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TMCNet:  Silicom Reports Financial Results for Q1 2022

[April 28, 2022]

Silicom Reports Financial Results for Q1 2022

- Management transition: on July 1st, after 21 years as CEO, Shaike Orbach to become Silicom's Executive Vice Chairman of the Board, and Liron Eizenman, currently COO, to become President and CEO -

KFAR SAVA, Israel, April 28, 2022 /PRNewswire/ -- Silicom Ltd. (NASDAQ: SILC), a leading provider of high-performance networking and data infrastructure solutions, today reported its financial results for the first quarter ended March 31, 2022.

Financial Results

Silicom's revenues for the first quarter of 2022 totalled $32.1 million, up 11% compared with $29.0 million for the first quarter of 2021.

On a GAAP basis, net income for the quarter totalled $2.2 million compared with $2.6 million for the first quarter of 2021. GAAP earnings per share totalled $0.32 per diluted share ($0.33 per basic share) compared with $0.37 per diluted share ($0.38 per basic share) for the first quarter of 2021.

On a non-GAAP basis (as described and reconciled below), net income for the quarter totalled $3.0 million, unchanged from $3.0 million for the first quarter of 2022. Non-GAAP earnings per share increased to $0.44 per diluted share ($0.45 per basic share) compared with $0.42 per diluted share ($0.43 per basic share) for the first quarter of 2021.

Silicom Ltd.


Guidance

While multiple large design wins continue to provide visibility for dramatic growth in demand, our ability to fulfill demand continues to be impacted by the global components crisis, which we expect to continue at least through 2022. As such, we project that revenues for the second quarter of 2022 will range between $33 million and $35 million. In light of the Company's exceedingly strong backlog, which is currently at the highest level in the Company's history, we continue to project double-digit growth for 2022 and beyond.

Management Transition
As of July 1st, Mr. Shaike Orbach, the Company's President and CEO for the past 21 years, will become the Company's Executive Vice Chairman, and Liron Eizenman, currently the Company's Chief Operating Officer, will take over as the Company's new President and CEO.

Liron Eizenman has been a key member of Silicom's management team for the past six years, serving first as CEO of Silicom's North American subsidiary, and then as the COO of Silicom Ltd. (NASDAQ: SILC). He was the visionary behind Silicom's successful Edge Networking Solutions strategy, which emerged during 2021 as one of the Company's primary revenue drivers, and played a pivotal role in driving the company to its leadership position in the SD-WAN/Edge platforms market.

Comments of Management  

Shaike Orbach, Silicom's President and CEO, commented, "Our first quarter results continue to reflect the booming, stronger-than-ever demand we are experiencing for all our products, and the counter-effect of the global components crisis, which has constrained our ability to supply.

 "On the one hand, our design win momentum is accelerating beyond any level we have known in the past, demonstrating the market's critical need for our unique 'building block' products and platforms for disaggregated/decoupled architectures and next-generation networks. For example, during the quarter, we secured two major new design wins in highly competitive processes: one from an existing US communications service provider client, which we expect to build to approximately $15 million, and the other from a Tier-1 European telco, whose projected run rate is approximately $5 million per year. In parallel, discussions continue moving forward with a broad variety of telcos, networking equipment providers and partners, all regarding exciting new opportunities driven by SD-WAN's and 5G/O-RAN's coming of age.

Mr. Orbach concluded, "We therefore continue to believe, despite the – hopefully – short-term uncertainties of the components crisis, that we are headed for steep, multi-year growth, in step with the market's sweeping transition to next-generation networks."

Conference Call Details

Silicom's Management will host an interactive conference today, April 28th, 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: 1 866 860 9642

ISRAEL: 03 918 0609

INTERNATIONAL:  +972 3 918 0609

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, taxes on amortization of acquired intangible assets, as well lease liabilities - financial expenses (income). 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 200 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.






Company Contact:

Eran Gilad, CFO

Silicom Ltd.        

