Ceragon Networks Reports First Quarter 2014 Financial Results - WDRB 41 Louisville News

Ceragon Networks Reports First Quarter 2014 Financial Results

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SOURCE Ceragon Networks Ltd.

PARAMUS, N.J., May 8, 2014 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless hauling specialist today reported results for the first quarter which ended March 31, 2014.

Revenues for the first quarter of 2014 were within the range of updated guidance at $70.5 million, down 22% from $90.1 million for the first quarter of 2013, and down 21% from $89.5 million in the fourth quarter of 2013.

Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the first quarter of 2014 was $(27.0) million or $(0.51) per basic share and diluted share, compared to net loss of $(14.1) million in the first quarter of 2013, or $(0.38) per basic share and diluted share.

On a non-GAAP basis, net loss for the first quarter was $(12.9) million, or $(0.25) per basic share and diluted share, excluding (a) $1.1 million of stock-based compensation expenses, (b) $0.5 million amortization of intangible assets, (c) $4.4 million restructuring and other expenses associated with the 2013 restructuring (d) $0.3 million of changes in pre-acquisition indirect tax positions (e) $4.1 million finance expenses related to a currency devaluation in Venezuela (f) $2.2 million related to  certain transactions to expatriate cash from Venezuela and Argentina, and (g) $1.5 million of non-cash tax adjustments. Non-GAAP net loss for the first quarter of 2013 was $(5.7) million, or $(0.16) per basic share and diluted share. (Please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP.)

Gross margin on a GAAP basis in the first quarter of 2014 was 22.1% of revenues. Gross margin on a non-GAAP basis was 23.3% of revenues.

Operating loss on a GAAP basis in the first quarter of 2014 was $(17.1) million. On a non-GAAP basis, operating loss was $(10.8) million.

Cash and cash investments at the end of the quarter were $30.5 million. On April 2, the company announced a settlement agreement with Eltek ASA pursuant to which it has received $17 million in cash in the second quarter.

"We are pleased to see the strong bookings during the first quarter, especially for our new IP-20 products," said Ira Palti, President and CEO of Ceragon. "As previously indicated, our bookings increased substantially from the fourth quarter and the IP-20 products accounted for more than 40% of total bookings. The number of requests for proposals, evaluations, trials and other new business activity continues to increase with both existing and new customers, and we are making progress on some large projects. These factors are the basis of our expectation that the second half of the year will be substantially better than the first half.

"Meanwhile, as we indicated in our update on April 2nd, our first quarter revenues were affected  by our decision not to ship and install an order we received from a large customer pending renegotiation of payment terms, and  the higher than expected proportion of orders for new IP-20 products during the initial phase of the manufacturing ramp. We have reached an understanding with the customer that will improve payment terms but also will result in spreading shipments over a longer time period in the future. We have made good progress during the initial phase of ramping our manufacturing for the new products during the first quarter, and we continue to ramp production as quickly as possible to meet the growing demand for the IP-20 products."

Supplemental revenue breakouts:

Geographical breakdown, first quarter of 2014:

  • Europe:  19%
  • Africa:  11%
  • North America: 13%
  • Latin America:  30%
  • India:  14%
  • APAC: 13%

A conference call will follow today, May 8, 2014, beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (877) 777-1968, or international +1(612) 332-0632 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: 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: 325517. A replay of both the call and the webcast will be available through June 8, 2014.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 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 may contain statements concerning Ceragon's future prospects that are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. 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, 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, the risks relating to the concentration of our business 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:

Aviram Steinhart    


or 


Claudia Gatlin         


Yoel Knoll     

+972 3 5431 443




+1 201 853 0228


+972 3 5431132 or +1 201 853 0271

avirams@ceragon.com




claudiag@ceragon.com   


yoelk@ceragon.com 

 


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)




Three months ended



March 31,



2014


2013






Revenues


$     70,515


$     90,097

Cost of revenues


54,936


62,637






Gross profit


15,579


27,460






Operating expenses:





Research and development, net


10,439


11,906

Selling and marketing


15,420


17,533

General and administrative


5,906


6,715

Restructuring costs


936


-






Total operating expenses


$      32,701


$      36,154






Operating loss


17,122


8,694

Financial expenses, net


8,164


4,629






Loss before taxes


25,286


13,323






Taxes on income


1,677


818






Net loss


$    26,963


$    14,141






Basic and diluted net loss per share


$    0.51


$    0.38

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


52,457,168


36,755,603

 


CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)




March 31,

2014


December 31,
2013

ASSETS










CURRENT ASSETS:





Cash and cash equivalents


$       26,055


$       42,407

Short-term bank deposits


396


446

Marketable securities


-


5,499

Trade receivables, net


129,976


131,166

Other accounts receivable and prepaid expenses


33,179


34,205

Deferred taxes, net


6,986


7,198

Inventories


62,951


64,239

Total current assets


259,543


285,160






NON-CURRENT ASSETS:





Marketable securities


4,060


3,985

   Deferred taxes, net


5,620


6,542

   Severance pay funds and pension


6,883


7,065

   Property and equipment, net


35,140


35,245

   Intangible assets, net


6,703


7,213

   Goodwill


15,036


14,935

   Other non-current assets


6,995


5,826

Total non-current assets


80,437


80,811

Total assets


$  339,980


$  365,971

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 





CURRENT LIABILITIES:





