LITTLE FALLS, New Jersey,
May 4, 2020 /PRNewswire/
-- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless
hauling specialist, today reported results for the first quarter
ended March 31, 2020.
First Quarter 2020 Highlights
- Weak results reflecting COVID-19 challenges compounded
by normal Q1 seasonality
- Strong bookings (book-to-bill ratio well above 1) as
service providers addressed increased demand for broadband
connectivity
- Return of India as
major source of business; highest Q1 bookings in Europe in 6 years
- Management believes trends created by the COVID-19 crisis will
accelerate the global 5G network rollout, driving long-term growth
momentum for Ceragon. However, management remains cautious because
of the risk of a potential worldwide recession.
Primary Financial Results:
Revenues: $55.9 million
compared with $69.2 million for Q1'19
and $71.3 million for Q4'19.
Gross margin: 25.1% compared to 35.6% for Q1'19 and
31.7% for Q4'19.
Operating income (loss): $(6.0)
million compared with $3.2
million for Q1'19 and $(2.2)
million for Q4'19.
Net income (loss): $(6.9) million, $(0.09) per diluted share compared with
$0.8 million, $0.01 per diluted share for Q1'19 and
$(4.1) million, or $(0.05) per diluted share for Q4'19.
Non-GAAP results: gross margin 25.1%, operating loss
$(5.6) million, and net loss
$(6.7) million, or $(0.08) per diluted share. For reconciliation of
GAAP to non-GAAP results, see the attached tables.
Cash and cash equivalents: $44.1 million at
March 31, 2020, compared to
$23.9 million at December 31, 2019.
Commenting on the results, Ira
Palti, President and CEO of Ceragon, said, "Our results were
in line with the business update we provided on April 6th, reflecting the normal
seasonality of the first quarter compounded by the disruption
created by the COVID-19 environment. At the same time, the sweeping
changes that the pandemic has made in the way we all work, shop,
learn and stay entertained have created a global surge in demand
for broadband capacity that has increased demand for our products.
Although no one knows how to predict the timing of the recovery,
the fact that broadband connectivity is now recognized as an
essential utility brings urgency to the need to increase the
capacity of existing networks and to extend network coverage to
more of the population. During the first quarter, this trend
accelerated bookings for our wireless hauling solutions, and we
believe it will accelerate the transition to 5G, further
emphasizing the need for our differentiated technologies."
Mr. Palti continued, "In the meantime, we are fully focused on
serving our customers in today's dynamic environment. We are proud
of our success in meeting our commitments in the face of supply
chain disruptions, and working to overcome challenges as they
arise. We are pleased that India's
Airtel has recently placed a large order, indicating the return of
India as a major focus market
after last year's slowdown. In Europe, we had the strongest first-quarter
bookings in six years, and in Latin
America we continued executing on expansion projects across
the continent."
Mr. Palti concluded, "Looking forward, concerns of a global
recession could surely delay operators' network investments,
dampening short-to-mid-term demand for our equipment. However, with
strong ongoing operations, a healthy balance sheet and a new
urgency to the 5G market, we believe we are positioned favorably
and expect to emerge from today's challenges as a leader in a
growing market."
Supplemental revenue breakouts by geography:
First quarter 2020:
·
Europe:
|
15%
|
·
Africa:
|
6%
|
· North
America:
|
13%
|
· Latin
America:
|
20%
|
·
India:
|
25%
|
·
APAC
|
21%
|
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: 8883765. This
audio replay will be available through June
4, 2020.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless hauling
specialist. We help operators and other service providers worldwide
increase operational efficiency and enhance end customers' quality
of experience with innovative wireless backhaul and fronthaul
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 hauling provides highly reliable, fast to deploy,
high-capacity wireless hauling 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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Safe Harbor
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 risk of a disruption to our and
our customers' business related to the outbreak of the novel
coronavirus (COVID-19) pandemic ("Coronavirus"); the risk of
