Little Falls, New Jersey, November 14, 2016 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the third quarter which ended September 30, 2016.
Third Quarter 2016 Highlights:
Revenues - $79.1 million, down 7% from the third quarter of 2015, and up 13% from the second quarter of 2016.
Gross margin – 32.9%, compared to 31.9% in the third quarter of 2015, and compared to 34.7% in the second quarter of 2016.
Operating income – $5.8 million, compared to $6.2 million in the third quarter of 2015, and $4.0 million in the second quarter of 2016.
Net income – Net income of $3.5 million or $0.04 per diluted share for the third quarter of 2016. Net income for the third quarter of 2015 was $1.4 million or $0.02 per diluted share. Net income for the second quarter of 2016 was $0.1 million or $0.00 per diluted share.
Non-GAAP results – Gross margin was 33.8%, operating income was $6.9 million, and net income was $4.8 million, or $0.06 per diluted share. For reconciliation of GAAP to non-GAAP results, see attached tables.
Cash and cash equivalents– $32.4 million at September 30, 2016 compared to $34.4 million at June 30, 2016.
“We continue to reap the benefits of our strategic focus on delivering the most value to best-of-breed oriented customers,” said Ira Palti, president and CEO of Ceragon. “In Q3, we reported the highest net income in many quarters. We are targeting significant improvement in our net income in 2016, and further improvement in 2017 as well.”
Supplemental geographical breakdown of revenue for the third quarter of 2016:
- Europe:13%
- Africa:8%
- North America:10%
- Latin America:30%
- India:31%
- APAC:8%
A conference call to discuss the results will begin at 9:00 a.m. EDT on November 14, 2016. 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: https://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: 403910. A replay of both the call and the webcast will be available through December 15, 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. This technology 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 in relation to local business practices that may be inconsistent with international regulatory requirements, such as anti-corruption and anti-bribery regulations, currency export control issues and recent economic concerns; the risk that the business coming from our bigger customers will go down significantly 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 implemented from time to time; 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.
-tables follow-
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
| Three months ended September 30, |
Nine months ended September 30, |
|||
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| Revenues | $79,132 | $85,367 | $208,976 | $273,792 |
| Cost of revenues | 53,094 | 58,156 | 137,357 | 195,647 |
| Gross profit | 26,038 | 27,211 | 71,619 | 78,145 |
| Operating expenses | ||||
| Research and development | 5,339 | 5,493 | 15,977 | 17,662 |
| Selling and marketing | 9,608 | 10,045 | 29,181 | 30,834 |
| General and administrative | 5,328 | 5,501 | 15,438 | 15,762 |
| Restructuring costs | - | - | - | 1,225 |
| Total operating expenses | 20,275 | 21,039 | 60,596 | 65,483 |
| Operating income | 5,763 | 6,172 | 11,023 | 12,662 |
| Financial expenses, net | 1,519 | 2,966 | 4,809 | 12,473 |
| Income before taxes | 4,244 | 3,206 | 6,214 | 189 |
| Taxes on income | 761 | 1,763 | 3,118 | 4,410 |
