LITTLE FALLS, N.J.,
Aug. 3, 2020 /PRNewswire/
-- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless
hauling specialist, today reported results for the second quarter
ended June 30, 2020.
Second Quarter 2020 Highlights:
- $4 million in positive cash
flow from operating and investing activities, along with rising
revenues, margins and net results compared with Q1'20,
reflecting an improving business environment in most regions and
the Company's successful focus on execution.
- Book-to-bill ratio above 1 as multiple service providers
accelerate their 4G expansion projects and ISPs move swiftly to
fill capacity needs.
- Effect of COVID-19 differed from region to region:
business in North America,
Europe and APAC remained stable;
India emerged from lockdown in
mid-quarter; a major new project with a new customer was signed in
Africa; and Latin America bookings were weaker.
- Management expects trends created by the COVID-19 crisis
to accelerate 5G network rollouts, serving as a future growth
driver. However, for the short-term, the COVID-19 environment
creates uncertainty.
Primary Financial Results:
Revenues: $62.4 million
compared with $73.0 million for Q2'19
and $55.9 million for Q1'20.
Gross margin: 26.4% compared to 36.1% for Q2'19 and
25.1% for Q1'20.
Operating income (loss): $(3.5)
million compared with $4.1
million for Q2'19 and $(6.0)
million for Q1'20.
Net income (loss): $(5.5) million, or $(0.07) per diluted share compared with
$0.8 million, or $0.01 per diluted share for Q2'19 and
$(6.9) million, or $(0.09) per diluted share for Q1'20.
Non-GAAP results: gross margin 26.5%, operating loss
$(3.0) million, and net loss
$(4.9) million, or $(0.06) per diluted share. For reconciliation of
GAAP to non-GAAP results, see the attached tables.
Cash and cash equivalents: $35.2 million at
June 30, 2020, compared to
$44.1 million at March 31, 2020.
Ira Palti, President and CEO of
Ceragon, commented, "Our results for the second quarter show
improvement as compared with Q1, reflecting the return of many of
our customers to their ongoing infrastructure projects and the
beginning of the 'new normal.' Our focus has been to maintain an
uninterrupted flow of services and equipment to these customers. At
the same time, we have been strengthening our balance sheet and
cash position, as evident by the quarter's reduction in inventories
and healthy $4 million in positive
cash flow, while also focusing on improving our results, increasing
our revenues, margins and net results as compared with the first
quarter."
"The new COVID-19 reality has brought a new urgency to 5G
rollout and 4G network expansion plans, a trend that we expect to
persist long after COVID-19 has passed. While no one knows exactly
what the next few months will look like, we believe the situation
plays to our strengths and will have a positive long-term effect.
Meanwhile, we are financially stable, we expect our business to
continue returning towards normal, and we are positioned to benefit
from future opportunities."
Supplemental revenue breakouts by geography:
Second quarter 2020:
- Europe:
21%
-
Africa: 4%
- North America: 15%
- Latin America: 19%
-
India: 22%
-
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: 154231.
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: 9886196. This
audio replay will be available through September 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.
Join the discussion
LinkedIn:
https://www.linkedin.com/company/ceragon-networks
Facebook: https://www.facebook.com/ceragonnetworks/
Twitter: https://twitter.com/Ceragon
YouTube: https://www.youtube.com/user/CeragonNetworks
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 that constitute
"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.
Although we believe that the projections reflected in such
forward-looking statements are based upon reasonable assumptions,
we can give no assurance that our expectations will be obtained or
that any deviations therefrom will not be material. Such statements
involve risks and uncertainties that may cause future results to
differ materially from those anticipated. These risks and
uncertainties include, but are not limited to, the effects of
general economic conditions, the effect of the COVID-19 crisis on
the global markets and on the markets in which we operate,
including the risk of a continued disruption to our and our
customers', providers', business partners and contractors' business
as a result of the outbreak and effects of the COVID-19 pandemic
and of an 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 as a result therefrom; 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; risks
associated with any failure to meet our product development
timetable; the risk that the rollout of 5G services could take
longer or differently than anticipated and such other risks,
uncertainties and other factors that could affect our results, as
detailed in our press release that was published earlier today and
as further detailed in Ceragon's most recent Annual Report on Form
20-F and in Ceragon's other filings with the Securities and
Exchange Commission.
Such forward-looking statements, including the risks, uncertainties
and other factors that could affect our results, 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 results and there can be no assurance that it will
prove to be accurate. Ceragon may elect to update these
forward-looking statements at some point in the future but the
company specifically disclaims any obligation to do so.
