Ceragon Networks Reports Third Quarter 2013 Financial Results PR Newswire PARAMUS, N.J., Nov. 11, 2013 PARAMUS, N.J., Nov.11, 2013 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 high-capacity wireless hauling specialist today reported results for the third quarter which ended September 30, 2013. Revenues for the third quarter of 2013 reached $92.1 million, down 21% from $117.1 million for the third quarter of 2012, and up 2% from $90.1 million in the second quarter of 2013. Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the third quarter of 2013 was $(10.4) million or $(0.28) per basic share and diluted share, compared to net loss of $(4.7) million in the third quarter of 2012, or $(0.13) per basic share and diluted share. On a non-GAAP basis, net loss for the third quarter, excluding (a) $0.7 million of equity-based compensation expenses, (b) $0.6 million amortization of intangible assets, (c) $0.6 million of changes in pre-acquisition indirect tax positions, and (d) $4.0 million of non-recurring adjustment of valuation allowance on tax assets, was $(4.5) million, or $(0.12) per basic share and diluted share. Non-GAAP net income for the third quarter of 2012 was $1.6 million, or $0.04 per basic and 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 third quarter of 2013 was 30.9% of revenues. Gross margin on a non-GAAP basis was 31.9% of revenues. Operating loss on a GAAP basis in the third quarter of 2013 was $(4.1) million. On a non-GAAP basis operating loss was $(2.2) million. Cash and cash investments at the end of the quarter were $44.8 million. Cost Reduction Initiatives The company indicated that it will realign its operations, reduce head count and undertake other cost reduction measures in order to lower its breakeven point and improve profitability. The restructuring is expected to result in annual savings of approximately $25 million.Actions will include consolidating research and development activities worldwide and realigning teams on enhancing the newly released IP-20 platform, consolidating or relocating certain offices, and reducing staff functions and some operations positions, as well as other measures. No customer-facing activities will be affected. Total restructuring charges are expected to be approximately $18-$21 million, comprised of a non-recurring provision in the fourth quarter of 2013 of approximately $11-$13 million, as well as ongoing restructuring charges totaling $7-$8 million, which will begin in Q4 and will continue during the first half of 2014, mainly in the first quarter. "Our bookings and revenues remain stable in a challenging operator spending environment," said Ira Palti, President and CEO of Ceragon. "We continue to garner excellent feedback on our new products, whether deployed in live networks or in ongoing trials with Tier 1 operators, as they prepare to deploy LTE networks." "We recently launched our full IP-20 portfolio. This is a premium SDN-ready platform merging long haul and short haul products into a single hardware architecture managed by a common operating system. Introducing the IP-20 platform represents the attainment of an important strategic milestone. Now that we have completed this major development phase, we are implementing an organizational restructuring aimed at lowering our revenue breakeven point by reducing our operating expenses by 15%. We believe this new cost structure will be sustainable as revenue growth resumes and will position us to achieve substantial additional operating leverage," concluded Mr. Palti. Supplemental geographical breakdown of revenue, third quarter of 2013: oEurope: 18% oAfrica: 23% oNorth America:10% oLatin America: 29% oIndia:11% oAPAC: 9% A conference call will follow beginning at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling (USA) (800) 230-1096 or international +1 (612) 332-0107from 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-relationsselecting the webcast link, and following the registration instructions. If you are unable to join us live, the replay numbers are: Telephone:USA: (800) 475-6701; International: +1 (320) 365-3844; Access Code: 304945. A replay of both the call and the webcast will be available through December, 11 2013. 