Press Release

CERAGON NETWORKS REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS

August 08, 2016

Strength in India and Latin America drove sequential improvement in bookings and revenues during the second quarter

Little Falls, New Jersey, August 8, 2016 – Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the second quarter which ended June 30, 2016.

Second Quarter 2016 Highlights:

Revenues – $70.0 million, down 26% from the second quarter of 2015, and up 17% from the first quarter of 2016.

Gross margin – 34.7%, compared to 28.2% in the second quarter of 2015 and 35.6% in the first quarter of 2016.

Operating income – $4.0 million, compared to $5.9 million in the second quarter of 2015, and $1.2 million in the first quarter of 2016.

Net income (loss) – net income of $0.1 million, or $0.00 per diluted share for the second quarter of 2016.  Net income for the second quarter of 2015 was $1.3 million, or $0.02 per diluted share. Net loss for the first quarter of 2016 was $(0.4) million or $(0.01) per diluted share.

Non-GAAP results – gross margin was 35.5%, operating profit was $4.9 million, and net income was $1.6 million, or $0.02 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached table.

Cash and cash equivalents – $34.4 million at June 30, 2016, compared to $41.8 million at March 31, 2016.

“As the rollout of 4G LTE networks transitions from developed to emerging markets, we are benefitting from the related demand for high-value, best-of-breed solutions, “said Ira Palti, president and CEO of Ceragon. “Our bookings and revenues grew sequentially, primarily due to strength from India and Latin America. We are profitable and cash flow positive, and we used a portion of our cash to continue paying down debt. Based on the increase in bookings in the second quarter and the pipeline of potential business, we continue to expect a gradual increase in revenues during the second half of 2016.”

Supplemental geographical breakdown of revenue for the second quarter of 2016:

  •         Europe:                                   15%
  •         Africa:                                     6%
  •         North America:                       16%
  •         Latin America:                        27%
  •         India:                                      26%
  •         APAC:                                     10%

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) 234-9960, 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: 397184. A replay of both the call and the webcast will be available through September 8, 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.

 

Ceragon Networks® and FibeAir® are registered trademarks of Ceragon Networks Ltd. in the United States and other countries. CERAGON ® is a trademark of Ceragon Networks Ltd., registered in various countries. Other names mentioned are owned by their respective holders.

 

 

This press release contains statements concerning Ceragon’s future prospects that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs, expectations and assumptions of Ceragon’s management.Examples of forward-looking statements include: revenues, growth prospects, projections of gross margins, operating and other expenses, capital expenditures, profitability and liquidity, competitive pressures, product development, financial resources, cost savings and other financial matters. You may identify these and other forward-looking statements by the use of words such as “may,” “plans,” “anticipates,” “believes,” “estimates,” “targets,” “expects,” “intends,” “potential,” or the negative of such terms, or other comparable terminology. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the risk that Ceragon’s expectations regarding future revenues and profitability will not materialize; risks relating to the concentration of our business in India, Latin America, Africa and in developing nations in other regions, including political, economic and regulatory risks from doing business in those regions and nations, including but not limited to currency export controls and recent economic concerns; the risk that the amount of business coming from our most significant customers will go down or cease, the risk that Ceragon will not achieve the benefits it expects from its expense reduction plans and profit enhancement programs, as may be undertaken from time to time; the risk that Ceragon will not continue to comply with the financial or other covenants in its agreements with its lenders; the risk of significant expenses in connection with potential contingent tax liability; and other risks and uncertainties detailed from time to time in Ceragon’s Annual Report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission, and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements. 

