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Ceragon Networks Reports Third Quarter 2017 Financial Results
[November 06, 2017]

Ceragon Networks Reports Third Quarter 2017 Financial Results


LITTLE FALLS, New Jersey, Nov. 6, 2017 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the third quarter which ended September 30, 2017.

Third Quarter 2017 Highlights:

Revenues - $76.0 million, down 4.0% from the third quarter of 2016, and down 18.6% from the second quarter of 2017.

Gross margin – 35.1%, compared to 32.9% in the third quarter of 2016 and 31.3% in the second quarter of 2017.

Operating income - $5.7 million, compared to $5.8 million in the third quarter of 2016, and $8.0 million in the second quarter of 2017.

Net income - net income of $3.5 million, or $0.04 per diluted share for the third quarter of 2017.  Net income for the third quarter of 2016 was $3.5 million, or $0.04 per diluted share. Net income for the second quarter of 2017 was $5.0 million or $0.06 per diluted share.

Non-GAAP results - gross margin was 35.2%, operating income was $6.2 million, and net income was $4.4 million, or $0.05 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents - $36.5 million at September 30, 2017, compared to $34.1 million at June 30, 2017.

"Our revenue in Q3 compared to Q2 reflected the lumpiness of our business in India," said Ira Palti, president and CEO of Ceragon. "Our gross margin increased mainly due to a more favorable geographic revenue mix, and also due to lower shipping costs. We had strong bookings during Q3, and our book-to-bill ratio was above 1. Based on the geographic mix of our order backlog and the pipeline of potential new business, we continue to believe we can sustain a gross margin above 32%.

"During the quarter, we temporarily increased our borrowing under our revolving credit agreement to accommodate a timing issue with respect to a payment from a major customer. Most of this payment has already been received and we expect to receive the remaining amount within Q4. Meanwhile, we maintained a strong cash position of $36.5 million as of the end of the third quarter."

 

Supplemental geographical breakdown of revenue for the third quarter of 2017:

  • Europe:                       17%    
  • Africa:                           3%                  
  • North America:            12%
  • Latin America:             25%
  • India:                           31%
  • APAC:                         12%

 

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) 234-9959, 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: 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: 430998. A replay of both the call and the webcast will be available through December 6, 2017.

About Ceragon

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 a 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: 

https://www.linkedin.com/companies/14470 

https://www.facebook.com/ceragonnetworks/ 

https://twitter.com/Ceragon 

https://www.youtube.com/user/CeragonNetworks?feature=mhum 

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: projections of revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, growth prospects, 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 risks associated with a decline in revenues; the risks relating to the concentration of Ceragon's business in India, Latin America and in developing nations and the political, economic and regulatory risks from doing business in those regions, including  potential currency restrictions; the risk associated with a change in Ceragon's gross margin as a result of changes in the geographic mix of revenues; the risk associated with the loss of a single customer or customer group, which represents a significant portion of Ceragon's revenues; the risk associated with Ceragon's failure to effectively compete with other wireless equipment providers; 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 that 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,



2017


2016


2017


2016



















Revenues


$      75,999


$      79,132


$    245,354


$    208,976

Cost of revenues


49,326


53,094


167,174


137,357










Gross profit


26,673


26,038


78,180


71,619










Operating expenses:









Research and development


6,975


5,339


19,210


15,977

Selling and marketing


9,543


9,608


29,319


29,181

General and administrative


4,462


5,328


14,032


15,438










Total operating expenses


20,980


20,275


62,561


60,596










Operating income


5,693


5,763


15,619


11,023










Financial expenses, net


1,655


1,519


4,734


4,809










Income before taxes


4,038


4,244


10,885


6,214










Taxes on income


542


761


2,535


3,118










Net income


$        3,496


$        3,483


$       8,350


$       3,096



















Basic net income per share


$          0.04


$          0.04


$          0.11


$          0.04










Diluted net income per share


$          0.04


$          0.04


$          0.10


$          0.04










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


77,964,433


77,711,946


77,885,555


77,680,541










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


79,596,845


79,284,558


80,105,482


78,286,712



 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)




September 30,
2017


December 31,
2016

ASSETS


Unaudited


Audited   






CURRENT ASSETS:





Cash and cash equivalents


$     36,470


$     36,338

Trade receivables, net


127,124


107,395

Other accounts receivable and prepaid expenses


19,005


17,076

Inventories


55,866


45,647

Total current assets


238,465


206,456






NON-CURRENT ASSETS:





   Deferred taxes, net


952


1,344

   Severance pay and pension fund


5,189


4,575

   Property and equipment, net


29,399


27,560

Intangible assets, net


406


1,544

   Other non-current  assets


4,247


2,746

Total non-current assets


40,193


37,769

Total assets


$     278,658


$     244,225

 

LIABILITIES AND SHAREHOLDERS' EQUITY





 

CURRENT LIABILITIES:





Short term loan


$       23,800


$       17,000

Trade payables


82,748


68,408

Deferred revenues


4,126


2,673

Other accounts payable and accrued expenses


22,118


22,425

Total current liabilities


132,792


110,506

 

LONG-TERM LIABILITIES:





Accrued severance pay and pension


9,945


9,198

Other long term payables


9,067


8,357

Total long-term liabilities


19,012


17,555

 

SHAREHOLDERS' EQUITY:





Share capital:





Ordinary shares


214


214

    Additional paid-in capital


410,517


409,320

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(6,705)


(7,848)

Accumulated deficits


(257,081)