| Net income (loss) | $3,483 | $1,443 | $3,096 | $(4,221) |
| Basic net income (loss) per share | $0.04 | $0.02 | $0.04 | $(0.05) |
| Diluted net income (loss) per share | $0.04 | $0.02 | $0.04 | $(0.05) |
| Weighted average number of shares used in computing basic net income (loss) per share | 77,711,946 | 77,221,170 | 77,680,541 | 77,179,760 |
| Weighted average number of shares used in computing diluted net income (loss) per share | 79,284,558 | 77,355,761 | 78,286,712 | 77,179,760 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
|
|
Unaudited |
|
Audited |
| ASSETS |
|
|
|
|
|
|
|
|
|
|
| CURRENT ASSETS: |
|
|
|
|
| Cash and cash equivalents |
|
$32,374 |
|
$36,318 |
| Trade receivables, net |
|
109,615 |
|
116,683 |
| Deferred taxes |
|
534 |
|
1,633 |
| Other accounts receivable and prepaid expenses |
|
20,868 |
|
22,583 |
| Inventories |
|
44,182 |
|
49,690 |
| Total current assets |
|
207,573 |
|
226,907 |
|
|
|
|
|
|
| NON-CURRENT ASSETS: |
|
|
|
|
| Deferred tax assets, net |
|
- |
|
189 |
| Severance pay and pension fund |
|
4,546 |
|
4,681 |
| Property and equipment, net |
|
26,748 |
|
28,906 |
| Intangible assets, net |
|
1,958 |
|
3,192 |
| Other non-current assets |
|
1,738 |
|
1,457 |
| Total long-term assets |
|
34,990 |
|
38,425 |
| Total assets |
|
$242,563 |
|
$ 265,332 |
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
| CURRENT LIABILITIES: |
|
|
|
|
| Short term loan, including current maturities of long term bank loan |
|
$ 20,300 |
|
$ 34,922 |
| Trade payables |
|
64,212 |
|
71,721 |
| Deferred revenues |
|
4,426 |
|
8,901 |
| Other accounts payable and accrued expenses |
|
23,383 |
|
27,052 |
| Total current liabilities |
|
112,321 |
|
142,596 |
|
|
|
|
|
|
| LONG-TERM LIABILITIES: |
|
|
|
|
| Accrued severance pay and pension |
|
9,310 |
|
9,276 |
| Other long term payables |
|
12,569 |
|
10,639 |
| Total long-term liabilities |
|
21,879 |
|
19,915 |
| SHAREHOLDERS' EQUITY: |
|
|
|
|
| Share capital: |
|
|
|
|
| Ordinary shares |
|
214 |
|
214 |
| Additional paid-in capital |
|
409,114 |
|
408,174 |
| Treasury shares at cost |
|
(20,091) |
|
(20,091) |
| Other comprehensive loss |
|
(7,110) |
|
(8,616) |
| Accumulated deficits |
|
(273,764) |
|
(276,860) |
|
|
|
|
|
|
| Total shareholders' equity |
|
108,363 |
|
102,821 |
|
|
|
|
|
|
| Total liabilities and shareholders' equity |
|
$242,563 |
|
$ 265,332 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|||||
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
| Cash flow from operating activities: |
|
|
|
|
|
|
|
|
| Net income (loss) |
$ 3,483 |
|
$1,443 |
|
$ 3,096 |
|
$(4,221) |
|
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
2,527 |
|
2,844 |
|
7,503 |
|
9,066 |
|
| Stock-based compensation expense |
281 |
|
600 |
|
873 |
|
1,172 |
|
| Decrease (increase) in trade and other receivables, net |
(19,180) |
|
17,306 |
|
11,323 |
|
36,662 |
|
| Decrease in inventory, net of write off |
4,565 |
|
1,563 |
|
6,168 |
|
11,211 |
|
| Increase (decrease) in trade payables and ccrued liabilities |
8,269 |
|
(13,140) |
|
(10,176) |
|
(38,471) |
|
| Increase (decrease) in deferred revenues |
459 |
|
(3,176) |
|
(4,475) |
|
(7,604) |
|
| Decrease in deferred tax asset, net |
84 |
|
988 |
|
1,289 |
|
2,441 |
|
| Other adjustments |
276 |
|
(595) |
|
168 |
|
(784) |
|
| Net cash provided by operating activities |
$ 764 |
|
$7,833 |
|
$ 15,769 |
|
$9,472 |
|
| Cash flow from investing activities: |
|
|
|
|
|
|
|
|
