Ceragon Networks Reports Fourth Quarter and Full Year 2015 Financial Results

Returned to profitability for full year; Q4 positive cash flow used to further reduce debt

16 Feb, 2016, 06:00 ET from Ceragon Networks Ltd.

PARAMUS, N.J., Feb. 16, 2016 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Highlights:

Revenues -- $75.6 million, down 32% from the fourth quarter of 2014, and down 11% from the third quarter of 2015.

Gross margin – 32.8%, compared to 17.8% in the fourth quarter of 2014 and 31.9% in the third quarter of 2015.

Operating income – $8.9 million, compared to an operating loss of $(25.9) million in the fourth quarter of 2014 and an operating income of $6.2 million in the third quarter of 2015.

Net income $5.2 million or $0.07 per diluted share. Net loss for the fourth quarter of 2014 was $(52.0) million, or $(0.68) per diluted share. Net income for the third quarter of 2015 was $1.4 million or $0.02 per diluted share.

Non-GAAP results –gross margin was 33.2%, operating income was $5.0 million, and net income was $2.1 million, or $0.03 per diluted share. Non-GAAP results exclude adjustments of $(3.2) million. For a reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents – $36.3 million at December 31, 2015, compared to $39.2 million at September 30, 2015, after reducing debt by $9.0 million to $35.0 million.

Full Year 2015 Highlights:

Revenues $349.4 million, down 6% from 2014.

Gross margin – 29.5%, compared to 22.8% in 2014.

Operating income – $21.6 million, compared to an operating loss of $(32.0) million in 2014.

Net income – $1.0 million, or $0.01 per diluted share. Net loss for 2014 was $(76.5) million, or $(1.22) per diluted share.

Non-GAAP results – gross margin was 29.9%, operating income was $21.7 million, and net income was $7.4 million, or $0.10 per diluted share. Non-GAAP results exclude adjustments of $6.4 million. For a reconciliation of GAAP to non-GAAP results, see the attached tables.

"Our strategy, focused on improving profitability, resulted in further improvement in our gross margin in the fourth quarter," said Ira Palti, president and CEO of Ceragon. "With continued stringent control of our operating expenses, we achieved another solidly profitable quarter and used the cash flow we generated to further reduce debt. We achieved our profit goal for the year, and we are targeting a further increase in 2016, as we continue to pursue the same strategy. Meanwhile, we are carefully watching developing macroeconomic headwinds and the extent to which they may affect demand and the timing of projects during 2016."

Supplemental revenue breakouts by geography:

Fourth quarter 2015:

  • Europe: 15%
  • Africa: 12%
  • North America: 10%
  • Latin America: 24%
  • India: 30%
  • APAC: 9%

Full year 2015:

  • Europe: 14%
  • Africa: 10%
  • North America: 13%
  • Latin America: 24%
  • India: 30%
  • APAC: 9%

A conference call to discuss the results will begin at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling USA: (800) 230-1059 or International: +1 (612) 234-9959, from 8:50 a.m. EST. 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/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: 382915. A replay of both the call and the webcast will be available through March 16, 2016.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the world's #1 wireless backhaul specialist. We help operators and other service providers worldwide increase operational efficiency and enhance end customers' quality of experience with innovative wireless backhaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 4G, mission-critical multimedia services and other applications at high reliability and speed. Ceragon's unique multicore technology provides a highly reliable, high-capacity 4G wireless backhaul with minimal use of spectrum, power and other resources. It enables increased productivity, as well as simple and quick network modernization. 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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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" as defined in 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. Examples of forward-looking statements include: projections of capital expenditures and liquidity, competitive pressures, revenues, growth prospects, product development, financial resources, restructuring costs, 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 risks associated with a further decline in revenues beyond Ceragon's expectations, the risk that Ceragon's expectations regarding future profitability will not materialize; the risk that Ceragon will not achieve the benefits it expects from its expense reduction and profit enhancement programs; the risk that Ceragon will not continue to comply with the financial or other covenants in its agreements with its lenders; risks associated with doing business in Latin America in general and in Brazil in particular, including currency export controls and recent economic concerns; risks relating to the concentration of our business in India, Africa, and in developing nations, including political, economic and regulatory risks from doing business in those regions; the risk of significant expenses in connection with potential contingent tax liability; 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:


