PR Newswire | Feb 8, 2021 07:01AM EST

02/08 06:00 CST

Ceragon Networks Reports 2020 Fourth Quarter and Full Year Financial Results LITTLE FALLS, New Jersey, Feb. 8, 2021

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:

Revenueswere $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 profitwas $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 equivalentswas $27.1 million at December 31, 2020, compared to $29.2 million at September 30, 2020.

Primary Full Year 2020 Financial Results

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

Gross profitwas $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 losswas$(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 resultswere as followsGross 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 2020Full Year 2020

Europe 19% 17%

Africa 10% 9%

North America16% 14%

Latin America18% 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(r) and FibeAir(r) are registered trademarks of Ceragon Networks Ltd. in the United States and other countries. CERAGON (r) 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 atwww.sec.govand may also be obtained from Ceragon's website atwww.ceragon.com.

Investor & Media Contact: Maya LustigCeragon NetworksTel. +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 81,536,498 80,574,892 81,149,687 80,296,581 share

Weighted average number of shares used in computing diluted net loss per 81,536,498 80,574,892 81,149,687 80,296,581 share

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)

December 31, December 31,

2020 2019

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 cashprovided 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 receivableand prepaid expenses (including other long term (732) 2,185 (6,110) (2,086)assets)

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 payableand accrued expenses (including other long term 2,081 (1,852) 1,946 (3,767)liabilities)

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 $ 11,106 $ 8,607 $ 17,674 $ (12,931)activities

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 (11,900) (2,800) (8,621) 14,600loans, net

Net cash provided by (used in) financing $ (11,510) $ (2,589) $ (7,384) $ 15,202activities

Translation adjustments on cash and cash $ 121 $ $ (210) $ (49)equivalents 24

Increase (decrease) in cash and cash equivalents $ (2,054) $ 3,415 $ 3,162 $ (11,642)

Cash and cash equivalents at the beginning of 29,155 20,524 23,939 35,581the period

Cash and cash equivalents at the end of the $ 27,101 $ 23,939 $ 27,101 $ 23,939period

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 $ $ 48,646 $ 187,236 $ 188,741 52,447

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 $ 39,469GAAP 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) $ 7,302GAAP 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 $ 6,521GAAP 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 411 459 1,662 2,053 expenses

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

Non-GAAP diluted net income (loss) per $ (0.04) $ (0.06) $ (0.16) $ 0.00share

Weighted average number of sharesused in computing GAAP 81,536,498 80,574,892 80,574,892 80,296,581

basic net loss per share

Weighted average number of sharesused in computing GAAP diluted net 81,536,498 80,574,892 80,574,892 80,296,581lossper share

Weighted average number of sharesused in computing 81,536,498 80,574,892 80,574,892 82,124,615

Non-GAAP diluted net income (loss) pershare

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SOURCE Ceragon Networks Ltd