Ceragon Networks Reports Fourth Quarter and Year-End 2011 Financial Results
Full year revenues reach a record $445.3 million; improves gross margin and profitability quarter over quarter
PARAMUS, New Jersey, February 28, 2012 /PRNewswire/ --
Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the fourth quarter which ended December 31, 2011.
Revenues for the fourth quarter of 2011 reached $118.5 million, up 77% from $67.0 million for the fourth quarter of 2010, and up 2% from $116.1 million in the third quarter of 2011.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2011 was ($8.2) million or $(0.23) per basic share and diluted share, compared to net income of $3.8 million in the fourth quarter of 2010, or $0.11 per basic share and $0.10 per diluted share.
On a non-GAAP basis, net income for the fourth quarter, excluding (a) $2.0 million of equity-based compensation expenses, and (b) $8.4 million charges related to the Nera acquisition and integration plan, was $2.3 million, or $0.06 per basic share and diluted share. Non-GAAP net income for the fourth quarter of 2010 was $6.1 million, or $0.17 per basic and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).
Revenues for the full year of 2011 were $445.3 million, up 78% from $249.9 million in 2010. Net loss on a GAAP basis for 2011 was $(53.7) million or $(1.49) per basic share and diluted share. Net income for the year 2010 was $14.1 million or $0.40 per basic share and $0.38 per diluted share.
On a non-GAAP basis, net income for 2011, excluding (a) $6.6 million of equity-based compensation expenses, and (b) $47.5 million charges related to the Nera acquisition and integration plan, was $400,000 or $0.01 per basic share and diluted share. Net income for the year 2010 was $20.2 million, or $0.58 per basic share and $0.55 per diluted share.
Gross margin on a GAAP basis in the fourth quarter of 2011 was 29.0% of revenues. Gross margin on a non-GAAP basis in the fourth quarter was 33.0% of revenues.
Operating loss on a GAAP basis in the fourth quarter of 2011 was ($7.0) million. On a non-GAAP basis operating income in the fourth quarter of 2011 was $3.4 million.
Cash and cash investments at the end of the quarter were $49.5 million.
"As a result of our continued strong execution, we reported higher revenues, gross margin and profitability for the fourth quarter," said Ira Palti, President and CEO of Ceragon. "I am delighted to report that the integration of the Nera business is complete. We believe our decision to seize the first-mover advantage in the latest round of industry consolidation, combined with the rapid integration, positions us to continue to grow and to gain market share as the #1 wireless backhaul specialist.
"We expect revenues in Q1 to be similar to the fourth quarter, as macroeconomic and political concerns weigh on operators' plans in several regions," continued Mr. Palti. "We have recently added new customers and, with other tangible reasons to expect bookings to increase, our outlook for the year continues to call for moderate growth of 10-12% for 2012. With improvement as the year progresses, our goal is to exit 2012 with gross margin in the mid-30's and a non-GAAP operating margin of 8%-9%."
Supplemental revenue breakouts:
Geographical breakdown, fourth quarter of 2011:
- Europe: 24%
- Africa: 21%
- North America: 8%
- Latin America: 21%
- India: 10%
- APAC: 16%
A conference call will follow, beginning at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling (800) 398-9402, or international +1(612) 332-0720 from 8:50 a.m. EST. 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 (International) +1(320)-365-3844, Access Code: 231788.
A replay of both the call and the webcast will be available through March 28, 2012.
About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. Ceragon's high capacity wireless backhaul solutions enable cellular operators and other wireless service providers to deliver 2G/3G and LTE/4G voice and data services that enable smart-phone applications such as Internet browsing, music and video. With unmatched technology and cost innovation, Ceragon's advanced point-to-point microwave systems allow wireless service providers to evolve their networks from circuit-switched and hybrid concepts to all IP networks. Ceragon solutions are designed to support all wireless access technologies, delivering more capacity over longer distances under any given deployment scenario. Ceragon's solutions are deployed by more than 230 service providers of all sizes, and hundreds of private networks in more than 130 countries. Visit Ceragon at http://www.ceragon.com.
Ceragon Networks® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries.
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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 http://www.sec.gov or may be obtained on Ceragon's website at http://www.ceragon.com.
