EX-99 2 exhibit_a.htm EXHIBIT A
Exhibit A

Ceragon Networks Reports Financial Results for the Second Quarter of 2020

August 3, 2020

CERAGON NETWORKS REPORTS FINANCIAL RESULTS
FOR THE SECOND QUARTER OF 2020
 
- Sequential improvement in revenues, margin, net results and $4 million in positive cash
flow from operating and investing activities reflect improving business environment and
Company’s successful focus on execution -

- Initial return to the ‘new normal’ accelerating plans for 5G and rural bandwidth expansion projects
expected to increase long-term demand for Ceragon’s wireless
hauling solutions -
 
Little Falls, New Jersey, August 3, 2020 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless hauling specialist, today reported results for the second quarter ended June 30, 2020.
 
Second Quarter 2020 Highlights:
 
•
$4 million in positive cash flow from operating and investing activities, along with rising revenues, margins and net results compared with Q1’20, reflecting an improving business environment in most regions and the Company’s successful focus on execution.
 
•
Book-to-bill ratio above 1 as multiple service providers accelerate their 4G expansion projects and ISPs move swiftly to fill capacity needs.
 
•
Effect of COVID-19 differed from region to region: business in North America, Europe and APAC remained stable; India emerged from lockdown in mid-quarter; a major new project with a new customer was signed in Africa; and Latin America bookings were weaker.
 
•
Management expects trends created by the COVID-19 crisis to accelerate 5G network rollouts, serving as a future growth driver. However, for the short-term, the COVID-19 environment creates uncertainty.
 
Primary Financial Results:
 
Revenues: $62.4 million compared with $73.0 million for Q2’19 and $55.9 million for Q1’20.
 
Gross margin: 26.4% compared to 36.1% for Q2’19 and 25.1% for Q1’20.
 
Operating income (loss): $(3.5) million compared with $4.1 million for Q2’19 and $(6.0) million for Q1’20.
 
Net income (loss): $(5.5) million, or $(0.07) per diluted share compared with $0.8 million, or $0.01 per diluted share for Q2’19 and $(6.9) million, or $(0.09) per diluted share for Q1’20.
 
Non-GAAP results: gross margin 26.5%, operating loss $(3.0) million, and net loss $(4.9) million, or $(0.06) per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

 
Cash and cash equivalents: $35.2 million at June 30, 2020, compared to $44.1 million at March 31, 2020.

Ira Palti, President and CEO of Ceragon, commented, “Our results for the second quarter show improvement as compared with Q1, reflecting the return of many of our customers to their ongoing infrastructure projects and the beginning of the ‘new normal.’ Our focus has been to maintain an uninterrupted flow of services and equipment to these customers. At the same time, we have been strengthening our balance sheet and cash position, as evident by the quarter’s reduction in inventories and healthy $4 million in positive cash flow, while also focusing on improving our results, increasing our revenues, margins and net results as compared with the first quarter.”

“The new COVID-19 reality has brought a new urgency to 5G rollout and 4G network expansion plans, a trend that we expect to persist long after COVID-19 has passed. While no one knows exactly what the next few months will look like, we believe the situation plays to our strengths and will have a positive long-term effect. Meanwhile, we are financially stable, we expect our business to continue returning towards normal, and we are positioned to benefit from future opportunities.”
 
Supplemental revenue breakouts by geography:
 
Second quarter 2020:
•          Europe:
21%
  
•          Africa:
4%
  
•          North America:
15%
  
•          Latin America:
19%
  
•          India:
22%
  
•          APAC
19%
  

A conference call will follow beginning at 9:00 a.m. EST. Investors are invited to join the company’s teleconference by calling (USA) (844) 291-6360 or international +1 (234) 720-6993 and using the following access code: 154231.

Investors can also listen to the call live via the Internet by accessing Ceragon Networks’ website on the webcasts page in the section for investors: www.ceragon.com/investors/webcasts/ selecting the webcast link, and following the registration instructions.

If you are unable to join us live, the replay numbers are: (USA) (866) 207-1041 (International) +1 (402) 970-0847, with access code: 9886196. This audio replay will be available through September 4, 2020.
 
2

About Ceragon Networks Ltd.
 
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless hauling specialist. We help operators and other service providers worldwide increase operational efficiency and enhance end customers’ quality of experience with innovative wireless backhaul and fronthaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 5G & 4G, mission-critical multimedia services and other applications at high reliability and speed.
 
