EX-99 2 exhibit_a.htm EXHIBIT A
Exhibit A
 
Ceragon Networks Reports Second Quarter 2018 Financial Results

August 6, 2018

CERAGON NETWORKS REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS
 
Little Falls, New Jersey, August 6, 2018 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the second quarter which ended June 30, 2018.
 
Second Quarter 2018 Highlights:
 
Revenues - $88.3 million, down 5.4% from the second quarter of 2017, and up 6.1% from the first quarter of 2018.
 
Gross margin – 32.5%, compared to 31.3% in the second quarter of 2017 and 33.1% in the first quarter of 2018.
 
Operating income - $6.4 million, compared to $8.0 million in the second quarter of 2017, and $5.4 million in the first quarter of 2018.
 
Net income - $3.2 million, or $0.04 per diluted share for the second quarter of 2018, compared to 5.0 million, or $0.06 per diluted share, in the second quarter of 2017. Net income for the first quarter of 2018 was $2.1 million, or $0.03 per diluted share.
 
Non-GAAP results – Gross margin was 32.6%, operating income was $7.1 million, and net income was $3.8 million, or $0.05 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents - $29.4 million at June 30, 2018, compared to $26.0 million at March 31, 2018.
 
“The second quarter contributed to a strong first half and was in line with our expectations, said Ira Palti, president and CEO of Ceragon. “Our bookings in Q2 continue to support our target quarterly revenue run rate of $80 to $85 million during the second half, and we continue to target an increase in net income for the year. We are increasingly optimistic about the longer-term outlook as we work with operators to plan and implement projects to upgrade, densify and optimize their networks on the road to full 5G deployments during the next several years.”
 
 
Supplemental geographical breakdown of revenue for the second quarter of 2018:
 
 
·
Europe:
11%
  
 
·
Africa:
4%
  
 
·
North America:
10%
  
 
·
Latin America:
17%
  
 
·
India:
47%
  
 
·
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) 288-0340, 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: 451294. A replay of both the call and the webcast will be available through September 6, 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 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.

2
 
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-

3
 
Ceragon Reports Second Quarter 2018 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,
  
   
2018
    
2017
    
2018
    
2017
  
                         
Revenues
  
$
88,328
    
$
93,334
    
$
171,603
    
$
169,355
  
Cost of revenues
    
59,579
      
64,131
      
115,250
      
117,848
  
                                 
Gross profit
    
28,749
      
29,203
      
56,353
      
51,507
  
                                 
Operating expenses:
                                
Research and development
    
6,821
      
6,128
      
14,035
      
12,235
  
Selling and marketing
    
10,369
      
10,041
      
20,931
      
19,776
  
General and administrative
    
5,190
      
5,065
      
9,649
      
9,570
  
                                 
Total operating expenses
  
$
22,380
    
$
21,234
    
$
44,615
    
$
41,581
  
                                 
Operating income
    
6,369
      
7,969
      
11,738
      
9,926
  
                                 
Financial expenses, net
    
2,646
      
1,481
      
4,680
      
3,079
  
                                 
Income before taxes
    
3,723
      
6,488
      
7,058
      
6,847
  
                                 
Taxes on income
    
497
      
1,506
      
1,762
      
1,993
  
                                 
Net income
  
$
3,226
    
$
4,982
    
$
5,296
    
$
4,854
  
                                 
Basic net income per share
  
$
0.04
    
$
0.06
    
$
0.07
    
$
0.06
  
                                 
Diluted net income per share
  
$
0.04
    
$
0.06
    
$
0.07
    
$
0.06
  
                                 
Weighted average number of shares used in computing basic net income  per share
    
78,231,726
      
77,891,218
      
78,155,810
      
77,845,690
  
                                 
Weighted average number of shares used in computing diluted net income per share
    
80,850,353
      
80,202,048
      
80,457,636
      
80,359,375
  

4
 
Ceragon Reports Second Quarter 2018 Results
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

   
June 30,
2018
    
December 31, 2017
  
 
  
