PR Newswire | Nov 2, 2020 07:01AM EST

11/02 06:00 CST

Ceragon Networks Reports Financial Results For The Third Quarter Of 2020- Strong Quarter With $70.6M Revenues, 33.4% Gross Margin and $0.02 GAAP EPS Reflecting Focused Execution Despite Covid Environment -- Current Growth Driven By ISP & 4G Activities; Ongoing Progress With Major 5G Opportunities Paves Potential for Strong Mid-To-Long-Term Growth - LITTLE FALLS, N.J., Nov. 2, 2020

LITTLE FALLS, N.J., Nov. 2, 2020 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless hauling specialist, today reported results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights:

* Strong revenues, high gross margin and lower operating expenses generated $1.6 million in GAAP net profit despite COVID-19 constraints, as Ceragon benefited from ISP and 4G operator projects to increase network reach, capacity and speed * COVID-19-related uncertainty continued to impact Ceragon's performance, especially in Latin America * Continued progress in multiple large operator 5G network processes, moving from design wins to proof of concepts and purchase orders with initial low-volume shipments, in preparation for potential high-volume orders in second half of 2021

Primary Financial Results:

Revenues:$70.6 million compared with $72.2 million for Q3'19 and $62.4 million for Q2'20.

Gross margin: 33.4% compared to 32.2% for Q3'19 and 26.4% for Q2'20.

Operating income (loss):$3.4 million compared with $2.1 million for Q3'19 and $(3.5) million for Q2'20.

Net income (loss): $1.6 million, or $0.02 per diluted share compared with $0.2 million, or $0.00 per diluted share for Q3'19 and $(5.5) million, or $(0.07) per diluted share for Q2'20.

Non-GAAP results: Gross margin 33.5%, operating income $3.7 million, and net income $2.3 million, or $0.03 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.

Cash and cash equivalents: $29.2 million at September 30, 2020, compared to $35.2 million at June 30, 2020.

Ira Palti, President and CEO of Ceragon, commented, "Q3 was a strong period for Ceragon, reflecting the market's urgent need for increased network capacity and its recognition of the critical advantages of our solutions, coupled with our focused execution despite the COVID-19 environment. During the quarter, we achieved new 5G design wins, some of which have already translated into small orders, and completed significant shipments against large-scale 4G expansion projects. We also benefited from ISP activities in the US and Europe, as they move quickly to address broadband gaps left underserved by operators.

"While COVID-19 continues to bring uncertainty to project timing, the need for broadband network expansions - 4G, 5G and others - has never been clearer, and we expect this to continue working to our strengths. Meanwhile, we continue to maintain strong control over our operations, as demonstrated by our success in reducing our operating expenses and strengthening our balance sheet. The trend towards OpenRAN is enhancing our position as a best-in-class vendor in the 5G environment, and we are progressing on track with our 5G-enabling IP-50 platform development efforts and with our advanced 5G hauling chipset. Taken as a whole, as a 5G technology leader with strong 4G and ISP offerings, we believe we are ideally positioned to benefit from current market dynamics and the longer-term 5G promise."

Supplemental revenue breakouts by geography:

Third quarter 2020:

Europe: 14% Africa: 14% North America: 14% Latin America: 14% India: 24% APAC: 20%

A conference call will follow beginning at 9:00 a.m. EST. Investors are invited to join the company's teleconference by calling (USA) (844) 291-6360 or international +1 (234) 720-6993 and using the following access code: 2739037.

Investors can also listen to the call live via the Internet by accessing Ceragon Networks' website on the webcasts page in the section for investors: www.ceragon.com/investors/webcasts/ selecting the webcast link, and following the registration instructions.

If you are unable to join us live, the replay numbers are: (USA) (866) 207-1041 (International) +1 (402) 970-0847, with access code: 4059433. This audio replay will be available through December 2, 2020.

About Ceragon Networks Ltd.

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.

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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 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 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 ofan 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 differently than anticipated and such other risks, uncertainties and other factors that could affect our results, as detailed in our press release that was published earlier today and 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 from the Securities and Exchange Commission's website atwww.sec.govand may also be obtained from Ceragon's website atwww.ceragon.com.

