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Silicom Reports Q3 2019 Financial Results
[October 31, 2019]

Silicom Reports Q3 2019 Financial Results


KFAR SAVA, Israel, Oct. 31, 2019 /PRNewswire/ -- 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 first nine months ended September 30, 2019.

Silicom_Ltd_Logo

Financial Results

Third Quarter: Silicom's revenues for the third quarter of 2019 totalled $24.1 million compared with $31.1 million for the third quarter of 2018.

On a GAAP basis, net income for the quarter totalled $1.9 million, or $0.25 per share (basic and diluted), compared with $3.8 million, or $0.49 per diluted share ($0.50 per basic share), for the third quarter of 2018.

On a non-GAAP basis (as described and reconciled below), net income for the quarter totalled $2.5 million, or $0.34 per share (basic and diluted), compared with $4.7 million, or $0.62 per diluted share ($0.63 per basic share), for the third quarter of 2018.

First Nine Months: Silicom's revenues for the first nine months of 2019 totalled $79.7 million compared with $88.2 million for the first nine months of 2018.

On a GAAP basis, net income for the period totalled $7.8 million, or $1.03 per share (basic and diluted), compared with $4.8 million, or $0.62 per diluted share ($0.63 per diluted share), for the first nine months of 2018.

On a non-GAAP basis (as described and reconciled below), net income for the period totalled $9.5 million, or $1.24 per diluted share ($1.25 per diluted share), compared with $12.4 million, or $1.62 per diluted share ($1.65 per basic share), for the first nine months of 2018.

Guidance for the Fourth Quarter

Management projects that revenues for the fourth quarter of 2019 will total $25 to $26 million.

Comments of Management

Shaike Orbach, Silicom's President and CEO, commented, "The third quarter was another profitable period with revenues in line with our guidance and positive cash flow. While still not reflected in our top line results, we believe that both of our strategic growth drivers – including Edge for SDWAN/NFV and networking-related FPGAs – are closer than ever to ramp-up. We expect both to increase their contribution to our top line in the year ahead, supporting significant growth in 2020 with further acceleration in 2021. We see that some of our customers are already beginning to ramp up deployment quantities, and others are finalizing their deployment plans for these markets. This process confirms the indications provided by market reports, which project significant growth for both markets in the coming years."

Mr. Orbach continued, "In fact, the Edge/SDWAN/NFV market is now growing in both the Telco space, the segment on which we focused initially, and the Enterprise space, which we believe, as demonstrated by the Design Win we announced earlier this week, will also become a significant  growth vector for us within this market. We also see an increased interest in LTE-supported SDWAN activity, a market in which we have strong positioning due to the heavy investments we have made in this technology.

"We are excited by all of these trends as they are in line with our positioning for our current customers and wins, confirming the soundness of our growth strategy. We believe that the ramp-up of our major Edge-related wins will finally begin during 2020, and that the FPGA-related wins secured during the past year will begin making a real contribution in 2020, followed by accelerated growth during 2021."

Mr. Orbach concluded, "We plan to continue and invest in both the Edge and the FPGA spaces, building more products and solutions, further deepening our pipeline and transforming opportunities currently in the pipeline into Design Wins. With superior products and technologies, Design Wins with larger and larger companies, significant loyal customers, a strong balance sheet and an excellent cash position, we are ideally positioned to benefit from the long-term development of the industry's strongest trends and remain strongly confident about our prospects."

Conference Call Details
Silicom's Management will host an interactive conference today, October 31st, at 9am Eastern Time (6am Pacific Time, 3pm 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, 3:00pm 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, amortization of acquired intangible assets, taxes on amortization of acquired intangible assets, as well as discontinued project-related write-offs. 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 improve performance and efficiency in Cloud and Data Center environments, Silicom's solutions increase throughput, decrease latency and boost the performance of servers and networking appliances, the infrastructure backbone that enables advanced Cloud architectures and leading technologies like NFV, SD-WAN and Cyber Security. Our innovative solutions for high-density networking, high-speed fabric switching, offloading and acceleration, which utilize a range of cutting-edge silicon technologies as well as FPGA-based solutions, are ideal for scaling-up and scaling-out cloud infrastructures.

Silicom products are used by major Cloud players, service providers, telcos and OEMs as components of their infrastructure offerings, including both add-on adapters in the Data Center and stand-alone virtualized/universal CPE devices at the edge.

Silicom's long-term, trusted relationships with more than 150 customers throughout the world, its more than 400 active Design Wins and more than 300 product SKUs have made Silicom a "go-to" connectivity/performance partner of choice for technology leaders around the globe.