 

Investors:

Doron Arazi            or             Claudia Gatlin

+972 3 5431 660                     +1 212 830-9080

dorona@ceragon.com             claudiag@ceragon.com

 

Media:

Tanya Solomon

+972 3 5431163

tanyas@ceragon.com

 

 

-tables follow-

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

Three months ended

June 30,

Six months ended

June 30,

2016

2015

2016

2015

Revenues

$     70,010

$     94,772

$     129,844

$     188,425

Cost of revenues

45,720

68,078

       84,263

       137,491

Gross profit

24,290

26,694

45,581

50,934

Operating expenses:
Research and development

         5,355

         5,770

10,638

12,169

Selling and marketing

9,716

9,481

       19,573

       20,789

General and administrative

Restructuring costs

5,192

5,525

10,110

10,261

1,225

Total operating expenses

 $    20,263

 $    20,776

 $    40,321

 $    44,444

Operating income

4,027

5,918

 5,260

 6,490

Financial expenses, net

2,372

3,161

        3,290

        9,507

Income (loss) before taxes

1,655

2,757

1,970

(3,017)

Taxes on income

1,606

1,426

2,357

2,647

Net income (loss)

  $         49

  $      1,331

 $        (387)  $      (5,664)
Basic net income (loss) per share

$        0.00

$         0.02

 $          0.00

 $        (0.07)

Diluted net income (loss) per share

$        0.00

$         0.02

 $          0.00

 $        (0.07)

Weighted average number of shares used in computing basic net income (loss) per share

77,674,747

77,170,030

77,664,815

77,158,982

Weighted average number of shares used in computing diluted net income (loss) per share

77,919,559

77,243,249

77,664,815

77,158,982

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

June 30,

2016

December 31, 2015

ASSETS

Unaudited

CURRENT ASSETS:
Cash and cash equivalents

$        34,377

$     36,318

Short-term bank deposits

153

Trade receivables, net

      89,451

116,683

Other accounts receivable and prepaid expenses

20,351

22,583

Deferred taxes, net

524

1,633

Inventories

48,786

49,690

Total current assets

        193,642

226,907

NON-CURRENT ASSETS:
   Deferred tax assets, net

93

189

   Severance pay and pension fund

4,287

4,681

   Property and equipment, net

26,972

28,906

Intangible assets, net

2,374

3,192

   Other non-current assets

2,901

1,457

Total non-current assets

36,627

38,425

Total assets

$     230,269

$       265,332

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

Short term loan, including current maturities of long term loan

$         21,450

$        34,922

Trade payables

56,154

71,721

Deferred revenues

        3,966

8,901

Other accounts payable and accrued expenses

23,750

27,052

Total current liabilities

105,320

142,596

 

LONG-TERM LIABILITIES:

Accrued severance pay and pension

8,774

9,276

Other long term payables

12,127

10,639

Total long-term liabilities

20,901

19,915

 

SHAREHOLDERS’ EQUITY:

Share capital:
    Ordinary shares

              214

214

Additional paid-in capital

408,773

408,174

Treasury shares at cost

    (20,091)

(20,091)

Other comprehensive loss

           (7,601)

(8,616)

Accumulated deficits

    (277,247)

(276,860)

Total shareholders’ equity

104,048

102,821

Total liabilities and shareholders’ equity

$        230,269

$   265,332

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)

Three months ended

June 30,

Six months ended

June 30,

2016

2015

2016

2015

Cash flow from operating activities:
Net income (loss)

$  49

$  1,331

$   (387)

$   (5,664)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization

2,668

2,719

         4,976

         6,222

Stock-based compensation expense

181

378

592

572

Decrease (increase) in trade and other receivables, net

(3,875)

4,487

30,503

19,356

Decrease in inventory, net of write off

1,171

4,539

1,603

9,648

Decrease in deferred tax asset, net

972

723

        1,205

        1,453

 Increase (decrease) in trade payables and accrued liabilities

1,616

(11,612)

(18,445)

(25,331)

Increase (decrease) in deferred revenues

(267)

1,049

(4,934)

(4,428)

Other adjustments

(218)

(83)

(108)

  (189)

Net cash provided by operating activities

$ 2,297

$ 3,531

$ 15,005

$ 1,639

Cash flow from investing activities:
 Purchase of property and equipment

(1,407)

(1,431)

    (3,608)

    (3,473)

Investment in short-term bank deposits

(120)

(4)

(153)

(4)

Proceeds from short-term bank deposits

64

 Proceeds from sale and maturities of   marketable securities, net

122

Net cash used in investing activities

$ (1,527)

$ (1,435)

$  (3,761)

$  (3,291)

