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Ceragon Networks Reports Fourth Quarter and Full Year 2016 Financial Results
[February 15, 2017]

Ceragon Networks Reports Fourth Quarter and Full Year 2016 Financial Results

LITTLE FALLS, New Jersey, Feb. 15, 2017  /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the fourth quarter and full year ended December 31, 2016.

Fourth Quarter 2016 Highlights:

Revenues – $84.7 million, up 12% from the fourth quarter of 2015, and up 7% from the third quarter of 2016.

Gross margin – 32.5%, compared to 32.8% in the fourth quarter of 2015 and 32.9% in the third quarter of 2016.

Operating income – $8.5 million, compared to an operating income of $8.9 million in the fourth quarter of 2015 and an operating income of $5.8 million in the third quarter of 2016.

Net income $8.3 million, or $0.10 per diluted share. Net income for the fourth quarter of 2015 was $5.2 million, or $0.07 per diluted share. Net income for the third quarter of 2016 was $3.5 million, or $0.04 per diluted share. 

Non-GAAP results –gross margin was 32.9%, operating income was $7.2 million, and net income was $5.2 million, or $0.07 per diluted share. Non-GAAP results exclude adjustments of $(3.1) million. For a reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents – $36.3 million at December 31, 2016, compared to $32.4 million at September 30, 2016, after reducing debt by $3.3 million to $17.0 million

Full Year 2016 Highlights:

Revenues $293.6 million, down 16% from 2015.

Gross margin – 33.8%, compared to 29.5% in 2015.

Operating income – $19.5 million, compared to an operating income of $ 21.6 million in 2015.

Net income – $11.4 million, or $0.15 per diluted share. Net income for 2015 was $ 1.0 million, or $ 0.01 per diluted share.

Non-GAAP results – gross margin was 34.5%, operating income was $21.1 million, and net income was $11.5 million, or $0.15 per diluted share. Non-GAAP results exclude adjustments of $42,000. For a reconciliation of GAAP to non-GAAP results, see the attached tables.

"The continued success of our strategy to focus on increasing net income and free cash flow resulted in significant improvement in these key metrics in 2016, and enabled us to maintain a strong cash position while also substantially reducing debt," said Ira Palti, president and CEO of Ceragon. "We have a strong order book, particularly with the large orders we received in Q1 from a customer in India. However, the timing of delivering various elements of these orders may cause greater than normal quarter-to-quarter fluctuations in our results during the year. After integrating these orders into our overall operating plan, we now feel comfortable raising our net income target for 2017, on a constant currency basis, from the one we set in November 2016."  

Supplemental revenue breakouts by geography:

Fourth quarter 2016:

  •   Europe:               14%     
  •   Africa:                   4%               
  •   North America:     14%  
  •   Latin America:      27%  
  •   India:                   32% 
  •   APAC:                   9%

Full year 2016:

  •   Europe:                 15%     
  •   Africa:                     7%               
  •   North America:      14%
  •   Latin America:       27%
  •   India:                    27%
  •   APAC:                  10%

A conference call to discuss the results will begin at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling USA: (800) 230-1074 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:https://www.ceragon.com/about-ceragon/investor-relations/events-webcasts/, 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: 414711. A replay of both the call and the webcast will be available through March 15, 2017.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the world's #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.

Join the discussion:   

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https://twitter.com/Ceragon 

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http://blog.ceragon.com/blog 

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. 


 



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)





Three months ended


Year ended



December 31,


December 31,



2016


2015


2016


2015









(Audited)










Revenues


$      84,665


$       75,643


$     293,641


$     349,435

Cost of revenues


57,122


50,840


194,479


246,487










Gross profit


27,543


24,803


99,162


102,948










Operating expenses:









Research and development, net


5,718


5,268


21,695


22,930

Selling and marketing


10,334


9,982


39,515


40,816

General and administrative


4,942


5,473


20,380


21,235

Restructuring costs


-


-


-


1,225

Other income


(1,921)


(4,849)


(1,921)


(4,849)










Total operating expenses


$       19,073


$       15,874


$       79,669


$      81,357










Operating income


8,470


8,929


19,493


21,591










Financial expenses, net


1,494


2,265


6,303


14,738










Income before taxes


6,976


6,664


13,190


6,853










Taxes on income


(1,357)


