Break-out Quarter Rounds Out Breakthrough Year For Silicom: Revenues Reach $11M For Q4, $40M For 2011

Silicom Ltd. (NASDAQ:SILC)(TASE:SILC), an industry-leading provider of high-performance server/appliances networking solutions, today reported record financial results for the fourth quarter and full year ended December 31, 2011.

Financial Results

Financial results for 2011: Silicom’s financial results for 2011 broke all previous records in terms of revenues, operating income, net income and earnings per share (EPS). Revenues for the year increased by 30% to $39.6 million from $30.4 million in 2010. As such, Silicom has virtually doubled its revenues in two years from $20.5 million in 2009.

On a GAAP basis, the Company’s net income for the period totalled $8.2 million, or $1.18 per diluted share ($1.20 per basic share), up 44% from $5.7 million, or $0.82 per diluted share ($0.84 per basic share) for 2010. As such, Silicom has nearly tripled its net income in two years from $2.8 million in 2009. On a non-GAAP basis, which excludes non-cash share-based compensation, as described and reconciled below, net income for the period totalled $8.7 million, or $1.24 per diluted share ($1.26 per basic share). This is up 46% compared with $5.9 million, or $0.86 per diluted share ($0.87 per basic share) for 2010.

As of December 31, 2011, the Company’s cash, cash equivalents, bank deposits and marketable securities totalled $49.2 million, or $7.10 per outstanding share, up $2.1 million compared with the end of the third quarter of 2011 and up $3.7 million compared with the end of 2010.

Financial results for Q4 2011: For the fourth quarter of 2011, Silicom’s financial results broke all previous records in terms of revenues, operating income, net income and earnings per share (EPS). Revenues for the quarter reached $11.1 million, a 12% increase compared with $9.9 million in the fourth quarter of 2010.

On a GAAP basis, reported net income for the quarter totalled $2.4 million, or $0.34 per diluted share ($0.35 per basic share), up 23% from the $2.0 million, or $0.28 per diluted share ($0.29 per basic share), recorded in the fourth quarter of 2010. On a non-GAAP basis, which excludes non-cash share-based compensation, as described and reconciled below, net income for the quarter totalled $2.5 million, or $0.36 per diluted and basic share. This is up 25% compared with $2.0 million, or $0.29 per diluted and basic share for the fourth quarter of 2010.

Comments of Management

Commenting on the results, Shaike Orbach, President and CEO, said, “We are very excited to deliver another record quarter to close out a knock-out 2011, completing a 30% increase in revenues and 46% increase in net profit as compared with our record 2010 results. In fact, the Company’s strong positive momentum that we have developed over the last two years has doubled our revenues while tripling our net income, an undisputable confirmation of our value proposition for customers and the leverage inherent in our business model.”

Mr. Orbach continued, “We have good reason to project that we will continue to grow stronger than our high-growth target markets in 2012 and beyond. The segments that we sell into – especially the server and network appliance sectors being driven by cloud computing and virtualization – continue to develop rapidly, and our components are viewed as reliable, differentiated performance enhancers. We have a loyal, stable base of OEM customers, many of whom are global leaders in their industries, and we continue to add new names to the list. In addition, we continue to see ahead-of-plan growth for our strategic SETAC product lines, positioning us to enter even more deeply into the network appliance space. As a result, we believe that we are favorably positioned to continue growing rapidly in 2012 and beyond, and have never been more excited and confident about our long-term prospects.”

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Conference Call Details

Silicom’s Management will host an interactive conference today, January 23 rd, 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 granted to directors, officers and employees. 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 solutions designed to increase the throughput and availability of networking appliances and server-based systems.

Silicom’s large and growing base of OEM customers includes most of the market-leading players in the areas of WAN Optimization, Security and other mission-critical gateway applications. Silicom’s products include a variety of multi-port 1/10 Gigabit Ethernet server adapters, innovative internal and external BYPASS solutions and advanced Smart adapters, including SSL encryption solutions and Redirector adapters.

In addition, Silicom's patent-pending new SETAC (Server To Appliance Converter) product family is a unique solution that enables standard servers to be configured as network appliances with high-density front networking ports and no-hassle port modularity.

