EX-99 2 exhibit_a.htm EXHIBIT A
Exhibit A
 
Ceragon Networks Reports Second Quarter 2017 Financial Results
August 7, 2017

 
CERAGON NETWORKS REPORTS SECOND QUARTER 2017 FINANCIAL RESULTS

Q2 benefitted from revenue recognized from large orders received in Q1 from a customer in India
 
Little Falls, New Jersey, August 7, 2017 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the second quarter which ended June 30, 2017.
 
Second Quarter 2017 Highlights:
 
Revenues - $93.3 million, up 33.3% from the second quarter of 2016, and up 22.8% from the first quarter of 2017.
 
Gross margin – 31.3%, compared to 34.7% in the second quarter of 2016 and 29.3% in the first quarter of 2017.
 
Operating income - $8.0 million, compared to $4.0 million in the second quarter of 2016, and $2.0 million in the first quarter of 2017.
 
Net income (loss) - net income of $5.0 million, or $0.06 per diluted share for the second quarter of 2017.  Net income for the second quarter of 2016 was $0.1 million, or $0.00 per diluted share. Net loss for the first quarter of 2017 was $(0.1) million or $(0.00) per diluted share.
 
Non-GAAP results - gross margin was 31.8%, operating profit was $8.8 million, and net income was $6.0 million, or $0.07 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents - $34.1 million at June 30, 2017, compared to $36.5 million at March 31, 2017.
 
“We are pleased to report a very strong quarter, with total revenue boosted by the recognition of revenue related to large orders received in Q1 from a customer in India, said Ira Palti, president and CEO of Ceragon. “As a result of the additional gross profit contribution from this extra business, Q2 net income was a record, except in those quarters where we had large non-recurring items with a positive impact on net income. We also generated positive cash flow, paid down additional debt, and increased our net cash to $26 million. Our bookings in Q2 support our expectation that we will return to a quarterly run rate of $75 to $80 million during the second half of the year. We expect gross margin in the second half to be above 32%, and we remain on track to achieve our goal of substantial growth in net income for 2017 compared to 2016.”
 
Supplemental geographical breakdown of revenue for the second quarter of 2017:
 
 
·
Europe:
12%
 
·
Africa:
3%
 
·
North America:
7%
 
·
Latin America:
14%
 
·
India:
53%
 
·
APAC:
11%

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) 230-1059 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: 426481. A replay of both the call and the webcast will be available through September 7, 2017.

About Ceragon

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 a 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

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.

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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 risks relating to the concentration of Ceragon's business in India, Latin America and in developing nations and the political, economic and regulatory risks from doing business in those regions, including  potential currency restrictions; the risk associated with 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; 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 Second Quarter 2017 Results

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2017
    
2016
    
2017
    
2016
  
                         
Revenues
  
$
93,334
    
$
70,010
    
$
169,355
    
$
129,844
  
Cost of revenues
    
64,131
      
45,720
      
117,848
      
84,263
  
                                 
Gross profit
    
29,203
      
24,290
      
51,507
      
45,581
  
                                 
Operating expenses:
                                
Research and development
    
6,128
      
5,355
      
12,235
      
10,638
  
Selling and marketing
    
10,041
      
9,716
      
19,776
      
19,573
  
General and administrative
    
5,065
      
5,192
      
9,570
      
10,110
  
                                 
Total operating expenses
  
$
21,234
    
$
20,263
    
$
41,581
    
$
40,321
  
                                 
Operating income
    
7,969
      
4,027
      
9,926
      
5,260
  
                                 
Financial expenses, net
    
1,481
      
2,372
      
3,079
      
3,290
  
                                 
Income before taxes
    
6,488
      
1,655
      
6,847
      
1,970
  
                                 
Taxes on income
    
1,506
      
1,606
      
1,993
      
2,357
  
                                 
Net income (loss)
  
$
4,982
    
$
49
    
$
4,854
    
$
(387
)
                                 
Basic net income (loss) per share
  
$
0.06
    
$
0.00
    
$
0.06
    
$
(0.00
)
                                 
Diluted net income (loss) per share
  
$
0.06
    
$
0.00
    
$
0.06
    
$
(0.00
)
                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
77,891,218
      
77,674,747
      
77,845,690
      
77,664,815
  
                                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
80,202,048
      
77,919,559
      
80,359,375
      
77,664,815
  

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Ceragon Reports Second Quarter 2017 Results

CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

   
June 30,
2017
    
December 31,
2016
  
 
Unaudited
    
Audited
  
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
34,087
    
$
36,338
  
Trade receivables, net
    
114,077
      
107,395
  
Other accounts receivable and prepaid expenses
    
19,948
      
17,076
  
Inventories
    
56,158
      
45,647
  
Total current assets
    
224,270
      
206,456
  
                 
NON-CURRENT ASSETS:
                
   Deferred taxes, net
    
1,204
      
1,344
  
   Severance pay and pension fund
    
5,210
      
4,575
  
   Property and equipment, net
    
28,277
      
27,560
  
Intangible assets, net
    
790
      
1,544
  
   Other non-current  assets
    
3,931
      
2,746
  
Total non-current assets
    
39,412
      
37,769
  
Total assets
  
$
263,682
    
$
244,225
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Short term loan
  
$
8,000
    
$
17,000
  
Trade payables
    
90,067
      
68,408
  
Deferred revenues
    
3,674
      
2,673
  
Other accounts payable and accrued expenses
    
19,711
      
22,425
  
Total current liabilities
    
121,452
      
110,506
  
                 
LONG-TERM LIABILITIES:
                
Accrued severance pay and pension
    
9,745
      
9,198
  
Other long term payables
    
8,829
      
8,357
  
Total long-term liabilities
    
18,574
      
17,555
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
Ordinary shares
    
214
      
214
  
    Additional paid-in capital
    
410,128
      
409,320
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(6,018
)
    
(7,848
)
Accumulated deficits
    
(260,577
)
    
(265,431
)
                 
Total shareholders' equity
    
123,656
      
116,164
  
                 
Total liabilities and shareholders' equity
  
$
263,682
    
$
244,225
  

- 5 -
 
Ceragon Reports Second Quarter 2017 Results

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
 
   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2017
    
2016
    
2017
    
2016
  
Cash flow from operating activities:
                        
Net income (loss)
  
$
4,982
    
$
49
    
$
4,854
    
$
(387
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                                
                                 
Depreciation and amortization
    
2,229
      
2,668
      
4,574
      
4,976
  
Stock-based compensation expense
    
261
      
181
      
619
      
592
  
Decrease (increase) in trade and other  receivables, net
    
(16,519
)
    
(3,875
)
    
(9,288
)
    
30,503
  
Decrease (increase) in inventory, net of write off
    
(5,571
)
    
1,171
      
(10,555
)
    
1,603
  
Decrease in deferred tax asset, net
    
155
      
972
      
140
      
1,205
  
 Increase (decrease) in trade payables and accrued liabilities
    
14,778
      
1,616
      
18,775
      
(18,445
)
Increase (decrease) in deferred revenues
    
2,053
      
(267
)
    
1,018
      
(4,934
)
Other adjustments
    
(100
)
    
(218
)
    
(88
)
    
(108
)
Net cash provided by operating activities
  
$
2,268
    
$
2,297
    
$
10,049
    
$
15,005
  
                                 
Cash flow from investing activities:
                                
Purchase of property and equipment
    
(1,196
)
    
(1,407
)
    
(3,505
)
    
(3,608
)
Investment in short-term bank deposits
    
-
      
(120
)
    
-
      
(153
)
Net cash used in investing activities
  
$
(1,196
)
  
$
(1,527
)
  
$
(3,505
)
  
$
(3,761
)
                                 
Cash flow from financing activities:
                                
Proceeds from share options exercise
    
115
      
7
      
189
      
7
  
Repayment of bank loans
    
(3,500
)
    
(8,400
)
    
(9,000
)
    
(13,472
)
Net cash used in financing activities
  
$
(3,385
)
  
$
(8,393
)
  
$
(8,811
)
  
$
(13,465
)
                                 
Translation adjustments on cash and cash equivalents
  
$
(60
)
  
$
155
    
$
16
    
$
280
  
Decrease in cash and cash equivalents
  
$
(2,373
)
  
$
(7,468
)
  
$
(2,251
)
  
$
(1,941
)
Cash and cash equivalents at the beginning of the period
    
36,460
      
41,845
      
36,338
      
36,318
  
Cash and cash equivalents at the end of the period
  
$
34,087
    
$
34,377
    
$
34,087
    
$
34,377
  

- 6 -
 
Ceragon Reports Second Quarter 2017 Results

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)
 
