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Ceragon Networks Reports Fourth Quarter and Full Year 2019 Financial Results
[February 10, 2020]

Ceragon Networks Reports Fourth Quarter and Full Year 2019 Financial Results


LITTLE FALLS, New Jersey, Feb. 10, 2020 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Highlights:

Revenues - $71.3 million, down 16.9% from the fourth quarter of 2018, and down 1.3% from the third quarter of 2019.

Gross margin – 31.7%, compared to 34.4% in the fourth quarter of 2018 and 32.2% in the third quarter of 2019.

Operating income (loss) - $(2.2) million, compared to operating income of $6.5 million in the fourth quarter of 2018, and operating income of $2.1 million in the third quarter of 2019.

Net income (loss) - $(4.1) million, or $(0.05) per diluted share for the fourth quarter of 2019, compared to net income of $11.6 million, or $0.14 per diluted share, in the fourth quarter of 2018. Net income for the third quarter of 2019 was $0.2 million, or $0.00 per diluted share.

Non-GAAP results – Gross margin was 31.3%, operating loss was $(2.1) million, and net loss was $(5.0) million, or $(0.06) per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

Non-GAAP results excluding one-time items – Gross margin was 34.1%, operating income was $1.2 million, and net loss was $(1.7) million, or $(0.02) per diluted share.

Cash and cash equivalents - $23.9 million at December 31, 2019, compared to $20.5 million at September 30, 2019.

Full Year 2019 Highlights:

Revenues  $285.6 million, down 17.0% from 2018.

Gross margin – 33.9%, compared to 33.8% in 2018.

Operating income – $7.3 million, compared to an operating income of $26.1 million in 2018.

Net income (loss) – $(2.3) million, or $(0.03) per diluted share. Net income for 2018 was $23.0 million, or $ 0.28 per diluted share.

Non-GAAP results - gross margin was 33.8%, operating income was $9.0 million, and net income was $0.1 million, or $0.00 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

Non-GAAP results excluding one-time items – gross margin was 34.5%, operating income was $12.3 million, and net income was $3.4 million, or $0.04 per diluted share.

"Revenue in 2019 declined primarily due to region-specific issues affecting operators in India, causing a significant slowdown after several very strong years," said Ira Palti President and CEO of Ceragon. "Excluding India, revenue from the rest of the world increased by approximately 11% compared to 2018, and we believe we are gaining market share. The most significant accomplishment of 2019 was obtaining several important new 5G design wins, including one through a new relationship with a very large Tier 1 U.S. operator. Given the long planning and project cycles, these new design wins are likely to begin contributing meaningfully to revenue only in late 2020 and beyond.

"We are targeting revenue growth in 2020, although we are off to a slow start. We are expecting a sequential decline in Q1 revenue, based on a Q4 book-to-bill below 1:1 plus typical seasonal factors negatively affecting Q1.  For the remaining quarters of the year, we continue to expect a $70-$75 million average quarterly revenue run rate, with a more favorable geographic mix leading to higher gross margin in 2020 versus 2019. We are also targeting better net income for 2020, as well as positive cash flow."  

"Our outlook for the coming months, is clouded by the effects of the outbreak of the novel coronavirus in Asia and particularly in China.  Our supply chain could be significantly impacted and our customers could be negatively affected. However, as the impact is too early to determine, we have not addressed it in our forward-looking statements. 

"Looking forward beyond 2020," Mr. Palti added, "we have the only value proposition designed for our customers to unlock their 5G potential."

Supplemental geographical breakdown of revenue for:

 Fourth quarter 2019:





·  Europe:

15%

·  Africa:

7%

·  North America:

13%

·  Latin America:

31%

·  India:

16%

·  APAC:

18%


 

Full year 2019:

·  Europe:

15%

·  Africa:

9%

·  North America:

15%

·  Latin America:

25%

·  India:

17%

·  APAC:

19%

 

A conference call will follow beginning at 9:00 a.m. EST. Investors are invited to join the company's teleconference by calling (USA) (844) 291-6360 or international +1 (234) 720-6993 and using the following access code: 6063623.

Investors can also listen to the call live via the Internet by accessing Ceragon Networks' website on the webcasts page in the section for investors: www.ceragon.com/investors/webcasts/ selecting the webcast link, and following the registration instructions.

If you are unable to join us live, the replay numbers are: (USA) (866) 207-1041 (International) +1 (402) 970-0847, with access code: 5075947. This audio replay will be available through March 10, 2020.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #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 5G & 4G, mission-critical multimedia services and other applications at high reliability and speed.

Ceragon's unique multicore technology and disaggregated approach to wireless backhaul provides highly reliable, fast to deploy, high-capacity wireless backhaul for 5G and 4G networks with minimal use of spectrum, power and other resources. It enables increased productivity, as well as simple and quick network modernization, positioning Ceragon as a leading solutions provider for the 5G era. 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.

