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

FOR IMMEDIATE RELEASE

EARNINGS RELEASE
 
Silicom Reports Financial
Results for the 2nd Quarter & 1st Half of 2016
 
- Q2 Revenues Up 52% to $26M, H1 Revenues up 32% to $47M; Management
Projects Continued Strong Growth Ahead -
 
KFAR SAVA, Israel, July 25, 2016 - Silicom Ltd. (NASDAQ: SILC), a leading provider of high-performance networking and data infrastructure solutions, today reported its financial results for the second quarter and six months ended June 30, 2016.
 
Financial Results
 
Second Quarter: Revenues for the second quarter of 2016 totalled $26.0 million, up 52% on a year-over-year basis compared with $17.1 million in the second quarter of 2015, and up 22% compared sequentially with the first quarter of 2016.
 
On a GAAP basis, net income for the quarter totalled $3.5 million, or $0.48 per share (basic and diluted), a 72% increase compared with $2.1 million, $0.28 per share (basic and diluted), in the second quarter of 2015, and an 85% increase compared with the first quarter of 2016. On a non-GAAP basis (as described and reconciled below), net income totalled $4.7 million, or $0.63 per diluted share ($0.64 per basic share), up 59% compared with $2.9 million, or $0.40 per diluted share ($0.41 per basic share), for the second quarter of 2015, and 54% compared with the first quarter of 2016.
 
First Six Months: Revenues for the first half of 2016 totalled $47.4 million, a 32% increase compared with $35.9 million in the first half of 2015.
 
On a GAAP basis, net income for the period totalled $5.4 million, or $0.73 per diluted share ($0.74 per basic share), an 8% increase compared with $5.0 million, or $0.68 per diluted share ($0.69 per basic share), in the first half of 2015. On a non-GAAP basis (as described and reconciled below), net income for the period totalled $7.7 million, or $1.04 per diluted share ($1.05 per basic share), a 14% increase compared with $6.8 million, or $0.92 per diluted share ($0.94 per basic share), in the first six months of 2015.
 
Comments of Management
 
Mr. Shaike Orbach, Silicom’s President and CEO, commented, “We are proud to report another great quarter, with strong revenues and multiple Design Wins demonstrating our accelerating momentum in many of our target markets: especially Cyber Security, Network Monitoring, Cloud, SDN and SD-WAN. These target markets have a critical need for robust throughput solutions, and our concepts are proving to be an exact fit. For example, during the quarter we secured a first Design Win from an emerging Cyber Security player and closed a Time Stamping/Packet Processing Design Win with a Tier-1 Network Monitoring company, while also achieving significant initial sales for our new Switched SETAC Cloud Platform. And after the quarter, we announced our first major win in the SD-WAN space.”
 
Mr. Orbach continued, “With a solid pipeline from our existing customers and stronger-than-ever sales activities with existing and emerging players in fast-growth markets, we feel comfortable projecting that 2016 will be a strong growth year for Silicom. We are fully focused on leveraging our excellent positioning and the momentum of our target markets to generate growth and create value in 2016 and beyond.”
 
##
 
Conference Call Details
Silicom’s Management will host an interactive conference today, July 25th, 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.
 
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 –
 
Silicom Ltd. Consolidated Balance Sheets
 
(US$ thousands)
           
   
June 30,
    
December 31,
  
   
2016
    
2015
  
             
Assets
            
             
Current assets
            
Cash and cash equivalents
  
$
10,969
    
$
18,178
  
Marketable securities
    
15,517
      
8,636
  
Accounts receivables: Trade, net
    
21,378
      
23,768
  
Accounts receivables: Other
    
4,411
      
1,380
  
Inventories
    
38,367
      
26,321
  
Deferred tax assets
    
-
      
950
  
Total current assets
    
90,642
      
79,233
  
                 
Marketable securities
    
13,629
      
24,246
  
Assets held for employees’ severance benefits
    
1,407
      
1,374
  
Deferred tax assets
    
1,721
      
595
  
Property, plant and equipment, net
    
3,972
      
3,825
  
Intangible assets, net
    
4,331
      
5,164
  
Goodwill
    
25,741
      
25,561
  
                 
Total assets
  
$
141,443
    
$
139,998
  
                 
Liabilities and shareholders' equity
                
                 
Current liabilities
                
Trade accounts payable
  
$
14,996
    
$
8,556
  
Other accounts payable and accrued expenses
    
6,040
      
11,147
  
Deferred tax liabilities
    
-
      
111
  
                 
Total current liabilities
    
21,036
      
19,814
  
                 
Contingent consideration
    
4,991
      
4,942
  
Liability for employees’ severance benefits
    
2,504
      
2,251
  
Deferred tax liabilities
    
438
      
157
  
                 
Total liabilities
    
28,969
      
27,164
  
                 
Shareholders' equity
                
Ordinary shares and additional paid-in capital
    
45,633
      
44,122
  
Treasury shares
    
(38
)
    
(38
)
Retained earnings
    
66,879
      
68,750
  
Total shareholders' equity
    
112,474
      
112,834
  
                 
Total liabilities and shareholders' equity
  
$
141,443
    
$
139,998
  
 
 