Ceragon’s unique multicore technology and disaggregated approach to wireless hauling provides highly reliable, fast to deploy, high-capacity wireless hauling for 5G and 4G networks with minimal use of spectrum, power and other resources. It enables increased productivity, as well as simple and quick network modernization, positioning Ceragon as a leading solutions provider for the 5G era. 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


Safe Harbor
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 that constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and the safe-harbor provisions of 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 about Ceragon’s business, financial condition, results of operations, micro and macro market trends and other issues addressed or reflected therein. Examples of forward-looking statements include: projections of demand, revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, order timing, 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.

Although we believe that the projections reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations therefrom will not be material. Such statements involve risks and uncertainties that may cause future results to differ materially from those anticipated. These risks and uncertainties include, but are not limited to, the effects of general economic conditions, the effect of the COVID-19 crisis on the global markets and on the markets in which we operate, including the risk of a continued disruption to our and our customers’, providers’, business partners and contractors’ business as a result of the outbreak and effects of the COVID-19 pandemic and of an adverse effect on our and our customers’ financial performance, cash flow, revenue and financial results, available cash and financing, and our ability to bill and collect amounts due from our customers as a result therefrom; the risks relating to the concentration of a significant portion of Ceragon’s expected business in certain countries and particularly in India, where a small number of customers are expected to represent a significant portion of our revenues; risks associated with any failure to meet our product development timetable; the risk that the rollout of 5G services could take longer or differently than anticipated and such other risks, uncertainties and other factors that could affect our results, as detailed in our press release that was published earlier today and as further detailed in Ceragon’s most recent Annual Report on Form 20-F and in Ceragon’s other filings with the Securities and Exchange Commission.

Such forward-looking statements, including the risks, uncertainties and other factors that could affect our results, 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. Such forward-looking statements do not purport to be predictions of future events or results and there can be no assurance that it will prove to be accurate. Ceragon may elect to update these forward-looking statements at some point in the future but the company specifically disclaims any obligation to do so.
Ceragon’s public filings are available from the Securities and Exchange Commission’s website at www.sec.gov and may also be obtained from Ceragon’s website at www.ceragon.com.
 
Investors:
Osi Sessler
+972 3 5431047
investor@ceragon.com
 
Media:
Tanya Solomon
+972 3 5431163
media@ceragon.com
 
-tables follow-



3

Ceragon Reports Second Quarter 2020 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,
  
   
2020
    
2019
    
2020
    
2019
  
                         
Revenues
  
$
62,427
    
$
73,001
    
$
118,298
    
$
142,164
  
Cost of revenues
    
45,925
      
46,640
      
87,786
      
91,171
  
                                 
Gross profit
    
16,502
      
26,361
      
30,512
      
50,993
  
                                 
Operating expenses:
                                
Research and development, net
    
6,770
      
6,254
      
14,060
      
12,418
  
Selling and marketing
    
8,200
      
10,121
      
16,473
      
19,583
  
General and administrative
    
4,985
      
5,854
      
9,441
      
11,636
  
                                 
Total operating expenses
  
$
19,955
    
$
22,229
    
$
39,974
    
$
43,637
  
                                 
Operating income (loss)
    
(3,453
)
    
4,132
      
(9,462
)
    
7,356
  
                                 
Financial expenses and others, net
    
1,464
      
1,830
      
1,772
      
2,939
  
                                 
Income (loss) before taxes
    
(4,917
)
    
2,302
      
(11,234
)
    
4,417
  
                                 
Taxes on income
    
400
      
1,398
      
780
      
2,532
  
Equity loss in affiliates
    
160
      
141
      
343
      
314
  
                                 
Net income (loss)
  
$
(5,477
)
  
$
763
    
$
(12,357
)
  
$
1,571
  
                                 
Basic net income (loss) per share
  
$
(0.07
)
  
$
0.01
    
$
(0.15
)
  
$
0.02
  
Diluted net income (loss) per share
  
$
(0.07
)
  
$
0.01
    
$
(0.15
)
  
$
0.02
  
                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
81,012,896
      
80,192,036
      
80,889,022
      
80,153,038
  
                                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
81,012,896
      
82,051,028
      
80,889,022
      
82,192,544
  
4
Ceragon Reports Second Quarter 2020 Results

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

   
June 30,
2020
    
December 31, 2019
  
ASSETS
  
Unaudited
    
Audited
  
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
35,167
    
$
23,939
  
Trade receivables, net
    
97,547
      
118,531
  
Other accounts receivable and prepaid expenses
    
12,935
      
11,033
  
Inventories
    
53,593
      
62,132
  
                 
Total current assets
    
199,242
      
215,635
  
                 
NON-CURRENT ASSETS:
                
