PARAMUS, New Jersey, May 7, 2012 /PRNewswire/ --
Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the first quarter which ended March 31, 2012.
Revenues for the first quarter of 2012 reached $117.8 million, up 17% from $100.3 million for the first quarter of 2011, the first quarter of combined revenues following the acquisition of Nera Networks, and down 1% from $118.5 million in the fourth quarter of 2011.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the first quarter of 2012 was $(3.5) million or $(0.10) per basic share and diluted share, compared to net loss of $(21.4) million in the first quarter of 2011, or $(0.60) per basic share and diluted share.
On a non-GAAP basis, net income for the first quarter of 2012, excluding (a) $1.6 million of equity-based compensation expenses and (b) $3.6 million charges related to the Nera acquisition and integration plan, was $1.7 million or $0.05 per basic share and diluted share. Non-GAAP net loss for the first quarter of 2011 was $(0.9) million, or $(0.02) 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 2012 was 31.4% of revenues. Gross margin on a non-GAAP basis was 33.3% of revenues.
Operating loss on a GAAP basis in the first quarter of 2012 was $(2.3) million. On a non-GAAP basis operating profit was $2.9 million.
Cash and cash investments at the end of the quarter were $49.5 million.
"Strength in Africa and Latin America drove revenues in Q1 as expected," said Ira Palti, President and CEO of Ceragon. "We are continuing to penetrate these markets according to our plan, adding new customers as well as increasing sales to existing ones. During Q1, our sales in North America grew sequentially and we expanded our market share in India, another indication of our strong execution.
"Most of the pickup in bookings occurred during April, which we expect will bring the book to bill ratio above 1:1 in Q2 and increases our confidence for the outlook for the second half of the year," continued Mr. Palti. "We remain on track to continue improving gross margin in the second half of 2012 after extending our design-to-cost capabilities to the long haul product. We believe that we will meet our expectations and exit 2012 with a revenue run rate of around $130 million per quarter with gross margin in the mid 30's and a non-GAAP operating margin of around 8%."
Supplemental revenue breakouts:
Geographical breakdown, first quarter of 2012:
- Europe: 19%
- Africa: 27%
- North America: 12%
- Latin America: 26%
- India: 9%
- APAC: 7%
A conference call will follow today, May 7, 2012, beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (800) 230-1093, or international +1(612) 288-0337 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/ir_events.asp?lang=0 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: 242686.
A replay of both the call and the webcast will be available through June 7, 2012.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We provide innovative, flexible and cost-effective wireless backhaul 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® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries. Other names mentioned are owned by their respective holders.
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 statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts and estimates. These are important factors that could cause actual results to differ materially from forecasts and estimates. Some of the factors that could significantly impact the forward-looking statements in this press release includethe risk of significant expenses in connection with potential contingent tax liability associated with Nera's prior operations or facilities, the risk that the combined Ceragon and Nera business may not perform as expected, , and other risks and uncertainties, which are discussed in greater detail in Ceragon's Annual Report on Form 20-F and Ceragon's other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made. Ceragon's public filings are available from the Securities and Exchange Commission's website at http://www.sec.gov or may be obtained on Ceragon's website at http://www.ceragon.com.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
Three months ended March 31, 2012 2011 Revenues $ 117,783 $ 100,312 Cost of revenues 80,844 70,728 Gross profit 36,939 29,584 Operating expenses: Research and development, net 12,155 12,457 Selling and marketing 19,847 19,185 General and administrative 7,215 5,523 Restructuring costs - 7,834 Acquisition related costs - 4,919 Total operating expenses $ 39,217 $ 49,918 Operating loss (2,278) (20,334) Financial expenses, net (906) (447) Loss before taxes (3,184) (20,781) Taxes on income (290) (595) Net loss $ (3,474) $ (21,376) Basic net loss per share $ (0.10) $ (0.60) Diluted net loss per share $ (0.10) $ (0.60) Weighted average number of shares used in computing basic net loss per share 36,346,482 35,603,764 Weighted average number of shares used in computing diluted net loss per share 36,346,482 35,603,764
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
