Good day, everyone. Welcome to the Ceragon Networks Limited Fourth Quarter and Full Year 2018 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 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 risks relating to the concentration of Ceragon's business in certain geographic regions and particularly in India, risks associated with the decline in demand from a single market segment and which we focus, risks relating to certain guarantees granted by Ceragon on behalf of Orocom to FITEL in the framework of the FITEL project; risks associated with any failure to effectively compete with other wireless equipment providers; risks associated with a change in our gross margin as a result of changes in the geographic mix of revenue; risks related to the fact that our operating results may vary significantly from quarter-to-quarter and from our expectations for any specific period; risks related to our ability to meet the supply demands of our customers in a timely manner due to the highly volatile in their supply beings; risks associated with difficulties in obtaining market acceptance of newly introduced products; risks associated with technical difficulties that may be discovered in newly developed products and other risks and uncertainties detailed from time to time in Ceragon's Annual Reports on Form of 20-F and Ceragon's other filings with the Securities and Exchange Commission that 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 dates. 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 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. We had a great fourth quarter and 2018 was an excellent year and we are targeting a fifth year of growth in net income in 2019. We are looking forward to sharing the details with you. With me on the call is Doron Arazi. As most of you are aware, Doron is Deputy CEO and Chief Financial Officer, which means that Doron has two separate time-consuming roles. This morning, we announced that Ran Vered has joined Ceragon to assume the CFO role and he is here with us on the call today. Both, Doron and I will continue to do what we have been doing, which is make sure that between the two of us we are maintaining at the executive level key customer channel and supply chain relationships. With Ran as CFO, we'll both be able to bring more focus to our work, so we're very pleased that Ran has joined us. Welcome, Ran. Turning to our results; we had a very strong finish to the year. The fourth quarter exceeded our expectations for revenue, gross margin and net income. We also had a book-to-bill above one in Q4. The strong finish contributed to 2018 being an excellent year in several respects. In addition to achieving our primary goal of net income growth, our revenue increased about 4% which is ahead of our original expectations. We were successful in virtually increasing our market share in Latin America, Africa, Asia and some vertical markets in North America. Gross margin improved and we kept operating expenses within our target range. We also generated close to $10 million in positive cash flow in 2018 which enabled us to end the year with even stronger balance sheet. On balance, the organization executed very well and we continue…

Thank you, Ira. Since you've all seen the press release, I'll just highlight some of the significant items in the report. The fourth quarter was a strong finish to the year and we achieved our primary goal for 2018 which was improving net income. Our primary branch mark non-GAAP net income was up 14.8% to $17.5 million. As Ira noted, revenues grew about 4% for the year, which was likely more related to timing of orders and revenue recognition factors although we do believe we are gradually increasing our market share. For those of you on the call who might be new to our story, we manage to the bottom line, not the top line. We look at each deal according to the amount of incremental gross profit it can bring and we keep stringent control of our operating expenses. We increased our GAAP gross profit by 8.2% in 2018 and our gross margin improved to 33.8% which was in line with our expectations despite some higher component costs. Our GAAP operating expenses for the year were also in line with our expectations and higher than 2017 mainly due to foreign currency headwinds, increased R&D investment to continue our technology leadership and performance-related compensation expenses. Our GAAP EPS in 2018 was $0.28 per diluted share compared to $0.19 per diluted share in 2017. I will further elaborate on the big jump in the GAAP EPS in 2018 when reviewing the Q4 results shortly. Turning to the details of our fourth quarter, revenues were better than expected and about even with both the third quarter and the fourth quarter of 2017. We saw strength in virtually all regions except India, which was below the very high level of recent quarters is we ate through the backlog from the large orders received…

Hello, everyone. I just have to say that I'm very excited to join the Ceragon team. I think we're in great position to take advantage of the transition to 5G technology and I look forward to contributing the CFO. I will be sticking with you on the next quarterly results called and I'm eager to meet those of you I haven't met before. Thanks, Doron.

Okay, now we'll open the call for questions. Our first question comes from George Iwanyc with Oppenheimer. Please go ahead.

Thank you for taking my questions. And congrats on the solid quarter. When you look at the March quarter, Ira, how much of a down-tick do you expected revenue fall below the $80 million a line that you kind of have set as the low end of the quarterly run rate?

Hey, George, this is Doron. The short answer is yes, but if we are looking back on the trends in previous years, if you look on the Q1 2017, or even if you go far back to 2016, when there is seasonality and when you don't get the big orders towards the end of the year from India, we expect the numbers to be somewhat in between the numbers of Q1 of 2017 and Q1 of 2016. I believe that we'll be able to end up towards -- closer toward the 2017 numbers.

Okay. Thank you. And then when you look at India, can you tell us where the confidence is that the revenues will come back at strong levels and how good the visibility is, is it 2Q, 3Q or is it sometime just during the second half of the year?

It's probably 2Q, 3Q and 4Q. We have very good visibility as I think we indicated the coal, the timing issues is usually having to do with people needing to align site acquisition installations, the equipment and there are pauses like that that happened in almost any one of our large installations. We know almost exact plans of how the progress for needs to look like the demand and this time it's the alignment of them having more equipment than they were able to do installations. By the way, we talked in the past about the alignment on the other side where we had issues to deliver quickly enough, the equipment to meet our site acquisition installation. And the alignment issue is where it is. I think we have very good visibility as in moving forward while discussing with all the customer, the specific plans.

Okay. And now shifting a little bit, Ira, the IP-50, it's a nice-looking platform. Can you give us a sense of how that could impact the second half of this year? How that changes your go to market, possibilities for a market share gains and how that helps address 5G?

