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Ceragon Networks Reports Fourth Quarter and Full Year 2017 Financial Results
[February 12, 2018]

Ceragon Networks Reports Fourth Quarter and Full Year 2017 Financial Results


LITTLE FALLS, New Jersey, Feb. 12, 2018 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Highlights:

Revenues - $86.7 million, up 2.4% from the fourth quarter of 2016, and up 14.1% from the third quarter of 2017.

Gross margin – 33.6%, compared to 32.5% in the fourth quarter of 2016 and 35.1% in the third quarter of 2017.

Operating income - $7.5 million, compared to $8.5 million in the fourth quarter of 2016, and $5.7 million in the third quarter of 2017.

Net income - net income of $7.2 million, or $0.09 per diluted share for the fourth quarter of 2017.  Net income for the fourth quarter of 2016 was $8.3 million, or $0.10 per diluted share. Net income for the third quarter of 2017 was $3.5 million or $0.04 per diluted share.

Non-GAAP results - gross margin was 33.8%, operating income was $6.2 million, and net income was $4.1 million, or $0.05 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents - $25.9 million at December 31, 2017, compared to $36.5 million at September 30, 2017.

Full Year 2017 Highlights:

Revenues $332.0 million, up 13.1% from 2016.

Gross margin – 32.3%, compared to 33.8% in 2016.

Operating income – $23.1 million, compared to an operating income of $19.5 million in 2016.

Net income – $15.6 million, or $0.19 per diluted share. Net income for 2016 was $11.4 million, or $ 0.15 per diluted share.

Non-GAAP results – gross margin was 32.7%, operating income was $24.0 million, and net income was $15.3 million, or $0.19 per diluted share. For a reconciliation of GAAP to non-GAAP results, see the attached tables.

"2017 was the third consecutive year that we have achieved significant growth in net income," said Ira Palti, president and CEO of Ceragon. "Our technology and product leadership, strong global presence, financial strength and track record of performance are key differentiators that have enabled us to win a major share of several large projects during the year.  We achieved a 36% increase in net income, and increased our net cash to $25.9 million at the end of 2017 from $19.3 million at the end of 2016. We had particularly strong bookings during Q4, and we believe we can continue to gradually gain market share as operators are compelled to address complex backhaul challenges in a comprehensive way. We expect these challenges, which are part of the ongoing evolution to full 5G commercial service, to drive greater demand for state-of-the-art solutions and enable us to target progressively higher revenue goals during the next several years."

 Supplemental revenue breakouts by geography:

Fourth quarter 2017:

  • Europe:                      17%
  • Africa:                          3%
  • North America:            14%
  • Latin America:             20%
  •  India:                         34%
  • APAC:                        12%

Full year 2017:

  • Europe:                       14%
  • Africa:                           4%
  • North America:             12%
  • Latin America:              18%
  •  India:                          39%
  • APAC:                         13%

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) 288-8960 or International: +1 (612) 234-9960, 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: 442462. A replay of both the call and the webcast will be available through March 12, 2018.

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: 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 due to our focus on a single market segment; risks relating to the concentration of Ceragon's business in certain geographic regions such as India, Latin America and in developing nations and the political, economic and regulatory risks from doing business in those regions, including potential currency restrictions; risks associated with a change in Ceragon's gross margin as a result of changes in the geographic mix of revenues; risks associated with the loss of a single customer or customer group, which represents a significant portion of Ceragon's revenues; risks 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
December 31,


Year ended
December 31,



2017


2016


2017


2016









Audited










Revenues


$        86,679


$        84,665


$      332,033


$      293,641

Cost of revenues


57,524


57,122


224,698


194,479










Gross profit


29,155


27,543


107,335


99,162










Operating expenses:









Research and development, net


6,493


5,718


25,703


21,695

Selling and marketing


12,337


10,334


41,656


39,515

General and administrative


4,544


4,942


18,576


20,380

Other income


(1,746)


(1,921)


(1,746)


(1,921)










Total operating expenses


21,628


19,073


84,189


79,669










Operating income


7,527


8,470


23,146


19,493










Financial expenses, net


1,155


1,494


5,889


6,303










Income before taxes


6,372


6,976


17,257


13,190










Tax expenses (benefit)


