Ceragon Networks Reports Fourth Quarter and Full Year 2016 Financial Results
LITTLE FALLS, New Jersey, Feb. 15, 2017 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the fourth quarter and full year ended December 31, 2016.
Fourth Quarter 2016 Highlights:
Revenues – $84.7 million, up 12% from the fourth quarter of 2015, and up 7% from the third quarter of 2016.
Gross margin – 32.5%, compared to 32.8% in the fourth quarter of 2015 and 32.9% in the third quarter of 2016.
Operating income – $8.5 million, compared to an operating income of $8.9 million in the fourth quarter of 2015 and an operating income of $5.8 million in the third quarter of 2016.
Net income – $8.3 million, or $0.10 per diluted share. Net income for the fourth quarter of 2015 was $5.2 million, or $0.07 per diluted share. Net income for the third quarter of 2016 was $3.5 million, or $0.04 per diluted share.
Non-GAAP results –gross margin was 32.9%, operating income was $7.2 million, and net income was $5.2 million, or $0.07 per diluted share. Non-GAAP results exclude adjustments of $(3.1) million. For a reconciliation of GAAP to non-GAAP results, see the attached tables.
Cash and cash equivalents – $36.3 million at December 31, 2016, compared to $32.4 million at September 30, 2016, after reducing debt by $3.3 million to $17.0 million.
Full Year 2016 Highlights:
Revenues – $293.6 million, down 16% from 2015.
Gross margin – 33.8%, compared to 29.5% in 2015.
Operating income – $19.5 million, compared to an operating income of $ 21.6 million in 2015.
Net income – $11.4 million, or $0.15 per diluted share. Net income for 2015 was $ 1.0 million, or $ 0.01 per diluted share.
Non-GAAP results – gross margin was 34.5%, operating income was $21.1 million, and net income was $11.5 million, or $0.15 per diluted share. Non-GAAP results exclude adjustments of $42,000. For a reconciliation of GAAP to non-GAAP results, see the attached tables.
"The continued success of our strategy to focus on increasing net income and free cash flow resulted in significant improvement in these key metrics in 2016, and enabled us to maintain a strong cash position while also substantially reducing debt," said Ira Palti, president and CEO of Ceragon. "We have a strong order book, particularly with the large orders we received in Q1 from a customer in India. However, the timing of delivering various elements of these orders may cause greater than normal quarter-to-quarter fluctuations in our results during the year. After integrating these orders into our overall operating plan, we now feel comfortable raising our net income target for 2017, on a constant currency basis, from the one we set in November 2016."
Supplemental revenue breakouts by geography:
Fourth quarter 2016:
- Europe: 14%
- Africa: 4%
- North America: 14%
- Latin America: 27%
- India: 32%
- APAC: 9%
Full year 2016:
- Europe: 15%
- Africa: 7%
- North America: 14%
- Latin America: 27%
- India: 27%
- APAC: 10%
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) 332-0107, 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:https://www.ceragon.com/about-ceragon/investor-relations/events-webcasts/, 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: 414711. A replay of both the call and the webcast will be available through March 15, 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.
