Ceragon Networks Reports First Quarter 2019 Financial Results
LITTLE FALLS, New Jersey, May 6, 2019 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights
Revenues - $69.2 million, down 16.9% from the first quarter of 2018, and down 19.3% from the fourth quarter of 2018.
Gross margin - 35.6%, compared to 33.1% in the first quarter of 2018 and 34.4% in the fourth quarter of 2018.
Operating income - $3.2 million, compared to $5.4 million in the first quarter of 2018 and $6.5 million in the fourth quarter of 2018.
Net income - net income of $0.8 million, or $0.01 per diluted share for the first quarter of 2019. Net income for the first quarter of 2018 was $2.1 million, or $0.03 per diluted share. Net income for the fourth quarter of 2018 was $11.6 million or $0.14 per diluted share.
Non-GAAP results - gross margin was 35.7%, operating income was $3.7 million, and net income was $2.1 million, or $0.03 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
Cash and cash equivalents - $29.8 million at March 31, 2019, compared to $35.6 million at December 31, 2018.
"As we expected, first quarter results were low due to the timing of large orders from India, in addition to typical seasonal factors," said Ira Palti, president and CEO of Ceragon. "We continue to experience a high level of customer activity around the world resulting from the ongoing expansion of 4G and the beginning of the transition to 5G. This high level of customer activity, together with our expectation that we will receive a batch of large orders in Q2 related to ongoing deployments in India, causes us to believe that our quarterly revenue during the balance of 2019 is likely to be at or above the high end of our $80 to $85 million quarterly revenue run rate. Thus, we continue to expect overall revenue for 2019 to be similar to that of 2018. We are also continuing to target in 2019 a 5(th) consecutive year of growth in our non-GAAP net income, based on our expectation to higher gross margin from a more favorable geographic mix of revenue as well as lower financial expenses compared to 2018."
Supplemental revenue breakouts by geography:
First quarter 2019:
- Europe: 17%
- Africa: 13%
- North America: 15%
- Latin America: 22%
- India: 15%
- APAC 18%
A conference call to discuss the results will begin at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling USA: (800) 230-1074 or International: +1 (612) 288-0329, from 8:50 a.m. EDT. 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: https://www.ceragon.com/investors/webcasts/, and completing the registration.
If you are unable to join us live, the replay numbers are: USA: (800) 475-6701 or International +1 (320) 365-3844 Access Code: 466180. A replay of both the call and the webcast will be available through June 6, 2019.
About Ceragon Networks Ltd.
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 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 risks relating to the concentration of a significant portion of Ceragon's business in certain geographic regions and particularly in India, where two customers currently represent a significant portion of its revenues, risks associated with a decline in demand from the single market segment on which we focus; risks associated with any failure to effectively compete with other wireless equipment providers; risk relating to certain guarantees granted by Ceragon on behalf of Orocom to FITEL, in the framework of the FITEL project; 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.
Investors:
Ran Vered
+972-3-543-1595
ranv@ceragon.com
or
Claudia Gatlin
+1-212 830-9080
claudiag@ceragon.com
Media:
Tanya Solomon
+972-3-5431163
tanyas@ceragon.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended
March 31,
2019 2018
Revenues $69,163 $83,275
Cost of revenues 44,531 55,671
Gross profit 24,632 27,604
Operating expenses:
Research and development, net 6,164 7,214
Selling and marketing 9,462 10,562
General and administrative 5,782 4,459
Total operating expenses $21,408 $22,235
---
Operating income 3,224 5,369
Financial expenses, net 1,109 2,034
Income before taxes 2,115 3,335
Taxes on income 1,134 1,265
Equity loss in affiliates 173
Net income $808 $2,070
Basic net income per share $0.01 $0.03
Diluted net income per share $0.01 $0.03
Weighted average number of shares used in 80,113,607 78,080,146
computing basic net income per share
Weighted average number of shares used in 82,333,627 80,065,171
computing diluted net income per share
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
March 31, December 31,
2018
2019
---
ASSETS
Unaudited
Audited
CURRENT ASSETS:
Cash and cash equivalents $29,754 $35,581
Short - term bank deposits 515
Trade receivables, net 119,548 123,451
Other accounts receivable and prepaid expenses 12,555 12,135
Inventories 67,370 53,509
Total current assets 229,227 225,191
---
NON-CURRENT ASSETS:
Long-term bank deposits 90 504
Deferred tax assets 6,882 7,476
Severance pay and pension fund 5,378 5,096
Property and equipment, net 34,287 33,613
Intangible assets, net 6,931 6,576
Other non-current assets 14,722 4,544
Total non-current assets 68,290 57,809
---
Total assets $297,517 $283,000
---
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $82,845 $78,892
Deferred revenues 4,246 3,873
Other accounts payable and accrued expenses 29,281 27,256
Total current liabilities 116,372 110,021
---
LONG-TERM LIABILITIES:
Deferred tax liability 24 28
Accrued severance pay and pension 9,973 9,711
Other long term payables 9,315 3,672
Total long-term liabilities 19,312 13,411
---
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares 214 214
Additional paid-in capital 415,949 415,408
Treasury shares at cost (20,091) (20,091)
Other comprehensive loss (8,292) (9,208)
Accumulated deficits (225,947) (226,755)
Total shareholders' equity 161,833 159,568
---
Total liabilities and shareholders' equity $297,517 $283,000
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended
March 31,
2019 2018
Cash flow from operating activities:
Net Income $808 $2,070
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,120 1,511
Stock-based compensation expense 475 353
Decrease (increase) in trade and other receivables, net (6,391) 183
Decrease (increase) in inventory, net of write-off (14,150) 4,488
Decrease in deferred tax asset, net 590 474
Increase (decrease) in trade payables and accrued 15,583 (5,854)
liabilities
Increase in deferred revenues 376 940
Other adjustments (31) 208
Net cash provided by (used in) operating activities $(620) $4,373
Cash flow from investing activities:
Purchase of property and equipment, net (3,991) (3,299)
Purchase of intangible assets, net (2,189) (1,086)
Release of long and short - term bank 940
deposit
Net cash used in investing activities $(5,240) $(4,385)
Cash flow from financing activities:
Proceeds from exercise of options 66 100
---
Net cash provided by financing activities $66 $100
Translation adjustments on cash and cash equivalents $(33) $(9)
Increase (decrease) in cash and cash equivalents $(5,827) $79
Cash and cash equivalents at the beginning of the period 35,581 25,877
Cash and cash equivalents at the end of the period $29,754 $25,956
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)
Three months ended
March 31,
---
2019 2018
GAAP cost of revenues $44,531 $55,671
Stock based compensation expenses (15) (17)
Changes in indirect tax positions (21) (15)
Non-GAAP cost of revenues $44,495 $55,639
GAAP gross profit $24,632 $27,604
Gross profit adjustments 36 32
Non-GAAP gross profit $24,668 $27,636
GAAP Research and development expenses $6,164 $7,214
Stock based compensation expenses (103) (60)
Non-GAAP Research and development expenses $6,061 $7,154
GAAP Sales and Marketing expenses $9,462 $10,562
Stock based compensation expenses (175) (144)
Non-GAAP Sales and Marketing expenses $9,287 $10,418
GAAP General and Administrative expenses $5,782 $4,459
Stock based compensation expenses (182) (132)
Non-GAAP General and Administrative expenses $5,600 $4,327
GAAP financial expenses $1,109 $2,034
Leases - financial income (expenses) 26
Non-GAAP financial expenses $1,135 $2,034
GAAP taxes on income $1,134 $1,265
Non-cash tax adjustments (618) (564)
Non-GAAP taxes on income $516 $701
GAAP equity loss in affiliates $173
$ -
Other non-cash adjustments (173)
Non-GAAP equity loss in affiliates
$ -
$ -
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended
March 31,
---
2019 2018
GAAP net income $808 $2,070
Stock based compensation expenses 475 353
Changes in indirect tax positions 21 15
Leases - financial expenses (income) (26)
Non-cash tax adjustment 618 564
Other non-cash adjustment 173
$2,069 $3,002
Non-GAAP net income
$0.01 $0.03
GAAP basic net income per share
$0.01 $0.03
GAAP diluted net income per share
$0.03 $0.04
Non-GAAP basic and diluted net income per share
Weighted average number of shares used in computing
GAAP basic net income per share 80,113,607 78,080,146
82,333,627 80,065,171
Weighted average number of shares used in computing
GAAP diluted net income per share
Weighted average number of shares used in computing 82,701,755 80,377,797
Non-GAAP basic and diluted net income per share
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SOURCE Ceragon Networks Ltd
