EX-99 2 exhibit_a.htm EXHIBIT A
 
Exhibit A
 
Ceragon Networks Reports Third Quarter 2017 Financial Results
November 6, 2017
 


CERAGON NETWORKS REPORTS THIRD QUARTER 2017 FINANCIAL RESULTS
 
Little Falls, New Jersey, November 6, 2017 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the third quarter which ended September 30, 2017.
 
Third Quarter 2017 Highlights:
 
Revenues - $76.0 million, down 4.0% from the third quarter of 2016, and down 18.6% from the second quarter of 2017.
 
Gross margin – 35.1%, compared to 32.9% in the third quarter of 2016 and 31.3% in the second quarter of 2017.
 
Operating income - $5.7 million, compared to $5.8 million in the third quarter of 2016, and $8.0 million in the second quarter of 2017.
 
Net income - net income of $3.5 million, or $0.04 per diluted share for the third quarter of 2017.  Net income for the third quarter of 2016 was $3.5 million, or $0.04 per diluted share. Net income for the second quarter of 2017 was $5.0 million or $0.06 per diluted share.
 
Non-GAAP results - gross margin was 35.2%, operating income was $6.2 million, and net income was $4.4 million, or $0.05 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents - $36.5 million at September 30, 2017, compared to $34.1 million at June 30, 2017.
 
"Our revenue in Q3 compared to Q2 reflected the lumpiness of our business in India," said Ira Palti, president and CEO of Ceragon. "Our gross margin increased mainly due to a more favorable geographic revenue mix, and also due to lower shipping costs. We had strong bookings during Q3, and our book-to-bill ratio was above 1. Based on the geographic mix of our order backlog and the pipeline of potential new business, we continue to believe we can sustain a gross margin above 32%.
 
"During the quarter, we temporarily increased our borrowing under our revolving credit agreement to accommodate a timing issue with respect to a payment from a major customer. Most of this payment has already been received and we expect to receive the remaining amount within Q4. Meanwhile, we maintained a strong cash position of $36.5 million as of the end of the third quarter."
 
Supplemental geographical breakdown of revenue for the third quarter of 2017:
 
 
·
Europe:
17%
 
·
Africa:
3%
 
·
North America:
12%
 
·
Latin America:
25%
 
·
India:
31%
 
·
APAC:
12%
 
A conference call to discuss the results will begin at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling USA: (800) 230-1074 or International: +1 (612) 234-9959, from 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-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: 430998. A replay of both the call and the webcast will be available through December 6, 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
 
 
 
2
 
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 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-
 
3
 
Ceragon Reports Third Quarter 2017 Results
 
 

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,
  
   
2017
    
2016
    
2017
    
2016
  
                         
                         
Revenues
  
$
75,999
    
$
79,132
    
$
245,354
    
$
208,976
  
Cost of revenues
    
49,326
      
53,094
      
167,174
      
137,357
  
                                 
Gross profit
    
26,673
      
26,038
      
78,180
      
71,619
  
                                 
Operating expenses:
                                
Research and development
    
6,975
      
5,339
      
19,210
      
15,977
  
Selling and marketing
    
9,543
      
9,608
      
29,319
      
29,181
  
General and administrative
    
4,462
      
5,328
      
14,032
      
15,438
  
                                 
Total operating expenses
    
20,980
      
20,275
      
62,561
      
60,596
  
                                 
Operating income
    
5,693
      
5,763
      
15,619
      
11,023
  
                                 
Financial expenses, net
    
1,655
      
1,519
      
4,734
      
4,809
  
                                 
Income before taxes
    
4,038
      
4,244
      
10,885
      
6,214
  
                                 
Taxes on income
    
542
      
761
      
2,535
      
3,118
  
                                 
Net income
  
$
3,496
    
$
3,483
    
$
8,350
    
$
3,096
  
                                 
Basic net income per share
  
$
0.04
    
$
0.04
    
$
0.11
    
$
0.04
  
                                 
Diluted net income per share
  
$
0.04
    
$
0.04
    
$
0.10
    
$
0.04
  
                                 
Weighted average number of shares used in computing basic net income per share
    
77,964,433
      
77,711,946
      
77,885,555
      
77,680,541
  
                                 
Weighted average number of shares used in computing diluted net income per share
    
79,596,845
      
79,284,558
      
80,105,482
      
78,286,712
  


4
 
Ceragon Reports Third Quarter 2017 Results
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

