KFAR SAVA, Israel--(BUSINESS WIRE)--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 second quarter and six month period ended June 30, 2015.
Financial Results
Second Quarter 2015: Revenues for the second quarter totalled $17.1 million, a 4% decrease compared with $17.9 million in the second quarter of 2014.
On a GAAP basis, net income for the quarter totalled $2.1 million, $0.28 per share (basic and diluted), compared with $3.3 million, or $0.45 per diluted share ($0.46 per basic share), in the second quarter of 2014. On a non-GAAP basis (as described and reconciled below), net income totalled $2.9 million, or $0.40 per diluted share ($0.41 per basic share), compared with $3.7 million, or $0.50 per diluted share ($0.51 per basic share), in the second quarter of 2014.
First Six Months 2015: Revenues for the first half of 2015 totalled $35.9 million, a 3% decrease compared with $36.9 million in the first half of 2014.
On a GAAP basis, net income for the period totalled $5.0 million, or $0.68 per diluted share ($0.69 per basic share), compared with $7.4 million, or $1.00 per diluted share ($1.03 per basic share), in the first half of 2014. On a non-GAAP basis (as described and reconciled below), net income for the period totalled $6.8 million, or $0.92 per diluted shares ($0.94 per basic share), compared with $7.9 million, or $1.07 per diluted share ($1.10 per basic share), in the first six months of 2014.
Comments of Management
Mr. Shaike Orbach, Silicom’s President and CEO, commented, “Our shortfall for the second quarter reflects the longer-than-expected decision-making processes and slower-than-projected market deployments by some of our largest customers. While this has had an impact on our revenues, giving us what we believe will be our weakest quarter for 2015, we are pleased to have been able to maintain strong profitability and a positive operating cash flow, demonstrating the value of our Company’s correct organizational structure. We continue to be strong believers in the strategy which has worked so well in the past, bringing us a steady flow of new design wins with both existing and new customers. We expect that the many active design wins in hand, together with the opportunities we project to win in the future, will compensate for any local delays and return us to a growth path.”
Mr. Orbach continued, “During and after the quarter, we announced two important ‘Cloud’ design wins: our first big win in the booming SDS (Software-Defined Storage) space, and a ramp-up of our business with an emerging storage industry leader. These successes demonstrate the strong need of virtualized Cloud players for Silicom’s high-performance connectivity solutions, and the fact that our solutions are catching up with the most important market trends.”
Mr. Orbach concluded, “With a long-term perspective, we continue to develop products for new industry trends and to build our customer relationships, and look forward to returning to growth in the quarters ahead.”
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Conference Call Details
Silicom’s Management will host an
interactive conference today, July 22nd, 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.
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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.
-- FINANCIAL TABLES FOLLOW –
Silicom Ltd. Consolidated Balance Sheets | |||||||||||||||||||||||||
(US$ thousands) | |||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Current assets | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 17,460 | $ | 17,890 | |||||||||||||||||||||
Short-term bank deposits | - | 4,000 | |||||||||||||||||||||||
Marketable securities | 8,599 | 15,167 | |||||||||||||||||||||||
Accounts receivables: Trade, net | 15,597 | 18,831 | |||||||||||||||||||||||
Accounts receivables: Other | 1,944 | 1,632 | |||||||||||||||||||||||
Inventories | 31,001 | 25,449 | |||||||||||||||||||||||
Deferred tax assets | 660 | 567 | |||||||||||||||||||||||
Total current assets | 75,261 | 83,536 | |||||||||||||||||||||||
Marketable securities | 29,387 | 20,358 | |||||||||||||||||||||||
Assets held for employees’ severance benefits | 1,513 | 1,425 | |||||||||||||||||||||||
Deferred tax assets | 471 | 346 | |||||||||||||||||||||||
Property, plant and equipment, net | 3,957 | 2,458 | |||||||||||||||||||||||
Intangible assets, net | 1,705 | 2,071 | |||||||||||||||||||||||
Goodwill | 12,242 | 12,242 | |||||||||||||||||||||||
Total assets | $ | 124,536 | $ | 122,436 | |||||||||||||||||||||
Liabilities and shareholders' equity | |||||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||||
Trade accounts payable | $ | 9,106 | $ | 8,236 | |||||||||||||||||||||
Other accounts payable and accrued expenses | 7,289 | 5,783 | |||||||||||||||||||||||
Contingent consideration | 5,132 | 4,728 | |||||||||||||||||||||||
Deferred tax liabilities | 191 | 259 | |||||||||||||||||||||||
Total current liabilities | 21,718 | 19,006 | |||||||||||||||||||||||
