Silicom Ltd (SILC) 2023 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

女士們先生們，謝謝你們的支持。

Welcome to the Silicom fourth-quarter and final 2023 results conference call.

歡迎參加 Silicom 第四季和 2023 年最終業績電話會議。

(Operator Instructions)

（操作員說明）

As a reminder, this conference is being recorded.

提醒一下，本次會議正在錄製中。

(Operator Instructions) You should have all received by now the company's press release.

（操作員說明） 現在您應該已經收到公司的新聞稿了。

If you have not received it, please contact Silicom's Investor Relations team at EK Global Investor Relations at 1212-378-8040 or view it in the news section of the company's website, www.silicom-usa.com. I would now like to hand over the call to Mr. Kenny Green of EK Global Investor Relations.

如果您尚未收到，請聯絡 EK Global 投資者關係部門的 Silicom 投資者關係團隊，電話：1212-378-8040，或在公司網站 www.silicom-usa.com 的新聞部分查看。現在我想將電話轉交給 EK 全球投資者關係部的 Kenny Green 先生。

Mr. Green, would you like to begin?

格林先生，您想開始嗎？

Yeah, thank you, operator.

是的，謝謝你，接線生。

I would like to welcome all of you to Silicom's fourth-quarter 2023 results conference call.

歡迎大家參加 Silicom 2023 年第四季業績電話會議。

Before we start, I would like to draw your attention to the following Safe Harbor statements.

在我們開始之前，我想提請您注意以下安全港聲明。

This conference call contains forward-looking statements.

本次電話會議包含前瞻性陳述。

Such statements may include, but are not limited to, anticipated future financial and operating results and Silicom's outlook and prospects.

此類聲明可能包括但不限於預期的未來財務和經營業績以及 Silicom 的前景和前景。

These statements are based on management's current beliefs, expectations, and assumptions which may be affected by subsequent business, political, environmental, regulatory, economic, and other conditions and are subject to known and unknown risks and uncertainties and other factors, many of which are outside Silicom's control, which might cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements and which include but are not limited to Silicom's increasing dependence of substantial revenue growth on a limited number of customers that didn't extend to which the Silicom's are adopted by the relevant market; 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, and marketing; development and customer support activities; the impact of the war in Gaza and in the Ukraine; rising inflation; rising interest rate; volatile exchange rate as well as any continuing or new effects resulting from the COVID-19 pandemic and the global economic uncertainty, which may impact customer demand through their existing rate of caution and selectivity with short term IT investments.

這些陳述是基於管理層當前的信念、期望和假設，這些信念、期望和假設可能會受到後續業務、政治、環境、監管、經濟和其他條件的影響，並受到已知和未知的風險和不確定性以及其他因素的影響，其中許多因素是超出Silicom 的控制範圍，這可能導致實際結果與前瞻性陳述中明示或暗示的預期存在重大差異，其中包括但不限於Silicom 的大幅收入增長越來越依賴有限數量的客戶，而這些客戶並未擴展Silicom 被相關市場採用； Silicom 產品和服務的商業化和行銷有困難；維持及保護品牌認知；保護智慧財產權競爭對其製造、銷售和行銷的干擾；開發和客戶支援活動；加薩和烏克蘭戰爭的影響；通膨上升；利率上升；匯率波動以及 COVID-19 大流行和全球經濟不確定性造成的任何持續或新的影響，這些影響可能會透過短期 IT 投資的現有謹慎度和選擇性影響客戶的需求。

The factors noted above are not exhaustive.

上述因素並非詳盡。

Further information about the company's business, including information about factors that could materially affect incomes, 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 Securities and Exchange Commission Therefore, there can be no assurance that actual future results will not differ materially from anticipated results.

有關公司業務的更多信息，包括有關可能對收入、經營業績和財務狀況產生重大影響的因素的信息，請在我們的20-F 表格年度報告和公司提交的以及隨後可能由公司提交的其他文件中討論。因此，不能保證未來的實際結果不會與預期結果有重大差異。

Consequently, you are cautioned not to rely on these forward-looking statements.

因此，請注意不要依賴這些前瞻性陳述。

Silicom does not undertake to update any forward-looking statements as a result of new information or future events or developments, except as may be required by law.

Silicom 不承諾因新資訊或未來事件或發展而更新任何前瞻性聲明，法律要求的除外。

In addition, following the company's disclosure, certain non-GAAP financial measures in today's earnings release, such non-GAAP financial measures will be discussed during this call.

此外，根據本公司在今日的財報中揭露的某些非公認會計原則財務指標，此類非公認會計原則財務指標將在本次電話會議中進行討論。

Such non-GAAP financial measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance.