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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" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and the safe-harbor provisions of 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 about Ceragon's business, financial condition, results of operations, micro and macro market trends and other issues addressed or reflected therein. Examples of forward-looking statements include: projections of demand, revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, order timing, 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 the  risks relating to the concentration of a significant portion of Ceragon's expected business in certain geographic regions and particularly in India, where a small number of customers are expected to represent a significant portion of our revenues, including the risks of deviations from our expectations of timing and size of orders from these customers; the risk that the current slowdown in revenue from India could extend for a longer period than anticipated; the risk of delays in converting design wins into revenue as well as the expected revenue growth; the risk of a disruption to our and our customers' business related to the outbreak and potential spread of the novel coronavirus; risks associated with any failure to meet our product development timetable and specifications, and to maintain our technological advantage over our competitors; risks associated with any failure to effectively compete with other wireless equipment providers; the risk that the rollout of 5G services could take longer or differently than anticipated; and other risks and uncertainties detailed from time to time in Ceragon's Annual Report on Form 20-F, Item 3, under the caption "Risk Factors", 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. Such forward-looking statements do not purport to be predictions of future events or circumstances, and therefore, there can be no assurance that any forward-looking statement contained in our announcements, presentations, or commentary will prove to be accurate. We do not assume any obligation to update any forward-looking statements.

-tables follow-

 

 

 

Ceragon Reports Fourth Quarter and Year End 2019 Results


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,



2019


2018


2019


2018









Audited










Revenues


$     71,256


$     85,742


$     285,583


$     343,874

Cost of revenues


48,646


56,210


188,741


227,705










Gross profit


22,610


29,532


96,842


116,169










Operating expenses:









Research and development, net


7,639


6,709


26,793


28,180

Selling and marketing


10,130


11,520


39,469


42,961

General and administrative


7,032


4,797


23,278


18,884










Total operating expenses


$     24,801


$     23,026


$      89,540


$      90,025










Operating income (loss)


(2,191)


6,506


7,302


26,144










Financial expenses and others, net


2,204


872


6,521


6,349










Income (loss) before taxes


(4,395)


5,634


781


19,795










Taxes on income (benefit)


(471)


(5,965)


2,476


(3,251)

Equity loss in affiliates


177


-


649


-










Net income (loss)


$      (4,101)


$     11,599


$     (2,344)


$       23,046










Basic net income (loss) per share


$        (0.05)


$         0.15


$        (0.03)


$           0.29

Diluted net income (loss) per share


$        (0.05)


$         0.14


$        (0.03)


$           0.28










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


 

80,574,892


 

79,538,654


 

80,296,581


 

78,579,013










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


 

80,574,892


 

81,987,796


 

80,296,581


 

81,021,527

 

 

 

Ceragon Reports Fourth Quarter and Year End 2019 Results


CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)




Year ended December 31



2019


2018

ASSETS




Audited






CURRENT ASSETS:





Cash and cash equivalents


$        23,939


$        35,581

Short - term bank deposits


-


515

Trade receivables, net


118,531


123,451

Other accounts receivable and prepaid expenses


11,033


12,135

Inventories


62,132


53,509






Total current assets


215,635


225,191






NON-CURRENT ASSETS:





Long-term bank deposits


17


504

Deferred tax assets


8,106


7,476

    Severance pay and pension fund


5,661


5,096

    Property and equipment, net


34,865


33,613

    Intangible assets, net


7,898


6,576

Other non-current assets


17,707


4,544






Total non-current assets


74,254


57,809






Total assets


$      289,889


$      283,000






LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





Trade payables


$        59,635


$        78,892

Deferred revenues


1,734


3,873

Short- term loans


14,600


-

Other accounts payable and accrued expenses


28,201


27,256






Total current liabilities


104,170


110,021






LONG-TERM LIABILITIES:





Deferred tax liability


-


28

Accrued severance pay and pension


10,907


9,711

Deferred revenues


6,265


-

Other long-term payables


8,126


3,672






Total long-term liabilities


25,298


13,411






SHAREHOLDERS' EQUITY:





Share capital:





     Ordinary shares


215


214

Additional paid-in capital


418,062


415,408

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(8,666)


(9,208)

Accumulated deficits


(229,099)


(226,755)






Total shareholders' equity


160,421


159,568






Total liabilities and shareholders' equity


$    289,889


$    283,000








 

 

 

Ceragon Reports Fourth Quarter and Year End 2019 Results


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)



Three months ended

December 31,


Year ended

December 31,


2019


2018


2019


2018

Cash flow from operating activities:







Audited

Net income (loss)

$        (4,101)


$    11,599


$      (2,344)


$      23,046

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








Depreciation and amortization

2,680


2,163


9,691


7,758

Stock-based compensation expense

459


498


2,053


1,980

Decrease (increase) in trade and other receivables, net

11,367


(10,169)


7,795


(6,474)

Decrease (increase) in inventory, net of write off

5,602


(6,286)


(9,475)


(956)

    Increase in deferred tax asset, net

(1,300)


(6,949)


(258)


(6,601)

 Increase (decrease) in trade payables and
 accrued liabilities

(3,517)


11,815


(24,814)


4,402

Increase (decrease) in long and short – term deferred revenues

(3,023)


(4,130)


4,150


(650)

Other adjustments

440


(120)


271


(11)

Net cash provided by (used in) operating activities

$         8,607


$     (1,579)