(838)


(1,357)


1,697


1,761










Net income


$          7,210


$          8,333


$        15,560


$        11,429



















Basic net income per share


$            0.09


$            0.11


$            0.20


$            0.15










Diluted net income per share


$            0.09


$            0.10


$            0.19


$            0.15










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


78,010,416


77,759,346


77,916,912


77,702,788










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


79,452,404


79,583,792


79,942,353


78,613,528



 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)




Year ended December 31



2017


2016

          ASSETS


Unaudited


Audited

CURRENT ASSETS:





Cash and cash equivalents


$         25,877


$         36,338

Trade receivables, net


113,719


107,395

Other accounts receivable and prepaid expenses


17,052


17,076

Inventories


54,164


45,647

Total current assets


210,812


206,456

NON-CURRENT ASSETS:





Long-term bank deposits


996


-

Deferred tax assets


988


1,344

    Severance pay and pension funds


5,459


4,575

    Property and equipment, net


29,870


27,560

    Intangible assets, net


2,199


1,544

Other non-current assets


3,269


2,746

Total non-current assets


42,781


37,769

Total assets


$       253,593


$       244,225

LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





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


$                  -


$         17,000

Trade payables


75,476


68,408

Deferred revenues


5,193


2,673

Other accounts payable and accrued expenses


24,781


22,425

Total current liabilities


105,450


110,506

LONG-TERM LIABILITIES:





Deferred tax liability


141


-

Accrued severance pay and pension


10,085


9,198

Other long term payables


4,019


8,357

Total long-term liabilities


14,245


17,555

SHAREHOLDERS' EQUITY:





Share capital:





     Ordinary shares


214


214

Additional paid-in capital


410,817


409,320

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(7,171)


(7,848)

Accumulated deficits


(249,871)


(265,431)

Total shareholders' equity


133,898


116,164

Total liabilities and shareholders' equity


$      253,593


$       244,225

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)




Three months ended

December 31,


Year ended

December 31,



2017


2016


2017


2016









(Audited)

Cash flow from operating activities:









Net income


$        7,210


$        8,333


$      15,560


$      11,429

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









Depreciation and amortization


2,439


2,534


9,205


10,037

Stock-based compensation expense


235


198


1,203


1,071

Decrease (increase) in trade and other receivables, net


15,551


4,475


(6,662)


15,798

Decrease (increase) in inventory, net of write  off


1,561


(1,462)


(8,592)


4,706

Increase (decrease) in trade payables and  accrued liabilities


(11,582)


(1,372)


3,362


(11,548)

Increase (decrease) in deferred revenues


1,228


(1,753)


2,575


(6,228)

Decrease (increase) in deferred tax asset, net


105


(811)


497


478

Other adjustments


(130)


(140)


3


28










Net cash provided by operating activities


$     16,617


$      10,002


$     17,151


$     25,771

Cash flow from investing activities:









   Purchase of property and equipment, net


(1,048)


(2,757)


(8,533)


(8,190)

   Purchase of intangible assets, net


(1,407)


-


(1,407)


-

   Investment in short and long-term bank deposit


(996)


-


(996)


(153)

   Proceeds from maturities of short and long-term bank deposits


-


-


-


153










Net cash used in investing activities


$     (3,451)


$      (2,757)


$    (10,936)


$      (8,190)

Cash flow from financing activities:









Proceeds from exercise of options


65


8


294


75

Repayments of bank loans


(23,800)


(3,300)


(17,000)


(17,922)










Net cash used in financing activities


$   (23,735)


$     (3,292)


$   (16,706)


$   (17,847)










Translation adjustments on cash and cash equivalents


(24)


11


30


286

Increase (decrease) in cash and cash equivalents


(10,593)


3,964


(10,461)


20

Cash and cash equivalents at the beginning of the period


36,470


32,374


36,338


36,318

Cash and cash equivalents at the end of the period


25,877


36,338


25,877


36,338

 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)