管理階層使用此類非公認會計準則財務指標來制定策略決策、預測未來績效並評估公司當前績效。

Management believes that the presentation of these non-GAAP financial measures may be useful to investors' understanding and assessment of the company's ongoing cooperations and prospects for the future.

管理層認為，這些非公認會計準則財務指標的呈現可能有助於投資者了解和評估公司正在進行的合作以及未來的前景。

Unless otherwise stated, it should be assumed that financials discussed in this conference call will be on a non-GAAP basis.

除非另有說明，否則應假設本次電話會議中討論的財務數據將基於非公認會計原則。

Non-GAAP financial measures disclosed by management are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results.

管理階層揭露的非公認會計原則財務指標作為附加資訊提供給投資者，以便為他們提供評估我們財務狀況和經營績效的替代方法。

These measures are not in accordance with or a substitute for GAAP, and a full reconciliation of the non-GAAP to GAAP financial measures are included in today's earnings release, which you can find on Silicom's website.

這些措施不符合或取代 GAAP，非 GAAP 與 GAAP 財務措施的全面調整包含在今天的收益報告中，您可以在 Silicom 網站上找到該報告。

With us on the line today are Mr. Liron Eizenman, President and CEO; and Mr. Eran Gilad, CFO.

今天與我們連線的是總裁兼執行長 Liron Eizenman 先生；和財務長 Eran Gilad 先生。

Liron will begin with an overview of the results, followed by Eran, who will provide the analysis of the financials, who will then turn the call over to the question-and-answer session.

Liron 將首先概述結果，隨後 Eran 將提供財務分析，然後將電話轉入問答環節。

And with that, I will now like to hand the call over to Liron.

現在，我想將電話轉交給 Liron。

Liron, please go ahead.

利隆，請繼續。

Thank you, Kenny.

謝謝你，肯尼。

Welcome, everyone, to our financial results conference call to discuss our fourth-quarter ending 2023.

歡迎大家參加我們的財務業績電話會議，討論我們截至 2023 年第四季的業績。

Revenue were $18.8 million in the quarter, and we reported a net loss of $0.5 million.

本季營收為 1,880 萬美元，淨虧損為 50 萬美元。

Over the past few months, we have made a significant effort to conduct checks and engage in discussions with all our customers in order to assess and gain a strong handle on the situation.

在過去的幾個月裡，我們做出了巨大的努力來進行檢查並與所有客戶進行討論，以評估並強有力地處理這種情況。

I believe that now we do understand the situation much better, including both the challenges and the opportunities in front of us.

我相信現在我們確實更加了解局勢，包括我們面臨的挑戰和機會。

In our previous conference call, we have discussed two significant headwinds, which impacted our results during the second half of 2023 and that we are now facing as we move into 2024.

在先前的電話會議中，我們討論了兩個重大不利因素，它們影響了我們 2023 年下半年的業績，並且在進入 2024 年時我們現在面臨著這些不利因素。

The first headwind is our customer excess inventory.

第一個阻力是我們的客戶庫存過剩。

During the global COVID shutdown in 2020 and onward, supply chains around the world became tight with very limited availability of electronic components.

在 2020 年全球新冠疫情封鎖期間及以後，世界各地的供應鏈變得緊張，電子元件的供應非常有限。

As a precaution, our customers ordered a high level of our product from us with a significant portion being for inventory purposes and this drove above average demand and high backlog for our products, which we enjoyed in 2021, 2022 and the first half of 2023.

作為預防措施，我們的客戶向我們訂購了高水平的產品，其中很大一部分用於庫存目的，這推動了我們產品的需求高於平均水平，積壓量很高，我們在2021 年、2022 年和2023 年上半年都享受到了這種情況。

However, as we shared in the second half of 2023, we saw reversal of this strength.

然而，正如我們在 2023 年下半年所分享的那樣，我們看到了這種強勢的逆轉。

Supply chain tightness abated and customers have built up significant inventory began drawing on their existing inventory stock while reducing significantly ongoing purchases.

供應鏈緊張狀況有所緩解，客戶已經累積了大量庫存，開始利用現有庫存，同時大幅減少持續採購。

The second headwind we are facing are industry related and macroeconomic factors delaying IT infrastructure investment.

我們面臨的第二個阻力是產業相關因素和宏觀經濟因素推遲了 IT 基礎設施投資。

This is leading to a longer decision making process on new projects and slower investment implementation of existing infrastructure projects.

這導致新項目的決策過程更長，現有基礎設施項目的投資實施速度更慢。

As I mentioned last quarter, some of the design wins we achieved in 2022 and 2023 are ramping up significantly slower than our customers that initially anticipated when first time.

正如我上個季度所提到的，我們在 2022 年和 2023 年取得的一些設計成果的成長速度明顯慢於客戶最初的預期。

Those projects are proceeding cautiously, diverging significantly from the original time line forecast by our customers.

