Paramus, New Jersey, May 6, 2015 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the first quarter ended March 31, 2015.
First Quarter 2015 Highlights:
Revenues -- $93.7 million, up 33% from the first quarter of 2014, and down 16% from the fourth quarter of 2014.
Gross margin – 25.9%, compared to 22.1% in the first quarter of 2014 and 20.5% in the fourth quarter of 2014.
Operating income – $0.6 million, compared to an operating loss of $(17.1) million in the first quarter of 2014 and an operating loss of $(25.9) million in the fourth quarter of 2014.
Net loss – $(7.0) million or $(0.09) per diluted share. Net loss for the first quarter of 2014 was $(27.0) million, or $(0.51) per diluted share. Net loss for the fourth quarter of 2014 was $(52.0) million or $(0.68) per diluted share.
One-time items – First quarter 2015 net loss includes a total of $4.2 million of one-time charges. This amount consists of $1.2 million in restructuring costs and additional financial expense of $3.0 million resulting from re-measurement of certain assets related to Venezuela.
Non-GAAP results – gross margin was 26.3%, operating profit was $2.5 million, and net loss was $(1.3) million, or $(0.02) per diluted share. Non-GAAP results exclude one-time items as well as recurring adjustments of $1.5 million. For a reconciliation of GAAP to non-GAAP results, see the attached tables.
Cash and cash equivalents – $37.3 million at March 31, 2015, compared to $41.4 million at December 31, 2014. The decrease represents a combination of $1.2 million of cash consumption and a currency devaluation, primarily in Venezuela, of approximately $3 million.
“Our first quarter performance clearly reflects the initiatives we have been pursuing to improve profitability,” said Ira Palti, president and CEO of Ceragon. “Gross margin improved and operating expenses declined significantly, resulting in further improvement in our operating result, and we managed to lower our cash consumption to $1.2 million in Q1. We continue to expect to generate positive cash flow in Q2 and will continue to focus on improving profitability with a target of reaching a mid-single-digit non-GAAP operating margin by the end of this year.”
Supplemental revenue breakouts:
Geographical breakdown, first quarter of 2015:
· Europe: 16%
· Africa: 8%
· North America: 10%
· Latin America: 28%
· India: 31%
· APAC: 7%
A conference call to discuss the results will begin at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling USA: (800) 230-1074 or International: +1 (612) 234-9959, from 8:50 a.m. EDT.
The call-in lines will be available on a first-come, first-serve basis.
Investors can also listen to the call live via the Internet by accessing Ceragon Networks’ website at the investors’ page, selecting the webcast link, and
following the registration instructions.
If you are unable to join us live, the replay numbers are: USA: (800) 475-6701 or International +1 (320) 365-3844 Access Code: 357142. A replay of both the call and the webcast will be available through June 6, 2015.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We provide innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers. Ceragon’s high-capacity, solutions use microwave technology to transfer voice and data traffic while maximizing bandwidth efficiency, to deliver more capacity over longer distances under any deployment scenario. Based on our extensive global experience, Ceragon delivers turnkey solutions that support service provider profitability at every stage of the network lifecycle enabling faster time to revenue, cost-effective operation and simple migration to all-IP networks. As the demand for data pushes the need for ever-increasing capacity, Ceragon is committed to serve the market with unmatched technology and innovation, ensuring effective solutions for the evolving needs of the marketplace. Our solutions are deployed by more than 430 service providers in over 130 countries.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
