Ceragon Networks Reports Second Quarter 2012 Financial Results

Author
SySAdmin
Posted
August 6, 2012
Views
1230

Page All:

Page 1
Ceragon Networks Reports Second Quarter 2012 Financial Results

Achieves record revenue of $119.1 million; improved profitability and record booking

PARAMUS, New Jersey, August 6, 2012/PRNewswire-FirstCall/ --

    Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today
reported results for the second quarter which ended June 30, 2012.

    Revenues for the second quarter of 2012 reached $119.1 million, up 8% from $110.4
million for the second quarter of 2011, and up 1% from $117.8 million in the first quarter
of 2012.

    Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the
second quarter of 2012 was $(1.0) million or $(0.03) per basic share and diluted share,
compared to net loss of $(17.4) million in the second quarter of 2011, or $(0.48) per
basic share and diluted share.

    On a non-GAAP basis, net income for the second quarter, excluding (a) $1.3 million of
equity-based compensation expenses, (b) $0.9 million amortization of intangible assets,
(c) $1.6 million inventory step up related to the Nera acquisition and (d) $0.2 million of
changes in pre-acquisition indirect tax positions, was $3.0 million, or $0.08 per basic
share and diluted share. Non-GAAP net loss for the second quarter of 2011 was $(1.6)
million, or $(0.04) per basic share 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 second quarter of 2012 was 31.9% of revenues.
Gross margin on a non-GAAP basis was 33.8% of revenues.

    Operating loss on a GAAP basis in the second quarter of 2012 was $(0.2) million. On a
non-GAAP basis operating profit was $3.8 million.

    Cash and cash investments at the end of the quarter were $44.8 million. Negative cash
flow from operations in the quarter relates mainly to additional working capital
requirements associated with more sales to Tier 1 operators in Latin America and Africa
that have longer payment terms and practices.

    "We continued to grow in Q2, achieving all-time record revenues, better gross margin
and improved profitability," said Ira Palti, President and CEO of Ceragon. "Record
bookings resulted in a book-to-bill ratio well above one. Our success in securing several
large orders from Tier 1 operators expands our working capital needs. We believe this
represents a temporary timing issue, which we have addressed by drawing down on our unused
credit facilities.

    "Ceragon has a comprehensive portfolio of solutions with the most advanced technology,
we are gaining share in key growth regions, and we are executing very well. Therefore, we
expect to be able to continue to grow revenues and improve profitability and cash flow,
even in light of growing macro headwinds," concluded Mr. Palti.

    Supplemental revenue breakouts:

    Geographical breakdown, second quarter of 2012:

   
    - Europe: 18%
    - Africa: 20%
    - North America: 8%
    - Latin America: 31%
    - India: 16%
    - APAC: 7%

    A conference call will follow today, August 6, 2012, beginning at 9:00 a.m. EDT.
Investors are invited to join the Company's teleconference by calling (USA) (800) 230-1074
or international +1 (612) 234-9960 from 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: Telephone: (USA) (800)
475-6701 or international +1 (320) 365-3844, Access Code: 252653. A replay of both the
call and the webcast will be available through September 6, 2012.

    About Ceragon Networks Ltd.

    Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We
provide innovative, flexible and cost-effective wireless backhaul 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(R) is a registered trademark of Ceragon Networks Ltd. in the United
States and other 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 press release include the risk of significant expenses in connection
with potential contingent tax liability associated with Nera's prior operations or
facilities, the risk that the combined Ceragon and Nera business may not perform as
expected, risks associated with increased working capital needs, 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
http://www.sec.govor may be obtained on Ceragon's website at
http://www.ceragon.com

    Ceragon Reports Second Quarter 2012 Results

   
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

        (U.S. dollars in thousands, except share and per share data)

        (Unaudited)

   
                                     Three months ended          Six months ended
                                          June 30,                    June 30,
                                     2012          2011         2012           2011
 