Ceragon's public filings are available from the Securities and
Exchange Commission's website at www.sec.gov and may also be
obtained from Ceragon's website at
www.ceragon.com.
Investors:
Osi Sessler
+972 3 5431047
investor@ceragon.com
Media:
Tanya Solomon
+972 3 5431163
media@ceragon.com
-tables follow-
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(U.S. dollars in
thousands, except share and per share data)
|
(Unaudited)
|
|
|
|
Three months
ended June
30,
|
|
Six months
ended June
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
62,427
|
|
$
73,001
|
|
$
118,298
|
|
$
142,164
|
Cost of
revenues
|
|
45,925
|
|
46,640
|
|
87,786
|
|
91,171
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
16,502
|
|
26,361
|
|
30,512
|
|
50,993
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development, net
|
|
6,770
|
|
6,254
|
|
14,060
|
|
12,418
|
Selling and
marketing
|
|
8,200
|
|
10,121
|
|
16,473
|
|
19,583
|
General and
administrative
|
|
4,985
|
|
5,854
|
|
9,441
|
|
11,636
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
$
19,955
|
|
$
22,229
|
|
$
39,974
|
|
$
43,637
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(3,453)
|
|
4,132
|
|
(9,462)
|
|
7,356
|
|
|
|
|
|
|
|
|
|
Financial expenses and
others, net
|
|
1,464
|
|
1,830
|
|
1,772
|
|
2,939
|
|
|
|
|
|
|
|
|
|
Income (loss) before
taxes
|
|
(4,917)
|
|
2,302
|
|
(11,234)
|
|
4,417
|
|
|
|
|
|
|
|
|
|
Taxes on
income
|
|
400
|
|
1,398
|
|
780
|
|
2,532
|
Equity loss in
affiliates
|
|
160
|
|
141
|
|
343
|
|
314
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
(5,477)
|
|
$
763
|
|
$
(12,357)
|
|
$
1,571
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share
|
|
$
(0.07)
|
|
$
0.01
|
|
$
(0.15)
|
|
$
0.02
|
|
|
|
|
|
|
|
|
|
Diluted net income
(loss) per share
|
|
$
(0.07)
|
|
$
0.01
|
|
$
(0.15)
|
|
$
0.02
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares
used in computing basic net income
(loss) per share
|
|
81,012,896
|
|
80,192,036
|
|
80,889,022
|
|
80,153,038
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares
used in computing diluted net
income (loss) per share
|
|
81,012,896
|
|
82,051,028
|
|
80,889,022
|
|
82,192,544
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(U.S. dollars in
thousands)
|
|
|
|
June
30, 2020
|
|
December 31,
2019
|
ASSETS
|
|
Unaudited
|
|
Audited
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
35,167
|
|
$
23,939
|
Trade receivables,
net
|
|
97,547
|
|
118,531
|
Other accounts
receivable and prepaid expenses
|
|
12,935
|
|
11,033
|
Inventories
|
|
53,593
|
|
62,132
|
|
|
|
|
|
Total current
assets
|
|
199,242
|
|
215,635
|
|
|
|
|
|
NON-CURRENT
ASSETS:
|
|
|
|
|
Long-term bank
deposits
|
|
16
|
|
17
|
Deferred tax
assets
|
|
8,215
|
|
8,106
|
Severance pay and pension
fund
|
|
5,748
|
|
5,661
|
Property and equipment,
net
|
|
33,171
|
|
34,865
|
Intangible assets,
net
|
|
8,113
|
|
7,898
|
Other non-current
assets
|
|
17,592
|
|
17,707
|
|
|
|
|
|
Total non-current
assets
|
|
72,855
|
|
74,254
|
|
|
|
|
|
Total assets
|
|
$
272,097
|
|
$
289,889
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Trade
payables
|
|
$
54,357
|
|
$
59,635
|
Deferred
revenues
|
|
2,537
|
|
1,734
|
Short-term
loans
|
|
19,679
|
|
14,600
|
Other accounts payable
and accrued expenses
|
|
24,463
|
|
28,399
|
|
|
|
|
|
Total current
liabilities
|
|
101,036
|
|
104,368
|
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
Accrued severance pay
and pension
|
|
10,509
|
|
10,709
|
Deferred
revenues
|
|
6,265
|
|
6,265
|
Other long-term
payables
|
|
6,958
|
|
8,126
|
|
|
