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Ceragon Networks Reports First Quarter 2015 Financial Results
[May 06, 2015]

Ceragon Networks Reports First Quarter 2015 Financial Results


PARAMUS, N.J., May 6, 2015 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the first quarter ended March 31, 2015.

First Quarter 2015 Highlights:

Revenues -- $93.7 million, up 33% from the first quarter of 2014, and down 16% from the fourth quarter of 2014.  

Gross margin – 25.9%, compared to 22.1% in the first quarter of 2014 and 20.5% in the fourth quarter of 2014.

Operating income – $0.6 million, compared to an operating loss of $(17.1) million in the first quarter of 2014 and an operating loss of $(25.9) million in the fourth quarter of 2014.

Net loss $(7.0) million or $(0.09) per diluted share. Net loss for the first quarter of 2014 was $(27.0) million, or $(0.51) per diluted share. Net loss for the fourth quarter of 2014 was $(52.0) million or $(0.68) per diluted share.

One-time items – First quarter 2015 net loss includes a total of $4.2 million of one-time charges. This amount consists of $1.2 million in restructuring costs and additional financial expense of $3.0 million resulting from re-measurement of certain assets related to Venezuela.

Non-GAAP results – gross margin was 26.3%, operating profit was $2.5 million, and net loss was $(1.3) million, or $(0.02) per diluted share. Non-GAAP results exclude one-time items as well as recurring adjustments of $1.5 million. For a reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents – $37.3 million at March 31, 2015, compared to $41.4 million at December 31, 2014. The decrease represents a combination of $1.2 million of cash consumption and a currency devaluation, primarily in Venezuela, of approximately $3 million.

"Our first quarter performance clearly reflects the initiatives we have been pursuing to improve profitability," said Ira Palti, president and CEO of Ceragon. "Gross margin improved and operating expenses declined significantly, resulting in further improvement in our operating result, and we managed to lower our cash consumption to $1.2 million in Q1. We continue to expect to generate positive cash flow in Q2 and will continue to focus on improving profitability with a target of reaching a mid-single-digit non-GAAP operating margin by the end of this year."

Supplemental revenue breakouts:

Geographical breakdown, first quarter of 2015:

  • Europe: 16%
  • Africa: 8%
  • North America: 10%
  • Latin America: 28%
  • India: 31%
  • APAC: 7%

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) 234-9959, 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 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: 357142. A replay of both the call and the webcast will be available through June 6, 2015.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We provide innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers. Ceragon's high-capacity, solutions use microwave technology to transfer voice and data traffic while maximizing bandwidth efficiency, to deliver more capacity over longer distances under any deployment scenario. Based on our extensive global experience, Ceragon delivers turnkey solutions that support service provider profitability at every stage of the network lifecycle enabling faster time to revenue, cost-effective operation and simple migration to all-IP networks. As the demand for data pushes the need for ever-increasing capacity, Ceragon is committed to serve the market with unmatched technology and innovation, ensuring effective solutions for the evolving needs of the marketplace. Our solutions are deployed by more than 430 service providers in over 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" under the Private Securities Litigation Reform Act of 1995.Examples of forward-looking statements include: projections of capital expenditures and liquidity, competitive pressures, revenues, growth prospects, product development, financial resources, restructuring costs, cost savings and other financial matters. You can identify these and other forward-looking statements by the use of words such as "may," "plans," "anticipates," "believes," "estimates," "predicts," "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 increased working capital needs; risks associated with the ability of Ceragon to meet its liquidity needs; the risk that Ceragon will not achieve the benefits it expects from its expense reduction and profit enhancement programs; the risk that Ceragon will not comply with the financial or other covenants in its agreements with its lenders; the risk that sales of Ceragon's new IP-20 products will not meet expectations; risks associated with doing business in Latin America, including currency export controls and recent economic concerns; risks relating to the concentration of our business in the Asia Pacific region and in developing nations; the risk of significant expenses in connection with potential contingent tax liability associated with Nera's prior operations or facilities; 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, and 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:



Doron Arazi 

or

Claudia Gatlin

+972 3 5431 660


+1 212 830-9080

[email protected] 

[email protected]




Media:



Tanya Solomon



+972 3 5431163



[email protected] 


 



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)

(Unaudited)








Three months ended



March 31,



2015


2014






Revenues


$     93,653


$     70,515

Cost of revenues


69,413


54,936






Gross profit


24,240


15,579






Operating expenses:





Research and development, net


6,399


10,439

Selling and marketing


11,308


15,420

General and administrative


4,736


5,906

Restructuring costs


1,225


936






Total operating expenses


$      23,668


$      32,701






Operating income (loss)


572


(17,122)

Financial expenses, net


6,346


8,164






Loss before taxes


5,774


25,286






Taxes on income


1,221


1,677






Net loss


$    6,995


$    26,963






Basic and diluted net loss per share


$    0.09


$    0.51

Weighted average number of shares used in computing basic and diluted net loss per share


77,145,265


52,457,168






 


CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)








March 31,
2015


December 31,
2014

ASSETS


Unaudited


Audited






CURRENT ASSETS:





Cash and cash equivalents


$       37,270


$       41,423

Short-term bank deposits


349


413

Marketable securities


-


535

Trade receivables, net


141,961


162,626

Other accounts receivable and prepaid expenses


23,270


22,898

Deferred taxes, net


2,993


3,522

Inventories


55,700


61,830

Total current assets


261,543


293,247






NON-CURRENT ASSETS:





   Deferred taxes, net


167


239

   Severance pay funds and pension


5,313


5,669

   Property and equipment, net


31,731


33,138

   Intangible assets, net


4,586


5,070

   Other non-current assets


4,460


4,510

Total non-current assets


46,257


48,626

Total assets


$  307,800


$  341,873

 

LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Short term loans, including current maturities of long term loan


$       50,896


$       48,832

Trade payables


89,916


101,752

Deferred revenues


12,190


17,667

Other accounts payable and accrued expenses


33,816


37,248

Total current liabilities


186,818


205,499

 

LONG-TERM LIABILITIES





Long term bank loan, net of current maturities


-


2,072

Accrued severance pay and pension


10,660


11,452

Other long term liabilities


16,878


18,298

Total long-term liabilities


27,538


31,822

 

SHAREHOLDERS' EQUITY:





Share capital:





    Ordinary shares


212


212

Additional paid-in capital


406,607


406,413

Treasury shares at cost


(20,091)


(20,091)

Accumulated other comprehensive loss, net of taxes


(8,418)


(4,111)

Accumulated deficit


(284,866)


(277,871)






Total shareholders' equity


93,444


104,552






Total liabilities and shareholders' equity


$     307,800


$     341,873

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)








Three months ended



March 31,



2015


2014

Cash flow from operating activities:





Net loss


$    (6,995)


$    (26,963)

Adjustments to reconcile net loss to net cash used in operating activities:









Depreciation and amortization


3,503


3,378

Stock-based compensation expense


194


1,047

Decrease in trade and other receivables, net


14,869


1,894

Decrease in inventory, net of write-off


5,109


1,609

Decrease in deferred tax asset, net


730


1,317

Decrease in trade payables and accrued liabilities


(13,719)


(15,058)

Decrease in deferred revenues


(5,477)


(2,899)

Other adjustments


(106)


841

Net cash used in operating activities


$    (1,892)


$    (34,834)






Cash flow from investing activities:





Purchase of property and equipment ,net


(2,042)


(2,850)

Proceeds from short and long-term bank deposits


64


50

Proceeds from sale and maturities of marketable securities


122


5,161

Net cash provided by (used in) investing activities


$    (1,856)


$    2,361






Cash flow from financing activities:





Proceeds from short-term bank loans


2,050


18,110

Repayment of loans from financial institutions


(2,058)


(2,058)

Net cash provided by (used in) financing activities


$    (8)


$    16,052






Translation adjustments on cash and cash equivalents


$    (397)


$    69






Decrease in cash and cash equivalents


$  (4,153)


$    (16,352)






Cash and cash equivalents at the beginning of the period


41,423


42,407






Cash and cash equivalents at the end of the period


$    37,270


$    26,055

 


RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands, except share and per share data)

(Unaudited)






Three months ended March 31,



2015


2014



GAAP
(as reported)


Adjustments


Non-GAAP


Non-GAAP










Revenues


$   93,653




$   93,653


$   70,515

Cost of revenues


69,413


(a)   364


69,049


54,070

Gross profit


24,240




24,604


16,445










Operating expenses:









Research and development, net


6,399


(b)    96


6,303


7,853

Selling and marketing


11,308


(c)    271


11,037


14,405

General and administrative


4,736


(d)    (16)


4,752


5,022

Restructuring costs


1,225


1,225


-


-










Total operating expenses


$  23,668




$  22,092


$  27,280










Operating income (loss)


572




2,512


(10,835)

Financial expenses, net


6,346


(e)    2,974


3,372


1,854










Loss before taxes


5,774




860


12,689










Taxes on income


1,221


(f)     734


487


187










Net loss


$   6,995




$   1,347


$   12,876










Basic and diluted net loss per share


$     0.09




$     0.02


$     0.25










Weighted average number of shares used in computing basic and diluted net loss  per share


77,145,265




77,145,265


52,457,168










Total adjustments




5,648














(a) 

Cost of revenues includes $0.3 million of amortization of intangible assets, $30 thousand of changes in pre-acquisition indirect tax positions and $30 thousand of stock based compensation expenses in the three months ended March 31, 2015.

(b)

Research and development expenses include stock-based compensation expenses in the three months ended March 31, 2015.

(c)

Selling and marketing expenses include $0.2 million of amortization of intangible assets and $0.1 million of stock based compensation expenses in the three months ended March 31, 2015.

(d)

General and administrative expenses include net stock based compensation expenses in the three months ended March 31, 2015.

(e)

Financial expenses include the effect of re-measurement of certain assets denominated in or linked to the U.S. dollar in Venezuela, due to restrictive government policies on payments in foreign currency in the three months ended March 31, 2015.

(f)

Taxes on income include non-cash tax adjustments in the three months ended March 31, 2015.

 

RECONCILIATION BETWEEN REPORTED AND NON-GAAP

NET LOSS

(U.S. dollars in thousands)

(Unaudited)








Three months ended



March 31,



2015


2014






Reported GAAP net loss


6,995


26,963






Stock based compensation expenses


194


1,047

Amortization of intangible assets


492


523

Restructuring expenses


1,225


4,440

Changes in pre-acquisition indirect tax positions


30


277

Currency devaluation in Venezuela


2,973


4,140

Expenses related to certain transactions to expatriate cash from Venezuela and Argentina


-


2,170

Non-cash tax adjustments


734


1,490






Non-GAAP net loss


1,347


12,876











 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ceragon-networks-reports-first-quarter-2015-financial-results-300078487.html

SOURCE Ceragon Networks Ltd


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