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Ceragon Networks Reports Fourth Quarter and Full Year 2018 Financial Results
[February 20, 2019]

Ceragon Networks Reports Fourth Quarter and Full Year 2018 Financial Results


LITTLE FALLS, New Jersey, Feb. 20, 2019 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Highlights:

Revenues - $85.7 million, down 1.1% from the fourth quarter of 2017, and down 0.9% from the third quarter of 2018.

Gross margin - 34.4%, compared to 33.6% in the fourth quarter of 2017 and 35.0% in the third quarter of 2018.

Operating income - $6.5 million, compared to $7.5 million in the fourth quarter of 2017, and $7.9 million in the third quarter of 2018.

Net income -  $11.6 million, or $0.14 per diluted share for the fourth quarter of 2018.  This includes $7.2 million of income related to the creation of a deferred tax asset reflecting projected utilization of NOLs. Net income for the fourth quarter of 2017 was $7.2 million, or $0.09 per diluted share. Net income for the third quarter of 2018 was $6.2 million or $0.08 per diluted share.

Non-GAAP results - gross margin was 34.7%, operating income was $6.8 million, and net income was $5.0 million, or $0.06 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents - $35.6 million at December 31, 2018, compared to $41.3 million at September 30, 2018.

Full Year 2018 Highlights:

Revenues  $343.9 million, up 3.6% from 2017.

Gross margin – 33.8%, compared to 32.3% in 2017.

Operating income – $26.1 million, compared to an operating income of $23.1 million in 2017.

Net income – $23.0 million, or $0.28 per diluted share. This includes $7.2 million of income related to the creation of a deferred tax asset reflecting projected utilization of NOLs. Net income for 2017 was $15.6 million, or $ 0.19 per diluted share.

Non-GAAP results - gross margin was 33.9%, operating income was $27.9 million, and net income was $17.5 million, or $0.22 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

"Our fourth quarter constituted a strong finish to the year, with revenue, gross margin and net income exceeding our expectations," said Ira Palti, president and CEO of Ceragon. "We achieved our primary goal of growing net income for the fourth consecutive year in 2018. We are also targeting a fifth consecutive year of non-GAAP net income growth in 2019, although the first quarter is expected to dip due to seasonal factors and timing of orders and revenue recognition. We continue to see a high level of customer activity in most geographic regions due to the continued expansion of 4G in some areas and the beginning of the transition to 5G in others. To help our customers address their specific challenges, we are offering constantly expanding capabilities from both existing and new platforms, as we also continue to invest aggressively in our next generation technology."

Supplemental revenue breakouts by geography:

Fourth quarter 2018:

  • Europe: 13%
  • Africa: 12%
  • North America: 15%
  • Latin America: 20%
  • India: 25%
  • APAC: 15%

Full year 2018:

  • Europe: 11%
  • Africa: 7%
  • North America: 12%
  • Latin America: 18%
  • India: 38%
  • APAC: 14%

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) 230-1085 or International: +1 (612) 288-0329, 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/, 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: 462292. A replay of both the call and the webcast will be available through March 20, 2019.

About Ceragon

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We help operators and other service providers worldwide smoothly evolve their networks towards 5G, while increasing operational efficiency and enhancing end customers' quality of experience, with innovative wireless backhaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, that use our solutions to deliver mission-critical multimedia services and other applications at high reliability and speed.

Ceragon's unique multicore technology and wireless backhaul solutions provide highly reliable, 5G high-capacity connectivity with minimal use of spectrum, power and other resources. Our solutions enable 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. Ceragon's solutions are deployed by more than 460 service providers, as well as hundreds of private network owners, in more than 130 countries. 

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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 relating to the concentration of Ceragon's business in certain geographic regions and particularly in India, risks associated with a decline in demand from the single market segment on which we focus; risk relating to certain guarantees granted by Ceragon on behalf of Orocom to FITEL, in the framework of the FITEL project; risks associated with any failure to effectively compete with other wireless equipment providers; risks associated with a change in our gross margin as a result of changes in the geographic mix of revenue;  risks related to the fact that our operating results may vary significantly from quarter to quarter and from our expectations for any specific period; risks related to our ability to meet the supply demands of our customers in a timely manner due to the high volatility in their supply needs; risks associated with difficulties in obtaining market acceptance of  newly introduced product; risks associated with technical difficulties that may be discovered in newly developed products; 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.