|
Three months ended |
|||||||||||
|
March 31, |
|||||||||||
|
2015 |
2014 |
||||||||||
| Revenues |
$ 93,653 |
$ 70,515 |
|||||||||
| Cost of revenues |
69,413 |
54,936 |
|||||||||
| Gross profit |
24,240 |
15,579 |
|||||||||
| Operating expenses: | |||||||||||
| Research and development, net |
6,399 |
10,439 |
|||||||||
| Selling and marketing |
11,308 |
15,420 |
|||||||||
| General and administrative |
4,736 |
5,906 |
|||||||||
| Restructuring costs |
1,225 |
936 |
|||||||||
| Total operating expenses |
$ 23,668 |
$ 32,701 |
|||||||||
| Operating income (loss) |
572 |
(17,122) |
|||||||||
| Financial expenses, net |
6,346 |
8,164 |
|||||||||
| Loss before taxes |
5,774 |
25,286 |
|||||||||
| Taxes on income |
1,221 |
1,677 |
|||||||||
| Net loss |
$ 6,995 |
$ 26,963 |
|||||||||
| Basic and diluted net loss per share |
$ 0.09 |
$ 0.51 |
|||||||||
| Weighted average number of shares used in computing basic and diluted net loss per share |
77,145,265 |
52,457,168 |
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
|
March 31, 2015 |
December 31, 2014 |
|||
| ASSETS |
Unaudited |
Audited |
||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents |
$ 37,270 |
$ 41,423 |
||
| Short-term bank deposits |
349 |
413 |
||
| Marketable securities |
- |
535 |
||
| Trade receivables, net |
141,961 |
162,626 |
||
| Other accounts receivable and prepaid expenses |
23,270 |
22,898 |
||
| Deferred taxes, net |
2,993 |
3,522 |
||
| Inventories |
55,700 |
61,830 |
||
| Total current assets |
261,543 |
293,247 |
||
| NON-CURRENT ASSETS: | ||||
| Deferred taxes, net |
167 |
239 |
||
| Severance pay funds and pension |
5,313 |
5,669 |
||
| Property and equipment, net |
31,731 |
33,138 |
||
| Intangible assets, net |
4,586 |
5,070 |
||
| Other non-current assets |
4,460 |
4,510 |
||
| Total non-current assets |
46,257 |
48,626 |
||
| Total assets |
$ 307,800 |
$ 341,873 |
||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||
| CURRENT LIABILITIES: | ||||
| Short term loans, including current maturities of long term loan |
$ 50,896 |
$ 48,832 |
||
| Trade payables |
89,916 |
101,752 |
||
| Deferred revenues |
12,190 |
17,667 |
||
| Other accounts payable and accrued expenses |
33,816 |
37,248 |
||
| Total current liabilities |
186,818 |
205,499 |
||
|
LONG-TERM LIABILITIES |
||||
| Long term bank loan, net of current maturities |
- |
2,072 |
||
| Accrued severance pay and pension |
10,660 |
11,452 |
||
| Other long term liabilities |
16,878 |
18,298 |
||
| Total long-term liabilities |
27,538 |
31,822 |
||
|
SHAREHOLDERS' EQUITY: |
||||
| Share capital: | ||||
| Ordinary shares |
212 |
212 |
||
| Additional paid-in capital |
406,607 |
406,413 |
||
| Treasury shares at cost |
(20,091) |
(20,091) |
||
| Accumulated other comprehensive loss, net of taxes |
(8,418) |
(4,111) |
||
| Accumulated deficit |
(284,866) |
(277,871) |
||
| Total shareholders' equity |
93,444 |
104,552 |
||
| Total liabilities and shareholders' equity |
$ 307,800 |
$ 341,873 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
|
Three months ended |
|||||||||||
|
March 31, |
|||||||||||
|
2015 |
2014 |
||||||||||
| Cash flow from operating activities: | |||||||||||
| Net loss |
$ (6,995) |
$ (26,963) |
|||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization |
3,503 |
3,378 |
|||||||||
| Stock-based compensation expense |
194 |
1,047 |
|||||||||
| Decrease in trade and other receivables, net |
14,869 |
1,894 |
|||||||||
| Decrease in inventory, net of write-off |
5,109 |
1,609 |
|||||||||
| Decrease in deferred tax asset, net |
730 |
1,317 |
|||||||||
| Decrease in trade payables and accrued liabilities |
(13,719) |
(15,058) |
|||||||||
| Decrease in deferred revenues |
(5,477) |
(2,899) |
|||||||||
| Other adjustments |
(106) |
841 |
|||||||||
| Net cash used in operating activities |
$ (1,892) |
$ (34,834) |
|||||||||
| Cash flow from investing activities: | |||||||||||
| Purchase of property and equipment ,net |
(2,042) |
(2,850) |
|||||||||