    Revenues                      $ 119,050     $ 110,350    $ 236,833      $ 210,662
    Cost of revenues                 81,081        86,716      161,925        157,444
    Gross profit                     37,969        23,634       74,908         53,218
    Operating expenses:
    Research and development         11,900        12,660       24,055         25,117
    Selling and marketing            20,129        21,003       39,976         40,188
    General and administrative        6,163         6,212       13,378         11,735
    Restructuring costs                   -             -            -          7,834
    Acquisition related costs             -             -            -          4,919
    Total operating expenses       $ 38,192      $ 39,875     $ 77,409       $ 89,793
    Operating loss                     (223)      (16,241)      (2,501)       (36,575)
    Financial expenses, net            (554)         (312)      (1,460)          (759)
    Loss before taxes                  (777)      (16,553)      (3,961)       (37,334)
    Taxes on income                     245           817          535          1,412
    Net loss                       $ (1,022)    $ (17,370)    $ (4,496)     $ (38,746)
    Basic net loss per share        $ (0.03)      $ (0.48)     $ (0.12)       $ (1.08)
    Diluted net loss per share      $ (0.03)      $ (0.48)     $ (0.12)       $ (1.08)
    Weighted average number of
    shares used in computing
    basic net loss per share     36,421,106    35,983,033   36,354,389     35,794,446
    Weighted average number of
    shares used in computing
    diluted net loss per share   36,421,106    35,983,033   36,354,389     35,794,446

    Ceragon Reports Second Quarter 2012 Results

   
                           CONDENSED CONSOLIDATED BALANCE SHEETS

                                (U.S. dollars in thousands)

                                        (Unaudited)

   
                                                         
                                                          June 30, December 31,
                                                             2012         2011
    ASSETS
    CURRENT ASSETS:
    Cash and cash equivalents                            $ 37,944     $ 28,991
    Short-term bank deposits                                2,901        7,159
    Marketable securities                                       -        9,665
    Trade receivables, net                                174,482      143,247
    Deferred taxes                                          8,695        8,622
    Other accounts receivable and prepaid expenses         34,834       37,281
    Inventories                                            68,830       93,465
    Total current assets                                  327,686      328,430
    LONG-TERM INVESTMENTS:
    Long-term marketable securities                         3,970        3,716
    Severance pay funds                                     6,572        6,360
    Total long-term investments                            10,542       10,076
    OTHER ASSETS:
    Deferred taxes                                          8,828        8,898
    Goodwill and intangible assets, net                    26,118       28,032
    Other long-term receivables                             8,871        5,257
    Total other assets                                     43,817       42,187
    PROPERTY AND EQUIPMENT, NET                            32,059       30,465
    Total assets                                        $ 414,104    $ 411,158
    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Short term loan, including current maturities of
    long term bank loan                                  $ 22,832      $ 8,232
    Trade payables                                         92,875       77,395
    Deferred revenues                                      25,917       38,308
    Other accounts payable and accrued expenses            41,880       49,508
    Total current liabilities                             183,504      173,443
    LONG-TERM LIABILITIES
    Long term bank loan, net of current maturities         22,652       26,768
    Accrued severance pay and pension                      12,020       11,996
    Other long term payables                               36,921       37,900
                                                           71,593       76,664
    SHAREHOLDERS' EQUITY:
    Share capital:
    Ordinary shares                                            97           97
    Additional paid-in capital                            315,217      311,911
    Treasury shares at cost                               (20,091)     (20,091)
    Other comprehensive loss                               (1,197)        (343)
    Accumulated deficits                                 (135,019)    (130,523)
    Total shareholders' equity                            159,007      161,051
    Total liabilities and shareholders' equity          $ 414,104    $ 411,158

    Ceragon Reports Second Quarter 2012 Results

   
                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

                                       (U.S. dollars, in thousands)

                                               (Unaudited)

   
                                                 Three months ended      Six months ended
                                                      June 30,               June 30,
                                                  2012        2011       2012        2011
    Cash flow from operating activities:
                                                                                                         