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)
 

December 31,2011
 

December 31,2010

Assets
 
Current assets
Cash and cash equivalents $11,483 $6,657
Short-term bank deposits 5,010 9,209
Marketable securities 9,027 8,044
Accounts receivables: Trade, net 8,613 6,762
Accounts receivables: Other 1,597 886
Inventories 11,173 8,140
Deferred tax assets 48 50
Total current assets 46,951 39,748
 
Marketable securities 23,667 21,560

Assets held for employees’ severancebenefits

1,275

1,302
Deferred tax assets 135 219
Property, plant and equipment, net 837 650
 
Total assets $72,865 $63,479
 

Liabilities and shareholders' equity
 

Current liabilities

Trade accounts payable

$3,978

$3,753

Other accounts payable and accruedexpenses

2,460

2,074

Total current liabilities

6,438

5,827
 

Liability for employees’ severancebenefits

2,153

2,222
 

Total liabilities

8,591

8,049
 

Shareholders' equity

Ordinary shares and additionalpaid-in capital

35,265

34,664

Treasury shares

(38)

(38)

Retained earnings

29,047

20,804

Total Shareholders' equity

64,274

55,430

Total liabilities and shareholders' equity

$72,865

$63,479

Silicom Ltd. Consolidated

Statements of Operations

(US$ thousands, except for share and per share data)
  Three-month period       Twelve-month period
ended December 31, ended December 31,
 
2011       2010 2011       2010
Sales $11,080 $9,880 $39,633 $30,399
Cost of sales 6,369 5,859 22,430 17,490
Gross profit 4,711 4,021 17,203 12,909
 
Research and development expenses 1,071 945 4,165 3,280
Selling and marketing expenses 728 667 2,677 2,207
General and administrative expenses 443 469 1,890 1,523
Total operating expenses 2,242 2,081 8,732 7,010
 
Operating income 2,469 1,940 8,471 5,899
 
Financial income, net 87 123 439 617
Income before income taxes 2,556 2,063 8,910 6,516
Income taxes 156 109 667 801
Net income $2,400 $1,954 $8,243 $5,715
 
 

Basic income per ordinary share (US$)

$0.35

$0.29

$1.20

$0.84
 
Weighted average number of ordinary shares used to compute basic income per share (in thousands)

 

6,917

 

6,853

 

6,896

 

6,821
 

Diluted income per ordinary share (US$)

$0.34

$0.28

$1.18

$0.82
 
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)

 

7,014

 

6,985

 

6,995

 

6,938

Silicom Ltd. Reconciliation of

Non-GAAP Financial Results

(US$ thousands, except for share and per share data)
  Three-month period
ended December 31,
     
2011 2010
GAAP

(as reported)
  Adjustments (*)   Non-GAAP Non-GAAP
Sales $11,080 $11,080 $9,880
Cost of sales 6,369 5 6,364 5,853
Gross profit 4,711   4,716 4,027
 
Research and development expenses 1,071 22 1,049 931
Selling and marketing expenses 728 31 697 655
General and administrative expenses 443 44 399 452
Total operating expenses 2,242   2,145 2,038
 
Operating income 2,469 2,571 1,989
 
Financial income, net 87   87 123
Income before income taxes 2,556 2,658 2,112
Income taxes 156   156 109
Net income $2,400   $2,502 $2,003
 
 

Basic income per ordinary share (US$)

$0.35
 

$0.36

$0.29
 
Weighted average number of ordinary shares used to compute basic income per share (in thousands)

 

6,917
 

 

6,917

 

6,853
 

Diluted income per ordinary share (US$)

$0.34
 

$0.36

$0.29
 
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)

 

7,014
 

 

7,014

 

6,985
 
Total Adjustments 102
 
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))

Silicom Ltd. Reconciliation of

Non-GAAP Financial Results

(US$ thousands, except for share and per share data)
  Twelve-month period
ended December 31,
 
    2011           2010
GAAP

(as reported)
Adjustments (*) Non-GAAP Non-GAAP
Sales $39,633 $39,633 $30,399
Cost of sales 22,430 24 22,406 17,458
Gross profit 17,203   17,227 12,941
 
Research and development expenses 4,165 96 4,069 3,208
Selling and marketing expenses 2,677 134 2,543 2,143
General and administrative expenses 1,890 183 1,707 1,461
Total operating expenses 8,732   8,319 6,812
 
Operating income 8,471 8,908 6,129
 
Financial income, net 439   439 617
Income before income taxes 8,910 9,347 6,746
Income taxes 667   667 801
Net income $8,243   $8,680 $5,945
 
 

Basic income per ordinary share (US$)

$1.20
 

$1.26

$0.87
 
Weighted average number of ordinary shares used to compute basic income per share (in thousands)

 

6,896
 

 

6,896

 

6,821
 

Diluted income per ordinary share (US$)

$1.18
 

$1.24

$0.86
 
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)

 

6,995
 

 

6,995

 

6,938
 
Total Adjustments 437
 
(*) Adjustments related to share-based compensation expenses according to ASC topic 718 (SFAS 123 (R))

Copyright Business Wire 2010

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