CERAGON NETWORKS LTD. PARAMUS, N.J., Oct. 30, 2014 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 high-capacity wireless hauling specialist, today reported results for the third quarter which ended September 30, 2014.
Revenues for the third quarter of 2014 reached $99.0 million, up 8% from $92.1 million for the third quarter of 2013, and up 10% from $90.4 million in the second quarter of 2014.
Gross margin in accordance with US Generally Accepted Accounting Principles (GAAP) in the third quarter of 2014 was 25.6% of revenues, compared to 30.9% of revenues in the third quarter of 2013, and compared to 26.3% of revenues in the second quarter of 2014. Gross margin on a non-GAAP basis was 25.7% of revenues in the third quarter of 2014, compared to 31.9 % of revenues in the third quarter of 2013, and compared to 27.0 % of revenues in the second quarter of 2014.
Operating loss on a GAAP basis in the third quarter of 2014 was $(0.8) million, compared to an operating loss of $(4.1) million in the third quarter of 2013, and compared to an operating income of $11.8 million in the second quarter of 2014. On a non-GAAP basis, the operating profit was $0.1 million in the third quarter of 2014, compared to an operating loss of $(2.2) million in the third quarter of 2013, and compared to an operating loss of $(2.6) million in the second quarter of 2014.
Net loss on a GAAP basis for the third quarter of 2014 was $(5.6) million or $(0.08) per basic share and diluted share. Net loss for the third quarter of 2013 was $(10.4) million, or $(0.28) per basic share and diluted share. Net income for the second quarter of 2014 was $8.0 million or $0.15 per basic share and diluted share, primarily due to $16.8 million of non-recurring other income resulting from a settlement agreement with Eltek ASA.
On a non-GAAP basis, net loss for the third quarter of 2014 was $(3.6) million, or $(0.05) per basic share and diluted share, compared to a non-GAAP net loss for the third quarter of 2013 of $(4.5) million, or $(0.12) per basic share and diluted share. The non-GAAP net loss for the second quarter of 2014 was $(5.0) million or $(0.10) per basic share and diluted share.
For reconciliations of GAAP to non-GAAP results, see the attached tables.
"The pickup in revenues and the continued acceleration in bookings during the third quarter were mainly a result of extremely strong demand from India," said Ira Palti, president and CEO of Ceragon. "We approached breakeven on an operating basis and reported a small non-GAAP operating profit, despite a less favorable geographic revenue mix putting pressure on our gross margin. With improving overall demand and the excellent reception our IP-20 platform is receiving in the market, our primary focus going forward will be on achieving sustainable profitability and positive cash flow."
Supplemental geographical breakdown of revenue, third quarter of 2014:
Europe: 17%
Africa: 17%
North America: 7%
Latin America: 24%
India: 26%
APAC: 9%
A conference call will follow beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (USA) (800) 230-1093 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: Telephone: USA: (800) 475-6701; International: +1 (320) 365-3844; Access Code: 338241. A replay of both the call and the webcast will be available through November 30, 2014.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Ceragon uses non-GAAP measures of its financial results. Ceragon's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Ceragon's ongoing core operations and prospects for the future. Historically, Ceragon has also publicly presented these supplemental non-GAAP financial measures in order to assist the investment community to see the Company "through the eyes of management," and thereby enhance understanding of its operating performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in the tables attached to this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 high-capacity wireless hauling 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.
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.
