Good day, everyone. Welcome to the Ceragon Networks Limited Fourth Quarter and Full Year 2016 Results Conference Call. Today's call is being recorded and will be hosted by Mr. Ira Palti, President and CEO of Ceragon Networks. Today's call will include statements concerning Ceragon's future prospects that are forward-looking statements as defined in 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. For examples of forward-looking statements, please refer to the forward-looking statements paragraph in our press release that was published earlier today. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the risk that Ceragon's expectations regarding future revenues and profitability will not materialize; risks relating to the concentration of our business in India, Latin America, Africa, and in developing nations in other regions, including political, economic and regulatory risks from doing business in those regions and nations, including in relation to local business practices that may be inconsistent with international requirements, such as anti-corruption and anti-bribery regulations, currency export control issues and recent economic concerns; the risk that the business coming from our bigger customers will go down significantly or cease; the risk that Ceragon will not achieve the benefits it expects from its expense reduction plans and profit enhancement programs, as may be implemented from time to time; the risk of significant expenses in connection with potential contingent tax liability; 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. Ceragon's public filings are available from the Securities and Exchange Commission's website at www.sec.gov or may be obtained from Ceragon's website at www.ceragon.com. Also today's call will include certain non-GAAP numbers. For a reconciliation between GAAP and non-GAAP results please see the table attached to the press release that was issued earlier today. I will now turn the call over to Mr. Ira Palti, President and CEO of Ceragon. Please go ahead, sir.

Thank you for joining us today. With me on the call is Doron Arazi, our CFO. Q4 represented a very strong finish to 2016. We continued to execute well on our strategy. For anyone new to our story the main elements of our strategy include: focusing on the best-of-breed portion of the market, evaluating each deal individually based on the value it generates, continuously improving our product cost, and carefully controlling our operating expenses while maintaining a global presence. By meeting our goals in each of these area, for the full-year 2016, we achieved $11.4 million in GAAP net income, our best performance in six years. We also exceeded our non-GAAP net income goal of 50% growth compared to 2015, reaching $11.5 million of non-GAAP net income. We generated strong positive cash flow during the year, which we used to pay down debt. We are very pleased with this performance, particularly considering the market conditions globally were far from ideal. Doron will get into all the detail of Q4. I just want to note that we exceeded our own goal and raised the bar in terms of continuing to deliver strong profit growth. On our Q3 call, we set a preliminary 2017 profit goal of 40% increase in non-GAAP net income, on constant currency basis. Since then, we received some very large orders, and the profit outlook has improved. We are raising our target for non-GAAP net income growth in 2017 to 50% when compared to 2016, also on a constant currency basis. So, the main message we want to convey today is: we had a very good year in 2016 and we're expecting an even better one in 2017. Turning to the global market conditions, we don't see any major change since our last call, when we said we…

Thank you, Ira. Since you have all seen the press release, I'll just highlight some of the significant items. Our fourth quarter revenue of $84.7 million represented a 7% sequential increase from Q3. As expected, our book-to-bill ratio was substantially below 1. In addition to typical seasonality, Q4 bookings reflected the fact that orders we expected from our large customer in India were held up by the negotiation to increase the size of the deal. Adjusted for this factor, our booking level in Q4 was in line with the expectations and we are expecting that our Q1 book-to-bill ratio will be significantly above 1, despite the fact that Q1 is also usually a seasonally weak booking quarter. As shown in the press release, the geographic breakdown showed a similar pattern to the one we saw in Q2 and Q3, with continued strength in India, a portion of Latin America, and some improvement in North America. We had one above 10% customer in the quarter, our large customer in India. Non-GAAP gross margin was 32.9% in Q4, down a bit from Q3, and showing typical mix-related quarter-to-quarter fluctuations and the impact of some non-recurring costs such as changing the location of some of our distribution hubs in order to be closer to our customers. In Q4, we continued to hold our non-GAAP operating expenses steady within the $20 million to $21 million range we have been targeting. Although for comparability reason, the non-GAAP income figures are the ones most often tracked, it's worth mentioning that in Q4, we had non-recurring other income of $1.9 million and positive impact on taxes of $1.8 million, which caused GAAP net income to reach $8.3 million, or $0.10 per diluted share in Q4. Non-GAAP net income was $5.2 million, or $0.07 per diluted share. For…

Thank you. [Operator Instructions]. And first from the line of Alex Henderson with Needham. Please go ahead.

