Silicom Q1 Revenues up 26% to $19M; Operating Profit up 37% to $4.8M

Business Wire

KFAR SAVA, Israel--(BUSINESS WIRE)--

Silicom Ltd. (SILC) (SILC), an industry-leading provider of high-performance networking and data infrastructure solutions, today reported its financial results for the first quarter ended March 31, 2014.

Silicom’s revenues for the first quarter of 2014 were $19.0 million, a 26% increase compared with $15.0 million in the first quarter of 2013.

On a GAAP basis, operating income for the quarter increased by 39% to $4.6 million, compared with $3.3 million, in the first quarter of 2013. Net income increased by 30% to $4.0 million, or $0.55 per diluted ordinary share ($0.56 per basic share), compared with $3.1 million, or $0.43 per diluted ordinary share ($0.44 per basic share), in the first quarter of 2013.

On a non-GAAP basis, operating income for the quarter increased by 37% to $4.8 million, compared with $3.5 million, for the first quarter of 2013. Net income increased by 28% to $4.2 million, or $0.57 per diluted ordinary share ($0.58 per basic share), compared with $3.3 million, or $0.46 per diluted and basic share, for the first quarter of 2013.

Comments of Management
Commenting on the results, Mr. Shaike Orbach, Silicom’s President and CEO, said, “We are very pleased to report another quarter of solid growth and strategic progress in line with our long-term plan for the Company’s future development. During the quarter, all of our existing revenue streams continued to deliver as planned, reflecting steady shipments made to many of our over 90+ OEM customers.

“In addition, we were very excited to launch the first offering of our new SmartSilc VHIO product line, a family of totally unique solutions that we have planned for the growing virtualized data center market segment. Incorporating the advanced patent-pending technology that we acquired last October, the first SmartSilc VHIO product is an OpenStack-supporting offload solution that enables more VMs to fit onto each cluster, helping data centers boost network performance while reducing power consumption, space and cost. Discussions currently underway with key virtualized market players give us confidence regarding the potential for SmartSilc VHIO to develop into an important new revenue stream over time.”

Mr. Orbach concluded, “In addition, we have recently distributed our second yearly dividend in line with a policy aimed at sharing our success more directly with our shareholders. We are confident that the combination of a strong existing platform and exciting new products for fast-growing markets will enable us to continue creating shareholder value over the long-term.”

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Conference Call Details

Silicom’s Management will host an interactive conference today, April 24th, at 9:00am Eastern Time (6:00am Pacific Time, 16:00 Israel Time). On the call, management will review and discuss the results, and will also be available to answer investors’ questions.

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, 16:00 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.

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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 throughput 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 Application Delivery,

WAN Optimization, Security and other mission-critical segments within the fast-growing virtualization, cloud computing and big data markets. Silicom’s product portfolio includes multi-port 1/10 Gigabit Ethernet server adapters, Intelligent Bypass solutions, Encryption accelerators and a variety of 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.

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 granted to directors, officers and employees, as well as amortization of 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.

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.

-- FINANCIAL TABLES FOLLOW –

Silicom Ltd. Consolidated Balance Sheets

 

(US$ thousands)

   
March 31, December 31,
2014 2013
 
Assets
 
Current assets
Cash and cash equivalents $ 15,663 $ 12,997
Short-term bank deposits - 3,000
Marketable securities 18,320 14,871
Accounts receivables: Trade, net 16,020 14,866
Accounts receivables: Other 2,581 2,460
Inventories 30,188 28,778
Deferred tax assets   432   274
Total current assets 83,204 77,246
 
Marketable securities 20,912 24,370
Assets held for employees’ severance benefits 1,537 1,543
Deferred tax assets 363 439
Property, plant and equipment, net 1,906 1,479
Intangible assets, net   164   180
 
Total assets $ 108,086 $ 105,257
 
Liabilities and shareholders' equity
 
Current liabilities
Trade accounts payable $ 4,846 $ 6,814
Other accounts payable and accrued expenses   4,930   5,134
Total current liabilities 9,776 11,948
 
Liability for employees’ severance benefits   2,643   2,618
 
Total liabilities   12,419   14,566
 
Shareholders' equity
Ordinary shares and additional paid-in capital 39,575 38,647
Treasury shares (38) (38)
Retained earnings   56,130   52,082
Total Shareholders' equity   95,667   90,691
 
Total liabilities and shareholders' equity $ 108,086 $ 105,257
Silicom Ltd. Consolidated Statements of Operations
 

(US$ thousands, except for share and per share data)

Three-month period
ended March 31,
2014   2013
Sales $ 19,004 $ 15,030
Cost of sales   11,266   9,001
Gross profit   7,738   6,029
Research and development expenses 1,458 1,244
Selling and marketing expenses 980 849
General and administrative expenses   666   614
Total operating expenses   3,104   2,707
Operating income 4,634 3,322
Financial income, net   105   118
Income before income taxes 4,739 3,440
Income taxes   691   337
Net income $ 4,048 $ 3,103
Basic income per ordinary share (US$) $ 0.56 $ 0.44
Weighted average number of ordinary shares used to compute basic income per share (in thousands)   7,176   7,063
Diluted income per ordinary share (US$) $ 0.55 $ 0.43
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)   7,343   7,166
Silicom Ltd. Reconciliation of Non-GAAP Financial Results
 

(US$ thousands, except for share and per share data)

 
Three-month period
ended March 31,
2014 2013
 
GAAP gross profit $ 7,738 $ 6,029
(1) Share-based compensation (*)   24   25
Non-GAAP gross profit $ 7,762 $ 6,054
 
GAAP operating income $ 4,634 $ 3,322
(1) Share-based compensation (*) 128 165
(2) Amortization of intangible assets   17   -
Non-GAAP operating income $ 4,779 $ 3,487
 
GAAP net income $ 4,048 $ 3,103
(1) Share-based compensation (*) 128 165
(2) Amortization of intangible assets   17   -
Non-GAAP net income $ 4,193 $ 3,268
 
 
GAAP basic income per ordinary share (US$) $ 0.56 $ 0.44
(1) Share-based compensation (*) 0.02 0.02
(2) Amortization of intangible assets - -
       
Non-GAAP basic income per ordinary share (US$) $ 0.58 $ 0.46
 
 
GAAP diluted income per ordinary share (US$) $ 0.55 $ 0.43
(1) Share-based compensation (*) 0.02 0.03
(2) Amortization of intangible assets - -
       
Non-GAAP diluted income per ordinary share (US$) $ 0.57 $ 0.46
 
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))

Contact:
Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail: erang@silicom.co.il
or
Investor relations contact:
Kenny Green / Ehud Helft
CCG Israel Investor Relations
Tel: +1 646 201 9246
E-mail : silicom@ccgisrael.com

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