Cambium Networks Corp 8-K/A, filed Mar 15, 2024
Cambium Networks Corp (CMBMF)
About this 8-K/A
Cambium Networks Corp filed this 8-K/A on March 15, 2024, reporting on events of February 15, 2024.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Explanatory Note
An updated version of the Original Earnings Release and the included Quarterly and Full Year selected information tables, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Cash Flows, Supplement Schedule of Non-GAAP Adjusted EBITDA and Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures have been corrected on Exhibit 99.1 to this Amendment No. 1.
Item 2.02 Results of Operations and Financial Condition.
The Exhibit 99.1 attached hereto is a replacement of the Exhibit furnished on the Original Earnings Release.
The foregoing information is furnished pursuant to Item 2.02 and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. |
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Description |
99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CAMBIUM NETWORKS CORPORATION |
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Date: |
March 15, 2024 |
By: |
/s/ John M. Becerril |
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John M. Becerril |
Exhibit 99.1
Cambium Networks Reports Fourth Quarter and Full Year 2023 Financial Results
ROLLING MEADOWS, Ill., Feb. 15, 2024 — Cambium Networks Corporation (“Cambium Networks”) (NASDAQ: CMBM), a leading provider of wireless networking infrastructure solutions, today announced financial results for the fourth quarter and full year ended December 31, 2023.
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GAAP |
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Non-GAAP (1) |
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(in millions, except percentages) |
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Q4 2023 |
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Q3 2023 |
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Q4 2022 |
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Q4 2023 |
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Q3 2023 |
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Q4 2022 |
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Revenues |
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$ |
40.2 |
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$ |
43.0 |
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$ |
84.5 |
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$ |
40.2 |
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$ |
43.0 |
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$ |
84.5 |
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Gross margin |
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(27.4 |
)% |
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25.5 |
% |
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49.0 |
% |
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(25.1 |
)% |
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27.7 |
% |
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49.6 |
% |
Operating margin |
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(103.5 |
)% |
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(51.3 |
)% |
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11.2 |
% |
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(90.6 |
)% |
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(36.1 |
)% |
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15.6 |
% |
Net (loss) income |
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$ |
(52.9 |
) |
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$ |
(26.2 |
) |
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$ |
10.0 |
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$ |
(28.2 |
) |
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$ |
(12.1 |
) |
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$ |
10.3 |
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Adjusted EBITDA margin |
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(87.5 |
)% |
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(33.5 |
)% |
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16.9 |
% |
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GAAP |
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Non-GAAP (1) |
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(in millions, except percentages) |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenues |
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$ |
220.2 |
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$ |
296.9 |
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$ |
220.2 |
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$ |
296.9 |
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Gross margin |
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31.3 |
% |
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48.9 |
% |
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32.7 |
% |
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49.5 |
% |
Operating margin |
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(27.6 |
)% |
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6.7 |
% |
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(18.6 |
)% |
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11.6 |
% |
Net (loss) income |
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$ |
(77.4 |
) |
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$ |
20.2 |
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$ |
(32.6 |
) |
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$ |
26.9 |
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Adjusted EBITDA margin |
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(16.6 |
)% |
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13.1 |
% |
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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 for the fourth quarter and full year 2023 ended December 31, 2023.
“Our revenue shortfall was due in part to an $11 million reduction to revenues mostly as the result of incentives and discounts provided to distributors related to our Enterprise business during the fourth quarter 2023. As expected, we delivered a solid quarter of government defense shipments in our Point-to-Point business, received meaningful orders for our new 6 GHz products in the Point-to-Multi-Point business ahead of the Federal Communications Commission’s (FCC’s) approval, and continued to make significant reductions in channel inventories for the Enterprise business,” said Morgan Kurk, president and CEO.
Kurk continued, “The approval of 6 GHz spectrum by the FCC will accelerate the growth of the Point-to-Multi-Point business during 2024. We believe we are well positioned to deliver future growth and are taking the necessary steps to rationalize business operations and improve operating efficiencies to benefit our operating results during calendar 2024.”
Revenues of $40.2 million for the fourth quarter 2023 decreased $44.3 million year-over-year primarily as a result of lower revenues due in part by an $11.0 million reduction to revenues mostly as the result of incentives provided to distributors
offering aggressive Enterprise product discounts to clear excess channel inventories, high stock rotations, slowing economies, and lower Point-to-Multi-Point revenues with the weakness primarily from regions outside of North America, partially offset by higher Point-to-Point revenues due to increased defense revenues. Revenues for the fourth quarter 2023 decreased by $2.8 million compared to $43.0 million for the third quarter 2023, primarily due to lower Enterprise revenues due to the previously mentioned Enterprise rebates, stock rotations, as well as economic headwinds, while Point-to-Multi-Point revenues decreased primarily due to weakness in EMEA partially offset by strength in North America from customers purchasing 6 GHz products under experimental licenses ahead of the FCC’s approval of 6 GHz spectrum, and strength in the Point-to-Point business due to higher defense revenues.