Thank you. So a couple of questions, if I could just to clarify the guidance a little bit. So when you're talking about a spike in 2Q I assume that that also implies that the revenue numbers for the full-year would in fact be a little bit higher as a result of that as opposed to the prior guidance, I believe which was flat revenues for the year; is that correct?

Yes, that is correct.

So we should still expect revenue in the $75 million to $80 million in the other three quarters?

Yes, I think what we expect is, let's start with the second half of 2017; there we expect to maintain the level of $75 million to $80 million a quarter, per quarter. On the first quarter of 2017 we expect to be at the low-end of the range and may be slightly lower as we communicated in the past. And the second quarter is expected to be a very strong quarter. And as we also announced in the press release relating this deal we believe that this could boost the revenue by approximately $20 million may be $25 million relative to the regular level or the average level that we're indicating in the past.

Okay, that's clear. Thanks. Just going back to the Sprint stuff in 4Q. I assume that there is a fair amount of business behind that initial purchase that was a fairly small number relative to the scale of their facilities. Is that the right way to be thinking about it, that's just the initial order and even though you've absorbed some of that in 1Q that there should be further ramp in that business as we go through the year?

I think Sprint from that perspective; is a little bit more for Client Company than we see in other places. We do expect to see regular pieces of the whole order and I think I said it less time over there a period of between two to three years, where each quarter we're getting a small piece and while it's in advance by installing the orders from the prior quarter and moving ahead. The start was in Q4 and we do expect that to continue throughout the year.

I see, okay. And just for kind of bookkeeping purposes here, what are your expectations in terms of staffing levels, I assume it's fairly flat staffing over the course of the year therefore OpEx is fairly steady over the course of the year; is that still kind of the plan?

Yes we intend to continue and keep the same level of OpEx as you have seen in the two recent years between $20 million to $20 million per quarter or $80 million to $84 million per year.

Okay. And then just last one and then I will cede the floor, any thoughts on the tax rate numbers for 2017?

I don't expect any major changes in tax rate let's not forget the entity that holds all the intellectual property of this company is primarily the Israel entity have suffered losses, accumulated losses from past years. And despite the fact that we pay taxes in some of our Tata like subsidiaries, we don't expect a major change in tax percentages in the upcoming year.

So we're on the same dollar amount or same percentage amount?

I expect in terms of dollar amount, I expect some increase but not a significant one to the total numbers that we hope to achieve.

Our next question is from George Iwanyc with Oppenheimer. Please go ahead.

Thank you for taking my questions. Ira, can you expand on Latin America and just the positive trends you are seeing in Mexico versus the rest of the region?

What we're seeing and I think I talked about it a few times. One of the big drivers today within specific areas around the world is what I call first competitive situation for market share which usually comes up as someone defined, they want to gain significant market share within the territory, and start holding out, then you have the operators chasing them are trying to better them and do the work. This is a situation we see in Mexico which drives large volumes in business. If I look at the other parts of Latin America, there are big differences between the different countries, Brazil, which used to be a significant revenue generator for us because of market economy right now and other conditions, it's much slower from our perspective, also because when we evaluate specific deals in Brazil, the way we do as a strategy, they were not as profitable as we want them to be and in some places even in Brazil we said no, although it's still generating revenue. On the other hand, we have other very good customers in some of the other countries where we work closely with and in some countries you still feel the economic pressures similar to Brazil. But I think we highlighted Mexico specifically because of the first competition for market share which then drives network expansion which is today mainly 4G expansions or 4G advanced expansions with huge amounts of data which requires very large amounts of backhaul.

Okay. When you look at your regional mix excluding India, do you feel visibility is improving or is it still a pretty mixed environment and what you are seeing on the pricing environment?

First it's a mixed environment, okay. Independent by the way of the pricing issues because I think the main drivers are in the different places both local macro economics. And I think, as I said, on the Q3 call also availability of hot cash to use because of the lower oil prices and other countries cannot buy as much as they want and we see that mainly in Africa, and some of it in places like Russia and others which is slowing down. And which now then lowers the visibility but this is already taking into account in our plan for 2017. I don't think any of that effectively changes the price pressure picture. Price pressure picture has been here for long time and is still there and I don't think it has changed. I think that our strategy going and to selling to best-of-breed where we can show the value and the value that we uniquely bring to the customers allows us to also mitigate some but not all of the price pressures.

Thank you. And just one last question. You have talked about TAM expansion opportunities into public safety and couple other areas. With the product update that you are looking at, is that mostly incremental improvement and performance or are you looking at adding new functions and features that can help expand TAM further?

