2014

Ceragon Networks Reports Second Quarter 2012 Financial Results Achieves record revenue of $119.1 million; improved profitability and record booking

PARAMUS, New Jersey, August 6, 2012 /PRNewswire/ --

Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the second quarter which ended June 30, 2012.

Revenues for the second quarter of 2012 reached $119.1 million, up 8% from $110.4 million for the second quarter of 2011, and up 1% from $117.8 million in the first quarter of 2012.

Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the second quarter of 2012 was $(1.0) million or $(0.03) per basic share and diluted share, compared to net loss of $(17.4) million in the second quarter of 2011, or $(0.48) per basic share and diluted share.

On a non-GAAP basis, net income for the second quarter, excluding (a) $1.3 million of equity-based compensation expenses, (b) $0.9 million amortization of intangible assets, (c) $1.6 million inventory step up related to the Nera acquisition and (d) $0.2 million of changes in pre-acquisition indirect tax positions, was $3.0 million, or $0.08 per basic share and diluted share. Non-GAAP net loss for the second quarter of 2011 was $(1.6) million, or $(0.04) 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 second quarter of 2012 was 31.9% of revenues. Gross margin on a non-GAAP basis was 33.8% of revenues.

Operating loss on a GAAP basis in the second quarter of 2012 was $(0.2) million. On a non-GAAP basis operating profit was $3.8 million.

Cash and cash investments at the end of the quarter were $44.8 million. Negative cash flow from operations in the quarter relates mainly to additional working capital requirements associated with more sales to Tier 1 operators in Latin America and Africa that have longer payment terms and practices.

"We continued to grow in Q2, achieving all-time record revenues, better gross margin and improved profitability," said Ira Palti, President and CEO of Ceragon. "Record bookings resulted in a book-to-bill ratio well above one.  Our success in securing several large orders from Tier 1 operators expands our working capital needs. We believe this represents a temporary timing issue, which we have addressed by drawing down on our unused credit facilities.

"Ceragon has a comprehensive portfolio of solutions with the most advanced technology, we are gaining share in key growth regions, and we are executing very well. Therefore, we expect to be able to continue to grow revenues and improve profitability and cash flow, even in light of growing macro headwinds," concluded Mr. Palti.

Supplemental revenue breakouts:

Geographical breakdown, second quarter of 2012:

  • Europe:            18%
  • Africa:            20%
  • North America:      8%
  • Latin America:     31%
  • India:             16%
  • APAC:               7%

A conference call will follow today, August 6, 2012, beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (USA) (800) 230-1074 or international +1 (612) 234-9960 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: Telephone: (USA) (800) 475-6701 or international +1 (320) 365-3844, Access Code: 252653. A replay of both the call and the webcast will be available through September 6, 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 include the 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, risks associated with increased working capital needs, 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.govor may be obtained on Ceragon's website at http://www.ceragon.com 

 

Ceragon Reports Second Quarter 2012 Results

                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                       (Unaudited)

                                     Three months ended          Six months ended
                                          June 30,                    June 30,
                                     2012          2011         2012           2011
  
    Revenues                      $ 119,050     $ 110,350    $ 236,833      $ 210,662
    Cost of revenues                 81,081        86,716      161,925        157,444
 
    Gross profit                     37,969        23,634       74,908         53,218
 
    Operating expenses:
    Research and development         11,900        12,660       24,055         25,117
    Selling and marketing            20,129        21,003       39,976         40,188
    General and administrative        6,163         6,212       13,378         11,735
    Restructuring costs                   -             -            -          7,834
    Acquisition related costs             -             -            -          4,919
 
    Total operating expenses       $ 38,192      $ 39,875     $ 77,409       $ 89,793
 
    Operating loss                     (223)      (16,241)      (2,501)       (36,575)
 
    Financial expenses, net            (554)         (312)      (1,460)          (759)
 
    Loss before taxes                  (777)      (16,553)      (3,961)       (37,334)
 
