EX-99 2 exhibit_a.htm EXHIBIT A
Exhibit A
 
Ceragon Networks Reports First Quarter 2019 Financial Results

May 6, 2019


CERAGON NETWORKS REPORTS FIRST QUARTER 2019 FINANCIAL RESULTS
 
Revenues affected by timing of orders from India, while positive overall demand trends continue
 
Little Falls, New Jersey, May 6, 2019 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist, today reported results for the first quarter ended March 31, 2019.
 
First Quarter 2019 Highlights
 
Revenues - $69.2 million, down 16.9% from the first quarter of 2018, and down 19.3% from the fourth quarter of 2018.
 
Gross margin - 35.6%, compared to 33.1% in the first quarter of 2018 and 34.4% in the fourth quarter of 2018.
 
Operating income - $3.2 million, compared to $5.4 million in the first quarter of 2018 and $6.5 million in the fourth quarter of 2018.
 
Net income - net income of $0.8 million, or $0.01 per diluted share for the first quarter of 2019.  Net income for the first quarter of 2018 was $2.1 million, or $0.03 per diluted share. Net income for the fourth quarter of 2018 was $11.6 million or $0.14 per diluted share.
 
Non-GAAP results - gross margin was 35.7%, operating income was $3.7 million, and net income was $2.1 million, or $0.03 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
 
Cash and cash equivalents - $29.8 million at March 31, 2019, compared to $35.6 million at December 31, 2018.
 
“As we expected, first quarter results were low due to the timing of large orders from India, in addition to typical seasonal factors,” said Ira Palti, president and CEO of Ceragon. “We continue to experience a high level of customer activity around the world resulting from the ongoing expansion of 4G and the beginning of the transition to 5G. This high level of customer activity, together with our expectation that we will receive a batch of large orders in Q2 related to ongoing deployments in India, causes us to believe that our quarterly revenue during the balance of 2019 is likely to be at or above the high end of our $80 to $85 million quarterly revenue run rate. Thus, we continue to expect overall revenue for 2019 to be similar to that of 2018. We are also continuing to target in 2019 a 5th consecutive year of growth in our non-GAAP net income, based on our expectation to higher gross margin from a more favorable geographic mix of revenue as well as lower financial expenses compared to 2018.”
 
Ceragon Networks Reports First Quarter 2019 Financial Results

May 6, 2019
 
Supplemental revenue breakouts by geography:
 
First quarter 2019:
·
Europe:
17%
·
Africa:
13%
·
North America:
15%
·
Latin America:
22%
·
India:
15%
·
APAC
18%
 
A conference call to discuss the results will begin at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling USA: (800) 230-1074 or International: +1 (612) 288-0329, 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: https://www.ceragon.com/investors/webcasts/, and completing the registration.
 
If you are unable to join us live, the replay numbers are: USA: (800) 475-6701 or International +1 (320) 365-3844 Access Code: 466180. A replay of both the call and the webcast will be available through June 6, 2019.
 
About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We help operators and other service providers worldwide smoothly evolve their networks towards 5G, while increasing operational efficiency and enhancing end customers’ quality of experience, with innovative wireless backhaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, that use our solutions to deliver mission-critical multimedia services and other applications at high reliability and speed.

Ceragon’s unique multicore technology and wireless backhaul solutions provide highly reliable, 5G high-capacity connectivity with minimal use of spectrum, power and other resources. Our solutions enable increased productivity, as well as simple and quick network modernization. We deliver a range of professional services that ensure efficient network rollout and optimization to achieve the highest value for our customers. Ceragon’s 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
 

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.
 
2
Ceragon Networks Reports First Quarter 2019 Financial Results

May 6, 2019
 
This press release contains statements concerning Ceragon's future prospects that are "forward-looking statements" as defined in 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. 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. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks relating to the concentration of a significant portion of Ceragon's business in certain geographic regions and particularly in India, where two customers currently represent a significant portion of its revenues, risks associated with a decline in demand from the single market segment on which we focus; risks associated with any failure to effectively compete with other wireless equipment providers; risk relating to certain guarantees granted by Ceragon on behalf of Orocom to FITEL, in the framework of the FITEL project; 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, that 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.
 