Long-term bank deposits
    
16
      
17
  
Deferred tax assets
    
8,215
      
8,106
  
   Severance pay and pension fund
    
5,748
      
5,661
  
   Property and equipment, net
    
33,171
      
34,865
  
   Intangible assets, net
    
8,113
      
7,898
  
Other non-current assets
    
17,592
      
17,707
  
                 
Total non-current assets
    
72,855
      
74,254
  
                 
Total assets
  
$
272,097
    
$
289,889
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Trade payables
  
$
54,357
    
$
59,635
  
Deferred revenues
    
2,537
      
1,734
  
Short-term loans
    
19,679
      
14,600
  
Other accounts payable and accrued expenses
    
24,463
      
28,399
  
                 
Total current liabilities
    
101,036
      
104,368
  
                 
LONG-TERM LIABILITIES:
                
Accrued severance pay and pension
    
10,509
      
10,709
  
Deferred revenues
    
6,265
      
6,265
  
Other long-term payables
    
6,958
      
8,126
  
                 
Total long-term liabilities
    
23,732
      
25,100
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
    Ordinary shares
    
215
      
215
  
Additional paid-in capital
    
419,483
      
418,062
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(10,122
)
    
(8,666
)
Accumulated deficits
    
(242,156
)
    
(229,099
)
                 
Total shareholders' equity
    
147,329
      
160,421
  
                 
Total liabilities and shareholders' equity
  
$
272,097
    
$
289,889
  

5
Ceragon Reports Second Quarter 2020 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)

   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2020
    
2019
    
2020
    
2019
  
Cash flow from operating activities:
                        
Net income (loss)
  
$
(5,477
)
  
$
763
    
$
(12,357
)
  
$
1,571
  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                                
Depreciation and amortization
    
2,680
      
2,318
      
5,384
      
4,438
  
Stock-based compensation expense
    
441
      
697
      
867
      
1,172
  
Decrease (increase) in trade and other receivables, net
    
5,094
      
(3,797
)
    
16,962
      
(10,188
)
Decrease (increase) in inventory, net of write off
    
5,529
      
(6,663
)
    
7,526
       (20,813
)
Decrease (increase) in deferred tax asset, net
    
(85
)
    
646
      
(109
)
    
1,236
  
Increase (decrease) in trade payables and accrued liabilities
    
(865
)
    
(6,120
)
    
(8,995
)
    
9,463
  
Increase (decrease) in deferred revenues
    
(806
)
    
5,774
      
803
      
6,150
  
Other adjustments
    
155
      
(105
)
    
(288
)
    
(136
)
Net cash provided by (used in) operating activities
  
$
6,666
    
$
(6,487
)
  
$
9,793
    
$
(7,107
)
                                 
Cash flow from investing activities:
                                
Purchase of property and equipment, net
    
(2,679
)
    
(2,716
)
    
(3,638
)
    
(6,707
)
Purchase of intangible assets, net
    
(36
)
    
(603
)
    
(279
)
    
(2,792
)
Proceeds from (repayment of) bank deposits
    
-
      
(20
)
    
-
      
920
  
Net cash used in investing activities
  
$
(2,715
)
  
$
(3,339
)
  
$
(3,917
)
  
$
(8,579
)
                                 
Cash flow from financing activities:
                                
Proceeds from exercise of options
    
308
      
190
      
554
      
256
  
Proceeds from (repayment of) bank credits and loans, net
    
(13,176
)
    
8,900
      
5,079
      
8,900
  
Net cash provided by (used in) financing activities
  
$
(12,868
)
  
$
9,090
    
$
5,633
    
$
9,156
  
                                 
Translation adjustments on cash and cash equivalents
  
$
(36
)
  
$
23
    
$
(281
)
  
$
(10
)
Increase (decrease) in cash and cash equivalents
  
$
(8,953
)
  
$
(713
)
  
$
11,228
    
$
(6,540
)
Cash and cash equivalents at the beginning of the period
    
44,120
      
29,754
      
23,939
      
35,581
  
Cash and cash equivalents at the end of the period
  
$
35,167
    
$
29,041
    
$
35,167
    
$
29,041
  

6
Ceragon Reports Second Quarter 2020 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,
  
   
2020
    
2019
    
2020
    
2019
  
                         
GAAP cost of revenues
  
$
45,925
    
$
46,640
    
$
87,786
    
$
91,171
  
Stock based compensation expenses
    
(33
)
    
