Ceragon Networks Reports Fourth Quarter And Full Year 2013 Financial Results
PARAMUS, N.J., Feb. 13, 2014 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 high-capacity wireless hauling specialist today reported results for the fourth quarter and full year of 2013 which ended December 31, 2013.
Revenues for the fourth quarter of 2013 were $89.5 million, down 16% from $106.8 million for the fourth quarter of 2012, and down 3% from $92.1 million in the third quarter of 2013.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2013 was $(15.4) million or $(0.35) per basic share and diluted share, compared to net loss of $(8.4) million in the fourth quarter of 2012, or $(0.23) per basic share and diluted share.
On a non-GAAP basis, net loss for the fourth quarter of 2013 was $(4.1) million, or $(0.09) per basic and diluted share, excluding (a) $0.9 million of equity-based compensation expenses, (b) $0.6 million amortization of intangible assets, (c) $12.6 million restructuring and other expenses associated with the Q4 2013 restructuring, (d) $7.5 million primarily related to the expiration of certain pre-acquisition indirect tax exposures, (e) $1.3 million non-recurring adjustment of pension liabilities, and (f) $3.3 million of financial expenses related to actions taken in order to expatriate cash from Argentina. Non-GAAP net income for the fourth quarter of 2012 was $0.4 million, or $0.01 per basic share and diluted share, with 16% fewer weighted average shares outstanding (Please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP.)
Revenues for the full year of 2013 were $361.8 million, down 19% from $446.7 million in 2012. Net loss on a GAAP basis for 2013 was $(47.5) million or $(1.23) per basic share and diluted share. Net loss for the year 2012 was $(23.4) million or $(0.64) per basic share and diluted share.
On a non-GAAP basis, net loss for 2013 was $(20.0) million or $(0.52) per basic share and diluted share, excluding (a) $3.7 million of equity-based compensation expenses, (b) $2.5 million amortization of intangible assets, (c) $0.5 million of inventory step-up, (d) $15.4 million restructuring and other expenses associated with Q4 2013 restructuring, (e) $6.4 million related to the expiration of certain pre-acquisition indirect tax exposures, net of $1.3 million of interest accretion during the year, (f) $1.3 million non-recurring adjustment of pension liabilities, (g) $3.1 million non-recurring currency devaluation in Venezuela, (h) $3.3 million financial expenses related to actions taken in order to expatriate cash from Argentina, and (i) $4.0 million non-recurring adjustment of valuation allowance on tax assets. Net income for the year 2012 was $0.1 million, or $0.00 per basic share and diluted share.
Gross margin on a GAAP basis in the fourth quarter of 2013 was 31.0% of revenues. Gross margin on a non-GAAP basis in the fourth quarter was 32.1% of revenues.
Operating loss on a GAAP basis in the fourth quarter of 2013 was ($9.6) million. On a non-GAAP basis operating loss in the fourth quarter of 2013 was $(1.6) million.
Cash and cash investments at the end of the quarter were $52.3 million.
"We ended 2013 as we expected, with Latin America continuing to be the strongest region," said Ira Palti, President and CEO of Ceragon. "The restructuring in Q4 was completed swiftly, the organization is operating efficiently, and the balance of our new product portfolio will be shipping this quarter as planned.
"The excellent feedback we are receiving from customers is validating our strategy, our technology and our time-to-market leadership. With the restructuring behind us, and our new products garnering attention from existing customers as well as opening doors with important new ones, we are entering 2014 well-positioned to benefit as overall demand improves, which we expect to begin gradually in the second half of the year," concluded Mr. Palti.
Supplemental quarterly revenue breakouts:
Geographical breakdown, fourth quarter of 2013:
- Europe: 20%
- Africa: 11%
- North America: 10%
- Latin America: 40%
- India: 8%
- APAC: 11%
Geographical breakdown, full year 2013:
- Europe: 18%
- Africa: 20%
- North America: 9%
- Latin America: 34%
- India: 8%
- APAC: 11%
A conference call to discuss the results will begin at 9:00 a.m. ET. Investors are invited to join the Company's teleconference by calling USA: (800) 230-1085 or International: +1 (612) 332-0107, from 8:50 a.m. ET. 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: 314921. A replay of both the call and the webcast will be available through March 13, 2014.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 high-capacity 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.