GAAP gross margin for the fourth quarter 2023 was (27.4)%, compared to 49.0% for the fourth quarter 2022, and 25.5% for the third quarter 2023. GAAP operating loss for the fourth quarter 2023 was $41.6 million, compared to operating income of $9.5 million for the fourth quarter 2022, and operating loss of $22.1 million for the third quarter 2023. GAAP net loss for the fourth quarter 2023 was $52.9 million, or net loss of $1.91 per diluted share, compared to net income of $10.0 million, or net earnings of $0.35 per diluted share for the fourth quarter 2022, and net loss of $26.2 million, or net loss of $0.95 per diluted share for the third quarter 2023.
Non-GAAP gross margin for the fourth quarter 2023 was (25.1)% and included the $11 million reduction in revenues as the result of price incentives provided to distributors, and inventory reserves of approximately $21.2 million mostly for Enterprise products, and compared to 49.6% for the fourth quarter 2022, and 27.7% for third quarter 2023. Non-GAAP operating loss for the fourth quarter 2023 was $36.4 million, compared to non-GAAP operating income of $13.2 million for the fourth quarter 2022, and a non-GAAP operating loss of $15.5 million for the third quarter 2023. Non-GAAP net loss for the fourth quarter 2023 was $28.2 million, or a net loss of $1.01 per diluted share, compared to net income of $10.3 million, or net earnings of $0.36 per diluted share for the fourth quarter 2022, and net loss of $12.1 million, or a net loss of $0.44 per diluted share for the third quarter 2023. For the fourth quarter 2023, adjusted EBITDA was a loss of $35.2 million or (87.5)% of revenues, compared to adjusted EBITDA of $14.3 million or 16.9% of revenues for the fourth quarter 2022, and adjusted EBITDA loss of $14.4 million or (33.5)% of revenues for the third quarter 2023.
For full year 2023, revenues of $220.2 million decreased by $76.7 million compared to full year 2022. GAAP gross margin was 31.3% for full year 2023 compared to 48.9% for 2022. Non-GAAP gross margin was 32.7% of revenues for full year 2023, compared to 49.5% of revenues for 2022. GAAP operating loss of $60.9 million for full year 2023 compared to GAAP operating income of $19.9 million for 2022. Non-GAAP operating loss was $40.9 million or (18.6)% of revenues for full year 2023, compared to non-GAAP operating income of $34.3 million or 11.6% of revenues during 2022. GAAP net loss for full year 2023 was $77.4 million, or a net loss of $2.81 per diluted share, compared to GAAP net income of $20.2 million, or net earnings of $0.72 per diluted share for 2022. For full year 2023, non-GAAP net loss was $32.6 million or a net loss of $1.17 per diluted share, compared to non-GAAP net income $26.9 million or net earnings of $0.94 per diluted share for 2022. Adjusted EBITDA for full year 2023 was a loss of $36.5 million or (16.6)% of revenues, compared to adjusted EBITDA of $38.8 million or 13.1% of revenues for 2022.
Net cash used in operating activities was $6.2 million for the fourth quarter 2023, compared to net cash provided by operating activities of $4.0 million for the fourth quarter 2022, and net cash used in operating activities of $0.2 million for the third quarter 2023. Cash totaled $18.7 million as of December 31, 2023, $29.5 million lower than December 31, 2022.
Fourth Quarter 2023 Highlights
Full Year 2023 Highlights
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.
First Quarter 2024 Financial Outlook
Taking into account our current visibility, the financial outlook as of February 15, 2024, for the first quarter ending March 31, 2024, is expected to be as follows:
Cash requirements are expected to be as follows:
Full Year 2024 Financial 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, February 15, 2024. To join the financial results live webcast and view additional materials which will be posted to the investor website, 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 for a period of one year.
To access the live conference call by phone, listeners should register in advance at https://register.vevent.com/register/BI0916ee75cac74a599dd6f1ea618e78a4. Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique passcode.
In addition, Cambium Networks president & CEO, Morgan Kurk will present and hold one-on-one meetings with investors on Tuesday, March 5, 2024, at the JMP Securities Technology Conference in San Francisco; and on Tuesday, March 19, 2024, in person at the ROTH Capital Partner Annual Conference in Dana Point, California. To join the live webcasts for the JMP Securities and ROTH Capital conferences, listeners should access the investor page of Cambium Networks website https://investors.cambiumnetworks.com/. Following the live webcasts, a replay will be available in the event archives at the same web address.
About Cambium Networks
Cambium Networks enables service providers, enterprises, industrial organizations, and governments to deliver exceptional digital experiences and device connectivity with compelling economics. Our ONE Network platform simplifies management of Cambium Networks’ wired and wireless broadband and network edge technologies. Our customers can focus more resources on managing their business rather than the network. We deliver connectivity 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.
