EX-99 2 exhibit_a.htm EXHIBIT A

Exhibit A
 
Ceragon Reports First Quarter 2017 Results
May 11, 2017
 
 
CERAGON NETWORKS REPORTS FIRST QUARTER 2017
FINANCIAL RESULTS

Company continued to pay down debt, increasing net cash to $25 million
 
Little Falls, New Jersey, May 11, 2017 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the first quarter ended March 31, 2017.
 
First Quarter 2017 Highlights:
 
Revenues – $76.0 million, up 27.1% from the first quarter of 2016, and down 10.2% from the fourth quarter of 2016.
 
Gross margin – 29.3%, compared to 35.6% in the first quarter of 2016 and 32.5% in the fourth quarter of 2016.
 
Operating income – $2.0 million, compared to operating income of $1.2 million in the first quarter of 2016 and operating income of $8.5 million in the fourth quarter of 2016.
 
Net loss – $(0.1) million or $(0.00) per diluted share. Net loss for the first quarter of 2016 was $(0.4) million, or $(0.01) per diluted share. Net income for the fourth quarter of 2016 was $8.3 million, or $0.10 per diluted share.
 
Non-GAAP results – gross margin was 30.0%, operating profit was $2.9 million, and net income was $0.9 million, or $0.01 per diluted share. Non-GAAP results exclude adjustments of $1.0 million.  For a reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents – $36.5 million at March 31, 2017, compared to $36.3 million at December 31, 2016.
 
"Q1 was in line with expectations and we increased our net cash position to $25 million, using our free cash flow to further reduce our debt," said Ira Palti, president and CEO of Ceragon. "Our book-to-bill ratio was substantially above 1:1 in the first quarter. Our gross margin fluctuates from quarter to quarter, mainly based on geographic mix of revenue. Based on our bookings, funnel of opportunities and assumptions about timing of revenue, we expect our gross margin to improve as the year progresses due to a more favorable revenue mix, and we continue to target substantial growth in net income for 2017 compared to 2016."
 
Supplemental revenue breakouts:
 
Geographical breakdown, first quarter of 2017:
 
· Europe: 10%
· Africa:   6%
· North America:  15%
· Latin America:  14%
· India:  36%
· APAC: 19%
 
A conference call to discuss the results will begin at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling USA: (800) 230-1096 or International: +1 (612) 288-0337, 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/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: 421730. A replay of both the call and the webcast will be available through June 11, 2017.
 
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 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.

Join the Discussion
 
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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 revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, 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. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks associated with a decline in revenues; the risk of a decrease in the amount of business coming from a certain geographic region, from which a significant portion of Ceragon's business is generated; the risk associated with the a change in Ceragon's gross margin as a result of changes in the geographic mix of revenues; the risk associated with the loss of a single customer or customer group, which represents a significant portion of Ceragon's revenues; the risk associated with Ceragon's failure to effectively compete with other wireless equipment providers; the risk relating to the concentration of Ceragon's business in India, Latin America, Africa, and in developing nations and the political, economic and regulatory risks from doing business in those regions, including  potential currency restrictions; 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 that 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:
Doron Arazi or                         Claudia Gatlin
+972 3 5431 660                                                       +1 212 830-9080
dorona@ceragon.com                                           claudiag@ceragon.com
 
Media:
Tanya Solomon
+972 3 5431163
tanyas@ceragon.com
 
-tables follow-
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Ceragon Reports First Quarter 2017 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

 
Three months ended
  
   
March 31,
  
   
2017
    
2016
  
             
Revenues
  
$
76,021
    
$
59,834
  
Cost of revenues
    
53,717
      
38,543
  
                 
Gross profit
    
22,304
      
21,291
  
                 
Operating expenses:
                
Research and development, net
    
6,107
      
5,283
  
Selling and marketing
    
9,735
      
9,857
  
General and administrative
    
4,505
      
4,918
  
                 
Total operating expenses
  
$
20,347
    
$
20,058
  
                 
Operating income
    
1,957
      
1,233
  
Financial expenses, net
    
1,598
      
918
  
                 
Income before taxes
    
359
      
315
  
                 
Taxes on income
    
487
      
751
  
                 
Net loss
  
$
128
    
$
436
  
                 
Basic and diluted net loss per share
  
$
0.00
    
$
0.01
  
                 
Weighted average number of shares used in computing basic and diluted net loss per share
    
77,796,425
      
77,655,440
  

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Ceragon Reports First Quarter 2017 Results
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
 
   
March 31,
2017
    
December 31, 2016
  
ASSETS
  
Unaudited
    
Audited
  
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
36,460
    
$
36,338
  
Trade receivables, net
    
99,539
      
107,395
  
Other accounts receivable and prepaid expenses
    
18,897
      
17,076
  
Inventories
    
50,815
      
45,647
  
Total current assets
    
205,711
      
206,456
  
                 
NON-CURRENT ASSETS:
                
   Deferred taxes, net
    
1,359
      
1,344
  
   Severance pay funds and pension
    
4,877
      
4,575
  
   Property and equipment, net
    
27,763
      
27,560
  
   Intangible assets, net
    
1,169
      
1,544
  
   Other non-current assets
    
2,969
      
2,746
  
Total non-current assets
    
38,137
      
37,769
  
Total assets
  
$
243,848
    
$
244,225
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Short term loans, including current maturities of long term loan
  
$
11,500
    
$
17,000
  
Trade payables
    
71,234
      
68,408
  
Deferred revenues
    
1,638
      
2,673
  
Other accounts payable and accrued expenses
    
23,142
      
22,425
  
Total current liabilities
    
107,514
      
110,506
  
                 
 LONG-TERM LIABILITIES
                
Accrued severance pay and pension
    
9,512
      
9,198
  
Other long term liabilities
    
8,796
      
8,357
  
Total long-term liabilities
    
18,308
      
17,555
  
                 
 SHAREHOLDERS' EQUITY:
                
