Exhibit A
Press Release
Ceragon Reports First Quarter 2012 – May 7 2012
CERAGON NETWORKS REPORTS FIRST QUARTER 2012 FINANCIAL RESULTS
Achieves revenues of $117.8 million with improving gross margin and profitability
Paramus, New Jersey, May 7, 2012 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the first quarter which ended March 31, 2012.
Revenues for the first quarter of 2012 reached $117.8 million, up 17% from $100.3 million for the first quarter of 2011, the first quarter of combined revenues following the acquisition of Nera Networks, and down 1% from $118.5 million in the fourth quarter of 2011.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the first quarter of 2012 was $(3.5) million or $(0.10) per basic share and diluted share, compared to net loss of $(21.4) million in the first quarter of 2011, or $(0.60) per basic share and diluted share.
On a non-GAAP basis, net income for the first quarter of 2012, excluding (a) $1.6 million of equity-based compensation expenses and (b) $3.6 million charges related to the Nera acquisition and integration plan, was $1.7 million or $0.05 per basic share and diluted share. Non-GAAP net loss for the first quarter of 2011 was $(0.9) million, or $(0.02) per basic share and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).
Gross margin on a GAAP basis in the first quarter of 2012 was 31.4% of revenues. Gross margin on a non-GAAP basis was 33.3% of revenues.
Operating loss on a GAAP basis in the first quarter of 2012 was $(2.3) million. On a non-GAAP basis operating profit was $2.9 million.
Cash and cash investments at the end of the quarter were $49.5 million.
“Strength in Africa and Latin America drove revenues in Q1 as expected,” said Ira Palti, President and CEO of Ceragon. “We are continuing to penetrate these markets according to our plan, adding new customers as well as increasing sales to existing ones. During Q1, our sales in North America grew sequentially and we expanded our market share in India, another indication of our strong execution.
“Most of the pickup in bookings occurred during April, which we expect will bring the book to bill ratio above 1:1 in Q2 and increases our confidence for the outlook for the second half of the year,” continued Mr. Palti. “We remain on track to continue improving gross margin in the second half of 2012 after extending our design-to-cost capabilities to the long haul product. We believe that we will meet our expectations and exit 2012 with a revenue run rate of around $130 million per quarter with gross margin in the mid 30’s and a non-GAAP operating margin of around 8%.”
Supplemental revenue breakouts:
Geographical breakdown, first quarter of 2012:
· | Europe: | 19% |
· | Africa: 27% |
· | North America: | 12% |
· | Latin America: | 26% |
· | India: | 9% |
· | APAC: | 7% |
A conference call will follow today, May 7, 2012, beginning at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling (800) 230-1093, 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: http://www.ceragon.com/ir_events.asp?lang=0 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: 242686.
A replay of both the call and the webcast will be available through June 7, 2012.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We provide innovative, flexible and cost-effective wireless backhaul 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® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries. Other names mentioned are owned by their respective holders.
Company & Investor Contact: | Media Contact: | Media Contact: |
Yoel Knoll | Abigail Levy-Gurwitz | Karen Quatromoni |
Ceragon Networks Ltd. | Ceragon Networks Ltd. | Rainier Communications |
Tel: +1-(201)-853-0228 | Tel: +1-(201)-853-0271 | Tel. +1-(508)-475-0025 x150 |
yoelk@ceragon.com | abigaill@ceragon.com | kquatromoni@rainierco.com |
Join the discussion
This press release may contain statements concerning Ceragon’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts and estimates. These are important factors that could cause actual results to differ materially from forecasts and estimates. Some of the factors that could significantly impact the forward-looking statements in this press release include the risk of significant expenses in connection with potential contingent tax liability associated with Nera’s prior operations or facilities, the risk that the combined Ceragon and Nera business may not perform as expected, , and other risks and uncertainties, which are discussed in greater detail in Ceragon’s Annual Report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made. Ceragon’s public filings are available from the Securities and Exchange Commission’s website at www.sec.gov or may be obtained on Ceragon’s website at www.ceragon.com .