1,432


1,761


5,842










Net income


$         8,333


$         5,232


$       11,429


$        1,011



















Basic net income per share


$           0.11


$         0.07


$        0.15


$        0.01

 

Diluted net income per share


$          0.10


$         0.07


$        0.15


$        0.01

 

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


77,759,346


 

 

77,416,409


77,702,788


 

 

77,239,409











 


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


 

 

79,583,792


 

 

78,432,387


 

 

78,613,528


 

 

77,296,681

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)





December 31, 2016


December 31, 2015

ASSETS




(Audited)






CURRENT ASSETS:





Cash and cash equivalents


$        36,338


$       36,318

Trade receivables, net


107,395


116,683

Deferred taxes, net


1,327


1,633

Other accounts receivable and prepaid expenses


18,516


22,583

Inventories


45,647


49,690

Total current assets


209,223


226,907






NON-CURRENT ASSETS:





Deferred tax assets, net


17


189

   Severance pay and pension funds


4,575


4,681

   Property and equipment, net


27,560


28,906

   Intangible assets, net


1,544


3,192

Other non-current assets


1,306


1,457






Total non-current assets


35,002


38,425

Total assets


$       244,225


$      265,332

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 





CURRENT LIABILITIES:





Short term loan, including current maturities of long term bank loan


$        17,000


$        34,922

Trade payables


68,408


71,721

Deferred revenues


2,673


8,901

Other accounts payable and accrued expenses


22,425


27,052

Total current liabilities


110,506


142,596

 

LONG-TERM LIABILITIES:





Accrued severance pay and pension


9,198


9,276

Other long term payables


8,357


10,639

Total long-term liabilities


17,555


19,915

 

SHAREHOLDERS' EQUITY:





Share capital:





    Ordinary shares


214


214

Additional paid-in capital


409,320


408,174

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(7,846)


(8,616)

Accumulated deficits


(265,433)


(276,860)






Total shareholders' equity


116,164


102,821






Total liabilities and shareholders' equity


$       244,225


$      265,332

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)




Three months ended

December 31,


Year ended

December 31,


2016


2015


2016


2015








(Audited)

Cash flow from operating activities:








Net income

$   8,333


$   5,232


$   11,429


$   1,011

Adjustments to reconcile net loss to net cash provided by operating activities:








Depreciation and amortization

2,534


3,137


10,037


12,203

Stock-based compensation expense

198


453


1,071


1,625

Decrease in trade and other receivables, net

4,361


3,509


15,684


40,171

Decrease (increase) in inventory, net of write off

(1,462)


(971)


4,706


10,240

Decrease in trade payables and accrued liabilities

(1,258)


(3,009)


(11,434)


(41,480)

Decrease in deferred revenues

(1,753)


(1,162)


(6,228)


(8,766)

Decrease (increase) in deferred tax asset, net

(811)


(466)


478


1,975

Other adjustments

(140)


(74)


28


(858)

Net cash provided by operating activities

$  10,002


$  6,649


$  25,771


$  16,121

Cash flow from investing activities:








Purchase of property and equipment ,net

(2,757)


(946)


(8,190)


(5,266)

Investment in short and long-term bank deposit

-


-


(153)


(19)

Proceeds from maturities of short and long-term bank deposits

-


368


153


432

Proceeds from sales of available for sale marketable securities

-


-


-


122

Net cash used in investing activities

$  (2,757)


$  (578)


$  (8,190)


$  (4,731)









Cash flow from financing activities:








Proceeds from exercise of options

8


26


75


138

Proceeds from financial institutions, net

-


-


-


4,200

Repayments of bank loans

(3,300)


(9,008)


(17,922)


(20,182)

Net cash used in financing activities

 

$  (3,292)


 

$  (8,982)


$  (17,847)


 

$  (15,844)









Translation adjustments on cash and cash equivalents

 

$   11


 

$ 25


 

$  286


 

$  (651)

Increase (decrease) in cash and cash equivalents

$  3,964


$  (2,886)


 

$  20


$  (5,105)

Cash and cash equivalents at the beginning of the period

32,374


39,204


36,318


41,423

Cash and cash equivalents at the end of the period

$  36,338


$  36,318


$  36,338


$  36,318









 

 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

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

(Unaudited)






Three months ended


Year ended




December 31,


December 31,




2016


2015


2016


2015
















GAAP cost of revenues


$

57,122


$

50,840


$

194,479


$

246,487


Amortization of intangible assets



(310)



