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                   Year ended
                                                                                                                                                       December 31,                         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                           Year ended

                                                                                                                                                                    December 31,                           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                                                                                                            (3,517)          11,815            (24,814)                               4,402

      accrued liabilities



     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





                                                                                $
         10,130                        $
          11,520                  $
              39,469                                   $
         42,961


     GAAP Sales and Marketing expenses



     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





                                                                                                                                       $
              (0.05)                        $
          0.15                 $
            (0.03)    $
          0.29


              GAAP basic net income (loss) per share





                                                                                                                                       $
              (0.05)                        $
          0.14                 $
            (0.03)    $
          0.28


              GAAP diluted net income (loss) per share



                                                                                                                                       $
              (0.06)                        $
          0.06                   $
            0.00     $
          0.22


              Non-GAAP diluted net income (loss) per share






              Weighted average number of shares used in computing GAAP                                                                        80,574,892                           79,538,654                       80,296,581       78,579,013
    basic net income (loss) per share






              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                                                                             80,574,892                           82,368,838                       82,124,615       81,364,897
    Non-GAAP diluted net income (loss) per share


Investors:
Osi Sessler
+972-3-5431047
investor@ceragon.com

Media:
Tanya Solomon
+972-3-5431163
media@ceragon.com

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SOURCE Ceragon Networks Ltd