Short term loans, including current maturities of long term loan


$       65,032


$       46,922

Trade payables


64,841


77,979

Deferred revenues


5,070


7,968

Other accounts payable and accrued expenses


44,282


45,526

Total current liabilities


179,225


178,395

 

LONG-TERM LIABILITIES





Long term bank loan, net of current maturities


8,246


10,304

Accrued severance pay and pension


13,879


13,635

Other long term liabilities


29,116


28,559



51,241


52,498

SHAREHOLDERS' EQUITY:





Share capital:





    Ordinary shares


141


141

Additional paid-in capital


359,036


357,989

Treasury shares at cost


(20,091)


(20,091)

Accumulated other comprehensive loss, net of taxes


(1,217)


(1,569)

Accumulated deficit


(228,355)


(201,392)






Total shareholders' equity


109,514


135,078






Total liabilities and shareholders' equity


$     339,980


$     365,971

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)






Three months ended



March 31,



2014


2013

Cash flow from operating activities:





Net loss


$    (26,963)


$    (14,141)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:










Depreciation and amortization


3,378


4,038

Stock-based compensation expense


1,047


1,075

Decrease in trade and other receivables, net


1,894


23,652

Decrease in inventory, net of write-off


1,609


2,863

Decrease in deferred tax asset, net


1,317


150

Decrease in trade payables and accrued liabilities


(15,058)


(13,425)

Decrease in deferred revenues


(2,899)


(1,252)

Other adjustments


841


(101)

Net cash provided by (used in) operating activities

$    (34,834)


$    2,859






Cash flow from investing activities:





Purchase of property and equipment ,net


(2,850)


(2,895)

Investment in short and long-term bank deposits


-


(217)

Proceeds from short and long-term bank deposits

50


-

Proceeds from sale and maturities of marketable securities

5,161


-

Net cash provided by (used in) investing activities


$    2,361


$    (3,112)






Cash flow from financing activities:





Proceeds from exercise of options


-


1,137

Proceeds from short-term bank loans


18,110


3,000

Repayment of loans from financial institutions

(2,058)


(4,058)

Net cash provided by financing activities


$    16,052


$    79






Translation adjustments on cash and cash equivalents

$    69


$    (120)






Decrease in cash and cash equivalents

$  (16,352)


$    (294)






Cash and cash equivalents at the beginning of the period

42,407


47,099






Cash and cash equivalents at the end of the period

$    26,055


$    46,805

 

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)






Three months ended March 31,



2014


2013



GAAP
(as reported)


Adjustments


Non-GAAP


Non-GAAP










Revenues


$   70,515




$   70,515


$   90,097

Cost of revenues


54,936


(a)   866


54,070


61,342

Gross profit


15,579




16,445


28,755










Operating expenses:









Research and development, net


10,439


(b)    2,586


7,853


10,383

Selling and marketing


15,420


(c)    1,015


14,405


16,110

General and administrative


5,906


(d)    884


5,022


5,648

Restructuring costs


936


936


-


-










Total operating expenses


$  32,701




$  27,280


$  32,141










Operating loss


17,122




10,835


3,386

Financial expenses, net


8,164


(e)    6,310


1,854


1,496










Loss before taxes


25,286




12,689


4,882










Taxes on income


1,677


(f)     1,490


187


818










Net loss


$   26,963




$   12,876


$   5,700










Basic and diluted net loss per share


$     0.51




$     0.25


$   0.16










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


52,457,168




52,457,168


36,755,603










Total adjustments




14,087














(a) Cost of revenues includes $0.3 million of amortization of intangible assets, $0.3 million of changes in pre-acquisition indirect tax positions, $0.1 million of stock based compensation expenses and $0.2 million of restructuring plan related costs in the three months ended March 31, 2014.

(b)Research and development expenses include $2.1 million of restructuring plan related costs and $0.5 million of stock-based compensation expenses in the three months ended March 31, 2014.

(c) Selling and marketing expenses include $0.2 million of amortization of intangible assets, $0.5 million of restructuring plan related costs and $0.3 million of stock based compensation expenses in the three months ended March 31, 2014.

(d) General and administrative expenses include $0.6 million of restructuring plan related costs and $0.3 million of stock based compensation expenses in the three months ended March 31, 2014.

(e) 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 three months ended March 31, 2014.

(f) Taxes on income include $1.5 million of non-cash tax adjustments in the three months ended March 31, 2014.

 

RECONCILIATION BETWEEN REPORTED AND NON-GAAP

NET LOSS

(U.S. dollars in thousands)

(Unaudited)



Three months ended



March 31,



2014


2013






Reported GAAP net loss


26,963


14,141






Stock based compensation expenses


1,047


1,075

Amortization of intangible assets


523


666

Inventory step-up


-


459

Restructuring expenses


4,440


2,844

Changes in pre-acquisition indirect tax positions


277


264

Currency devaluation in Venezuela


4,140


3,133

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


2,170


-

Non-cash tax adjustments


1,490


-






Non-GAAP net loss


12,876


5,700

 

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