Three months ended

December 31,


Year ended

December 31,



2017


2016


2017


2016










GAAP cost of revenues


$    57,524


$      57,122


$    224,698


$    194,479

Amortization of intangible assets


(367)


(310)


(1,286)


(1,232)

Stock based compensation expenses


(12)


(4)


(54)


(30)

Changes in pre-acquisition indirect tax positions


237


-


119


(806)

Non-GAAP cost of revenues


$      57,382


$      56,808


$    223,477


$    192,411










GAAP gross profit


$      29,155


$      27,543


$    107,335


$      99,162

Gross profit adjustments


142


314


1,221


2,068

Non-GAAP gross profit


$      29,297


$      27,857


$    108,556


$    101,230










GAAP Research and Development expenses


$        6,493


$        5,718


$      25,703


$      21,695

Stock based compensation expenses


(73)


(17)


(229)


(151)

Non-GAAP Research and Development expenses


$        6,420


$        5,701


$      25,474


$      21,544










GAAP Sales and Marketing expenses


$      12,337


$      10,334


$      41,656


$      39,515

Amortization of intangible assets


(39)


(105)


(258)


(417)

Stock based compensation expenses


(46)


(54)


(292)


(369)

Non-GAAP Sales and Marketing expenses


$      12,252


$      10,175


$      41,106


$      38,729










GAAP General and Administrative expenses


$        4,544


$        4,942


$      18,576


$      20,380

Stock based compensation expenses


(104)


(123)


(628)


(521)

Non-GAAP General and Administrative expenses


$        4,440


$        4,819


$      17,948


$      19,859










GAAP other income


$      (1,746)


$      (1,921)


$      (1,746)


$      (1,921)

Statute of limitation on certain pre-acquisition
indirect tax liabilities


1,746


1,921


1,746


1,921

Non-GAAP other income


$               -


$             -


$              -


$             -










GAAP financial expenses


$        1,155


$        1,494


$        5,889


$        6,303

Currency devaluation in Venezuela related expenses


-


-


-


907

Non-GAAP financial expenses


$        1,155


$        1,494


$        5,889


$        7,210










GAAP taxes on income


$         (838)


$      (1,357)


$        1,697


$        1,761

Changes in pre-acquisition tax liability


-


-


-


(453)

Other non-cash tax adjustments


1,802


1,786


1,177


1,109

Non-GAAP taxes on income


$          964


$          429


$        2,874


$        2,417

 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

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

(Unaudited)




Three months ended

December 31,


Year ended

December 31,



2017


2016


2017


2016










GAAP net income 


$          7,210


$          8,333


$        15,560


$        11,429

Amortization of intangible assets


406


415


1,544


1,649

Stock based compensation expenses


235


198


1,203


1,071

Changes in pre-acquisition indirect tax positions


(237)


-


(119)


1,259

Currency devaluation in Venezuela related expenses


-


-


-


(907)

Non-cash tax adjustments


(1,802)


(1,786)


(1,177)


(1,109)

Statute of limitation on certain pre-acquisition
indirect tax liabilities


(1,746)


(1,921)


(1,746)


(1,921)

Non-GAAP net income 


$          4,066


$          5,239


$        15,265


$        11,471










GAAP basic net income per share


$            0.09


$            0.11


$            0.20


$            0.15










GAAP diluted net income per share


$            0.09


$            0.10


$            0.19


$            0.15

Non-GAAP basic and diluted net income per share


$            0.05


$            0.07


$            0.19


$            0.15










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


78,010,416


77,759,346


77,916,912


77,702,788










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


79,452,404


79,583,792


79,942,353


78,613,528










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


79,784,939


79,888,786


80,206,822


78,986,738

 

Investors:



Doron Arazi

or

Claudia Gatlin

+972 3 5431 660


212 830-9080

dorona@ceragon.com 


claudiag@ceragon.com




Media:



Tanya Solomon



+972 3 5431163



tanyas@ceragon.com



  

Cision View original content:http://www.prnewswire.com/news-releases/ceragon-networks-reports-fourth-quarter-and-full-year-2017-financial-results-300596968.html

SOURCE Ceragon Networks Ltd


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