macro-economic downturn and slowdown of development and significant
decline of business that can harm our and our customers' ability to
conduct or further develop our/their business, including,
cancellation, suspension or reduction in the investment in new
equipment purchases, postponement or cancellation of rollout of
wireless networks, postponement in the transition to 5G
technologies and in the introduction of new products and
capabilities, inability to deliver and perform under our contracts,
disruption to our supply chain and production capacity, adverse
effect on our and our customers' financial performance, cash flow,
revenue and financial results, available cash and financing, and
our ability to bill and collect amounts due from our customers; the
risks relating to the concentration of a significant portion of
Ceragon's expected business in certain countries 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 of
delays in converting design wins into revenue as well as the
expected revenue growth; 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-
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(U.S. dollars in
thousands, except share and per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three months
ended
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Revenues
|
|
$
55,871
|
|
$
69,163
|
|
Cost of
revenues
|
|
41,861
|
|
44,531
|
|
|
|
|
|
|
|
Gross
profit
|
|
14,010
|
|
24,632
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development, net
|
|
7,290
|
|
6,164
|
|
Selling and
marketing
|
|
8,273
|
|
9,462
|
|
General and
administrative
|
|
4,456
|
|
5,782
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
$
20,019
|
|
$
21,408
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(6,009)
|
|
3,224
|
|
Financial expenses
and others, net
|
|
308
|
|
1,109
|
|
|
|
|
|
|
|
Income (loss) before
taxes
|
|
(6,317)
|
|
2,115
|
|
|
|
|
|
|
|
Taxes on
income
|
|
380
|
|
1,134
|
|
Equity loss in
affiliates
|
|
183
|
|
173
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
(6,880)
|
|
$
808
|
|
|
|
|
|
|
|
Basic net
income (loss) per share
|
|
$
(0.09)
|
|
$
0.01
|
|
Diluted net
income (loss) per share
|
|
$
(0.09)
|
|
$
0.01
|
|
|
|
80,764,932
|
|
80,113,607
|
|
|
Weighted average
number of shares used in
computing basic net income (loss) per
share
|
|
|
80,764,932
|
|
82,333,627
|
|
Weighted average
number of shares used in
computing diluted net income (loss)
per share
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(U.S. dollars in
thousands)
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
2019
|
2020
|
ASSETS
|
|
Unaudited
|
|
Audited
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
44,120
|
|
$
23,939
|
Trade receivables,
net
|
|
104, 185
|
|
118, 531
|
Other accounts
receivable and prepaid expenses
|
|
12, 215
|
|
11, 033
|
Inventories
|
|
59,659
|
|
62,132
|
|
|
|
|
|
Total current
assets
|
|
220,179
|
|
215,635
|
|
|
|
|
|
NON-CURRENT
ASSETS:
|
|
|
|
|
Long-term bank
deposits
|
|
16
|
|
17
|
Deferred tax
assets
|
|
8, 130
|
|
8, 106
|
Severance pay and
pension fund
|
|
5,654
|
|
5,661
|
Property and equipment,
net
|
|
33,589
|
|
34,865
|
Intangible assets,
net
|
|
8,033
|
|
7,898
|
Other non-current
assets
|
|
17, 070
|
|
17, 707
|
|
|
|
|
|
Total non-current
assets
|
|
72,492
|
|
74,254
|
|
|
|
|
|
Total
assets
|
|
$
292,671
|
|
$
289,889
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Trade
payables
|
|
$
55,553
|
|
$
59,635
|
Deferred
revenues
|
|
3,343
|
|
1,734
|
Short-term
loans
|
|
32,855
|
|
14,600
|
Other accounts payable
and accrued expenses
|
|
25,598
|
|
28,399
|
|
|
|
|
|
Total current
liabilities
|
|
117,349
|
|
104,368
|
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
Accrued severance pay
and pension
|
|
10,295
|
|
10,709
|
Deferred
revenues
|
|
6,265
|
|
6,265
|
Other long-term
payables
|
|
7,348
|
|
8,126
|
|
|
|
|
|
Total long-term
liabilities
|
|
23,908
|
|
25,100
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
Share
capital:
|
|
|
|
|
Ordinary
shares
|
|
215
|
|
215
|
Additional paid-in
capital
|
|
418,734
|
|
418,062
|
Treasury shares at
cost
|
|
(20,091)
|
|
(20,091)
|
Other comprehensive
loss
|
|
(10,765)
|
|
(8,666)
|
Accumulated
deficits
|
|
(236,679)
|
|
(229,099)
|
|
|
|
|
|
Total shareholders'
equity
|
|
151,414
|
|
160,421
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
292,671
|
|
$
289,889
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
(U.S. dollars, in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
March
31,
|
