Silicom Q2 Revenues up 14% to $17.9M; Operating Profit up 17% to $4.3M Business Wire KFAR SAVA, Israel -- July 22, 2014 Silicom Ltd. (NASDAQ:SILC) (TASE:SILC), an industry-leading provider of high-performance server/appliances networking solutions, today reported its financial results for the second quarter and first half ended June 30, 2014. Financial Results Q2 2014: Revenues for the second quarter increased by 14% to $17.9 million from $15.7 million in the second quarter of 2013. On a GAAP basis, operating income for the quarter increased by 12% to $3.9 million compared with $3.5 million in the second quarter of 2013. Net income for the quarter totalled $3.3 million, or $0.45 per diluted share ($0.46 per basic share), compared with $3.3 million, or $0.45 per diluted share ($0.46 per basic share), in the second quarter of 2013. On a non-GAAP basis (as described and reconciled below), operating income for the quarter increased by 17% to $4.3 million compared with $3.6 million in the second quarter of 2013. Net income increased by 7% to $3.7 million, or $0.50 per diluted share ($0.51 per basic share), compared with $3.5 million, or $0.48 per diluted share ($0.49 per basic share), in the second quarter of 2013. H1 2014: Revenues for the first half of 2014 increased by 20% to $36.9 million from $30.7 million in the first half of 2013. On a GAAP basis, operating income for the period increased by 25% to $8.5 million compared with $6.8 million in the first six months of 2013. Net income increased by 15% to $7.4 million, or $1.00 per diluted share ($1.03 per basic share), compared with $6.4 million, or $0.89 per diluted share ($0.90 per basic share), in the first half of 2013. On a non-GAAP basis (as described and reconciled below), operating income for the period increased by 27% to $9.0 million compared with $7.1 million in the first six months of 2013. Net income increased by 17% to $7.9 million, or $1.07 per diluted share ($1.10 per basic share), compared with $6.7 million, or $0.93 per diluted share ($0.95 per basic share), in the first six months of 2013. Comments of Management Commenting on the results, Shaike Orbach, President and CEO, said, “We have reported solid year-over-year growth for both the quarter and the first half of 2014, however softer demand in Q2 resulted in a 6% sequential revenue decline compared with the first quarter of 2014. While these challenges may remain with us for the short term, we continue to believe in the long-term power of our growth engines: especially our more than 100 existing customers, many of whom are industry leaders, our proven portfolio of mission-critical products, and our impressive roadmap of innovative new product lines that give us entry into high-potential new opportunities. As such, we continue implementing our proven strategy for building our business and pursuing our goals.” ## Conference Call Silicom’s Management will host an interactive conference today, July 22^nd, at 9am Eastern Time (6am Pacific Time, 4pm Israel Time) to review and discuss its second quarter 2014 results and guidance for the full year 2014. 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. 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 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. ## 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 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, 2014 2013 Assets Current assets Cash and cash equivalents $ 15,525 $ 12,997 Short-term bank deposits - 3,000 Marketable securities 15,094 14,871 Accounts receivables: Trade, net 14,553 14,866 Accounts receivables: Other 1,690 2,460 Inventories 28,239 28,778 Deferred tax assets 506 274 Total current assets 75,607 77,246 Marketable securities 23,731 24,370 Assets held for employees’ severance benefits 1,584 1,543 Deferred tax assets 432 439 Property, plant and equipment, net 2,258 1,479 Intangible assets, net 147 180 Total assets $ 103,759 $ 105,257 Liabilities and shareholders' equity Current liabilities Trade accounts payable $ 3,569 $ 6,814 Other accounts payable and accrued expenses 5,346 5,134 Total current liabilities 8,915 11,948 Liability for employees’ severance benefits 2,694 2,618 Total liabilities 11,609 14,566 Shareholders' equity Ordinary shares and additional paid-in capital 39,914 38,647 Treasury shares (38) (38) Retained earnings 52,274 52,082 Total shareholders' equity 92,150 90,691 Total liabilities and shareholders' equity $ 103,759 $ 105,257 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, 2014 2013 2014 2013 Sales $ 17,918 $ 15,715 $ 36,922 $ 30,745 Cost of sales 10,730 9,414 21,996 18,415 Gross profit 7,188 6,301 14,926 12,330 Research and development expenses 1,586 1,345 3,044 2,589 Selling and marketing expenses 1,082 864 2,062 1,713 General and administrative expenses 619 613 1,285 1,227 Total operating expenses 3,287 2,822 6,391 5,529 Operating income 3,901 3,479 8,535 6,801 Financial income, net 58 62 163 180 Income before income taxes 3,959 3,541 8,698 6,981 Income taxes 632 252 1,323 589 Net income $ 3,327 $ 3,289 $ 7,375 $ 6,392 Basic income per ordinary share $ 0.46 $ 0.46 $ 1.03 $ 0.90 (US$) Weighted average number of ordinary shares used to compute basic income 7,183 7,115 7,179 7,089 per share (in thousands) Diluted income per ordinary share $ 0.45 $ 0.45 $ 1.00 $ 0.89 (US$) Weighted average number of ordinary shares used to compute diluted 7,337 7,263 7,340 7,218 income per share (in thousands) Silicom Ltd. Reconciliation of Non-GAAP Financial Results (US$ thousands, except for share and per share data) Three-month period Six-month period ended June 30, ended June 30, 2014 2013 2014 2013 GAAP gross profit $ 7,188 $ 6,301 $ 14,926 $ 12,330 (1) Share-based 35 26 59 51 compensation (*) Non-GAAP gross profit $ 7,223 $ 6,327 $ 14,985 $ 12,381 GAAP operating income $ 3,901 $ 3,479 $ 8,535 $ 6,801 (1) Share-based 339 167 467 332 compensation (*) (2) Amortization of 16 - 33 - intangible assets Non-GAAP operating income $ 4,256 $ 3,646 $ 9,035 $ 7,133 GAAP net income $ 3,327 $ 3,289 $ 7,375 $ 6,392 (1) Share-based 339 167 467 332 compensation (*) (2) Amortization of 16 - 33 - intangible assets Non-GAAP net income $ 3,682 $ 3,456 $ 7,875 $ 6,724 GAAP basic income per $ 0.46 $ 0.46 $ 1.03 $ 0.90 ordinary share (US$) (1) Share-based 0.05 0.03 0.07 0.05 compensation (*) (2) Amortization of - - - - intangible assets Non-GAAP basic income per $ 0.51 $ 0.49 $ 1.10 $ 0.95 ordinary share (US$) GAAP diluted income per $ 0.45 $ 0.45 $ 1.00 $ 0.89 ordinary share (US$) (1) Share-based 0.05 0.03 0.07 0.04 compensation (*) (2) Amortization of - - - - intangible assets Non-GAAP diluted income per $ 0.50 $ 0.48 $ 1.07 $ 0.93 ordinary share (US$) (*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R)) Contact: Company Contact: Eran Gilad, CFO, Tel: +972-9-764-4555 Silicom Ltd. E-mail: firstname.lastname@example.org or Investor relations contact: Kenny Green / Ehud Helft, Tel: +1 646 201 9246 GK Investor Relations E-mail : email@example.com
Silicom Q2 Revenues up 14% to $17.9M; Operating Profit up 17% to $4.3M
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