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, Silicom's increasing dependence for substantial revenue growth on a limited number of customers in the evolving cloud-based, SD-WAN, NFV and Edge markets, the speed and extent to which solutions are adopted by these markets, likelihood that Silicom will rely increasingly on customers which provide solutions in these evolving markets, resulting in an increasing dependence on a smaller number of larger customers, 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 / Gavriel Frohwein

GK Investor Relations

Tel: +1-646-668-3559

E-mail: silicom@gkir.com 


 

-- FINANCIAL TABLES FOLLOW –

Silicom Ltd. Consolidated Balance Sheets


(US$ thousands)








September 30,


December 31,


2019


2018







Assets












Current assets






Cash and cash equivalents

$

15,938


$

26,808

Short-term bank deposits


13,542



-

Marketable securities


8,817



1,600

Accounts receivables: Trade, net


22,446



23,817

Accounts receivables: Other


4,027



9,487

Inventories


32,378



42,369

Total current assets


97,148



104,081







Marketable securities


50,735



45,612

Assets held for employees' severance benefits


1,666



1,517

Deferred tax assets


1,813



894

Property, plant and equipment, net


3,556



3,670

Intangible assets, net


1,600



966

Right of Use


3,374



-

Goodwill


25,561



25,561

Total assets

$

185,453


$

182,301







Liabilities and shareholders' equity












Current liabilities






Trade accounts payable

$

9,235


$

15,407

Other accounts payable and accrued expenses


6,512



6,133

Lease Liabilities


1,289



-







Total current liabilities


17,036



21,540







Lease Liabilities


2,148



-

Liability for employees' severance benefits


2,951



2,612







Total liabilities


22,135



24,152







Shareholders' equity






Ordinary shares and additional paid-in capital


56,488



54,643

Treasury shares


(4,527)



(38)

Retained earnings


111,357



103,544

Total shareholders' equity


163,318



158,149







Total liabilities and shareholders' equity

$

185,453


$

182,301

 

 

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,


2019


2018


2019


2018

Sales

$

24,104


$

31,104


$

79,733


$

88,229

Cost of sales


15,720



20,583



52,495



64,269

Gross profit


8,384



10,521



27,238



23,960













Research and development expenses


3,873



3,666



11,352



10,744

Selling and marketing expenses


1,575



1,599



4,896



4,731

General and administrative expenses


995



956



3,072



2,931

Total operating expenses


6,443



6,221



19,320



18,406













Operating income (loss)


1,941



4,300



7,918



5,554













Financial income, net


361



235



1,086



719

Income (Loss) before income taxes


2,302



4,535



9,004



6,273

Income taxes


407



769



1,191



1,510

Net income (loss)

$

1,895


$

3,766


$

7,813


$

4,763





































Basic income (loss) per ordinary share (US$)

$

0.25


$

0.50


$

1.03


$

0.63













Weighted average number of ordinary shares used to compute basic income per share (in thousands)


7,506



7,553



7,561



7,551

























Diluted income (loss) per ordinary share (US$)

$

0.25


$

0.49


$

1.03


$

0.62













Weighted average number of ordinary shares used to compute diluted income per share (in thousands)


7,551



7,641



7,614



7,660

 

 

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,


2019


2018


2019


2018













GAAP gross profit

$

8,384


$

10,521


$

27,238


$

23,960

(1) Share-based compensation (*)


108



91



330



237

(2) Discontinued project-related write-offs


-



-



-



4,985

Non-GAAP gross profit

$

8,492


$

10,612


$

27,568


$

29,182













GAAP operating income (loss)

$

1,941


$

4,300


$

7,918


$

5,554

Gross profit adjustments


108



91



330



5,222

(1) Share-based compensation (*)


462



547



1,457



1,470

(2) Discontinued project-related write-offs


-



-



-



13

(3) Amortization of acquired intangible assets


-



316



-



933

Non-GAAP operating income

$

2,511


$

5,254


$

9,705


$

13,192













GAAP net income (loss)

$

1,895


$

3,766


$

7,813


$

4,763

Operating income adjustments


570



954



1,787



7,638

(4) Taxes on amortization of acquired intangible assets


69



8



(142)



24

Non-GAAP net income

$

2,534


$

4,728


$

9,458


$

12,425













GAAP net income (loss)

$

1,895


$

3,766


$

7,813


$

4,763

Adjustments for Non-GAAP cost of sales


108



91



330



5,222

Adjustments for Non-GAAP Research and development expenses


219



410



682



1,180

Adjustments for Non-GAAP Selling and marketing expenses


119



280



375



760

Adjustments for Non-GAAP General and administrative expenses


124



173



400



476

Adjustments for Non-GAAP Income taxes


69



8



(142)



24

Non-GAAP net income

$

2,534


$

4,728


$

9,458


$

12,425













GAAP basic income (loss) per ordinary share (US$)

$

0.25


$

0.50


$

1.03


$

0.63

(1) Share-based compensation (*)


0.08



0.08



0.24



0.23

(2) Discontinued project-related write-offs


-



-



-



0.66

(3-4) Acquisition-related adjustments


0.01



0.05



(0.02)



0.13

Non-GAAP basic income per ordinary share (US$)

$

0.34


$

0.63


$

1.25


$

1.65













GAAP diluted income (loss) per ordinary share (US$)

$

0.25


$

0.49


$

1.03


$

0.62

(1) Share-based compensation (*)


0.08



0.08



0.23



0.22

(2) Discontinued project-related write-offs


-



-



-



0.65

(3-4) Acquisition-related adjustments


0.01



0.05



(0.02)



0.13

Non-GAAP diluted income per ordinary share (US$)

$

0.34


$

0.62


$

1.24


$

1.62













(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))

 

 

Cision View original content:http://www.prnewswire.com/news-releases/silicom-reports-q3-2019-financial-results-300949018.html

SOURCE Silicom Ltd.


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