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,
  
   
2016
    
2015
    
2016
    
2015
  
Sales
  
$
26,001
    
$
17,121
    
$
47,358
    
$
35,884
  
Cost of sales
    
16,150
      
10,075
      
29,575
      
20,967
  
Gross profit
    
9,851
      
7,046
      
17,783
      
14,917
  
                                 
Research and development expenses
    
2,869
      
2,283
      
5,897
      
4,581
  
Selling and marketing expenses
    
1,648
      
1,396
      
3,175
      
2,689
  
General and administrative expenses
    
1,048
      
956
      
2,016
      
1,909
  
Total operating expenses
    
5,565
      
4,635
      
11,088
      
9,179
  
                                 
Operating income
    
4,286
      
2,411
      
6,695
      
5,738
  
                                 
Financial income (expenses), net
    
90
      
4
      
25
      
113
  
Income before income taxes
    
4,376
      
2,415
      
6,720
      
5,851
  
Income taxes
    
843
      
360
      
1,279
      
810
  
Net income
  
$
3,533
    
$
2,055
    
$
5,441
    
$
5,041
  
                                 
Basic income per ordinary share (US$)
  
$
0.48
    
$
0.28
    
$
0.74
    
$
0.69
  
                                 
Weighted average number of ordinary shares used to compute basic income per share (in thousands)
    
7,335
      
7,274
      
7,316
      
7,260
  
                                 
                                 
Diluted income per ordinary share (US$)
  
$
0.48
    
$
0.28
    
$
0.73
    
$
0.68
  
                                 
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)
    
7,414
      
7,378
      
7,404
      
7,372
  
 
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,
  
   
2016
    
2015
    
2016
    
2015
  
                         
GAAP gross profit
  
$
9,851
    
$
7,046
    
$
17,783
    
$
14,917
  
(1) Share-based compensation (*)
    
39
      
27
      
77
      
53
  
(2) Adjustment of inventory step up related to acquisition
    
-
      
173
      
-
      
268
  
(4)Amortization of acquired intangible assets
    
-
      
-
      
274
      
-
  
Non-GAAP gross profit
  
$
9,890
    
$
7,246
    
$
18,134
    
$
15,238
  
                                 
GAAP operating income
  
$
4,286
    
$
2,411
    
$
6,695
    
$
5,738
  
Gross profit adjustments
    
39
      
200
      
351
      
321
  
(1) Share-based compensation (*)
    
381
      
343
      
787
      
681
  
(3) Acquisition-related expenses
    
-
      
42
      
-
      
130
  
(4) Amortization of acquired intangible assets
    
495
      
180
      
987
      
361
  
(5) Changes in the fair value of contingent consideration
    
62
      
207
      
15
      
404
  
Non-GAAP operating income
  
$
5,263
    
$
3,383
    
$
8,835
    
$
7,635
  
                                 
GAAP net income
  
$
3,533
    
$
2,055
    
$
5,441
    
$
5,041
  
Operating income adjustments
    
977
      
972
      
2,140
      
1,897
  
(6) Taxes on amortization of acquired intangible assets
    
174
      
(79
)
    
135
      
(141
)
Non-GAAP net income
  
$
4,684
    
$
2,948
    
$
7,716
    
$
6,797
  
                                 
GAAP net income
  
$
3,533
    
$
2,055
    
$
5,441
    
$
5,041
  
Adjustments for Non-GAAP cost of sales
    
39
      
200
      
351
      
321
  
Adjustments for Non-GAAP Research and development expenses
    
492
      
272
      
960
      
571
  
Adjustments for Non-GAAP Selling and marketing expenses
    
258
      
165
      
537
      
328
  
Adjustments for Non-GAAP General and administrative expenses
    
188
      
335
      
292
      
677
  
Adjustments for Non-GAAP Income taxes
    
174
      
(79
)
    
135
      
(141
)
Non-GAAP net income
  
$
4,684
    
$
2,948
    
$
7,716
    
$
6,797
  
                                 
GAAP basic income per ordinary share (US$)
  
$
0.48
    
$
0.28
    
$
0.74
    
$
0.69
  
(1) Share-based compensation (*)
    
0.06
      
0.05
      
0.12
      
0.10
  
(2-6) Acquisition-related adjustments
    
0.10
      
0.08
      
0.19
      
0.15
  
Non-GAAP basic income per ordinary share (US$)
  
$
0.64
    
$
0.41
    
$
1.05
    
$
0.94
  
                                 
GAAP diluted income per ordinary share (US$)
  
$
0.48
    
$
0.28
    
$
0.73
    
$
0.68
  
(1) Share-based compensation (*)
    
0.06
      
0.05
      
0.12
      
0.10
  
(2-6) Acquisition-related adjustments
    
0.09
      
0.07
      
0.19
      
0.14
  
Non-GAAP diluted income per ordinary share (US$)
  
$
0.63
    
$
0.40
    
$
1.04
    
$
0.92
  
 
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))