Ceragon Networks Ltd. Net Income dropped on 110% and EBITDA Margin decreased slightly on 1.9 pp from 9.9% to 7.9%
02/10/2020 • About Ceragon Networks Ltd. (
$CRNT) • By InTwits
Ceragon Networks Ltd. reported 2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ceragon Networks Ltd. is a company in decline: 2019 revenue growth was -17.0%, 5 years revenue CAGR was -5.1%
- Ceragon Networks Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $3m in 2019, $1m in 2018, $5m in 2017, $14m in 2016, $5m in 2015
- The company has potentially unprofitable business model: ROIC is 4.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.0x while industry average is -0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ceragon Networks Ltd.'s Revenue dropped on 17.0%. Revenue decline showed acceleration in 19Q4 - it was 17.2% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.9 pp from 9.9% to 7.9% in 2019.
Gross Margin showed almost no change in 2019. SG&A as a % of Revenue increased on 3.9 pp from 18.1% to 22.0% in 2019.
Net Income margin decreased on 7.5 pp from 6.7% to -0.82% in 2019. During the last 5 years Net Income margin topped in 2018 at 6.7%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.1% in 2019. The company's CAPEX/Revenue increased slightly on 1.3 pp from 2.8% in 2016 to 4.1% in 2019. It's average CAPEX/Revenue for the last three years was 3.2%. The company invested a big chunk of EBITDA (51.3%) to CAPEX which didn't stop revenue from falling. CAPEX as a % of Revenue followed a growing trend at 0.53 pp per annum in the last 5 years.
Return on investment
The company operates at low but positive ROIC (4.6%) and negative ROE (-1.5%). ROIC dropped on 13.0 pp from 17.6% to 4.6% in 2019. ROE dropped on 17.2 pp from 15.7% to -1.5% in 2019. During the last 5 years ROE topped in 2018 at 15.7%.
Leverage (Debt)
Debt level is 0.0x Net Debt / EBITDA and 1.1x Debt / EBITDA. Net Debt / EBITDA surged on 1.1x from -1.0x to 0.045x in 2019. Debt surged while cash dropped on 32.7%. During 2015-2019 Net Debt/EBITDA bottomed in 2018 at -1.0x.
Ceragon Networks Ltd. has no short term refinancing risk: cash is higher than short term debt (118.3%).
Management team
At the end of financial year the company had 13.9% shares owned by insiders.
At the end of financial year the company had 1,042 employees. Average revenue per employee in 2019 was
$274,072.
Financial and operational results
FY ended 12/31/2019
Ceragon Networks Ltd. ($CRNT) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 349.4 | 293.6 | 332.0 | 343.9 | 285.6 | -17.0% |
| Gross Profit | 102.9 | 99.2 | 107.3 | 116.2 | 96.8 | -16.6% |
| SG&A | 62.1 | 59.9 | 60.2 | 62.3 | 62.7 | 0.7% |
| EBITDA | 33.8 | 29.5 | 32.4 | 33.9 | 22.6 | -33.3% |
| EBIT | | | | | 12.9 | |
| Net Income | 1.0 | 11.4 | 15.6 | 23.0 | -2.3 | -110.2% |
| Stock Based Compensation | | | | | 2.1 | |
Balance Sheet
|
|---|
| Cash | 36.3 | 36.3 | 25.9 | 35.6 | 23.9 | -32.7% |
| Accounts Receivable | | | | | 118.5 | |
| Inventory | | | | | 62.1 | |
| Accounts Payable | | | | | 59.6 | |
| Short Term Debt | 34.9 | 17.0 | 0.0 | 0.0 | 20.2 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 4.7 | |
Cash flow
|
|---|
| Capex | 5.3 | 8.2 | 8.5 | 10.3 | 11.6 | 12.5% |
Ratios
|
|---|
| Revenue growth | -5.8% | -16.0% | 13.1% | 3.6% | -17.0% | |
| EBITDA growth | 1,009.1% | -12.6% | 9.6% | 4.8% | -33.3% | |
|
|---|
| Gross Margin | 29.5% | 33.8% | 32.3% | 33.8% | 33.9% | 0.1% |
| EBITDA Margin | 9.7% | 10.1% | 9.7% | 9.9% | 7.9% | -1.9% |
| EBIT Margin | | | | | 4.5% |
| SG&A, % of revenue | 17.8% | 20.4% | 18.1% | 18.1% | 22.0% | 3.9% |
| SBC, % of revenue | | | | | 0.7% |
| Net Income Margin | 0.3% | 3.9% | 4.7% | 6.7% | -0.8% | -7.5% |
| CAPEX, % of revenue | 1.5% | 2.8% | 2.6% | 3.0% | 4.1% | 1.1% |
|
|---|
| ROIC | 13.8% | 13.2% | 16.2% | 17.6% | 4.6% | -13.0% |
| ROE | 1.0% | 10.4% | 12.4% | 15.7% | -1.5% | -17.2% |
| Net Debt/EBITDA | -0.0x | -0.7x | -0.8x | -1.0x | 0.0x | 1.1x |
People
|
|---|
| Insider ownership | | | | | 13.9% | |
| Employees | | | | | 1,042 | |