Investors:

Osi Sessler +972 3 5431047 investor@ceragon.com

Media:

Tanya Solomon+972 3 5431163 media@ceragon.com

-tables follow-

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

Three months ended Nine months ended September 30, September 30,

2020 2019 2020 2019

Revenues $ $ $ 188,879 $ 214,327 70,581 72,163

Cost of revenues 47,003 48,924 134,789 140,095

Gross profit 23,578 23,239 54,090 74,232

Operating expenses:

Research and development, net 7,329 6,736 21,389 19,154

Selling and marketing 7,986 9,756 24,459 29,339

General and administrative 4,909 4,610 14,350 16,246

Total operating expenses $ $ $ 60,198 $ 64,739 20,224 21,102

Operating income (loss) 3,354 2,137 (6,108) 9,493

Financial expenses and others, net 1,395 1,378 3,167 4,317

Income (loss) before taxes 1,959 759 (9,275) 5,176

Taxes on income 277 415 1,057 2,947

Equity loss in affiliates 98 158 441 472

Net income (loss) $ $ $ (10,773) $ 1,584 186 1,757

Basic net income (loss) per share $ $ 0.02 0.00 $ $ (0.13) 0.02

Diluted net income (loss) per share $ $ 0.02 0.00 $ $ (0.13) 0.02

Weighted average number of shares used incomputing basic net income (loss) per share

81,277,995 80,303,699 81,019,808 80,202,791

Weighted average number of shares used incomputing diluted net income (loss) per share

82,000,357 81,652,356 81,019,808 82,012,013

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

September 30, December 31, 2020 2019

ASSETS Unaudited Audited

CURRENT ASSETS:

Cash and cash equivalents $ 29,155 $ 23,939

Trade receivables, net 108,394 118,531

Other accounts receivable and prepaid 11,778 11,033expenses

Inventories 51,869 62,132

Total current assets 201,196 215,635

NON-CURRENT ASSETS:

Long-term bank deposits 17 17

Deferred tax assets 8,142 8,106

Severance pay and pension fund 5,738 5,661

Property and equipment, net 32,014 34,865

Intangible assets, net 8,015 7,898

Other non-current assets 18,637 17,707

Total non-current assets 72,563 74,254

Total assets $ 273,759 $ 289,889

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables $ 54,035 $ 59,635

Deferred revenues 2,382 1,734

Short-term loans 17,879 14,600

Other accounts payable and accrued expenses 24,833 28,399

Total current liabilities 99,129 104,368

LONG-TERM LIABILITIES:

Accrued severance pay and pension 10,618 10,709

Deferred revenues 7,495 6,265

Other long-term payables 6,855 8,126

Total long-term liabilities 24,968 25,100

SHAREHOLDERS' EQUITY:

Share capital:

Ordinary shares 215 215

Additional paid-in capital 420,160 418,062

Treasury shares at cost (20,091) (20,091)

Other comprehensive loss (10,050) (8,666)

Accumulated deficits (240,572) (229,099)

Total shareholders' equity 149,662 160,421

Total liabilities and shareholders' equity $ 273,759 $ 289,889

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)

Three months ended Nine months ended

September 30, September 30,

2020 2019 2020 2019

Cash flow from operating activities:

Net income (loss) $ 1,584 $ 186 $ (10,773) $ 1,757

Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities:

Depreciation and amortization 2,728 2,573 8,112 7,011

Stock-based compensation expense 384 422 1,251 1,594

Decrease (increase) in trade and other receivables, net (10,301) 6,616 6,661 (3,572)

Decrease (increase) in inventory, net of write off 1,384 5,736 8,910 (15,077)

Decrease (increase) in deferred tax asset, net 73 (194) (36) 1,042

Decrease in trade payables and (274) (30,760) (9,269) (21,297)accrued liabilities

Increase in deferred revenues 1,075 1,023 1,878 7,173

Other adjustments 122 (33) (166) (169)

Net cash provided by (used in) operating activities $ (3,225) $ (14,431) $ 6,568 $ (21,538)





Cash flow from investing activities:

Purchase of property and equipment, net (1,166) (2,409) (4,804) (9,116)

Purchase of intangible assets, net (64) (249) (343) (3,041)

Proceeds from bank deposits - - - 920

Net cash used in investing activities $ (1,230) $ (2,658) $ (5,147) $ (11,237)

