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
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: |
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Doron Arazi or |
Claudia Gatlin |
+972 3 5431 660 |
+1 212 830-9080 |
Media: |
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Tanya Solomon |
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+972 3 5431163 |
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-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 |
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, |
December 31, |
|||
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 |
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 |
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 |
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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