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Ceragon Networks Reports 2020 Fourth Quarter and Full Year Financial Results

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 Q4 2020 Financial Highlights:

  • Revenues of $74.0 million
  • Operating Income (loss) of $(1.5) million on a GAAP basis, or $0.5 million on a non-GAAP basis
  • EPS of $(0.08) per diluted share on a GAAP basis, or $(0.04) per diluted share on a non-GAAP basis
  • Cash flow provided by operating activities of $11.1 million; Returned $11.9M of short-term loans

Q4 2020 Business Highlights:

  • Revenues return to normal run-rates as customers begin to accelerate network deployment in response to strong global demand for connectivity
  • From five 5G design wins in Q3 2020 to nine 5G design wins in Q4 2020, across all geographies
  • Accelerated 5G tailwinds and increased OpenRAN momentum expected to drive multi-year growth
  • Provides outlook for 2021

Full Year 2020 Financial Highlights:

  • Revenues of $262.9 million
  • Operating loss of $(7.6) million on a GAAP basis, or $(4.3) million on a non-GAAP basis
  • EPS of $(0.21) per diluted share on a GAAP basis, or $(0.16) per diluted share on a non-GAAP basis

LITTLE FALLS, New Jersey, Feb. 8, 2021 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ:CRNT), the #1 wireless hauling specialist, today reported its financial results for the fourth quarter and full year ended December 31, 2020.

Ira Palti, President & CEO, commented: "2020 was a unique year, to say the least. Given the mass exodus to remote work, back-to-back lockdowns, and reduced travel, online services have become more important and in-demand than ever before. Fueled by this 'new normal,' there arose a strong global demand for connectivity which drove telcos to accelerate their evolution to 5G."

"As the recognized best-in-class provider of wireless hauling solutions, we believe we are ideally positioned to provide operators with everything they need to make this 5G transition successful: the technology, including both our signature IP-50 Platform available today, and our advanced 5G hauling chipset which we expect to complete tape-out during the first half of 2021 and be integrated into our advanced 5G solutions in 2022; the expertise, ranging from regulatory and deployment strategy to design and more; and finally the on-the-ground deployment and operational services. In fact, we are already in progress with large 5G network development processes moving us from design wins to proof of concepts and purchase orders."

"At Ceragon, we have a history of benefitting from the transition between wireless generations, first as 2G moved to 3G, and later when 3G transitioned to 4G. As the new 5G technology builds momentum, we believe we will do again what we do best: leverage this transition to take our company story to the next level."

Primary Fourth Quarter 2020 Financial Results:

Revenues were $74.0 million, up 3.8% from $71.3 million in Q4 2019 and up 4.8% from $70.6 million in Q3 2020. Our revenues varied from region to region and were in line with the effect that COVID has had on local business operations and network build-out plans.

Gross profit was $21.6 million, giving us a gross margin of 29.1%, compared with a gross margin of 31.7% in Q4 2019 and 33.4% in Q3 2020. The relatively low gross margin reflects a one-time impact of agreements reached with several customers, which we believe will improve our future business with them, as well as continued high supply chain costs due to the COVID-19 environment.

Operating income (loss) was $(1.5) million compared with $(2.2) million for Q4 2019 and $3.4 million for Q3 2020.

Net income (loss) was $(6.3) million, or $(0.08) per diluted share compared with $(4.1) million, or $(0.05) per diluted share for Q4 2019 and $1.6 million, or $0.02 per diluted share for Q3 2020.

Non-GAAP results were as follows: Gross margin was 28.9%, operating income was $0.5 million, and net loss was $(3.5) million, or $(0.04) per diluted share.

Cash and cash equivalents was $27.1 million at December 31, 2020, compared to $29.2 million at September 30, 2020.

Primary Full Year 2020 Financial Results:

Revenues were $262.9 million, down 7.9% from $285.6 million in 2019.

Gross profit was $75.6 million, giving us a gross margin of 28.8%, compared with a gross margin of 33.9% in 2019.