Ceragon Reports Fourth Quarter and Year End 2018 Results

 






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,



2018


2017


2018


2017









Audited










Revenues


$             85,742


$      86,679


$      343,874


$    332,033

Cost of revenues


56,210


57,524


227,705


224,698










Gross profit


29,532


29,155


116,169


107,335










Operating expenses:









Research and development


6,709


6,493


28,180


25,703

Selling and marketing


11,520


12,337


42,961


41,656

General and administrative


5,267


4,544


19,354


18,576

Other income


(470)


(1,746)


(470)


(1,746)










Total operating expenses


23,026


21,628


90,025


84,189










Operating income


6,506


7,527


26,144


23,146










Financial expenses, net


872


1,155


6,349


5,889










Income before taxes


5,634


6,372


19,795


17,257










Taxes on income (benefit)


(5,965)


(838)


(3,251)


1,697










Net income


$        11,599


$        7,210


$       23,046


$      15,560



















Basic net income per share


$            0.15


$          0.09


$          0.29


$          0.20










Diluted net income per share


$            0.14


$          0.09


$          0.28


$          0.19











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


79,538,654


78,010,416


78,579,013


77,916,912










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


81,987,796


79,452,404


81,021,527


79,942,353


 

 

Ceragon Reports Fourth Quarter and Year end 2018 Results


CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)





Year ended December 31



2018


2017

ASSETS




Audited






CURRENT ASSETS:





Cash and cash equivalents


$        35,581


$         25,877

Short -term bank deposits


515


-

Trade receivables, net


123,451


113,719

Other accounts receivable and prepaid expenses


12,135


17,052

Inventories


53,509


54,164

Total current assets


225,191


210,812






NON-CURRENT ASSETS:





   Long-term bank deposits


504


996

   Deferred tax assets


7,476


988

   Severance pay and pension fund


5,096


5,459

   Property and equipment, net


33,613


29,870

Intangible assets, net


6,576


2,199

   Other non-current assets


4,544


3,269

Total non-current assets


57,809


42,781

Total assets


$      283,000


$      253,593






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$      78,892


$       75,476

Deferred revenues


3,873


5,193

Other accounts payable and accrued expenses


27,256


24,781

Total current liabilities


110,021


105,450






LONG-TERM LIABILITIES:





     Deferred tax liability


28


141

Accrued severance pay and pension


9,711


10,085

Other long-term payables


3,672


4,019

Total long-term liabilities


13,411


14,245






SHAREHOLDERS' EQUITY:





Share capital:





Ordinary shares


214


214

     Additional paid-in capital


415,408


410,817

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(9,208)


(7,171)

Accumulated deficits


(226,755)


(249,871)






Total shareholders' equity


159,568


133,898






Total liabilities and shareholders' equity


$     283,000


$       253,593







 

 

Ceragon Reports Fourth Quarter and Year end 2018 Results 




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW


(U.S. dollars, in thousands)


(Unaudited)





Three months ended


Year ended



December 31,


December 31,



2018


2017


2018


2017


Cash flow from operating activities:







Audited  


Net income

$ 11,599


$ 7,210


$ 23,046


$    15,560


Adjustments to reconcile net income to net cash provided
   by (used in) operating activities:









Depreciation and amortization

2,163


2,439


7,758


9,205


Stock-based compensation expense

498


235


1,980


1,203


Decrease (increase) in trade and other receivables, net

(11,797)


15,551


(8,102)


(6,662)


Decrease (increase) in inventory, net of write off

(6,286)


1,561


(956)


(8,592)


 Increase (decrease) in trade payables and accrued liabilities

11,815


(11,582)


4,402


3,362


Increase (decrease) in deferred revenues

(4,130)


1,228


(650)


2,575


Decrease (increase) in deferred tax asset, net

(6,949)


105


(6,601)


497


Other adjustments

(120)


(130)


(11)


3


Net cash provided by (used in) operating activities

$ (3,207)


$  16,617


$ 20,866


$      17,151











Cash flow from investing activities:









   Purchase of property and equipment

(4,070)


(1,048)


(10,303)


(8,533)


   Purchase of intangible assets, net

(588)


(1,407)


(3,412)


(1,407)


   Investment in short and long-term bank deposit

48


(996)


48


(996)


   Net cash used in investing activities

$ (4,610)


$  (3,451)


$ (13,667)


$ (10,936)











Cash flow from financing activities:









Proceeds from share options exercise 

2,048


65


2,611


294


Repayments from bank loans

-


(23,800)


-


(17,000)


Net cash provided by(used in) financing activities

$    2,048


$  (23,735)