這些項目正在謹慎進行，與我們客戶最初預測的時間表有很大差異。

On top of those market headwinds, there are also a few additional Silicom specific issues that are impacting revenues.

除了這些市場阻力之外，還有一些影響收入的 Silicom 特定問題。

First, we won two very large design wins in 2021 and 2020.

首先，我們在 2021 年和 2020 年贏得了兩場非常大的設計勝利。

According to the customer's initial forecast, each of those wins were expected to provide us with annual revenue of $20 million to $30 million.

根據客戶的初步預測，每一次勝利預計將為我們帶來 2,000 萬至 3,000 萬美元的年收入。

Both customers provided us with very large purchase orders, and we've already delivered more than $10 million of each.

這兩位客戶都向我們提供了非常大的採購訂單，我們已經交付了每筆超過 1000 萬美元的訂單。

Both still have very large inventories, which they are digesting at a very slow pace due to poor market success of their full solution.

兩家公司仍然擁有大量庫存，但由於其完整解決方案在市場上的成功率不佳，他們消化庫存的速度非常緩慢。

Currently, there are no additional outstanding purchase orders from either of those two customers.

目前，這兩位客戶均沒有其他未完成的採購訂單。

Second, a large customer of ours was acquired during 2023 with the new owner and management, which prefer to focus on software and following a long period of severe global supply chain and hardware disruption, the focus of the customer is shifting and this negatively impact its ongoing hardware purchases from us.

其次，我們的一個大客戶在2023 年被新的所有者和管理層收購，他們更喜歡專注於軟體，並且在長期嚴重的全球供應鍊和硬體中斷之後，客戶的重點正在轉移，這對其產生了負面影響持續向我們購買硬體。

This shift may reduce their ongoing annual purchases by $10 million.

這一轉變可能會使他們每年持續的採購量減少 1000 萬美元。

Third, unfortunately, O-RAN is not developed according to industry expectations as well as our expectation on those and those of our customers.

第三，不幸的是，O-RAN 並不是根據行業期望以及我們對這些期望和客戶的期望而開發的。

During 2022, we had a very nice early success with O-RAN sales among a few telcos and mobile operators, which provided us revenue of about $10 million.

2022 年，我們在一些電信公司和行動營運商的 O-RAN 銷售方面取得了非常好的早期成功，為我們帶來了約 1000 萬美元的收入。

However, with the lack of general success and acceptance of O-RAN technology, we do not anticipate further POs in the near future.

然而，由於 O-RAN 技術缺乏普遍的成功和接受度，我們預計在不久的將來不會有更多的 PO。

All of the above factors combined, led to our current lower level of revenue, coupled with short-term uncertainty, and low visibility.

所有上述因素綜合起來，導致我們目前的收入水準較低，加上短期的不確定性和可見度較低。

We have, therefore made various adjustments to our operations to align with this new reality.

因此，我們對我們的營運進行了各種調整，以適應這一新的現實。

Following that, we initiated and started working under a new five-year strategic plan, covering 2024 until the end of 2028.

此後，我們啟動並開始實施新的五年策略計劃，涵蓋 2024 年至 2028 年底。

This plan is designed to generate significant value for our shareholders, even under the new market reality of today.

該計劃旨在為我們的股東創造巨大價值，即使在當今新的市場現實下也是如此。

This strategic plan has been approved by our Board of Directors, and I want to share this plan with you now.

這個策略計畫已經我們董事會批准了，我現在想跟大家分享這個計畫。

In terms of our financial objectives, the main long-term goal of our plan is to gradually increase earnings per share to above $3 in 2020.

就我們的財務目標而言，我們計劃的主要長期目標是在2020年逐步將每股收益提高到3美元以上。

Looking towards the new term, we believe that our 2024 revenue will be about $70 million, impacted mainly by the headwinds and issues I mentioned earlier.

展望新的時期，我們認為 2024 年的收入將約為 7,000 萬美元，主要受到我之前提到的逆風和問題的影響。

We believe that the excess inventory in global economic headwinds will ease as we move forward through 2024 and thus the second half revenues will be higher than those of the first half.

我們相信，隨著2024年的到來，全球經濟逆風帶來的過剩庫存將會緩解，因此下半年收入將高於上半年。

Q1 2024 revenue are expected at between $14 million and $17 million.

2024 年第一季營收預計在 1,400 萬美元至 1,700 萬美元之間。

We are facing a tough transition period.

我們正面臨一個艱難的轉型期。

However, our very strong balance sheet and cash position allows us to continue at full steam ahead supporting our broad and deep pipeline as well as continue with our core R&D efforts, while not being significantly impacted by a loss of few million during this transition period.