    Taxes on income                     245           817          535          1,412
 
    Net loss                       $ (1,022)    $ (17,370)    $ (4,496)     $ (38,746)
 
    Basic net loss per share        $ (0.03)      $ (0.48)     $ (0.12)       $ (1.08)
 
    Diluted net loss per share      $ (0.03)      $ (0.48)     $ (0.12)       $ (1.08)
 
    Weighted average number of 
    shares used in computing 
    basic net loss per share     36,421,106    35,983,033   36,354,389     35,794,446
 
    Weighted average number of 
    shares used in computing 
    diluted net loss per share   36,421,106    35,983,033   36,354,389     35,794,446


Ceragon Reports Second Quarter 2012 Results

                        CONDENSED CONSOLIDATED BALANCE SHEETS

                             (U.S. dollars in thousands)

                                     (Unaudited)

                                                         
                                                          June 30, December 31,
                                                             2012         2011
    ASSETS
 
    CURRENT ASSETS:
    Cash and cash equivalents                            $ 37,944     $ 28,991
    Short-term bank deposits                                2,901        7,159
    Marketable securities                                       -        9,665
    Trade receivables, net                                174,482      143,247
    Deferred taxes                                          8,695        8,622
    Other accounts receivable and prepaid expenses         34,834       37,281
    Inventories                                            68,830       93,465
    Total current assets                                  327,686      328,430
 
    LONG-TERM INVESTMENTS:
    Long-term marketable securities                         3,970        3,716
    Severance pay funds                                     6,572        6,360
    Total long-term investments                            10,542       10,076
 
    OTHER ASSETS:
    Deferred taxes                                          8,828        8,898
    Goodwill and intangible assets, net                    26,118       28,032
    Other long-term receivables                             8,871        5,257
 
    Total other assets                                     43,817       42,187
 
    PROPERTY AND EQUIPMENT, NET                            32,059       30,465
    Total assets                                        $ 414,104    $ 411,158
    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Short term loan, including current maturities of
    long term bank loan                                  $ 22,832      $ 8,232
    Trade payables                                         92,875       77,395
    Deferred revenues                                      25,917       38,308
    Other accounts payable and accrued expenses            41,880       49,508
    Total current liabilities                             183,504      173,443
    LONG-TERM LIABILITIES
    Long term bank loan, net of current maturities         22,652       26,768
    Accrued severance pay and pension                      12,020       11,996
    Other long term payables                               36,921       37,900
                                                           71,593       76,664
    SHAREHOLDERS' EQUITY:
    Share capital:
    Ordinary shares                                            97           97
    Additional paid-in capital                            315,217      311,911
    Treasury shares at cost                               (20,091)     (20,091)
    Other comprehensive loss                               (1,197)        (343)
    Accumulated deficits                                 (135,019)    (130,523)
 
    Total shareholders' equity                            159,007      161,051
 
    Total liabilities and shareholders' equity          $ 414,104    $ 411,158


Ceragon Reports Second Quarter 2012 Results

                            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

                                    (U.S. dollars, in thousands)

                                            (Unaudited)

                                                 Three months ended      Six months ended
                                                      June 30,               June 30,
                                                  2012        2011       2012        2011
    Cash flow from operating activities:
                                                                                                         
    Net loss                                   $ (1,022)  $ (17,370)  $ (4,496)  $ (38,746)
    Adjustments to reconcile net income
    to net cash used in operating activities:
 
    Depreciation and amortization                 3,648       2,951      7,419       6,152
    Stock-based compensation expense              1,257       1,437      2,842       2,856
    Decrease (increase) in trade and 
    other receivables, net                      (27,812)      6,640    (36,463)     29,134
    Decrease in inventory                         4,623      14,168     24,083      23,993
    Increase (decrease) in trade payables 
    and accrued liabilities                       8,734      (7,743)    10,721     (24,680)
    Decrease in deferred revenues                (3,219)    (12,755)   (12,391)    (12,765)
    Decrease (increase) in deferred tax 
    asset, net                                      114           1       (263)         32
    Other adjustments                              (325)      1,661       (429)      1,650
                                               