| Purchase of property and equipment |
(1,825) |
|
(847) |
|
(5,433) |
|
(4,320) |
|
| Investment in short-term bank deposits |
- |
|
(15) |
|
(153) |
|
(19) |
|
| Proceeds from short-term bank deposits |
153 |
|
- |
|
153 |
|
64 |
|
| Proceeds from sale of available for sale marketable securities, net |
- |
|
- |
|
- |
|
122 |
|
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
$ (1,672) |
|
$(862) |
|
$ (5,433) |
|
$(4,153) |
|
|
|
|
|
|
|
|
|
|
|
| Cash flow from financing activities: |
|
|
|
|
|
|
|
|
| Proceeds from exercise of options |
60 |
|
112 |
|
67 |
|
112 |
|
| Proceeds from issuance of shares, net |
- |
|
- |
|
- |
|
- |
|
| Proceeds from bank loans |
- |
|
- |
|
- |
|
4,200 |
|
| Repayment of bank loans |
(1,150) |
|
(7,058) |
|
(14,622) |
|
(11,174) |
|
| Net cash used in financing activities |
$ (1,090) |
|
$(6,946) |
|
$ (14,555) |
|
$(6,862) |
|
|
|
|
|
|
|
|
|
|
|
| Translation adjustments on cash and cash equivalents |
$ (5) |
|
$(356) |
|
$ 275 |
|
$(676) |
|
| Decrease in cash and cash equivalents |
$ (2,003) |
|
$(331) |
|
$ (3,944) |
|
$(2,219) |
|
| Cash and cash equivalents at the beginning of the period |
34,377 |
|
39,535 |
|
36,318 |
|
41,423 |
|
| Cash and cash equivalents at the end of the period |
$ 32,374 |
|
$39,204 |
|
$ 32,374 |
|
$39,204 |
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS |
|||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
(U.S. dollars in thousands, except share and per share data) |
|||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited) |
|||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
Three months ended |
|
Nine months ended |
|||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
September 30, |
|
September 30, |
|||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
GAAP cost of revenues |
|
$ |
53,094 |
|
$ |
58,156 |
|
$ |
137,357 |
|
$ |
195,647 |
|||||||||||||||||||||||||||||||||||||||
|
|
Amortization of intangible assets |
|
|
(309) |
|
|
(310) |
|
|
(922) |
|
|
(919) |
|||||||||||||||||||||||||||||||||||||||
|
|
Stock based compensation expenses |
|
|
(5) |
|
|
(34) |
|
|
(26) |
|
|
(44) |
|||||||||||||||||||||||||||||||||||||||
|
|
Changes in pre-acquisition indirect tax positions |
|
|
(403) |
|
|
(129) |
|
|
(806) |
|
|
(277) |
|||||||||||||||||||||||||||||||||||||||
|
|
Non-GAAP cost of revenues |
|
$ |
52,377 |
|
$ |
57,683 |
|
$ |
135,603 |
|
$ |
194,407 |
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
GAAP gross profit |
|
$ |
26,038 |
|
$ |
27,211 |
|
$ |
71,619 |
|
$ |
78,145 |
|||||||||||||||||||||||||||||||||||||||
|
|
Gross profit adjustments |
|
|
717 |
|
|
473 |
|
|
1,754 |
|
|
1,240 |
|||||||||||||||||||||||||||||||||||||||
|
|
Non-GAAP gross profit |
|
$ |
26,755 |
|
$ |
27,684 |
|
$ |
73,373 |
|
$ |
79,385 |
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
GAAP Research and development expenses |
|
$ |
5,339 |
|
$ |
5,493 |
|
$ |
15,977 |
|
$ |
17,662 |
|||||||||||||||||||||||||||||||||||||||
|
|
Stock based compensation expenses |
|
|
(8) |
|
|
(215) |
|
|
(134) |
|
|
(556) |
|||||||||||||||||||||||||||||||||||||||
|
|
Non-GAAP Research and development expenses |
|
$ |
5,331 |
|
$ |
5,278 |
|
$ |
15,843 |
|
$ |
17,106 |
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
GAAP Sales and Marketing expenses |
|
$ |
9,608 |
|
$ |
10,045 |
|
$ |
29,181 |
|
$ |
30,834 |
|||||||||||||||||||||||||||||||||||||||
|
|
Amortization of intangible assets |
|
|
(105) |
|
|
