Ceragon Networks Reports Financial Results For The Third Quarter Of 2020

Rhea-AI Summary

Ceragon Networks Ltd. (NASDAQ: CRNT) reported a net profit of $1.6 million for Q3 2020, despite COVID-19 challenges, benefiting from ISP and 4G operator projects. Revenues were $70.6 million, slightly down from $72.2 million in Q3 2019 but up from $62.4 million in Q2 2020. The gross margin improved to 33.4%, and operating income was $3.4 million. Progress was noted in 5G initiatives with new design wins and initial orders. Cash equivalents decreased to $29.2 million from $35.2 million in Q2 2020. The company expresses confidence in its position amid rising demand for broadband expansion.

Positive

• Achieved GAAP net profit of $1.6 million.
• Improved gross margin to 33.4%, up from 32.2% in Q3 2019.
• Operating income increased to $3.4 million compared to a loss of $3.5 million in Q2 2020.
• Notable progress in 5G projects with new design wins leading to initial low-volume shipments.

Negative

• Revenue decreased to $70.6 million from $72.2 million in Q3 2019.
• Cash and cash equivalents decreased to $29.2 million from $35.2 million at the end of Q2 2020.
• COVID-19 continues to create uncertainty in project timing.

LITTLE FALLS, N.J., Nov. 2, 2020 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless hauling specialist, today reported results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights:

• Strong revenues, high gross margin and lower operating expenses generated $1.6 million in GAAP net profit despite COVID-19 constraints, as Ceragon benefited from ISP and 4G operator projects to increase network reach, capacity and speed
• COVID-19-related uncertainty continued to impact Ceragon's performance, especially in Latin America
• Continued progress in multiple large operator 5G network processes, moving from design wins to proof of concepts and purchase orders with initial low-volume shipments, in preparation for potential high-volume orders in second half of 2021

Primary Financial Results:

Revenues: $70.6 million compared with $72.2 million for Q3'19 and $62.4 million for Q2'20.

Gross margin: 33.4% compared to 32.2% for Q3'19 and 26.4% for Q2'20.

Operating income (loss): $3.4 million compared with $2.1 million for Q3'19 and $(3.5) million for Q2'20.

Net income (loss): $1.6 million, or $0.02 per diluted share compared with $0.2 million, or $0.00 per diluted share for Q3'19 and $(5.5) million, or $(0.07) per diluted share for Q2'20.

Non-GAAP results: Gross margin 33.5%, operating income $3.7 million, and net income $2.3 million, or $0.03 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents: $29.2 million at September 30, 2020, compared to $35.2 million at June 30, 2020.

Ira Palti, President and CEO of Ceragon, commented, "Q3 was a strong period for Ceragon, reflecting the market's urgent need for increased network capacity and its recognition of the critical advantages of our solutions, coupled with our focused execution despite the COVID-19 environment. During the quarter, we achieved new 5G design wins, some of which have already translated into small orders, and completed significant shipments against large-scale 4G expansion projects. We also benefited from ISP activities in the US and Europe, as they move quickly to address broadband gaps left underserved by operators.

"While COVID-19 continues to bring uncertainty to project timing, the need for broadband network expansions - 4G, 5G and others - has never been clearer, and we expect this to continue working to our strengths. Meanwhile, we continue to maintain strong control over our operations, as demonstrated by our success in reducing our operating expenses and strengthening our balance sheet. The trend towards OpenRAN is enhancing our position as a best-in-class vendor in the 5G environment, and we are progressing on track with our 5G-enabling IP-50 platform development efforts and with our advanced 5G hauling chipset. Taken as a whole, as a 5G technology leader with strong 4G and ISP offerings, we believe we are ideally positioned to benefit from current market dynamics and the longer-term 5G promise."  

Supplemental revenue breakouts by geography:

Third quarter 2020:

·  Europe:                   14%
·  Africa:                     14%
·  North America:       14%
·  Latin America:        14%
·  India:                      24%
·  APAC:                    20%

A conference call will follow beginning at 9:00 a.m. EST. Investors are invited to join the company's teleconference by calling (USA) (844) 291-6360 or international +1 (234) 720-6993 and using the following access code: 2739037.

