Global / North America

Press Release

CERAGON NETWORKS REPORTS FIRST QUARTER 2016 FINANCIAL RESULTS

May 09, 2016

Strong cash flow enabled Company to increase its cash position while also reducing debt

Little Falls, New Jersey, May 9, 2016 – Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the first quarter ended March 31, 2016.

First Quarter 2016 Highlights:

Revenues — $59.8 million, down 36% from the first quarter of 2015, and down 21% from the fourth quarter of 2015.

Gross margin – 35.6%, compared to 25.9% in the first quarter of 2015 and 32.8% in the fourth quarter of 2015.

Operating income – $1.2 million, compared to operating income of $0.6 million in the first quarter of 2015 and operating income of $8.9 million in the fourth quarter of 2015.

Net loss $(0.4) million or $(0.01) per diluted share. Net loss for the first quarter of 2015 was $(7.0) million, or $(0.09) per diluted share. Net income for the fourth quarter of 2015 was $5.2 million, or $0.07 per diluted share.

Non-GAAP results – gross margin was 36.3%, operating profit was $2.2 million, and net loss was $(0.1) million, or $(0.00) per diluted share. Non-GAAP results exclude adjustments of $0.3 million.  For a reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents – $41.8 million at March 31, 2016, compared to $36.3 million at December 31, 2015.

“In the first quarter of 2016, higher gross margin on the low level of revenue enabled us to report an operating profit,” said Ira Palti, president and CEO of Ceragon. “In addition, strong cash flow results increased our cash position to $41.8 million, which exceeded debt by over $10 million, improving our financial position. Based on our recent bookings and pipeline of potential business, we believe that revenue will grow from the current level during the remainder of the year.”

Supplemental revenue breakouts:

Geographical breakdown, first quarter of 2016:

        Europe:                     18%

        Africa:                        9%

        North America:          15%

        Latin America:           25%

        India:                        19%

        APAC:                        14%

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) 230-1059 or International: +1 (612) 332-0107, 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: http://www.ceragon.com/about-us/ceragon/investor-relations, 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: 390820. A replay of both the call and the webcast will be available through June 9, 2016.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We help operators and other service providers worldwide increase operational efficiency and enhance end customers’ quality of experience with innovative wireless backhaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 4G, mission-critical multimedia services and other applications at high reliability and speed. Ceragon’s unique multicore technology provides highly reliable, high-capacity 4G wireless backhaul with minimal use of spectrum, power and other resources. It enables increased productivity, as well as simple and quick network modernization. We deliver a range of professional services that ensure efficient network rollout and optimization to achieve the highest value for our customers. Our solutions are deployed by more than 460 service providers, as well as hundreds of private network owners, in more than 130 countries.

-tables follow-

  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (U.S. dollars in thousands, except share and per share data)

 (Unaudited) 

Three months ended

March 31,

2016

2015

Revenues

$     59,834

$     93,653

Cost of revenues

38,543

69,413

Gross profit

21,291

24,240

Operating expenses:
Research and development, net

5,283

6,399

Selling and marketing

9,857

11,308

General and administrative

4,918

4,736

Restructuring costs

1,225

Total operating expenses

$      20,058

$      23,668

Operating income

1,233

572

Financial expenses, net

918

6,346

Income (loss) before taxes

315

(5,774)

Taxes on income

751

1,221

Net loss

$    436

$    6,995

Basic and diluted net loss per share

$    0.01

$    0.09

Weighted average number of shares used in computing basic and diluted net loss per share

77,655,440

77,145,265

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

March 31,

2016

December 31, 2015

ASSETS

Unaudited

Audited

CURRENT ASSETS:
Cash and cash equivalents

$     41,845

$     36,318

Short-term bank deposits

33

Trade receivables, net

82,070

116,683

Other accounts receivable and prepaid expenses

23,714

22,583

Deferred taxes, net

1,429

1,633

Inventories

49,592

49,690

Total current assets

198,683

226,907

NON-CURRENT ASSETS:
   Deferred taxes, net

160

189

   Severance pay funds and pension

4,567

4,681

   Property and equipment, net

27,985

28,906

   Intangible assets, net

2,783

3,192

   Other non-current assets

2,304

1,457

Total non-current assets

37,799

38,425

Total assets

$  236,482

$  265,332

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

CURRENT LIABILITIES:
Short term loans, including current maturities of long term loan

$       29,850

$       34,922

Trade payables

51,239

71,721

Deferred revenues

4,234

8,901

Other accounts payable and accrued expenses

26,799

27,052

Total current liabilities

112,122

142,596

 

LONG-TERM LIABILITIES

Accrued severance pay and pension

9,272

9,276

Other long term liabilities

11,648

10,639

Total long-term liabilities

20,920

19,915

 