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 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2024. 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; our inability to predict and respond to emerging technological trends and network operators’ changing needs; the impact of political tensions between the United States and other countries such as the war between Russia and Ukraine, tensions with China and the evolving events in Israel and Gaza; the strength of the dollar and the impact on the cost of our products globally; current or future unfavorable economic conditions, both domestically and in our foreign markets, including the risk of a global or localized recession; our inability to predict and respond to emerging technological trends and network operators’ changing needs; the impact of competitive pressures on the development of our new products; the impact of actual or threatened health epidemics and other outbreaks; our limited or sole source suppliers’ inability to acquire or produce third-party components to build our products and the impact of supply shortages, extended lead times or changes in supply or cost of components needed to manufacture our products; our ability to effectively forecast demand or manage our inventory, including our channel inventory, which may cause us to record write-downs for excess or obsolete inventory; 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; 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 or subject our products to the risks of ransomware or malware or other cyber-attack; our channel partners’ inability to effectively manage inventory of our products, timely resell our products or estimate expected future demand; and current or future unfavorable economic conditions, both domestically and in foreign markets.
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 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except share and per share amounts) |
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(Unaudited) |
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Three months ended |
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Year ended |
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December 31, 2023 |
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September 30, 2023 |
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December 31, 2022 |
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December 31, 2023 |
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December 31, 2022 |
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Revenues |
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$ |
40,206 |
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|
$ |
43,046 |
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$ |
84,507 |
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$ |
220,195 |
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$ |
296,899 |
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Cost of revenues |
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51,236 |
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32,087 |
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43,138 |
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151,364 |
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151,759 |
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Gross profit |
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(11,030 |
) |
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10,959 |
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41,369 |
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68,831 |
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145,140 |
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Gross margin |
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-27.4 |
% |
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25.5 |
% |
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49.0 |
% |
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31.3 |
% |
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48.9 |
% |
Operating expenses |
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Research and development |
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13,057 |
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13,151 |
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12,874 |
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53,478 |
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49,865 |
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Sales and marketing |
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9,726 |
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9,675 |
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12,148 |
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42,599 |
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44,452 |
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General and administrative |
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6,207 |
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8,688 |
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5,422 |
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27,398 |
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24,982 |
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Depreciation and amortization |
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1,596 |
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1,545 |
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1,475 |
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6,210 |
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5,961 |
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Total operating expenses |
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30,586 |
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33,059 |
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31,919 |
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129,685 |
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125,260 |
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Operating (loss) income |
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(41,616 |
) |
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(22,100 |
) |
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9,450 |
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(60,854 |
) |
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19,880 |
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Operating margin |
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(103.5 |
)% |
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(51.3 |
)% |
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11.2 |
% |
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(27.6 |
)% |
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6.7 |
% |
Interest expense, net |
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725 |
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|
620 |
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|
559 |
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2,521 |
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1,977 |
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Other (income) expense, net |
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(10 |
) |
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63 |
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15 |
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271 |
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(114 |
) |
(Loss) income before income taxes |