| Revenue/Employee, th. $ | | | | | 274 | |
Ceragon Networks Ltd. ($CRNT) key quoterly financial indicators
| mln. $ | 19Q1 | 19Q2 | 19Q3 | 19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 69 | 73 | 72 | 71 | | -17.1% | -17.4% | -16.8% | -17.2% |
| EBITDA | 5 | 6 | 5 | 0 | | -27.3% | -28.2% | -50.0% | -100.0% |
| Net Income | 1 | 1 | 0 | -4 | | -51.7% | -69.0% | -100.0% | -134.5% |
Balance Sheet
|
|---|
| Cash | 30 | 29 | 21 | 24 | | 15.6% | -1.4% | -49.2% | -32.5% |
| Short Term Debt | 0 | 9 | 17 | 20 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 5 | | | | | |
Ratios
|
|---|
| Gross Margin | 36.0% | 36.0% | 32.0% | 32.0% | | 2.9% | 3.5% | -3.0% | -2.4% |
| EBITDA Margin | 7.2% | 8.2% | 6.9% | 0.0% | | -1.0% | -1.2% | -4.6% | -10.1% |
| Net Income Margin | 1.4% | 1.4% | 0.0% | -5.6% | | -1.0% | -2.3% | -7.1% | -19.2% |
Peers in Communications Equipment
Below you can find Ceragon Networks Ltd. benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | 30.6% | 75.2% | |
| Extreme Networks, Inc. ($EXTR) | 6.4% | -4.4% | 13.2% | 64.4% | |
| Optical Cable Corporation ($OCC) | -11.3% | -12.2% | -0.8% | 37.0% | |
| ParkerVision Inc ($PRKR) | | 37,601.2% | -97.5% | 35.0% | |
| Network-1 Technologies, Inc. ($NTIP) | 34.6% | 292.9% | -74.7% | 34.4% | |
| |
|---|
| Median (66 companies) | 1.8% | 7.6% | 5.1% | 2.8% | -0.1% |
|---|
| Ceragon Networks Ltd. ($CRNT) | | -16.0% | 13.1% | 3.6% | -17.0% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.7% | 83.1% | 83.1% | 83.3% | |
| Radware Ltd. ($RDWR) | 82.4% | 81.8% | 81.3% | 82.2% | |
| Radcom Ltd. ($RDCM) | 76.8% | 69.6% | 71.8% | 74.0% | 70.0% |
| Casa Systems, Inc. ($CASA) | 70.8% | 69.1% | 73.4% | 73.4% | |
| NetScout Systems, Inc. ($NTCT) | 79.2% | 65.6% | 70.2% | 72.4% | |
| |
|---|
| Median (67 companies) | 44.0% | 43.9% | 41.7% | 41.2% | 46.4% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 29.5% | 33.8% | 32.3% | 33.8% | 33.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 33.7% | 50.6% | 37.8% | 42.8% | |
| InterDigital, Inc. ($IDCC) | 58.1% | 73.6% | 67.3% | 41.9% | |
| EchoStar Corporation ($SATS) | 39.7% | 40.3% | 38.1% | 37.4% | |
| Ubiquiti Networks, Inc. ($UBNT) | 25.5% | 37.3% | 34.3% | 32.8% | |
| Ituran Location and Control Ltd. ($ITRN) | 30.5% | 29.9% | 29.9% | 30.4% | |
| |
|---|
| Median (65 companies) | 6.1% | 5.5% | 6.0% | 4.6% | -4.9% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 9.7% | 10.1% | 9.7% | 9.9% | 7.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Resonant Inc. ($RESN) | | 132.5% | 124.8% | 245.2% | |
| ViaSat, Inc. ($VSAT) | 26.5% | 26.7% | 33.0% | 32.1% | |
| Applied Optoelectronics, Inc. ($AAOI) | 30.1% | 19.0% | 17.5% | 26.9% | |
| EchoStar Corporation ($SATS) | 43.8% | 39.9% | 30.9% | 26.5% | |
| Finisar Corporation ($FNSR) | 11.9% | 9.4% | 9.7% | 16.8% | |
| |
|---|
| Median (65 companies) | 2.5% | 1.9% | 1.8% | 1.6% | 1.3% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 1.5% | 2.8% | 2.6% | 3.0% | 4.1% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| F5 Networks, Inc. ($FFIV) | 40.8% | 43.1% | 46.9% | 47.9% | |
| Ubiquiti Networks, Inc. ($UBNT) | 31.5% | 41.5% | 38.5% | 39.1% | |
| Motorola Solutions, Inc. ($MSI) | 18.9% | 26.4% | 39.5% | 35.3% | |
| Ituran Location and Control Ltd. ($ITRN) | 46.8% | 50.1% | 48.5% | 35.1% | |
| Casa Systems, Inc. ($CASA) | | 43.2% | 39.7% | 21.9% | |
| |
|---|
| Median (70 companies) | 2.0% | 2.2% | 2.1% | 0.3% | -7.4% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 13.8% | 13.2% | 16.2% | 17.6% | 4.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Extreme Networks, Inc. ($EXTR) | | -2.2x | -1.5x | 7.1x | |
| ViaSat, Inc. ($VSAT) | 2.5x | 3.2x | 2.5x | 5.8x | |
| CommScope Holding Company, Inc. ($COMM) | 9.6x | 4.3x | 4.6x | 4.4x | |
| Inseego Corp. ($INSG) | | | | 3.9x | |
| Finisar Corporation ($FNSR) | 0.2x | -0.5x | 1.6x | 3.8x | |
| |
|---|
| Median (45 companies) | -0.7x | -0.9x | -0.6x | 0.2x | |
|---|
| Ceragon Networks Ltd. ($CRNT) | -0.0x | -0.7x | -0.8x | -1.0x | 0.0x |