Cash flow from financing activities:

Proceeds from exercise of options 293 135 847 391

Proceeds from (repayment of) bank credits and loans, net (1,800) 8,500 3,279 17,400

Net cash provided by (used in) financing activities $ (1,507) $ 8,635 $ 4,126 $ 17,791

$ Translation adjustments on cash and cash equivalents $ (50) (63) $ (331) $ (73)

Increase (decrease) in cash and cash equivalents $ (6,012) $ (8,517) $ 5,216 $ (15,057)

Cash and cash equivalents at the beginning of the period 35,167 29,041 23,939 35,581

Cash and cash equivalents at the end of the period $ 29,155 $ 20,524 $ 29,155 $ 20,524

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)

Three months ended Nine months ended

September 30, September 30,

2020 2019 2020 2019

GAAP cost of revenues $ 47,003 $ 48,924 $ 134,789 $ 140,095

Stock based compensation expenses (32) (13) (92) (44)

Changes in indirect tax positions (1) (4) (3) (34)

Non-GAAP cost of revenues $ 46,970 $ 48,907 $ 134,694 $ 140,017

GAAP gross profit $ 23,578 $ 23,239 $ 54,090 $ 74,232

Gross profit adjustments 33 17 95 78

Non-GAAP gross profit $ 23,611 $ 23,256 $ 54,185 $ 74,310

GAAP Research and development $ 7,329 $ 6,736 $ 21,389 $ 19,154expenses

Stock based compensation expenses (30) (84) (129) (285)

Non-GAAP Research and development $ 7,299 $ 6,652 $ 21,260 $ 18,869expenses

$ 7,986 $ 9,756 $ 24,459 $ 29,339GAAP Sales and Marketing expenses

Stock based compensation expenses (167) (171) (435) (553)

Non-GAAP Sales and Marketing $ 7,819 $ 9,585 $ 24,024 $ 28,786expenses

GAAP General and Administrative $ 4,909 $ 4,610 $ 14,350 $ 16,246expenses

Stock based compensation expenses (155) (154) (595) (712)

Non-GAAP General and Administrative $ 4,754 $ 4,456 $ 13,755 $ 15,534expenses

GAAP financial expenses and others, $ 1,395 $ 1,378 $ 3,167 $ 4,317net

Leases - financial income (expenses) (157) 91 183 (101)

Non-GAAP financial expenses and $ 1,238 $ 1,469 $ 3,350 $ 4,216others, net

GAAP Tax expenses $ 277 $ 415 $ 1,057 $ 2,947

Non cash tax adjustments (76) 182 (4) (1,090)

Non-GAAP Tax expenses $ 201 $ 597 $ 1,053 $ 1,857

GAAP equity loss in affiliates $ 98 $ 158 $ 441 $ 472

Other non-cash adjustments (98) (158) (441) (472)

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 Nine months ended,

September 30, September 30,

2020 2019 2020 2019

GAAP net income (loss) $ 1,584 $ 186 $ (10,773) $ 1,757

Stock based compensation 384 422 1,251 1,594 expenses

Changes in indirect tax positions 1 4 3 34

Leases - financial expenses 157 (91) (183) 101 (income)

Non-cash tax adjustments 76 (182) 4 1,090

Other non-cash adjustment 98 158 441 472

Non-GAAP net income (loss) $ 2,300 $ 497 $ (9,257) $ 5,048

$ 0.02 $ 0.00 $ (0.13) $ 0.02 GAAP basic net income (loss) per share

$ 0.02 $ 0.00 $ (0.13) $ 0.02 GAAP diluted net income (loss) per share

$ 0.03 $ 0.01 $ (0.11) $ 0.06 Non-GAAP basic and diluted net income (loss) per share

Weighted average number of shares used in computing GAAP basic net income (loss) per share 81,277,995 80,303,699 81,019,808 80,202,791



Weighted average number of shares used in computing GAAP diluted net income 82,000,357 81,652,356 81,019,808 82,012,013 (loss) per share

82,244,119 81,814,367 81,019,808 82,254,919 Weighted average number of shares used in computing Non-GAAP diluted net income (loss) per share

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SOURCE Ceragon Networks Ltd