Doron Arazi      or

Claudia Gatlin

+972 3 5431 660

+1 212 830-9080

dorona@ceragon.com

claudiag@ceragon.com



Media:


Tanya Solomon


+972 3 5431163


tanyas@ceragon.com


-tables follow-

 

 

Ceragon Reports Fourth Quarter and Year End 2015 Results


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)





Three months ended

December 31,


Year ended

December 31,



2015


2014


2015


2014









(Audited)










Revenues


$       75,643


$     111,164


$     349,435


$     371,112

Cost of revenues


50,840


91,432


246,487


286,670










Gross profit


24,803


19,732


102,948


84,442










Operating expenses:









Research and development, net


5,268


8,112


22,930


35,004

Selling and marketing


9,982


13,142


40,816


56,059

General and administrative

Restructuring costs


5,473

-


6,764

5,880


21,235

1,225


23,657

6,816

Other expense (income)


(4,849)


11,738


(4,849)


(5,062)










Total operating expenses


$     15,874


$     45,636


$    81,357


$    116,474










Operating income (loss)


8,929


(25,904)


21,591


(32,032)










Financial expenses, net


2,265


24,296


14,738


37,946










Income (loss) before taxes


6,664


(50,200)


6,853


(69,978)










Taxes on income


1,432


1,756


5,842


6,501










Net income (loss)


$         5,232


$    (51,956)


$        1,011


$   (76,479)



















Basic and diluted net income (loss) per share


 

$         0.07


 

$        (0.68)


 

$        0.01


 

$       (1.22)










Weighted average number of shares used in computing basic net income (loss) per share


 

 

77,416,409


 

 

76,784,068


77,239,409


 

 

62,518,602










Weighted average number of shares
used in computing diluted net income
(loss) per share


 

 

78,432,387


 

 

76,784,068


 

 

77,296,681


 

 

62,518,602

 

 

Ceragon Reports Fourth Quarter and Year End 2015 Results


CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)




December 31,
2015


December 31,
2014

ASSETS




(Audited)






CURRENT ASSETS:





Cash and cash equivalents


$    36,318


$    41,423

Short-term bank deposits


-


413

Marketable securities


-


535

Trade receivables, net


120,397


162,626

Deferred taxes, net


1,333


3,522

Other accounts receivable and prepaid expenses


21,471


22,898

Inventories


49,690


61,830

Total current assets


229,209


293,247






NON-CURRENT ASSETS:





Deferred tax assets, net


189


239

   Severance pay and pension funds


4,681


5,669

   Property and equipment, net


28,906


33,138

   Intangible assets, net


3,192


5,070

Other non-current assets


1,457


4,510






Total non-current assets


38,425


48,626

Total assets


$     267,634


$     341,873






LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





Short term loan, including current maturities of long term bank loan


$       34,922


$      48,832

Trade payables


71,721


101,752

Deferred revenues


8,901


17,667

Other accounts payable and accrued expenses


29,654


37,248

Total current liabilities


145,198


205,499

 

LONG-TERM LIABILITIES:





Long term bank loan, net of current maturities


-


2,072

Accrued severance pay and pension


9,276


11,452

Other long term payables


10,339


18,298

Total long-term liabilities


19,615


31,822

 

SHAREHOLDERS' EQUITY:





Share capital:





    Ordinary shares


214


212

Additional paid-in capital


408,174


406,413

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(8,616)


(4,111)

Accumulated deficits


(276,860)


(277,871)