Tel: +972-9-764-4555      

E-mail: [email protected]

Investor Relations Contact:

Ehud Helft

GK Investor Relations

Tel: +1 212 378 8040

E-mail: [email protected] 

 

 

Silicom Ltd. Consolidated Balance Sheets







(US$ thousands)









March 31,


December 31,


2022


2021







Assets












Current assets






Cash and cash equivalents

$

8,677


$

29,285

Marketable securities


7,669



8,266

Accounts receivables: Trade, net


30,418



31,120

Accounts receivables: Other


9,295



4,693

Inventories


95,454



75,753

Total current assets


151,513



149,117







Marketable securities


26,729



23,773

Assets held for employees' severance benefits


1,863



1,882

Deferred tax assets


1,426



1,616

Property, plant and equipment, net


4,364



4,576

Intangible assets, net


5,495



4,314

Right of Use


8,976



8,765

Goodwill


25,561



25,561

Total assets

$

225,927


$

219,604







Liabilities and shareholders' equity












Current liabilities






Trade accounts payable

$

40,254


$

29,918

Other accounts payable and accrued expenses


13,905



18,582

Lease Liabilities


1,722



1,811







Total current liabilities


55,881



50,311







Lease Liabilities


7,314



7,377

Liability for employees' severance benefits


3,502



3,443

Deferred tax liabilities


3



10







Total liabilities


66,700



61,141







Shareholders' equity






Ordinary shares and additional paid-in capital


64,550



63,412

Treasury shares


(37,542)



(34,995)

Retained earnings


132,219



130,046

Total shareholders' equity


159,227



158,463







Total liabilities and shareholders' equity

$

225,927


$

219,604

      

 

 

Silicom Ltd. Consolidated Statements of Operations

























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
















Three-month period




ended March 31,






2022


2021

Sales







$

32,070


$

29,002

Cost of sales








21,180



19,071

Gross profit








10,890



9,931













Research and development expenses








5,478



5,020

Selling and marketing expenses








1,783



1,555

General and administrative expenses








1,197



1,063

Total operating expenses








8,458



7,638













Operating income








2,432



2,293













Financial income (loss), net








341



817

Income before income taxes








2,773



3,110

Income taxes








600



515

Net income







$

2,173


$

2,595





































Basic income per ordinary share (US$)







$

0.33


$

0.38













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








6,682



6,909

























Diluted income per ordinary share (US$)







$

0.32


$

0.37













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








6,829



7,067

 

 

 

Silicom Ltd. Reconciliation of Non-GAAP Financial Results



























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





















Three-month period









ended March 31,









2022


2021















GAAP gross profit







$

10,890


$

9,931


(1) Share-based compensation (*)








161



147


Non-GAAP gross profit







$

11,051


$

10,078















GAAP operating income







$

2,432


$

2,293


Gross profit adjustments








161



147


(1) Share-based compensation (*)








785



577


Non-GAAP operating income







$

3,378


$

3,017















GAAP net income







$

2,173


$

2,595


Operating income adjustments








946



724


(2) Lease liabilities - financial expenses (income)








(186)



(404)


(3) Taxes on amortization of acquired intangible assets








68



66


Non-GAAP net income







$

3,001


$

2,981















GAAP net income







$

2,173


$

2,595


Adjustments for Non-GAAP Cost of sales








161



147


Adjustments for Non-GAAP Research and development expenses








375



266


Adjustments for Non-GAAP Selling and marketing expenses








208



157


Adjustments for Non-GAAP General and administrative expenses








202



154


Adjustments for Non-GAAP Financial income (loss), net








(186)



(404)


Adjustments for Non-GAAP Income taxes








68



66


Non-GAAP net income







$

3,001


$

2,981















GAAP basic income per ordinary share (US$)







$

0.33


$

0.38


(1) Share-based compensation (*)








0.14



0.10


(2) Lease liabilities - financial expenses (income)








(0.03)



(0.06)


(3) Taxes on amortization of acquired intangible assets








0.01



0.01


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







$

0.45


$

0.43















GAAP diluted income per ordinary share (US$)







$

0.32


$

0.37


(1) Share-based compensation (*)








0.14



0.10


(2) Lease liabilities - financial expenses (income)








(0.03)



(0.06)


(3) Taxes on amortization of acquired intangible assets








0.01



0.01


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







$

0.44


$

0.42















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














 

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SOURCE Silicom Ltd.


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