然而，我們非常強勁的資產負債表和現金狀況使我們能夠繼續全速前進，支持我們廣泛而深入的產品線，並繼續我們的核心研發工作，同時不會受到過渡期間數百萬美元損失的重大影響。

We believe that our five-year strategic plan will allow us to return Silicom to a gradual and steady top line and EPS growth.

我們相信，我們的五年策略計畫將使我們能夠使 Silicom 恢復逐步穩定的營收和每股盈餘成長。

In terms of our gross margin for the coming years, we expect a range between 27% to 32%, the reasons are threefold.

就未來幾年的毛利率而言，我們預計在 27% 至 32% 之間，原因有三方面。

First, our Edge systems typically carry lower gross margin than our server adapters as we grow the portion of Edge systems in our mix of products sold, it should reduce our company gross margin.

首先，我們的邊緣系統的毛利率通常低於我們的伺服器適配器，隨著我們增加邊緣系統在銷售產品組合中的比例，它應該會降低我們公司的毛利率。

Second, the market has changed from a vendor's market to a buyer's market or the purchasing people and their tifos are pushing us as well as other vendors for discounts.

其次，市場已經從供應商市場轉變為買方市場，或者採購人員及其提福斯正在推動我們以及其他供應商進行折扣。

This is a cyclical issue and will probably improve in a year or two, should inventories be drawn down and the global economy improves.

這是一個週期性問題，如果庫存減少且全球經濟改善，可能會在一兩年內得到改善。

And third, our cost of goods include a fixed cost element.

第三，我們的商品成本包括固定成本要素。

Therefore, as revenue decrease, our gross margin will decrease.

因此，隨著收入減少，我們的毛利率也會下降。

While we already put efforts into reducing the fixed portion of our cost of goods, it did exist.

雖然我們已經努力降低商品成本的固定部分，但它確實存在。

The negative impact of these fixed costs should decrease in the coming years as we return to growth.

隨著我們恢復成長，這些固定成本的負面影響在未來幾年應該會減少。

Thus, we believe that in 2024 and 2025, our gross margin will be at the lower part of the range and will improve in the years following.

因此，我們相信，在 2024 年和 2025 年，我們的毛利率將處於該範圍的較低水平，並將在接下來的幾年中有所改善。

I want to stress that our current working capital and marketable securities as of the end of 2023 is $140 million with very high-quality inventory amounting to $51 million account receivables, net of accounts payable of $18 million as well as $71 million cash.

我想強調的是，截至2023 年底，我們目前的營運資金和有價​​證券為1.4 億美元，優質庫存達5,100 萬美元的應收帳款，扣除1,800 萬美元的應付帳款和7,100 萬美元的現金。

All this represents about $21 per share.

所有這些相當於每股約 21 美元。

I want to address the primary elements of our 5-year strategic plan.

我想談談我們五年策略計畫的主要內容。

First, our initial step has been to align our current expense footprint, with our expected revenue level ahead.

首先，我們的第一步是根據我們未來的預期收入水準調整目前的支出足跡。

We've already reduced our personnel from 310 to 240.

我們已經將人員從 310 人減少到 240 人。

With that, we expect to reduce our OpEx in 2024 to about $27 million, assuming current exchange rates.

這樣，假設當前匯率，我們預計 2024 年的營運支出將減少至約 2700 萬美元。

I want to stress that while making those expense reductions, we have verified that we are maintaining sufficient investment to support future revenue growth per our strategic plan.

我想強調的是，在削減這些費用的同時，我們已經證實，我們正在保持足夠的投資，以根據我們的策略計劃來支持未來的收入成長。

Over the coming years.

未來幾年。

We will continue to tightly control our expense level and allow only minimal increase in OpEx in 2025 and beyond based on the execution of our strategic plan.

我們將繼續嚴格控制我們的費用水平，並根據我們策略計畫的執行，在 2025 年及以後僅允許營運支出的最小成長。

Second, based on our very strong balance sheet, as I discussed earlier, we plan to continue with an aggressive buyback of shares throughout 2024 and 2025.

其次，正如我之前討論的那樣，基於我們非常強勁的資產負債表，我們計劃在 2024 年和 2025 年繼續積極回購股票。

We currently plan to repurchase approximately a total of 1.6 million shares over the next two years.

我們目前計劃在未來兩年內回購約 160 萬股股票。

The timing and amount of the repurchases will be subject to business and market conditions, corporate and regulatory requirement, share price, acquisition opportunities and other factors.

回購的時間和金額將取決於業務和市場狀況、公司和監管要求、股價、收購機會和其他因素。

I know that at year end, we have 6.4 million shares outstanding following the repurchase of 250,000 shares in the fourth quarter.

我知道，在第四季回購25萬股之後，截至年底，我們有640萬股流通股。

Third, in terms of growth, we believe that as of 2025, we will achieve about 20% compound average annual growth from 2024 base time.