Safe Harbor
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 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: Media:
Doron Arazi or Claudia Gatlin Tanya Solomon
+972 3 5431 660 +1 212 830 9080 +972 3 5431 163
dorona@ceragon.com claudiag@ceragon.com tanyas@ceragon.com
Ceragon Reports Third Quarter 2014 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,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Revenues $99,013 $92,099 $259,948 $272,280
Cost of revenues 73,695 63,610 195,238 187,792
------ ------ ------- -------
Gross profit 25,318 28,489 64,710 84,488
------ ------ ------ ------
Operating expenses:
Research and
development 7,999 10,065 26,892 32,553
Selling and marketing 12,842 16,296 42,917 50,637
General and
administrative 5,267 6,189 16,893 18,668
Restructuring costs - - 936 -
Other income - - 16,800 -
Total operating
expenses $26,108 $32,550 $70,838 $101,858
--------------- ------- ------- ------- --------
Operating loss 790 4,061 6,128 17,370
Financial expenses, net 3,311 1,980 13,650 8,856
Loss before taxes 4,101 6,041 19,778 26,226
Taxes on income 1,457 4,399 4,745 5,875
----- ----- ----- -----
Net loss $5,558 $10,440 $24,523 $32,101
====== ======= ======= =======
Basic and diluted net
loss per share $0.08 $0.28 $0.42 $0.87
===== ===== ===== =====
Weighted average number
of shares used in
computing basic and
diluted net loss per
share
68,047,913 36,815,864 57,711,192 36,736,417
========== ========== ========== ==========
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
September 30, December 31,
2014 2013
---- ----
(Unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $43,944 $42,407
Short-term bank deposits 377 446
Marketable securities 4,163 5,499
Trade receivables, net 162,046 131.166
Deferred taxes 5,550 7,198
Other accounts receivable and prepaid
expenses 29,390 34,205
Inventories 60,037 64,239
------ ------
Total current assets 305,507 285,160
-------------------- ------- -------
NON-CURRENT ASSETS:
Marketable securities - 3,985
Deferred tax assets, net 4,271 6,542
Severance pay and pension fund 6,306 7,065
Property and equipment, net 34,707 35,245
Intangible assets, net 5,619 7,213
Goodwill 14,855 14,935
Other non-current assets 6,505 5,826
----- -----
Total long-term assets 72,263 80,811
---------------------- ------ ------
Total assets $377,770 $365,971
------------ ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term loan, including current
maturities of long term bank loan $46,332 $46,922
Trade payables 84,330 77,979
Deferred revenues 8,560 7,968
Other accounts payable and accrued
expenses 37,532 45,526
------ ------
Total current liabilities 176,754 178,395
------------------------- ------- -------
LONG-TERM LIABILITIES:
Long term bank loan, net of current
maturities 4,130 10,304
Accrued severance pay and pension 12,181 13,635
Other long term payables 27,390 28,559
------ ------
Total long-term liabilities 43,701 52,498
--------------------------- ------ ------
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares 212 141
Additional paid-in capital 405,758 357,989
Treasury shares at cost (20,091) (20,091)
Other comprehensive loss (2,649) (1,569)
Accumulated deficits (225,915) (201,392)
-------- --------
Total shareholders' equity 157,315 135,078
-------------------------- ------- -------
Total liabilities and shareholders'
equity $377,770 $365,971
----------------------------------- ======== ========
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2014 2013 2014 2013
---- ---- ---- ----
Cash flow from operating activities:
Net loss $(5,558) $(10,440) $(24,523) $(32,101)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 3,486 3,885 10,394 11,656
Stock-based compensation expense 568 701 2,691 2,774
Decrease (increase) in trade and other receivables, net (14,918) (6,130) (28,824) 20,334
Decrease in inventory, net of write off 1,046 91 4,075 7,493
Increase (decrease) in trade payables and accrued liabilities 7,131 4,604 (1,788) (19,069)
Increase (decrease) in deferred revenues (455) (3,683) 592 (8,218)
Decrease in deferred tax asset, net 1,360 3,228 4,004 3,743
Other adjustments (562) 299 (291) (22)
---- --- ---- ---
Net cash used in operating activities $(7,902) $(7,445) $(33,670) $(13,410)
======= ======= ======== ========
Cash flow from investing activities:
Purchase of property and equipment (2,286) (4,009) (8,464) (11,706)
Investment in short-term bank deposits - - - (255)
Proceeds from short-term bank deposits 11 - 69 336
Proceeds from sale of available for sale marketable securities, net - - 5,161 301
--- --- ----- ---
Net cash provided by investing activities $(2,275) $(4,009) $(3,234) $(11,324)
======= ======= ======= ========
Cash flow from financing activities:
Proceeds from exercise of options - - - 1,145
Proceeds from issuance of shares, net 45,150 - 45,150 -
Proceeds from bank loans - 9,300 20,190 25,990
Repayment of bank loans (22,838) (2,058) (26,954) (8,174)
Net cash provided by financing activities
$22,312 $7,242 $38,386 $18,961
======= ====== ======= =======
Translation adjustments on cash and cash equivalents
$(66) $(114) $55 $(744)
==== ===== === =====
Increase (decrease) in cash and cash equivalents $12,069 $(4,326) $1,537 $(6,517)
======= ======= ====== =======
Cash and cash equivalents at the beginning of the period 31,875 44,908 42,407 47,099
Cash and cash equivalents at the end of the period $43,944 $40,582 $43,944 $40,582
======= ======= ======= =======
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended September 30,
2014 2013
---- ----
GAAP Adjustments
(as reported)
Non-GAAP Non-GAAP
-------- --------
Revenues $99,013 $92,099
$99,013
Cost of revenues 73,695 (a) 116 73,579 62,708
Gross profit 25,318 25,434 29,391
------ ------ ------
Operating expenses:
Research and development 7,999 (b) 376 7,623 9,937
Selling and marketing 12,842 (c) 219 12,623 15,636
General and administrative 5,267 (d) 143 5,124 5,989
Total operating expenses $26,108 $25,370 $31,562
------------------------ ------- ------- -------
Operating profit (loss) (790) 64 (2,171)
Financial expenses, net 3,311 3,311 1,980
Loss before taxes 4,101 3,247 4,151
Taxes on income 1,457 (e) 1,150 307 362
----- --- ---
Net loss $5,558 $3,554 $4,513
====== ====== ======
$0.08 $0.05 $0.12
Basic and diluted net loss per share
68,047,913 68,047,913 36,815,864
Weighted average number of shares used in computing basic and
diluted net loss per share
Total adjustments 2,004
----------------- =====
(a) Cost of revenues includes $0.3 million of amortization of intangible assets, $50 thousand of stock based compensation expenses and $(0.2) million of changes in pre-acquisition indirect tax positions in the three months ended September 30, 2014.
