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Cambium Networks Reports First Quarter 2022 Financial Results

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  • Revenues of $61.9 million, decreased 21% sequentially, and decreased 30% year-over-year

  • Enterprise Wi-Fi revenues of $15.5 million, increased 28% year-over-year

  • Gross margin of 47.1%, non-GAAP(1) gross margin of 47.8%

  • Operating loss of $2.2 million, non-GAAP(1) operating income of $1.0 million

  • Net loss of $1.6 million or $0.06 per diluted share, non-GAAP(1) net income of $0.3 million or $0.01 per diluted share

  • Adjusted EBITDA(1) of $1.9 million or 3.1% of revenues

ROLLING MEADOWS, Ill., May 5, 2022 /PRNewswire/ -- Cambium Networks Corporation ("Cambium Networks") (NASDAQ: CMBM), a leading provider of wireless networking infrastructure solutions, today announced financial results for the first quarter 2022 ended March 31, 2022.

Cambium Networks Logo (PRNewsFoto/Cambium Networks)
Cambium Networks Logo (PRNewsFoto/Cambium Networks)



GAAP


Non-GAAP (1)

(in millions, except percentages)


Q1 2022


Q4 2021


Q1 2021


Q1 2022


Q4 2021


Q1 2021

Revenues


$ 61.9


$ 78.7


$ 88.5


$ 61.9


$ 78.7


$ 88.5

Gross margin


47.1%


43.8%


49.9%


47.8%


44.2%


50.1%

Operating margin


(3.5)%


3.7%


15.1%


1.6%


7.3%


17.5%

Adjusted EBITDA margin








3.1%


8.6%


18.6%














1 Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and
for reconciliation of adjusted EBITDA for the first quarter ended March 31, 2022.


"We faced supply chain challenges within our industry which impacted our first quarter results as a consequence of two unexpected events," said Atul Bhatnagar, president and CEO. "A Chinese government COVID lockdown in Shenzhen impacted manufacturing during the middle of March, and during the last two weeks of the quarter, a lockdown in Shanghai shuttered our distribution and warehousing facility. We remain confident that once the supply chain recovers, Cambium expects improved financial performance."

Bhatnagar continued, "Cambium's gigabit wireless fabric, which allows network operators to dramatically improve broadband performance and quality of service, will continue to expand with the addition of fixed 5G technology at 28 GHz, increased federal spending for defense, and new premium versions of our software-as-a-service solutions. We remain very well positioned with customers for the next generation multi-gigabit fixed wireless infrastructure solutions featuring higher performance at affordable prices."

Revenues of $61.9 million for the first quarter 2022 decreased $26.6 million year-over-year primarily as a result of lower Point-to-Multi-Point and Point-to-Point revenues due primarily to global supply and distribution constraints, including Chinese government COVID lockdowns, and slower demand from North American service providers, offsetting higher demand for enterprise Wi-Fi products. Revenues for the first quarter 2022 decreased by $16.8 million compared to $78.7 million for the fourth quarter 2021, primarily due to lower enterprise Wi-Fi and Point-to-Multi-Point revenues due to global supply and distribution constraints negatively impacting shipments of products.

GAAP gross margin for the first quarter 2022 was 47.1%, compared to 49.9% for the first quarter 2021, and 43.8% for the fourth quarter 2021. GAAP operating loss for the first quarter 2022 was $2.2 million, compared to operating income of $13.4 million for the first quarter 2021, and operating income of $2.9 million for the fourth quarter 2021. GAAP net loss for the first quarter 2022 was $1.6 million, or net loss of $0.06 per diluted share, compared to net income of $19.9 million, which includes a $7.6 million tax benefit, or net earnings of $0.70 per diluted share for the first quarter 2021, and net income of $1.4 million, or net earnings of $0.05 per diluted share for the fourth quarter 2021.