(265,431)






Total shareholders' equity


126,854


116,164






Total liabilities and shareholders' equity


$     278,658


$     244,225


 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)




Three months ended
September 30,


Nine months ended
September 30,


2017


2016


2017


2016

Cash flow from operating activities:








Net income

$   3,496


$   3,483


$    8,350


$    3,096

Adjustments to reconcile net income to net cash
used in operating activities:








Depreciation and amortization

2,191


2,527


6,766


7,503

Stock-based compensation expense

349


281


968


873

Decrease (increase) in trade and other receivables, net

(12,925)


(19,180)


(22,213)


11,323

Decrease (increase) in inventory, net of write off

402


4,565


(10,153)


6,168

 Increase (decrease) in trade payables and accrued liabilities

(3,831)


8,269


14,944


(10,176)

Increase (decrease) in deferred revenues

329


459


1,347


(4,475)

Decrease in deferred tax asset, net

252


84


392


1,289

Other adjustments

221


276


133


168

Net cash provided by (used in) operating activities

$ (9,516)


$      764


$      534


$            15,769









Cash flow from investing activities:








    Purchase of property and equipment

(3,980)


(1,825)


(7,485)


(5,433)

   Investment in short-term bank deposits

-


-


-


(153)

   Proceeds from short-term bank deposits

-


153


-


153









 Net cash used in investing activities

$ (3,980)


$  (1,672)


$   (7,485)


$   (5,433)









Cash flow from financing activities:








Proceeds from exercise of options

40


60


229


67

Proceeds from bank loans

15,800


-


6,800


-

Repayment of bank loans

-


(1,150)


-


(14,622)

Net cash provided by (used in) financing activities

$ 15,840


$  (1,090)


$     7,029


$ (14,555)









Translation adjustments on cash and cash equivalents

39


(5)


54


275

Increase (decrease) in cash and cash equivalents

$   2,383


$  (2,003)


$       132


$   (3,944)

Cash and cash equivalents at the beginning of the period

34,087


34,377


36,338


36,318

Cash and cash equivalents at the end of the period

$ 36,470


$ 32,374


$  36,470


$  32,374









 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)




Three months ended


Nine months ended



September 30,


September 30,



2017


2016


2017


2016














GAAP cost of revenues


$

49,326


$

53,094


$

167,174


$

137,357

Amortization of intangible assets



(310)



(309)



(919)



(922)

Stock based compensation expenses



(10)



(5)



(42)



(26)

Changes in pre-acquisition indirect tax positions



209



(403)



(118)



(806)

Non-GAAP cost of revenues


$

49,215


$

52,377


$

166,095


$

135,603














 

GAAP gross profit


$

26,673


$

26,038


$

78,180


$

71,619

Gross profit adjustments



111



717



1,079



1,754

Non-GAAP gross profit


$

26,784


$

26,755


$

79,259


$

73,373














 

GAAP Research and development expenses


$

6,975


$

5,339


$

19,210


$

15,977

Stock based compensation expenses



(32)



(8)



(156)



(134)

Non-GAAP Research and development expenses


$

6,943


$

5,331


$

19,054


$

15,843














 

GAAP Sales and Marketing expenses


$

9,543


$

9,608


$

29,319


$

29,181

Amortization of intangible assets



(74)



(107)



(219)



(312)

Stock based compensation expenses



(94)



(95)



(246)



(315)

Non-GAAP Sales and Marketing expenses


$

9,375


$

9,406


$

28,854


$

28,544














 

GAAP General and Administrative expenses


$

4,462


$

5,328


$

14,032


$

15,438

Stock based compensation expenses



(213)



(173)



(524)



(398)

Non-GAAP General and Administrative expenses


$

4,249


$

5,155


$

13,508


$

15,040














GAAP financial expenses


$

1,655


$

1,519


$

4,734


$

4,809

Currency devaluation in Venezuela related expenses



-



-



-



907

Non-GAAP financial expenses


$

1,655


$

1,519


$

4,734


$

5,716














 

GAAP taxes on income


$

542


$

761


$

2,535


$

3,118

Changes in pre-acquisition tax liability



-



-



-



(453)

Other non-cash tax adjustments



(340)



(189)



(625)



(677)

Non-GAAP taxes on income


$

202


$

572


$

1,910


$

1,988















 

 

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,




2017



2016



2017



2016














GAAP net income (loss) 


$

3,496


$

3,483


$

8,350


$

3,096

Amortization of intangible assets



384



416



1,138



1,234

Stock based compensation expenses



349



281



968



873

Changes in pre-acquisition tax exposures



(209)



403



118



1,259

Currency devaluation in Venezuela
related expenses



-



-



-



(907)

Non-cash tax adjustments



340



189



625



677

Non-GAAP net income 


$

4,360


$

4,772


$

11,199


$

6,232














GAAP basic net income per share


$

0.04


$

0.04


$

0.11


$

0.04














GAAP diluted net income per share


$

0.04


$

0.04


$

0.10


$

0.04














Non-GAAP basic and diluted net
income per share


$

0.05


$

0.06


$

0.14


$

0.08














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



77,964,433



77,711,946



77,885,555



77,680,541














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



79,596,845



79,284,558



80,105,482



78,286,712














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



79,880,400



79,780,138



80,347,262



78,682,661

 

 

 

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



View original content:http://www.prnewswire.com/news-releases/ceragon-networks-reports-third-quarter-2017-financial-results-300549871.html

SOURCE Ceragon Networks Ltd


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