We will be introducing the IP-50 platforms in pieces over the next 18 months. The first pieces will be available at Mobile World Congress and will be available in shipping in the second half. As I indicated on the first part, we do expect significant revenues from the IP-50 only in the first half of 2020 not this year. There are certain areas where this will be part of the mix, towards the second half of this year of '19, but only in smaller numbers. Just as a question on that, one of the reasons for introducing is that usually planning times and walk in with customers is a long process and we are planning with them already the networks of 2020 and beyond and there's a mixture between the IP-20 and the IP-50 that is required on those networks and that's part of introducing and making some of the products available at different times.

Our next question comes from Alex Henderson with Needham & Company. Please go ahead.

Hey, thanks. This is Roger Boyd on for Alex. Just a quick one on Africa. Nice to see revenues kind of ramping there. Can you remind us what the margins look like there in comparison to the rest of your business?

I would say that the margins are not too bad. Obviously, they're not as low as our margins in India. And I would say that if you look at the average corporate they're not far away from these margins.

Okay. That makes sense. And then just another quick one with the shekel, I know you mentioned that you began hedging in 4Q and presumably continue that as it reached kind of a 52-week lows. How does that offset the plan increases in OpEx? Have you quantified the benefit you receive from that?

Yes. So, just to remind you, we usually hedge a portion of our shekel exposure during the year and once we finalize the budget and it is approved, we hedge the later. So obviously relative to previous year, the exchange rate in which we were able to hedge the expenses, the shekel expenses is higher than the exchange rate we had last year. However, the increased investment in R&D especially relating to our next generation chip set is impacting the R&D level that we expect. So to a certain degree it's aids some of our potential reduction in the OpEx.

Our next question in queue will come from Michael Stager with Odian Capital. Please go ahead.

Hey, good morning. Thanks for taking my question. And hey, you're focused on growing net income in 2019. Is there a range we should expect and would this also be reflected in the free cash flow generation? And then one follow-on would be, if you overcome some of these challenges in India in 2019, is there a sort of a revenue growth range that you would expect from India? Thanks.

So, let me start with the first question first. We are not the indicating a specific number of increase to the bottom line, but I think as a reference, if you look back, at the achievements of this year relative to previous year, this would probably be a good ballpark. In terms of cash flow or free cash flow, yes, indeed we intend to continue generating a free cash flow and we don't see any reason why not to do that. Let's just not forget that usually or what we intend to do is to use our cash for increasing our business. So the bottom line is that as long as we continue with this plan and we don't see any huge pickup or any, I would say strategic moves in which we will have to spend more cash, our free cash flow is going to increase according to our plans in 2019. Regarding India; so as we were trying to explain, India is very volatile because of the behavior of the operators. And we are very, very careful in giving indication where -- whether the revenue or the business from India will grow in a certain year or will go down because of this volatility. So my preference is not to comment specifically on any growth in India, but just say that we are highly confident that based on what we see now we can make 2019 in terms of total revenue quite similar to 2018.

Next in queue is Gunther Karger [ph] with Discovery Group. Your line is open.

Okay, good morning and afternoon. Actually, two comments. First of all, I want to congratulate the team for executing their long-time strategy. I've been following the company for some years and you have done a great job and executing your plan. Second; my question, well actually in the industry world that has not been observed generally. So this is very unique accomplishment. The question is vertical markets -- and could you care to make any comments on vertical markets?

I'll comment on vertical markets by saying that we do put an effort on vertical markets mainly in the North America and the European business. A large proportion of both our North America and European business comes from different vertical markets. We do make progress in some of those, mainly around what we call industrial NISPs. We are targeting public safety application, which we won a few and continuing to push there to gain market share with those in other places. We also focus and we had a nice initial successes but in small numbers in all sorts of maritime type of applications. So it's a very segmented niche market and we need to walk in a lot of those segments, and in some of them we did gain market share doing 2018.

We do have another question and that's from David Allen with Woodbury Financial. Please go ahead.

Good morning, good results, guys. Two quick questions; number one is to you -- can you talk about the competition in terms of landscape. And number two is the cost structure for the 20 products versus the 50 products which you're anticipating coming out, basically I guess in the spring. Thank you.

So, I'll talk about competition in general. We do have and I don't think the competitive landscape have changed significantly over the last year or even longer than that. Although we see some of our competitors weakening because in some of the markets it's where we gained market share. I've seen some of them weakening somewhat is public, some of it is less than public on the table, but we still do have strong competition both from other specialists and the large generalist out there. As a comment, and this is a question I'm being asked once in a while lately is what does the Huawei [ph] ban have an effect on us. It does contribute in some places, but in other places sometimes it balances out with them being a little bit more aggressive as we move forward and we still need to see how this develops in different markets and with different operators. As going back to your question around the cost basis, there is a difference in the cost basis between the two, but there's also significant functionality difference between the two of them. But if we look at the needs and value generation and the total cost of ownerships from the operators as we move forward, the IP-50 in where it's targeted in in 5G networks will continue to offer a reduced total cost of ownership or significant additional value to our customers over the IP-20.

I'm showing no additional questions in the queue. Please continue.

So, I'd like to thank everyone who joined us on this call. I would to welcome Ron again to the team here and we will be exhibiting and whole five in Mobile World Congress next week. So any one of you who plans to be in Barcelona, please, we would love to welcome you to our booth show, both the current product and the IP-50 products and have further discussions as we move along. Thank you very much and have a good day.

Thank you. Ladies and gentlemen, that does conclude your conference call for today. We do thank you for your participation entering AT&Ts executive teleconference. You may now disconnect.