Ceragon Networks Reports Third Quarter 2018 Financial Results
LITTLE FALLS, New Jersey, Nov. 5, 2018 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the third quarter which ended September 30, 2018.
Third Quarter 2018 Highlights:
Revenues - $86.5 million, up 13.9% from the third quarter of 2017, and down 2.0% from the second quarter of 2018.
Gross margin - 35.0%, compared to 35.1% in the third quarter of 2017 and 32.5% in the second quarter of 2018.
Operating income - $7.9 million, compared to $5.7 million in the third quarter of 2017, and $6.4 million in the second quarter of 2018.
Net income - $6.2 million, or $0.08 per diluted share for the third quarter of 2018. Net income for the third quarter of 2017 was $3.5 million, or $0.04 per diluted share. Net income for the second quarter of 2018 was $3.2 million or $0.04 per diluted share.
Non-GAAP results - gross margin was 35.0%, operating income was $8.4 million, and net income was $5.7 million, or $0.07 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
Cash and cash equivalents - $41.3 million at September 30, 2018, compared to $29.4 million at June 30, 2018.
"We are pleased to report an excellent third quarter, with revenues above the upper end of our quarterly run rate and net income growing both sequentially and versus Q3 of 2017," said Ira Palti, president and CEO of Ceragon. "We are achieving our goal of growing net income and delivering strong cash flow, even as we continue to invest aggressively in our next generation 5G solutions, and we remain on track to attain an increase in non-GAAP net income in 2018 compared to 2017. We manage the business with net income growth as our most important metric, and our goal is to report further growth in non-GAAP net income for 2019 as well."
Supplemental geographical breakdown of revenue for the third quarter of 2018:
- Europe: 9%
- Africa: 10%
-North America: 13%
-Latin America: 21%
- India: 34%
- 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) 230-1059 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: 455394. A replay of both the call and the webcast will be available through December 5, 2018.
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 mission-critical multimedia services and other applications at high reliability and speed. Ceragon's unique multicore technology provides a highly reliable, high-capacity 4G and 5G 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 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, and in other developing nations; risk relating to certain guarantees granted by Ceragon on behalf of Orocom to FITEL, in the framework of the FITEL project; political, economic and regulatory risks from doing business in developing regions, including potential currency restrictions and fluctuations; risks related to our ability to meet the demand for our products due to shortages in raw materials, including certain passive components; risks associated with a change in Ceragon's gross margin as a result of changes in the geographic mix of revenues and/or as a result of increase in costs of raw materials, including certain passive components; 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-
Ceragon Reports Third Quarter 2018 Results
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,
2018 2017 2018 2017
Revenues $86,529 $75,999 $258,132 $245,354
Cost of revenues 56,245 49,326 171,495 167,174
Gross profit 30,284 26,673 86,637 78,180
Operating expenses:
Research and development 7,436 6,975 21,471 19,210
Selling and marketing 10,510 9,543 31,441 29,319
General and administrative 4,438 4,462 14,087 14,032
Total operating expenses 22,384 20,980 66,999 62,561
---
Operating income 7,900 5,693 19,638 15,619
Financial expenses, net 797 1,655 5,477 4,734
Income before taxes 7,103 4,038 14,161 10,885
Taxes on income 952 542 2,714 2,535
Net income $6,151 $3,496 $11,447 $8,350
Basic net income per share $0.08 $0.04 $0.15 $0.11
Diluted net income per share $0.08 $0.04 $0.14 $0.10
Weighted average number of shares 78,455,128 77,964,433 78,256,060 77,885,555
used in computing basic net income
per share
Weighted average number of shares 81,172,392 79,596,845 80,696,365 80,105,482
used in computing diluted net
income per share
Ceragon Reports Third Quarter 2018 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
September 30,
December 31,
2018 2017
ASSETS Unaudited
Audited
CURRENT ASSETS:
Cash and cash equivalents $41,322 $25,877
Trade receivables, net 113,193 113,719
Other accounts receivable and prepaid expenses 11,435 17,052
Inventories 47,435 54,164
Total current assets 213,385 210,812
---
NON-CURRENT ASSETS: 997 996
Long-term bank deposits
Deferred taxes, net 564 988
Severance pay and pension fund 5,271 5,459
Property and equipment, net 31,096 29,870
Intangible assets, net 4,154 2,199
Other non-current assets 3,481 3,269
Total non-current assets 45,563 42,781
---
Total assets $258,948 $253,593