Unaudited
    
Audited
  
ASSETS
            
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
29,398
    
$
25,877
  
Trade receivables, net
    
118,545
      
113,719
  
Other accounts receivable and prepaid expenses
    
10,512
      
17,052
  
Inventories
    
46,040
      
54,164
  
Total current assets
    
204,495
      
210,812
  
                 
NON-CURRENT ASSETS:
                
   Long-term bank deposits
    
996
      
996
  
   Deferred tax assets
    
529
      
988
  
   Severance pay and pension fund
    
5,115
      
5,459
  
   Property and equipment, net
    
30,055
      
29,870
  
    Intangible assets, net
    
2,810
      
2,199
  
  Other non-current assets
    
3,212
      
3,269
  
Total non-current assets
    
42,717
      
42,781
  
Total assets
  
$
247,212
    
$
253,593
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
 CURRENT LIABILITIES:
                
Trade payables
  
$
63,614
    
$
75,476
  
Deferred revenues
    
6,357
      
5,193
  
Other accounts payable and accrued expenses
    
25,390
      
24,781
  
Total current liabilities
    
95,361
      
105,450
  
                 
 LONG-TERM LIABILITIES:
                
Deferred tax liability
    
92
      
141
  
Accrued severance pay and pension
    
9,555
      
10,085
  
Other long term payables
    
3,730
      
4,019
  
Total long-term liabilities
    
13,377
      
14,245
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
Ordinary shares
    
214
      
214
  
    Additional paid-in capital
    
412,223
      
410,817
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(9,367
)
    
(7,171
)
Accumulated deficits
    
(244,505
)
    
(249,871
)
                 
Total shareholders' equity
    
138,474
      
133,898
  
                 
Total liabilities and shareholders' equity
  
$
247,212
    
$
253,593
  
 
5
 
Ceragon Reports Second Quarter 2018 Results

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
 
   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2018
    
2017
    
2018
    
2017
  
Cash flow from operating activities:
                        
Net income
  
$
3,226
    
$
4,982
    
$
5,296
    
$
4,854
  
Adjustments to reconcile net income to net cash provided by operating activities:
                                
                                 
Depreciation and amortization
    
1,990
      
2,229
      
3,501
      
4,574
  
Stock-based compensation expense
    
679
      
261
      
1,032
      
619
  
Increase in trade and other receivables, net
    
(292
)
    
(16,519
)
    
(109
)
    
(9,288
)
Decrease (increase) in inventory, net of write off
    
2,561
      
(5,571
)
    
7,049
      
(10,555
)
Decrease (increase) in deferred tax asset, net
    
(64
)
    
155
      
410
      
140
  
 Increase (decrease) in trade payables and  accrued liabilities
    
(4,383
)
    
14,778
      
(10,237
)
    
18,775
  
Increase in deferred revenues
    
856
      
2,053
      
1,796
      
1,018
  
Other adjustments
    
(394
)
    
(100
)
    
(186
)
    
(88
)
Net cash provided by operating activities
  
$
4,179
    
$
2,268
    
$
8,552
    
$
10,049
  
                                 
Cash flow from investing activities:
                                
Purchase of property and equipment, net
    
(658
)
    
(1,196
)
    
(3,957
)
    
(3,505
)
Purchase of intangible assets, net
    
(250
)
    
-
      
(1,336
)
    
-
  
Net cash used in investing activities
  
$
(908
)
  
$
(1,196
)
  
$
(5,293
)
  
$
(3,505
)
                                 
Cash flow from financing activities:
                                
Proceeds from share options exercise
    
274
      
115
      
374
      
189
  
Repayment of bank loans
    
-
      
(3,500
)
    
-
      
(9,000
)
Net cash provided by (used in) financing activities
  
$
274
    
$
(3,385
)
  
$
374
    
$
(8,811
)
                                 
Translation adjustments on cash and cash equivalents
  
$
(103
)
  
$
(60
)
  
$
(112
)
  
$
16
  
Increase (decrease) in cash and cash equivalents
  
$
3,442
    
$
(2,373
)
  
$
3,521
    
$
(2,251
)
Cash and cash equivalents at the beginning of the period
    
25,956
      
36,460
      
25,877
      
36,338
  
Cash and cash equivalents at the end of the period
  
$
29,398
    
$
34,087
    
$
29,398
    
$
34,087
  
 
6
 
Ceragon Reports Second Quarter 2018 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,
  
