Ceragon Networks Reports Third Quarter 2010 Financial Results
Achieves Record Revenues, Higher Gross Margins and Improved Operating Margin
PARAMUS, New Jersey, October 25, 2010 /PRNewswire-FirstCall/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the provider of high-capacity, LTE/4G-ready wireless backhaul networks, today reported results for the third quarter which ended September 30, 2010.
Revenues for the third quarter of 2010 reached an all-time high of $62.3 million, up 39% from $44.7 million for the third quarter of 2009 and up 2% from $60.9 million in the second quarter of 2010.
Net income in accordance with US Generally Accepted Accounting Principles (GAAP) for the third quarter of 2010 was $4.6 million or $0.13 per basic share and diluted share. Net income in the third quarter of 2009 was $1.1 million, or $0.03 per basic and diluted share.
On a non-GAAP basis, net income for the third quarter of 2010, excluding $843,000 of equity-based compensation expenses, was $5.5 million, or $0.16 per basic share and $0.15 per diluted share. Non-GAAP net income for the third quarter of 2009 was $1.8 million, or $0.05 per basic and diluted share (please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).
Gross margin on a GAAP basis in the third quarter of 2010 was 36.6%. Gross margin on a non-GAAP basis was 36.7% of revenues.
Cash and cash investments at the end of the quarter were $77.3 million.
"In Q3, we again reported record revenues, higher gross margin and improved operating margin," said Ira Palti, President and CEO of Ceragon. "With new security procedures now in place, business from India is beginning to return to normal. Our book-to-bill ratio in Q3 was about one and, excluding India, it was higher. As a result of strong demand throughout the world, we now expect to achieve annual revenue growth toward the upper end of our target range of 30-35% for the full year."
Supplemental revenue breakouts:
Geographical breakdown, third quarter of 2010:
EMEA: 23%
North America: 15%
Asia Pacific: 51%
Latin America: 11%
A conference call will follow, beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (800) 230-1092, or international (612)234-9960 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) (320)365-3844, Access Code: 173717.
A replay of both the call and the webcast will be available through November 25, 2010.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is a leading provider of high capacity LTE/4G-ready wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services, enabling 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 200 service providers of all sizes, and hundreds of private networks in more than 130 countries. Visit Ceragon at http://www.ceragon.com.
Ceragon Networks(R), CeraView(R), FibeAir(R), the FibeAir(R) design mark and Native2(R) are registered trademarks., and Ceragon(TM), PolyView(TM), ConfigAir(TM), CeraMon(TM), QuickAir(TM), QuickAir Partner Program(TM), QuickAir Partner Certification Program(TM), QuickAir Partner Zone(TM) and EncryptAir(TM) are trademarks of Ceragon Networks Ltd.
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. These risks and uncertainties, as well as others, 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended Nine months ended
September 30 September 30,
2010 2009 2010 2009
Revenues $ 62,293 $ 44,715 $ 182,869 $ 130,863
Cost of revenues 39,514 30,269 118,245 87,655
Gross profit 22,779 14,446 64,624 43,208
Operating expenses:
Research and 6,191 4,378 18,383 13,475
development
Selling and 9,397 6,767 27,538 21,576
marketing
General and 2,940 2,625 8,716 7,702
administrative
Total operating $ 18,528 $ 13,770 $ 54,637 $ 42,753
expenses
Operating profit 4,251 676 9,987 455
Financial income, 621 446 1,131 1,268
net
Income before taxes 4,872 1,122 11,118 1,723
Taxes on income 249 43 874 196
Net income $ 4,623 $ 1,079 $ 10,244 $ 1,527
Basic net earnings $ 0.13 $ 0.03 $ 0.29 $ 0.04
per share
Diluted net earnings $ 0.13 $ 0.03 $ 0.28 $ 0.04
per share
Weighted average
number of shares
used in computing
basic net earnings
per share 34,933,437 34,178,001 34,769,657 34,407,042
Weighted average
number of shares
used in computing
diluted net earnings
per share 36,233,612 35,542,326 36,440,599 35,278,880
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
September
30,
December
2010 31, 2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,546 $ 38,339
Short-term bank deposits 18,652 30,183
Marketable securities 13,701 16,724
Trade receivables, net 69,417 68,452
Deferred taxes 2,836 3,462
Other accounts receivable and prepaid expenses 8,282 7,492
Inventories 61,850 65,925
Total current assets 194,284 230,577
LONG-TERM INVESTMENTS:
Long-term bank deposits 9,269 10,824
Long-term marketable securities 16,118 2,250
Severance pay funds 5,598 4,971
Total long-term investments 30,985 18,045
OTHER ASSETS
Deferred taxes 9,896 8,942
Goodwill 1,093 -
Total other assets 10,989 $ 8,942