Investors:
    
Ran Vered
or
Claudia Gatlin
+972 3 543 1595
  
+1 212 830-9080
ranv@ceragon.com
  
claudiag@ceragon.com

Media:
Tanya Solomon
+972 3 5431163
tanyas@ceragon.com

-tables follow-

3

Ceragon Reports First Quarter 2019 Results

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

 
Three months ended
  
   
March 31,
  
   
2019
    
2018
  
             
Revenues
  
$
69,163
    
$
83,275
  
Cost of revenues
    
44,531
      
55,671
  
                 
Gross profit
    
24,632
      
27,604
  
                 
Operating expenses:
                
Research and development, net
    
6,164
      
7,214
  
Selling and marketing
    
9,462
      
10,562
  
General and administrative
    
5,782
      
4,459
  
                 
Total operating expenses
  
$
21,408
    
$
22,235
  
                 
Operating income
    
3,224
      
5,369
  
Financial expenses, net
    
1,109
      
2,034
  
                 
Income before taxes
    
2,115
      
3,335
  
                 
Taxes on income
    
1,134
      
1,265
  
Equity loss in affiliates
    
173
      
-
  
                 
Net income
  
$
808
    
$
2,070
  
                 
 Basic net income per share
  
$
0.01
    
$
0.03
  
 Diluted net income per share
  
$
0.01
    
$
0.03
  
                 
Weighted average number of shares used in computing basic net income per share
    
80,113,607
      
78,080,146
  
                 
Weighted average number of shares used in computing diluted net income per share
    
82,333,627
      
80,065,171
  

4

Ceragon Reports First Quarter 2019 Results
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

   
March 31,
2019
    
December 31, 2018
  
 
Unaudited
    
Audited
  
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
29,754
    
$
35,581
  
Short - term bank deposits
    
-
      
515
  
Trade receivables, net
    
119,548
      
123,451
  
Other accounts receivable and prepaid expenses
    
12,555
      
12,135
  
Inventories
    
67,370
      
53,509
  
                 
Total current assets
    
229,227
      
225,191
  
                 
NON-CURRENT ASSETS:
                
Long-term bank deposits
    
90
      
504
  
Deferred tax assets
    
6,882
      
7,476
  
   Severance pay and pension fund
    
5,378
      
5,096
  
   Property and equipment, net
    
34,287
      
33,613
  
   Intangible assets, net
    
6,931
      
6,576
  
Other non-current assets
    
14,722
      
4,544
  
                 
Total non-current assets
    
68,290
      
57,809
  
                 
Total assets
  
$
297,517
    
$
283,000
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Trade payables
  
$
82,845
    
$
78,892
  
Deferred revenues
    
4,246
      
3,873
  
Other accounts payable and accrued expenses
    
29,281
      
27,256
  
                 
Total current liabilities
    
116,372
      
110,021
  
                 
LONG-TERM LIABILITIES:
                
Deferred tax liability
    
24
      
28
  
Accrued severance pay and pension
    
9,973
      
9,711
  
Other long term payables
    
9,315
      
3,672
  
                 
Total long-term liabilities
    
19,312
      
13,411
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
    Ordinary shares
    
214
      
214
  
Additional paid-in capital
    
415,949
      
415,408
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(8,292
)
    
(9,208
)
Accumulated deficits
    
(225,947
)
    
(226,755
)
                 
Total shareholders' equity
    
161,833
      
159,568
  
                 
Total liabilities and shareholders' equity
  
$
297,517
    
$
283,000
  

5
 
Ceragon Reports First Quarter 2019 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)

   
Three months ended
  
   
March 31,
  
   
2019
    
2018
  
Cash flow from operating activities:
            
Net Income
  
$
808
    
$
2,070
  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
                
                 
Depreciation and amortization
    
2,120
      
1,511
  
Stock-based compensation expense
    
475
      
353
  
Decrease (increase) in trade and other receivables, net
    
(6,391
)
    
183
  
Decrease (increase) in inventory, net of write-off
    
(14,150
)
    
4,488
  
Decrease in deferred tax asset, net
    
590
      
474
  
Increase (decrease) in trade payables and accrued liabilities
    
15,583
      
(5,854
)
Increase in deferred revenues
    
376
      
940
  
Other adjustments
    
(31
)
    
