Ceragon Networks Reports Financial Results For the Second Quarter of 2020

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.

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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 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


 

 

 

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SOURCE Ceragon Networks Ltd

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