   
September 30,
2017
    
December 31,
2016
  
 
  
Unaudited
    
Audited
  
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
36,470
    
$
36,338
  
Trade receivables, net
    
127,124
      
107,395
  
Other accounts receivable and prepaid expenses
    
19,005
      
17,076
  
Inventories
    
55,866
      
45,647
  
Total current assets
    
238,465
      
206,456
  
                 
NON-CURRENT ASSETS:
                
   Deferred taxes, net
    
952
      
1,344
  
   Severance pay and pension fund
    
5,189
      
4,575
  
   Property and equipment, net
    
29,399
      
27,560
  
Intangible assets, net
    
406
      
1,544
  
   Other non-current  assets
    
4,247
      
2,746
  
Total non-current assets
    
40,193
      
37,769
  
Total assets
  
$
278,658
    
$
244,225
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Short term loan
  
$
23,800
    
$
17,000
  
Trade payables
    
82,748
      
68,408
  
Deferred revenues
    
4,126
      
2,673
  
Other accounts payable and accrued expenses
    
22,118
      
22,425
  
Total current liabilities
    
132,792
      
110,506
  
                 
LONG-TERM LIABILITIES:
                
Accrued severance pay and pension
    
9,945
      
9,198
  
Other long term payables
    
9,067
      
8,357
  
Total long-term liabilities
    
19,012
      
17,555
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
Ordinary shares
    
214
      
214
  
     Additional paid-in capital
    
410,517
      
409,320
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(6,705
)
    
(7,848
)
Accumulated deficits
    
(257,081
)
    
(265,431
)
                 
Total shareholders' equity
    
126,854
      
116,164
  
                 
Total liabilities and shareholders' equity
  
$
278,658
    
$
244,225
  


5
 
Ceragon Reports Third Quarter 2017 Results
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)

   
Three months ended
September 30,
    
Nine months ended
September 30,
  
   
2017
    
2016
    
2017
    
2016
  
Cash flow from operating activities:
                        
Net income
  
$
3,496
    
$
3,483
    
$
8,350
    
$
3,096
  
Adjustments to reconcile net income to net cash used in operating activities:
                                
Depreciation and amortization
    
2,191
      
2,527
      
6,766
      
7,503
  
Stock-based compensation expense
    
349
      
281
      
968
      
873
  
Decrease (increase) in trade and other receivables, net
    
(12,925
)
    
(19,180
)
    
(22,213
)
    
11,323
  
Decrease (increase) in inventory, net of write off
    
402
      
4,565
      
(10,153
)
    
6,168
  
 Increase (decrease) in trade payables and accrued liabilities
    
(3,831
)
    
8,269
      
14,944
      
(10,176
)
Increase (decrease) in deferred revenues
    
329
      
459
      
1,347
      
(4,475
)
Decrease in deferred tax asset, net
    
252
      
84
      
392
      
1,289
  
Other adjustments
    
221
      
276
      
133
      
168
  
Net cash provided by (used in) operating activities
  
$
(9,516
)
  
$
764
    
$
534
    
$
15,769
  
                                 
Cash flow from investing activities:
                                
    Purchase of property and equipment
    
(3,980
)
    
(1,825
)
    
(7,485
)
    
(5,433
)
   Investment in short-term bank deposits
    
-
      
-
      
-
      
(153
)
   Proceeds from short-term bank deposits
    
-
      
153
      
-
      
153
  
    Net cash used in investing activities
  
$
(3,980
)
  
$
(1,672
)
  
$
(7,485
)
  
$
(5,433
)
                                 
Cash flow from financing activities:
                                
 Proceeds from exercise of options
    
40
      
60
      
229
      
67
  
 Proceeds from bank loans
    
15,800
      
-
      
6,800
      
-
  
 Repayment of bank loans
    
-
      
(1,150
)
    
-
      
(14,622
)
    Net cash provided by (used in) financing activities
  
$
15,840
    
$
(1,090
)
  
$
7,029
    
$
(14,555
)
                                 
Translation adjustments on cash and cash equivalents
    
39
      
(5
)
    
54
      
275
  
Increase (decrease) in cash and cash equivalents
  
$
2,383
    
$
(2,003
)
  
$
132
    
$
(3,944
)
Cash and cash equivalents at the beginning of the period
    
34,087
      
34,377
      
36,338
      
36,318
  
Cash and cash equivalents at the end of the period
  
$
36,470
    
$
32,374
    
$
36,470
    
$
32,374
  


6
 
Ceragon Reports Third Quarter 2017 Results
 
 
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)

