SILC Silicom Ltd

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16

OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of February, 2024

 

Commission File Number 000-23288

 

SILICOM LTD.

(Translation of Registrant’s name into English)

 

14 Atir Yeda St., P.O.Box 2164, Kfar-Sava 4464323, Israel

(Address of Principal Executive Offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒     Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):___

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):___

 

 

On February 01, 2024, the Registrant issued a press release announcing the Registrant's fourth quarter 2023 financial results. Attached hereto are the following exhibits:

 

Exhibit 99.1          Press Release

 

The US GAAP information set forth on the Consolidated Balance Sheet and Consolidated Statement of Operations in the financial tables on Pages 5 and 6 of Exhibit 99.1 is hereby incorporated by reference into all effective registration statements filed by the registrant under the Securities Act of 1933.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

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Key elements of the plan: focus on core businesses, expense reductions and an

aggressive share buyback aimed at raising EPS gradually to $3+ in 2028

KFAR SAVA, Israel, February 1, 2024 - Silicom Ltd. (NASDAQ: SILC), a leading provider of high-performance networking and data infrastructure solutions, today reported its financial results for the fourth quarter and full year ended December 31, 2023, together with a 5-Year Strategic Plan recently approved by its Board of Directors.

5-Year Strategic Plan

The main objective of the 5-Year Strategic Plan is to create significant shareholder value over time, increasing Earnings Per Share (EPS) gradually to above $3 in 2028. The primary elements of the plan include an increased focus on the company’s core Server Adapter and Edge solution portfolios, for which there is robust fundamental demand, together with significant reductions in workforce and other expenses. To date, implementation of the plan has resulted in the discontinuation of two non-core programs and a downsizing of Silicom’s workforce from 310 to 240 employees. Associated one-time impairment of intangible assets and related write-offs of Cost of Sales have been reflected in the Company’s fourth quarter GAAP financial results, with reconciliation detailed in the Non-GAAP financial results.

The starting point for the plan is the company’s extremely strong balance sheet, which, as of year-end, included working capital and marketable securities totalling $140 million ($71 million in cash, $18 million in Accounts Receivable net of Accounts Payable, and $51 million in high-quality inventory), or approximately $21 per share. Based on this balance sheet strength, the company currently plans to continue with an aggressive share buyback in 2024 and 2025, repurchasing a total of approximately 1.6 million shares during the next two years. The timing and amount of the repurchases will be subject to business and market conditions, corporate and regulatory requirements, share price, acquisition opportunities and other factors.

Financial Results

 

Full Year: Silicom’s revenues for 2023 totalled $124.1 million compared with $150.6 million for 2022.

 

On a GAAP basis, reflecting the one-time write-offs described above, the company posted a net loss of $(3.0) million, or $(0.44) per ordinary share (basic and diluted) for the year, compared with net income of $18.3 million, or $2.69 per diluted share ($2.73 per basic share), for 2022.

 

On a non-GAAP basis (as described and reconciled below), net income for the year totalled $10.2 million, or $1.52 per ordinary share (basic and diluted), compared with $21.2 million, or $3.12 per diluted share ($3.17 per basic share), for 2022.

 

Fourth Quarter: Silicom’s revenues for the fourth quarter of 2023 totalled $18.8 million compared with $45.2 million for the fourth quarter of 2022.

 

On a GAAP basis, reflecting the one-time write-offs described above, the company posted a net loss of $(11.5) million, or $(1.76) per ordinary share (basic and diluted), compared with net income of $5.6 million, or $0.82 per diluted share ($0.84 per basic share) for the fourth quarter of 2022.

 

On a non-GAAP basis (as described and reconciled below), net loss for the quarter totalled $(0.5) million, or $(0.07) per ordinary share (basic and diluted), compared with net income of $6.6 million, or $0.98 per diluted share ($0.99 per basic share) for the fourth quarter of 2022.

 

Comments of Management  

 

Liron Eizenman, Silicom’s President and CEO, commented, “We are facing a tough transition period fueled by macro-economic headwinds and customer drawdowns of stockpiled inventories. We believe that our 5-Year Strategic Plan will allow us to return Silicom to gradual and steady growth of our revenues and EPS, creating significant value for our shareholders even in times of market volatility. The main elements of the plan include increased investment in our focus areas, discontinuation of non-core programs, a significant scale-back of our expenses and an aggressive share buyback. We believe these activities will raise our EPS gradually to above $3 in 2028.”

 

Mr. Eizenman continued, “We expect our revenue growth from 2025 and beyond to be driven by the ramp-up of already-achieved, long-term SD-WAN and SASE design wins, from the sale of additional Edge systems to telcos and service providers, and from our ‘fat’ existing pipeline of potential server adapter and Edge product design wins with leading networking, security, and service providers. We believe this will enable us to achieve 20% compound average annual growth from 2024 as a baseline. With full dedication and buy-in from our highly experienced management team and staff, we are moving forward according to plan and will report our progress over the coming quarters.”

 

Silicom’s Management will host an interactive conference today, February 1^st, 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.

 

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, the speed and extent to which Silicom's solutions are adopted by the relevant markets, difficulty in commercializing and marketing of Silicom’s products and services, maintaining and protecting brand recognition, protection of intellectual property, competition, disruptions to its manufacturing, sales & marketing, development and customer support activities, the impact of the wars in Gaza and in the Ukraine, attacks on shipping by Huthis in the Red Sea, rising inflation, rising interest rates and volatile exchange rates, as well as any continuing or new effects resulting from the COVID-19 pandemic, and  the global economic uncertainty, which may impact customer demand by encouraging them to exercise greater caution and selectivity with their short-term IT investment plans. The factors noted above are not exhaustive.

 

Further information about the company’s businesses, including information about factors that could materially affect Silicom’s results of operations and financial condition, are discussed in our Annual Report on Form 20-F and other documents filed by the Company and that may be subsequently filed by the company from time to time with the SEC. These forward-looking statements can generally be identified as such because the context of the statement will include words such as “expect,” “should,” “believe,” “anticipate” 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.