| Proceeds from short and long-term bank deposits |
64 |
50 |
|||||||||
| Proceeds from sale and maturities of marketable securities |
122 |
5,161 |
|||||||||
| Net cash provided by (used in) investing activities |
$ (1,856) |
$ 2,361 |
|||||||||
| Cash flow from financing activities: | |||||||||||
| Proceeds from short-term bank loans |
2,050 |
18,110 |
|||||||||
| Repayment of loans from financial institutions |
(2,058) |
(2,058) |
|||||||||
| Net cash provided by (used in) financing activities |
$ (8) |
$ 16,052 |
|||||||||
| Translation adjustments on cash and cash equivalents |
$ (397) |
$ 69 |
|||||||||
| Decrease in cash and cash equivalents |
$ (4,153) |
$ (16,352) |
|||||||||
| Cash and cash equivalents at the beginning of the period |
41,423 |
42,407 |
|||||||||
| Cash and cash equivalents at the end of the period |
$ 37,270 |
$ 26,055 |
|||||||||
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
|
Three months ended March 31,
|
||||||||
|
2015 |
2014 |
|||||||
|
GAAP (as reported) |
Adjustments |
Non-GAAP |
Non-GAAP |
|||||
| Revenues |
$ 93,653 |
$ 93,653 |
$ 70,515 |
|||||
| Cost of revenues |
69,413 |
$1(a) 364 |
69,049 |
54,070 |
||||
| Gross profit |
24,240 |
24,604 |
16,445 |
|||||
| Operating expenses: | ||||||||
| Research and development, net |
6,399 |
$1(b) 96 |
6,303 |
7,853 |
||||
| Selling and marketing |
11,308 |
$1(c) 271 |
11,037 |
14,405 |
||||
| General and administrative |
4,736 |
$1(d) (16) |
4,752 |
5,022 |
||||
| Restructuring costs |
1,225 |
1,225 |
- |
- |
||||
| Total operating expenses |
$ 23,668 |
$ 22,092 |
$ 27,280 |
|||||
| Operating income (loss) |
572 |
2,512 |
(10,835) |
|||||
| Financial expenses, net |
6,346 |
$1(e) 2,974 |
3,372 |
1,854 |
||||
| Loss before taxes |
5,774 |
860 |
12,689 |
|||||
| Taxes on income |
1,221 |
$1(f) 734 |
487 |
187 |
||||
| Net loss |
$ 6,995 |
$ 1,347 |
$ 12,876 |
|||||
| Basic and diluted net loss per share |
$ 0.09 |
$ 0.02 |
$ 0.25 |
|||||
| Weighted average number of shares used in computing basic and diluted net loss per share |
77,145,265 |
77,145,265 |
52,457,168 |
|||||
| Total adjustments |
5,648 |
|||||||
- (a) Cost of revenues includes $0.3 million of amortization of intangible assets, $30 thousand of changes in pre-acquisition indirect tax positions and $30 thousand of stock based compensation expenses in the three months ended March 31, 2015.
- (b) Research and development expenses include stock-based compensation expenses in the three months ended March 31, 2015.
- (c) Selling and marketing expenses include $0.2 million of amortization of intangible assets and $0.1 million of stock based compensation expenses in the three months ended March 31, 2015.
- (d) General and administrative expenses include net stock based compensation expenses in the three months ended March 31, 2015.
- (e) Financial expenses include the effect of re-measurement of certain assets denominated in or linked to the U.S. dollar in Venezuela, due to restrictive government policies on payments in foreign currency in the three months ended March 31, 2015.
- (f) Taxes on income include non-cash tax adjustments in the three months ended March 31, 2015.
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
NET LOSS
(U.S. dollars in thousands)
(Unaudited)
|
Three months ended |
|||||||||||||||
|
March 31, |
|||||||||||||||
|
2015 |
2014 |
||||||||||||||
| Reported GAAP net loss |
6,995 |
26,963 |
|||||||||||||
| Stock based compensation expenses |
194 |
1,047 |
|||||||||||||
| Amortization of intangible assets |
492 |
523 |
|||||||||||||
| Restructuring expenses |
1,225 |
4,440 |
|||||||||||||
| Changes in pre-acquisition indirect tax positions |
30 |
277 |
|||||||||||||
| Currency devaluation in Venezuela |
2,973 |
4,140 |
|||||||||||||
| Expenses related to certain transactions to expatriate cash from Venezuela and Argentina |
- |
2,170 |
|||||||||||||
| Non-cash tax adjustments |
734 |
1,490 |
|||||||||||||
| Non-GAAP net loss |
1,347 |
12,876 |
|||||||||||||
$1(a