We talked about expanding the TAM, the product features and the products we are putting on the table at this point is still to the same TAM that we're in, it will also expand our parts of within that TAM but not significantly.

Our next question is from James Kisner with Jefferies. Please go ahead.

Thank you. So going to India for a second, I mean it sounds like you have pretty good visibility and this is going to be confined to Q2. But I'm just wondering if there is any potential for there to be additional orders in India in the second half or is it pretty much if recalls are needed there won't be follow-on orders?

We do expect follow-on orders from the same customer towards the second half. And we do expect also to have a flow of orders from other customers in India which we are getting on a regular basis.

Okay, that helps. So what about this year, I just want to understand how in terms of your revenue outlook, the way you're kind of physically assuming in terms of the U.S. business, is it going to be up tens of millions this year within that outlook or not as dramatically just any thoughts on that portion of the mix?

As you can see the portion of revenue in 2016 was even slightly lower than what we had in 2015. We expect to actually I would say, resume the growth in revenue in North America and our target is to exceed the numbers of 2015 as a minimum.

Okay that helps. I mean can you step back again it sounds like business is going to be kind of flattish excluding India, it sounds like U.S. is going to be up, Mexico is going to be up, just kind of recap just geographically what's up, what's down in the revenue outlook based on what you are currently assuming?

Yes, if we go back second to our previous conference call, I think except for these big orders from India nothing has really changed in our anticipations and dimensions. So to summarize what we said, we said within Latin America we expect to maintain the same level of business more or less and also making a conscious statement that Brazil is still weak and might be even weaker for Europe. We said that we expect I would say flattish year. We did mention Africa as the place that we expect even further reduction in business in 2017 relative to 2016. And in APAC we hope to start seeing signs of a small growth not that big that make things change dramatically. So all in all, what we expect is North America to be stronger than this year and this place will be probably offset by the relatively weakness in other places especially in Africa and now you can add to this equation the big order we received from India and this will probably drive the total revenue to go up slightly relative to what we are anticipating before these orders were received.

That's a good recap and just one final one if I could. Just general I mean how do you expect cash flows to kind of call away with revenues this year, I mean should we take into kind of similarly thoroughly a portion through the year could we see back half loaded cash flows, any thought on the impact of the balance sheet in respect to the events will be helpful. Thanks.

Yes, so generally speaking if I'm trying to look at the full 2016 we still maintain our view that we are going to continue generating positive cash flow, probably in magnitude that is relative to what we have done in 2016 may be slightly lower but not dramatically lower because obviously and increasing the business especially in countries where payment terms are relatively longer, we anticipate to have a higher working capital that will definitely be on account of some positive cash flow. If we try to look into the year, I think that we expect the first part of the year to be around cash flow breaking even and there is a good chance to be even slightly positive and we expect that we will generate majority of the cash during the second part of the year.

[Operator Instructions]. And next we will go to line of Viral Shah with Credit Suisse. Please go ahead.

Hi thank you. I have three questions. One could you help me again with size of the orders that you have received from India. The second question being what is the timeline that you are looking at in terms of the implementation of the order. And can you bifurcate that into what percentage would be completed say in 1Q relative to what would be completed in the second Q? And the third one being can you compare this order with what order you had previously received from the same customer? Thank you.

Okay. I will try to give some color into it but not all the color because I don't want much or all the details. I think we said on our press release very clearly order size was around $60 million from that customer, with a requirement for very quick delivery within Q1 and Q2 delivering to the customer. We do expect the conditions to do not change; we will deliver most of that order within that time period. And again I refer you back to Doron comments, because there is all sorts of pieces there which is equipment, which is services, which is licenses, revenue recognition there is a little bit more complicated and a little bit lumpy and probably might extend a little bit longer than the two quarters. For your last part of the question, we continue to be and receive the major lion's share of microwave backhaul orders from that customer, the same as has been in the past depending on their rates of deployment.

Can you help me with the size of the past order that you had received from the same customer?

We didn't announce it in the past; I don't think we want to put it on the table at this point.

And Mr. Palti, no further questions in queue.

Okay. So thank you everyone for joining us on the call today. Like always, we will be glad to entertain one-on-one calls. If people have further questions by reaching out both to myself, Doron and have more detailed types of questions. I do encourage anyone who is going to be participating in Mobile World Congress in two weeks in Barcelona, please come in to a booth and we can show you around discuss the new products we are excited about and have further on conversation face-to-face in Barcelona. Thank you everyone and have a good day.

Ladies and gentlemen that does conclude your conference for today. Thank you for your participation. You may now disconnect.