Ceragon Networks Reports First Quarter 2011 Financial Results
Achieves Record Revenues of $100.3 Million; Results Also Reflect Restructuring Charges, Transaction Costs and Other Expenses in Connection With the Rapid Integration of Nera Networks
PARAMUS, New Jersey, May 16, 2011 /PRNewswire-FirstCall/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the premier wireless backhaul specialist today reported results for the first quarter which ended March 31, 2011.
Revenues for the first quarter of 2011, the first quarter of combined revenues following the acquisition of Nera Networks, reached $100.3 million, up 68% from $59.7 million for the first quarter of 2010, and up 50% from $67.0 million in the fourth quarter of 2010.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the first quarter of 2011 was $21.4 million or $(0.60) per basic share and diluted share, compared to net income of $3.0 million in the first quarter of 2010, or $0.09 per basic and $0.08 per diluted share.
On a non-GAAP basis, net loss for the first quarter, excluding (a) $1.4 million of equity-based compensation expenses, and (b)$17.1 million charges related to the Nera acquisition and integration plan, was $857,000, or $(0.02) per basic share and diluted share. Non-GAAP net income for the first quarter of 2010 was $4.0 million, or $0.12 per basic share and $0.11 per 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 2011 was 29.5% of revenues. Gross margin on a non-GAAP basis was 32.4% of revenues.
Operating loss on a GAAP basis in the first quarter of 2011 was $20.3 million. On a non-GAAP basis operating profit was $185,000.
Cash and cash investments at the end of the quarter were $78.1 million.
"We are happy to conclude another strong quarter," said Ira Palti, President and CEO of Ceragon. "Revenue from traditional Ceragon customers in the quarter accounted for about 70%, making it another record quarter for our core business, and the revenue contribution from Nera Networks customers since the January 19th closing was in line with our expectations.
"In Q1 we moved quickly to identify and implement most of the necessary steps towards the integration of Nera Networks operations," continued Mr. Palti. "We are pleased with the progress we've made in a short amount of time, including the migration of several key Nera Networks customers to the Ceragon FibeAir short-haul product line. Based on our excellent progress in Q1, we believe that we are on track to reach, by the end of 2011, quarterly revenues run rate of $125. This will be a half-way mark toward our goal of $150 million in quarterly revenue run rate and over 10% operating margin, to be reached by the end of 2012."
Supplemental revenue breakouts:
Geographical breakdown, first quarter of 2011:
- Europe: 22%
- Africa: 18%
- North America: 13%
- Latin America: 15%
- India: 15%
- APAC: 17%
A conference call will follow today, May16, 2011, beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (800) 230-1059 or international (612) 234-9959 at 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: 195281.
A replay of both the call and the webcast will be available through June 22, 2011.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the premier wireless backhaul specialist. Ceragon's high capacity wireless backhaul solutions enable cellular operators and other wireless service providers to deliver 2G/3G and LTE/4G voice and data services that enable smart-phone applications such as Internet browsing, music and video. With unmatched technology and cost innovation, Ceragon's advanced point-to-point microwave systems allow wireless service providers to evolve their networks from circuit-switched and hybrid concepts to all IP networks. Ceragon solutions are designed to support all wireless access technologies, delivering more capacity over longer distances under any given deployment scenario. Ceragon's solutions are deployed by more than 230 service providers of all sizes, and hundreds of private networks in more than 130 countries. Visit Ceragon at www.ceragon.com.
Ceragon Networks(R) is a registered trademark of Ceragon Networks Ltd. in the United States and other countries. Other names mentioned are owned by their respective holders.
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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 that Nera Networks and Ceragon's businesses will not be integrated successfully; the risk that any synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the Nera Networks transaction making it more difficult to maintain relationships with customers, employees or suppliers, the risk that Nera Networks 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)
(Unaudited)
Three months ended
March 31,
2011 2010
Revenues $ 100,312 $ 59,687
Cost of
revenues 70,728 39,311
Gross profit 29,584 20,376
Operating
expenses:
Research and
development 12,457 5,273
Selling and
marketing 19,185 9,182
General and
administrative 5,523 2,780
Restructuring
costs 7,834 -
Acquisition
related costs 4,919 -
Total
operating
expenses $ 49,918 $ 17,235
Operating
profit (loss) (20,334) 3,141
Financial
income
(expenses),
net (447) 234
Income (loss)
before taxes (20,781) 3,375
Taxes on
income (595) (352)
Net Income
(loss) $ (21,376) $ 3,023
Basic net
earnings
(loss) per
share $ (0.60) $ 0.09
Diluted net
earnings
(loss) per
share $ (0.60) $ 0.08
Weighted
average number
of shares used
in computing
basic net
earnings
(loss) per
share 35,603,764 34,489,121
Weighted
average number
of shares used
in computing
diluted net
earnings
(loss) per
share 35,603,764 36,765,358
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
December
March 31, 31,
2011 2010
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $ 45,594 $ 37,725
Short-term bank