Total shareholders' equity


102,821


104,552






Total liabilities and shareholders' equity


$    267,634


$    341,873

 

 

Ceragon Reports Fourth Quarter and Year End 2015 Results


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)



Three months ended

December 31,


Year ended

December 31,


2015


2014


2015


2014








(Audited)

Cash flow from operating activities:








Net income (loss)

$   5,232


$   (51,956)


$   1,011


$   (76,479)

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








Depreciation and amortization

3,138


3,104


12,204


13,498

Stock-based compensation expense

452


654


1,624


3,345

Write off of property and equipment

-


2,367


-


2,367

Write off of goodwill

-


14,765


-


14,765

Decrease (increase) in trade and other receivables, net

906


6,231


37,568


(22,593)

Decrease (increase) in inventory, net of write off

(971)


(2,283)


10,240


1,792

Increase (decrease) in trade payables and accrued liabilities

788


10,643


(37,683)


8,855

Increase (decrease) in deferred revenues

(1,162)


9,107


(8,766)


9,699

Decrease (increase) in deferred tax asset, net

(166)


5,784


2,275


9,788

Other adjustments

(74)


2,975


(858)


2,684

Net cash provided by (used in) operating activities

$  8,143


$  1,391


$  17,615


$  (32,279)

Cash flow from investing activities:








Purchase of property and equipment ,net

(2,441)


(4,227)


(6,761)


(12,691)

Investment in short and long-term bank deposit

-


(36)


(19)


(36)

Proceeds from maturities of short and long-term bank deposits

368


-


432


69

Proceeds from sales of available for sale marketable securities

-


-


122


5,161

Net cash used in investing activities

$  (2,073)


$  (4,263)


$  (6,226)


$  (7,497)









Cash flow from financing activities:








Proceeds from exercise of options

26


-


138


-

Proceeds from issuance of shares, net

-


-


-


45,150

Proceeds from financial institutions, net

-


2,500


4,200


22,690

Repayments of bank loans

(9,008)


(2,058)


(20,182)


(29,012)

Net cash provided by (used in)financing activities

 

$  (8,982)


 

$  442


 

$  (15,844)


 

$  38,828









Translation adjustments on cash and cash equivalents

 

$ 26


 

$ (91)


 

$  (650)


 

$  (36)

Decrease in cash and cash equivalents

$  (2,886)


$  (2,521)


$  (5,105)


$  (984)

Cash and cash equivalents at the beginning of the period

39,204


43,944


41,423


42,407

Cash and cash equivalents at the end of the period

$  36,318


$  41,423


$  36,318


$  41,423









 

 

Ceragon Reports Fourth Quarter and Year End 2015 Results


RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)




Three months ended December 31,



2015


2014



GAAP (as
reported)


Adjustments


Non-GAAP


Non-GAAP










Revenues


$    75,643




$    75,643


$    111,164


Cost of revenues


50,840


(a)       339


50,501


84,049












Gross profit


24,803




25,142


27,115












Operating expenses:










Research and development, net


5,268


(b)        179


5,089


7,805


Selling and marketing


9,982


(c)        257


9,725


12,804


General and administrative


5,473


(d)        135


5,338


5,626


Other income


(4,849)


(e)    (4,849)


-


-












Total operating expenses


$    15,874




$ 20,152


$ 26,235












Operating income


8,929




4,990


880


Financial expenses, net


2,265




2,265


3,845












Income (loss) before taxes


6,664




2,725


(2,965)












Taxes on income


1,432


(f)        762


670


741












Net income (loss)


$    5,232




$     2,055


$     (3,706)












Basic and diluted net income (loss) per share


$      0.07




$      0.03


$      (0.05)












Weighted average number of shares used in computing basic net income (loss) per share


77,416,409




77,416,409


76,784,068


 

Weighted average number of shares used in computing diluted net income (loss) per share


77,432,387




78,264,309


76,784,068












Total adjustments




(3,177)
















 

(a)   

Cost of revenues includes $0.3 million of amortization of intangible assets and $30 thousand of stock based compensation expenses in the three months ended December 31, 2015.