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Ceragon Reports First Quarter 2012 Results
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
2012 | 2011 | |||||||
Revenues | $ | 117,783 | $ | 100,312 | ||||
Cost of revenues | 80,844 | 70,728 | ||||||
Gross profit | 36,939 | 29,584 | ||||||
Operating expenses: | ||||||||
Research and development, net | 12,155 | 12,457 | ||||||
Selling and marketing | 19,847 | 19,185 | ||||||
General and administrative | 7,215 | 5,523 | ||||||
Restructuring costs | - | 7,834 | ||||||
Acquisition related costs | - | 4,919 | ||||||
Total operating expenses | $ | 39,217 | $ | 49,918 | ||||
Operating loss | (2,278 | ) | (20,334 | ) | ||||
Financial expenses, net | (906 | ) | (447 | ) | ||||
Loss before taxes | (3,184 | ) | (20,781 | ) | ||||
Taxes on income | (290 | ) | (595 | ) | ||||
Net loss | $ | (3,474 | ) | $ | (21,376 | ) | ||
Basic net loss per share | $ | (0.10 | ) | $ | (0.60 | ) | ||
Diluted net loss per share | $ | (0.10 | ) | $ | (0.60 | ) | ||
Weighted average number of shares used in computing basic net loss per share | 36,346,482 | 35,603,764 | ||||||
Weighted average number of shares used in computing diluted net loss per share | 36,346,482 | 35,603,764 |
Ceragon Reports First Quarter 2012 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 39,418 | $ | 28,991 | ||||
Short-term bank deposits | 6,229 | 7,159 | ||||||
Marketable securities | - | 9,665 | ||||||
Trade receivables, net | 147,062 | 143,247 | ||||||
Deferred taxes, net | 8,627 | 8,622 | ||||||
Other accounts receivable and prepaid expenses | 41,630 | 37,281 | ||||||
Inventories | 74,177 | 93,465 | ||||||
Total current assets | 317,143 | 328,430 | ||||||
LONG-TERM INVESTMENTS: | ||||||||
Marketable securities | 3,850 | 3,716 | ||||||
Severance pay funds and pension | 6,683 | 6,360 | ||||||
Total long-term investments | $ | 10,533 | $ | 10,076 | ||||
OTHER ASSETS | ||||||||
Deferred taxes, net | 8,868 | 8,898 | ||||||
Goodwill and Intangible assets, net | 27,191 | 28,032 | ||||||
Other long-term receivables | 7,960 | 5,257 | ||||||
Total other assets | $ | 44,019 | $ | 42,187 | ||||
PROPERTY AND EQUIPMENT, NET | 30,964 | 30,465 | ||||||
Total assets | $ | 402,659 | $ | 411,158 |
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Ceragon Reports First Quarter 2012 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
(Unaudited)
March 31, | December 31, | |||||||
2012 | 2011 | |||||||
CURRENT LIABILITIES: | ||||||||
Current maturities of long term bank loan | 8,232 | 8,232 | ||||||
Trade payables | 82,847 | 77,395 | ||||||
Deferred revenues | 29,136 | 38,308 | ||||||
Other accounts payable and accrued expenses | 44,234 | 49,508 | ||||||
Total current liabilities | $ | 164,449 | $ | 173,443 | ||||
LONG TERM LIABILITIES: | ||||||||
Long term bank loan, net of current maturities | 24,710 | 26,768 | ||||||
Accrued severance pay and pension | 12,531 | 11,996 | ||||||
Other long term liabilities | 40,030 | 37,900 | ||||||
Total long term liabilities | $ | 77,271 | $ | 76,664 | ||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital: | ||||||||
Ordinary shares | 97 | 97 | ||||||
Additional paid-in capital | 313,709 | 311,911 | ||||||
Treasury shares at cost | (20,091 | ) | (20,091 | ) | ||||
Other comprehensive income (loss) | 1,221 | (343 | ) | |||||
Accumulated deficits | (133,997 | ) | (130,523 | ) | ||||
Total shareholders' equity | $ | 160,939 | $ | 161,051 | ||||
Total liabilities and shareholders' equity | $ | 402,659 | $ | 411,158 |
Ceragon Reports First Quarter 2012 Results
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
2012 | 2011 | |||||||
Cash flow from operating activities: | ||||||||
Net loss | $ | (3,474 | ) | $ | (21,376 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 3,771 | 3,201 | ||||||
Stock-based compensation expense | 1,585 | 1,419 | ||||||
Decrease (increase) in trade and other receivables, net | (8,651 | ) | 22,494 | |||||
Decrease in inventory, net of write-off | 19,460 | 9,825 | ||||||
Increase (decrease) in trade payables and accrued liabilities | 1,987 | (16,937 | ) | |||||
Decrease in deferred revenues | (9,172 | ) | (10 | ) | ||||
Decrease (increase) in deferred tax asset, net | (377 | ) | 31 | |||||
Other adjustments | (104 | ) | (11 | ) | ||||
Net cash provided by (used in) operating activities | $ | 5,025 | $ | (1,364 | ) | |||
Cash flow from investing activities: | ||||||||
Purchase of property and equipment ,net | (3,303 | ) | (2,789 | ) | ||||