    Net loss                                   $ (1,022)  $ (17,370)  $ (4,496)  $ (38,746)
    Adjustments to reconcile net income
    to net cash used in operating activities:
    Depreciation and amortization                 3,648       2,951      7,419       6,152
    Stock-based compensation expense              1,257       1,437      2,842       2,856
    Decrease (increase) in trade and
    other receivables, net                      (27,812)      6,640    (36,463)     29,134
    Decrease in inventory                         4,623      14,168     24,083      23,993
    Increase (decrease) in trade payables
    and accrued liabilities                       8,734      (7,743)    10,721     (24,680)
    Decrease in deferred revenues                (3,219)    (12,755)   (12,391)    (12,765)
    Decrease (increase) in deferred tax
    asset, net                                      114           1       (263)         32
    Other adjustments                              (325)      1,661       (429)      1,650
                                               
    Net cash used in operating activities     $ (14,002)  $ (11,010)  $ (8,977)  $ (12,374)
    Cash flow from investing activities:
    Purchase of property and equipment ,net      (3,065)     (3,240)    (6,368)     (6,029)
    Payment for business acquisition(*)               -           -          -     (42,405)
    Investment in short and long-term
    bank deposit                                      -      (7,589)    (1,266)     (9,843)
    Proceeds from short and long-term
    bank deposits                                 3,186      10,273      5,436      24,069
    Investment in held-to-maturity
    marketable securities                           (64)          -        (64)          -
    Proceeds from maturities of held-to-maturity
    marketable securities, net                        -          23      9,717       4,258
    Net cash provided by (used in)
    investing activities                           $ 57      $ (533)   $ 7,455   $ (29,950)
    Cash flow from financing activities:
    Proceeds from exercise of options               251         284        464       3,580
    Proceeds from bank loans                     14,600           -     14,600      35,000
    Repayment of bank loan                       (2,058)          -     (4,116)          -
    Net cash provided by financing activities  $ 12,793       $ 284   $ 10,948    $ 38,580
    Translation adjustments on cash
    and cash equivalents                         $ (322)     $ (789)    $ (473)     $ (435)
                                                                                                         
    Increase (decrease) in cash
    and cash equivalents                       $ (1,474)  $ (12,048)   $ 8,953    $ (4,179)
    Cash and cash equivalents
    at the beginning of the period               39,418      45,594     28,991      37,725
    Cash and cash equivalents
    at the end of the period                   $ 37,944    $ 33,546   $ 37,944    $ 33,546

    (*) 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 June 30,
                                                           2012                    2011
                                                 GAAP
                                         (as reported)  Adjustments   Non-GAAP    Non-GAAP
    Revenues                                $ 119,050                $ 119,050   $ 110,350
    Cost of revenues                           81,081     2,225 (a)     78,856      75,128
    Gross profit                               37,969                   40,194      35,222
    Operating expenses:
    Research and development                   11,900       607 (b)     11,293      11,453
    Selling and marketing                      20,129     1,113 (c)     19,016      18,730
    General and administrative                  6,163        47 (d)      6,116       5,509
    Total operating expenses                 $ 38,192                 $ 36,425    $ 35,692
    Operating profit (loss)                      (223)                   3,769        (470)
    Financial expenses, net                      (554)                    (554)       (312)
    Income (loss) before taxes                   (777)                   3,215        (782)
    Taxes on income                               245                      245         817
    Net income (loss)                        $ (1,022)                 $ 2,970    $ (1,599)
    Basic net earnings (loss) per share       $ (0.03)                  $ 0.08     $ (0.04)
    Diluted net earnings (loss) per share     $ (0.03)                  $ 0.08     $ (0.04)
    Weighted average number of shares
    used in computing basic net earnings
    (loss) per share                       36,421,106               36,421,106  35,983,033
    Weighted average number of shares
    used in computing diluted net
    earnings (loss) per share              36,421,106               37,380,275  35,983,033
    Total adjustments                                      3,992

    (a) Cost of revenues includes $0.3 million of amortization of intangible assets,
        $1.6 million of inventory step-up, $0.1 million of stock based compensation
        expenses and $0.2 million of changes in pre-acquisition indirect tax positions in
        the three months ended June 30, 2012.
    (b) Research and development expenses include $0.6 million of stock based compensation
        expenses in the three months ended June 30, 2012.
    (c) Selling and marketing expenses include $0.6 million of amortization of intangible
        assets and $0.5 million of stock based compensation expenses in the three months
        ended June 30, 2012.
    (d) General and administrative expenses include $0.05 million of stock based
        compensation expenses in the three months ended June 30, 2012.