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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: revenues, growth prospects, projections of gross margins, operating and other expenses, capital expenditures, profitability and liquidity, competitive pressures, 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 the risk that Ceragon's expectations regarding future revenues and profitability will not materialize; risks relating to the concentration of our business in India, Latin America, Africa and in developing nations in other regions, including political, economic and regulatory risks from doing business in those regions and nations, including in relation to local business practices that may be inconsistent with international regulatory requirements, such as anti-corruption and anti-bribery regulations, currency export control issues and recent economic concerns; the risk that the business coming from our bigger customers will go down significantly or cease, the risk that Ceragon will not achieve the benefits it expects from its expense reduction plans and profit enhancement programs, as may be implemented from time to time; the risk of significant expenses in connection with potential contingent tax liability; 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, and 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.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
|
(U.S. dollars in thousands, except share and per share data) | ||||||||
|
(Unaudited) | ||||||||
|
Three months ended |
Year ended | |||||||
|
December 31, |
December 31, | |||||||
|
2016 |
2015 |
2016 |
2015 | |||||
|
(Audited) | ||||||||
|
Revenues |
$ 84,665 |
$ 75,643 |
$ 293,641 |
$ 349,435 | ||||
|
Cost of revenues |
57,122 |
50,840 |
194,479 |
246,487 | ||||
|
Gross profit |
27,543 |
24,803 |
99,162 |
102,948 | ||||
|
Operating expenses: |
||||||||
|
Research and development, net |
5,718 |
5,268 |
21,695 |
22,930 | ||||
|
Selling and marketing |
10,334 |
9,982 |
39,515 |
40,816 | ||||
|
General and administrative |
4,942 |
5,473 |
20,380 |
21,235 | ||||
|
Restructuring costs |
- |
- |
- |
1,225 | ||||
|
Other income |
(1,921) |
(4,849) |
(1,921) |
(4,849) | ||||
|
Total operating expenses |
$ 19,073 |
$ 15,874 |
$ 79,669 |
$ 81,357 | ||||
|
Operating income |
8,470 |
8,929 |
19,493 |
21,591 | ||||
|
Financial expenses, net |
1,494 |
2,265 |
6,303 |
14,738 | ||||
|
Income before taxes |
6,976 |
6,664 |
13,190 |
6,853 | ||||
|
Taxes on income |
(1,357) |
1,432 |
1,761 |
5,842 | ||||
|
Net income |
$ 8,333 |
$ 5,232 |
$ 11,429 |
$ 1,011 | ||||
|
Basic net income per share |
$ 0.11 |
$ 0.07 |
$ 0.15 |
$ 0.01 | ||||
|
Diluted net income per share |
$ 0.10 |
$ 0.07 |
$ 0.15 |
$ 0.01 | ||||
|
Weighted average number of shares used in computing basic net income per share |
77,759,346 |
77,416,409 |
77,702,788 |
77,239,409 | ||||
|
Weighted average number of shares used in computing diluted net income per share |
79,583,792 |
78,432,387 |
78,613,528 |
77,296,681 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
|
(U.S. dollars in thousands) | ||||
|
(Unaudited) | ||||
|
December 31, 2016 |
December 31, 2015 | |||
|
ASSETS |
(Audited) | |||
|
CURRENT ASSETS: |
||||
|
Cash and cash equivalents |
$ 36,338 |
$ 36,318 | ||
|
Trade receivables, net |
107,395 |
116,683 | ||
|
Deferred taxes, net |
1,327 |
1,633 | ||
|
Other accounts receivable and prepaid expenses |
18,516 |
22,583 | ||
|
Inventories |
45,647 |
49,690 | ||
|
Total current assets |
