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.
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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 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 Nine months ended
September 30, 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 77,964,433 77,711,946 77,885,555 77,680,541
used in computing basic net income
per share
Weighted average number of shares 79,596,845 79,284,558 80,105,482 78,286,712
used in computing diluted net income
per share
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
September 30, December 31,
2017 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 Nine months ended
September 30, 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
------- ------- -------- --------
$26,673 $26,038 $78,180 $71,619
GAAP gross profit
Gross profit adjustments 111 717 1,079 1,754
--- --- ----- -----
Non-GAAP gross profit $26,784 $26,755 $79,259 $73,373
------- ------- ------- -------
$6,975 $5,339 $19,210 $15,977
GAAP Research and development expenses
Stock based compensation expenses (32) (8) (156) (134)
--- --- ---- ----
Non-GAAP Research and development expenses $6,943 $5,331 $19,054 $15,843
------ ------ ------- -------
$9,543 $9,608 $29,319 $29,181
GAAP Sales and Marketing expenses
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
------ ------ ------- -------
$4,462 $5,328 $14,032 $15,438
GAAP General and Administrative expenses
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
------ ------ ------ ------
$542 $761 $2,535 $3,118
GAAP taxes on income
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 - - - (907)
related expenses
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 $0.05 $0.06 $0.14 $0.08
income per share
Weighted average number of 77,964,433 77,711,946 77,885,555 77,680,541
shares used in computing GAAP
basic net income per share
Weighted average number of 79,596,845 79,284,558 80,105,482 78,286,712
shares used in computing GAAP
diluted net income per share
Weighted average number of 79,880,400 79,780,138 80,347,262 78,682,661
shares used in computing Non-GAAP
diluted net income per share
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
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SOURCE Ceragon Networks Ltd