---
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $66,168 $75,476
Deferred revenues 7,926 5,193
Other accounts payable and accrued expenses 25,474 24,781
Total current liabilities 99,568 105,450
---
LONG-TERM LIABILITIES: 65 141
Deferred tax liability
Accrued severance pay and pension 10,006 10,085
Other long-term payables 3,766 4,019
Total long-term liabilities 13,837 14,245
---
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares 214 214
Additional paid-in capital 412,862 410,817
Treasury shares at cost (20,091) (20,091)
Other comprehensive loss (9,088) (7,171)
Accumulated deficits (238,354) (249,871)
Total shareholders' equity 145,543 133,898
---
Total liabilities and shareholders' equity $258,948 $253,593
---
Ceragon Reports Third Quarter 2018 Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2018 2017 2018 2017
Cash flow from operating activities:
Net income $6,151 $3,496 $11,447 $8,350
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,094 2,191 5,595 6,766
Stock-based compensation expense 450 349 1,482 968
Decrease (increase) in trade and other receivables, net 3,804 (12,925) 3,695 (22,213)
Decrease (increase) in inventory, net of write off (1,719) 402 5,330 (10,153)
Increase (decrease) in trade payables and accrued liabilities 2,824 (3,831) (7,413) 14,944
Increase in deferred revenues 1,684 329 3,480 1,347
Decrease (increase) in deferred tax asset, net (62) 252 348 392
Other adjustments 295 221 109 133
Net cash provided by (used in) operating activities $15,521 $(9,516) $24,073 $534
Cash flow from investing activities:
Purchase of property and equipment (2,276) (3,980) (6,233) (7,485)
Purchase of intangible assets, net (1,488) (2,824)
Net cash used in investing activities $(3,764) $(3,980) $(9,057) $(7,485)
Cash flow from financing activities:
Proceeds from share options exercise 189 40 563 229
Proceeds from bank loans 15,800 6,800
Net cash
provided by
financing activities $189 $15,840 $563 $7,029
Translation adjustments on cash and cash equivalents (22) 39 (134) 54
Increase in cash and cash equivalents $11,924 $2,383 $15,445 $132
Cash and cash equivalents at the beginning of the period 29,398 34,087 25,877 36,338
Cash and cash equivalents at the end of the period $41,322 $36,470 $41,322 $36,470
Ceragon Reports Third Quarter 2018 Results
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2018 2017 2018 2017
GAAP cost of revenues $
56,245 $
49,326 $
171,495 $
167,174
Amortization of intangible assets (310) (919)
Stock based compensation expenses (15) (10) (33) (42)
Changes in pre-acquisition indirect tax positions (11) 209 (38) (118)
Non-GAAP cost of revenues
$ 56,219 $
49,215 $
171,424 $
166,095
GAAP gross profit
$ 30,284 $
26,673 $
86,637 $
78,180
Gross profit adjustments 26 111 71 1,079
Non-GAAP gross profit
$ 30,310 $
26,784 $
86,708 $
79,259
GAAP Research and development expenses
$ 7,436 $
6,975 $
21,471 $
19,210
Stock based compensation expenses (83) (32) (210) (156)
Non-GAAP Research and development expenses
$ 7,353 $
6,943 $
21,261 $
19,054
GAAP Sales and Marketing expenses
$ 10,510 $
9,543 $
31,441 $
29,319
Amortization of intangible assets (74) (219)
Stock based compensation expenses (161) (94) (447) (246)
Non-GAAP Sales and Marketing expenses
$ 10,349 $
9,375 $
30,994 $
28,854
GAAP General and Administrative expenses
$ 4,438 $
4,462 $
14,087 $
14,032
Stock based compensation expenses (191) (213) (792) (524)
Non-GAAP General and Administrative expenses
$ 4,247 $
4,249 $
13,295 $
13,508
GAAP financial expenses
$ 797 $
1,655 $
5,477 $
4,734
Recovery of devaluation related expenses in Venezuela 969 969
Non-GAAP financial expenses $
1,766 $
1,655 $
6,446 $
4,734
GAAP taxes on income $
952 $
542 $
2,714 $
2,535
Other non-cash tax adjustments (58) (340) (526) (625)
Non-GAAP taxes on income $
894 $
202 $
2,188 $
1,910
Ceragon Reports Third Quarter 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 Nine months ended
September 30, September 30,
2018 2017 2018 2017
GAAP net income $
6,151 $
3,496 $
11,447 $
8,350
Amortization of intangible assets 384 1,138
Stock based compensation 450 349 1,482 968
expenses
Changes in pre-acquisition tax 11 (209) 38 118
exposures
Recovery of devaluation related (969) (969)
expenses in Venezuela
Non-cash tax adjustments 58 340 526 625
Non-GAAP net income $
5,701 $
4,360 $
12,524 $
11,199
GAAP basic net income per share $
0.08 $
0.04 $
0.15 $
0.11
GAAP diluted net income per share $
0.08 $
0.04 $
0.14 $
0.10
Non-GAAP basic and diluted net $
0.07 $
0.05 $
0.15 $
0.14
income per share
Weighted average number of 78,455,128 77,964,433 78,256,060 77,885,555
shares used in computing GAAP
basic net income per share
Weighted average number of 81,172,392 79,596,845 80,696,365 80,105,482
shares used in computing
GAAP diluted net income per share
Weighted average number of 81,546,013 79,880,400 81,027,179 80,347,262
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