March 31, December 31, 2012 2011 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 39,418 $ 28,991 Short-term bank deposits 6,229 7,159 Marketable securities - 9,665 Trade receivables, net 147,062 143,247 Deferred taxes, net 8,627 8,622 Other accounts receivable and prepaid expenses 41,630 37,281 Inventories 74,177 93,465 Total current assets 317,143 328,430 LONG-TERM INVESTMENTS: Marketable securities 3,850 3,716 Severance pay funds and pension 6,683 6,360 Total long-term investments $ 10,533 $ 10,076 OTHER ASSETS Deferred taxes, net 8,868 8,898 Goodwill and Intangible assets, net 27,191 28,032 Other long-term receivables 7,960 5,257 Total other assets $ 44,019 $ 42,187 PROPERTY AND EQUIPMENT, NET 30,964 30,465 Total assets $ 402,659 $ 411,158 CURRENT LIABILITIES: Current maturities of long term bank loan 8,232 8,232 Trade payables 82,847 77,395 Deferred revenues 29,136 38,308 Other accounts payable and accrued expenses 44,234 49,508 Total current liabilities $ 164,449 $ 173,443 LONG TERM LIABILITIES: Long term bank loan, net of current maturities 24,710 26,768 Accrued severance pay and pension 12,531 11,996 Other long term liabilities 40,030 37,900 Total long term liabilities $ 77,271 $ 76,664 SHAREHOLDERS' EQUITY: Share capital: Ordinary shares 97 97 Additional paid-in capital 313,709 311,911 Treasury shares at cost (20,091) (20,091) Other comprehensive income (loss) 1,221 (343) Accumulated deficits (133,997) (130,523) Total shareholders' equity $ 160,939 $ 161,051 Total liabilities and shareholders' equity $ 402,659 $ 411,158
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
Three months ended March 31, 2012 2011 Cash flow from operating activities: Net loss $ (3,474) $ (21,376) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 3,771 3,201 Stock-based compensation expense 1,585 1,419 Decrease (increase) in trade and other receivables, net (8,651) 22,494 Decrease in inventory, net of write-off 19,460 9,825 Increase (decrease) in trade payables and accrued liabilities 1,987 (16,937) Decrease in deferred revenues (9,172) (10) Decrease (increase) in deferred tax asset, net (377) 31 Other adjustments (104) (11) Net cash provided by (used in) operating activities $ 5,025 $ (1,364) Cash flow from investing activities: Purchase of property and equipment ,net (3,303) (2,789) Payment for business acquisition - (42,405) Investment in short and long-term bank deposit (1,266) (2,254) Proceeds from short and long-term bank deposits 2,250 13,796 Proceeds from sale and maturities of marketable securities 9,717 4,235 Net cash provided by (used in) investing activities $ 7,398 $ (29,417) Cash flow from financing activities: Proceeds from exercise of options 213 3,296 Proceeds from long-term bank loan - 35,000 Repayment of long-term bank loan (2,058) - Net cash provided by (used in) financing activities $ (1,845) $ 38,296 Translation adjustments on cash and cash equivalents $ (151) $ 354 Increase in cash and cash equivalents $ 10,427 $ 7,869 Cash and cash equivalents at the beginning of the period 28,991 37,725 Cash and cash equivalents at the end of the period $ 39,418 $ 45,594
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
Three months ended March 31, 2012 2011 GAAP Adjustments Non-GAAP Non-GAAP (as reported) Revenues $ 117,783 $ 117,783 $ 100,312 Cost of revenues 80,844 2,292 (a) 78,552 67,833 Gross profit 36,939 39,231 32,479 Operating expenses: Research and development, net 12,155 424 (b) 11,731 11,041 Selling and marketing 19,847 1,615 (c) 18,232 16,661 General and administrative 7,215 852 (d) 6,363 4,592 Total operating expenses $ 39,217 $ 36,326 $ 32,294 Operating profit (loss) (2,278) 2,905 185 Financial expenses, net (906) (906) (447) Income (loss) before taxes (3,184) 1,999 (262) Taxes on income (290) (290) (595) Net income (loss) $ (3,474) $ 1,709 $ (857) Basic net earnings (loss) per share $ (0.10) $ 0.05 $ (0.02) Diluted net earnings (loss) per share $ (0.10) $ 0.05 $ (0.02) Weighted average number of shares used in computing basic net earnings (loss) per share 36,346,482 36,346,482 35,603,764 Weighted average number of shares used in computing diluted net earnings (loss) per share 36,346,482 37,253,865 35,603,764 Total adjustments 5,183
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(a) Cost of revenues includes $0.3 million of amortization of intangible assets, $0.4 million of inventory step-up, $0.1 million of stock based compensation expenses, $0.2 million of integration plan related costs and $1.3 million of changes in pre-acquisition indirect tax positions in the three months ended March 31, 2012.
(b) Research and development expenses include $40 thousand of integration plan related costs and $0.4 million of stock based compensation expenses in the three months ended March 31, 2012.
(c) Selling and marketing expenses include $0.6 million of amortization of intangible assets, $0.4 million of integration plan related costs and $0.6 million of stock based compensation expenses in the three months ended March 31, 2012.
(d) General and administrative expenses include $0.3 million of integration plan related costs and $0.6 million of stock based compensation expenses in the three months ended March 31, 2012.
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
(U.S. dollars in thousands)
Three months ended March 31, 2012 Reported GAAP net operating loss (2,278) Stock based compensation expenses 1,585 Amortization of intangible assets 901 Inventory step-up 404 Integration plan related costs 955 Changes in pre-acquisition indirect tax positions 1,338 Non-GAAP net operating profit 2,905
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