(b)

Research and development expenses include $0.2 million of stock based compensation expenses in the three months ended December 31, 2015.

(c)

Selling and marketing expenses includes $0.1 million of amortization of intangible assets and $0.1 million of stock based compensation expenses in the three months ended December 31, 2015.

(d)

General and administrative expenses include $0.1 million of stock based compensation expenses in the three months ended December 31, 2015.

(e)

Other income includes statute of limitation on certain pre-acquisition indirect tax liabilities.

(f)

Taxes on income include $0.8 million non-cash tax adjustments in the three months ended December 31, 2015. 

 

 

Ceragon Reports Fourth Quarter and Year End 2015 Results


RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)




Year ended December 31,



2015


2014



GAAP (as
reported)


Adjustments


Non-GAAP


Non-GAAP










Revenues


$   349,435




$   349,435


$   371,112

Cost of revenues


246,487


(a)     1,579


244,908


277,743

Gross profit


102,948




104,527


93,369










Operating expenses:









Research and development, net


22,930


(b)         735


22,195


30,970

Selling and marketing


40,816


(c)      1,132


39,684


53,821

General and administrative


21,235


(d)         321


20,914


21,055

Restructuring costs


1,225


1,225


-


-

Other income


(4,849)


(e)    (4,849)


-


-










Total operating expenses


$   81,357




$   82,793


$   105,846










Operating income (loss)


21,591




21,734


(12,477)

Financial expenses, net


14,738


(f)      2,973


11,765


11,185










Income (loss) before taxes


6,853




9,969


(23,662)










Taxes on income


5,842


(g)     3,297


2,545


1,495










Net income (loss)


$   1,011




$   7,424


$   (25,157)










Basic and diluted net income (loss) per share


$     0.01




$     0.10


$     (0.40)










Weighted average number of shares used in computing basic net income (loss)  per share


77,239,409




77,239,409


62,518,602

Weighted average number of shares used in computing diluted net income (loss)  per share


77,296,681




77,967,811


62,518,602










Total adjustments




6,413














 

(a)   

Cost of revenues includes $1.2 million of amortization of intangible assets, $0.3 million of changes in pre-acquisition indirect tax positions and $0.1 million of stock based compensation expenses in the year ended December 31, 2015.

(b)

Research and development expenses include $0.7 million of stock based compensation expenses in the year ended December 31, 2015.

(c)

Selling and marketing expenses includes $0.6 million of amortization of intangible assets and $0.5 million of stock based compensation expenses in the year ended December 31, 2015.

(d)

General and administrative expenses include $0.3 million of stock based compensation expenses in the year ended December 31, 2015.

(e)

Other income includes statute of limitation on certain pre-acquisition indirect tax liabilities.

(f)

Financial expenses included the effect of re-measurement of certain assets denominated in or linked to the U.S. dollar in Venezuela, due to restrictive government policies on payments in foreign currency in the year ended December 31, 2015.

(g)

Taxes on income include $3.3 million non-cash tax adjustments in the year ended December 31, 2015. 

 

 

Ceragon Reports Fourth Quarter and Year End 2015 Results


RECONCILIATION BETWEEN REPORTED AND NON-GAAP

NET INCOME

(U.S. dollars in thousands)

(Unaudited)




Three months
ended



Year ended



December 31, 2015







Reported GAAP net income


5,232



1,011







Stock based compensation expenses


452



1,624

Amortization of intangible assets


457



1,865

Changes in pre-acquisition indirect tax positions


(4,848)



(4,571)

Restructuring plan related costs


-



1,225

Currency devaluation in Venezuela


-



2,973

Non-cash tax adjustments


762



3,297







Non-GAAP net income


2,055



7,424








 

SOURCE Ceragon Networks Ltd.



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