第三，在成長方面，我們認為截至2025年，我們將實現以2024年為基準時間的20%左右的複合年增長率。

This growth rate does not consider potential significant upside that we may experience from very large projects like the ones we had in the past, such as the large IBM project in 2017 and 2018, which may provide additional incremental growth for our business.

這一成長率並未考慮到我們可能從過去的大型專案中體驗到的潛在顯著優勢，例如 2017 年和 2018 年的大型 IBM 項目，這可能會為我們的業務帶來額外的增量成長。

We believe that the growth in 2025 and beyond will come from the ramp-up of already achieved SD-WAN and SASE design wins, additional Edge system sales to leading telcos and service providers and from increased revenues related to our large roster of design wins and pipeline of potential design wins for server adapter and Edge products with leading networking, security, and service providers globally.

我們相信，2025 年及以後的成長將來自於已實現的 SD-WAN 和 SASE 設計勝利的增加、向領先電信公司和服務提供商的額外邊緣系統銷售以及與我們大量設計勝利和相關的收入增​​加。與全球領先的網路、安全和服務供應商合作的伺服器適配器和邊緣產品的潛在設計獲勝管道。

Fourth, as an important part of the strategic plan, we will increase the focus on our core server adapter and Edge solution portfolio for which we had typically been robust fundamental demand.

第四，作為策略計畫的重要組成部分，我們將更加關注我們的核心伺服器適配器和邊緣解決方案組合，我們通常對此有強勁的基本需求。

As a part of this strategy, we conducted a very detailed evaluation of all our current programs and decided to discontinue two non-core or unrelated programs.

作為該策略的一部分，我們對所有當前專案進行了非常詳細的評估，並決定終止兩個非核心或不相關的專案。

Unfortunately, O-RAN can no longer be considered as a core business for us as it is not developed according to the industry expectation as well as the expectation of both ours and those of our customers.

不幸的是，O-RAN 不能再被視為我們的核心業務，因為它不是根據行業期望以及我們和客戶的期望來開發的。

Fifth, we will also return to a marketing and sales strategy that worked well for us in the past.

第五，我們也將回歸過去對我們效果良好的行銷和銷售策略。

We will once again also focus on smaller design wins with current annual expected revenues in the $1 million range as many of those types of accounts have the potential to become much larger accounts over the years.

我們也將再次關注目前年預期收入在 100 萬美元範圍內的小型設計勝利，因為許多此類類型的客戶多年來有潛力成為更大的客戶。

This does not mean that we will not pursue and achieve larger design win of an immediate $10 billion-plus range.

這並不意味著我們不會追求並實現立即超過 100 億美元的更大設計勝利。

However, the plan is to actively compete on smaller design wins as well and not focus only on the larger ones.

然而，該計劃是積極競爭較小的設計勝利，而不僅僅是專注於較大的設計勝利。

This should make our revenues more diverse and long-term growth more robust.

這將使我們的收入更加多樣化，長期成長更加強勁。

The compensation plan of our salespeople have already been adjusted to reflect this approach.

我們的銷售人員的薪酬計劃已經進行了調整以反映這種方法。

By executing all of the above aspects of the strategy, taking measures designed to maximize growth in revenues, controlling our expenses, and putting in place an aggressive buyback plan.

透過執行該策略的所有上述方面，採取旨在最大限度地增加收入的措施，控制我們的支出，並製定積極的回購計劃。

We believe that we will achieve the main goal of our strategy to create significant value for our shareholders.

我們相信，我們將實現策略的主要目標，為股東創造巨大價值。

As a reminder, our target is earnings per share of almost $3 in 2028.

提醒一下，我們的目標是 2028 年每股盈餘接近 3 美元。

As we approach this target, we believe that our EPS will improve gradually and across the milestone of $1.6 and EPS in 2027.

隨著我們接近這一目標，我們相信我們的每股收益將逐步改善，並在 2027 年突破 1.6 美元的里程碑。

Please bear in mind that those are internal targets that we are sharing with you and should not be taken as our current financial guidance.

請記住，這些是我們與您分享的內部目標，不應被視為我們當前的財務指導。

As we proceed, we will share with you our progress against those targets.

隨著我們的進展，我們將與您分享我們在實現這些目標方面取得的進展。

We have a very dedicated loyal management team with a lot of experience in the hardware business.

我們擁有一支非常敬業且忠誠的管理團隊，在硬體業務方面擁有豐富的經驗。

Most members of our management team and Board of Directors has been with us for many years and have already navigated our business success through many market prices and transformations in 2000, in 2008, and in 2017, just to name a few.

我們的管理團隊和董事會的大多數成員已經在我們工作多年，並且已經在 2000 年、2008 年和 2017 年等許多市場價格和轉型中帶領我們取得了業務成功。

We strongly believe that the targets that I outlined are attainable by Silicom, and I'm optimistic in our ability to successfully execute on this 5-year plan.