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(42,331 |
) |
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(22,783 |
) |
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8,876 |
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(63,646 |
) |
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18,017 |
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(Benefit) provision for income taxes |
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10,523 |
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3,417 |
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(1,135 |
) |
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13,774 |
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(2,183 |
) |
Net (loss) income |
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$ |
(52,854 |
) |
|
$ |
(26,200 |
) |
|
$ |
10,011 |
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|
$ |
(77,420 |
) |
|
$ |
20,200 |
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(Loss) earnings per share |
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Basic |
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$ |
(1.91 |
) |
|
$ |
(0.95 |
) |
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$ |
0.37 |
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$ |
(2.81 |
) |
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$ |
0.75 |
|
Diluted |
|
$ |
(1.91 |
) |
|
$ |
(0.95 |
) |
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$ |
0.35 |
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|
$ |
(2.81 |
) |
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$ |
0.72 |
|
Weighted-average number of shares outstanding to compute (loss) earnings per share |
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|||||
Basic |
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27,680,080 |
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|
27,619,281 |
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27,109,926 |
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27,519,476 |
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|
26,919,550 |
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Diluted |
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27,680,080 |
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27,619,281 |
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|
28,273,786 |
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27,519,476 |
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28,025,278 |
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|||||
Share-based compensation included in costs and expenses: |
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|||||
Cost of revenues |
|
$ |
47 |
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|
$ |
45 |
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|
$ |
56 |
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|
$ |
207 |
|
|
$ |
219 |
|
Research and development |
|
|
1,005 |
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|
1,037 |
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|
|
1,258 |
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|
|
4,699 |
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|
|
4,532 |
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Sales and marketing |
|
|
547 |
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|
597 |
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|
702 |
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|
2,572 |
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|
|
2,603 |
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General and administrative |
|
|
1,212 |
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|
|
1,166 |
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|
879 |
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|
4,115 |
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|
3,326 |
|
Total share-based compensation expense |
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$ |
2,811 |
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$ |
2,845 |
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$ |
2,895 |
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$ |
11,593 |
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|
$ |
10,680 |
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CAMBIUM NETWORKS CORPORATION |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands, except share information) |
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(Unaudited) |
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|||||||
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December 31, 2023 |
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December 31, 2022 |
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ASSETS |
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Current assets |
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Cash |
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$ |
18,710 |
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$ |
48,162 |
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Accounts receivable, net of allowance of $283 and $577 |
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|
64,103 |
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|
89,321 |
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Inventories, net |
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66,878 |
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57,068 |
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Recoverable income taxes |
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|
222 |
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|
117 |
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Prepaid expenses |
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6,589 |
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|
11,857 |
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Other current assets |
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|
6,069 |
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|
|
6,464 |
|
Total current assets |
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|
162,571 |
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|
212,989 |
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Noncurrent assets |
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Property and equipment, net |
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12,879 |
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|
11,271 |
|
Software, net |
|
|
11,985 |
|
|
|
8,439 |
|
Operating lease assets |
|
|
7,894 |
|
|
|
4,011 |
|
Intangible assets, net |
|
|
7,675 |
|
|
|
9,173 |
|
Goodwill |
|
|
9,842 |
|
|
|
9,842 |
|
Deferred tax assets, net |
|
|
3,694 |
|
|
|
12,782 |
|
Other noncurrent assets |
|
|
1,335 |
|
|
|
955 |
|
TOTAL ASSETS |
|
$ |
217,875 |
|
|
$ |
269,462 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
19,120 |
|
|
$ |
31,284 |
|
Accrued liabilities |
|
|
47,069 |
|
|
|
28,042 |
|
Employee compensation |
|
|
5,071 |
|
|
|
7,394 |
|
Current portion of long-term external debt, net |
|
|
3,186 |
|
|
|
3,158 |
|
Deferred revenues |
|
|
8,765 |
|
|
|
8,913 |
|
Other current liabilities |
|
|
13,117 |
|
|
|
8,429 |
|
Total current liabilities |
|
|
96,328 |
|
|
|
87,220 |
|
Noncurrent liabilities |
|
|
|
|
|
|
||
Long-term external debt, net |
|
|
21,926 |
|
|
|
24,463 |
|
Deferred revenues |
|
|
10,473 |
|
|
|
8,617 |
|
Noncurrent operating lease liabilities |
|
|
6,595 |
|
|
|
2,170 |
|
Other noncurrent liabilities |
|
|
1,619 |
|
|
|
1,619 |
|
Total liabilities |
|
|
136,941 |
|
|
|
124,089 |
|
Shareholders' equity |
|
|
|
|
|
|
||