(280) |
|
|
(311) |
|
|
(489) |
|||||||||||||||||||||||||||||||||||||||
|
|
Stock based compensation expenses |
|
|
(96) |
|
|
(173) |
|
|
(315) |
|
|
(386) |
|||||||||||||||||||||||||||||||||||||||
|
|
Non-GAAP Sales and Marketing expenses |
|
$ |
9,407 |
|
$ |
9,592 |
|
$ |
28,555 |
|
$ |
29,959 |
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
GAAP General and Administrative expenses |
|
$ |
5,328 |
|
$ |
5,501 |
|
$ |
15,438 |
|
$ |
15,762 |
|||||||||||||||||||||||||||||||||||||||
|
|
Stock based compensation expenses |
|
|
(174) |
|
|
(178) |
|
|
(399) |
|
|
(186) |
|||||||||||||||||||||||||||||||||||||||
|
|
Non-GAAP General and Administrative expenses |
|
$ |
5,154 |
|
$ |
5,323 |
|
$ |
15,039 |
|
$ |
15,576 |
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
GAAP financial expenses |
|
$ |
1,519 |
|
$ |
2,966 |
|
$ |
4,809 |
|
$ |
12,473 |
|||||||||||||||||||||||||||||||||||||||
|
|
Currency devaluation in Venezuela related expenses |
|
|
- |
|
|
- |
|
|
907 |
|
|
(2,973) |
|||||||||||||||||||||||||||||||||||||||
|
|
Non-GAAP financial expenses |
|
$ |
1,519 |
|
$ |
2,966 |
|
$ |
5,716 |
|
$ |
9,500 |
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
GAAP taxes on income |
|
$ |
761 |
|
$ |
1,763 |
|
$ |
3,118 |
|
$ |
4,410 |
|||||||||||||||||||||||||||||||||||||||
|
|
Changes in pre-acquisition tax liability |
|
|
- |
|
|
- |
|
|
(453) |
|
|
- |
|||||||||||||||||||||||||||||||||||||||
|
|
Other non-cash tax adjustments |
|
|
(189) |
|
|
(945) |
|
|
(677) |
|
|
(2,535) |
|||||||||||||||||||||||||||||||||||||||
|
|
Non-GAAP taxes on income |
|
$ |
572 |
|
$ |
818 |
|
$ |
1,988 |
|
$ |
1,875 |
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
ECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS |
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
(U.S. dollars in thousands, except share and per share data) |
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
(Unaudited) |
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
|
|
|
Three months ended |
|
Nine months ended September 30, |
|
|
|
|
|
September 30, |
|
||
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP net income (loss) |
|
$ |
3,483 |
|
$ |
1,443 |
|
$ |
3,096 |
|
$ |
(4,221) |
|
| Amortization of intangible assets |
|
|
414 |
|
|
590 |
|
|
1,223 |
|
|
1,408 |
|
| Stock based compensation expenses |
|
|
283 |
|
|
600 |
|
|
874 |
|
|
1,172 |
|
| Restructuring expenses |
|
|
- |
|
|
- |
|
|
- |
|
|
1,225 |
|
| Changes in pre-acquisition tax exposures |
|
|
403 |
|
|
129 |
|
|
1,259 |
|
|
277 |
|
| Currency devaluation in Venezuela related expenses |
|
|
- |
|
|
- |
|
|
(907) |
|
|
2,973 |
|
| Non-cash tax adjustments |
|
|
189 |
|
|
945 |
|
|
677 |
|
|
2,535 |
|
| Non-GAAP net income |
|
$ |
4,772 |
|
$ |
3,707 |
|
$ |
6,232 |
|
$ |
5,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP basic and diluted net income (loss) per share |
|
$ |
0.04 |
|
$ |
0.02 |
|
$ |
0.04 |
|
$ |
(0.05) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic and diluted net income (loss) per share |
|
$ |
0.06 |
|
$ |
0.05 |
|
$ |
0.08 |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing |
|
|
77,711,946 |
|
|
77,221,170 |
|
|
77,680,541 |
|
|
77,179,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing |
|
|
79,284,558 |
|
|
77,355,761 |
|
|
78,286,712 |
|
|
77,179,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing |
|
|
79,780,138 |
|
|
78,011,917 |
|
|
78,682,661 |
|
|
77,868,331 |
|
###
