Silicom .(US:SILC)2022-04-30 10:20Financial Data and Key Metrics Changes - The company reported Q1 2022 revenues of $32 million, an 11% increase year-over-year, aligning with the expected target range of $31 million to $33 million [9] - Net income for Q1 2022 was $3 million, with earnings per share at $0.44, compared to $3 million and $0.42 in Q1 2021 [18] - Gross profit for Q1 2022 was $11.1 million, with a gross margin of 34.5%, slightly down from 34.7% in Q1 2021 [17] Business Line Data and Key Metrics Changes - The SD-WAN and edge devices, along with 5G/O-RAN products, contributed significantly to revenue growth, with the SD-WAN market currently in a growth phase [11] - The company achieved its highest backlog in history, indicating strong demand across its full product range [10] Market Data and Key Metrics Changes - Geographical revenue breakdown showed North America at 69%, Europe and Israel at 25%, and the Far East and Rest of the World at 6% [17] - The top three customers accounted for approximately 30% of total revenues over the last 12 months [17] Company Strategy and Development Direction - The company plans to continue increasing inventory levels to meet high demand and mitigate supply chain challenges, with current inventory at about $95 million, an increase of nearly $20 million in one quarter [10] - The strategic focus remains on capitalizing on trends in disaggregation and decoupling within IT architecture, particularly in the SD-WAN and 5G O-RAN markets [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued double-digit growth rates for 2022 and beyond, despite ongoing supply chain issues [14] - The company expects revenues for Q2 2022 to be between $33 million and $35 million, representing approximately 12% growth over Q2 2021 [14] Other Important Information - The CEO transition is planned, with Liron Eizenman set to take over as President and CEO, while Shaike Orbach will become Executive Vice Chairman of the Board [8] - The company has executed a $15 million share buyback plan, purchasing approximately 78,000 shares at a total cost of $3.3 million during Q1 2022 [19] Q&A Session Summary Question: Update on supply chain issues and component availability - Management noted that the component situation remains challenging, but the company has built inventory to help with deliveries [20] Question: Discussion on inventory increase and growth opportunities - The company plans to continue its inventory strategy, supported by the largest backlog in its history [21] Question: Any disruptions in contract wins and timelines - Management confirmed no disruptions in contract and design wins, only challenges in supply chain deliveries [26] Question: Demand changes in EMEA and APAC regions - The majority of sales are to the U.S., with minimal impact from macro concerns in EMEA and APAC [27] Question: CEO transition and strategy changes - Management indicated no changes in strategy with the CEO transition, emphasizing continuity in strategic direction [28] Question: Impact of currency fluctuations and hedging strategy - The company does not hedge currency risks, but experienced a minor positive effect from exchange rate differences in Q1 [29]