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 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, risks associated with increased working capital needs, 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: |
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Aviram Steinhart |
or |
Claudia Gatlin |
+972 3 5431 443 |
+1 201 853 0228 |
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Media: |
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Yoel Knoll |
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+972 3 5431 32 or |
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+1 201 853 0271 |
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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, |
|||||||
2013 |
2012 |
2013 |
2012 |
|||||
Revenues |
$ 89,492 |
$ 106,849 |
$ 361,772 |
$ 446,651 |
||||
Cost of revenues |
61,751 |
71,802 |
249,543 |
308,354 |
||||
Gross profit |
27,741 |
35,047 |
112,229 |
138,297 |
||||
Operating expenses: |
||||||||
Research and development, net |
10,409 |
12,007 |
42,962 |
47,487 |
||||
Selling and marketing |
17,106 |
18,564 |
67,743 |
77,326 |
||||
General and administrative Restructuring costs |
8,089 9,345 |
6,925 4,608 |
26,757 9,345 |
27,519 4,608 |
||||
Other income |
(7,657) |
- |
(7,657) |
- |
||||
Total operating expenses |
$ 37,292 |
$ 42,104 |
$ 139,150 |
$ 156,940 |
||||
Operating loss |
9,551 |
7,058 |
26,921 |
18,643 |
||||
Financial expenses, net |
5,162 |
938 |
14,018 |
3,547 |
||||
Loss before taxes |
14,713 |
7,995 |
40,939 |
22,190 |
||||
Taxes on income |
664 |
405 |
6,539 |
1,201 |
||||
Net loss |
$ 15,377 |
$ 8,400 |
$ 47,478 |
$ 23,391 |
||||
Basic and diluted net loss per share |
$ 0.35 |
$ 0.23 |
$ 1.23 |
$ 0.64 |
||||
Weighted average number of shares used in computing basic and diluted net loss per share |
43,639,777 |
36,565,168 |
38,519,606 |
36,457,989 |
||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
(U.S. dollars in thousands) |
||||
(Unaudited) |
||||
December 31, 2013 |
December 31, |
|||
ASSETS |
||||
CURRENT ASSETS: |
||||
Cash and cash equivalents |
$ 42,407 |
$ 47,099 |
||
Short-term bank deposits |
446 |
422 |
||
Marketable securities |
5,499 |
- |
||
Trade receivables, net |
131,166 |
149,120 |
||
Deferred taxes, net |
7,198 |
8,589 |
||
Other accounts receivable and prepaid expenses |
34,205 |
38,743 |
||
Inventories |
64,239 |
65,554 |
||
Total current assets |
285,160 |
309,527 |
||
NON-CURRENT ASSETS: |
||||
Marketable securities |
3,985 |
4,068 |
||
Deferred tax assets, net |
6,542 |
9,140 |
||
Severance pay and pension funds |
7,065 |
7,163 |
||
Property and equipment, net |
35,245 |
33,642 |
||
Intangible assets, net |
7,213 |
9,809 |
||
Goodwill |
14,935 |
15,283 |
||
Other non-current assets |
5,826 |
4,964 |
||
80,811 |
84,069 |
|||
Total assets |
$ 365,971 |
$ 393,596 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
CURRENT LIABILITIES: |
||||
Short term loan, including current maturities of long term bank loan |
$ 46,922 |
$ 25,232 |
||
Trade payables |
77,979 |
102,079 |
||
Deferred revenues |
7,968 |
16,719 |
||
Other accounts payable and accrued expenses |
45,526 |
36,090 |
||
Total current liabilities |
178,395 |
180,120 |
||
LONG-TERM LIABILITIES |
||||
Long term bank loan, net of current maturities |
10,304 |
18,536 |
||
Accrued severance pay and pension |
13,635 |
12,311 |
||
Other long term payables |
28,559 |
38,920 |
||
52,498 |
69,767 |
|||
SHAREHOLDERS' EQUITY: |