   
                             RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

                     (U.S. dollars in thousands, except share and per share data)

                                              (Unaudited)

   
                                                              Six months ended June 30,
                                                           2012                     2011
                                                 GAAP
                                         (as reported)  Adjustments   Non-GAAP    Non-GAAP
    Revenues                                $ 236,833                $ 236,833   $ 210,662
    Cost of revenues                          161,925     4,517 (a)    157,408     142,961
    Gross profit                               74,908                   79,425      67,701
    Operating expenses:
    Research and development                   24,055     1,031 (b)     23,024      22,494
    Selling and marketing                      39,976     2,728 (c)     37,248      35,391
    General and administrative                 13,378       899 (d)     12,479      10,101
    Total operating expenses                 $ 77,409                 $ 72,751    $ 67,986
    Operating profit (loss)                    (2,501)                   6,674        (285)
    Financial expenses, net                    (1,460)                  (1,460)       (759)
    Income (loss) before taxes                 (3,961)                   5,214      (1,044)
    Taxes on income                               535                      535       1,412
    Net income (loss)                        $ (4,496)                 $ 4,679    $ (2,456)
    Basic net earnings (loss) per share       $ (0.12)                  $ 0.13     $ (0.07)
    Diluted net earnings (loss) per share     $ (0.12)                  $ 0.13     $ (0.07)
    Weighted average number of shares
    used in computing basic net earnings
    (loss) per share                       36,354,389               36,354,389  35,794,446
    Weighted average number of shares
    used in computing diluted net
    earnings (loss) per share              36,354,389               37,287,665  35,794,446
    Total adjustments                                     9,175

    (a) Cost of revenues includes $0.6 million of amortization of intangible assets,
        $2.0 million of inventory step-up, $0.1 million of stock based compensation
        expenses, $0.2 million of integration plan related costs and $1.6 million of
        changes in pre-acquisition indirect tax positions in the six months ended
        June 30, 2012.
    (b) Research and development expenses include $40 thousand of integration plan related
        costs and $1.0 million of stock based compensation expenses in the six months
        ended June 30, 2012.
    (c) Selling and marketing expenses includes $1.2 million of amortization of intangible
        assets, $0.4 million of integration plan related costs and $1.1 million of stock
        based compensation expenses in the six months ended June 30, 2012.
    (d) General and administration expenses include, $0.3 million of integration plan
        related costs and $0.6 million of stock based compensation expenses in the
        six months ended June 30, 2012.

   
                           RECONCILIATION BETWEEN REPORTED AND NON-GAAP

                                          OPERATING LOSS

                                   (U.S. dollars in thousands)

                                            (Unaudited)

   
                                                           Three months     Six months
                                                               ended           ended
                                                                   June 30, 2012
    Reported GAAP net operating loss                            (223)         (2,501)
    Stock based compensation expenses                          1,257           2,842
    Amortization of intangible assets                            901           1,802
    Inventory step up                                          1,613           2,017
    Integration plan related costs                                 -             955
    Changes in pre-acquisition indirect tax positions            221           1,559
    Non-GAAP net operating profit                              3,769           6,674

   
    Company & Investor Contact:

    Yoel Knoll
    Ceragon Networks Ltd.
    Tel: +1-201-853-0228
    Office (Int'l): +972(0)3-5431-132
    yoelk@ceragon.com

    Media Contact:

    Abigail Levy-Gurwitz
    Ceragon Networks Ltd.
    Tel: +1-201-853-0271
    (Int'l): +972(0)3-5431-166
    abigaill@ceragon.com

    Media Contact:

    Karen Quatromoni
    Rainier Communications
    Tel. +1-508-475-0025
    x150
    kquatromoni@rainierco.com

    Join the discussion

    http://www.linkedin.com/company/14470

    http://www.facebook.com/ceragonnetworks

    http://twitter.com/Ceragon

    http://www.youtube.com/user/CeragonNetworks?feature=mhum

Source: Ceragon Networks Ltd

Title

Medium Image View Large