Liability for employees’ severance benefits | 2,518 | 2,414 | |||||||||||||||||||||||
Deferred tax liabilities | 211 | 284 | |||||||||||||||||||||||
Total liabilities | 24,447 | 21,704 | |||||||||||||||||||||||
Shareholders' equity | |||||||||||||||||||||||||
Ordinary shares and additional paid-in capital | 42,856 | 41,266 | |||||||||||||||||||||||
Treasury shares | (38) | (38) | |||||||||||||||||||||||
Retained earnings | 57,271 | 59,504 | |||||||||||||||||||||||
Total shareholders' equity | 100,089 | 100,732 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 124,536 | $ | 122,436 | |||||||||||||||||||||
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, | ||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||
Sales | $ | 17,121 | $ | 17,918 | $ | 35,884 | $ | 36,922 | |||||||||||||||||
Cost of sales | 10,075 | 10,730 | 20,967 | 21,996 | |||||||||||||||||||||
Gross profit | 7,046 | 7,188 | 14,917 | 14,926 | |||||||||||||||||||||
Research and development expenses | 2,283 | 1,586 | 4,581 | 3,044 | |||||||||||||||||||||
Selling and marketing expenses | 1,396 | 1,082 | 2,689 | 2,062 | |||||||||||||||||||||
General and administrative expenses | 956 | 619 | 1,909 | 1,285 | |||||||||||||||||||||
Total operating expenses | 4,635 | 3,287 | 9,179 | 6,391 | |||||||||||||||||||||
Operating income | 2,411 | 3,901 | 5,738 | 8,535 | |||||||||||||||||||||
Financial income, net | 4 | 58 | 113 | 163 | |||||||||||||||||||||
Income before income taxes | 2,415 | 3,959 | 5,851 | 8,698 | |||||||||||||||||||||
Income taxes | 360 | 632 | 810 | 1,323 | |||||||||||||||||||||
Net income | $ | 2,055 | $ | 3,327 | $ | 5,041 | $ | 7,375 | |||||||||||||||||
Basic income per ordinary share (US$) | $ | 0.28 | $ | 0.46 | $ | 0.69 | $ | 1.03 | |||||||||||||||||
Weighted average number of ordinary shares used |
7,274 | 7,183 | 7,260 | 7,179 | |||||||||||||||||||||
Diluted income per ordinary share (US$) | $ | 0.28 | $ | 0.45 | $ | 0.68 | $ | 1.00 | |||||||||||||||||
Weighted average number of ordinary shares used |
7,378 | 7,337 | 7,372 | 7,340 | |||||||||||||||||||||
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, | ||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||
GAAP gross profit | $ | 7,046 | $ | 7,188 | $ | 14,917 | $ | 14,926 | |||||||||||||||||
(1) Share-based compensation (*) | 27 | 35 | 53 | 59 | |||||||||||||||||||||
(2) Adjustment of inventory step up related to acquisition | 173 | - | 268 | - | |||||||||||||||||||||
Non-GAAP gross profit | $ | 7,246 | $ | 7,223 | $ | 15,238 | $ | 14,985 | |||||||||||||||||
GAAP operating income | $ | 2,411 | $ | 3,901 | $ | 5,738 | $ | 8,535 | |||||||||||||||||
Gross profit adjustments | 200 | 35 | 321 | 59 | |||||||||||||||||||||
(1) Share-based compensation (*) | 343 | 304 | 681 | 408 | |||||||||||||||||||||
(3) Acquisition-related expenses | 42 | - | 130 | - | |||||||||||||||||||||
(4) Amortization of acquired intangible assets | 180 | 16 | 361 | 33 | |||||||||||||||||||||
(5) Changes in the fair value of contingent consideration | 207 | - | 404 | - | |||||||||||||||||||||
Non-GAAP operating income | $ | 3,383 | $ | 4,256 | $ | 7,635 | $ | 9,035 | |||||||||||||||||
GAAP net income | $ | 2,055 | $ | 3,327 | $ | 5,041 | $ | 7,375 | |||||||||||||||||
Operating income adjustments | 972 | 355 | 1,897 | 500 | |||||||||||||||||||||
(6) Taxes on amortization of acquired intangible assets | (79) | - | (141) | - | |||||||||||||||||||||
Non-GAAP net income | $ | 2,948 | $ | 3,682 | $ | 6,797 | $ | 7,875 | |||||||||||||||||
GAAP net income | $ | 2,055 | $ | 3,327 | $ | 5,041 | $ | 7,375 | |||||||||||||||||
Adjustments for Non-GAAP cost of sales | 200 | 35 | 321 | 59 | |||||||||||||||||||||
Adjustments for Non-GAAP Research and development expenses | 272 | 108 | 571 | 165 | |||||||||||||||||||||
Adjustments for Non-GAAP Selling and marketing expenses | 165 | 97 | 328 | 129 | |||||||||||||||||||||
Adjustments for Non-GAAP General and administrative expenses | 335 | 115 | 677 | 147 | |||||||||||||||||||||
Adjustments for Non-GAAP Income taxes | (79) | - | (141) | - | |||||||||||||||||||||
Non-GAAP net income | $ | 2,948 | $ | 3,682 | $ | 6,797 | $ | 7,875 | |||||||||||||||||
GAAP basic income per ordinary share (US$) | $ | 0.28 | $ | 0.46 | $ | 0.69 | $ | 1.03 | |||||||||||||||||
(1) Share-based compensation (*) | 0.05 | 0.05 | 0.10 | 0.07 | |||||||||||||||||||||
(2-6) Acquisition-related adjustments | 0.08 | - | 0.15 | - | |||||||||||||||||||||
Non-GAAP basic income per ordinary share (US$) | $ | 0.41 | $ | 0.51 | $ | 0.94 | $ | 1.10 | |||||||||||||||||
GAAP diluted income per ordinary share (US$) | $ | 0.28 | $ | 0.45 | $ | 0.68 | $ | 1.00 | |||||||||||||||||
(1) Share-based compensation (*) | 0.05 | 0.05 | 0.10 | 0.07 | |||||||||||||||||||||
(2-6) Acquisition-related adjustments | 0.07 | - | 0.14 | - | |||||||||||||||||||||
Non-GAAP diluted income per ordinary share (US$) | $ | 0.40 | $ | 0.50 | $ | 0.92 | $ | 1.07 | |||||||||||||||||
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R)) |