$    (12,931)


$      22,494

 

 

Cash flow from investing activities:








 Purchase of property and equipment, net

(2,476)


(4,070)


(11,592)


(10,303)

 Purchase of intangible assets, net

(233)


(588)


(3,274)


(3,412)

 Proceeds from bank deposits

82


48


1,002


48

 Investment in shares

-


(1,628)


-


(1,628)

Net cash used in investing activities

$        (2,627)


$     (6,238)


$    (13,864)


$   (15,295)









Cash flow from financing activities:








Proceeds from exercise of stock options

211


2,048


602


2,611

Proceeds from (repayment of) bank credits and loans, net

(2,800)


-


14,600


-

Net cash provided by (used in) financing activities

$        (2,589)


$       2,048


$      15,202


$       2,611









Translation adjustments on cash and cash equivalents

$               24


$            28


 

$          (49)


 

$       (106)

Increase (decrease) in cash and cash equivalents

$          3,415


$     (5,741)


$   (11,642)


$      9,704

Cash and cash equivalents at the beginning of the period

20,524


41,322


35,581


25,877

Cash and cash equivalents at the end of the period

$        23,939


$     35,581


$      23,939


$    35,581

 

 

 

Ceragon Reports Fourth Quarter and Year End 2019 Results


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)




Three months ended


Year ended



December 31,


December 31,



2019


2018


2019

2018















GAAP cost of revenues


$

48,646


$

56,210


$

188,741



$

227,705

Stock based compensation expenses



(27)



(9)



(71)




(42)

Changes in indirect tax positions



361



(240)



327




(278)

Non-GAAP cost of revenues


$

48,980


$

55,961


$

188,997



$

227,385















GAAP gross profit


$

22,610


$

29,532


$

96,842



$

116,169

Gross profit adjustments



(334)



249



(256)




320

Non-GAAP gross profit


$

22,276


$

29,781


$

96,586



$

116,489















GAAP Research and development expenses


$

7,639


$

6,709


$

26,793



$

28,180

Stock based compensation expenses



(81)



(103)



(366)




(313)

Non-GAAP Research and development expenses


$

7,558


$

6,606


$

26,427



$

27,867















 

GAAP Sales and Marketing expenses


$

10,130


$

11,520


$

39,469



$

42,961

Stock based compensation expenses



(155)



(193)



(708)




(640)

Non-GAAP Sales and Marketing expenses


$

9,975


$

11,327


$

38,761



$

42,321















GAAP General and Administrative expenses


$

7,032


$

4,797


$

23,278



$

18,884

Changes in indirect tax positions



-



470



-




470

Stock based compensation expenses



(196)



(193)



(908)




(985)

Non-GAAP General and Administrative expenses


$

6,836


$

5,074


$

22,370



$

18,369















GAAP financial expenses and others, net


$

2,204


$

872


$

6,521



$

6,349

Recovery of devaluation related expenses in Venezuela



-



-



-




969

Leases – financial expenses



(133)



-



(234)




-

Non-GAAP financial expenses and others, net


$

2,071


$

872


$

6,287



$

7,318















GAAP Tax (income) expenses


$

(471)


$

(5,965)


$

2,476



$

(3,251)

Non-cash tax adjustments



1,272



6,869



182




6,343

Non-GAAP Tax expenses


$

801


$

904


$

2,658



$

3,092















GAAP equity loss in affiliates


$

177


$

-


$

649



$

-

Other non-cash adjustments



(177)



-



(649)




-

Non-GAAP equity loss in affiliates


$

-


$

-


$

-



$

-

















































 

 

 

Ceragon Reports Fourth Quarter and Year End 2019 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,





2019



2018



2019



2018
















GAAP net income (loss)


$

(4,101)


$

11,599


$

(2,344)


$

23,046


Stock based compensation expenses



459



498



2,053



1,980


Changes in indirect tax positions



(361)



(230)



(327)



(192)


Leases – financial expenses



133



-



234



-


Non-cash tax adjustments



(1,272)



(6,869)



(182)



(6,343)


Recovery of devaluation related expenses in Venezuela



-



-



-



(969)


Other non-cash adjustment



177



-



649



-


Non-GAAP net income (loss)


$

(4,965)


$

4,998


$

83


$

17,522
















 

GAAP basic net income (loss) per share


$

(0.05)


$

0.15


$

(0.03)


$

0.29
















 

GAAP diluted net income (loss) per share


$

(0.05)


$

0.14


$

(0.03)


$

0.28


 

Non-GAAP diluted net income (loss) per share


$

(0.06)


$

0.06


$

0.00


$

0.22
















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



80,574,892



79,538,654



80,296,581



78,579,013
















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



80,574,892



81,987,796



80,296,581



81,021,527
















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



80,574,892



82,368,838



82,124,615



81,364,897


 

 

 

Investors:
Osi Sessler 
+972-3-5431047
[email protected]

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

Cision View original content:http://www.prnewswire.com/news-releases/ceragon-networks-reports-fourth-quarter-and-full-year-2019-financial-results-301001832.html

SOURCE Ceragon Networks Ltd


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