   
2018
    
2017
    
2018
    
2017
  
                         
GAAP cost of revenues
  
$
59,579
    
$
64,131
    
$
115,250
    
$
117,848
  
Amortization of intangible assets
    
-
      
(306
)
    
-
      
(609
)
Stock based compensation expenses
    
(1
)
    
(12
)
    
(18
)
    
(32
)
Changes in pre-acquisition indirect tax positions
    
(12
)
    
(165
)
    
(27
)
    
(327
)
Non-GAAP cost of revenues
  
$
59,566
    
$
63,648
    
$
115,205
    
$
116,880
  
                                 
GAAP gross profit
  
$
28,749
    
$
29,203
    
$
56,353
    
$
51,507
  
Gross profit adjustments
    
13
      
483
      
45
      
968
  
Non-GAAP gross profit
  
$
28,762
    
$
29,686
    
$
56,398
    
$
52,475
  
                                 
GAAP Research and development expenses
  
$
6,821
    
$
6,128
    
$
14,035
    
$
12,235
  
Stock based compensation expenses
    
(67
)
    
(45
)
    
(127
)
    
(123
)
Non-GAAP Research and development expenses
  
$
6,754
    
$
6,083
    
$
13,908
    
$
12,112
  
                                 
GAAP Sales and Marketing expenses
  
$
10,369
    
$
10,041
    
$
20,931
    
$
19,776
  
Amortization of intangible assets
    
-
      
(74
)
    
-
      
(145
)
Stock based compensation expenses
    
(142
)
    
(75
)
    
(286
)
    
(153
)
Non-GAAP Sales and Marketing expenses
  
$
10,227
    
$
9,892
    
$
20,645
    
$
19,478
  
                                 
GAAP General and Administrative expenses
  
$
5,190
    
$
5,065
    
$
9,649
    
$
9,570
  
Stock based compensation expenses
    
(469
)
    
(129
)
    
(601
)
    
(311
)
Non-GAAP General and Administrative expenses
  
$
4,721
    
$
4,936
    
$
9,048
    
$
9,259
  
                                 
GAAP Tax expenses
  
$
497
    
$
1,506
    
$
1,762
    
$
1,993
  
Non cash tax adjustments
    
96
      
(187
)
    
(468
)
    
(285
)
Non-GAAP Tax expenses
  
$
593
    
$
1,319
    
$
1,294
    
$
1,708
  
 
7

Ceragon Reports Second Quarter 2018 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,
  
   
2018
    
2017
    
2018
    
2017
  
                         
GAAP net income 
  
$
3,226
    
$
4,982
    
$
5,296
    
$
4,854
  
Amortization of intangible assets
    
-
      
380
      
-
      
754
  
Stock based compensation expenses
    
679
      
261
      
1,032
      
619
  
Changes in pre-acquisition indirect tax positions
    
12
      
165
      
27
      
327
  
Non-cash tax adjustments
    
(96
)
    
187
      
468
      
285
  
Non-GAAP net income 
  
$
3,821
    
$
5,975
    
$
6,823
    
$
6,839
  
                                 
GAAP basic net income per share
  
$
0.04
    
$
0.06
    
$
0.07
    
$
0.06
  
                                 
GAAP diluted net income per share
  
$
0.04
    
$
0.06
    
$
0.07
    
$
0.06
  
                                 
Non-GAAP basic and diluted net income per share
  
$
0.05
    
$
0.07
    
$
0.08
    
$
0.08
  
                                 
Weighted average number of shares used in computing GAAP basic net income per share
    
78,231,726
      
77,891,218
      
78,155,810
      
77,845,690
  
                                 
Weighted average number of shares used in computing GAAP diluted net income per share
    
80,850,353
      
80,202,048
      
80,457,636
      
80,359,375
  
                                 
Weighted average number of shares used in computing Non-GAAP diluted net income per share
    
81,156,546
      
80,404,841
      
80,767,046
      
80,580,267
  
 
8