Q2-2015 Financial Review
August 2015
Ceragon Networks proprietary and confidential
Safe Harbor Statement This presentation contains statements concerning Ceragon’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include: projections of capital expenditures and liquidity, competitive pressures, revenues, growth prospects, product development, financial resources, restructuring costs, cost savings and other financial matters. You can identify these and other forward-looking statements by the use of words such as “may,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “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 the risk that Ceragon will not achieve the benefits it expects from its expense reduction and profit enhancement programs; the risk that Ceragon’s expectations regarding future revenues and profitability will not materialize; the risk that Ceragon will not comply with the financial or other covenants in its agreements with its lenders; risks associated with doing business in Latin America, including currency export controls and recent economic concerns; risks relating to the concentration of our business in the Asia Pacific region and in developing nations; the risk of significant expenses in connection with potential contingent tax liability associated with Nera’s prior operations or facilities; 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, and 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.
2
Proprietary and Confidential
Revenues- Geographic Split Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Europe
18%
20%
19%
16%
17%
14%
16%
12%
Africa
23%
11%
11%
19%
17%
11%
8%
8%
North America
10%
10%
13%
12%
7%
12%
10%
18%
India
11%
8%
14%
17%
26%
37%
31%
30%
APAC
9%
11%
13%
14%
9%
11%
7%
10%
29%
40%
30%
22%
24%
15%
28%
22%
100%
100%
100%
100%
100%
100%
100%
100%
Latin America Total Latin America, 22%
Q2/15
Europe, 12% Africa, 8%
APAC, 10%
Latin America, 22%
% DIRECT % OEM 3
Europe, 15% Africa, 11%
APAC, 9%
N. America, 18%
N. America, 12% India, 31%
India, 30%
Direct vs. OEM
Q3/14 – Q2/15
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
96%
89%
97%
96%
94%
93%
93%
93%
93%
93%
4%
11%
3%
4%
6%
7%
7%
7%
7%
7%
Proprietary and Confidential
Q1/15
Q2/15
NON-GAAP Profit & Loss Actual (unaudited)
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Revenues
92,099
89,492
70,515
90,420
99,013
111,164
93,653
94,772
Cost of Revenues
62,708
60,761
54,070
66,045
73,579
84,049
69,049
67,675
Gross profit
29,391
28,731
16,445
24,375
25,434
27,115
24,604
27,097
Gross margin
31.9%
32.1%
23.3%
27.0%
25.7%
24.4%
26.3%
28.6%
Research & Development
9,937
8,587
7,853
7,689
7,623
7,805
6,303
5,525
% R&D
10.8%
9.6%
11.1%
8.5%
7.7%
7.0%
6.7%
5.8%
15,636
15,887
14,405
13,989
12,623
12,804
11,037
9,331
%S&M
17.0%
17.8%
20.4%
15.5%
12.7%
11.5%
11.8%
9.8%
General & Administration
5,989
5,837
5,022
5,283
5,124
5,626
4,752
5,501
6.5%
6.5%
7.1%
5.8%
5.2%
5.1%
5.1%
5.8%
Total operating expenses
31,562
30,311
27,280
26,961
25,370
26,235
22,092
20,357
Operating profit (loss)
(2,171)
(1,580)
(10,835)
(2,586)
64
880
2,512
6,740
Operating margin
(2.4%)
(1.8%)
(15.4%)
(2.9%)
0.1%
0.8%
2.7%
7.1%
Sales & Marketing
%G&A
4
Proprietary and Confidential
Cash Flow (U.S. dollars in thousands) Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Total cash & cash investments
44,826
52,337
30,511
36,384
48,484
42,371
37,619
39,888
Cash flow from operations
(7,445)
(16,102)
(34,834)
9,066
(7,902)
1,391
(1,892)
3,531
Capital expenditures
(4,009)
(4,717)
(2,850)
(3,328)
(2,275)
(4,227)