|
|
|
Total long-term
liabilities
|
|
23,732
|
|
25,100
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
|
Share
capital:
|
|
|
|
|
Ordinary shares
|
|
215
|
|
215
|
Additional paid-in
capital
|
|
419,483
|
|
418,062
|
Treasury shares at
cost
|
|
(20,091)
|
|
(20,091)
|
Other comprehensive
loss
|
|
(10,122)
|
|
(8,666)
|
Accumulated
deficits
|
|
(242,156)
|
|
(229,099)
|
|
|
|
|
|
Total shareholders'
equity
|
|
147,329
|
|
160,421
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$
272,097
|
|
$
289,889
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
(U.S. dollars, in
thousands)
|
(Unaudited)
|
|
|
Three months
ended
June
30,
|
|
Six months
ended
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flow from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(5,477)
|
|
$
763
|
|
$
(12,357)
|
|
$
1,571
|
Adjustments to
reconcile net income (loss) to
net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,680
|
|
2,318
|
|
5,384
|
|
4,438
|
Stock-based
compensation expense
|
441
|
|
697
|
|
867
|
|
1,172
|
Decrease (increase)
in trade and other
receivables, net
|
5,094
|
|
(3,797)
|
|
16,962
|
|
(10,188)
|
Decrease (increase)
in inventory, net of write off
|
5,529
|
|
(6,663)
|
|
7,526
|
|
(20,813)
|
Decrease (increase)
in deferred tax asset, net
|
(85)
|
|
646
|
|
(109)
|
|
1,236
|
Increase (decrease)
in trade payables and
accrued
liabilities
|
(865)
|
|
(6,120)
|
|
(8,995)
|
|
9,463
|
Increase (decrease)
in deferred revenues
|
(806)
|
|
5,774
|
|
803
|
|
6,150
|
Other
adjustments
|
155
|
|
(105)
|
|
(288)
|
|
(136)
|
Net cash provided
by (used in) operating
activities
|
$
6,666
|
|
$
(6,487)
|
|
$
9,793
|
|
$
(7,107)
|
Cash flow from
investing activities:
|
|
|
|
|
|
|
|
Purchase of property
and equipment, net
|
(2,679)
|
|
(2,716)
|
|
(3,638)
|
|
(6,707)
|
Purchase of
intangible assets, net
|
(36)
|
|
(603)
|
|
(279)
|
|
(2,792)
|
Proceeds from
(repayment of) bank deposits
|
-
|
|
(20)
|
|
-
|
|
920
|
Net cash used in
investing activities
|
$
(2,715)
|
|
$
(3,339)
|
|
$
(3,917)
|
|
$
(8,579)
|
|
|
|
|
|
|
|
|
Cash flow from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
exercise of options
|
308
|
|
190
|
|
554
|
|
256
|
Proceeds from
(repayment of) bank credits
and loans, net
|
(13,176)
|
|
8,900
|
|
5,079
|
|
8,900
|
Net cash
provided by (used in) financing
activities
|
$
(12,868)
|
|
$
9,090
|
|
$
5,633
|
|
$
9,156
|
|
|
|
|
|
|
|
|
Translation
adjustments on cash and cash
equivalents
|
$
(36)
|
|
$
23
|
|
$
(281)
|
|
$
(10)
|
Increase
(decrease) in cash and cash
equivalents
|
$
(8,953)
|
|
$
(713)
|
|
$
11,228
|
|
$
(6,540)
|
Cash and cash
equivalents at the beginning
of the period
|
44,120
|
|
29,754
|
|
23,939
|
|
35,581
|
Cash and cash
equivalents at the end of
the period
|
$
35,167
|
|
$
29,041
|
|
$
35,167
|
|
$
29,041
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL RESULTS
|
(U.S. dollars in
thousands)
|
(Unaudited)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP cost
of revenues
|
|
$
|
45,925
|
|
$
|
46,640
|
|
$
|
87,786
|
|
$
|
91,171
|
Stock based
compensation expenses
|
|
|
(33)
|
|
|
(16)
|
|
|
(60)
|
|
|
(31)
|
Changes in indirect
tax positions
|
|
|
(1)
|
|
|
(9)
|
|
|
(2)
|
|
|
(30)
|
Non-GAAP cost
of revenues
|
|
$
|
45,891
|
|
$
|
46,615
|
|
$
|
87,724
|
|
$
|
91,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
$
|
16,502
|
|
$
|
26,361
|
|
$
|
30,512
|
|
$
|
50,993
|
Gross profit
adjustments
|
|
|
34
|
|
|
25
|
|
|
62
|
|
|
61
|
Non-GAAP gross
profit
|
|
$
|
16,536
|
|
$
|
26,386
|
|
$
|
30,574
|
|
$
|