SHAREHOLDERS’ EQUITY:

Share capital:
    Ordinary shares

214

214

Additional paid-in capital

408,585

408,174

Treasury shares at cost

(20,091)

(20,091)

Accumulated other comprehensive loss, net of taxes

(7,972)

(8,616)

Accumulated deficit

(277,296)

(276,860)

Total shareholders’ equity

103,440

102,821

Total liabilities and shareholders’ equity

$   236,482

$   265,332

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW 

(U.S. dollars, in thousands) 

(Unaudited) 

Three months ended

March 31,

2016

2015

Cash flow from operating activities:
Net loss

$     (436)

$    (6,995)

Adjustments to reconcile net loss to net cash provided by (used) in operating activities:
Depreciation and amortization

2,308

3,503

Stock-based compensation expense

411

194

Decrease in trade and other receivables, net

34,378

14,869

Decrease in inventory, net of write-off

432

5,109

Decrease in deferred tax asset, net

233

730

Decrease in trade payables and accrued liabilities

(20,061)

(13,719)

Decrease in deferred revenues

(4,667)

(5,477)

Other adjustments

110

(106)

Net cash provided by (used in) operating activities

$   12,708

$   (1,892)

Cash flow from investing activities:
Purchase of property and equipment ,net

(2,201)

(2,042)

Proceeds from short-term bank deposits

64

Investment in short-term bank deposits

(33)

Proceeds from sale and maturities of marketable securities

122

Net cash used in investing activities

$   (2,234)

$    (1,856)

Cash flow from financing activities:
Proceeds from short-term bank loans

2,050

Repayment of loans from financial institutions

(5,072)

(2,058)

Net cash used in financing activities

$  (5,072)

$    (8)

Translation adjustments on cash and cash equivalents

$    125

$    (397)

Increase (decrease) in cash and cash equivalents

$    5,527

    $    (4,153)

Cash and cash equivalents at the beginning of the period

36,318

41,423

Cash and cash equivalents at the end of the period

$   41,845

$    37,270

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands, except share and per share data)

(Unaudited)

Three months ended March 31,

  2016

2015

GAAP (as reported)

Adjustments

Non-GAAP

Non-GAAP

Revenues

$     59,834

$   59,834

$   93,653

Cost of revenues

38,543

$1(a)   458

38,085

69,049

Gross profit

21,291

21,749

24,604

Operating expenses:
Research and development, net

5,283

$1(b)   128

5,155

6,303

Selling and marketing

  9,857

$1(c)    231

  9,626

  11,037

General and administrative

4,918

$1(d)   133

4,785

4,752

Total operating expenses

$  20,058

$  19,566

$  22,092

Operating income

1,233

     2,183

     2,512

Financial expenses, net

918

$1(e)    (907)

1,825

       3,372

Income (loss) before taxes

315

358

(860)

Taxes on income

751

$1(f)    246

          505

          487

Net loss

$   436

$   147

$   1,347

Basic and diluted net loss per share

$     0.01

$     0.00

$     0.02

Weighted average number of shares used in computing basic and diluted net loss  per share

77,655,440

77,655,440

77,145,265

Total adjustments

289

(a)  Cost of revenues includes $0.3 million of amortization of intangible assets, $0.1 million of changes in pre-acquisition indirect tax positions and $20 thousand of stock based compensation expenses in the three months ended March 31, 2016.

(b)  Research and development expenses include stock-based compensation expenses in the three months ended March 31, 2016.

(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, 2016.

(d)  General and administrative expenses include net stock based compensation expenses in the three months ended March 31, 2016.

(e)  Financial expenses include adjustment of accounts receivable that had been written-off as part of re-measurement of certain assets denominated in or linked to the U.S. dollar in Venezuela, and were collected in April 2016.

(f)   Taxes on income include non-cash tax adjustments in the three months ended March 31, 2016.

RECONCILIATION BETWEEN REPORTED AND NON-GAAP

 NET LOSS

(U.S. dollars in thousands)

 (Unaudited) 

Three months ended

March 31,

2016

2015

Reported GAAP net loss

436

6,995

Stock based compensation expenses

411

194

Amortization of intangible assets

406

492

Restructuring expenses

1,225

Changes in pre-acquisition indirect tax positions

133

30

Currency devaluation in Venezuela related expenses

(907)

2,973

Non-cash tax adjustments

246

734

Non-GAAP net loss

147

1,347

###

Media Contact

Matthew Krieger

GK Public Relations

Phone: (914) 768-4219

Email: matthew@gkpr.com

Tanya Solomon

Ceragon Networks Ltd.

Phone: (201) 853-0271

Email: tanyas@ceragon.com

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