Non-GAAP gross margin for the first quarter 2022 was 47.8%, compared to 50.1% for the first quarter 2021, and 44.2% for the fourth quarter 2021. Non-GAAP operating income for the first quarter 2022 was $1.0 million, compared to $15.5 million for the first quarter 2021, and $5.8 million for the fourth quarter 2021. Non-GAAP net income for the first quarter 2022 was $0.3 million, or $0.01 per diluted share, compared to $11.7 million, or $0.41 per diluted share for the first quarter 2021, and $4.4 million, or $0.16 per diluted share, for the fourth quarter 2021. For the first quarter 2022, adjusted EBITDA was $1.9 million or 3.1% of revenues, compared to adjusted EBITDA of $16.5 million or 18.6% of revenues for the first quarter 2021, and $6.7 million or 8.6% of revenues for the fourth quarter 2021.

Cash used in operating activities was $19.2 million for the first quarter 2022, compared to $7.6 million cash used in operating activities for the first quarter 2021, and $5.6 million cash provided by operating activities for the fourth quarter 2021. Cash totaled $38.4 million as of March 31, 2022, $12.8 million lower than March 31, 2021, due primarily to the net debt paydown of $22.9 million, offset by earnings during the past year. The decrease in cash balance of $20.9 million from December 31, 2021, was primarily the result of a payment for 2021 annual variable compensation, and a $12.1 million decrease in accounts payable principally due to the timing of inventories payments.

First Quarter 2022 Highlights

  • Revenues of $61.9 million, decreased 21% sequentially, and was lower by 30% year-over-year.

  • GAAP net loss of $1.6 million or $0.06 per diluted share, non-GAAP net income of $0.3 million or $0.01 per diluted share.

  • Adjusted EBITDA of $1.9 million or 3.9% of revenues, compared to $16.5 million or 18.6% of revenues for the first quarter 2021.

  • Net cash used in operating activities of $19.2 million, compared to $7.6 million used in operating activities for the first quarter 2021.

  • Increased new channel partners by approximately 1,670 year-over-year, an increase of 17%.

  • Devices under cnMaestro® Cloud management increased 37% year-over-year.

Second Quarter 2022 Financial Outlook
Taking into account our current visibility, the financial outlook as of May 5, 2022, for the second quarter ending June 30, 2022, is expected to be as follows:

  • Revenues between $65.0-$73.0 million

  • GAAP gross margin between 46.9%-47.9%; and non-GAAP gross margin between 47.5%-48.5%

  • GAAP operating expenses between $33.3-$34.3 million; and non-GAAP operating expenses between $29.7-$30.7 million

  • GAAP operating (loss) income between ($2.75)-$0.7 million; and non-GAAP operating income between $1.2-$4.7 million

  • Interest expense, net of approximately $0.7 million

  • GAAP net (loss) income between ($2.8)-$0.0 million or between ($0.10) and $0.00 per diluted share; and non-GAAP net income between $0.4-$3.2 million or between $0.01 and $0.11 per diluted share

  • Adjusted EBITDA between $2.2-$5.8 million; and adjusted EBITDA margin between 3.4%-7.9%

  • GAAP and non-GAAP effective tax rate of approximately 18.0%-20.0%

  • Approximately 28.7 million weighted average diluted shares outstanding

Cash requirements are expected to be as follows:

  • Paydown of debt: $1.3 million

  • Cash flow interest expense: approximately $0.3 million

  • Capital expenditures: $1.4-$1.6 million

Full Year 2022 Financial Outlook

  • Revenues between $280.0-$300.0 million, decreasing between 16.6%-10.7%

  • GAAP net (loss) income between ($1.3)-$10.3 million or between ($0.04) and $0.36 per diluted share; and non-GAAP net income between $8.1-$20.1 million or between $0.28 and $0.70 per diluted share

  • Adjusted EBITDA margin between 6.0%-10.8%

Cambium Networks financial outlook does not include the potential impact of any possible future financial transactions, acquisitions, pending legal matters, or other transactions. Accordingly, Cambium Networks only includes such items in the company's financial outlook to the extent they are reasonably foreseeable; however, actual results may differ materially from the outlook.

Conference Call and Webcast

Cambium Networks will host a live webcast and conference call to discuss its financial results at 4:30 p.m. ET today, May 5, 2022. To access the live conference call by phone, listeners should dial +1(877) 288-4394 in the U.S. or Canada and +1(470) 495-9483 for international callers, referencing conference ID number 4383975. To join the live webcast and view additional materials, listeners should access the investor page of Cambium Networks website at https://investors.cambiumnetworks.com/. Following the live webcast, a replay will be available on the investor page of Cambium Networks website for a period of one year. A replay of the conference call will be available for 48 hours soon after the call by phone by dialing +1(855) 859-2056 in the U.S. or Canada and +1(404) 537-3406 for international callers, using the conference ID number 4383975.