(309)



(1,232)



(1,228)


Stock based compensation expenses



(4)



(29)



(30)



(73)


Changes in pre-acquisition indirect tax positions



-



(1)



(806)



(278)


Non-GAAP cost of revenues


$

56,808


$

50,501


$

192,411


$

244,908
















 

 

GAAP gross profit


$

27,543


$

24,803


$

99,162


$

102,948


Gross profit adjustments



314



339



2,068



1,579


Non-GAAP gross profit


$

27,857


$

25,142


$

101,230


$

104,527
















 

GAAP Research and development expenses


$

5,718


$

5,268


$

21,695


$

22,930


Stock based compensation expenses



(17)



(179)



(151)



(735)


Non-GAAP Research and development expenses


$

5,701


$

5,089


$

21,544


$

22,195
















 

 

GAAP Sales and Marketing expenses


$

10,334


$

9,982


$

39,515


$

40,816


Amortization of intangible assets



(106)



(148)



(417)



(637)


Stock based compensation expenses



(54)



(109)



(369)



(495)


Non-GAAP Sales and Marketing expenses


$

10,174


$

9,725


$

38,729


$

39,684
















 

GAAP General and Administrative expenses


$

4,942


$

5,473


$

20,380


$

21,235


Stock based compensation expenses



(122)



(135)



(521)



(321)


Non-GAAP General and Administrative expenses


$

4,820


$

5,338


$

19,859


$

20,914
















GAAP restructuring cost


$

-


$

-


$

-


$

1,225


Restructuring plan related cost



-



-



-



(1,225)


Non-GAAP restructuring cost


$

-


$

-


$

-


$

-
















 

GAAP other income


$

(1,921)



$


(4,849)


$


(1,921)


$

(4,849)


Statute of limitation on certain pre-acquisition indirect tax liabilities




1,921





4,849




1,921



4,849


Non-GAAP other income


$


-



$


-


$


-


$

-















 


 


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

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

(Unaudited)

 














Three months ended



Year ended



December 31,



December 31,



2016


2015



2016


2015

GAAP financial expenses


$

1,494


$

2,265



$

6,303


$

14,738

Currency devaluation in Venezuela related expenses



-



-




907



(2,973)

Non-GAAP financial expenses


$

1,494


$

2,265



$

7,210


$

11,765















GAAP taxes on income


$

(1,357)


$

1,432



$

1,761


$

5,842

Changes in pre-acquisition tax liability



-



-




(453)



-

Other non-cash tax adjustments



1,786



(762)




1,109



(3,297)

Non-GAAP taxes on income


$

429


$

670



$

2,417


$

2,545

 

 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

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

(Unaudited)





 Three months ended


Year ended




December 31,


December 31





2016



2015



2016



2015
















GAAP net income 


$

8,333


$

5,232


$

11,429


$

1,011


Amortization of intangible assets



416



457



1,649



1,865


Stock based compensation expenses



197



452



1,071



1,624


Restructuring expenses



-



-



-



1,225


Changes in pre-acquisition indirect tax positions



-



1



1,259



278


Currency devaluation in Venezuela related expenses



-



-



(907)



2,973


Non-cash tax adjustments



(1,786)



762



(1,109)



3,297


Statute of limitation on certain pre-acquisition indirect tax liabilities



(1,921)



(4,849)



(1,921)



(4,849)


Non-GAAP net income 


$

5,239


$

2,055


$

11,471


$

7,424
















 

 

GAAP basic net income per share


$

0.11


$

0.07


$

0.15


$

0.01
















 

GAAP diluted net income per share


$

0.10


$

0.07


$

0.15


$

0.01


 

Non-GAAP basic and diluted net income per share


$

0.07


$

0.03


$

0.15


$

0.10
















 

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



77,759,346



77,416,409



77,702,788



77,239,409
















 

Weighted average number of shares used in computing
GAAP diluted net income per share



79,583,792



77,432,387



78,613,528



77,296,681
















 

Weighted average number of shares used in computing
Non-GAAP diluted net income per share



79,888,786



78,264,309



78,986,738



77,967,811


 

   

 

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

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ceragon-networks-reports-fourth-quarter-and-full-year-2016-financial-results-300407839.html

SOURCE Ceragon Networks Ltd


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