    Net cash used in operating activities     $ (14,002)  $ (11,010)  $ (8,977)  $ (12,374)
 
    Cash flow from investing activities:
    Purchase of property and equipment ,net      (3,065)     (3,240)    (6,368)     (6,029)
    Payment for business acquisition(*)               -           -          -     (42,405)
    Investment in short and long-term
    bank deposit                                      -      (7,589)    (1,266)     (9,843)
    Proceeds from short and long-term 
    bank deposits                                 3,186      10,273      5,436      24,069
    Investment in held-to-maturity 
    marketable securities                           (64)          -        (64)          -
    Proceeds from maturities of held-to-maturity 
    marketable securities, net                        -          23      9,717       4,258
    Net cash provided by (used in) 
    investing activities                           $ 57      $ (533)   $ 7,455   $ (29,950)
 
    Cash flow from financing activities:
    Proceeds from exercise of options               251         284        464       3,580
    Proceeds from bank loans                     14,600           -     14,600      35,000
    Repayment of bank loan                       (2,058)          -     (4,116)          -
    Net cash provided by financing activities  $ 12,793       $ 284   $ 10,948    $ 38,580
 
    Translation adjustments on cash 
    and cash equivalents                         $ (322)     $ (789)    $ (473)     $ (435)
                                                                                                          
    Increase (decrease) in cash 
    and cash equivalents                       $ (1,474)  $ (12,048)   $ 8,953    $ (4,179)
    Cash and cash equivalents 
    at the beginning of the period               39,418      45,594     28,991      37,725
    Cash and cash equivalents 
    at the end of the period                   $ 37,944    $ 33,546   $ 37,944    $ 33,546

    (*) Excluding cash and cash equivalents


                            RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

                                            (Unaudited)

 
                                                            Three months ended June 30,
                                                           2012                    2011
                                                 GAAP 
                                         (as reported)  Adjustments   Non-GAAP    Non-GAAP
 
    Revenues                                $ 119,050                $ 119,050   $ 110,350
    Cost of revenues                           81,081     2,225 (a)     78,856      75,128
 
    Gross profit                               37,969                   40,194      35,222
 
    Operating expenses:
    Research and development                   11,900       607 (b)     11,293      11,453
    Selling and marketing                      20,129     1,113 (c)     19,016      18,730
    General and administrative                  6,163        47 (d)      6,116       5,509
 
    Total operating expenses                 $ 38,192                 $ 36,425    $ 35,692
 
    Operating profit (loss)                      (223)                   3,769        (470)
    Financial expenses, net                      (554)                    (554)       (312)
 
    Income (loss) before taxes                   (777)                   3,215        (782)
 
    Taxes on income                               245                      245         817
 
    Net income (loss)                        $ (1,022)                 $ 2,970    $ (1,599)
 
    Basic net earnings (loss) per share       $ (0.03)                  $ 0.08     $ (0.04)
 
    Diluted net earnings (loss) per share     $ (0.03)                  $ 0.08     $ (0.04)
 
    Weighted average number of shares
    used in computing basic net earnings
    (loss) per share                       36,421,106               36,421,106  35,983,033
 
    Weighted average number of shares
    used in computing diluted net
    earnings (loss) per share              36,421,106               37,380,275  35,983,033
 
    Total adjustments                                      3,992

    (a) Cost of revenues includes $0.3 million of amortization of intangible assets, 
        $1.6 million of inventory step-up, $0.1 million of stock based compensation 
        expenses and $0.2 million of changes in pre-acquisition indirect tax positions in 
        the three months ended June 30, 2012. 
    (b) Research and development expenses include $0.6 million of stock based compensation 
        expenses in the three months ended June 30, 2012. 
    (c) Selling and marketing expenses include $0.6 million of amortization of intangible 
        assets and $0.5 million of stock based compensation expenses in the three months 
        ended June 30, 2012. 
    (d) General and administrative expenses include $0.05 million of stock based 
        compensation expenses in the three months ended June 30, 2012. 