   
Three months ended
    
Six months ended   
  
   
June 30,
    
June 30,   
  
   
2017
    
2016
    
2017
    
2016
  
                         
GAAP cost of revenues
  
$
64,131
    
$
45,720
    
$
117,848
    
$
84,263
  
Amortization of intangible assets
    
(306
)
    
(307
)
    
(609
)
    
(613
)
Stock based compensation expenses
    
(12
)
    
(3
)
    
(32
)
    
(21
)
Changes in pre-acquisition indirect tax positions
    
(165
)
    
(269
)
    
(327
)
    
(403
)
Non-GAAP cost of revenues
  
$
63,648
    
$
45,141
    
$
116,880
    
$
83,226
  
                                 
GAAP gross profit
  
$
29,203
    
$
24,290
    
$
51,507
    
$
45,581
  
Gross profit adjustments
    
483
      
579
      
968
      
1,037
  
Non-GAAP gross profit
  
$
29,686
    
$
24,869
    
$
52,475
    
$
46,618
  
                                 
GAAP Research and development expenses
  
$
6,128
    
$
5,355
    
$
12,235
    
$
10,638
  
Stock based compensation expenses
    
(45
)
    
2
      
(123
)
    
(126
)
Non-GAAP Research and development expenses
  
$
6,083
    
$
5,357
    
$
12,112
    
$
10,512
  
                                 
GAAP Sales and Marketing expenses
  
$
10,041
    
$
9,716
    
$
19,776
    
$
19,573
  
Amortization of intangible assets
    
(74
)
    
(106
)
    
(145
)
    
(205
)
Stock based compensation expenses
    
(75
)
    
(88
)
    
(153
)
    
(220
)
Non-GAAP Sales and Marketing expenses
  
$
9,892
    
$
9,522
    
$
19,478
    
$
19,148
  
                                 
GAAP General and Administrative expenses
  
$
5,065
    
$
5,192
    
$
9,570
    
$
10,110
  
Stock based compensation expenses
    
(129
)
    
(92
)
    
(311
)
    
(225
)
Non-GAAP General and Administrative expenses
  
$
4,936
    
$
5,100
    
$
9,259
    
$
9,885
  
                                 
GAAP financial expenses
  
$
1,481
    
$
2,372
    
$
3,079
    
$
3,290
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
-
      
907
  
Non-GAAP financial expenses
  
$
1,481
    
$
2,372
    
$
3,079
    
$
4,197
  
                                 
GAAP Tax expenses
  
$
1,506
    
$
1,606
    
$
1,993
    
$
2,357
  
Changes in pre acquisition tax liability
    
-
      
(453
)
    
-
      
(453
)
Non cash tax adjustments
    
(187
)
    
(242
)
    
(285
)
    
(488
)
Non-GAAP Tax expenses
  
$
1,319
    
$
911
    
$
1,708
    
$
1,416
  

- 7 -
Ceragon Reports Second Quarter 2017 Results
 
 RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

   
Three months ended
June 30,
    
Six months ended,
June 30,   
  
   
2017
    
2016
    
2017
    
2016
  
                         
GAAP net income (loss)
  
$
4,982
    
$
49
    
$
4,854
    
$
(387
)
Amortization of intangible assets
    
380
      
413
      
754
      
818
  
Stock based compensation expenses
    
261
      
181
      
619
      
592
  
Changes in pre-acquisition indirect tax positions
    
165
      
722
      
327
      
856
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
-
      
(907
)
Non-cash tax adjustments
    
187
      
242
      
285
      
488
  
Non-GAAP net income 
  
$
5,975
    
$
1,607
    
$
6,839
    
$
1,460
  
                                 
GAAP basic net income (loss) per share
  
$
0.06
    
$
0.00
    
$
0.06
    
$
(0.00
)
                                 
GAAP diluted net income (loss) per share
  
$
0.06
    
$
0.00
    
$
0.06
    
$
(0.00
)
                                 
Non-GAAP basic and diluted net income per share
  
$
0.07
    
$
0.02
    
$
0.08
    
$
0.02
  
                                 
Weighted average number of shares used in computing GAAP basic net income (loss) per share
    
77,891,218
      
77,674,747
      
77,845,690
      
77,664,815
  
                                 
Weighted average number of shares used in computing GAAP diluted net income (loss) per share
    
80,202,048
      
77,919,559
      
80,359,375
      
77,664,815
  
                                 
Weighted average number of shares used in computing Non-GAAP diluted net income per share
    
80,404,841
      
78,525,583
      
80,580,267
      
78,133,900
  

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