$ 2,611


$  (16,706)











Translation adjustments on cash and cash equivalents

28


(24)


(106)


30


Increase (decrease) in cash and cash equivalents

$  (5,741)


$ (10,593)


$ 9,704


$  (10,461)


Cash and cash equivalents at the beginning of the period

41,322


36,470


25,877


36,338


Cash and cash equivalents at the end of the period

$  35,581


$  25,877


$ 35,581


$  25,877












 

 

Ceragon Reports Fourth Quarter and year End 2018 Results


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)




Three months ended


Year ended



December 31,


December 31,



2018


2017


2018


2017














GAAP cost of revenues


$

56,210


$

57,524


$

227,705


$

224,698

Amortization of intangible assets



-



(367)



-



(1,286)

Stock based compensation expenses



(9)



(12)



(42)



(54)

Changes in indirect tax positions



(240)



237



(278)



119

Non-GAAP cost of revenues


$

55,961


$

57,382


$

227,385


$

223,477














GAAP gross profit


$

29,532


$

29,155


$

116,169


$

107,335

Gross profit adjustments



249



142



320



1,221

Non-GAAP gross profit


$

29,781


$

29,297


$

116,489


$

108,556














GAAP Research and development expenses


$

6,709


$

6,493


$

28,180


$

25,703

Stock based compensation expenses



(103)



(73)



(313)



(229)

Non-GAAP Research and development expenses


$

6,606


$

6,420


$

27,867


$

25,474














GAAP Sales and Marketing expenses


$

11,520


$

12,337


$

42,961


$

41,656

Amortization of intangible assets



-



(39)



-



(258)

Stock based compensation expenses



(193)



(46)



(640)



(292)

Non-GAAP Sales and Marketing expenses


$

11,327


$

12,252


$

42,321


$

41,106














GAAP General and Administrative expenses


$

5,267


$

4,544


$

19,354


$

18,576

Stock based compensation expenses



(193)



(104)



(985)



(628)

Non-GAAP General and Administrative expenses


$

5,074


$

4,440


$

18,369


$

17,948














GAAP other income


$

(470)


$

(1,746)


$

(470)


$

(1,746)

Statute of limitation on certain













indirect tax liabilities


$

470


$

1,746


$

470


$

1,746

Non-GAAP other income


$

-


$

-


$

-


$

-














GAAP financial expenses


$

872


$

1,155


$

6,349


$

5,889

Recovery of devaluation related expenses in
Venezuela



-



-



969



-

Non-GAAP financial expenses


$

872


$

1,155


$

7,318


$

5,889














GAAP taxes on income


$

(5,965)


$

(838)


$

(3,251)


$

1,697

Other non-cash tax adjustments



6,869



1,802



6,343



1,177

Non-GAAP taxes on income


$

904


$

964


$

3,092


$

2,874

 

 

Ceragon Reports Fourth Quarter and Year end 2018 Results


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,




2018



2017



2018



2017

GAAP net income


$

11,599


$

7,210


$

23,046


$

15,560

Amortization of intangible assets



-



406



-



1,544

Stock based compensation
expenses



498



235



1,980



1,203

Changes in indirect tax
exposures



240



(237)



278



(119)

Recovery of devaluation related
expenses in Venezuela



-



-



(969)



-

Statute of limitation on certain indirect tax liabilities



(470)



(1,746)



(470)



(1,746)

Non-cash tax adjustments



(6,869)



(1,802)



(6,343)



(1,177)

Non-GAAP net income 


$

4,998


$

4,066


$

17,522


$

15,265














GAAP basic net income per share


$

0.15


$

0.09


$

0.29


$

0.20














GAAP diluted net income per share


$

0.14


$

0.09


$

0.28


$

0.19














Non-GAAP basic and diluted net
income per share


$

0.06


$

0.05


$

0.22


$

0.19














Weighted average number of
shares used in computing GAAP

basic net income per share



79,538,654



78,010,416



78,579,013



77,916,912














Weighted average number of
shares used in computing

GAAP diluted net income per share



81,987,796



79,452,404



81,021,527



79,942,353














Weighted average number of
shares used in computing

Non-GAAP diluted net income per
share



82,368,838



79,784,939



81,364,897



80,206,822

 

 

 

Investors:
Doron Arazi  
+972 3 5431 660 
dorona@ceragon.com

or

Claudia Gatlin
+1 212 830-9080
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-2018-financial-results-300798758.html

SOURCE Ceragon Networks Ltd


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