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2023 and December 31, 2022; 27,834,908 outstanding at December 31, 2023 and 27,313,273 outstanding at December 31, 2022 |
|
|
3 |
|
|
|
3 |
|
Additional paid in capital |
|
|
152,768 |
|
|
|
138,997 |
|
Treasury shares, at cost, 260,236 shares at December 31, 2023 and 209,461 shares at December 31, 2022 |
|
|
(5,624 |
) |
|
|
(4,922 |
) |
Accumulated (deficit) earnings |
|
|
(64,598 |
) |
|
|
12,822 |
|
Accumulated other comprehensive loss |
|
|
(1,615 |
) |
|
|
(1,527 |
) |
Total shareholders’ equity |
|
|
80,934 |
|
|
|
145,373 |
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
217,875 |
|
|
$ |
269,462 |
|
|
|
|
|
|
|
|
||
CAMBIUM NETWORKS CORPORATION |
|
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|||||||||||
(In thousands) |
|
|||||||||||
(Unaudited) |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||
|
|
Three Months Ended |
|
|||||||||
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|||
Net (loss) income |
|
$ |
(52,854 |
) |
|
$ |
(26,200 |
) |
|
$ |
10,011 |
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization of software and intangible assets |
|
|
2,414 |
|
|
|
2,294 |
|
|
|
1,972 |
|
Amortization of debt issuance costs |
|
|
99 |
|
|
|
81 |
|
|
|
75 |
|
Share-based compensation |
|
|
2,811 |
|
|
|
2,845 |
|
|
|
2,895 |
|
Deferred income taxes |
|
|
8,800 |
|
|
|
3,612 |
|
|
|
(3,202 |
) |
Provision for inventory excess and obsolescence |
|
|
10,958 |
|
|
|
4,577 |
|
|
|
2,024 |
|
Other |
|
|
(431 |
) |
|
|
155 |
|
|
|
(31 |
) |
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|||
Receivables |
|
|
9,399 |
|
|
|
22,457 |
|
|
|
(3,470 |
) |
Inventories |
|
|
1,928 |
|
|
|
(1,993 |
) |
|
|
(8,451 |
) |
Prepaid expenses |
|
|
2,224 |
|
|
|
(772 |
) |
|
|
(3,768 |
) |
Accounts payable |
|
|
(7,141 |
) |
|
|
(5,156 |
) |
|
|
3,114 |
|
Accrued employee compensation |
|
|
(145 |
) |
|
|
(527 |
) |
|
|
1,293 |
|
Other assets and liabilities |
|
|
15,712 |
|
|
|
(1,619 |
) |
|
|
1,564 |
|
Net cash (used in) provided by operating activities |
|
|
(6,226 |
) |
|
|
(246 |
) |
|
|
4,026 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|||
Purchase of property and equipment |
|
|
(1,228 |
) |
|
|
(1,125 |
) |
|
|
(1,332 |
) |
Purchase of software |
|
|
(1,118 |
) |
|
|
(2,185 |
) |
|
|
(1,230 |
) |
Net cash used in investing activities |
|
|
(2,346 |
) |
|
|
(3,310 |
) |
|
|
(2,562 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|||
Repayment of term loan |
|
|
(656 |
) |
|
|
(656 |
) |
|
|
(657 |
) |
Payment of debt issuance costs |
|
|
(122 |
) |
|
|
— |
|
|
|
— |
|
Issuance of ordinary shares under ESPP |
|
|
578 |
|
|
|
— |
|
|
|
839 |
|
Taxes paid related to net share settlement of equity awards |
|
|
(48 |
) |
|
|
(219 |
) |
|
|
(226 |
) |
Proceeds from share option exercises |
|
|
— |
|
|
|
6 |
|
|
|
1,872 |
|
Net cash (used in) provided by financing activities |
|
|
(248 |
) |
|
|
(869 |
) |
|
|
1,828 |
|
Effect of exchange rate on cash |
|
|
1 |
|
|
|
(24 |
) |
|
|
11 |
|
Net (decrease) increase in cash |
|
|
(8,819 |
) |
|
|
(4,449 |
) |
|
|
3,303 |
|
Cash, beginning of period |
|
|
27,529 |
|
|
|
31,978 |
|
|
|
44,859 |
|
Cash, end of period |
|
$ |
18,710 |
|
|
$ |
27,529 |
|
|
$ |
48,162 |
|
|
|
|
|
|
|
|
|
|
|
|||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|||
Income taxes paid |
|
$ |
960 |
|
|
$ |
1,120 |
|
|
$ |
438 |
|
Interest paid |
|
$ |
486 |
|
|
$ |
474 |
|
|
$ |
310 |
|
CAMBIUM NETWORKS CORPORATION |
|
|||||||||||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION |
|
|||||||||||||||||||
(In thousands) |
|
|||||||||||||||||||
(Unaudited) |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
REVENUES BY PRODUCT CATEGORY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Three Months Ended |
|
|
Year Ended |
|
||||||||||||||
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|||||
Point-to-Multi-Point |
|
$ |
22,575 |
|
|
$ |
23,596 |
|
|
$ |
29,656 |
|
|
$ |
95,197 |
|
|
$ |
114,941 |
|
Point-to-Point |
|
|
21,874 |
|
|
|
15,809 |
|
|
|
21,276 |
|
|
|
80,765 |
|
|
|
67,083 |
|
Enterprise |
|
|
(5,478 |
) |
|
|
2,499 |
|
|
|
31,992 |
|
|
|
39,097 |
|
|
|
109,844 |
|
Other |
|
|
1,235 |
|
|
|
1,142 |
|
|
|
1,583 |
|
|
|
5,136 |
|
|
|
5,031 |
|
Total Revenues |
|
$ |
40,206 |
|
|
$ |
43,046 |
|
|
$ |
84,507 |
|
|
$ |
220,195 |
|
|
$ |
296,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
REVENUES BY REGION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Three Months Ended |
|
|
Year Ended |
|
||||||||||||||
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|||||
North America |
|
$ |
27,056 |
|
|
$ |
17,768 |
|
|
$ |
44,350 |
|
|
$ |
131,943 |
|
|
$ |
133,897 |
|
Europe, Middle East and Africa |
|
|
3,418 |
|
|
|
14,274 |
|
|
|
20,007 |
|
|
|
44,169 |
|
|
|
90,883 |
|
Caribbean and Latin America |
|
|
5,303 |
|
|
|
5,726 |
|
|
|
9,244 |
|
|
|
20,729 |
|
|
|
31,223 |
|
Asia Pacific |
|
|
4,429 |
|
|
|
5,278 |
|
|
|
10,906 |
|
|
|
23,354 |
|
|
|
40,896 |
|
Total Revenues |
|
$ |
40,206 |
|
|
$ |
43,046 |
|
|
$ |
84,507 |
|
|
$ |
220,195 |
|
|
$ |
296,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Use of non-GAAP (Adjusted) Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide additional financial metrics that are not prepared in accordance with GAAP (non-GAAP), including Adjusted EBITDA, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP operating margin, non-GAAP pre-tax income, non-GAAP provision for income taxes, non-GAAP net income, and non-GAAP fully weighted basic and diluted shares. Management uses these non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes, to measure executive compensation and to evaluate our financial performance. We believe that these non-GAAP financial measures help us to identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of the non-GAAP financial measures.
We believe that these financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. Although the calculation of non-GAAP financial measures may vary from company to company, our detailed presentation may facilitate analysis and comparison of our operating results by management and investors with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results in their public disclosures. These non-GAAP financial measures are discussed below.
Adjusted EBITDA is defined as net (loss) income as reported in our consolidated statements of operations excluding the impact of (i) interest expense (income), net; (ii) income tax provision (benefit); (iii) depreciation and amortization expense; (iv) nonrecurring expenses, (v) share-based compensation expense, and (vi) restructuring expenses. EBITDA is widely used
by securities analysts, investors and other interested parties to evaluate the profitability of companies. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting net finance costs), tax positions (such as the availability of net operating losses against which to relieve taxable profits), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We adjust EBITDA to also exclude nonrecurring expenses since this is one-time in nature and does not reflect our ongoing operations. We adjust EBITDA for share-based compensation expense which is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Cambium Networks’ control. As a result, management excludes this item from Cambium Networks' internal operating forecasts and models. We also adjust EBITDA to exclude nonrecurring expenses and restructuring expenses as these relate to events outside of the ordinary course of continuing operations and to provide a more accurate comparison of our ongoing business results.
Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP operating margin, non-GAAP effective tax rate and non-GAAP net income are used as a supplement to our unaudited condensed consolidated financial statements presented in accordance with GAAP. We believe these non-GAAP measures are the most meaningful for period-to-period comparisons because they exclude the impact of share-based compensation expense, restructuring expenses, nonrecurring legal expenses, amortization of acquired intangibles, and amortization of capitalized software costs as we do not consider these costs and expenses to be indicative of our ongoing operations.
Share-based compensation expenses are excluded. Management may issue different types of awards, including share options, and restricted share units, and excludes the associated expense in this non-GAAP measure. Share-based compensation expense is a non-cash expense that varies in amount from period to period and is dependent on market forces that are often beyond Cambium Networks control.
Amortization of acquired intangibles includes customer relationships and is excluded since these are not indicative of continuing operations.
Amortization of capitalized software costs include capitalized research and development activities amortized over their useful life and included in cost of revenues and are excluded since these are not indicative of continuing operations.
Restructuring expenses consist primarily of severance costs for employees which are not related to future operating expenses. Cambium Networks excludes these expenses since they result from an event that is outside the ordinary course of continuing operations. Excluding these charges permits more accurate comparisons of Cambium Networks’ ongoing business results.
Our non-GAAP tax adjustments include the tax impacts from share-based compensation expense including excess or decremental tax benefits available to the company that are recorded when incurred. Non-GAAP results exclude the effect of a valuation allowance recorded against tax assets for the cumulative loss related to our UK operation. Cambium Networks excludes these amounts to more closely approximate the company’s ongoing effective tax rate after adjusting for one-time or unique non-recurring items. The associated non-GAAP effective tax rate is also applied to the gross amount of non-GAAP adjustments for the purpose of calculating non-GAAP net income in total and on a per-share basis. This approach is designed to enhance the ability of investors to understand the company's tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP adjustments which may not reflect actual cash tax expense.
Non-GAAP fully weighted basic and diluted shares are shown as outstanding during the entire period presented and include dilutive shares if their effect on earnings per share is dilutive. We also use non-GAAP fully weighted basic and diluted shares to provide more comparable per-share results across periods.
These non-GAAP financial measures do not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We present a “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” in the tables below.
The following table reconciles net income to Adjusted EBITDA, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands):
CAMBIUM NETWORKS CORPORATION |
|
|||||||||||||||||||
SUPPLEMENTAL SCHEDULE OF NON-GAAP ADJUSTED EBITDA |
|
|||||||||||||||||||
(In thousands) |
|
|||||||||||||||||||
(Unaudited) |
|
|||||||||||||||||||
|
|
Three months ended |
|
|
Year ended |
|
||||||||||||||
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|||||
Net (loss) income |
|
$ |
(52,854 |
) |
|
$ |
(26,200 |
) |
|
$ |
10,011 |
|
|
$ |
(77,420 |
) |
|
$ |
20,200 |
|
Interest expense, net |
|
|
725 |
|
|
|
620 |
|
|
|
559 |
|
|
|
2,521 |
|
|
|
1,977 |
|
(Benefit) provision for income taxes |
