Ceragon Networks Reports Third Quarter 2014 Financial Results

PARAMUS, N.J., Oct. 30, 2014 /PRNewswire/ -- Ceragon Networks Ltd. CRNT, the #1 high-capacity wireless hauling specialist, today reported results for the third quarter which ended September 30, 2014.

Revenues for the third quarter of 2014 reached $99.0 million, up 8% from $92.1 million for the third quarter of 2013, and up 10% from $90.4 million in the second quarter of 2014.

Gross margin in accordance with US Generally Accepted Accounting Principles (GAAP) in the third quarter of 2014 was 25.6% of revenues, compared to 30.9% of revenues in the third quarter of 2013, and compared to 26.3% of revenues in the second quarter of 2014. Gross margin on a non-GAAP basis was 25.7% of revenues in the third quarter of 2014, compared to 31.9 % of revenues in the third quarter of 2013, and compared to 27.0 % of revenues in the second quarter of 2014.

Operating loss on a GAAP basis in the third quarter of 2014 was $(0.8) million, compared to an operating loss of $(4.1) million in the third quarter of 2013, and compared to an operating income of $11.8 million in the second quarter of 2014. On a non-GAAP basis, the operating profit was $0.1 million in the third quarter of 2014, compared to an operating loss of $(2.2) million in the third quarter of 2013, and compared to an operating loss of $(2.6) million in the second quarter of 2014.

Net loss on a GAAP basis for the third quarter of 2014 was $(5.6) million or $(0.08) per basic share and diluted share. Net loss for the third quarter of 2013 was $(10.4) million, or $(0.28) per basic share and diluted share. Net income for the second quarter of 2014 was $8.0 million or $0.15 per basic share and diluted share, primarily due to $16.8 million of non-recurring other income resulting from a settlement agreement with Eltek ASA.

On a non-GAAP basis, net loss for the third quarter of 2014 was $(3.6) million, or $(0.05) per basic share and diluted share, compared to a non-GAAP net loss for the third quarter of 2013 of $(4.5) million, or $(0.12) per basic share and diluted share. The non-GAAP net loss for the second quarter of 2014 was $(5.0) million or $(0.10) per basic share and diluted share. 

For reconciliations of GAAP to non-GAAP results, see the attached tables.

"The pickup in revenues and the continued acceleration in bookings during the third quarter were mainly a result of extremely strong demand from India," said Ira Palti, president and CEO of Ceragon. "We approached breakeven on an operating basis and reported a small non-GAAP operating profit, despite a less favorable geographic revenue mix putting pressure on our gross margin.  With improving overall demand and the excellent reception our IP-20 platform is receiving in the market, our primary focus going forward will be on achieving sustainable profitability and positive cash flow."

Supplemental geographical breakdown of revenue, third quarter of 2014:

A conference call will follow beginning at 9:00 a.m. EDT. Investors are invited to join the Company's teleconference by calling (USA) (800) 230-1093 or international +1 (612) 234-9959 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: Telephone:  USA: (800) 475-6701; International: +1 (320) 365-3844; Access Code: 338241. A replay of both the call and the webcast will be available through November 30, 2014.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Ceragon uses non-GAAP measures of its financial results. Ceragon's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Ceragon's ongoing core operations and prospects for the future. Historically, Ceragon has also publicly presented these supplemental non-GAAP financial measures in order to assist the investment community to see the Company "through the eyes of management," and thereby enhance understanding of its operating performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in the tables attached to this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. CRNT is the #1 high-capacity wireless hauling specialist.  We provide innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers.  Ceragon's high-capacity solutions use microwave technology to transfer voice and data traffic, while maximizing bandwidth efficiency, to deliver more capacity over longer distances under any deployment scenario. Based on our extensive global experience, Ceragon delivers turnkey solutions that support service provider profitability at every stage of the network lifecycle enabling faster time to revenue, cost-effective operation and simple migration to all-IP networks.  As the demand for data pushes the need for ever-increasing capacity, Ceragon is committed to serve the market with unmatched technology and innovation, ensuring effective solutions for the evolving needs of the marketplace. Our solutions are deployed by more than 430 service providers in over 130 countries.

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.

Safe Harbor

This press release contains statements concerning Ceragon's future prospects that are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995.Examples of forward-looking statements include: projections of capital expenditures and liquidity, competitive pressures, revenues, growth prospects, product development, financial resources, restructuring costs, cost savings and other financial matters. You can identify these and other forward-looking statements by the use of words such as "may," "plans," "anticipates," "believes," "estimates," "predicts," "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 increased working capital needs; risks associated with the ability of Ceragon to meet its liquidity needs;  the risk that sales of Ceragon's new IP-20 products will not meet expectations; risks associated with doing business in Latin America, including currency export controls and recent economic concerns; risks relating to the concentration of our business in the Asia Pacific region and in developing nations; the risk of significant expenses in connection with potential contingent tax liability associated with Nera's prior operations or facilities; 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.

 

Ceragon Reports Third Quarter 2014 Results

 

 

 

 

 

 

 

(a)     Cost of revenues includes $0.3 million of amortization of intangible assets, $50 thousand of stock based compensation expenses and $(0.2) million of changes in pre-acquisition indirect tax positions in the three months ended September 30, 2014.
(b)     Research and development expenses include $0.4 million of stock based compensation expenses in the three months ended September 30, 2014.
(c)     Selling and marketing expenses include $0.2 million of amortization of intangible assets in the three months ended September 30, 2014.
(d)     General and administrative expenses include $0.1 million of stock based compensation expenses in the three months ended September 30, 2014.
(e)     Taxes on income include $1.2 million of non-cash tax adjustments in the three months ended September 30, 2014.

 

 

(a)     Cost of revenues includes $0.9 million of amortization of intangible assets, $0.2 million of stock based compensation expenses, $0.3 million of restructuring plan related costs and $0.2 million of changes in pre-acquisition indirect tax positions in the nine months ended September 30, 2014.
(b)     Research and development expenses include $2.4 million of restructuring plan related costs and $1.3 million of stock based compensation expenses in the nine months ended September 30, 2014.
(c)     Selling and marketing expenses include $0.7 million of amortization of intangible assets, $0.7 million of restructuring plan related costs and $0.6 million of stock based compensation expenses in the nine months ended September 30, 2014.
(d)     General and administrative expenses include $0.7 million of restructuring plan related costs and $0.6 million of stock based compensation expenses in the nine months ended September 30, 2014.
(e)     Other income represents net cash received as a result of an agreement with Eltek ASA to settle all claims related to the purchase of Nera from Eltek in January 2011.
(f)      Financial expenses include $4.1 million of currency devaluation in Venezuela and $2.2 million related to certain transactions to expatriate cash from Venezuela and Argentina in the nine months ended September 30, 2014.
(g)    Taxes on income include $4.0 million non-cash tax adjustments in the nine months ended September 30, 2014.

 

 

 

 

SOURCE Ceragon Networks Ltd.