Paramus, New Jersey, July 28, 2014 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 high-capacity wireless hauling specialist today reported results for the second quarter which ended June 30, 2014.
Revenues for the second quarter of 2014 were $90.4 million, about the same as the $90.1 million reported for the second quarter of 2013, and up 28% from $70.5 million in the first quarter of 2014.
Gross margin in accordance with US Generally Accepted Accounting Principles (GAAP) in the second quarter of 2014 was 26.3% of revenues, compared to 31.7% of revenues in the second quarter of 2013, and compared to 22.1% of revenues in the first quarter of 2014. Gross margin on a non-GAAP basis was 27.0% of revenues in the second quarter of 2014, compared to 32.4 % of revenues in the second quarter of 2013, and compared to 23.3 % of revenues in the first quarter of 2014.
Operating income on a GAAP basis in the second quarter of 2014 was $11.8 million, compared to an operating loss of $(4.6) million in the second quarter of 2013, and compared to an operating loss of $(17.1) million in the first quarter of 2014. On a non-GAAP basis, the operating loss was $(2.6) million in the second quarter of 2014, compared to an operating loss of $(2.8) million in the second quarter of 2013, and compared to an operating loss of $(10.8) million in the first quarter of 2014.
Net income on a GAAP basis for the second quarter of 2014 was $8.0 million or $0.15 per basic share and diluted share, primarily due to $16.8 million of non-recurring other income resulting from a settlement agreement with Eltek ASA. Net loss for the second quarter of 2013 was $(7.5) million, or $(0.20) per basic share and diluted share. Net loss for the first quarter of 2014 was $(27.0) million or $(0.51) per basic share and diluted share.
On a non-GAAP basis, net loss for the second quarter of 2014 was $(5.0) million, or $(0.10) per basic share and diluted share, compared to a non-GAAP net loss for the second quarter of 2013 of $(5.7) million, or $(0.15) per basic share and diluted share. The non-GAAP net loss for the first quarter of 2014 was $(12.9) million or $(0.25) cents per basic share and diluted share.
For reconciliations of GAAP to non-GAAP results, see the attached tables.
“We are pleased to report a continuation of the improved booking pattern that began in the first quarter, when bookings were 19% above the average quarterly bookings in 2013,” said Ira Palti, President and CEO of Ceragon. “Bookings in the second quarter were 30% higher than the 2013 quarterly average. This provides tangible evidence of a further improvement in revenues in the second half, compared with the first half of 2014. We are especially encouraged by the penetration of the new IP-20 platform, which accounted for 39% of total bookings during the first six months of 2014. We believe the second half of 2014 will mark the beginning of a sustainable uptrend in revenues, followed by a return to profitability with substantial operating leverage, based on a lower expense profile from the recent restructuring.
"In addition to the orders in hand from two quarters of very strong bookings, we expect significant additional orders during the second half of 2014 related to customers' modernization and expansion programs for which we have already been chosen as a vendor. Therefore, with demand picking up faster with larger orders than we anticipated, we are moving immediately to raise additional equity capital in order to ensure that we have the necessary working capital and financial flexibility to fund our growth and avoid any potential liquidity issues."
Cash and cash investments at the end of the quarter were $36.4 million, including $16.8 million received during the second quarter pursuant to a settlement agreement with Eltek ASA.
In order to provide sufficient liquidity to maintain our operations and the expected level of growth from improved demand for our products, and in order to address the cash flow impact of the losses in the first half of 2014, the Company will be required to seek funding from external sources during the second half of 2014. Delays in obtaining additional funding could also result in Ceragon requesting covenant waivers from its lenders. Ceragon’s board of directors and management are confident in the Company’s ability to address these cash needs and, in this context, as mentioned above, the Company announced separately today that it intends to offer and sell its ordinary shares in an underwritten public offering pursuant to its existing shelf registration statement.
Supplemental geographical breakdown of revenue for the second quarter of 2014:
- Europe: 16%
- Africa: 19%
- North America: 12%
- Latin America: 22%
- India: 17%
- APAC: 14%
A conference call will follow beginning 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) 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: Telephone: USA: (800) 475-6701; International: +1 (320) 365-3844; Access Code: 330547. A replay of both the call and the webcast will be available through August 28, 2014.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Ceragon uses non-GAAP measures of its financial results. Ceragon’s management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of Ceragon’s ongoing core operations and prospects for the future. Historically, Ceragon has also publicly presented these supplemental non-GAAP financial measures in order to assist the investment community to see the Company “through the eyes of management,” and thereby enhance understanding of its operating performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in the tables attached to this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.