||||
Share capital: |
||||
Ordinary shares |
141 |
98 |
||
Additional paid-in capital |
357,989 |
318,106 |
||
Treasury shares at cost |
(20,091) |
(20,091) |
||
Other comprehensive loss |
(1,569) |
(490) |
||
Accumulated deficits |
(201,392) |
(153,914) |
||
Total shareholders' equity |
135,078 |
143,709 |
||
Total liabilities and shareholders' equity |
$ 365,971 |
$ 393,596 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW |
|||||||
(U.S. dollars, in thousands) |
|||||||
(Unaudited) |
|||||||
Three months ended December 31, |
Year ended December 31, |
||||||
2013 |
2012 |
2013 |
2012 |
||||
Cash flow from operating activities: |
|||||||
Net loss |
$ (15,377) |
$ (8,400) |
$ (47,478) |
$ (23,391) |
|||
Adjustments to reconcile net loss to net cash used in operating activities: |
|||||||
Depreciation and amortization |
3,989 |
3,802 |
15,645 |
15,030 |
|||
Stock-based compensation expense |
1,048 |
1,215 |
3,822 |
5,460 |
|||
Write off of property and equipment |
2,559 |
- |
2,559 |
- |
|||
Capital loss from marketable securities |
2,108 |
- |
2,108 |
- |
|||
Decrease (Increase) in trade and other receivables, net |
(2,062) |
27,768 |
18,272 |
(11,753) |
|||
Decrease (Increase) in inventory, net of write off |
(7,092) |
(1,599) |
401 |
27,210 |
|||
Increase (decrease) in trade payables and accrued liabilities |
(1,975) |
274 |
(21,044) |
17,712 |
|||
Decrease in deferred revenues |
(533) |
(5,170) |
(8,751) |
(21,589) |
|||
Decrease (increase) in deferred tax asset, net |
(171) |
(324) |
3,572 |
(743) |
|||
Other adjustments |
1,404 |
(481) |
1,382 |
(727) |
|||
Net cash provided by (used in) operating activities |
$ (16,102) |
$ 17,085 |
$ (29,512) |
$ 7,209 |
|||
Cash flow from investing activities: |
|||||||
Purchase of property and equipment ,net |
(4,717) |
(4,317) |
(16,423) |
(14,530) |
|||
Investment in short and long-term bank deposit |
(424) |
- |
(679) |
(1,266) |
|||
Proceeds from maturities of short and long-term bank deposits |
299 |
- |
635 |
7,920 |
|||
Investment in available for sale marketable securities |
(7,867) |
- |
(7,867) |
(64) |
|||
Proceeds from sales of available for sale marketable securities |
212 |
- |
513 |
9,781 |
|||
Net cash provided by (used in) investing activities |
$ (12,497) |
$ (4,317) |
$ (23,821) |
$ 1,841 |
|||
Cash flow from financing activities: |
|||||||
Proceeds from exercise of options |
- |
2 |
1,145 |
736 |
|||
Proceeds from issuance of shares, net |
34,957 |
- |
34,957 |
- |
|||
Proceeds from financial institutions, net |
(2,300) |
2,000 |
23,690 |
27,000 |
|||
Repayments of bank loans |
(2,058) |
(12,058) |
(10,232) |
(18,232) |
|||
Net cash provided by (used in) financing activities |
$ 30,599 |
$ (10,056) |
$ 49,560 |
$ 9,504 |
|||
Translation adjustments on cash and cash equivalents |
$ (175) |
$ 36 |
$ (919) |
$ (446) |
|||
Increase (Decrease) in cash and cash equivalents |
$ 1,825 |
$ 2,748 |
$ (4,692) |
$ 18,108 |
|||
Cash and cash equivalents at the beginning of the period |
40,582 |
44,351 |
47,099 |
28,991 |
|||
Cash and cash equivalents at the end of the period |
$ 42,407 |
$ 47,099 |
$ 42,407 |
$ 47,099 |
|||
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS |
|||||||||
(U.S. dollars in thousands, except share and per share data) |
|||||||||
(Unaudited) |
|||||||||
Three months ended December 31, |
|||||||||
2013 |
2012 |
||||||||
GAAP (as reported) |
Adjustments |
Non-GAAP |
Non-GAAP |
||||||
Revenues |
