EX-99 2 exhibit_a.htm EXHIBIT A
Exhibit A

Ceragon Networks Reports Financial Results for the Third Quarter of 2020

November 2, 2020

CERAGON NETWORKS REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER OF 2020
 
-  Strong Quarter With $70.6M Revenues, 33.4% Gross Margin and $0.02 GAAP EPS
Reflecting Focused Execution Despite Covid Environment  -
 
-  Current Growth Driven By ISP & 4G Activities; Ongoing Progress With Major 5G
Opportunities Paves Potential for Strong Mid-To-Long-Term Growth  -
 
Little Falls, New Jersey, November 2, 2020 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless hauling specialist, today reported results for the third quarter ended September 30, 2020.
 
Third Quarter 2020 Highlights:
 
•
Strong revenues, high gross margin and lower operating expenses generated $1.6 million in GAAP net profit despite COVID-19 constraints, as Ceragon benefited from ISP and 4G operator projects to increase network reach, capacity and speed
 
•
COVID-19-related uncertainty continued to impact Ceragon’s performance, especially in Latin America
 
•
Continued progress in multiple large operator 5G network processes, moving from design wins to proof of concepts and purchase orders with initial low-volume shipments, in preparation for potential high-volume orders in second half of 2021
 
Primary Financial Results:
 
Revenues: $70.6 million compared with $72.2 million for Q3’19 and $62.4 million for Q2’20.
 
Gross margin: 33.4% compared to 32.2% for Q3’19 and 26.4% for Q2’20.
 
Operating income (loss): $3.4 million compared with $2.1 million for Q3’19 and $(3.5) million for Q2’20.
 
Net income (loss): $1.6 million, or $0.02 per diluted share compared with $0.2 million, or $0.00 per diluted share for Q3’19 and $(5.5) million, or $(0.07) per diluted share for Q2’20.
 
Non-GAAP results: Gross margin 33.5%, operating income $3.7 million, and net income $2.3 million, or $0.03 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents: $29.2 million at September 30, 2020, compared to $35.2 million at June 30, 2020.
 

Ira Palti, President and CEO of Ceragon, commented, “Q3 was a strong period for Ceragon, reflecting the market’s urgent need for increased network capacity and its recognition of the critical advantages of our solutions, coupled with our focused execution despite the COVID-19 environment. During the quarter, we achieved new 5G design wins, some of which have already translated into small orders, and completed significant shipments against large-scale 4G expansion projects. We also benefited from ISP activities in the US and Europe, as they move quickly to address broadband gaps left underserved by operators.

“While COVID-19 continues to bring uncertainty to project timing, the need for broadband network expansions - 4G, 5G and others - has never been clearer, and we expect this to continue working to our strengths. Meanwhile, we continue to maintain strong control over our operations, as demonstrated by our success in reducing our operating expenses and strengthening our balance sheet. The trend towards OpenRAN is enhancing our position as a best-in-class vendor in the 5G environment, and we are progressing on track with our 5G-enabling IP-50 platform development efforts and with our advanced 5G hauling chipset. Taken as a whole, as a 5G technology leader with strong 4G and ISP offerings, we believe we are ideally positioned to benefit from current market dynamics and the longer-term 5G promise.”
 
Supplemental revenue breakouts by geography:
 
Third quarter 2020:

•          Europe:
14%
  
•          Africa:
14%
  
•          North America:
14%
  
•          Latin America:
14%
  
•          India:
24%
  
•          APAC
20%
  
 
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: 2739037.

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: 4059433. This audio replay will be available through December 2, 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 and operations as a result of the COVID-19 pandemic effects and the restrictions on operations created thereby, 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 except as may be required by law.
 
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 Third Quarter 2020 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,
  
   
2020
    
2019
    
2020
    
2019
  
                         
                         
Revenues
  
$
70,581
    
$
72,163
    
$
188,879
    
$
214,327
  
Cost of revenues
    
47,003
      
48,924
      
134,789
      
140,095
  
                                 
Gross profit
    
23,578
      
23,239
      
54,090
      
74,232
  
                                 
Operating expenses:
                                
Research and development, net
    
7,329
      
6,736
      
21,389
      
19,154
  
Selling and marketing
    
7,986
      
9,756
      
24,459
      
29,339
  
General and administrative
    
4,909
      
4,610
      
14,350
      
16,246
  
                                 
Total operating expenses
  
$
20,224
    
$
21,102
    
$
60,198
    
$
64,739
  
                                 
Operating income (loss)
    
3,354
      
2,137
      
(6,108
)
    
9,493
  
                                 
Financial expenses and others, net
    
1,395
      
1,378
      
3,167
      
4,317
  
                                 
Income (loss) before taxes
    
1,959
      
759
      
(9,275
)
    
5,176
  
                                 
Taxes on income
    
277
      
415
      
1,057
      
2,947
  
Equity loss in affiliates
    
98
      
158
      
441
      
472
  
                                 
Net income (loss)
  
