Silicom Reports Q2 2020 Financial Results
KFAR SAVA, Israel, July 29, 2020 /PRNewswire/ -- Silicom Ltd. (NASDAQ: SILC), a leading provider of high-performance networking and data infrastructure solutions, today today reported its financial results for the second quarter and six months ended June 30, 2020.
https://mma.prnewswire.com/media/733229/Silicom_Ltd_Logo.jpg
Financial Results
Second Quarter: Silicom's revenues for the second quarter of 2020 totalled $23.0 million compared with $25.4 million compared for the second quarter of 2019.
On a GAAP basis, net income for the quarter totalled $1.3 million, or $0.18 per share (basic and diluted), compared with $2.3 million, or $0.30 per share (basic and diluted), for the second quarter of 2019.
On a non-GAAP basis (as described and reconciled below), net income for the quarter totalled $1.8 million, or $0.26 per share (basic and diluted), compared with $2.9 million, or $0.38 per share (basic and diluted), for the second quarter of 2019.
First Six Months: Silicom's revenues for the first half of 2020 totalled $45.1 million compared with $55.6 million for the first half of 2019.
On a GAAP basis, net income for the period totalled $2.8 million, or $0.38 per diluted share ($0.39 per basic share), compared with $5.9 million, or $0.77 per diluted share ($0.78 per basic share), for the first half of 2019.
On a non-GAAP basis (as described and reconciled below), net income for the period totalled $4.1 million, or $0.57 per share (basic and diluted), compared with $6.9 million, or $0.91 per share (basic and diluted), for the first half of 2019.
Guidance for the Third Quarter
While remaining cautious due to the continued uncertainty of the market environment, improved visibility leads Management to project sequential double digit growth in revenues for the third quarter of 2020 as compared with the second quarter of 2020, totaling approximately $26 to $27 million.
Comments of Management
Shaike Orbach, Silicom's President and CEO, commented, "The second quarter was another period of solid revenues and profits despite the ongoing COVID-19 disruptions to our supply chain and logistics. While the uncertainty of the situation may still lead to short-term delays in telco and cloud infrastructure investments, the booming demand for network capacity is leading to long-term acceleration of their SD-WAN, NFV, Security and 5G network build-out plans. We believe that this is a fundamental market change that will increase long-term demand for our innovative enabling solutions, which increase network flexibility and capacity while reducing network costs.
"The increased demand for capacity is already having an impact on our target markets, both new and traditional. For example, our Intelligent Bypass solutions were selected in April to maximize the throughput of a massive governmental broadband network, resulting in a $15 million Design Win. The fact that the project's integrator expects additional similar projects over time is just one demonstration of the continuous pipeline of opportunities that we see in each of our target markets."
Mr. Orbach concluded, "While the environment remains uncertain, with a long list of design wins, a healthy cash balance, solid baseline activities and strong market fundamentals, we are well positioned and optimistic about our long-term prospects. As such, we continue to project that we will achieve a double-digit CAGR (Compound Annual Growth Rate) for several years ahead - once our markets return to normal."
Conference Call Details
Silicom's Management will host an interactive conference today, July 29th, at 9am Eastern Time (6am Pacific Time, 4pm Israel Time) to review and discuss the results.
To participate, investors may either listen via a webcast link hosted on Silicom's website or via the dial-in. The link is under the investor relations' webcast section of Silicom's website at https://www.silicom-usa.com/webcasts/
For those that wish to dial in via telephone, one of the following teleconferencing numbers may be used:
US: 1 888 407 2553
ISRAEL: 03 918 0610
INTERNATIONAL: +972 3 918 0610
At: 9:00am Eastern Time, 6:00am Pacific Time, 4:00pm Israel Time
It is advised to connect to the conference call a few minutes before the start.
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 above-mentioned webcast 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, 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 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 170 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, disruptions to our manufacturing and development along with general disruptions to the entire world economy relating to the spread of the novel coronavirus (COVID-19) 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.