In addition, Cambium Networks President and CEO, Atul Bhatnagar, will present and hold one-on-one meetings with investors including Thursday May 19, 2022, at the Barrington Research Virtual Spring Conference; and on Wednesday May 25, 2022, at the J.P. Morgan Global TMT Conference in Boston, Mass. To join the live webcasts for the conferences, listeners should access the investor page of Cambium Networks website https://investors.cambiumnetworks.com/. Following the live webcast, a replay will be available in the event archives at the same web address.

About Cambium Networks

Cambium Networks delivers wireless communications that work for businesses, communities, and cities worldwide. Millions of our radios are deployed to connect people, places and things with a unified wireless fabric that spans multiple standards and frequencies of fixed wireless and Wi-Fi, all managed centrally via the cloud. Our multi-gigabit wireless fabric offers a compelling value proposition over traditional fiber and alternative wireless solutions. We work with our Cambium certified ConnectedPartners to deliver purpose-built networks for service provider, enterprise, industrial, and government connectivity solutions in urban, suburban, and rural environments, with wireless that just works.

Cautionary Note Regarding Forward-Looking Statements

This release contains certain forward-looking statements within the meaning of the federal securities laws, including statements concerning our expected next quarter revenues, net income and cash. All statements other than statements of historical fact contained in this document, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this document are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this document and are subject to a number of risks, uncertainties and assumptions including those described in the "Risk factors" section of our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2022. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include: the unpredictability of our operating results; the impact of the global shortage of certain components including semiconductor chipsets; the constraint in global shipping and logistics; risks presented by the global COVID-19 pandemic, including new or continued government shutdowns such as the recent shutdowns in China that caused some of our manufacturing operations as well as our third-party logistics and warehousing provider to shutdown, which has and could continue to significantly disrupt our manufacturing, supply chain, sales and other operations and negatively impact our financial results; our inability to predict and respond to emerging technological trends and network operators' changing needs; the impact of the tensions between Russia and Ukraine, which have resulted in our cessation of sales to Russia, Belarus and select regions of Ukraine, and may continue to disrupt our sales and product design activities in these regions; our reliance on third-party manufacturers, which subjects us to risks of product delivery delays and reduced control over product costs and quality; our reliance on distributors and value-added resellers for the substantial majority of our sales; the inability of our third-party logistics and warehousing providers to deliver products to our channel partners and network operators in a timely manner; the quality of our support and services offerings; our or our distributors' and channel partners' inability to attract new network operators or sell additional products to network operators that currently use our products; the technological complexity of our products, which may contain undetected hardware defects or software bugs; our channel partners' inability to effectively manage inventory of our products, timely resell our products or estimate expected future demand; our inability to manage our growth and expand our operations; unpredictability of sales and revenues due to lengthy sales cycles; our inability to maintain an effective system of internal controls, produce timely and accurate financial statements or comply with applicable regulations; our reliance on the availability of third-party licenses; risks associated with international sales and operations; current or future unfavorable economic conditions, both domestically and in foreign markets and political tensions among the U.S. and China; and our inability to obtain intellectual property protections for our products.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

CAMBIUM NETWORKS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)



Three months ended



March 31, 2022


December 31, 2021


March 31, 2021







Revenues


$ 61,896


$ 78,710


$ 88,515

Cost of revenues


32,730


44,196


44,345

Gross profit


29,166


34,514


44,170

Gross margin


47.1%


43.8%


49.9%

Operating expenses







Research and development


12,102


11,627


11,603

Sales and marketing


10,148


11,091


10,040

General and administrative


7,665


7,425


7,529

Depreciation and amortization


1,446


1,464


1,595

Total operating expenses


31,361


31,607


30,767

Operating (loss) income


(2,195)


2,907


13,403

Operating margin


-3.5%


3.7%


15.1%

Interest expense, net


497


1,061


1,140

Other expense, net


77


35


42

(Loss) income before income taxes


(2,769)