208
  
Net cash provided by (used in) operating activities
  
$
(620
)
  
$
4,373
  
                 
Cash flow from investing activities:
                
Purchase of property and equipment, net
    
(3,991
)
    
(3,299
)
Purchase of intangible assets, net
    
(2,189
)
    
(1,086
)
Release of long and short - term bank deposit
    
940
      
-
  
Net cash used in investing activities
  
$
(5,240
)
  
$
(4,385
)
                 
Cash flow from financing activities:
                
Proceeds from exercise of options
    
66
      
100
  
Net cash provided by financing activities
  
$
66
    
$
100
  
                 
Translation adjustments on cash and cash equivalents
  
$
(33
 )   
$
(9
)
                 
Increase (decrease) in cash and cash equivalents
  
$
(5,827
)
  
$
79
  
                 
Cash and cash equivalents at the beginning of the period
    
35,581
      
25,877
  
                 
Cash and cash equivalents at the end of the period
  
$
29,754
    
$
25,956
  

6
 
Ceragon Reports First Quarter 2019 Results

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

   
Three months ended
March 31,
  
   
2019
    
2018
  
             
GAAP cost of revenues
  
$
44,531
    
$
55,671
  
Stock based compensation expenses
    
(15
)
    
(17
)
Changes in indirect tax positions
    
(21
)
    
(15
)
Non-GAAP cost of revenues
  
$
44,495
    
$
55,639
  
                 
GAAP gross profit
  
$
24,632
    
$
27,604
  
Gross profit adjustments
    
36
      
32
  
Non-GAAP gross profit
  
$
24,668
    
$
27,636
  
                 
GAAP Research and development expenses
  
$
6,164
    
$
7,214
  
Stock based compensation expenses
    
(103
)
    
(60
)
Non-GAAP Research and development expenses
  
$
6,061
    
$
7,154
  
                 
GAAP Sales and Marketing expenses
  
$
9,462
    
$
10,562
  
Stock based compensation expenses
    
(175
)
    
(144
)
Non-GAAP Sales and Marketing expenses
  
$
9,287
    
$
10,418
  
                 
GAAP General and Administrative expenses
  
$
5,782
    
$
4,459
  
Stock based compensation expenses
    
(182
)
    
(132
)
Non-GAAP General and Administrative expenses
  
$
5,600
    
$
4,327
  
                 
GAAP financial expenses
  
$
1,109
    
$
2,034
  
Leases – financial income (expenses)
    
26
      
-
  
Non-GAAP financial expenses
  
$
1,135
    
$
2,034
  
                 
GAAP taxes on income
  
$
1,134
    
$
1,265
  
Non-cash tax adjustments
    
(618
)
    
(564
)
Non-GAAP taxes on income
  
$
516
    
$
701
  
                 
GAAP equity loss in affiliates
  
$
173
    
$
-
  
Other non-cash adjustments
    
(173
)
    
-
  
Non-GAAP equity loss in affiliates
  
$
-
    
$
-
  

7
 
Ceragon Reports First Quarter 2019 Results

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
   
Three months ended
March 31,
  
   
2019
    
2018
  
             
GAAP net income
  
$
808
    
$
2,070
  
Stock based compensation expenses
    
475
      
353
  
Changes in indirect tax positions
    
21
      
15
  
Leases – financial expenses (income)
    
(26
)
    
-
  
Non-cash tax adjustment
    
618
      
564
  
Other non-cash adjustment
    
173
      
-
  
                 
Non-GAAP net income
  
$
2,069
    
$
3,002
  
                 
GAAP basic net income per share
  
$
0.01
    
$
0.03
  
                 
GAAP diluted net income per share
  
$
0.01
    
$
0.03
  
                 
Non-GAAP basic and diluted net income per share
  
$
0.03
    
$
0.04
  
                 
Weighted average number of shares used in computing GAAP basic net income per share
    
80,113,607
      
78,080,146
  
                 
Weighted average number of shares used in computing GAAP diluted net income per share
    
82,333,627
      
80,065,171
  
                 
Weighted average number of shares used in computing Non-GAAP basic and diluted net income per share
    
82,701,755
      
80,377,797
  

8