Investors can also listen to the call live via the Internet by accessing Ceragon Networks' website on the webcasts page in the section for investors: www.ceragon.com/investors/webcasts/ selecting the webcast link, and following the registration instructions.

If you are unable to join us live, the replay numbers are: (USA) (866) 207-1041 (International) +1 (402) 970-0847, with access code: 4059433. This audio replay will be available through December 2, 2020.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless hauling specialist. We help operators and other service providers worldwide increase operational efficiency and enhance end customers' quality of experience with innovative wireless backhaul and fronthaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 5G & 4G, mission-critical multimedia services and other applications at high reliability and speed.

Ceragon's unique multicore technology and disaggregated approach to wireless hauling provides highly reliable, fast to deploy, high-capacity wireless hauling for 5G and 4G networks with minimal use of spectrum, power and other resources. It enables increased productivity, as well as simple and quick network modernization, positioning Ceragon as a leading solutions provider for the 5G era. 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. 

Join the Discussion

LinkedIn: http://www.linkedin.com/companies/14470
Facebook: http://www.facebook.com/CeragonNetworks
Twitter: http://www.twitter.com/Ceragon
YouTube: http://www.youtube.com/user/CeragonNetworks?feature=mhum

Safe Harbor

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 that constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and the safe-harbor provisions of 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 about Ceragon's business, financial condition, results of operations, micro and macro market trends and other issues addressed or reflected therein. Examples of forward-looking statements include: projections of demand, revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, order timing, growth prospects, product development, financial resources, 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.

Although we believe that the projections reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations therefrom will not be material. Such statements involve risks and uncertainties that may cause future results to differ materially from those anticipated. These risks and uncertainties include, but are not limited to, the effects of general economic conditions, the effect of the COVID-19 crisis on the global markets and on the markets in which we operate, including the risk of a continued disruption to our and our customers', providers', business partners and contractors' business and operations as a result of the COVID-19 pandemic effects and the restrictions on operations created thereby, and of an adverse effect on our and our customers' financial performance, cash flow, revenue and financial results, available cash and financing, and our ability to bill and collect amounts due from our customers as a result therefrom; the risks relating to the concentration of a significant portion of Ceragon's expected business in certain countries and particularly in India, where a small number of customers are expected to represent a significant portion of our revenues; risks associated with any failure to meet our product development timetable; the risk that the rollout of 5G services could take longer or differently than anticipated and such other risks, uncertainties and other factors that could affect our results, as detailed in our press release that was published earlier today and as further detailed in Ceragon's most recent Annual Report on Form 20-F and in Ceragon's other filings with the Securities and Exchange Commission.

Such forward-looking statements, including the risks, uncertainties and other factors that could affect our results, 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. Such forward-looking statements do not purport to be predictions of future events or results and there can be no assurance that it will prove to be accurate. Ceragon may elect to update these forward-looking statements at some point in the future but the company specifically disclaims any obligation to do so except as may be required by law.

Ceragon's public filings are available from the Securities and Exchange Commission's website at www.sec.gov and may also be obtained from Ceragon's website at www.ceragon.com.

Investors:

Osi Sessler 
+972 3 5431047  
investor@ceragon.com

Media:

Tanya Solomon
+972 3 5431163  
media@ceragon.com

-tables follow-

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
		Three months ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019
Revenues		$    70,581		$     72,163		$    188,879		$     214,327
Cost of revenues		47,003		48,924		134,789		140,095
Gross profit		23,578		23,239		54,090		74,232
Operating expenses:
Research and development, net		7,329		6,736		21,389		19,154
Selling and marketing		7,986		9,756		24,459		29,339
General and administrative		4,909		4,610		14,350		16,246
Total operating expenses		$    20,224		$     21,102		$     60,198		$      64,739
Operating income (loss)		3,354		2,137		(6,108)		9,493
Financial expenses and others, net		1,395		1,378		3,167		4,317
Income (loss) before taxes		1,959		759		(9,275)		5,176
Taxes on income		277		415		1,057		2,947
Equity loss in affiliates		98		158		441		472
Net income (loss)		$     1,584		$        186		$   (10,773)		$        1,757
Basic net income (loss) per share		$        0.02		$        0.00		$      (0.13)		$          0.02
Diluted net income (loss) per share		$        0.02		$        0.00		$      (0.13)		$          0.02
Weighted average number of shares used in computing basic net income (loss) per share		81,277,995		80,303,699		81,019,808		80,202,791
Weighted average number of shares used in computing diluted net income (loss) per share		82,000,357		81,652,356		81,019,808		82,012,013

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
		September 30, 2020		December 31, 2019
ASSETS		Unaudited		Audited
CURRENT ASSETS:
Cash and cash equivalents		$       29,155		$       23,939
Trade receivables, net		108,394		118,531
Other accounts receivable and prepaid expenses		11,778		11,033
Inventories		51,869		62,132
Total current assets		201,196		215,635
NON-CURRENT ASSETS:
Long-term bank deposits		17		17
Deferred tax assets		8,142		8,106
Severance pay and pension fund		5,738		5,661
Property and equipment, net		32,014		34,865
Intangible assets, net		8,015		7,898
Other non-current assets		18,637		17,707
Total non-current assets		72,563		74,254
Total assets		$     273,759		$     289,889
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$        54,035		$        59,635
Deferred revenues		2,382		1,734
Short-term loans		17,879		14,600
Other accounts payable and accrued expenses		24,833		28,399
Total current liabilities		99,129		104,368
LONG-TERM LIABILITIES:
Accrued severance pay and pension		10,618		10,709
Deferred revenues		7,495		6,265
Other long-term payables		6,855		8,126
Total long-term liabilities		24,968		25,100
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares		215		215
Additional paid-in capital		420,160		418,062
Treasury shares at cost		(20,091)		(20,091)
Other comprehensive loss		(10,050)		(8,666)
Accumulated deficits		(240,572)		(229,099)
Total shareholders' equity		149,662		160,421
Total liabilities and shareholders' equity		$     273,759		$     289,889

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Cash flow from operating activities:
Net income (loss)	$         1,584		$          186		$    (10,773)		$        1,757
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	2,728		2,573		8,112		7,011
Stock-based compensation expense	384		422		1,251		1,594
Decrease (increase) in trade and other receivables, net	(10,301)		6,616		6,661		(3,572)
Decrease (increase) in inventory, net of write off	1,384		5,736		8,910		(15,077)
Decrease (increase) in deferred tax asset, net	73		(194)		(36)		1,042
Decrease in trade payables and accrued liabilities	(274)		(30,760)		(9,269)		(21,297)
Increase in deferred revenues	1,075		1,023		1,878		7,173
Other adjustments	122		(33)		(166)		(169)
Net cash provided by (used in) operating activities	$        (3,225)		$   (14,431)		$       6,568		$   (21,538)
Cash flow from investing activities:
Purchase of property and equipment, net	(1,166)		(2,409)		(4,804)		(9,116)
Purchase of intangible assets, net	(64)		(249)		(343)		(3,041)
Proceeds from bank deposits	-		-		-		920
Net cash used in investing activities	$       (1,230)		$     (2,658)		$      (5,147)		$   (11,237)
Cash flow from financing activities:
Proceeds from exercise of options	293		135		847		391
Proceeds from (repayment of) bank credits and loans, net	(1,800)		8,500		3,279		17,400
Net cash provided by (used in) financing activities	$       (1,507)		$       8,635		$        4,126		$      17,791
Translation adjustments on cash and cash equivalents	$             (50)		$          (63)		$        (331)		$          (73)
Increase (decrease) in cash and cash equivalents	$        (6,012)		$     (8,517)		$       5,216		$   (15,057)
Cash and cash equivalents at the beginning of the period	35,167		29,041		23,939		35,581
Cash and cash equivalents at the end of the period	$        29,155		$     20,524		$     29,155		$    20,524

