Ceragon Networks Ltd. EBITDA dropped on 52.4% and Revenue decreased on 7.9%
02/08/2021 • About Ceragon Networks Ltd. (
$CRNT) • By InTwits
Ceragon Networks Ltd. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Ceragon Networks Ltd. is a company in decline: 2020 revenue growth was -7.9%, 5 years revenue CAGR was -5.5%
- Ceragon Networks Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $14m in FY2020, $9m in FY2019, $9m in FY2018, $6m in FY2017, $5m in FY2016
- The company has unprofitable business model: ROIC is -4.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ceragon Networks Ltd.'s Revenue decreased on 7.9%. Annual revenue decline showed slowdown in 20Q4 - revenue increased on 4.2%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.3 pp from 7.3% to 10.6% in 2020.
Gross Margin decreased on 5.1 pp from 33.9% to 28.8% in 2020. SG&A as a % of Revenue decreased on 2.1 pp from 22.0% to 19.9% in 2020.
Net Income margin decreased on 5.7 pp from -0.82% to -6.5% in 2020. During the last 5 years Net Income margin topped in 2018 at 6.7% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.3% in 2020. The company's CAPEX/Revenue showed almost no change from 2017 to 2020. Average CAPEX/Revenue for the last three years was 3.1%. Ceragon Networks Ltd. invested a big chunk of EBITDA (56.4%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-4.3%) and ROE (-11.2%). ROIC decreased on 8.9 pp from 4.6% to -4.3% in 2020. ROE decreased on 9.7 pp from -1.5% to -11.2% in 2020. During 2016-2020 ROIC topped in 2018 at 17.6% and was declining since that time. During the last 5 years ROE topped in 2018 at 15.7% and was declining since that time.
Leverage (Debt)
Debt level is -1.3x Net Debt / EBITDA and 1.2x Debt / EBITDA. Debt dropped on 47.9% while cash jumped on 13.2%.
Ceragon Networks Ltd. has no short term refinancing risk: cash is higher than short term debt (295.8%).
Financial and operational results
FY ended 12/31/2020
Ceragon Networks Ltd. ($CRNT) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 293.6 | 332.0 | 343.9 | 285.6 | 262.9 | -7.9% |
| Gross Profit | 99.2 | 107.3 | 116.2 | 96.8 | 75.6 | -21.9% |
| SG&A | 59.9 | 60.2 | 62.3 | 62.7 | 52.2 | -16.8% |
| EBITDA | 29.5 | 32.4 | 33.9 | 22.6 | 10.8 | -52.4% |
| EBIT | | | | 12.9 | | |
| Net Income | 11.4 | 15.6 | 23.0 | -2.3 | -17.1 | |
| Stock Based Compensation | | | | 2.1 | | |
Balance Sheet
|
|---|
| Cash | 36.3 | 25.9 | 35.6 | 23.9 | 27.1 | 13.2% |
| Accounts Receivable | | | | 118.5 | | |
| Inventory | | | | 62.1 | | |
| Accounts Payable | | | | 59.6 | | |
| Short Term Debt | 17.0 | 0.0 | 0.0 | 20.2 | 9.2 | -54.7% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 4.7 | 3.8 | -18.6% |
Cash flow
|
|---|
| Capex | 8.2 | 8.5 | 10.3 | 11.6 | 6.1 | -47.6% |
Ratios
|
|---|
| Revenue growth | -16.0% | 13.1% | 3.6% | -17.0% | -7.9% | |
| EBITDA growth | -12.6% | 9.6% | 4.8% | -33.3% | -52.4% | |
|
|---|
| Gross Margin | 33.8% | 32.3% | 33.8% | 33.9% | 28.8% | -5.1% |
| EBITDA Margin | 10.1% | 9.7% | 9.9% | 7.9% | 4.1% | -3.8% |
| EBIT Margin | | | | 4.5% | |
| SG&A, % of revenue | 20.4% | 18.1% | 18.1% | 22.0% | 19.9% | -2.1% |
| SBC, % of revenue | | | | 0.7% | |
| Net Income Margin | 3.9% | 4.7% | 6.7% | -0.8% | -6.5% | -5.7% |
| CAPEX, % of revenue | 2.8% | 2.6% | 3.0% | 4.1% | 2.3% | -1.7% |
|
|---|
| ROIC | 13.2% | 16.2% | 17.6% | 4.6% | -4.3% | -8.9% |
| ROE | 10.4% | 12.4% | 15.7% | -1.5% | -11.2% | -9.7% |
| Net Debt/EBITDA | -0.7x | -0.8x | -1.0x | 0.0x | -1.3x | -1.4x |
People
|
|---|
| Insider ownership | | | | 13.9% | | |
| Employees | | | | 1,042 | | |
| Revenue/Employee, th. $ | | | | 274 | | |
Ceragon Networks Ltd. ($CRNT) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 56 | 62 | 71 | 74 | | -19.0% | -14.5% | -2.0% | 4.2% |
| EBITDA | -3 | -1 | 6 | 3 | | -166.1% | -112.9% | 21.6% | - |
| Net Income | -7 | -5 | 2 | -6 | | -788.0% | -647.7% | - | - |
Balance Sheet
|
|---|
| Cash | 44 | 35 | 29 | 27 | | 47.1% | 21.3% | 38.8% | 12.9% |
| Short Term Debt | 33 | 20 | 18 | 9 | | - | 118.7% | 5.2% | -54.2% |
| Long Term Debt | 0 | 0 | 0 | 4 | | - | - | - | -23.2% |
Ratios
|
|---|
| Gross Margin | 25.1% | 26.4% | 33.4% | 29.1% | | -10.9% | -9.6% | 1.4% | -2.9% |
| EBITDA Margin | -5.9% | -1.2% | 8.6% | 4.4% | | -13.2% | -9.5% | 1.7% | 4.4% |
| Net Income Margin | -12.3% | -8.8% | 2.2% | -8.5% | | -13.8% | -10.1% | 2.2% | -2.9% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 2.8% | 3.7% | 4.4% |
|---|
| Ceragon Networks Ltd. ($CRNT) | - | 13.1% | 3.6% | -17.0% | -7.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 33.8% | 32.3% | 33.8% | 33.9% | 28.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 3.1% | 9.3% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 10.1% | 9.7% | 9.9% | 7.9% | 4.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.0% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 2.8% | 2.6% | 3.0% | 4.1% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | -1.6% | 2.3% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 13.2% | 16.2% | 17.6% | 4.6% | -4.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.9x | -0.6x | 0.2x | -0.4x | -0.3x |
|---|
| Ceragon Networks Ltd. ($CRNT) | -0.7x | -0.8x | -1.0x | 0.0x | -1.3x |
