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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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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
[email protected]                 [email protected]

Media: 
Tanya Solomon 
+972-3-5431163  
[email protected]

 

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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