Use of non-GAAP Measures:
This press release provides financial measures that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these Non-GAAP financial measures provide meaningful supplemental information regarding our performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended Year ended
December 31 December 31,
2011 2010 2011 2010
Revenues $ 118,487 $ 66,983 $ 445,269 $ 249,852
Cost of revenues 84,096 42,225 323,191 160,470
Gross profit 34,391 24,758 122,078 89,382
Operating expenses:
Research and
development, net 12,534 6,732 50,456 25,115
Selling and
marketing 20,540 9,641 81,716 37,179
General and
administrative 8,337 3,612 26,524 12,328
Restructuring costs - - 7,834 - Acquisition related
costs - 775 4,919 775
Total operating
expenses $ 41,411 $ 20,760 $ 171,449 $ 75,397
Operating profit
(loss) (7,020) 3,998 (49,371) 13,985
Financial income
(expenses), net (1,024) 124 (2,024) 1,255
Income (loss) before
taxes (8,044) 4,122 (51,395) 15,240
Taxes on income 123 304 2,259 1,178
Net Income (loss) $ (8,167) $ 3,818 $ (53,654) $ 14,062
Basic net earnings
(loss) per share $ (0.23) $ 0.11 $ (1.49) $ 0.40
Diluted net earnings
(loss) per share $ (0.23) $ 0.10 $ (1.49) $ 0.38
Weighted average
number of shares
used in computing
basic net earnings
(loss) per share 36,241,106 35,106,882 35,975,434 34,854,657
Weighted average
number of shares
used in computing
diluted net earnings
(loss) per share 36,241,106 36,995,821 35,975,434 36,564,830
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)
December 31, December 31,
2011 2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 28,991 $ 37,725
Short-term bank deposits 7,159 23,357
Marketable securities 9,665 7,363
Trade receivables, net 143,247 88,074
Deferred taxes, net 6,874 4,057
Other accounts receivable
and prepaid expenses 37,281 15,425
Inventories 93,465 65,921
Total current assets 326,682 241,922
LONG-TERM INVESTMENTS:
Long-term marketable
securities 3,716 13,088
Severance pay funds and
pension 6,360 6,039
Total long-term
investments 10,076 19,127
OTHER ASSETS:
Long-term receivables 5,257 -
Deferred taxes, net 10,266 8,829
Goodwill and intangible
assets, net 28,032 1,093
Total other assets 43,555 9,922
PROPERTY AND EQUIPMENT,
NET 30,573 16,211
Total assets $ 410,886 $ 287,182
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long
term loan $ 8,232 $ -
Trade payables 77,395 40,537
Deferred revenues 38,308 20,661
Other accounts payable and
accrued expenses 47,309 13,215
Total current liabilities 171,244 74,413
LONG-TERM LIABILITIES
Long term bank loan, net
of current maturities 26,768 -
Accrued severance pay and
pension 11,996 8,600
Other long term payables 39,827 -
Total Long-Term Liabilities 78,591 8,600
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares 97 95
Additional paid-in capital 311,911 300,875
Treasury shares at cost (20,091) (20,091)
Other comprehensive income
(loss) (343) 159
Accumulated deficits (130,523) (76,869)
Total shareholders' equity 161,051 204,169
Total liabilities and
shareholders' equity $ 410,886 $ 287,182
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2011 2010 2011 2010
Cash flow from operating
activities:
Net income (loss) $ (8,167) $ 3,818 $ (53,654) $ 14,062
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation and amortization 4,497 1,321 14,393 4,712
Stock-based compensation expense 2,031 1,541 6,564 4,207
Decrease (Increase) in trade and
other receivables, net 6,930 (25,744) 3,440 (27,229)
Decrease (Increase) in inventory,
net of write off 7,617 (4,071) 40,643 4
Increase (decrease) in trade
payables and accrued liabilities (4,756) 20,084 (20,650) (8,323)
Increase (decrease) in deferred
revenues (42) 7,902 (11,925) 2,113
Increase in deferred tax asset,
net (1,269) (114) (1,237) (469)
Other adjustments 595 191 2,301 226
Net cash provided by (used in)
operating activities $ 7,436 $ 4,928 $ (20,125) $ (10,697)
Cash flow from investing
activities:
Purchase of property and
equipment ,net (4,696) (2,083) (14,447) (9,798)
Payment for business
acquisition *) - - (42,405) (1,232)
Investment in short and
long-term bank deposit - (1,972) (7,304) (13,754)
Proceeds from short and
long-term bank deposits 2,368 6,580 25,664 31,680
Investment in held-to-maturity
marketable securities - - - (18,339)
Proceeds and maturities of
held-to-maturity and
available-for-sale marketable
securities 201 9,091 10,459 16,591
Net cash provided by (used in)
investing activities $ (2,127) $ 11,616 $ (28,033) $ 5,148
Cash flow from financing
activities:
Proceeds from exercise of
options 518 1,635 4,474 4,935
Long term bank loan raised in
connection with business
acquisition - - 35,000 -
Net cash provided by
financing activities $ 518 $ 1,635 $ 39,474 $ 4,935
Translation adjustments on
cash and cash equivalents $ 223 $ - $ (50) $ -
Increase (Decrease) in cash
and cash equivalents $ 6,050 $ 18,179 $ (8,734) $ (614)
Cash and cash equivalents
at the beginning of the period 22,941 19,546 37,725 38,339
Cash and cash equivalents
at the end of the period $ 28,991 $ 37,725 $ 28,991 $ 37,725
*) Excluding cash and cash equivalents
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Three months ended December 31,
2011 2010
GAAP Adjustments Non-GAAP Non-GAAP
(as reported)
Revenues $ 118,487 $ 118,487 $ 66,983
Cost of revenues 84,096 4,740 (a) 79,356 42,142
Gross profit 34,391 39,131 24,841
Operating expenses:
Research and
development, net 12,534 626 (b) 11,908 6,471
Selling and marketing 20,540 2,604 (c) 17,936 9,402
General and
administrative 8,337 2,465 (d) 5,872 2,654
Total operating
expenses $ 41,411 $ 35,716 $ 18,527
Operating profit (loss) (7,020) 3,415 6,314
Financial income
(expenses), net (1,024) (1,024) 124
Income (loss) before
taxes (8,044) 2,391 6,438
Taxes on income 123 123 304
Net income (loss) $ (8,167) $ 2,268 $ 6,134
Basic net earnings (loss)
per share $ (0.23) $ 0.06 $ 0.17
Diluted net earnings
(loss) per share $ (0.23) $ 0.06 $ 0.17
Weighted average
number of shares
used in computing basic
net earnings
(loss) per share 36,241,106 36,241,106 35,106,882
Weighted average
number of shares
used in computing diluted
net earnings
(loss) per share 36,241,106 37,504,556 36,995,821
Total adjustments 10,435
a. Cost of revenues includes $0.4 million of amortization of purchased intangible assets, $2.8 million of inventory step-up, $0.1 million of stock based compensation expenses and $1.5 million of integration plan related costs in the three months ended December 31, 2011.