$
1,584
    
$
186
    
$
(10,773
)
  
$
1,757
  
                                 
Basic net income (loss) per share
  
$
0.02
    
$
0.00
    
$
(0.13
)
  
$
0.02
  
Diluted net income (loss) per share
  
$
0.02
    
$
0.00
    
$
(0.13
)
  
$
0.02
  
                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
81,277,995
      
80,303,699
      
81,019,808
      
80,202,791
  
                                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
82,000,357
      
81,652,356
      
81,019,808
      
82,012,013
  


4

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

   
September 30,
2020
    
December 31,
2019
  
ASSETS
  
Unaudited
    
Audited
  
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
29,155
    
$
23,939
  
Trade receivables, net
    
108,394
      
118,531
  
Other accounts receivable and prepaid expenses
    
11,778
      
11,033
  
Inventories
    
51,869
      
62,132
  
                 
Total current assets
    
201,196
      
215,635
  
                 
NON-CURRENT ASSETS:
                
Long-term bank deposits
    
17
      
17
  
Deferred tax assets
    
8,142
      
8,106
  
   Severance pay and pension fund
    
5,738
      
5,661
  
   Property and equipment, net
    
32,014
      
34,865
  
   Intangible assets, net
    
8,015
      
7,898
  
Other non-current assets
    
18,637
      
17,707
  
                 
Total non-current assets
    
72,563
      
74,254
  
                 
Total assets
  
$
273,759
    
$
289,889
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Trade payables
  
$
54,035
    
$
59,635
  
Deferred revenues
    
2,382
      
1,734
  
Short-term loans
    
17,879
      
14,600
  
Other accounts payable and accrued expenses
    
24,833
      
28,399
  
                 
Total current liabilities
    
99,129
      
104,368
  
                 
LONG-TERM LIABILITIES:
                
Accrued severance pay and pension
    
10,618
      
10,709
  
Deferred revenues
    
7,495
      
6,265
  
Other long-term payables
    
6,855
      
8,126
  
                 
Total long-term liabilities
    
24,968
      
25,100
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
    Ordinary shares
    
215
      
215
  
Additional paid-in capital
    
420,160
      
418,062
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(10,050
)
    
(8,666
)
Accumulated deficits
    
(240,572
)
    
(229,099
)
                 
Total shareholders' equity
    
149,662
      
160,421
  
                 
Total  liabilities and shareholders' equity
  
$
273,759
    
$
289,889
  

5

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

   
Three months ended
September 30,
    
Nine months ended
September 30,
  
   
2020
    
2019
    
2020
    
2019
  
Cash flow from operating activities:
                        
Net income (loss)
  
$
1,584
    
$
186
    
$
(10,773
)
  
$
1,757
  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                                
Depreciation and amortization
    
2,728
      
2,573
      
8,112
      
7,011
  
Stock-based compensation expense
    
384
      
422
      
1,251
      
1,594
  
Decrease (increase) in trade and other receivables, net
    
(10,301
)
    
6,616
      
6,661
      
(3,572
)
Decrease (increase) in inventory, net of write off
    
1,384
      
5,736
      
8,910
      
(15,077
)
Decrease (increase) in deferred tax asset, net
    
73
      
(194
)
    
(36
)
    
1,042
  
Decrease in trade payables and accrued liabilities
    
(274
)
    
(30,760
)
    
(9,269
)
    
(21,297
)
Increase in deferred revenues
    
1,075
      
1,023
      
1,878
      
7,173
  
Other adjustments
    
122
      
(33
)
    
(166
)
    
(169
)
Net cash provided by (used in) operating activities
  
$
(3,225
)
  
$
(14,431
)
  
$
6,568
    
$
(21,538
)
Cash flow from investing activities:
                                
Purchase of property and equipment, net
    
(1,166
)
    
(2,409
)
    
(4,804
)
    
(9,116
)
Purchase of intangible assets, net
    
(64
)
    
(249
)
    
(343
)
    
(3,041
)
Proceeds from bank deposits
    
-
      
-
      
-
      
920
  
Net cash used in investing activities
  
$
(1,230
)
  
$
(2,658
)
  
$
(5,147
)
  
$
(11,237
)
                                 
Cash flow from financing activities:
                                
Proceeds from exercise of options
    
293
      
135
      
847
      
391
  
Proceeds from (repayment of) bank credits and loans, net
    
(1,800
)
    
8,500
      
3,279
      
17,400
  
Net cash provided by (used in) financing activities
  
$
(1,507
)
  
$
8,635
    
$
4,126
    
$
17,791
  
                                 
Translation adjustments on cash and cash equivalents
  
$
(50
)
  
$
(63
)
  
$
(331
)
  
$
(73
)
Increase (decrease) in cash and cash equivalents
  
$
(6,012
)
  
$
(8,517
)
  