|
|
10,523 |
|
|
|
3,417 |
|
|
|
(1,135 |
) |
|
|
13,774 |
|
|
|
(2,183 |
) |
Depreciation and amortization of software and intangible assets |
|
|
2,414 |
|
|
|
2,294 |
|
|
|
1,972 |
|
|
|
9,025 |
|
|
|
7,596 |
|
EBITDA |
|
|
(39,192 |
) |
|
|
(19,869 |
) |
|
|
11,407 |
|
|
|
(52,100 |
) |
|
|
27,590 |
|
Share-based compensation |
|
|
2,811 |
|
|
|
2,845 |
|
|
|
2,895 |
|
|
|
11,593 |
|
|
|
10,680 |
|
Restructuring and other nonrecurring expenses |
|
|
1,191 |
|
|
|
2,602 |
|
|
|
— |
|
|
|
4,049 |
|
|
|
511 |
|
Adjusted EBITDA |
|
$ |
(35,190 |
) |
|
$ |
(14,422 |
) |
|
$ |
14,302 |
|
|
$ |
(36,458 |
) |
|
$ |
38,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjusted EBITDA Margin |
|
|
(87.5 |
)% |
|
|
(33.5 |
)% |
|
|
16.9 |
% |
|
|
(16.6 |
)% |
|
|
13.1 |
% |
The following table reconciles all other GAAP to non-GAAP financial measures (in thousands):
CAMBIUM NETWORKS CORPORATION |
|
|||||||||||||||||||
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES |
|
|||||||||||||||||||
(In thousands, except per share data) |
|
|||||||||||||||||||
(Unaudited) |
|
|||||||||||||||||||
|
|
Three Months Ended |
|
|
Year Ended |
|
||||||||||||||
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|||||
GAAP gross profit |
|
$ |
(11,030 |
) |
|
$ |
10,959 |
|
|
$ |
41,369 |
|
|
$ |
68,831 |
|
|
$ |
145,140 |
|
Share-based compensation expense |
|
|
47 |
|
|
|
45 |
|
|
|
56 |
|
|
|
207 |
|
|
|
219 |
|
Amortization of capitalized software costs |
|
|
818 |
|
|
|
750 |
|
|
|
497 |
|
|
|
2,815 |
|
|
|
1,635 |
|
Restructuring and nonrecurring expense |
|
|
69 |
|
|
|
152 |
|
|
|
— |
|
|
|
221 |
|
|
|
— |
|
Non-GAAP gross profit |
|
$ |
(10,096 |
) |
|
$ |
11,906 |
|
|
$ |
41,922 |
|
|
$ |
72,074 |
|
|
$ |
146,994 |
|
Non-GAAP gross margin |
|
|
-25.1 |
% |
|
|
27.7 |
% |
|
|
49.6 |
% |
|
|
32.7 |
% |
|
|
49.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP research and development expense |
|
$ |
13,057 |
|
|
$ |
13,151 |
|
|
$ |
12,874 |
|
|
$ |
53,478 |
|
|
$ |
49,865 |
|
Share-based compensation expense |
|
|
1,005 |
|
|
|
1,037 |
|
|
|
1,258 |
|
|
|
4,699 |
|
|
|
4,532 |
|
Restructuring and other nonrecurring expense |
|
|
1,145 |
|
|
|
630 |
|
|
|
— |
|
|
|
2,031 |
|
|
|
— |
|
Non-GAAP research and development expense |
|
$ |
10,907 |
|
|
$ |
11,484 |
|
|
$ |
11,616 |
|
|
$ |
46,748 |
|
|
$ |
45,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP sales and marketing expense |
|
$ |
9,726 |
|
|
$ |
9,675 |
|
|
$ |
12,148 |
|
|
$ |
42,599 |
|
|
$ |
44,452 |
|
Share-based compensation expense |
|
|
547 |
|
|
|
597 |
|
|
|
702 |
|
|
|
2,572 |
|
|
|
2,603 |
|
Restructuring and other nonrecurring expenses |
|
|
34 |
|
|
|
350 |
|
|
|
— |
|
|
|
384 |
|
|
|
166 |
|
Non-GAAP sales and marketing expense |
|
$ |
9,145 |
|
|
$ |
8,728 |
|
|
$ |
11,446 |
|
|
$ |
39,643 |
|
|
$ |
41,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP general and administrative expense |
|
$ |
6,207 |
|
|
$ |
8,688 |
|
|
$ |
5,422 |
|
|
$ |
27,398 |
|
|
$ |
24,982 |
|
Share-based compensation expense |
|
|
1,212 |
|
|
|
1,166 |
|
|
|
879 |
|
|
|
4,115 |
|
|
|
3,326 |
|
Restructuring and other nonrecurring expenses |
|
|
(57 |
) |
|
|
1,470 |
|
|
|
— |
|
|
|
1,413 |
|
|
|
345 |
|
Non-GAAP general and administrative expense |
|
$ |
5,052 |
|
|
$ |
6,052 |
|
|
$ |
4,543 |
|
|
$ |
21,870 |
|
|
$ |
21,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP depreciation and amortization |
|
$ |
1,596 |
|
|
$ |
1,545 |
|
|
$ |
1,475 |
|
|
$ |
6,210 |
|
|
$ |
5,961 |
|
Amortization of acquired intangibles |
|
|
375 |
|
|
|
374 |
|
|
|
374 |
|
|
|
1,498 |
|
|
|
1,603 |
|
Non-GAAP depreciation and amortization |
|
$ |
1,221 |
|
|
$ |
1,171 |
|
|
$ |
1,101 |
|
|
$ |
4,712 |
|
|
$ |
4,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP operating (loss) income |
|
$ |
(41,616 |
) |
|
$ |
(22,100 |
) |
|
$ |
9,450 |