Share capital:
                
    Ordinary shares
    
214
      
214
  
Additional paid-in capital
    
409,751
      
409,320
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Accumulated other comprehensive loss, net of taxes
    
(6,289
)
    
(7,848
)
Accumulated deficit
    
(265,559
)
    
(265,431
)
                 
Total shareholders' equity
    
118,026
      
116,164
  
                 
Total liabilities and shareholders' equity
  
$
243,848
    
$
244,225
  
 
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Ceragon Reports First Quarter 2017 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars in thousands)
(Unaudited)
 
   
Three months ended
  
   
March 31,
  
   
2017
    
2016
  
Cash flow from operating activities:
            
Net loss
  
$
(128
)
  
$
(436
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                
                 
Depreciation and amortization
    
2,345
      
2,308
  
Stock-based compensation expense
    
358
      
411
  
Decrease in trade and other receivables, net
    
7,231
      
34,378
  
Decrease (increase) in inventory, net of write-off
    
(4,984
)
    
432
  
Decrease (increase) in deferred tax asset, net
    
(15
)
    
233
  
Increase (decrease) in trade payables and accrued liabilities
    
3,997
      
(20,061
)
Decrease in deferred revenues
    
(1,035
)
    
(4,667
)
Other adjustments
    
12
      
110
  
Net cash provided by operating activities
  
$
7,781
    
$
12,708
  
                 
Cash flow from investing activities:
                
Purchase of property and equipment ,net
    
(2,309
)
    
(2,201
)
Investment in short-term bank deposits
    
-
      
(33
)
Net cash used in investing activities
  
$
(2,309
)
  
$
(2,234
)
                 
Cash flow from financing activities:
                
Repayment of loans from financial institutions
    
(5,500
)
    
(5,072
)
Proceeds from exercise of options
    
74
      
-
  
Net cash used in financing activities
  
$
(5,426
)
  
$
(5,072
)
                 
Translation adjustments on cash and cash equivalents
  
$
76
    
$
125
  
                 
Increase in cash and cash equivalents
  
$
122
    
$
5,527
  
                 
Cash and cash equivalents at the beginning of the period
    
36,338
      
36,318
  
                 
Cash and cash equivalents at the end of the period
  
$
36,460
    
$
41,845
  


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Ceragon Reports First Quarter 2017 Results
 
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)

   
Three months ended
  
   
March 31,
  
   
2017
    
2016
  
             
GAAP cost of revenues
  
$
53,717
    
$
38,543
  
Amortization of intangible assets
    
(303
)
    
(306
)
Stock based compensation expenses
    
(20
)
    
(18
)
Changes in pre-acquisition indirect tax positions
    
(162
)
    
(134
)
Non-GAAP cost of revenues
  
$
53,232
    
$
38,085
  
                 
GAAP gross profit
  
$
22,304
    
$
21,291
  
Gross profit adjustments
    
485
      
458
  
Non-GAAP gross profit
  
$
22,789
    
$
21,749
  
                 
GAAP Research and development expenses
  
$
6,107
    
$
5,283
  
Stock based compensation expenses
    
(78
)
    
(128
)
Non-GAAP Research and development expenses
  
$
6,029
    
$
5,155
  
                 
GAAP Sales and Marketing expenses
  
$
9,735
    
$
9,857
  
Amortization of intangible assets
    
(71
)
    
(99
)
Stock based compensation expenses
    
(78
)
    
(132
)
Non-GAAP Sales and Marketing expenses
  
$
9,586
    
$
9,626
  
                 
GAAP General and Administrative expenses
  
$
4,505
    
$
4,918
  
Stock based compensation expenses
    
(182
)
    
(133
)
Non-GAAP General and Administrative expenses
  
$
4,323
      
4,785
  
                 
GAAP Financial expenses
  
$
1,598
    
$
918
  
Currency devaluation in Venezuela related expenses
    
-
      
907
  
Non-GAAP Financial expenses
  
$
1,598
    
$
1,825
  
                 
GAAP Tax expenses
  
$
487
    
$
751
  
Non cash tax adjustments
    
(98
)
    
(246
)
Non-GAAP Tax expenses
  
$
389
    
$
505
  
 
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Ceragon Reports First Quarter 2017 Results
 
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
    
Three months ended
  
    
March 31,
  
   
2017
    
2016
  
             
GAAP net loss 
  
$
(128
)
  
$
(436
)
                 
Stock based compensation expenses
    
358
      
411
  
Amortization of intangible assets
    
374
      
405
  
Changes in pre-acquisition indirect tax positions
    
162
      
134
  
Currency devaluation in Venezuela related expenses
    
-
      
(907
)
Non-cash tax adjustments
    
98
      
246
  
                 
Non-GAAP net income (loss) 
  
$
864
    
$
(147
)
                 
GAAP basic net loss per share
  
$
(0.00
)
  
$
(0.01
)
                 
GAAP diluted net loss per share
  
$
(0.00
)
  
$
(0.01
)
                 
Non-GAAP basic and diluted net income (loss) per share
  
$
0.01
    
$
(0.00
)
                 
Weighted average number of shares used in computing GAAP basic net loss per share
    
77,796,425
      
77,655,440
  
                 
Weighted average number of shares used in computing GAAP diluted net loss per share
    
80,512,964
      
77,656,530
  
                 
Weighted average number of shares used in computing Non-GAAP diluted net income (loss) per share
    
80,751,956
      
77,742,773
  
 
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