Operating income (loss) was $(7.6) million, compared to operating income of $7.3 million in 2019.

Net loss was $(17.1) million, or $(0.21) per diluted share. Net loss for 2019 was $(2.3) million, or $ (0.03) per diluted share.

Non-GAAP results were as follows: Gross margin was 28.7%, operating loss was $(4.3) million, and net loss was $(12.8) million, or $(0.16) per diluted share.

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

Revenue Breakouts by Geography:

 


Q4 2020

Full Year 2020

Europe

19%

17%

Africa

10%

9%

North America

16%

14%

Latin America

18%

18%

India

23%

24%

APAC

14%

18%

 

Outlook

We are targeting revenue growth in 2021. Although we expect a slow start for the first half of the year, we continue to expect yearly revenue to be between $275-$295 million.

Conference Call

The Company will host a conference call today at 9:00 a.m. ET to discuss the results, followed by a question and answer session for the investment community. Investors are invited to join by calling USA: (877)-692-8955 or international: +1 (234)-720-6979 and using the following access code: 8323785.

A live webcast of the call can be accessed at www.ceragon.com/investors/webcasts/.

If you are unable to join us live, the replay numbers are: USA: (866) 207-1041 International: +1 (402) 970-0847, with access code: 4510933. This audio replay will be available through March 8, 2021.

About Ceragon Networks

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.

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, as amended 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 and market 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 be performed differently than anticipated and such other risks, uncertainties and other factors that could affect our results, 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 on the Securities and Exchange Commission's website at www.sec.gov and may also be obtained from Ceragon's website at www.ceragon.com.  

Investor & Media Contact:
Maya Lustig
Ceragon Networks
Tel. +972-54-677-8100
mayal@ceragon.com

-Tables Follow-

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,



2020


2019


2020


2019









Audited










Revenues


$     74,002


$     71,256


$     262,881


$     285,583

Cost of revenues


52,447


48,646


187,236


188,741










Gross profit


21,555


22,610


75,645


96,842










Operating expenses:









    Research and development, net


9,608


7,639


30,997


26,793

Selling and marketing


8,562


10,130


33,021


39,469

General and administrative


4,849


7,032


19,199


23,278



















Total operating expenses


$     23,019


$     24,801


$      83,217


$      89,540










Operating income (loss)


(1,464)


(2,191)


(7,572)


7,302










Financial expenses and others, net


2,756


2,204


5,923


6,521










Income (loss) before taxes


(4,220)


(4,395)


(13,495)


781










Taxes on income (benefit)


1,561


(471)


2,618


2,476

Equity loss in affiliates


538


177


979


649










Net loss


$     (6,319)


$      (4,101)


$    (17,092)


$      (2,344)










Basic net loss per share









$        (0.08)

$        (0.05)

$        (0.21)

$       (0.03)

Diluted net loss per share









$        (0.08)

$        (0.05)

$        (0.21)

$       (0.03)










Weighted average number of shares 
     used in computing basic net loss per 
     share


81,536,498


80,574,892


81,149,687


80,296,581










Weighted average number of shares 
     used in computing diluted net loss per 
     share


81,536,498


80,574,892


81,149,687


80,296,581










 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)




December 31,


December 31,

2019

2020

ASSETS




Audited






CURRENT ASSETS:





 Cash and cash equivalents


$ 27,101


$ 23,939

     Trade receivables, net


107,388


118,531

     Other accounts receivable and prepaid expenses


14,633


11,033

     Inventories


50,627


62,132






Total current assets


199,749


215,635






NON-CURRENT ASSETS:





Long-term bank deposits


17


17

Deferred tax assets


8,279


8,106

    Severance pay and pension fund


6,059


5,661

    Property and equipment, net


32,299


34,865

    Operating lease right-of-use assets


6,780


10,128

    Intangible assets, net


6,117


7,898

    Other non-current assets


13,119


7,579






Total non-current assets


72,670


74,254






Total assets


$ 272,419


$ 289,889






     LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





Trade payables


$        63,722


$        59,635

Deferred revenues


3,492


1,734

Short-term loans


5,979


14,600

Other accounts payable and accrued expenses


24,048


22,755

Operating lease liabilities


3,183


5,644






Total current liabilities


100,424


104,368






LONG-TERM LIABILITIES:





Accrued severance pay and pension


11,601


10,709

Deferred revenues


7,495


6,265

Other long-term payables


2,933


3,408

Operating lease liabilities


3,840


4,718






Total long-term liabilities


25,869


25,100






SHAREHOLDERS' EQUITY:





Share capital:





    Ordinary shares


218


215

Additional paid-in capital


420,958


418,062

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(8,068)


(8,666)

Accumulated deficits


(246,891)


(229,099)






Total shareholders' equity


146,126


160,421






Total liabilities and shareholders' equity


$  272,419


$  289,889






 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)



Three months ended


Year ended

December 31,

December 31,


2020

2019


2020


2019

Cash flow from operating activities:




Audited

Net loss

$        (6,319)

$    (4,101)


$    (17,092)


$     (2,344)

Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:

Depreciation and amortization

4,749

2,680


12,861


9,691

Stock-based compensation expense

411

459


1,662


2,053

Decrease in trade receivables, net

1,168

7,871


9,345


4,533

Decrease (increase) in other accounts receivable
and prepaid expenses (including other long term
assets)

(732)

2,185


(6,110)


(2,086)

Decrease in operating lease right-of-use assets

1,259

1,311


5,121


5,348

Decrease (increase) in inventory, net of write off

1,009

5,602


9,919


(9,475)

Increase in deferred tax asset, net

(137)

(1,300)


(173)


(258)

Increase (decrease) in trade payables

6,919

(487)


1,831


(15,933)

Increase (decrease) in other accounts payable
and accrued expenses (including other long term
liabilities)

2,081

(1,852)


1,946


(3,767)

Decrease in operating lease liability

(1,066)

(1,178)


(5,112)


(5,114)

Increase (decrease) in deferred revenues

1,110

(3,023)


2,988


4,150

Accrued severance pay and pensions, net

654

440


488


271

Net cash provided by (used in) operating
activities

$        11,106

$        8,607


$   17,674


$   (12,931)










Cash flow from investing activities:

Purchase of property and equipment, net

(1,702)


(2,476)


(6,506)


(11,592)

Purchase of intangible assets, net

(69)


(233)


(412)


(3,274)

Proceeds from bank deposits

-


82


-


1,002

Net cash used in investing activities

$        (1,771)

$     (2,627)


$     (6,918)


$     (13,864)









Cash flow from financing activities:





Proceeds from exercise of options

390


211


1,237


602

Proceeds from (repayment of) bank credits and
loans, net

(11,900)


(2,800)


(8,621)


14,600

Net cash provided by (used in) financing
activities

$       (11,510)

$     (2,589)


$      (7,384)


$      15,202









Translation adjustments on cash and cash
equivalents

$              121

$            24


$         (210)


$            (49)


Increase (decrease) in cash and cash equivalents

$         (2,054)

$       3,415


$        3,162


$     (11,642)

Cash and cash equivalents at the beginning of
the period

29,155

20,524


23,939


35,581

Cash and cash equivalents at the end of the
period

$        27,101

$     23,939


$      27,101


$       23,939

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)




Three months ended


Year ended



December 31,


December 31,



2020


2019


2020


2019

GAAP cost of revenues


$        52,447


$         48,646


$

187,236


$

188,741

Stock based compensation expenses

(18)



(27)



(110)



(71)

Changes in indirect tax positions



202



361



199



327

Non-GAAP cost of revenues


$

52,631


$

48,980


$

187,325


$

188,997














GAAP gross profit


$

21,555


$

22,610


$

75,645


$

96,842

Stock based compensation expenses



18



27



110



71

Changes in indirect tax positions



(202)