 

 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)
		Three months ended						Nine months ended
		September 30,						September 30,
		2020			2019			2020				2019
GAAP cost of revenues		$	47,003		$	48,924		$	134,789				$	140,095
Stock based compensation expenses			(32)			(13)			(92)					(44)
Changes in indirect tax positions			(1)			(4)			(3)					(34)
Non-GAAP cost of revenues		$	46,970		$	48,907		$	134,694				$	140,017
GAAP gross profit		$	23,578		$	23,239		$	54,090				$	74,232
Gross profit adjustments			33			17			95					78
Non-GAAP gross profit		$	23,611		$	23,256		$	54,185				$	74,310
GAAP Research and development expenses		$	7,329		$	6,736		$	21,389				$	19,154
Stock based compensation expenses			(30)			(84)			(129)					(285)
Non-GAAP Research and development expenses		$	7,299		$	6,652		$	21,260				$	18,869
GAAP Sales and Marketing expenses		$	7,986		$	9,756		$	24,459				$	29,339
Stock based compensation expenses			(167)			(171)			(435)					(553)
Non-GAAP Sales and Marketing expenses		$	7,819		$	9,585		$	24,024				$	28,786
GAAP General and Administrative expenses		$	4,909		$	4,610		$	14,350				$	16,246
Stock based compensation expenses			(155)			(154)			(595)					(712)
Non-GAAP General and Administrative expenses		$	4,754		$	4,456		$	13,755				$	15,534
GAAP financial expenses and others, net		$	1,395		$	1,378		$	3,167				$	4,317
Leases – financial income (expenses)			(157)			91			183					(101)
Non-GAAP financial expenses and others, net		$	1,238		$	1,469		$	3,350				$	4,216
GAAP Tax expenses		$	277		$	415		$	1,057				$	2,947
Non cash tax adjustments			(76)			182			(4)					(1,090)
Non-GAAP Tax expenses		$	201		$	597		$	1,053				$	1,857
GAAP equity loss in affiliates		$	98		$	158		$	441				$	472
Other non-cash adjustments			(98)			(158)			(441)					(472)
Non-GAAP equity loss in affiliates		$	-		$	-		$	-				$	-

 

		RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
		(U.S. dollars in thousands, except share and per share data)
		(Unaudited)
						Three months ended								Nine months ended, September 30,
						September 30,
						2020			2019					2020			2019
	GAAP net income (loss)			$		1,584		$	186			$		(10,773)		$	1,757
	Stock based compensation       expenses					384			422					1,251			1,594
	Changes in indirect tax positions					1			4					3			34
	Leases – financial expenses     (income)					157			(91)					(183)			101
	Non-cash tax adjustments					76			(182)					4			1,090
	Other non-cash adjustment					98			158					441			472
	Non-GAAP net income (loss)			$		2,300		$	497			$		(9,257)		$	5,048
	GAAP basic net income (loss) per share			$		0.02		$	0.00			$		(0.13)		$	0.02
	GAAP diluted net income (loss) per share			$		0.02		$	0.00			$		(0.13)		$	0.02
	Non-GAAP basic and diluted net income (loss) per share			$		0.03		$	0.01			$		(0.11)		$	0.06
	Weighted average number of shares used in computing GAAP basic net income (loss) per share					81,277,995			80,303,699					81,019,808			80,202,791
	Weighted average number of shares used in computing GAAP diluted net income (loss) per share					82,000,357			81,652,356					81,019,808			82,012,013
	Weighted average number of shares used in computing Non-GAAP diluted net income (loss) per share					82,244,119			81,814,367					81,019,808			82,254,919

 

View original content:http://www.prnewswire.com/news-releases/ceragon-networks-reports-financial-results-for-the-third-quarter-of-2020-301164788.html

SOURCE Ceragon Networks Ltd