209,223 |
226,907 | ||
|
NON-CURRENT ASSETS: |
||||
|
Deferred tax assets, net |
17 |
189 | ||
|
Severance pay and pension funds |
4,575 |
4,681 | ||
|
Property and equipment, net |
27,560 |
28,906 | ||
|
Intangible assets, net |
1,544 |
3,192 | ||
|
Other non-current assets |
1,306 |
1,457 | ||
|
Total non-current assets |
35,002 |
38,425 | ||
|
Total assets |
$ 244,225 |
$ 265,332 | ||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||
|
CURRENT LIABILITIES: |
||||
|
Short term loan, including current maturities of long term bank loan |
$ 17,000 |
$ 34,922 | ||
|
Trade payables |
68,408 |
71,721 | ||
|
Deferred revenues |
2,673 |
8,901 | ||
|
Other accounts payable and accrued expenses |
22,425 |
27,052 | ||
|
Total current liabilities |
110,506 |
142,596 | ||
|
LONG-TERM LIABILITIES: |
||||
|
Accrued severance pay and pension |
9,198 |
9,276 | ||
|
Other long term payables |
8,357 |
10,639 | ||
|
Total long-term liabilities |
17,555 |
19,915 | ||
|
SHAREHOLDERS' EQUITY: |
||||
|
Share capital: |
||||
|
Ordinary shares |
214 |
214 | ||
|
Additional paid-in capital |
409,320 |
408,174 | ||
|
Treasury shares at cost |
(20,091) |
(20,091) | ||
|
Other comprehensive loss |
(7,846) |
(8,616) | ||
|
Accumulated deficits |
(265,433) |
(276,860) | ||
|
Total shareholders' equity |
116,164 |
102,821 | ||
|
Total liabilities and shareholders' equity |
$ 244,225 |
$ 265,332 | ||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | |||||||
|
(U.S. dollars, in thousands) | |||||||
|
(Unaudited) | |||||||
|
Three months ended December 31, |
Year ended December 31, | ||||||
|
2016 |
2015 |
2016 |
2015 | ||||
|
(Audited) | |||||||
|
Cash flow from operating activities: |
|||||||
|
Net income |
$ 8,333 |
$ 5,232 |
$ 11,429 |
$ 1,011 | |||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|||||||
|
Depreciation and amortization |
2,534 |
3,137 |
10,037 |
12,203 | |||
|
Stock-based compensation expense |
198 |
453 |
1,071 |
1,625 | |||
|
Decrease in trade and other receivables, net |
4,361 |
3,509 |
15,684 |
40,171 | |||
|
Decrease (increase) in inventory, net of write off |
(1,462) |
(971) |
4,706 |
10,240 | |||
|
Decrease in trade payables and accrued liabilities |
(1,258) |
(3,009) |
(11,434) |
(41,480) | |||
|
Decrease in deferred revenues |
(1,753) |
(1,162) |
(6,228) |
(8,766) | |||
|
Decrease (increase) in deferred tax asset, net |
(811) |
(466) |
478 |
1,975 | |||
|
Other adjustments |
(140) |
(74) |
28 |
(858) | |||
|
Net cash provided by operating activities |
$ 10,002 |
$ 6,649 |
$ 25,771 |
$ 16,121 | |||
|
Cash flow from investing activities: |
|||||||
|
Purchase of property and equipment ,net |
(2,757) |
(946) |
(8,190) |
(5,266) | |||
|
Investment in short and long-term bank deposit |
- |
- |
(153) |
(19) | |||
|
Proceeds from maturities of short and long-term bank deposits |
- |
368 |
153 |
432 | |||
|
Proceeds from sales of available for sale marketable securities |
- |
- |
- |
122 | |||
|
Net cash used in investing activities |
$ (2,757) |
$ (578) |
$ (8,190) |
$ (4,731) | |||
|
Cash flow from financing activities: |
|||||||
|
Proceeds from exercise of options |
8 |
26 |
75 |
138 | |||
|
Proceeds from financial institutions, net |
- |
- |
- |
4,200 | |||
|
Repayments of bank loans |
(3,300) |
(9,008) |
(17,922) |
(20,182) | |||
|
Net cash used in financing activities |
$ (3,292) |
$ (8,982) |
$ (17,847) |
$ (15,844) | |||
|
Translation adjustments on cash and cash equivalents |
$ 11 |
$ 25 |
$ 286 |
$ (651) | |||
|
