales and strategic progress that we expect to continue into 2015, thereby returning us to our normal pattern of year-over-year, faster-than-market growth.
 
“The three large Design Wins that we reported during the period – two for our new Switched SETAC products and one for an External Bypass solution - demonstrate the continued power of our full range of innovative products to drive our results, attracting both new and existing customers. In addition, during the quarter we were very pleased to acquire Fiberblaze, a provider of high-performance application acceleration solutions. We plan to leverage its synergistic products and technologies to build and expand our presence in the data center, network monitoring, telecommunications, cyber security and ultra-low latency HFT markets.”

Mr. Orbach concluded, “In short, we believe that we have returned to our normal growth trajectory and are optimistic regarding the future. With favourable industry trends, a growing portfolio of unique products and 100+ customer base with a deep and growing need for our solutions, we continue to build out each of our growth engines and look forward to a strong 2015.”
 
##
 
Conference Call Details
 
Silicom’s Management will host an interactive conference today, January 29th, 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 1/10/40/100 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.
 
Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail: erang@silicom.co.il
Investor relations contact:
Kenny Green / Ehud Helft
GK Investor Relations
Tel: +1 646 201 9246
E-mail : silicom@gkir.com
 
-- FINANCIAL TABLES FOLLOW –
 
 
 
 

Silicom Ltd. Consolidated Balance Sheets
 
(US$ thousands)
 
   
December 31,
    
December 31,
  
   
2014
    
2013
  
             
Assets
            
             
Current assets
            
Cash and cash equivalents
   $ 17,890     $ 12,997  
Short-term bank deposits
     4,000       3,000  
Marketable securities
     15,167       14,871  
Accounts receivables: Trade, net
     18,831       14,866  
Accounts receivables: Other
     1,632       2,460  
Inventories
     25,449       28,778  
Deferred tax assets
     567       274  
Total current assets
     83,536       77,246  
                 
Marketable securities
     20,358       24,370  
Assets held for employees’ severance benefits
     1,425       1,543  
Deferred tax assets
     346       439  
Property, plant and equipment, net
     2,458       1,479  
Intangible assets, net
     2,071       180  
Goodwill
     12,242       -  
                 
Total assets
   $ 122,436     $ 105,257  
                 
Liabilities and shareholders' equity
                
                 
Current liabilities
                
Trade accounts payable
   $ 8,236     $ 6,814  
Other accounts payable and accrued expenses
     5,783       5,134  
Contingent consideration
     4,728       -  
Deferred tax liabilities
     259       -  
                 
Total current liabilities
     19,006       11,948  
                 
Liability for employees’ severance benefits
     2,414       2,618  
Deferred tax liabilities
     284       -  
                 
Total liabilities
     21,704       14,566  
                 
Shareholders' equity
                
Ordinary shares and additional paid-in capital
     41,266       38,647  
Treasury shares
     (38 )     (38 )
Retained earnings
     59,504       52,082  
Total shareholders' equity
     100,732       90,691  
                 
Total liabilities and shareholders' equity
   $ 122,436     $ 105,257  
 
 
 
 
 
Silicom Ltd. Consolidated Statements of Operations
 
(US$ thousands, except for share and per share data)
 
   
Three-month period
    
Twelve-month period
  
   
ended December 31,
    
ended December 31,
  
   
2014
    
2013
    
2014
    
2013
  
Sales
   $ 22,834     $ 25,353     $ 75,622     $ 73,298  
Cost of sales
     13,407       15,267       44,835       43,865  
Gross profit
     9,427       10,086       30,787       29,433  
                                 
Research and development expenses
     1,768       1,571       6,480       5,465  
Selling and marketing expenses
     1,322       1,101       4,418       3,818  
General and administrative expenses
     885       709       2,843       2,572  
Total operating expenses
     3,975       3,381       13,741       11,855  
                                 
Operating income
     5,452       6,705       17,046       17,578  
                                 
Financial income, net
     93       124       263       404  
Income before income taxes
     5,545       6,829       17,309       17,982  
Income taxes
     823       164       2,704       905  
Net income
   $ 4,722     $ 6,665     $ 14,605     $ 17,077  
                                 
Basic income per ordinary share (US$)
   $ 0.66     $ 0.94     $ 2.03     $ 2.40  
                                 
Weighted average number of ordinary shares used to compute basic income per share (in thousands)
     7,195       7,119       7,184       7,103  
                                 
Diluted income per ordinary share (US$)
   $ 0.65     $ 0.91     $ 2.00     $ 2.36  
                                 
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)
     7,307       7,289       7,319       7,246  
 
 
 
 
 
Silicom Ltd. Reconciliation of Non-GAAP Financial Results
                       
(US$ thousands, except for share and per share data)
 
   
Three-month period
    
Twelve-month period
  
   
ended December 31,
    
ended December 31,
  
   
2014
    
2013
    
2014
    
2013
  
                         
GAAP gross profit
   $ 9,427     $ 10,086     $ 30,787     $ 29,433  
(1) Share-based compensation (*)
     26       26       124       103  
(2) Adjustment of inventory step up related to acquisition
     40       -       40       -  
Non-GAAP gross profit
   $ 9,493     $ 10,112     $ 30,951     $ 29,536  
                                 
GAAP operating income
   $ 5,452     $ 6,705     $ 17,046     $ 17,578  
Gross profit adjustments
     66       26       164       103  
(1) Share-based compensation (*)
     340       140       1,142       565  
(3) Acquisition-related expenses
     217       -       217       -  
(4) Amortization of acquired intangible assets
     56       17       106       20  
(5) Changes in the fair value of contingent consideration
     45       -       45       -  
Non-GAAP operating income
   $ 6,176     $ 6,888     $ 18,720     $ 18,266  
                                 
GAAP net income
   $ 4,722     $ 6,665     $ 14,605     $ 17,077  
Operating income adjustments
     724       183       1,674       688  
(6) Taxes on amortization of acquired intangible assets
     (19 )     -       (19 )     -  
Non-GAAP net income
   $ 5,427     $ 6,848     $ 16,260     $ 17,765  
                                 
GAAP net income
   $ 4,722     $ 6,665     $ 14,605     $ 17,077  
Adjustments for Non-GAAP cost of sales
     66       26       164       103  
Adjustments for Non-GAAP Research and development expenses
     140       65       436       213  
Adjustments for Non-GAAP Selling and marketing expenses
     120       44       376       177  
Adjustments for Non-GAAP General and administrative expenses
     398       48       698       195  
Adjustments for Non-GAAP Income taxes
     (19 )     -       (19 )     -  
Non-GAAP net income
   $ 5,427     $ 6,848     $ 16,260     $ 17,765  
                                 
GAAP basic income per ordinary share (US$)
   $ 0.66     $ 0.94     $ 2.03     $ 2.40  
(1) Share-based compensation (*)
     0.05       0.02       0.18       0.10  
(2-6) Acquisition-related adjustments
     0.04       -       0.05       -  
Non-GAAP basic income per ordinary share (US$)
   $ 0.75     $ 0.96     $ 2.26     $ 2.50  
                                 
GAAP diluted income per ordinary share (US$)
   $ 0.65     $ 0.91     $ 2.00     $ 2.36  
(1) Share-based compensation (*)
     0.05       0.03       0.17       0.09  
(2-6) Acquisition-related adjustments
     0.04       -       0.05       -  
Non-GAAP diluted income per ordinary share (US$)
   $ 0.74     $ 0.94     $ 2.22     $ 2.45  
                                 
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))