Silicom Ltd Net Income dropped on 44.1% while Revenue increased on 2.1%
01/28/2021 • About Silicom Ltd (
$SILC) • By InTwits
Silicom Ltd reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: in FY2020 vs. 13.0% in FY2019 vs. 19.6% in FY2016
- The company has potentially unprofitable business model: ROIC is 3.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Silicom Ltd's Revenue increased on 2.1%. Revenue growth showed acceleration in FY20Q4 - it increased 32.9% YoY.
Gross Margin decreased on 2.9 pp from 34.3% to 31.4% in FY2020. SG&A as a % of Revenue decreased slightly on 0.70 pp from 10.3% to 9.6% in FY2020.
Net Income margin decreased on 4.4 pp from 9.7% to 5.3% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2017 at 17.3% and was declining since that time.
Return on investment
The company operates at low ROIC (3.8%) and ROE (3.6%). ROIC decreased on 2.5 pp from 6.3% to 3.8% in FY2020. ROE decreased on 2.8 pp from 6.4% to 3.6% in FY2020. During the last 5 years ROIC topped in FY2017 at 19.6% and was declining since that time. During FY2016-FY2020 ROE topped in FY2017 at 16.6% and was declining since that time.
Leverage (Debt)
Debt surged on 167% while cash jumped on 25.5%.
Silicom Ltd has no short term refinancing risk: cash is higher than short term debt (1,140.4%).
Management team
Silicom Ltd's CEO Yeshayahu Orbach "Shaike" has spent 19 years with the company. The company's CFO Eran Gilad has spent 15 years with the company.
Financial and operational results
Silicom Ltd ($SILC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 100.3 | 125.7 | 133.8 | 105.2 | 107.4 | 2.1% |
| Gross Profit | 38.6 | 45.9 | 42.1 | 36.1 | 33.8 | -6.4% |
| SG&A | 10.4 | 11.2 | 10.6 | 10.8 | 10.3 | -4.9% |
| EBITDA | 19.7 | 29.2 | 19.9 | 13.7 | | |
| Net Income | 13.1 | 21.7 | 14.6 | 10.2 | 5.7 | -44.1% |
Balance Sheet
|
|---|
| Cash | 11.9 | 17.0 | 26.8 | 16.5 | 20.7 | 25.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 1.1 | 1.8 | 66.3% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 2.7 | 8.3 | 207.5% |
Cash flow
|
|---|
| Capex | 1.4 | 1.7 | 1.3 | 1.4 | | |
Ratios
|
|---|
| Revenue growth | 21.3% | 25.3% | 6.4% | -21.3% | 2.1% | |
| EBITDA growth | -6.1% | 48.5% | -31.8% | -31.3% | | |
|
|---|
| Gross Margin | 38.4% | 36.5% | 31.4% | 34.3% | 31.4% | -2.9% |
| EBITDA Margin | 19.6% | 23.3% | 14.9% | 13.0% | |
| SG&A, % of revenue | 10.4% | 8.9% | 7.9% | 10.3% | 9.6% | -0.7% |
| Net Income Margin | 13.1% | 17.3% | 10.9% | 9.7% | 5.3% | -4.4% |
| CAPEX, % of revenue | 1.4% | 1.3% | 1.0% | 1.4% | | |
|
|---|
| ROIC | 13.6% | 19.6% | 11.2% | 6.3% | 3.8% | -2.5% |
| ROE | 11.2% | 16.6% | 9.8% | 6.4% | 3.6% | -2.8% |
| Net Debt/EBITDA | -0.6x | -0.6x | -1.3x | -0.9x | |
Silicom Ltd ($SILC) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 22 | 23 | 28 | 34 | | -27.0% | -9.3% | 17.8% | 32.9% |
| Net Income | 1 | 1 | 2 | 1 | | -59.1% | -42.8% | 10.1% | -65.1% |
Balance Sheet
|
|---|
| Cash | 12 | 28 | 23 | 21 | | -34.1% | 91.4% | 46.4% | 25.5% |
| Short Term Debt | 1 | 1 | 1 | 2 | | -31.5% | -10.9% | -10.1% | 66.3% |
| Long Term Debt | 2 | 2 | 2 | 8 | | 7.6% | 2.9% | -1.8% | 207.5% |
Ratios
|
|---|
| Gross Margin | 32.3% | 33.5% | 32.8% | 28.3% | | -1.4% | -0.6% | -2.0% | -6.4% |
| Net Income Margin | 6.7% | 5.7% | 7.4% | 2.5% | | -5.3% | -3.3% | -0.5% | -7.0% |
Peers in Communications Equipment
Below we provide Silicom Ltd benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 2.8% | 3.7% | 4.4% |
|---|
| Silicom Ltd ($SILC) | - | 25.3% | 6.4% | -21.3% | 2.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| Silicom Ltd ($SILC) | 38.4% | 36.5% | 31.4% | 34.3% | 31.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (33 companies) | 5.5% | 6.0% | 4.6% | 3.1% | 9.2% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (33 companies) | 2.0% | 1.9% | 1.7% | 2.5% | 2.1% |
|---|
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | -1.6% | 1.9% |
|---|
| Silicom Ltd ($SILC) | 13.6% | 19.6% | 11.2% | 6.3% | 3.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (25 companies) | -0.9x | -0.8x | 0.2x | -0.1x | -0.4x |
|---|