51,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Research and
development expenses
|
|
$
|
6,770
|
|
$
|
6,254
|
|
$
|
14,060
|
|
$
|
12,418
|
Stock based
compensation expenses
|
|
|
(10)
|
|
|
(98)
|
|
|
(99)
|
|
|
(201)
|
Non-GAAP Research and
development
expenses
|
|
$
|
6,760
|
|
$
|
6,156
|
|
$
|
13,961
|
|
$
|
12,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Sales and
Marketing expenses
|
|
$
|
8,200
|
|
$
|
10,121
|
|
$
|
16,473
|
|
$
|
19,583
|
Stock based
compensation expenses
|
|
|
(168)
|
|
|
(207)
|
|
|
(268)
|
|
|
(382)
|
Non-GAAP Sales and
Marketing expenses
|
|
$
|
8,032
|
|
$
|
9,914
|
|
$
|
16,205
|
|
$
|
19,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP General and
Administrative expenses
|
|
$
|
4,985
|
|
$
|
5,854
|
|
$
|
9,441
|
|
$
|
11,636
|
Stock based
compensation expenses
|
|
|
(230)
|
|
|
(376)
|
|
|
(440)
|
|
|
(558)
|
Non-GAAP General and
Administrative
expenses
|
|
$
|
4,755
|
|
$
|
5,478
|
|
$
|
9,001
|
|
$
|
11,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP financial
expenses and others, net
|
|
$
|
1,464
|
|
$
|
1,830
|
|
$
|
1,772
|
|
$
|
2,939
|
Leases – financial
income (expenses)
|
|
|
(110)
|
|
|
(218)
|
|
|
340
|
|
|
(192)
|
Non-GAAP financial
expenses and others, net
|
|
$
|
1,354
|
|
$
|
1,612
|
|
$
|
2,112
|
|
$
|
2,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Tax
expenses
|
|
$
|
400
|
|
$
|
1,398
|
|
$
|
780
|
|
$
|
2,532
|
Non cash tax
adjustments
|
|
|
87
|
|
|
(654)
|
|
|
72
|
|
|
(1,272)
|
Non-GAAP Tax
expenses
|
|
$
|
487
|
|
$
|
744
|
|
$
|
852
|
|
$
|
1,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP equity loss in
affiliates
|
|
$
|
160
|
|
$
|
141
|
|
$
|
343
|
|
$
|
314
|
Other non-cash
adjustments
|
|
|
(160)
|
|
|
(141)
|
|
|
(343)
|
|
|
(314)
|
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
|
|
Six months
ended,
June
30,
|
|
|
|
|
June
30,
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
GAAP net
income (loss)
|
|
$
|
(5,477)
|
|
$
|
763
|
|
$
|
(12,357)
|
|
$
|
1,571
|
|
|
Stock
based compensation
expenses
|
|
|
441
|
|
|
697
|
|
|
867
|
|
|
1,172
|
|
|
Changes
in indirect tax positions
|
|
|
1
|
|
|
9
|
|
|
2
|
|
|
30
|
|
|
Leases –
financial expenses
(income)
|
|
|
110
|
|
|
218
|
|
|
(340)
|
|
|
192
|
|
|
Non-cash
tax adjustments
|
|
|
(87)
|
|
|
654
|
|
|
(72)
|
|
|
1,272
|
|
|
Other
non-cash adjustment
|
|
|
160
|
|
|
141
|
|
|
343
|
|
|
314
|
|
|
Non-GAAP net income
(loss)
|
|
$
|
(4,852)
|
|
$
|
2,482
|
|
$
|
(11,557)
|
|
$
|
4,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP basic net income
(loss) per share
|
|
$
|
(0.07)
|
|
$
|
0.01
|
|
$
|
(0.15)
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net
income (loss) per share
|
|
$
|
(0.07)
|
|
$
|
0.01
|
|
$
|
(0.15)
|
|
$
|
0.02
|
|
|
Non-GAAP basic and
diluted net
income (loss) per share
|
|
$
|
(0.06)
|
|
$
|
0.03
|
|
$
|
(0.14)
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
used in computing GAAP
basic net income (loss) per share
|
|
|
81,012,896
|
|
|
80,192,036
|
|
|
80,889,022
|
|
|
80,153,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
used in computing GAAP diluted net
income (loss) per share
|
|
|
81,012,896
|
|
|
82,051,028
|
|
|
80,889,022
|
|
|
82,192,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
used in computing
Non-GAAP diluted net income (loss)
per share
|
|
|
81,012,896
|
|
|
82,249,605
|
|
|
80,889,022
|
|
|
82,475,897
|
|
View original
content:http://www.prnewswire.com/news-releases/ceragon-networks-reports-financial-results-for-the-second-quarter-of-2020-301104611.html
SOURCE Ceragon Networks Ltd