1,811


12,221

(Benefit) provision for income taxes


(1,201)


384


(7,639)

Net (loss) income


$ (1,568)


$ 1,427


$ 19,860








(Loss) earnings per share







Basic


$ (0.06)


$ 0.05


$ 0.76

Diluted


$ (0.06)


$ 0.05


$ 0.70

Weighted-average number of shares outstanding to compute
(loss) earnings per share







Basic


26,749,675


26,655,437


26,115,615

Diluted


26,749,675


28,313,291


28,517,713








Share-based compensation included in costs and expenses:







Cost of revenues


$ 57


$ 44


$ 19

Research and development


1,022


851


517

Sales and marketing


627


561


295

General and administrative


714


677


579

Total share-based compensation expense


$ 2,420


$ 2,133


$ 1,410

CAMBIUM NETWORKS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(Unaudited)



March 31, 2022


December 31, 2021

ASSETS





Current assets





Cash


$ 38,397


$ 59,291

Accounts receivable, net of allowance of $735 and $683


64,506


69,773

Inventories, net


40,210


33,777

Recoverable income taxes


468


860

Prepaid expenses


12,741


12,170

Other current assets


5,130


4,718

Total current assets


161,452


180,589






Noncurrent assets





Property and equipment, net


10,732


10,490

Software, net


6,433


5,867

Operating lease assets


5,399


5,899

Intangible assets, net


10,357


10,777

Goodwill


9,842


9,842

Deferred tax assets, net


8,978


7,604

Other noncurrent assets


1,150


1,200

TOTAL ASSETS


$ 214,343


$ 232,268

LIABILITIES AND EQUITY





Current liabilities





Accounts payable


$ 16,543


$ 28,241

Accrued liabilities


25,016


21,948

Employee compensation


6,875


16,601

Current portion of long-term external debt, net


3,138


2,489

Deferred revenues


6,964


6,880

Other current liabilities


6,273


5,981

Total current liabilities


64,809


82,140

Noncurrent liabilities





Long-term external debt, net


26,351


26,965

Deferred revenues


5,647


5,363

Noncurrent operating lease liabilities


3,574


4,112

Other noncurrent liabilities


1,554


1,551

Total liabilities


101,935


120,131

Shareholders' equity





Share capital; $0.0001 par value; 500,000,000 shares authorized at March 31, 2022 and December 31, 2021;
26,825,097 outstanding at March 31, 2022 and 26,735,183 outstanding at December 31, 2021


3


3

Additional paid in capital


126,437


124,117

Treasury shares, at cost, 175,107 shares at March 31, 2022 and 156,907 shares at December 31, 2021


(4,321)


(3,906)

Accumulated deficit


(8,946)


(7,378)

Accumulated other comprehensive loss


(765)


(699)

Total shareholders' equity


112,408


112,137

TOTAL LIABILITIES AND EQUITY


$ 214,343


$ 232,268

CAMBIUM NETWORKS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)










Three Months Ended



March 31, 2022


December 31, 2021


March 31, 2021

Cash flows from operating activities:







Net (loss) income


$ (1,568)


$ 1,427


$ 19,860

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating
activities:







Depreciation and amortization of software and intangible assets


1,790


1,731


1,720

Amortization of debt issuance costs


77


467


137

Share-based compensation


2,420


2,133


1,410

Deferred income taxes


(1,373)


359


(6,367)

Provision for inventory excess and obsolescence


52


695


(709)

Other


81


(31)


(31)

Change in assets and liabilities:







Receivables


6,152


1,315


(11,700)

Inventories


(6,485)


(5,683)


3,236

Prepaid expenses


(578)


(6,931)


(3,099)

Accounts payable


(12,109)


4,400


(6,777)

Accrued employee compensation


(10,276)


3,671


(6,003)

Other assets and liabilities


2,592


2,012


761

Net cash (used in) provided by operating activities


(19,225)


5,565


(7,562)

Cash flows from investing activities:







Purchase of property and equipment


(714)


(2,062)


(814)

Purchase of software


(1,068)


(1,316)


(798)

Net cash used in investing activities


(1,782)


(3,378)


(1,612)

Cash flows from financing activities:







Proceeds from issuance of term loan