b. Research and development expenses include $0.2 million of integration plan related costs and $0.4 million of stock based compensation expenses in the three months ended December 31, 2011.
c. Selling and marketing expenses includes $1.1 million of amortization of purchased intangible assets, $0.8 million of integration plan related costs and $0.7 million of stock based compensation expenses in the three months ended December 31, 2011.
d. General and administration expenses includes $1.6 million of integration plan related costs and $0.8 million of stock based compensation expenses in the three months ended December 31, 2011.
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
Year ended December 31,
2011 2010
GAAP Adjustments Non-GAAP Non-GAAP
(as reported)
Revenues $ 445,269 $ 445,269 $ 249,852
Cost of revenues 323,191 22,207 (a) 300,984 160,155
Gross profit 122,078 144,285 89,697
Operating expenses:
Research and development, net 50,456 4,031 (b) 46,425 23,151
Selling and marketing 81,716 10,030 (c) 71,686 36,002
General and administrative 26,524 5,040 (d) 21,484 10,427
Restructuring costs 7,834 7,834 - -
Acquisition related costs 4,919 4,919 - -
Total operating expenses $ 171,449 $ 139,595 69,580
Operating profit (loss) (49,371) 4,690 20,117
Financial income (expenses),
net (2,024) (2,024) 1,255
Income (loss) before taxes (51,395) 2,666 21,372
Taxes on income 2,259 2,259 1,178
Net income (loss) $ (53,654) $ 407 $ 20,194
Basic net earnings (loss)
per share $ (1.49) $ 0.01 $ 0.58
Diluted net earnings (loss)
per share $ (1.49) $ 0.01 $ 0.55
Weighted average number
of shares used in computing
basic net earnings
(loss) per share 35,975,434 35,975,434 34,854,657
Weighted average number
of shares used in computing
diluted net earnings (loss)
per share 35,975,434 37,522,665 36,564,830
Total adjustments 54,061
a. Cost of revenues includes $1.2 million of amortization of purchased intangible assets, $15.4 million of inventory step-up, $0.3 million of stock based compensation expenses and $5.3 million of integration plan related costs in the year ended December 31, 2011.
b. Research and development expenses include $2.5 million of integration plan related costs and $1.5 million of stock based compensation expenses in the year ended December 31, 2011.
c. Selling and marketing expenses includes $3.0 million of amortization of purchased intangible assets, $4.6 million of integration plan related costs and $2.5 million of stock based compensation expenses in the year ended December 31, 2011.
d. General and administration expenses include $2.7 million of integration plan related costs and $2.3 million of stock based compensation expenses in the year ended December 31, 2011.
RECONCILIATION BETWEEN REPORTED AND NON-GAAP
OPERATING PROFIT (LOSS)
(U.S. dollars in thousands)
(Unaudited)
Three months ended Year ended
December 31, 2011
Reported GAAP net operating loss (7,020) (49,371)
Stock based compensation expenses 2,031 6,564
Amortization of purchased intangible assets 1,457 4,162
Inventory step up 2,815 15,442
Integration plan related costs 4,132 15,140
Restructuring costs - 7,834
Acquisition related costs - 4,919
Non-GAAP net operating profit 3,415 4,690
Company and Investor Contact:
Yoel Knoll
Vice President of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972-(0)-52-830-6419
Office (Int'l): +972-(0)-3-5431-132
Office (US): +1-(201)-406-1037
Tel. +1-(201)-853-0228
yoelk@ceragon.com
Media Contact:
Abigail Levy-Gurwitz
Ceragon Networks Ltd.
Tel: +1-(201)-853-0271
abigaill@ceragon.com
Media Contact:
Karen Quatromoni
Rainier Communications
Tel. +1-508-475-0025 x150
kquatromoni@rainierco.com
SOURCE Ceragon Networks Ltd
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