Increase (decrease) in cash and cash equivalents |
$ 3,964 |
$ (2,886) |
$ 20 |
$ (5,105) | |||
|
Cash and cash equivalents at the beginning of the period |
32,374 |
39,204 |
36,318 |
41,423 | |||
|
Cash and cash equivalents at the end of the period |
$ 36,338 |
$ 36,318 |
$ 36,338 |
$ 36,318 | |||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(U.S. dollars in thousands, except share and per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Three months ended |
Year ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
December 31, |
December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
2016 |
2015 |
2016 |
2015 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
GAAP cost of revenues |
$ |
57,122 |
$ |
50,840 |
$ |
194,479 |
$ |
246,487 | ||||||||||||||||||||||||||||||||||||||||||||
|
Amortization of intangible assets |
(310) |
(309) |
(1,232) |
(1,228) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Stock based compensation expenses |
(4) |
(29) |
(30) |
(73) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Changes in pre-acquisition indirect tax positions |
- |
(1) |
(806) |
(278) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP cost of revenues |
$ |
56,808 |
$ |
50,501 |
$ |
192,411 |
$ |
244,908 | ||||||||||||||||||||||||||||||||||||||||||||
|
GAAP gross profit |
$ |
27,543 |
$ |
24,803 |
$ |
99,162 |
$ |
102,948 | ||||||||||||||||||||||||||||||||||||||||||||
|
Gross profit adjustments |
314 |
339 |
2,068 |
1,579 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP gross profit |
$ |
27,857 |
$ |
25,142 |
$ |
101,230 |
$ |
104,527 | ||||||||||||||||||||||||||||||||||||||||||||
|
GAAP Research and development expenses |
$ |
5,718 |
$ |
5,268 |
$ |
21,695 |
$ |
22,930 | ||||||||||||||||||||||||||||||||||||||||||||
|
Stock based compensation expenses |
(17) |
(179) |
(151) |
(735) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP Research and development expenses |
$ |
5,701 |
$ |
5,089 |
$ |
21,544 |
$ |
22,195 | ||||||||||||||||||||||||||||||||||||||||||||
|
GAAP Sales and Marketing expenses |
$ |
10,334 |
$ |
9,982 |
$ |
39,515 |
$ |
40,816 | ||||||||||||||||||||||||||||||||||||||||||||
|
Amortization of intangible assets |
(106) |
(148) |
(417) |
(637) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Stock based compensation expenses |
(54) |
(109) |
(369) |
(495) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP Sales and Marketing expenses |
$ |
10,174 |
$ |
9,725 |
$ |
38,729 |
$ |
39,684 | ||||||||||||||||||||||||||||||||||||||||||||
|
GAAP General and Administrative expenses |
$ |
4,942 |
$ |
5,473 |
$ |
20,380 |
$ |
21,235 | ||||||||||||||||||||||||||||||||||||||||||||
|
Stock based compensation expenses |
(122) |
(135) |
(521) |
(321) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP General and Administrative expenses |
$ |
4,820 |
$ |
5,338 |
$ |
19,859 |
$ |
20,914 | ||||||||||||||||||||||||||||||||||||||||||||
|
GAAP restructuring cost |
$ |
- |
$ |
- |
$ |
- |
$ |
1,225 | ||||||||||||||||||||||||||||||||||||||||||||
|
Restructuring plan related cost |
- |
- |
- |
(1,225) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP restructuring cost |
$ |
- |
$ |
- |
$ |
- |
$ |
- | ||||||||||||||||||||||||||||||||||||||||||||
|
GAAP other income |
$ |
(1,921) |
$ |
(4,849) |
$ |
(1,921) |
$ |
(4,849) | ||||||||||||||||||||||||||||||||||||||||||||
|
Statute of limitation on certain pre-acquisition indirect tax liabilities |
1,921 |
4,849 |
1,921 |
4,849 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP other income |