(361)



(199)



(327)

Non-GAAP gross profit


$

21,371


$

22,276


$

75,556


$

96,586














GAAP Research and development expenses


$

9,608


$

7,639


$

30,997


$

26,793

Amortization of intangible assets



(1,800)



-



(1,800)



-

Stock based compensation expenses



(114)



(81)



(243)



(366)

Non-GAAP Research and development expenses


$

7,694


$

7,558


$

28,954


$

26,427
















$

8,562


$

10,130


$

33,021


$

39,469

GAAP Sales and Marketing expenses

Stock based compensation expenses



(110)



(155)



(545)



(708)

Non-GAAP Sales and Marketing expenses


$

8,452


$

9,975


$

32,476


$

38,761














GAAP General and Administrative expenses


$

4,849


$

7,032


$

19,199


$

23,278

Stock based compensation expenses



(169)



(196)



(764)



(908)

Non-GAAP General and Administrative expenses


$

4,680


$

6,836


$

18,435


$

22,370



$

(1,464)


$

(2,191)


$

(7,572)


$

7,302

GAAP operating income (loss)

Stock based compensation expenses



411



459



1,662



2,053

Changes in indirect tax positions



(202)



(361)



(199)



(327)

Amortization of intangible assets



1,800



-



1,800



-

Non-GAAP operating income (loss)


$

545


$

(2,093)


$

(4,309)


$

9,028



$

2,756


$

2,204


$

5,923


$

6,521

GAAP financial expenses and others, net

Leases – financial expenses



(229)



(133)



(46)



(234)

Non-GAAP financial expenses and others, net


$

2,527


$

2,071


$

5,877


$

6,287














GAAP Tax (income) expenses


$

1,561


$

(471)


$

2,618


$

2,476

Non cash tax adjustments



(2)



1,272



(6)



182

Non-GAAP Tax expenses


$

1,559


$

801


$

2,612


$

2,658














GAAP equity loss in affiliates


$

538


$

177


$

979


$

649

Other non-cash adjustments



(538)



(177)



(979)



(649)

Non-GAAP equity loss in affiliates


$

-


$

-


$

-


$

-

 


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS



(U.S. dollars in thousands, except share and per share data)



(Unaudited)








Three months ended


Year ended





December 31,


December 31,





2020


2019


2020


2019


GAAP net loss


$

(6,319)


$

(4,101)


$

(17,092)


$

(2,344)


   Amortization of intangible assets



1,800



-



1,800



-


   Stock based compensation   

   expenses



411



459



1,662



2,053


   Changes in indirect tax positions



(202)



(361)



(199)



(327)


   Leases – financial expenses 



229



133



46



234


   Non-cash tax adjustments



2



(1,272)



6



(182)


   Other non-cash adjustment



538



177



979



649
















Non-GAAP net income (loss) 


$

(3,541)


$

(4,965)


$

(12,798)


$

83





$

(0.08)


$

(0.05)


$

(0.21)


$

(0.03)


GAAP basic net loss per share



















$

(0.08)


$

(0.05)


$

(0.21)


$

(0.03)


GAAP diluted net loss per share




$

(0.04)


$

(0.06)


$

(0.16)


$

0.00


Non-GAAP diluted net income (loss) per share




















81,536,498



80,574,892



80,574,892



80,296,581


Weighted average number of shares
used in computing GAAP

basic net loss per share




















81,536,498



80,574,892



80,574,892



80,296,581


Weighted average number of shares
used in computing GAAP diluted net loss
per share




















81,536,498



80,574,892



80,574,892



82,124,615


Weighted average number of shares
used in computing

Non-GAAP diluted net income (loss) per
share






















Cision View original content:http://www.prnewswire.com/news-releases/ceragon-networks-reports-2020-fourth-quarter-and-full-year-financial-results-301223845.html

SOURCE Ceragon Networks Ltd

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