-- FINANCIAL TABLES FOLLOW -
Silicom Ltd. Consolidated Balance Sheets
(US$ thousands)
June 30, December 31,
2020 2019
---
Assets
Current assets
Cash and cash equivalents $
27,689 $
16,469
Short-term bank deposits 5,000 13,542
Marketable securities 34,715 14,045
Accounts receivables: Trade, net 16,650 24,936
Accounts receivables: Other 8,910 4,964
Inventories 45,684 36,491
Total current assets 138,648 110,447
Marketable securities 25,798 46,542
Assets held for employees' severance benefits 1,638 1,640
Deferred tax assets 1,784 1,798
Property, plant and equipment, net 3,645 3,574
Intangible assets, net 2,548 1,718
Right of Use 3,484 3,783
Goodwill 25,561 25,561
Total assets $
203,106 $
195,063
===
Liabilities and shareholders' equity
Current liabilities
Trade accounts payable $
13,751 $
16,419
Other accounts payable and accrued expenses 24,700 8,823
Lease Liabilities 1,247 1,090
Total current liabilities 39,698 26,332
Lease Liabilities 2,202 2,693
Liability for employees' severance benefits 2,992 2,910
Deferred tax liabilities 272 205
Total liabilities 45,164 32,140
Shareholders' equity
Ordinary shares and additional paid-in capital 58,387 57,152
Treasury shares (17,017) (8,009)
Retained earnings 116,572 113,780
Total shareholders' equity 157,942 162,923
Total liabilities and shareholders' equity $
203,106 $
195,063
===
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,
---
2020 2019 2020 2019
---
Sales $
23,045 $
25,402 $
45,115 $
55,629
Cost of sales 15,321 16,728 30,272 36,775
Gross profit 7,724 8,674 14,843 18,854
Research and development expenses 3,862 3,659 7,662 7,479
Selling and marketing expenses 1,396 1,692 2,935 3,321
General and administrative expenses 979 1,054 1,892 2,077
Total operating expenses 6,237 6,405 12,489 12,877
Operating income (loss) 1,487 2,269 2,354 5,977
Financial income, net 209 430 1,240 725
Income (Loss) before income taxes 1,696 2,699 3,594 6,702
Income taxes 392 421 802 784
Net income (loss) $
1,304 $
2,278 $
2,792 $
5,918
===
Basic income (loss) per ordinary share (US$) $
0.18 $
0.30 $
0.39 $
0.78
===
Weighted average number of ordinary shares used to 7,153 7,587 7,231 7,587
compute basic income per share (in thousands)
Diluted income (loss) per ordinary share (US$) $
0.18 $
0.30 $
0.38 $
0.77
===
Weighted average number of ordinary shares used to 7,168 7,635 7,265 7,644
compute diluted income per share (in thousands)
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,
---
2020 2019 2020 2019
---
GAAP gross profit $
7,724 $
8,674 $
14,843 $
18,854
(1) Share-based compensation (*) 109 106 280 222
Non-GAAP gross profit $
7,833 $
8,780 $
15,123 $
19,076
===
GAAP operating income (loss) $
1,487 $
2,269 $
2,354 $
5,977
Gross profit adjustments 109 106 280 222
(1) Share-based compensation (*) 357 457 908 995
Non-GAAP operating income $
1,953 $
2,832 $
3,542 $
7,194
===
GAAP net income (loss) $
1,304 $
2,278 $
2,792 $
5,918
Operating income adjustments 466 563 1,188 1,217
(2) Taxes on amortization of acquired intangible assets 67 67 134 (211)
Non-GAAP net income $
1,837 $
2,908 $
4,114 $
6,924
===
GAAP net income (loss) $
1,304 $
2,278 $
2,792 $
5,918
Adjustments for Non-GAAP cost of sales 109 106 280 222
Adjustments for Non-GAAP Research and development expenses 181 217 428 463
Adjustments for Non-GAAP Selling and marketing expenses 86 117 230 256
Adjustments for Non-GAAP General and administrative expenses 90 123 250 276
Adjustments for Non-GAAP Income taxes 67 67 134 (211)
Non-GAAP net income $
1,837 $
2,908 $
4,114 $
6,924
===
GAAP basic income (loss) per ordinary share (US$) $
0.18 $
0.30 $
0.39 $
0.78
(1) Share-based compensation (*) 0.07 0.07 0.16 0.16
(2) Acquisition-related adjustments 0.01 0.01 0.02 (0.03)
Non-GAAP basic income per ordinary share (US$) $
0.26 $
0.38 $
0.57 $
0.91
===
GAAP diluted income (loss) per ordinary share (US$) $
0.18 $
0.30 $
0.38 $
0.77
(1) Share-based compensation (*) 0.07 0.07 0.17 0.16
(2) Acquisition-related adjustments 0.01 0.01 0.02 (0.02)
Non-GAAP diluted income per ordinary share (US$) $
0.26 $
0.38 $
0.57 $
0.91
===
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))
Company Contact: Investor Relations Contact:
Eran Gilad, CFO
Ehud Helft
Silicom Ltd.
GK Investor Relations
Tel: +972-9-764-4555
Tel: +1 646 201 9246
E-mail: erang@silicom.co.il E-mail:
silicom@gkir.com
---
View original content:http://www.prnewswire.com/news-releases/silicom-reports-q2-2020-financial-results-301102005.html
SOURCE Silicom Ltd.