(2,042)
(1,431)
Option Exercise Public offering, net
Loans received (Repayment) Other Net Change in Cash
34,957
45,150
7,242
(4,358)
16,052
22
(22,838)
442
(8)
92
(24)
(2,269)*
(194)
113
(35)
(3,719)*
(810)
77
(4,236)
7,511
21,826
5,873
12,100
(6,113)
(4,752)
2,269
(*) Mainly devaluation of Bonds in Venezuela and Argentina
5
Proprietary and Confidential
Selected data from balance sheet (U.S. dollars in thousands) (Unaudited)
Q3/13 Inventory
Inventory Days
Trade Receivables
DSOs
6
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
57,438
64,239
62,951
61,784
60,037
61,830
55,700
51,337
81
94
95
91
85
80
68
63
128,766
131,166
129,976
145,878
162,046
162,626
141,961
138,110
124
132
139
155
169
160
131
126
Proprietary and Confidential
Reported Results – Non GAAP (U.S. dollars in thousands) (Unaudited) Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Revenues
89,492
70,515
90,420
99,013
111,164
93,653
94,772
Cost of Revenues
60,761
54,070
66,045
73,579
84,049
69,049
67,675
Gross profit
28,731
16,445
24,375
25,434
27,115
24,604
27,097
8,587
7,853
7,689
7,623
7,805
6,303
5,525
S&M
15,887
14,405
13,989
12,623
12,804
11,037
9,331
G&A
5,837
5,022
5,283
5,124
5,626
4,752
5,501
Total Operating Expenses
30,311
27,280
26,961
25,370
26,235
22,092
20,357
Operating income (loss)
(1,580)
(10,835)
(2,586)
64
880
2,512
6,740
Finance expenses
(1,842)
(1,854)
(2,175)
(3,311)
(3,845)
(3,372)
(3, 161)
(664)
(187)
(260)
(307)
(741)
(487)
(570)
(4,086)
(12,876)
(5,021)
(3,554)
(3,706)
(1,347)
3,009
Non GAAP EPS
$(0.09)
$(0.25)
$(0.1)
$(0.05)
$(0.05)
$(0.02)
$0.04
# of Shares for EPS (‘000)
43,640
52,457
52,861
68,048
76,784
77,145
77,811
R&D - Net
Income Tax Non GAAP Net income (loss)
7
Proprietary and Confidential
Reported Results – Reconciliation to GAAP (U.S. dollars in thousands) (Unaudited) Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
(4,086)
(12,876)
(5,021)
(3,554)
(3,706)
(1,347)
3,009
Share based compensation expense
932
1,047
1,076
568
654
194
378
Amortization of intangible assets
632
523
530
536
532
492
326
12,577
4,440
667
-
10,278
1,225
-
-
-
-
-
421
-
-
(7,461)
277
157
(250)
(399)
30
118
1,291
-
-
-
533
-
-
-
4,140
-
-
20,451
2,973
-
3,320
2,170
-
-
-
-
-
-
1,490
1,351
1,150
1,015
734
856
(16,800)
-
14,765
-
-
Non GAAP Net income (loss)
Restructuring and related expenses Liquidation of one of the Company’s subsidiaries Changes in pre-acquisition indirect tax positions Non-recurring adjustment of pension liabilities Currency devaluation in Venezuela Expenses related to efforts taken to expatriate cash from Latin America Non-cash tax adjustments Other expense (income)
(15,377)
(26,963)
7,998
(5,558)
(51,956)
(6.995)
1,331
GAAP EPS
$(0.35)
$(0.51)
$0.15
$(0.08)
$(0.68)
$(0.09)
$0.02
# of Shares for basic EPS (‘000)
43,640
52,457
52,457
68,048
76,784
77,145
77,170
43,640
52,457
52,457
68,048
76,784
77,145
77,243
GAAP Net Income (Loss)
# of Shares for diluted EPS (‘000)
8
Proprietary and Confidential
Quarterly Revenue and Non-GAAP Net Income (Loss) 140 120
110.3
116.1 118.5
110
112.7
117.1
111.2
106.8
100.3
100
90.1
80 62.3
90.1
92.1
99 90.4
89.5
93.7
94.8
70.5
66.9
60 40 20 0 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15
Non-GAAP Net Income($mm) 10 5.5
6.1
5 0.6
2.3 0.23
1.6
3 0.23
0 -5
Q3-10 Q4-10 Q1-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 -0.8 Q2-11 -1.3 -1.6 -2 -3.6 -3.7 -4.51 -4.1 -5.0 -5.7 -5.67
-10 -15
9
-12.9
Proprietary and Confidential
The Number 1 high-capacity wireless hauling Specialist
[email protected] www.ceragon.com
NASDAQ: CRNT