PROPERTY AND EQUIPMENT, NET 15,255 11,809
Total assets $ 251,513 $ 269,373
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 22,499 $ 52,898
Deferred revenues 12,759 18,548
Other accounts payable and accrued expenses 10,975 9,847
Total current liabilities 46,233 81,293
ACCRUED SEVERANCE PAY 8,074 7,174
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares 94 92
Additional paid-in capital 297,700 291,736
Treasury shares at cost (20,091) (20,091)
Other comprehensive income 190 100
Accumulated deficits (80,687) (90,931)
Total shareholders' equity 197,206 180,906
Total liabilities and shareholders' equity $ 251,513 $ 269,373
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
Cash flow from operating activities:
Net income $ 4,623 $ 1,079 $ 10,244 $ 1,527
Adjustments to
reconcile net income
to net cash provided
(used in) operating
activities:
Depreciation 1,213 852 3,391 2,323
Stock-based
compensation expense 843 696 2,666 2,290
Decrease (increase)
in trade and other
receivables, net (12,603) (5,348) (1,485) 15,889
Decrease (increase)
in inventory 6,727 (8,002) 4,075 (10,057)
Increase (decrease)
in trade payables and
accrued liabilities(10,422) 7,378 (28,407) (5,330)
Increase (decrease)
in deferred revenues(5,047) 7,932 (5,789) 8,097
Decrease (increase)
in deferred tax asset 4 - (355) -
Other adjustments (501) (183) 35 (416)
Net cash provided by
(used in) operating
activities $ (15,163) $ 4,404 $ (15,625) $ 14,323
Cash flow from
investing activities:
Purchase of property
and equipment ,net (2,244) (1,323) (7,715) (5,097)
Payment for
acquisition of
Elxys *) (1,232) (1,232)
Investment in
short and long-term
bank deposit (750) (8,840) (11,782) (27,795)
Proceeds from
short and long-term
bank deposits 5,420 6,334 25,100 26,893
Investment in
held-to-maturity
marketable securities - - (18,339) (1,500)
Proceeds from
maturities of
held-to-maturity
marketable
securities 3,000 - 7,500 11,754
Net cash provided
by (used in)
investing
activities $ 4,194 $ (3,829) $ (6,468) $ 4,255
Cash flow from
Financing
activities:
Proceeds from
exercise of
options 284 569 3,300 784
Purchase of
treasury shares at
cost - - - (8,040)
Net cash provided
by (used in)
financing activities $ 284 $ 569 $ 3,300 $ (7,256)
Increase (decrease)
in cash and cash
equivalents $ (10,685) $ 1,144 $ (18,793) $ 11,322
Cash and cash
equivalents at
the beginning of
the period 30,231 38,402 38,339 28,224
Cash and cash
equivalents at
the end of the
period $ 19,546 $ 39,546 $ 19,546 $ 39,546
* 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 September 30,
2010 2009
GAAP (as reported) Adjustments (*) Non-GAAP Non-GAAP
Revenues $ 62,293 $ 62,293 $ 44,715
Cost of revenues 39,514 94 39,420 30,207
Gross profit 22,779 22,873 14,508
Operating expenses:
Research and
development 6,191 193 5,998 4,230
Selling and
marketing 9,397 324 9,073 6,526
General and
administrative 2,940 232 2,708 2,380
Total operating
expenses 18,528 17,779 13,136
Operating profit 4,251 5,094 1,372
Financial income,
net 621 621 446
Income before taxes 4,872 5,715 1,818
Taxes on income 249 249 43
Net income $ 4,623 $ 5,466 $ 1,775
Basic net earnings
per share $ 0.13 $ 0.16 $ 0.05
Diluted net
earnings per share $ 0.13 $ 0.15 $ 0.05
Weighted average
number of
shares used in
computing basic
net earnings per
share 34,933,437 34,933,437 34,178,001
Weighted average
number of
shares used in
computing
diluted net
earnings per
share 36,233,612 36,233,612 35,542,326
Total adjustments 843
(*) Adjustments related to equity based compensation expenses according
to SFAS 123 (R)
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Nine months ended September 30,
2010 2009
GAAP (as reported) Adjustments(*) Non-GAAP Non-GAAP
Revenues $ 182,869 $ 182,869 $ 130,863
Cost of revenues 118,245 (*)232 118,013 87,469
Gross profit 64,624 64,856 43,394
Operating expenses:
Research and
development 18,383 (*)553 16,680 13,002
(**)1,150
Selling and
marketing 27,538 (*)938 26,600 20,707
General and
administrative 8,716 (*)943 7,773 6,940
Total operating
expenses 54,637 51,053 40,649
Operating profit 9,987 13,803 2,745
Financial income, net 1,131 1,131 1,268
Income before taxes 11,118 14,934 4,013
Taxes on income 874 874 196
Net Income $ 10,244 $ 14,060 $ 3,817
Basic net earnings
per share $ 0.29 $ 0.40 $ 0.11
Diluted net earnings
per share $ 0.28 $ 0.39 $ 0.11
Weighted average
number of
shares used in
computing basic
net earnings per
share
34,769,657 34,769,657 34,407,042
Weighted average
number of
shares used in
computing
diluted net
earnings per
share
36,440,599 36,440,599 35,278,880
Total adjustments 3,816
(*) Adjustments related to equity based compensation expenses according
to SFAS 123 (R)
(**) Adjustment related to purchase of technology for further development
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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]
SOURCE Ceragon Networks Ltd
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