$ 89,492 |
$ 89,492 |
$ 106,849 |
||||||
Cost of revenues |
61,751 |
(a) 990 |
60,761 |
71,307 |
|||||
Gross profit |
27,741 |
28,731 |
35,542 |
||||||
Operating expenses: |
|||||||||
Research and development, net |
10,409 |
(b) 1,822 |
8,587 |
10,539 |
|||||
Selling and marketing |
17,106 |
(c) 1,219 |
15,887 |
17,344 |
|||||
General and administrative |
8,089 |
(d) 2,252 |
5,837 |
5,895 |
|||||
Restructuring costs |
9,345 |
9,345 |
- |
- |
|||||
Other income |
(7,657) |
(e) (7,657) |
- |
- |
|||||
Total operating expenses |
$ 37,292 |
$ 30,311 |
$ 33,778 |
||||||
Operating profit (loss) |
(9,551) |
(1,580) |
1,764 |
||||||
Financial expenses, net |
5,162 |
(f) 3,320 |
1,842 |
938 |
|||||
Income (loss) before taxes |
(14,713) |
(3,422) |
826 |
||||||
Taxes on income |
664 |
664 |
405 |
||||||
Net income (loss) |
$ (15,377) |
$ (4,086) |
$ 421 |
||||||
Basic net earnings (loss) per share |
$ (0.35) |
$ (0.09) |
$ 0.01 |
||||||
Diluted net earnings (loss) per share |
$ (0.35) |
$ (0.09) |
$ 0.01 |
||||||
Weighted average number of shares used in computing basic net earnings (loss) per share |
43,639,777 |
43,639,777 |
36,565,168 |
||||||
Weighted average number of shares used in computing diluted net earnings (loss) per share |
43,639,777 |
43,639,777 |
36,641,920 |
||||||
Total adjustments |
11,291 |
||||||||
(a) Cost of revenues includes $0.3 million of amortization of intangible assets, $40 thousand of stock based compensation expenses, $0.2 million of changes in pre-acquisition indirect tax positions and $0.4 million of the Q4 2013 restructuring plan related costs in the three months ended December 31, 2013. (b) Research and development expenses include $1.6 million of the Q4 2013 restructuring related costs and $0.3 million of stock based compensation expenses in the three months ended December 31, 2013. (c) Selling and marketing expenses includes $0.3 million of amortization of intangible assets, $0.6 million of the Q4 2013 restructuring related costs and $0.2 million of stock based compensation expenses in the three months ended December 31, 2013. (d) General and administrative expenses include $0.6 million of the Q4 2013 restructuring related costs, $1.3 million of non-recurring adjustment of pension liabilities in Norway as a result of a change in the official Norwegian data regarding estimated life expectancy and $0.4 million of stock based compensation expenses in the three months ended December 31, 2013. (e) Other income includes $7.7 million related to the expiration of certain pre-acquisition indirect tax exposures during the three months ended December 31, 2013. (f) Financial expenses include $3.3 million related to actions taken in order to expatriate cash from Argentina in the three months ended December 31, 2013. |
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS |
||||||||
(U.S. dollars in thousands, except share and per share data) |
||||||||
(Unaudited) |
||||||||
Year ended December 31, |
||||||||
2013 |
2012 |
|||||||
GAAP (as reported) |
Adjustments |
Non-GAAP |
Non-GAAP |
|||||
Revenues |
$ 361,772 |
$ 361,772 |
$ 446,651 |
|||||
Cost of revenues |
249,543 |
(a) 3,792 |
245,751 |
299,781 |
||||
Gross profit |
112,229 |
116,021 |
146,870 |
|||||
Operating expenses: |
||||||||
Research and development, net |
42,962 |
(b) 3,810 |
39,152 |
44,584 |
||||
Selling and marketing |
67,743 |
(c) 3,957 |
63,786 |
72,306 |
||||
General and administrative |
26,757 |