Cash flow from financing activities:
Proceeds from share options exercise

7

7

Proceeds from bank loans

2,150

4,200

Repayment of bank loans

(8,400)

(2,058)

     (13,472)

     (4,116)

Net cash provided by (used in) financing activities

$  (8,393)

$  92

$  (13,465)

$  84

Translation adjustments on cash and cash equivalents

    $  155

    $  77

$  280

$  (320)

Increase (decrease) in cash and cash equivalents

$  (7,468)

$  2,265

$  (1,941)

$  (1,888)

Cash and cash equivalents at the beginning of the period

41,845

37,270

36,318

41,423

Cash and cash equivalents at the end of the period

$  34,377

$  39,535

$  34,377

$  39,535

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

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

(Unaudited)

                         

Three months ended

Six months ended

June 30,

June 30,

2016

2015

2016

2015

GAAP cost of revenues

$

45,720

$

68,078

$

84,263

$

137,491

Amortization of intangible assets

(307)

(306)

(613)

(609)

Stock based compensation expenses

(3)

21

(21)

(10)

Changes in pre-acquisition indirect tax positions

(269)

(118)

(403)

(148)

Non-GAAP cost of revenues

$

45,141

$

67,675

$

83,226

$

136,724

GAAP gross profit

$

24,290

$

26,694

$

45,581

$

50,934

Gross profit adjustments

579

403

1,037

767

Non-GAAP gross profit

$

24,869

$

27,097

$

46,618

$

51,701

GAAP Research and development expenses

$

5,355

$

5,770

$

10,638

$

12,169

Stock based compensation expenses

2

(245)

(126)

(341)

Non-GAAP Research and development expenses

$

5,357

$

5,525

$

10,512

$

11,828

GAAP Sales and Marketing expenses

$

9,716

$

9,481

$

19,573

$

20,789

Amortization of intangible assets

(107)

(20)

(206)

(209)

Stock based compensation expenses

(87)

(130)

(219)

(213)

Non-GAAP Sales and Marketing expenses

$

9,522

$

9,331

$

19,148

$

20,367

GAAP General and Administrative expenses

$

5,192

$

5,525

$

10,110

$

10,261

Stock based compensation expenses

(92)

(24)

(225)

(8)

Non-GAAP General and Administrative expenses

$

5,100

$

5,501

$

9,885

$

10,253

GAAP financial expenses

$

2,372

$

3,161

$

3,290

$

9,507

Currency devaluation in Venezuela related expenses

907

(2,973)

Non-GAAP financial expenses

$

2,372

$

3,161

$

4,197

$

6,534

GAAP taxes on income

$

1,606

$

1,426

$

2,357

$

2,647

Changes in pre-acquisition tax liability

(453)

(453)

Other non-cash tax adjustments

(242)

(856)

(488)

(1,590)

Non-GAAP taxes on income

$

911

$

570

$

1,416

$

1,057

 

 RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

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

(Unaudited)

Three months ended

Six months ended

June 30,

June 30,

2016

2015

2016

2015

GAAP net income (loss)

$

49

$

1,331

$

(387)

$

(5,664)

Amortization of intangible assets

414

326

819

818

Stock based compensation expenses

180

378

591

572

Restructuring expenses

1,225

Changes in pre-acquisition tax exposures

723

118

856

148

Currency devaluation in Venezuela related expenses

(907)

2,973

Non-cash tax adjustments

242

856

488

1,590

Non-GAAP net income

$

1,608

$

3,009

$

1,460

$

1,662

GAAP basic and diluted net income (loss) per share

$

0.00

$

0.02

$

0.00

$

(0.07)

Non-GAAP basic and diluted net income (loss) per share

$

0.02

$

0.04

$

0.02

$

0.02

Weighted average number of shares used in computing

GAAP basic net income (loss) per share

77,674,747

77,170,030

77,664,815

77,158,982

Weighted average number of shares used in computing

GAAP diluted net income (loss) per share

77,919,559

77,243,249

77,664,815

77,158,982

Weighted average number of shares used in computing

Non-GAAP basic and diluted net income per share

78,525,583

77,811,594

78,133,900

77,796,494

###

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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