我們堅信 Silicom 能夠實現我概述的目標，並且我對我們成功執行這項五年計畫的能力感到樂觀。

To summarize, as you know, our environment is much more challenging going into 2024 for all players in our industry.

總而言之，如您所知，進入 2024 年，對於我們行業的所有參與者來說，我們的環境將更具挑戰性。

We have a strong strategic plan in place, which focuses on ultimately bringing value to our shareholders, not just by returning to revenue growth, reducing expenses and growing profitability, but also enhancing it through an aggressive buyback and a strong reduction in share count over two years.

我們制定了強有力的策略計劃，重點是最終為我們的股東帶來價值，不僅透過恢復收入成長、減少開支和提高盈利能力，還透過積極回購和大幅減少超過兩股的股份數量來增強盈利能力年。

I want to stress that Silicom is well positioned as a key player in our industry and given our design win roster, a deep pipeline, a highly experienced management team, and a new strategic plan in place, I'm confident that we will achieve renewed growth starting from 2025 and beyond with a long-term goal of reporting of $3 per share earnings in 2028.

我想強調的是，Silicom 作為我們行業的關鍵參與者處於有利地位，鑑於我們的設計獲勝名冊、深厚的管道、經驗豐富的管理團隊以及新的戰略計劃，我相信我們將實現新的目標從2025年及以後開始成長，長期目標是2028 年每股收益達到3 美元。

With that, I will now hand over the call to Eran for a detailed review of the quarter results.

現在，我將把電話轉交給埃蘭，以詳細審查本季的業績。

Ron, please go ahead.

羅恩，請繼續。

Thank you, Liron, and good day to everyone.

謝謝你，Liron，祝大家有美好的一天。

Revenues for the fourth quarter of 2023 were $18.8 million, down from revenues of $45.2 million reported in the fourth quarter of last year.

2023 年第四季的營收為 1,880 萬美元，低於去年第四季報告的 4,520 萬美元。

Our geographical revenue breakdown over the last 12 months were as follows: North America, 85%; Europe and Israel, 13%; Far East and rest of the world, 2%.

過去 12 個月我們的營收地理分佈如下： 北美，85%；歐洲和以色列，13%；遠東和世界其他地區，2%。

During the last 12 months, we had [1] over 10% customer and our top three customers together accounted for about 38% of our revenue.

在過去 12 個月中，我們 [1] 擁有超過 10% 的客戶，我們的前三大客戶合計約占我們收入的 38%。

I will be presenting the rest of the financial results on a non-GAAP basis, which excludes the non-cash compensation expenses in respect of options and RSUs granted to directors, officers, and employees; acquisition related adjustments; impairment of intangible assets and related write-offs as well as lease liabilities, financial expenses.

我將在非公認會計原則的基礎上公佈其餘的財務業績，其中不包括與授予董事、管理人員和員工的選擇權和 RSU 相關的非現金補償費用；收購相關調整；無形資產減損及相關沖銷及租賃負債、財務費用。

Before moving on I want to highlight that due to the termination of two programs as part of the new five-year strategic plan, which Liron mentioned earlier, we recorded an impairment of intangible assets and related write-offs charged to GAAP cost of sales of $9.6 million, which are not included in our non-GAAP numbers.

在繼續之前，我想強調，由於 Liron 之前提到的兩個作為新五年戰略計劃一部分的計劃的終止，我們記錄了無形資產減值和相關沖銷，計入 GAAP 銷售成本960 萬美元，未包含在我們的非GAAP 資料中。

For the full reconciliation from GAAP to non-GAAP numbers, please refer to the press release we issued earlier today.

有關 GAAP 與非 GAAP 數據的完整對帳信息，請參閱我們今天早些時候發布的新聞稿。

Gross profit for the fourth quarter of 2023 was $5.3 million, representing a gross margin of 28% and compared to gross profit of $15.1 million or gross margin of 33.5% in the fourth quarter of 2022.

2023 年第四季的毛利為 530 萬美元，毛利率為 28%，而 2022 年第四季的毛利為 1,510 萬美元，毛利率為 33.5%。

As Liron mentioned earlier, our gross margin range going forward is expected at between 27% and 32% over the years 2024 and 2025 with the gross margin gradually increasing over that period.

正如 Liron 之前提到的，我們未來的毛利率範圍預計在 2024 年和 2025 年在 27% 至 32% 之間，並在此期間毛利率逐漸增加。

Operating expenses in the fourth quarter of 2023 were $6.8 million compared to $7.2 million reported in the fourth quarter of 2022.