(d) 3,768 |
22,989 |
25,167 |
||||
Restructuring costs |
9,345 |
9,345 |
- |
- |
||||
Other income |
(7,657) |
(e) (7,657) |
- |
- |
||||
Total operating expenses |
$ 139,150 |
$ 125,927 |
$ 142,057 |
|||||
Operating profit (loss) |
(26,921) |
(9,906) |
4,813 |
|||||
Financial expenses, net |
14,018 |
(f) 6,453 |
7,565 |
3,547 |
||||
Income (loss) before taxes |
(40,939) |
(17,471) |
1,266 |
|||||
Taxes on income |
6,539 |
(g) 4,037 |
2,502 |
1,201 |
||||
Net income (loss) |
$ (47,478) |
$ (19,973) |
$ 65 |
|||||
Basic net earnings (loss) per share |
$ (1.23) |
$ (0.52) |
$ 0.00 |
|||||
Diluted net earnings (loss) per share |
$ (1.23) |
$ (0.52) |
$ 0.00 |
|||||
Weighted average number of shares used in computing basic net earnings (loss) per share |
38,519,606 |
38,519,606 |
36,457,989 |
|||||
Weighted average number of shares used in computing diluted net earnings (loss) per share |
38,519,606 |
38,519,606 |
37,092,887 |
|||||
Total adjustments |
27,505 |
|||||||
(a) Cost of revenues includes $1.2 million of amortization of intangible assets, $0.5 million of inventory step-up, $1.3 million of changes in pre-acquisition indirect tax positions, $0.2 million of stock based compensation expenses and $0.7 million of the Q4 2013 restructuring related costs in the year ended December 31, 2013. (b) Research and development expenses include $2.8 million of the Q4 2013 restructuring related costs and $1.0 million of stock based compensation expenses in the year ended December 31, 2013. (c) Selling and marketing expenses includes $1.3 million of amortization of intangible assets, $1.3 million of the Q4 2013 restructuring related costs and $1.3 million of stock based compensation expenses in the year ended December 31, 2013. (d) General and administrative expenses include $1.3 million of the Q4 2013 restructuring related costs, $1.3 million of non-recurring adjustment of pension liabilities in Norway as a result of a change in the official Norwegian data regarding estimated life expectancy and $1.2 million of stock based compensation expenses, in the year ended December 31, 2013. (e) Other income includes $7.7 million related to the expiration of certain pre-acquisition indirect tax exposures during the year ended December 31, 2013. (f) Financial expenses include $3.1 million non-recurring currency devaluation in Venezuela and $3.3 million charge related to actions taken in order to expatriate cash from Argentina in the year ended December 31, 2013. (g) Taxes on income include $4.0 million non-recurring adjustment of valuation allowance on tax assets in the year ended December 31, 2013. |
RECONCILIATION BETWEEN REPORTED AND NON-GAAP |
||||||
OPERATING PROFIT (LOSS) |
||||||
(U.S. dollars in thousands) |
||||||
(Unaudited) |
||||||
Three months ended |
Year ended |
|||||
December 31, 2013 |
||||||
Reported GAAP net operating loss |
(9,551) |
(26,921) |
||||
Stock based compensation expenses |
932 |
3,706 |
||||
Amortization of purchased intangible assets |
632 |
2,534 |
||||
Inventory step up |
- |
459 |
||||
Restructuring expenses |
9,345 |
9,345 |
||||
Q4 2013 restructuring related costs |
3,232 |
6,076 |
||||
Expiration of certain pre-acquisition indirect tax exposures, |
(7,461) |
(6,396) |
||||
Non-recurring adjustment of pension liabilities |
1,291 |
1,291 |
||||
Non-GAAP net operating loss |
(1,580) |
(9,906) |
||||
SOURCE Ceragon Networks Ltd.
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