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. Media Contact: Media Contact: Company & Investor Contact: Justine Schneider Abigail Levy-Gurwitz Yoel Knoll Calysto Communications Ceragon Networks Ceragon Networks Tel: +1-(404)-266-2060 x507 Tel: +1-(201)-853-0271 Tel. +1-(201)-853-0228 firstname.lastname@example.org email@example.com firstname.lastname@example.org Join the discussion LinkedIn: http://www.linkedin.com/company/14470 Facebook: https://www.facebook.com/ceragonnetworks Twitter: https://twitter.com/Ceragon YouTube: http://www.youtube.com/user/CeragonNetworks?featur Download Ceragon's IRapp available on AppStore 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 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 presentation include risks associated with the impact of restructuring activities, risks associated with continuing losses and possible liquidity issues, risks associated with the possibility that new products will not be accepted in the market, the risk of significant expenses in connection with potential contingent tax liability associated with Nera's prior operations or facilities, 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 www.sec.gov or may be obtained on Ceragon's website at www.ceragon.com. Use of non-GAAP Measures: This press release provides financial measures that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these Non-GAAP financial measures provide meaningful supplemental information regarding our performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors 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, 2013 2012 2013 2012 Revenues $ 92,099 $ 117,087 $ 272,280 $ 339,802 Cost of revenues 63,610 82,559 187,792 236,552 Gross profit 28,489 34,528 84,488 103,250 Operating expenses: Research and 10,065 11,425 32,553 35,480 development Selling and 16,296 19,175 50,637 58,762 marketing General and 6,189 7,216 18,668 20,594 administrative Total operating $ 32,550 $ 37,816 $ 101,858 $ 114,836 expenses Operating loss 4,061 3,288 17,370 11,586 Financial expenses, 1,980 1,149 8,856 2,609 net Loss before taxes 6,041 4,437 26,226 14,195 Taxes on income 4,399 261 5,875 796 Net loss $ 10,440 $ 4,698 $ 32,101 $ 14,991 Basic and diluted $ 0.28 $ 0.13 $ 0.87 $ 0.41 net loss per share Weighted average number of shares used in computing basic and diluted net 36,815,864 36,495,563 36,736,417 36,397,410 loss per share CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) (Unaudited) September 30, December 2013 31, 2012 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 40,582 $ 47,099 Short-term bank deposits 321 422 Trade receivables, net 128,766 149,120 Deferred taxes 2,651 8,589 Other accounts receivable and prepaid expenses 37,529 38,743 Inventories 57,438 65,554 Total current assets 267,287 309,527 NON-CURRENT ASSETS: Marketable securities 3,923 4,068 Deferred tax assets, net 10,984 9,140 Severance pay and pension fund 7,673 7,163 Property and equipment, net 36,403 33,642 Intangible assets, net 7,866 9,809 Goodwill 15,061 15,283 Other non-current assets 4,882 4,964 86,792 84,069 $ 354,079 $ 393,596 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short term loan, including current maturities $ 49,222 $ 25,232 of long term bank loan Trade payables 81,041 102,079 Deferred revenues 8,501 16,719 Other accounts payable and accrued expenses 39,421 36,090 Total current liabilities 178,185 180,120 LONG-TERM LIABILITIES Long term bank loan, net of current maturities 12,362 18,536 Accrued severance pay and pension 12,818 12,311 Other long term payables 35,969 38,920 61,149 69,767 SHAREHOLDERS' EQUITY: Share capital: Ordinary shares 98 98 Additional paid-in capital 322,025 318,106 Treasury shares at cost (20,091) (20,091) Other comprehensive loss (1,272) (490) Accumulated deficits (186,015) (153,914) Total shareholders' equity 114,745 143,709 Total liabilities and shareholders' equity $ 354,079 $ 393,596 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (U.S. dollars, in thousands) (Unaudited) Three months ended Nine months ended September 30, September 30, 2013 2012 2013 2012 Cash flow from operating activities: Net loss $ (10,440) $ (4,698) $ (32,101) $ (14,991) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,885 3,809 11,656 11,228 Stock-based compensation 701 1,403 2,774 4,245 expense Decrease (increase) in trade and other (6,130) (15,712) 20,334 (39,521) receivables, net Decrease in inventory, net of 91 11,193 7,493 28,809 write off Increase (decrease) in trade payables and 4,604 7,107 (19,069) 17,438 accrued liabilities Decrease in deferred revenues (3,683) (4,028) (8,218) (16,419) Decrease (increase) in 3,228 (156) 3,743 (419) deferred tax asset, net Other adjustments 299 183 (22) (246) Net cash used in operating $ (7,445) $ (899) $ (13,410) $ (9,876) activities Cash flow from investing activities: Purchase of property and (4,009) (3,845) (11,706) (10,213) equipment Investment in short-term bank - - (255) (1,266) deposits Proceeds from short-term bank - 2,484 336 7,920 deposits Investment in available for - - - (64) sale marketable securities Proceeds from maturities of available for sale - 64 301 9,781 marketable securities, net Net cash provided by (used in) investing $ (4,009) $ (1,297) $ (11,324) $ 6,158 activities Cash flow from financing activities: Proceeds from exercise of - 270 1,145 734 options Proceeds from bank loans 9,300 10,400 25,990 25,000 Repayment of bank loans (2,058) (2,058) (8,174) (6,174) Net cash provided by financing activities $ 7,242 $ 8,612 $ 18,961 $ 19,560 Translation adjustments on cash and cash equivalents $ (114) $ (9) $ (744) $ (482) Increase (Decrease) in cash $ (4,326) $ 6,407 $ (6,517) $ 15,360 and cash equivalents Cash and cash