Paramus, New Jersey, November 11, 2013 – Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 high-capacity wireless hauling specialist today reported results for the third quarter which ended September 30, 2013.
Revenues for the third quarter of 2013 reached $92.1 million, down 21% from $117.1 million for the third quarter of 2012, and up 2% from $90.1 million in the second quarter of 2013.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the third quarter of 2013 was $(10.4) million or $(0.28) per basic share and diluted share, compared to net loss of $(4.7) million in the third quarter of 2012, or $(0.13) per basic share and diluted share.
On a non-GAAP basis, net loss for the third quarter, excluding (a) $0.7 million of equity-based compensation expenses, (b) $0.6 million amortization of intangible assets, (c) $0.6 million of changes in pre-acquisition indirect tax positions, and (d) $4.0 million of non-recurring adjustment of valuation allowance on tax assets, was $(4.5) million, or $(0.12) per basic share and diluted share. Non-GAAP net income for the third quarter of 2012 was $1.6 million, or $0.04 per basic and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).
Gross margin on a GAAP basis in the third quarter of 2013 was 30.9% of revenues. Gross margin on a non-GAAP basis was 31.9% of revenues.
Operating loss on a GAAP basis in the third quarter of 2013 was $(4.1) million. On a non-GAAP basis operating loss was $(2.2) million.
Cash and cash investments at the end of the quarter were $44.8 million.
Cost Reduction Initiatives
The company indicated that it will realign its operations, reduce head count and undertake other cost reduction measures in order to lower its breakeven point and improve profitability. The restructuring is expected to result in annual savings of approximately $25 million. Actions will include consolidating research and development activities worldwide and realigning teams on enhancing the newly released IP-20 platform, and realigning the remaining team in order to unite the engineering function within research and development, consolidating or relocating certain offices, and reducing staff functions and some operations positions, as well as other measures. No customer-facing activities will be affected. Total restructuring charges are expected to be approximately $18-$21 million, comprised of a non-recurring provision in the fourth quarter of 2013 of approximately $11-$13 million, as well as ongoing restructuring charges totaling $7-$8 million, which will begin in Q4 and will continue during the first half of 2014, mainly in the first quarter.
“Our bookings and revenues remain stable in a challenging operator spending environment,” said Ira Palti, President and CEO of Ceragon. “We continue to garner excellent feedback on our new products, whether deployed in live networks or in ongoing trials with Tier 1 operators, as they prepare to deploy LTE networks.”
“We recently launched our full IP-20 portfolio. This is a premium SDN-ready platform merging long haul and short haul products into a single hardware architecture managed by a common operating system. Introducing the IP-20 platform represents the attainment of an important strategic milestone. Now that we have completed this major development phase, we are implementing an organizational restructuring aimed at lowering our revenue breakeven point by reducing our operating expenses by 15%. We believe this new cost structure will be sustainable as revenue growth resumes and will position us to achieve substantial additional operating leverage,” concluded Mr. Palti.
Supplemental geographical breakdown of revenue, third quarter of 2013:
- Europe: 18%
- Africa: 23%
- North America: 10%
- Latin America: 29%
- India: 11%
- APAC: 9%
A conference call will follow beginning at 9:00 a.m. EST. 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. EST. 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://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: Telephone: (USA) (800) 475-6701 (International) +1 320-365-3844, Access Code: 304945. A replay of both the call and the webcast will be available through December 11, 2013.