EX-99 2 exhibit_a.htm EXHIBIT A
 
Exhibit A

Ceragon Networks Reports First Quarter 2018 Financial Results

May 7, 2018


CERAGON NETWORKS REPORTS FIRST QUARTER 2018
FINANCIAL RESULTS
 
Strong Q1 bookings and revenue, with particular strength coming from India
 
Little Falls, New Jersey, May 7, 2018 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the first quarter ended March 31, 2018.
 
First Quarter 2018 Highlights
 
Revenues - $83.3 million, up 9.5% from the first quarter of 2017, and down 3.9% from the fourth quarter of 2017.
 
Gross margin – 33.1%, compared to 29.3% in the first quarter of 2017 and 33.6% in the fourth quarter of 2017.
 
Operating income - $5.4 million, compared to $2.0 million in the first quarter of 2017 and $7.5 million in the fourth quarter of 2017.
 
Net income )loss) - net income of $2.1 million, or $0.03 per diluted share for the first quarter of 2018.  Net loss for the first quarter of 2017 was $(0.1) million, or $(0.00) per diluted share. Net income for the fourth quarter of 2017 was $7.2 million or $0.09 per diluted share.
 
Non-GAAP results - gross margin was 33.2%, operating income was $5.7 million, and net income was $3.0 million, or $0.04 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents - $26.0 million at March 31, 2018, compared to $25.9 million at December 31, 2017.
 
“We are beginning 2018 with a strong quarter in all respects,” said Ira Palti, president and CEO of Ceragon. “We had strong bookings in Q1, with particular strength coming from India. Revenue increased 9.5% year over year, and we now have enough visibility to raise our quarterly run rate expectations to $80 to $85 million during the balance of this year.  We won several important new projects in Q1 and our objective is to continue to gradually gain market share. Our financial goal is to make 2018 the fourth consecutive year of increasing net income, despite facing some challenges with factors we can’t control such as currency headwinds and shortages of passive components.”
 
 
Supplemental revenue breakouts by geography:
 
First quarter 2018:
 
·          Europe:                       12%
·          Africa:                           2%
·          North America:          11%
·          Latin America:           13%
·          India:                           46%
·          APAC:                        16%
 
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) 398-9367 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: 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: 446862. A replay of both the call and the webcast will be available through June 7, 2018.
 
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
 
 
 
 

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 due to our focus on a single market segment; risks relating to the concentration of Ceragon's business in certain geographic regions such as India, and in other developing nations; political, economic and regulatory risks from doing business in those developing regions, including potential currency restrictions and fluctuations; risks related to our ability to meet the demand for our products due shortages in raw materials including certain passive components; risks associated with a change in Ceragon’s gross margin as a result of changes in the geographic mix of revenues and/or as a results of increase in costs of raw material, including certain passive components; risks associated with the loss of a single customer or customer group, which represents a significant portion of Ceragon’s revenues; risks 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 First Quarter 2018 Results

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


 
Three months ended
  
   
March 31,
  
   
2018
    
2017
  
             
Revenues
  
$
83,275
    
$
76,021
  
Cost of revenues
    
55,671
      
53,717
  
                 
Gross profit
    
27,604
      
22,304
  
                 
Operating expenses:
                
Research and development, net
    
7,214
      
6,107
  
Selling and marketing
    
10,562
      
9,735
  
General and administrative
    
4,459
      
4,505
  
                 
Total operating expenses
  
$
22,235
    
$
20,347
  
                 
Operating income
    
5,369
      
1,957
  
Financial expenses, net
    
2,034
      
1,598
  
                 
Income before taxes
    
3,335
      
359
  
                 
Taxes on income
    
1,265
      
487
  
                 
Net income (loss)
  
$
2,070
    
$
(128
)
                 
 Basic net income (loss) per share
  
$
0.03
    
$
(0.00
)
 Diluted net income (loss) per share
  
$
0.03
    
$
(0.00
)
                 
Weighted average number of shares used in computing basic net income (loss) per share
    
78,080,146
      
77,796,425
  
                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
80,065,171
      
77,796,425
  

4
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
 
   
March 31,
2018
    
December 31,
2017
  
ASSETS
  
Unaudited
    
Audited
  
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
25,956
    
$
25,877
  
Trade receivables, net
    
116,002
      
113,719
  
Other accounts receivable and prepaid expenses
    
14,081
      
17,052
  
Inventories
    
49,676
      
54,164
  
                 
Total current assets
    
205,715
      
210,812
  
                 
NON-CURRENT ASSETS:
                
Long-term bank deposits
    
996
      
996
  
Deferred tax assets
    
505
      
988
  
   Severance pay and pension funds
    
5,445
      
5,459
  
   Property and equipment, net
    
29,367
      
29,870
  
   Intangible assets, net
    
2,656
      
2,199
  
Other non-current assets
    
3,506
      
3,269
  
                 
Total non-current assets
    
42,475
      
42,781
  
                 
Total assets
  
$
248,190
    
$
253,593
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
CURRENT LIABILITIES:
                
Trade payables
  
$
63,007
    
$
75,476
  
Deferred revenues
    
6,130
      
5,193
  
Other accounts payable and accrued expenses
    
28,548
      
24,781
  
                 
Total current liabilities
    
97,685
      
105,450
  
                 
LONG-TERM LIABILITIES:
                