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
Net Income
(loss)
|
|
$
(6,880)
|
|
$
808
|
Adjustments required
to reconcile net income (loss)
to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
2,704
|
|
2,120
|
Stock-based
compensation expense
|
|
426
|
|
475
|
Decrease (increase)
in trade and other receivables, net
|
|
11,868
|
|
(6,391)
|
Decrease (increase)
in inventory, net of write-off
|
|
1,997
|
|
(14,150)
|
Decrease (increase)
in deferred tax asset, net
|
|
(24)
|
|
590
|
Increase (decrease)
in trade payables and
accrued
|
|
(8,130)
|
|
15,583
|
Liabilities
|
Increase in deferred
revenues
|
|
1,609
|
|
376
|
Other
adjustments
|
|
(443)
|
|
(31)
|
Net cash provided
by (used in) operating activities
|
$
3,127
|
|
$
(620)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchase of property
and equipment, net
|
|
(959)
|
|
(3,991)
|
Purchase of
intangible assets, net
|
|
(243)
|
|
(2,189)
|
Proceeds from bank
deposits
|
|
-
|
|
940
|
Net cash used in
investing activities
|
|
$
(1,202)
|
|
$
(5,240)
|
|
|
|
|
|
Cash flow from
financing activities:
|
|
|
|
|
Proceeds from bank
credits and loans, net
|
|
18,255
|
|
-
|
Proceeds from
exercise of options
|
246
|
|
66
|
Net cash provided
by financing activities
|
|
$
18,501
|
|
$
66
|
|
|
|
|
|
Translation
adjustments on cash and cash equivalents
|
$
(245)
|
|
$
(33)
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
$
20,181
|
|
$
(5,827)
|
|
|
|
|
|
Cash and cash
equivalents at the beginning of the period
|
23,939
|
|
35,581
|
|
|
|
|
|
Cash and cash
equivalents at the end of the period
|
$
44,120
|
|
$
29,754
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL RESULTS
|
(U.S. dollars in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
March
31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
GAAP cost
of revenues
|
|
$
41,861
|
|
$
44,531
|
|
Stock based
compensation expenses
|
|
(27)
|
|
(15)
|
|
Changes in indirect
tax positions
|
|
(1)
|
|
(21)
|
|
Non-GAAP cost
of revenues
|
|
$
41,833
|
|
$
44,495
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
$
14,010
|
|
$
24,632
|
|
Gross profit
adjustments
|
|
28
|
|
36
|
|
Non-GAAP gross
profit
|
|
$
14,038
|
|
$
24,668
|
|
|
|
|
|
|
|
GAAP Research and
development expenses
|
$
7,290
|
|
$
6,164
|
|
Stock based
compensation expenses
|
|
(89)
|
|
(103)
|
|
Non-GAAP Research and
development expenses
|
$
7,201
|
|
$
6,061
|
|
|
|
|
|
|
|
GAAP Sales and
Marketing expenses
|
|
$
8,273
|
|
$
9,462
|
|
Stock based
compensation expenses
|
|
(100)
|
|
(175)
|
|
Non-GAAP Sales and
Marketing expenses
|
$
8,173
|
|
$
9,287
|
|
|
|
|
|
|
|
GAAP General and
Administrative expenses
|
$
4,456
|
|
$
5,782
|
|
Stock based
compensation expenses
|
|
(210)
|
|
(182)
|
|
Non-GAAP General and
Administrative expenses
|
$
4,246
|
|
$
5,600
|
|
|
|
|
|
|
|
GAAP financial
expenses and others, net
|
$
308
|
|
$
1,109
|
|
Leases – financial
income
|
|
450
|
|
26
|
|
Non-GAAP financial
expenses and others, net
|
$
758
|
|
$
1,135
|
|
|
|
|
|
|
|
GAAP Tax
expenses
|
|
$
380
|
|
$
1,134
|
|
Non-cash tax
adjustments
|
|
(15)
|
|
(618)
|
|
Non-GAAP Tax
expenses
|
|
$
365
|
|
$
516
|
|
|
|
|
|
|
|
GAAP equity loss in
affiliates
|
|
$
183
|
|
$
173
|
|
Other non-cash
adjustments
|
|
(183)
|
|
(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,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
(6,880)
|
|
$
808
|
Stock based
compensation expenses
|
426
|
|
475
|
Changes in indirect
tax positions
|
1
|
|
21
|
Leases – financial
income
|
|
(450)
|
|
(26)
|
Non-cash tax
adjustment
|
|
15
|
|
618
|
Other non-cash
adjustment
|
|
183
|
|
173
|
|
|
$
(6,705)
|
|
$
2,069
|
Non-GAAP net income
(loss)
|
|
|
$
(0.09)
|
|
$
0.01
|
GAAP basic net income
(loss) per share
|
|
|
$
(0.09)
|
|
$
0.01
|
GAAP diluted net
income (loss) per share
|
|
|
$
(0.08)
|
|
$
0.03
|
Non-GAAP diluted net
income (loss) per share
|
|
|
|
|
|
Weighted average
number of shares used in computing
GAAP basic net income
(loss) per share
|
|
80,764,932
|
|
80,113,607
|
|
|
|
|
|
Weighted average
number of shares used in
computing
|
|
80,764,932
|
|
82,333,627
|
GAAP
diluted net income (loss) per share
|
|
|
|
|
|
Weighted average
number of shares used in computing
Non-GAAP diluted net
income (loss) per share
|
80,764,932
|
|
82,701,755
|
Investors:
Osi Sessler
+972-3-5431047
investor@ceragon.com
Media:
Tanya Solomon
+972-3-5431163
media@ceragon.com
View original
content:http://www.prnewswire.com/news-releases/ceragon-networks-reports-financial-results-for-the-first-quarter-of-2020-301051794.html
SOURCE Ceragon Networks Ltd