$ |
- |
$ |
- |
$ |
- |
$ |
- | ||||||||||||||||||||||||||||||||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS | |||||||||||||||||||||||||||||||||||||||||||||||||
|
(U.S. dollars in thousands, except share and per share data) (Unaudited)
| |||||||||||||||||||||||||||||||||||||||||||||||||
|
Three months ended |
Year ended | ||||||||||||||||||||||||||||||||||||||||||||||||
|
December 31, |
December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
|
2016 |
2015 |
2016 |
2015 | ||||||||||||||||||||||||||||||||||||||||||||||
|
GAAP financial expenses |
$ |
1,494 |
$ |
2,265 |
$ |
6,303 |
$ |
14,738 | |||||||||||||||||||||||||||||||||||||||||
|
Currency devaluation in Venezuela related expenses |
- |
- |
907 |
(2,973) | |||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP financial expenses |
$ |
1,494 |
$ |
2,265 |
$ |
7,210 |
$ |
11,765 | |||||||||||||||||||||||||||||||||||||||||
|
GAAP taxes on income |
$ |
(1,357) |
$ |
1,432 |
$ |
1,761 |
$ |
5,842 | |||||||||||||||||||||||||||||||||||||||||
|
Changes in pre-acquisition tax liability |
- |
- |
(453) |
- | |||||||||||||||||||||||||||||||||||||||||||||
|
Other non-cash tax adjustments |
1,786 |
(762) |
1,109 |
(3,297) | |||||||||||||||||||||||||||||||||||||||||||||
|
Non-GAAP taxes on income |
$ |
429 |
$ |
670 |
$ |
2,417 |
$ |
2,545 | |||||||||||||||||||||||||||||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS | |||||||||||||
|
U.S. dollars in thousands, except share and per share data) | |||||||||||||
|
(Unaudited) | |||||||||||||
|
Three months ended |
Year ended |
||||||||||||
|
December 31, |
December 31 |
||||||||||||
|
2016 |
2015 |
2016 |
2015 |
||||||||||
|
GAAP net income |
$ |
8,333 |
$ |
5,232 |
$ |
11,429 |
$ |
1,011 |
|||||
|
Amortization of intangible assets |
416 |
457 |
1,649 |
1,865 |
|||||||||
|
Stock based compensation expenses |
197 |
452 |
1,071 |
1,624 |
|||||||||
|
Restructuring expenses |
- |
- |
- |
1,225 |
|||||||||
|
Changes in pre-acquisition indirect tax positions |
- |
1 |
1,259 |
278 |
|||||||||
|
Currency devaluation in Venezuela related expenses |
- |
- |
(907) |
2,973 |
|||||||||
|
Non-cash tax adjustments |
(1,786) |
762 |
(1,109) |
3,297 |
|||||||||
|
Statute of limitation on certain pre-acquisition indirect tax liabilities |
(1,921) |
(4,849) |
(1,921) |
(4,849) |
|||||||||
|
Non-GAAP net income |
$ |
5,239 |
$ |
2,055 |
$ |
11,471 |
$ |
7,424 |
|||||
|
GAAP basic net income per share |
$ |
0.11 |
$ |
0.07 |
$ |
0.15 |
$ |
0.01 |
|||||
|
GAAP diluted net income per share |
$ |
0.10 |
$ |
0.07 |
$ |
0.15 |
$ |
0.01 |
|||||
|
Non-GAAP basic and diluted net income per share |
$ |
0.07 |
$ |
0.03 |
$ |
0.15 |
$ |
0.10 |
|||||
|
Weighted average number of shares used in computingbasic net income per share |
77,759,346 |
77,416,409 |
77,702,788 |
77,239,409 |
|||||||||
|
Weighted average number of shares used in computingGAAP diluted net income per share |
79,583,792 |
77,432,387 |
78,613,528 |
77,296,681 |
|||||||||
|
Weighted average number of shares used in computingNon-GAAP diluted net income per share |
79,888,786 |
78,264,309 |
78,986,738 |
77,967,811 |
|||||||||
Investors: Doron Arazi or Claudia Gatlin +972-3-5431-660 +1-212-830-9080 [email protected] [email protected]
Media: Tanya Solomon +972-3-5431163 [email protected]
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ceragon-networks-reports-fourth-quarter-and-full-year-2016-financial-results-300407839.html
SOURCE Ceragon Networks Ltd