   
Three months ended
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2017
    
2016
    
2017
    
2016
  
                         
GAAP cost of revenues
  
$
49,326
    
$
53,094
    
$
167,174
    
$
137,357
  
Amortization of intangible assets
    
(310
)
    
(309
)
    
(919
)
    
(922
)
Stock based compensation expenses
    
(10
)
    
(5
)
    
(42
)
    
(26
)
Changes in pre-acquisition indirect tax positions
    
209
      
(403
)
    
(118
)
    
(806
)
Non-GAAP cost of revenues
  
$
49,215
    
$
52,377
    
$
166,095
    
$
135,603
  
                                 
GAAP gross profit
  
$
26,673
    
$
26,038
    
$
78,180
    
$
71,619
  
Gross profit adjustments
    
111
      
717
      
1,079
      
1,754
  
Non-GAAP gross profit
  
$
26,784
    
$
26,755
    
$
79,259
    
$
73,373
  
                                 
GAAP Research and development expenses
  
$
6,975
    
$
5,339
    
$
19,210
    
$
15,977
  
Stock based compensation expenses
    
(32
)
    
(8
)
    
(156
)
    
(134
)
Non-GAAP Research and development expenses
  
$
6,943
    
$
5,331
    
$
19,054
    
$
15,843
  
                                 
GAAP Sales and Marketing expenses
  
$
9,543
    
$
9,608
    
$
29,319
    
$
29,181
  
Amortization of intangible assets
    
(74
)
    
(107
)
    
(219
)
    
(312
)
Stock based compensation expenses
    
(94
)
    
(95
)
    
(246
)
    
(315
)
Non-GAAP Sales and Marketing expenses
  
$
9,375
    
$
9,406
    
$
28,854
    
$
28,544
  
                                 
GAAP General and Administrative expenses
  
$
4,462
    
$
5,328
    
$
14,032
    
$
15,438
  
Stock based compensation expenses
    
(213
)
    
(173
)
    
(524
)
    
(398
)
Non-GAAP General and Administrative expenses
  
$
4,249
    
$
5,155
    
$
13,508
    
$
15,040
  
                                 
GAAP financial expenses
  
$
1,655
    
$
1,519
    
$
4,734
    
$
4,809
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
-
      
907
  
Non-GAAP financial expenses
  
$
1,655
    
$
1,519
    
$
4,734
    
$
5,716
  
                                 
GAAP taxes on income
  
$
542
    
$
761
    
$
2,535
    
$
3,118
  
Changes in pre-acquisition tax liability
    
-
      
-
      
-
      
(453
)
Other non-cash tax adjustments
    
(340
)
    
(189
)
    
(625
)
    
(677
)
Non-GAAP taxes on income
  
$
202
    
$
572
    
$
1,910
    
$
1,988
  
 
7
 
Ceragon Reports Third 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
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2017
    
2016
    
2017
    
2016
  
                         
GAAP net income (loss) 
  
$
3,496
    
$
3,483
    
$
8,350
    
$
3,096
  
Amortization of intangible assets
    
384
      
416
      
1,138
      
1,234
  
Stock based compensation expenses
    
349
      
281
      
968
      
873
  
Changes in pre-acquisition tax exposures
    
(209
)
    
403
      
118
      
1,259
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
-
      
(907
)
Non-cash tax adjustments
    
340
      
189
      
625
      
677
  
Non-GAAP net income 
  
$
4,360
    
$
4,772
    
$
11,199
    
$
6,232
  
                                 
GAAP basic net income per share
  
$
0.04
    
$
0.04
    
$
0.11
    
$
0.04
  
                                 
GAAP diluted net income per share
  
$
0.04
    
$
0.04
    
$
0.10
    
$
0.04
  
                                 
Non-GAAP basic and diluted net income per share
  
$
0.05
    
$
0.06
    
$
0.14
    
$
0.08
  
                                 
Weighted average number of shares used in computing GAAP
basic net income per share
    
77,964,433
      
77,711,946
      
77,885,555
      
77,680,541
  
                                 
Weighted average number of shares used in computing
 GAAP diluted net income per share
    
79,596,845
      
79,284,558
      
80,105,482
      
78,286,712
  
                                 
Weighted average number of shares used in computing
 Non-GAAP diluted net income per share
    
79,880,400
      
79,780,138
      
80,347,262
      
78,682,661
  

 

8