Payment for business acquisition | - | (42,405 | ) | |||||
Investment in short and long-term bank deposit | (1,266 | ) | (2,254 | ) | ||||
Proceeds from short and long-term bank deposits | 2,250 | 13,796 | ||||||
Proceeds from sale and maturities of marketable securities | 9,717 | 4,235 | ||||||
Net cash provided by (used in) investing activities | $ | 7,398 | $ | (29,417 | ) | |||
Cash flow from financing activities: | ||||||||
Proceeds from exercise of options | 213 | 3,296 | ||||||
Proceeds from long-term bank loan | - | 35,000 | ||||||
Repayment of long-term bank loan | (2,058 | ) | - | |||||
Net cash provided by (used in) financing activities | $ | (1,845 | ) | $ | 38,296 | |||
Translation adjustments on cash and cash equivalents | $ | (151 | ) | $ | 354 | |||
Increase in cash and cash equivalents | $ | 10,427 | $ | 7,869 | ||||
Cash and cash equivalents at the beginning of the period | 28,991 | 37,725 | ||||||
Cash and cash equivalents at the end of the period | $ | 39,418 | $ | 45,594 |
Ceragon Reports First Quarter 2012 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended March 31, | ||||||||||||||||
2012 | 2011 | |||||||||||||||
GAAP | Adjustments | Non-GAAP | Non-GAAP | |||||||||||||
(as reported) | ||||||||||||||||
Revenues | $ | 117,783 | $ | 117,783 | $ | 100,312 | ||||||||||
Cost of revenues | 80,844 | 2,292 | (a) | 78,552 | 67,833 | |||||||||||
Gross profit | 36,939 | 39,231 | 32,479 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 12,155 | 424 | (b) | 11,731 | 11,041 | |||||||||||
Selling and marketing | 19,847 | 1,615 | (c) | 18,232 | 16,661 | |||||||||||
General and administrative | 7,215 | 852 | (d) | 6,363 | 4,592 | |||||||||||
Total operating expenses | $ | 39,217 | $ | 36,326 | $ | 32,294 | ||||||||||
Operating profit (loss) | (2,278 | ) | 2,905 | 185 | ||||||||||||
Financial expenses, net | (906 | ) | (906 | ) | (447 | ) | ||||||||||
Income (loss) before taxes | (3,184 | ) | 1,999 | (262 | ) | |||||||||||
Taxes on income | (290 | ) | (290 | ) | (595 | ) | ||||||||||
Net income (loss) | $ | (3,474 | ) | $ | 1,709 | $ | (857 | ) | ||||||||
Basic net earnings (loss) per share | $ | (0.10 | ) | $ | 0.05 | $ | (0.02 | ) | ||||||||
Diluted net earnings (loss) per share | $ | (0.10 | ) | $ | 0.05 | $ | (0.02 | ) | ||||||||
Weighted average number of shares used in computing basic net earnings (loss) per share | 36,346,482 | 36,346,482 | 35,603,764 | |||||||||||||
Weighted average number of shares used in computing diluted net earnings (loss) per share | 36,346,482 | 37,253,865 | 35,603,764 | |||||||||||||
Total adjustments | 5,183 |
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Ceragon Reports First Quarter 2012 Results
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(a) | Cost of revenues includes $0.3 million of amortization of intangible assets, $0.4 million of inventory step-up, $0.1 million of stock based compensation expenses, $0.2 million of integration plan related costs and $1.3 million of changes in pre-acquisition indirect tax positions in the three months ended March 31, 2012. |
(b) | Research and development expenses include $40 thousand of integration plan related costs and $0.4 million of stock based compensation expenses in the three months ended March 31, 2012. |
(c) | Selling and marketing expenses include $0.6 million of amortization of intangible assets, $0.4 million of integration plan related costs and $0.6 million of stock based compensation expenses in the three months ended March 31, 2012. |
(d) | General and administrative expenses include $0.3 million of integration plan related costs and $0.6 million of stock based compensation expenses in the three months ended March 31, 2012. |
Ceragon Reports First Quarter 2012 Results
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
OPERATING LOSS
(U.S. dollars in thousands)
(Unaudited)
Three months ended | ||||
March 31, 2012 | ||||
Reported GAAP net operating loss | (2,278 | ) | ||
Stock based compensation expenses | 1,585 | |||
Amortization of intangible assets | 901 | |||
Inventory step-up | 404 | |||
Integration plan related costs | 955 | |||
Changes in pre-acquisition indirect tax positions | 1,338 | |||
Non-GAAP net operating profit | 2,905 |
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Contact: Yoel Knoll
Director of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972 (0) 52 830 6419
Office (Int’l): +972 (0)3 766 6419
yoelk@ceragon.com