(16
)
    
(60
)
    
(31
)
Changes in indirect tax positions
    
(1
)
    
(9
)
    
(2
)
    
(30
)
Non-GAAP cost of revenues
  
$
45,891
    
$
46,615
    
$
87,724
    
$
91,110
  
                                 
GAAP gross profit
  
$
16,502
    
$
26,361
    
$
30,512
    
$
50,993
  
Gross profit adjustments
    
34
      
25
      
62
      
61
  
Non-GAAP gross profit
  
$
16,536
    
$
26,386
    
$
30,574
    
$
51,054
  
                                 
GAAP Research and development expenses
  
$
6,770
    
$
6,254
    
$
14,060
    
$
12,418
  
Stock based compensation expenses
    
(10
)
    
(98
)
    
(99
)
    
(201
)
Non-GAAP Research and development expenses
  
$
6,760
    
$
6,156
    
$
13,961
    
$
12,217
  
                                 
GAAP Sales and Marketing expenses
  
$
8,200
    
$
10,121
    
$
16,473
    
$
19,583
  
Stock based compensation expenses
    
(168
)
    
(207
)
    
(268
)
    
(382
)
Non-GAAP Sales and Marketing expenses
  
$
8,032
    
$
9,914
    
$
16,205
    
$
19,201
  
                                 
GAAP General and Administrative expenses
  
$
4,985
    
$
5,854
    
$
9,441
    
$
11,636
  
Stock based compensation expenses
    
(230
)
    
(376
)
    
(440
)
    
(558
)
Non-GAAP General and Administrative expenses
  
$
4,755
    
$
5,478
    
$
9,001
    
$
11,078
  
                                 
GAAP financial expenses and others, net
  
$
1,464
    
$
1,830
    
$
1,772
    
$
2,939
  
Leases – financial income (expenses)
    
(110
)
    
(218
)
    
340
      
(192
)
Non-GAAP financial expenses and others, net
  
$
1,354
    
$
1,612
    
$
2,112
    
$
2,747
  
                                 
GAAP Tax expenses
  
$
400
    
$
1,398
    
$
780
    
$
2,532
  
Non cash tax adjustments
    
87
      
(654
)
    
72
      
(1,272
)
Non-GAAP Tax expenses
  
$
487
    
$
744
    
$
852
    
$
1,260
  
                                 
GAAP equity loss in affiliates
  
$
160
    
$
141
    
$
343
    
$
314
  
Other non-cash adjustments
    
(160
)
    
(141
)
    
(343
)
    
(314
)
Non-GAAP equity loss in affiliates
  
$
-
    
$
-
    
$
-
    
$
-
  

7
Ceragon Reports Second Quarter 2020 Results
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

   
Three months ended
    
Six months ended,
  
   
June 30,
    
June 30,
  
   
2020
    
2019
    
2020
    
2019
  
                         
GAAP net income (loss)
  
$
(5,477
)
  
$
763
    
$
(12,357
)
  
$
1,571
  
   Stock based compensation expenses
    
441
      
697
      
867
      
1,172
  
   Changes in indirect tax positions
    
1
      
9
      
2
      
30
  
   Leases – financial expenses (income)
    
110
      
218
      
(340
)
    
192
  
   Non-cash tax adjustments
    
(87
)
    
654
      
(72
)
    
1,272
  
   Other non-cash adjustment
    
160
      
141
      
343
      
314
  
                                 
Non-GAAP net income (loss) 
  
$
(4,852
)
  
$
2,482
    
$
(11,557
)
  
$
4,551
  
                                 
GAAP basic net income (loss) per share
  
$
(0.07
)
  
$
0.01
    
$
(0.15
)
  
$
0.02
  
                                 
GAAP diluted net income (loss) per share
  
$
(0.07
)
  
$
0.01
    
$
(0.15
)
  
$
0.02
  
                                 
Non-GAAP basic and diluted net income (loss) per share
  
$
(0.06
)
  
$
0.03
    
$
(0.14
)
  
$
0.06
  
                                 
Weighted average number of shares used in computing GAAP basic net income (loss) per share
    
81,012,896
      
80,192,036
      
80,889,022
      
80,153,038
  
                                 
Weighted average number of shares used in computing GAAP diluted net income (loss) per share
    
81,012,896
      
82,051,028
      
80,889,022
      
82,192,544
  
                                 
Weighted average number of shares used in computing Non-GAAP diluted net income (loss) per share
    
81,012,896
      
82,249,605
      
80,889,022
      
82,475,897
  

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