Deferred tax liability
    
132
      
141
  
Accrued severance pay and pension
    
10,279
      
10,085
  
Other long term payables
    
4,033
      
4,019
  
                 
Total long-term liabilities
    
14,444
      
14,245
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
    Ordinary shares
    
214
      
214
  
Additional paid-in capital
    
411,270
      
410,817
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(7,601
)
    
(7,171
)
Accumulated deficits
    
(247,731
)
    
(249,871
)
                 
Total shareholders' equity
    
136,061
      
133,898
  
                 
Total liabilities and shareholders' equity
  
$
248,190
    
$
253,593
  

5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)

   
Three months ended
  
   
March 31,
  
   
2018
    
2017
  
Cash flow from operating activities:
            
Net Income (loss)
  
$
2,070
    
$
(128
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                
                 
Depreciation and amortization
    
1,511
      
2,345
  
Stock-based compensation expense
    
353
      
358
  
Decrease in trade and other receivables, net
    
183
      
7,231
  
Decrease (increase) in inventory, net of write-off
    
4,488
      
(4,984
)
Decrease (increase) in deferred tax asset, net
    
474
      
(15
)
Increase (decrease) in trade payables and accrued liabilities
    
(5,854
)
    
3,997
  
Increase (decrease) in deferred revenues
    
940
      
(1,035
)
Other adjustments
    
208
      
12
  
Net cash provided by operating activities
  
$
4,373
    
$
7,781
  
                 
Cash flow from investing activities:
                
Purchase of property and equipment, net
    
(3,299
)
    
(2,309
)
Purchase of intangible assets, net
    
(1,086
)
    
-
  
Net cash used in investing activities
  
$
(4,385
)
  
$
(2,309
)
                 
Cash flow from financing activities:
                
Repayment of loans from financial institutions
    
-
      
(5,500
)
Proceeds from exercise of options
    
100
      
74
  
Net cash provided by (used in) financing activities
  
$
100
    
$
(5,426
)
                 
Translation adjustments on cash and cash equivalents
  
$
(9
 )   
$
76
  
                 
Increase in cash and cash equivalents
  
$
79
    
$
122
  
                 
Cash and cash equivalents at the beginning of the period
    
25,877
      
36,338
  
                 
Cash and cash equivalents at the end of the period
  
$
25,956
    
$
36,460
  


6
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)

   
Three months ended
March 31,
  
   
2018
    
2017
  
             
GAAP cost of revenues
  
$
55,671
    
$
53,717
  
Amortization of intangible assets
    
-
      
(303
)
Stock based compensation expenses
    
(17
)
    
(20
)
Changes in pre-acquisition indirect tax positions
    
(15
)
    
(162
)
Non-GAAP cost of revenues
  
$
55,639
    
$
53,232
  
                 
GAAP gross profit
  
$
27,604
    
$
22,304
  
Gross profit adjustments
    
32
      
485
  
Non-GAAP gross profit
  
$
27,636
    
$
22,789
  
                 
GAAP Research and development expenses
  
$
7,214
    
$
6,107
  
Stock based compensation expenses
    
(60
)
    
(78
)
Non-GAAP Research and development expenses
  
$
7,154
    
$
6,029
  
                 
GAAP Sales and Marketing expenses
  
$
10,562
    
$
9,735
  
Amortization of intangible assets
    
-
      
(71
)
Stock based compensation expenses
    
(144
)
    
(78
)
Non-GAAP Sales and Marketing expenses
  
$
10,418
    
$
9,586
  
                 
GAAP General and Administrative expenses
  
$
4,459
    
$
4,505
  
Stock based compensation expenses
    
(132
)
    
(182
)
Non-GAAP General and Administrative expenses
  
$
4,327
    
$
4,323
  
                 
GAAP taxes on income
  
$
1,265
    
$
487
  
Non-cash tax adjustments
    
(564
)
    
(98
)
Non-GAAP taxes on income
  
$
701
    
$
389
  


7
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
   
Three months ended
March 31,
  
   
2018
    
2017
  
             
GAAP net income (loss)
  
$
2,070
    
$
(128
)
Stock based compensation expenses
    
353
      
358
  
Amortization of intangible assets
    
-
      
374
  
Changes in pre-acquisition indirect tax positions
    
15
      
162
  
Non-cash tax adjustment
    
564
      
98
  
Non-GAAP net income
  
$
3,002
    
$
864
  
                 
GAAP basic net income (loss) per share
  
$
0.03
    
$
(0.00
)
                 
GAAP diluted net income (loss) per share
  
$
0.03
    
$
(0.00
)
                 
Non-GAAP basic and diluted net income per share
  
$
0.04
    
$
0.01
  
                 
Weighted average number of shares used in computing GAAP basic net income (loss) per share
    
78,080,146
      
77,796,425
  
                 
Weighted average number of shares used in computing GAAP diluted net income (loss) per share
    
80,065,171
      
77,796,425
  
                 
Weighted average number of shares used in computing Non-GAAP basic and diluted net income per share
    
80,377,797
      
80,751,956
  

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