(b) Research and development expenses include $0.4 million of stock based compensation expenses in the three months ended September 30, 2014.
(c) Selling and marketing expenses include $0.2 million of amortization of intangible assets in the three months ended September 30, 2014.
(d) General and administrative expenses include $0.1 million of stock based compensation expenses in the three months ended September 30, 2014.
(e) Taxes on income include $1.2 million of non-cash tax adjustments in the three months ended September 30, 2014.
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Nine months ended September 30,
2014 2013
---- ----
GAAP Adjustments Non-GAAP Non-GAAP
(as reported)
------------
Revenues $259,948 $259,948 $272,280
Cost of revenues 195,238 (a) 1,544 193,694 184,990
------- ------- -------
Gross profit 64,710 66,254 87,290
------ ------ ------
Operating expenses:
Research and development 26,892 (b) 3,727 23,165 30,565
Selling and marketing 42,917 (c) 1,900 41,017 47,899
General and administrative 16,893 (d) 1,464 15,429 17,152
Restructuring costs 936 936 - -
Other income 16,800 (e) 16,800 - -
Total operating expenses $70,838 $79,611 $95,616
------------------------ ------- ------- -------
Operating loss 6,128 13,357 8,326
Financial expenses, net 13,650 (f) 6,310 7,340 5,723
Loss before taxes 19,778 20,697 14,049
Taxes on income 4,745 (g) 3,991 754 1,838
----- --- -----
Net loss $24,523 $21,451 $15,887
======= ======= =======
$0.42 $0.37 $0.43
Basic and diluted net loss per share
57,711,192 57,711,192 36,736,417
Weighted average number of shares used in computing basic and
diluted net loss per share
Total adjustments 3,072
----------------- =====
(a) Cost of revenues includes $0.9 million of amortization of intangible assets, $0.2 million of stock based compensation expenses, $0.3 million of restructuring plan related costs and $0.2 million of changes in pre-acquisition indirect tax positions in the nine months ended September 30, 2014.
(b) Research and development expenses include $2.4 million of restructuring plan related costs and $1.3 million of stock based compensation expenses in the nine months ended September 30, 2014.
(c) Selling and marketing expenses include $0.7 million of amortization of intangible assets, $0.7 million of restructuring plan related costs and $0.6 million of stock based compensation expenses in the nine months ended September 30, 2014.
(d) General and administrative expenses include $0.7 million of restructuring plan related costs and $0.6 million of stock based compensation expenses in the nine months ended September 30, 2014.
(e) Other income represents net cash received as a result of an agreement with Eltek ASA to settle all claims related to the purchase of Nera from Eltek in January 2011.
(f) Financial expenses include $4.1 million of currency devaluation in Venezuela and $2.2 million related to certain transactions to expatriate cash from Venezuela and Argentina in the nine months ended September 30, 2014.
(g) Taxes on income include $4.0 million non-cash tax adjustments in the nine months ended September 30, 2014.
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
NET LOSS
(U.S. dollars in thousands)
(Unaudited)
Three months Nine months
ended ended
September 30, 2014
------------------
Reported GAAP net loss 5,558 24,523
Stock based compensation expenses 568 2,691
Amortization of intangible assets 536 1,589
Restructuring plan related costs - 5,107
Changes in pre-acquisition indirect tax positions (250) 184
Currency devaluation in Venezuela - 4,140
Expenses related to certain transactions to expatriate cash - 2,170
from Venezuela and Argentina
Non-cash tax adjustments 1,150 3,991
Income from settlement agreement with Eltek - 16,800
Non-GAAP net loss 3,554 21,451
===== ======
SOURCE Ceragon Networks Ltd.