2023 年第四季的營運支出為 680 萬美元，而 2022 年第四季的營運支出為 720 萬美元。

Operating loss for the fourth quarter of 2023 was $1.5 million compared to operating income of $7.9 million as reported in the fourth quarter of 2022.

2023 年第四季的營運虧損為 150 萬美元，而 2022 年第四季報告的營運收入為 790 萬美元。

Net loss for the quarter was $0.5 million compared to net income of $6.6 million in the fourth quarter of 2022.

該季度淨虧損為 50 萬美元，而 2022 年第四季淨利為 660 萬美元。

Loss per share in the quarter was $0.07. This is compared with diluted earnings per share of $0.98 as reported in the fourth quarter of last year.

本季每股虧損為 0.07 美元。相比之下，去年第四季的攤薄後每股收益為 0.98 美元。

Now turning to the balance sheet.

現在轉向資產負債表。

As of December 21, 2023, the company's cash, cash equivalents, and marketable securities totaled $71.5 million with no debt.

截至 2023 年 12 月 21 日，該公司的現金、現金等價物及有價證券總計 7,150 萬美元，無負債。

This represent an increase of $4.2 million just in quarter four as a result of a positive operational cash flow of $8.6 million, net of share repurchase cost of $4.4 million.

光是第四季就增加了 420 萬美元，這是由於扣除 440 萬美元的股票回購成本後，營運現金流為 860 萬美元。

During the quarter, Silicom repurchased approximately 250,000 shares under our current share repurchase plan.

本季度，Silicom 根據我們目前的股票回購計畫回購了約 250,000 股股票。

In total, Silicom has purchased an aggregate of $52 million in share buybacks in recent years.

近年來，Silicom 總共回購了價值 5,200 萬美元的股票。

As I mentioned by Liron, based on our strong balance sheet and improved cash position, we intend to continue repurchasing our shares at a full pace.

正如我在 Liron 中提到的，基於我們強勁的資產負債表和改善的現金狀況，我們打算繼續全速回購我們的股票。

That ends my summary, I would like to hand back over to the operator for questions-and answer-session.

我的總結到此結束，我想將提問和回答環節交還給接線員。

Operator?

操作員？

(Operator Instructions) Alex Henderson, Needham & Company.

（操作員說明）Alex Henderson，Needham & Company。

Great.

偉大的。

Thank you very much.

非常感謝。

So a couple of comments.

所以有幾點評論。

First off my condolences to all the people who lost their job and how dedicated the Silicom employees are with the tenure of those employees and I know that must have been a very painful to move on your part with the tickets, the right move.

首先，我向所有失去工作的人表示哀悼，以及 Silicom 員工在這些員工的任期內的奉獻精神，我知道，帶著門票繼續前進一定是非常痛苦的，這是正確的舉動。

Just going back to the share repurchases to start with, so what is left on the buyback?

我們先回到股票回購，那回購還剩下什麼？

I know you're saying you wanted to buy 1.6 million shares over the next two years.

我知道您是說您想在未來兩年內購買 160 萬股股票。

Is that all fully authorized?

這都是完全授權的嗎？

That's what's left on the buyback currently?

目前回購還剩下這麼多？

Currently, we are still in the third buyback plan.

目前，我們也正在進行第三次回購計畫。

We still have the possibility to purchase approximately $6 million.

我們仍有可能購買約 600 萬美元。

And the plan is scheduled to end in April 2024.

該計劃預計於2024年4月結束。

Moving forward, we will probably declare a new buyback plan.

展望未來，我們可能會宣布一項新的回購計劃。

I see.

我懂了。

So the Board will declare a dividend buyback in order to get to the 1.6 million shares.

因此，董事會將宣布股息回購，以獲得 160 萬股。

Exactly.

確切地。

In terms of the timing of this tax cuts, I think the comment was you've already reduced these tax [3.10 to 2.40], which is a 22% cut.

就這次減稅的時機而言，我認為評論是你已經降低了這些稅收[3.10至2.40]，即減少了22%。

Is that complete now or is there further trimming going to happen in the current quarter?

現在已經完成了嗎？或者本季會進一步削減？

And I assume that was done in the fourth quarter, is that correct?

我認為這是在第四季度完成的，對嗎？

That's correct.

這是正確的。

We have done.

我們已經做到了。

We completed all the reduction we need to do.

我們完成了所有需要做的削減工作。

Not the full impact was recorded in Q4 due to the fact that it happened in Q4, but some of that did.

由於它發生在第四季度，因此並未在第四季度記錄全部影響，但其中一些影響確實存在。

But we are now done with this process.

但我們現在已經完成了這個過程。

So when you talk about the full year run rate, I think it was $27 million OpEx.

因此，當您談論全年運行率時，我認為營運支出為 2700 萬美元。

I assume that we could just quarter that.

我認為我們可以將其四分之一。

Yes, that's a fair assumption.