deposits 13,809 23,357
Marketable securities 11,946 7,363
Trade receivables,
net 125,780 88,074
Deferred taxes 4,380 4,057
Other accounts
receivable and
prepaid expenses 29,232 15,425
Inventories 114,770 65,921
Total current assets 345,511 241,922
LONG-TERM
INVESTMENTS:
Long-term marketable
securities 6,789 13,088
Severance pay funds 6,098 6,039
Total long-term
investments $ 12,887 $ 19,127
OTHER ASSETS
Long term receivables 5,241 -
Deferred taxes 8,474 8,829
Goodwill and
Intangible assets,net 51,740 1,093
Total other assets $ 65,455 $ 9,922
PROPERTY AND
EQUIPMENT, NET 26,605 16,211
Total assets $ 450,458 $ 287,182
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long term bank loan 2,058 -
Trade payables 72,485 40,537
Deferred revenues 51,078 20,661
Other accounts
payable and accrued
expenses 66,329 13,215
Total current
liabilities $ 191,950 $ 74,413
LONG TERM
LIABILITIES:
Long term bank loan,
net of current
maturities 32,942 -
Accrued severance pay and pension 12,960 8,600
Other long term
payables 33,331 -
Total long term
liabilities $ 79,233 $ 8,600
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares 97 95
Additional paid-in
capital 305,588 300,875
Treasury shares at
cost (20,091) (20,091)
Other comprehensive
income (loss) (8,074) 159
Accumulated deficits (98,245) (76,869)
Total shareholders'
equity $ 179,275 $ 204,169
Total liabilities and
shareholders' equity $ 450,458 $ 287,182
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended
March 31,
2011 2010
Cash flow from operating activities:
Net income (loss) $ (21,376) $ 3,023
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 3,201 1,040
Stock-based compensation expense 1,419 971
Decrease in trade and other
receivables, net 22,494 9,445
Decrease (increase) in inventory 9,825 (7,824)
Increase in trade payables and
accrued liabilities (16,937) (6,772)
Increase (decrease) in deferred revenues (10) 1,321
Other adjustments 20 (352)
Net cash provided by (used in)
operating activities $ (1,364) $ 852
Cash flow from investing activities:
Purchase of property and equipment ,net (2,789) (2,894)
Payment for business acquisition *) (42,405) -
Investment in short and long-term
bank deposit (2,254) -
Proceeds from short and long-term
bank deposits 13,796 7,073
Investment in marketable
securities - (15,109)
Proceeds from maturities of
marketable securities 4,235 4,500
Net cash used in investing
activities $ (29,417) $ (6,430)
Cash flow from financing activities:
Proceeds from exercise of options 3,296 2,586
Long term bank loan raised in
connection with business
acquisition 35,000 -
Net cash provided by financing activities $ 38,296 $ 2,586
Translation adjustments on cash
and cash equivalents $ 354 $ -
Increase (decrease) in cash and
cash equivalents $ 7,869 $ (2,992)
Cash and cash equivalents at the
beginning of the period 37,725 38,339
Cash and cash equivalents at the
end of the period $ 45,594 $ 35,347
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended March 31,
2011 2010
GAAP Adjustments Non-GAAP Non-GAAP
(as reported)
Revenues $ 100,312 $ 100,312 $ 59,687
Cost of revenues 70,728 2,895 (a) 67,833 39,245
Gross profit 29,584 32,479 20,442
Operating expenses:
Research and development 12,457 1,416 (b) 11,041 5,096
Selling and marketing 19,185 2,524 (c) 16,661 8,920
General and
administrative 5,523 931 (d) 4,592 2,314
Restructuring costs 7,834 7,834 - -
Acquisition related costs 4,919 4,919 - -
Total operating
expenses $ 49,918 $ 32,294 $ 16,330
Operating profit
(loss) (20,334) 185 4,112
Financial income
(expenses), net (447) (447) 234
Income (loss) before
taxes (20,781) (262) 4,346
Taxes on income (595) (595) (352)
Net income (loss) $ (21,376) $ (857) $ 3,994
Basic net earnings
(loss) per share $ (0.60) $ (0.02) $ 0.12
Diluted net earnings
(loss) per share $ (0.60) $ (0.02) $ 0.11
Weighted average number
of shares
used in computing
basic net earnings
(loss) per share 35,603,764 35,603,764 34,489,121
Weighted average number
of shares
used in computing
diluted net
earnings (loss)
per share 35,603,764 35,603,764 36,765,358
Total adjustments 20,519
(a) Cost of revenues includes $0.3 million of amortization of purchased
intangible assets, $1.4 million of inventory step-up and
$1.2 million of integration plan related costs in the three months
ended March 31, 2011.
(b) Research and development expenses includes $1.1 million of
integration plan related costs and $0.3 million of stock based
compensation expenses in the three months ended March 31, 2011.
(c) Selling and marketing expenses includes $0.3 million of amortization
of purchased intangible assets, $1.7 million of integration plan
related costs and $0.5 million of stock
based compensation expenses in the three months ended March 31, 2011.
(d) General and administration expenses includes, $0.3 million of
integration plan related costs and $0.6 million of stock based
compensation expenses in the three months ended March 31, 2011.
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
OPERATING LOSS
(U.S. dollars in thousands)
(Unaudited)
Three months ended
March 31, 2011
Reported GAAP net operating loss (20,334)
Stock based compensation expenses 1,419
Amortization of purchased intangible assets 557
Inventory step up 1,444
Integration plan related costs 4,346
Restructuring costs 7,834
Acquisition related costs 4,919
Non-GAAP net operating profit 185
Company and Investor Contact:
Yoel Knoll
Ceragon Networks Ltd.
Tel. +1-201-853-0228
[email protected]
Media Contact:
Karen Quatromoni
Rainier Communications
Tel. +1-508-475-0025 x150
[email protected]
Contact: Yoel Knoll
Director of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972(0)52-830-6419
Office (Int'l): +972(0)3-766-6419
[email protected]
SOURCE Ceragon Networks Ltd
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