|
|
$ |
(60,854 |
) |
|
$ |
19,880 |
|
Share-based compensation expense |
|
|
2,811 |
|
|
|
2,845 |
|
|
|
2,895 |
|
|
|
11,593 |
|
|
|
10,680 |
|
Amortization of capitalized software costs |
|
|
818 |
|
|
|
750 |
|
|
|
497 |
|
|
|
2,815 |
|
|
|
1,635 |
|
Amortization of acquired intangibles |
|
|
375 |
|
|
|
374 |
|
|
|
374 |
|
|
|
1,498 |
|
|
|
1,603 |
|
Restructuring and other nonrecurring expenses |
|
|
1,191 |
|
|
|
2,602 |
|
|
|
— |
|
|
|
4,049 |
|
|
|
511 |
|
Non-GAAP operating (loss) income |
|
$ |
(36,421 |
) |
|
$ |
(15,529 |
) |
|
$ |
13,216 |
|
|
$ |
(40,899 |
) |
|
$ |
34,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP pre-tax (loss) income |
|
$ |
(42,331 |
) |
|
$ |
(22,783 |
) |
|
$ |
8,876 |
|
|
$ |
(63,646 |
) |
|
$ |
18,017 |
|
Share-based compensation expense |
|
|
2,811 |
|
|
|
2,845 |
|
|
|
2,895 |
|
|
|
11,593 |
|
|
|
10,680 |
|
Amortization of capitalized software costs |
|
|
818 |
|
|
|
750 |
|
|
|
497 |
|
|
|
2,815 |
|
|
|
1,635 |
|
Amortization of acquired intangibles |
|
|
375 |
|
|
|
374 |
|
|
|
374 |
|
|
|
1,498 |
|
|
|
1,603 |
|
Restructuring and other nonrecurring expenses |
|
|
1,191 |
|
|
|
2,602 |
|
|
|
— |
|
|
|
4,049 |
|
|
|
511 |
|
Non-GAAP pre-tax (loss) income |
|
$ |
(37,136 |
) |
|
$ |
(16,212 |
) |
|
$ |
12,642 |
|
|
$ |
(43,691 |
) |
|
$ |
32,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP provision (benefit) for income taxes |
|
$ |
10,523 |
|
|
$ |
3,417 |
|
|
$ |
(1,135 |
) |
|
$ |
13,774 |
|
|
$ |
(2,183 |
) |
Valuation allowance impacts |
|
|
29,841 |
|
|
|
5,292 |
|
|
|
— |
|
|
|
35,133 |
|
|
|
— |
|
Tax rate change |
|
|
(2,845 |
) |
|
|
119 |
|
|
|
118 |
|
|
|
(2,845 |
) |
|
|
(873 |
) |
Tax impacts of share vesting |
|
|
169 |
|
|
|
80 |
|
|
|
(221 |
) |
|
|
168 |
|
|
|
(221 |
) |
Tax effect of Non-GAAP adjustments |
|
|
(1,039 |
) |
|
|
(1,314 |
) |
|
|
(753 |
) |
|
|
(3,991 |
) |
|
|
(2,886 |
) |
All other discrete items |
|
|
(6,662 |
) |
|
|
3,373 |
|
|
|
(2,598 |
) |
|
|
(3,561 |
) |
|
|
(3,714 |
) |
Non-GAAP (benefit) provision for income taxes |
|
$ |
(8,941 |
) |
|
$ |
(4,133 |
) |
|
$ |
2,319 |
|
|
$ |
(11,129 |
) |
|
$ |
5,511 |
|
Non-GAAP ETR |
|
|
24.1 |
% |
|
|
25.5 |
% |
|
|
18.3 |
% |
|
|
25.5 |
% |
|
|
17.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP net (loss) income |
|
$ |
(52,854 |
) |
|
$ |
(26,200 |
) |
|
$ |
10,011 |
|
|
$ |
(77,420 |
) |
|
$ |
20,200 |
|
Share-based compensation expense |
|
|
2,811 |
|
|
|
2,845 |
|
|
|
2,895 |
|
|
|
11,593 |
|
|
|
10,680 |
|
Amortization of capitalized software costs |
|
|
818 |
|
|
|
750 |
|
|
|
497 |
|
|
|
2,815 |
|
|
|
1,635 |
|
Amortization of acquired intangibles |
|
|
375 |
|
|
|
374 |
|
|
|
374 |
|
|
|
1,498 |
|
|
|
1,603 |
|
Restructuring and other nonrecurring expenses |
|
|
1,191 |
|
|
|
2,602 |
|
|
|
— |
|
|
|
4,049 |
|
|
|
511 |
|
Non-GAAP adjustments to tax |
|
|
20,503 |
|
|
|
8,864 |
|
|
|
(2,701 |
) |
|
|
28,894 |
|
|
|
(4,808 |
) |
Tax effect of Non-GAAP adjustments |
|
|
(1,039 |
) |
|
|
(1,314 |
) |
|
|
(753 |
) |
|
|
(3,991 |
) |
|
|
(2,886 |
) |
Non-GAAP net (loss) income |
|
$ |
(28,195 |
) |
|
$ |
(12,079 |
) |
|
$ |
10,323 |
|
|
$ |
(32,562 |
) |
|
$ |
26,935 |
|
Non-GAAP fully weighted basic shares |
|
|
27,844 |
|
|
|
27,662 |
|
|
|
27,313 |
|
|
|
27,835 |
|
|
|
27,313 |
|
Non-GAAP fully weighted diluted shares |
|
|
27,861 |
|
|
|
27,744 |
|
|
|
28,605 |
|
|
|
27,871 |
|
|
|
28,578 |
|
Non-GAAP net (loss) income per Non-GAAP basic share |
|
$ |
(1.01 |
) |
|
$ |
(0.44 |
) |
|
$ |
0.38 |
|
|
$ |
(1.17 |
) |
|
$ |
0.99 |
|
Non-GAAP net (loss) income per Non-GAAP diluted share |
|
$ |
(1.01 |
) |
|
$ |
(0.44 |
) |
|
$ |
0.36 |
|
|
$ |
(1.17 |
) |
|
$ |
0.94 |
|
###
Investor Inquiries:
Peter Schuman, IRC
Vice President Investor & Industry Analyst Relations
Cambium Networks
+1 (847) 264-2188
peter.schuman@cambiumnetworks.com