equivalents at 44,908 37,944 47,099 28,991 the beginning of the period Cash and cash equivalents at $ 40,582 $ 44,351 $ 40,582 $ 44,351 the end of the period RECONCILIATION OF NON-GAAP FINANCIAL RESULTS (U.S. dollars in thousands, except share and per share data) (Unaudited) Three months ended September 30, 2013 2012 GAAP (as Adjustments Non-GAAP Non-GAAP reported) Revenues $ 92,099 $ 92,099 $ 117,087 Cost of revenues 63,610 (a) 902 62,708 78,149 Gross profit 28,489 29,391 38,938 Operating expenses: Research and 10,065 (b) 128 9,937 11,021 development Selling and 16,296 (c) 660 15,636 18,103 marketing General and 6,189 (d) 200 5,989 6,793 administrative Total operating $ 32,550 $ 31,562 $ 35,917 expenses Operating profit (4,061) (2,171) 3,021 (loss) Financial 1,980 1,980 1,149 expenses, net Income (loss) (6,041) (4,151) 1,872 before taxes Taxes on income 4,399 (e) 4,037 362 261 Net income (loss) $ (10,440) $ $ (4,513) 1,611 Basic net earnings $ (0.28) $ $ 0.04 (loss) per share (0.12) Diluted net $ earnings (loss) $ (0.28) (0.12) $ 0.04 per share Weighted average number of shares used in computing 36,815,864 36,815,864 36,495,563 basic net earnings (loss) per share Weighted average number of shares 36,815,864 36,815,864 37,091,849 used in computing basic net earnings (loss) per share Total adjustments 5,927 (a) Cost of revenues includes $0.3 million of amortization of intangible assets, $40 thousand of stock based compensation expenses and $0.6 million of changes in pre-acquisition indirect tax positions in the three months ended September 30, 2013. (b) Research and development expenses include $0.1 million of stock based compensation expenses in the three months ended September 30, 2013. (c) Selling and marketing expenses include $0.3 million of amortization of intangible assets and $0.3 million of stock based compensation expenses in the three months ended September 30, 2013. (d) General and administrative expenses include $0.2 million of stock based compensation expenses in the three months ended September 30, 2013. (e) Taxes on income include $4.0 million of non-recurring adjustment of valuation allowance on tax assets. RECONCILIATION OF NON-GAAP FINANCIAL RESULTS (U.S. dollars in thousands, except share and per share data) (Unaudited) Nine months ended September 30, 2013 2012 GAAP (as Adjustments Non-GAAP Non-GAAP reported) Revenues $ 272,280 $ 272,280 $ 339,802 Cost of revenues 187,792 (a) 2,802 184,990 228,474 Gross profit 84,488 87,290 111,328 Operating expenses: Research and 32,553 (b) 1,988 30,565 34,045 development Selling and 50,637 (c) 2,738 47,899 54,963 marketing General and 18,668 (d) 1,516 17,152 19,272 administrative Total operating $ 101,858 $ 95,616 $ 108,280 expenses Operating profit (17,370) (8,326) 3,048 (loss) Financial 8,856 (e) 3,133 5,723 2,609 expenses, net Income (loss) (26,226) (14,049) 439 before taxes Taxes on income 5,875 (f) 4,037 1,838 796 Net loss $ 32,101 $ 15,887 $ 357 $ 0.87 $ 0.43 $ 0.01 Basic and diluted net loss per share Weighted average number of shares used in 36,736,417 36,736,417 36,397,410 computing basic and diluted net loss per share Total adjustments 16,214 (a) Cost of revenues includes $0.9 million of amortization of intangible assets, $0.5 million of inventory step-up, $0.1 million of stock based compensation expenses, $0.2 million of integration plan related costs and $1.1 million of changes in pre-acquisition indirect tax positions in the nine months ended September 30, 2013. (b) Research and development expenses include $1.2 million of integration plan related costs and $0.8 million of stock based compensation expenses in the nine months ended September 30, 2013. (c) Selling and marketing expenses include $1.0 million of amortization of intangible assets, $0.7 million of integration plan related costs and $1.1 million of stock based compensation expenses in the nine months ended September 30, 2013. (d) General and administrative expenses include $0.7 million of integration plan related costs and $0.8 million of stock based compensation expenses in the nine months ended September 30, 2013. (e) Financial expenses include $3.1 million non-recurring currency devaluation in Venezuela in the nine months ended September 30, 2013. (f) Taxes on income include $4.0 million non-recurring adjustment of valuation allowance on tax assets. RECONCILIATION BETWEEN REPORTED AND NON-GAAP OPERATING LOSS (U.S. dollars in thousands) (Unaudited) Three months Nine months ended ended September 30, 2013 Reported GAAP net operating loss 4,061 17,370 Stock based compensation expenses 701 2,774 Amortization of intangible assets 632 1,902 Inventory step up - 459 Integration plan related costs - 2,844 Changes in pre-acquisition indirect tax positions 557 1,065 Non-GAAP net operating profit 2,171 8,326 SOURCE Ceragon Networks Ltd. Website: http://www.ceragon.com
Ceragon Networks Reports Third Quarter 2013 Financial Results
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