$
5,216
    
$
(15,057
)
Cash and cash equivalents at the beginning of the period
    
35,167
      
29,041
      
23,939
      
35,581
  
Cash and cash equivalents at the end of the period
  
$
29,155
    
$
20,524
    
$
29,155
    
$
20,524
  



6

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

   
Three months ended
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2020
    
2019
    
2020
    
2019
  
                         
GAAP cost of revenues
  
$
47,003
    
$
48,924
    
$
134,789
    
$
140,095
  
Stock based compensation expenses
    
(32
)
    
(13
)
    
(92
)
    
(44
)
Changes in indirect tax positions
    
(1
)
    
(4
)
    
(3
)
    
(34
)
Non-GAAP cost of revenues
  
$
46,970
    
$
48,907
    
$
134,694
    
$
140,017
  
                                 
GAAP gross profit
  
$
23,578
    
$
23,239
    
$
54,090
    
$
74,232
  
Gross profit adjustments
    
33
      
17
      
95
      
78
  
Non-GAAP gross profit
  
$
23,611
    
$
23,256
    
$
54,185
    
$
74,310
  
                                 
GAAP Research and development expenses
  
$
7,329
    
$
6,736
    
$
21,389
    
$
19,154
  
Stock based compensation expenses
    
(30
)
    
(84
)
    
(129
)
    
(285
)
Non-GAAP Research and development expenses
  
$
7,299
    
$
6,652
    
$
21,260
    
$
18,869
  
                                 
GAAP Sales and Marketing expenses
  
$
7,986
    
$
9,756
    
$
24,459
    
$
29,339
  
Stock based compensation expenses
    
(167
)
    
(171
)
    
(435
)
    
(553
)
Non-GAAP Sales and Marketing expenses
  
$
7,819
    
$
9,585
    
$
24,024
    
$
28,786
  
                                 
GAAP General and Administrative expenses
  
$
4,909
    
$
4,610
    
$
14,350
    
$
16,246
  
Stock based compensation expenses
    
(155
)
    
(154
)
    
(595
)
    
(712
)
Non-GAAP General and Administrative expenses
  
$
4,754
    
$
4,456
    
$
13,755
    
$
15,534
  
                                 
GAAP financial expenses and others, net
  
$
1,395
    
$
1,378
    
$
3,167
    
$
4,317
  
Leases – financial income (expenses)
    
(157
)
    
91
      
183
      
(101
)
Non-GAAP financial expenses and others, net
  
$
1,238
    
$
1,469
    
$
3,350
    
$
4,216
  
                                 
GAAP Tax expenses
  
$
277
    
$
415
    
$
1,057
    
$
2,947
  
Non cash tax adjustments
    
(76
)
    
182
      
(4
)
    
(1,090
)
Non-GAAP Tax expenses
  
$
201
    
$
597
    
$
1,053
    
$
1,857
  
                                 
GAAP equity loss in affiliates
  
$
98
    
$
158
    
$
441
    
$
472
  
Other non-cash adjustments
    
(98
)
    
(158
)
    
(441
)
    
(472
)
Non-GAAP equity loss in affiliates
  
$
-
    
$
-
    
$
-
    
$
-
  


7

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

   
Three months ended
September 30,
    
Nine months ended,
September 30,
  
   
2020
    
2019
    
2020
    
2019
  
                         
GAAP net income (loss)
  
$
1,584
    
$
186
    
$
(10,773
)
  
$
1,757
  
   Stock based compensation expenses
    
384
      
422
      
1,251
      
1,594
  
   Changes in indirect tax positions
    
1
      
4
      
3
      
34
  
   Leases – financial expenses (income)
    
157
      
(91
)
    
(183
)
    
101
  
   Non-cash tax adjustments
    
76
      
(182
)
    
4
      
1,090
  
   Other non-cash adjustment
    
98
      
158
      
441
      
472
  
Non-GAAP net income (loss) 
  
$
2,300
    
$
497
    
$
(9,257
)
  
$
5,048
  
                                 
 GAAP basic net income (loss) per share
  
$
0.02
    
$
0.00
    
$
(0.13
)
  
$
0.02
  
                                 
 GAAP diluted net income (loss) per share
  
$
0.02
    
$
0.00
    
$
(0.13
)
  
$
0.02
  
 Non-GAAP basic and diluted net income (loss) per share
  
$
0.03
    
$
0.01
    
$
(0.11
)
  
$
0.06
  
                                 
 Weighted average number of shares used in computing GAAP basic net income (loss) per share
    
81,277,995
      
80,303,699
      
81,019,808
      
80,202,791
  
                                 
 Weighted average number of shares used in computing GAAP diluted net income (loss) per share
    
82,000,357
      
81,652,356
      
81,019,808
      
82,012,013
  
                                 
 Weighted average number of shares used in computing Non-GAAP diluted net income (loss) per share
    
82,244,119
      
81,814,367
      
81,019,808
      
82,254,919
  

8