是的，這是一個合理的假設。

Is there any commentary in terms of the mix of the change in OpEx between R&D, sales and marketing, G&A and any thoughts on where it's heavier where lighter?

對於研發、銷售和行銷、一般行政費用之間的營運支出變化的組合，有什麼評論嗎？以及對哪裡重、哪裡輕有什麼想法嗎？

So the reductions we've made in general, the reduction were mainly in the operation side.

所以我們總體上進行了削減，主要是在營運方面。

So we reduced about, I think, something like 50 employees around that number, there in R&D, additional 10, and in other departments, the rest.

因此，我認為，我們減少了約 50 名員工，其中研發部門增加了 10 名員工，其他部門則減少了 10 名。

So that kind of gives you the picture of where we made the reductions and the impact of the different divisions.

這樣您就可以了解我們在哪些方面進行了削減以及不同部門的影響。

More heavily skewed to R&D, a little less in sales and marketing anf G&A.

更偏向研發，而較少偏向銷售和行銷以及一般管理費用。

In terms of these projects, you called out one where the companies, which is the software and hardware, but the longer term projects.

就這些項目而言，您提到了一家公司，即軟體和硬件，但是長期項目。

Have you seen other can't outright cancellation that we should be calling out here?

您是否見過我們應該在這裡呼籲的其他不能徹底取消的情況？

First of all, it's not cancellation per se.

首先，這本身並不是取消。

It just reduced their demand, reduced their activity, but it wasn't order cancellations or something of that sort.

它只是減少了他們的需求，減少了他們的活動，但不是取消訂單或類似的事情。

And again, we're monitoring it.

再說一遍，我們正在監視它。

We don't have an exact similar situation where we say, okay, this company was acquired and we expect it to behave the same.

我們沒有遇到完全相同的情況，我們會說，好吧，這家公司被收購了，我們希望它表現得一樣。

But everything is possible, I would say.

但我想說，一切都有可能。

But right now, we do believe we understand the situation much, much better.

但現在，我們確實相信我們對情況有了更好的了解。

And the two projects that were -- programs that were discontinued, was there revenue associated with those?

這兩個項目被終止了，這兩個項目有相關的收入嗎？

No.

不。

And is there any cost savings associated with those cancellations beyond the headcount?

除了人員數量之外，這些取消是否可以節省任何成本？

So just basically, the headcount is stopping those investments with mainly the headcount.

因此，基本上，人員數量主要是透過人員數量來停止這些投資。

Thanks.

謝謝。

And then finally, over the short term, is there an expectation that the $16 million, $17 million trajectory for the first quarter, it's going to stay at that level or will it rebound pleasingly into the June quarter?

最後，從短期來看，第一季 1,600 萬美元、1,700 萬美元的軌跡是否會保持在該水平，還是會在 6 月季度順利反彈？

Give us some thoughts on kind of the slope of that recovery, 1H to 2H.

請給我們一些關於復甦斜率（1H 到 2H）的想法。

So our forecast for Q1 is $14 million to $17 million.

因此，我們對第一季的預測為 1400 萬至 1700 萬美元。

And yes, I mean, we believe the second half is going to be very loaded on the second half.

是的，我的意思是，我們相信下半場將會非常繁忙。

Compared to the first half, we expect that the inventory situation will be a little bit better and maybe the economy will be a little bit better there.

與上半年相比，我們預期庫存狀況會好一點，也許經濟會好一點。

So we definitely expect the second half to be better than the first half.

所以我們肯定預計下半年會比上半年更好。

So no quantification that 40-60 or 30-70, what do you think?

所以沒有量化40-60或30-70，怎麼看？

Very hard to say.

很難說。

(Operator Instructions) There are no further questions at this time.

（操作員說明） 目前沒有其他問題。

Before I ask Mr. Eizenman to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available by tomorrow on Silicom's website, www.silicom-usa.com. Mr. Eizenman, would you like to make your concluding statements.

在我請 Eizenman 先生繼續其結束語之前，我想提醒與會者，明天之前將在 Silicom 網站 www.silicom-usa.com 上提供本次電話會議的重播。艾森曼先生，請您做一下總結發言。

Thank you, operator.

謝謝你，接線生。

Thank you, everybody, for joining the call and for your interest in Silicom.

感謝大家參加此次電話會議以及對 Silicom 的興趣。

We look forward to hosting you Our next call in three months.

我們期待在三個月內接待您的下一次電話會議。

Good day.

再會。

Thank you.

謝謝。

This concludes Silicom's fourth and final-quarter 2023 results conference call.

Silicom 2023 年第四季也是最後一個季度業績電話會議至此結束。

Thank you for your participation.

感謝您的參與。

You may go ahead and disconnect.

您可以繼續並斷開連線。