PR Newswire | May 3, 2021 07:02AM EDT

05/03 06:01 CDT

Ceragon Networks Reports 2021 First Quarter Financial ResultsQ1 2021 Financial Highlights:- Revenues of $68.3 million- Operating Income of $0.4 million on a GAAP basis, or $0.7 million on a non-GAAP basis- EPS of $(0.01) per diluted share on a GAAP basis, or $(0.01) per diluted share on a non-GAAP basisQ1 2021 Business Highlights:- Strong bookings in Europe, North America, Latin America and India; book-to-bill way above 1- Twelve 5G design wins to date, across all geographies- Accelerated 5G evolution and OpenRAN momentum expected to drive multi-year growth- New SoC for 5G is progressing and expected to be taped-out in July 2021 LITTLE FALLS, N.J., May 3, 2021

LITTLE FALLS, N.J., May 3, 2021 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the global innovator and leading solutions provider of 5G wireless transport, today reported its financial results for the first quarter ended March 31, 2021.

Ira Palti, President & CEO,commented: "2021 has been off to a good start both for the telecom industry in general and for us at Ceragon specifically. The amount of data flowing around the globe has increased at an exponential rate. As Tier-1 and Tier-2 operators step up their efforts to provide enhanced 4G coverage as well as new 5G services, many of them turn to Ceragon."

"In Q1 2021, the accelerated 5G evolution along with the growing OpenRan movement has kept Ceragon's growing suite of innovative solutions in the spotlight. We achieved three new 5G design wins, saw very strong bookings across different regions, and were selected to participate in an OpenRan trial in TIM Brazil. Even though the industry is currently facing component shortages, which might affect our short-term deliveries, the global telecom industry is fast moving into a new era and Ceragon is well prepared to excel in it."

"As the Company's president & CEO for the last sixteen years, I've led the company from a simpler 2G world into today's more complex OpenRan, 5G world. It's with peace of mind and a feeling of accomplishment that I pass the keys of the CEO office to our successful former deputy CEO & CFO Doron Arazi. I'll continue serving Ceragon as vice-chairman of the board starting July."

Primary First Quarter 2021 Financial Results:

Revenueswere $68.3 million, up 22.2% from $55.9 million in Q1 2020 and down 7.7% from $74.0 million in Q4 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 $20.1 million, giving us a gross margin of 29.5%, compared with a gross margin of 25.1% in Q1 2020 and 29.1% in Q4 2020. The relatively low gross margin reflects continued high supply chain costs due to the COVID-19 environment.

Operating income (loss)was $0.4 million compared with operating loss of $(6.0) million for Q1 2020 and $(1.5) million for Q4 2020.

Net loss was $(1.2) million, or $(0.01) per diluted share compared with $(6.9) million, or $(0.09) per diluted share for Q1 2020 and $(6.3) million, or $(0.08) per diluted share for Q4 2020.

Non-GAAP resultswere as followsGross margin was 29.6%, operating profit was $0.7 million, and net loss was $(0.9) million, or $(0.01) per diluted share.

Cash and cash equivalentswas $33.0 million at March 31, 2021, compared to $27.1 million at December 31, 2020.

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

Revenue Breakouts by Geography:

Q1 2021

India 26%

Europe 19%

North America 17%

Latin America 15%

APAC 14%

Africa 9%

Outlook

We continue to target revenue growth in 2021. Although we still expect a slow start for the first half of the year, we continue to expect yearly revenue to be between $275-$295 million. Now all that said, the growing component shortage may have a negative impact on the timeliness of our Q2 and rest-of-the-year deliveries and may lead to a probable push of revenues between quarters until the shortage is resolved.

Conference Call

The Company will host a Zoom web conference today at 9:00a.m. ET to discuss the results, followed by a question and answer session for the investment community.

Investors are invited to register by clicking the following link: https://us02web.zoom.us/webinar/register/WN_ZrHJ225HTJKmGqKKHgWtTA. All relevant information will be sent upon registration.

If you are unable to join us live, a recording of the call will be available on our website at www.ceragon.com within 24 hours after the call.

About Ceragon Networks

Ceragon Networks Ltd. (NASDAQ: CRNT) is the global innovator and leading solutions provider of 5G wireless transport. 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 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 transport provides highly reliable, fast to deploy, high-capacity wireless transport for 5G and 4G networks with minimal use of spectrum, power, real estate and labor 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 400 service providers, as well as more than 800 private network owners, in more than 150 countries. For more information please visit: www.ceragon.com

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 amendedand 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 risk of components shortage due to the global shortage in semiconductors and chipsets, which could cause delays in deliveries of our products and delays in the deployment of wireless communication networks by our customers, slowdowns and other adverse effects on our industry; 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 atwww.ceragon.com.

Investor & Media Contact:Maya LustigCeragon NetworksTel. +972-54-677-8100mayal@ceragon.com

- Tables Follow -

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

Three months ended March 31,

2021 2020

Revenues $ 68,270 $ 55,871

Cost of revenues 48,124 41,861

Gross profit 20,146 14,010

Operating expenses:

Research and development, net 7,410 7,290

Selling and marketing 8,290 8,273

General and administrative 4,093 4,456

Total operating expenses $ 20,019 $ 19,793

Operating income (loss) 353 (6,009)

Financial expenses and others, net 1,051 308

Loss before taxes (698) (6,317)

Taxes on income 475 380

Equity loss in affiliates - 183

Net loss $ (1,173) $ (6,880)

Basic net loss per share $ $ (0.09) (0.01)

Diluted net loss per share $ $ (0.01) (0.09)

Weighted average number of shares used in 82,583,760 80,764,932computingbasic net loss per share

Weighted average number of shares used in computing diluted net loss per share 82,583,760 80,764,932

CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) (Unaudited) March 31, December 31, 2021 2020 ASSETS Unaudited Audited CURRENT ASSETS: Cash and cash equivalents $ $ 33,011 27,101 Trade receivables, net 106,712 107,388 Other accounts receivable and prepaid 13,202 14,755 expenses Inventories 48,542 50,627 Total current assets 201,467 199,871 NON-CURRENT ASSETS: Deferred tax assets 8,269 8,279 Severance pay and pension fund 5,899 6,059 Property and equipment, net 31,063 31,748 Operating lease right-of-use assets 23,701 6,780 Intangible assets, net 6,018 6,117 Other non-current assets 14,681 13,565 Total non-current assets 89,631 72,548 Total assets $ $ 291,098 272,419 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 61,813 $ 63,722 Deferred revenues 3,489 3,492 Short-term loans 11,979 5,979 Operating lease liabilities 4,752 3,183 Other accounts payable and accrued 20,480 24,048 expenses Total current liabilities 102,513 100,424 LONG-TERM LIABILITIES: Accrued severance pay and pension 11,238 11,601 Deferred revenues 9,035 7,495 Operating lease liabilities 19,006 3,840 Other long-term payables 2,909 2,933 Total long-term liabilities 42,188 25,869 SHAREHOLDERS' EQUITY: Share capital: Ordinary shares 223 218 Additional paid-in capital 424,993 420,958 Treasury shares at cost (20,091) (20,091) Other comprehensive loss (10,664) (8,068) Accumulated deficits (248,064) (246,891) Total shareholders' equity 146,397 146,126 Total liabilities and shareholders' equity $ 291,098 $ 272,419

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)

Three months ended

March 31,

2021 2020

Cash flow from operating activities:

Net loss $ (1,173) $ (6,880)

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

Depreciation and amortization 2,886 2,704

Gain from sale of property and equipment, net (128) -

Stock-based compensation expense 351 426

Decrease in accrued severance pay and pensions, net (203) (443)

Decrease in trade receivables, net 413 12,586

Increase in other accounts receivable and prepaid expenses (including (1,092) (2,074)other long term assets)

Decrease in operating lease right-of-use assets 1,269 1,356

Decrease in inventory, net of write off 1,718 1,997

Decrease (increase) in deferred tax asset, net 10 (24)

Decrease in trade payables (2,131) (4,440)

Decrease in other accounts payable and accrued expenses (including (3,656) (1,883)other long term liabilities)

Decrease in operating lease liability (1,455) (1,807)

Increase in deferred revenues 1,537 1,609

Net cash provided by (used in) operating activities $ (1,654) $ 3,127





Cash flow from investing activities:

Purchase of property and equipment, net (2,203) (959)

Proceeds from sale of property and equipment, net 200 -

Purchase of intangible assets, net - (243)

Net cash used in investing activities $ (2,003) $ (1,202)

Cash flow from financing activities:

Proceeds from exercise of options 3,689 246

Proceeds from bank credits and loans, net 6,000 18,255

Net cash provided by financing activities $ 9,689 $ 18,501

$ Translation adjustments on cash and cash equivalents $ (122) (245)

Increase in cash and cash equivalents $ 5,910 $ 20,181

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

Cash and cash equivalents at the end of the period $ 33,011 $ 44,120

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)

Three months ended

March 31,

2021 2020

GAAP cost of revenues $ 48,124 $ 41,861

Stock based compensation expenses (36) (27)

Changes in indirect tax positions (1) (1)

Non-GAAP cost of revenues $ 48,087 $ 41,833

GAAP gross profit $ 20,146 $ 14,010

Stock based compensation expenses 36 27

Changes in indirect tax positions 1 1

Non-GAAP gross profit $ 20,183 $ 14,038

GAAP Research and development expenses $ 7,410 $ 7,290

Stock based compensation expenses (52) (89)

Non-GAAP Research and development expenses $ 7,358 $ 7,201

$ 8,290 $ 8,273GAAP Sales and Marketing expenses

Stock based compensation expenses (104) (100)

Non-GAAP Sales and Marketing expenses $ 8,186 $ 8,173

GAAP General and Administrative expenses $ 4,093 $ 4,456

Stock based compensation expenses (159) (210)

Non-GAAP General and Administrative expenses $ 3,934 $ 4,246

$ 353 $ (6,009)GAAP operating income (loss)

Stock based compensation expenses 351 426

Changes in indirect tax positions 1 1

Non-GAAP operating income (loss) $ 705 $ (5,582)

$ 1,051 $ 308GAAP financial expenses and others, net

Leases - financial income 186 450

Non-GAAP financial expenses and others, net $ 1,237 $ 758

GAAP Tax expenses $ 475 $ 380

Non cash tax adjustments (128) (15)

Non-GAAP Tax expenses $ 347 $ 365

GAAP equity loss in affiliates $ - $ 183

Other non-cash adjustments - (183)

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

March 31,

2021 2020

GAAP net loss $ (1,173) $ (6,880)

Stock based compensation 351 426 Expenses

Changes in indirect tax positions 1 1

Leases - financial income (186) (450)

Non-cash tax adjustments 128 15

Other non-cash adjustment - 183

$ (879) $ (6,705) Non-GAAP net loss

$ (0.01) $ (0.09) GAAP basic net loss per share

$ (0.01) $ (0.09) GAAP diluted net loss per share

$ (0.01) $ (0.08) Non-GAAP diluted net loss per share

82,583,760 80,764,932 Weighted average number of shares used in computing GAAP basic net loss per share

82,583,760 80,764,932 Weighted average number of shares used in computing GAAP diluted net loss per share

82,583,760 80,764,932 Weighted average number of shares used in computing Non-GAAP diluted net loss per share

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SOURCE Ceragon Networks Ltd