                          RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

                                           (Unaudited)

 
                                                              Six months ended June 30,
                                                           2012                     2011
                                                 GAAP
                                         (as reported)  Adjustments   Non-GAAP    Non-GAAP
 
    Revenues                                $ 236,833                $ 236,833   $ 210,662
    Cost of revenues                          161,925     4,517 (a)    157,408     142,961
    Gross profit                               74,908                   79,425      67,701
 
    Operating expenses:
    Research and development                   24,055     1,031 (b)     23,024      22,494
    Selling and marketing                      39,976     2,728 (c)     37,248      35,391
    General and administrative                 13,378       899 (d)     12,479      10,101
 
    Total operating expenses                 $ 77,409                 $ 72,751    $ 67,986
 
    Operating profit (loss)                    (2,501)                   6,674        (285)
    Financial expenses, net                    (1,460)                  (1,460)       (759)
 
    Income (loss) before taxes                 (3,961)                   5,214      (1,044)
 
    Taxes on income                               535                      535       1,412
 
    Net income (loss)                        $ (4,496)                 $ 4,679    $ (2,456)
 
    Basic net earnings (loss) per share       $ (0.12)                  $ 0.13     $ (0.07)
 
    Diluted net earnings (loss) per share     $ (0.12)                  $ 0.13     $ (0.07)
 
    Weighted average number of shares
    used in computing basic net earnings 
    (loss) per share                       36,354,389               36,354,389  35,794,446
 
    Weighted average number of shares
    used in computing diluted net
    earnings (loss) per share              36,354,389               37,287,665  35,794,446
 
    Total adjustments                                     9,175

    (a) Cost of revenues includes $0.6 million of amortization of intangible assets, 
        $2.0 million of inventory step-up, $0.1 million of stock based compensation 
        expenses, $0.2 million of integration plan related costs and $1.6 million of 
        changes in pre-acquisition indirect tax positions in the six months ended 
        June 30, 2012. 
    (b) Research and development expenses include $40 thousand of integration plan related 
        costs and $1.0 million of stock based compensation expenses in the six months 
        ended June 30, 2012. 
    (c) Selling and marketing expenses includes $1.2 million of amortization of intangible
        assets, $0.4 million of integration plan related costs and $1.1 million of stock 
        based compensation expenses in the six months ended June 30, 2012. 
    (d) General and administration expenses include, $0.3 million of integration plan 
        related costs and $0.6 million of stock based compensation expenses in the 
        six months ended June 30, 2012. 


                        RECONCILIATION BETWEEN REPORTED AND NON-GAAP

                                       OPERATING LOSS

                                (U.S. dollars in thousands)

                                         (Unaudited)

                                                           Three months     Six months 
                                                               ended           ended
                                                                   June 30, 2012
 
    Reported GAAP net operating loss                            (223)         (2,501)
 
    Stock based compensation expenses                          1,257           2,842
    Amortization of intangible assets                            901           1,802
    Inventory step up                                          1,613           2,017
    Integration plan related costs                                 -             955
    Changes in pre-acquisition indirect tax positions            221           1,559
 
    Non-GAAP net operating profit                              3,769           6,674


Company & Investor Contact:

Yoel Knoll
Ceragon Networks Ltd.
Tel: +1-201-853-0228
Office (Int'l): +972(0)3-5431-132
yoelk@ceragon.com

Media Contact:

Abigail Levy-Gurwitz
Ceragon Networks Ltd.
Tel: +1-201-853-0271
(Int'l): +972(0)3-5431-166
abigaill@ceragon.com

Media Contact:

Karen Quatromoni
Rainier Communications
Tel. +1-508-475-0025
x150
kquatromoni@rainierco.com  

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