CMBMF 8-K

CAMBIUM NETWORKS CORPORATION

Dated: May 12, 2020

/s/ STEPHEN CUMMING

Stephen Cumming

Chief Financial Officer

Cambium Networks Corp (CMBMF)

8-K 2020-05-12 For: 2020-05-12

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Exhibit No.		Description

99.1		Press release dated May 12, 2020

	GAAP									Non-GAAP ⁽¹⁾
(in millions, except percentages)	Q1 2020			Q4 2019			Q1 2019			Q1 2020			Q4 2019			Q1 2019
Revenues	$	60.4		$	64.1		$	68.1		$	60.4		$	64.1		$	68.1
Gross margin		50.7	%		52.0	%		46.7	%		51.0	%		52.4	%		46.8	%
Operating margin		0.6	%		2.9	%		6.9	%		5.0	%		6.6	%		7.4	%
Adjusted EBITDA margin											7.3	%		8.2	%		8.9	%

CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
(In thousands, except share and per share amounts)
(Unaudited)
	Three months ended
	March 31, 2020			December 31, 2019			March 31, 2019

Revenues	$	60,429		$	64,062		$	68,112
Cost of revenues		29,797			30,767			36,322
Gross profit		30,632			33,295			31,790
Gross margin		50.7	%		52.0	%		46.7	%
Operating expenses
Research and development		11,814			12,126			10,482
Sales and marketing		10,304			11,445			10,218
General and administrative		6,446			5,936			5,130
Depreciation and amortization		1,695			1,901			1,281
Total operating expenses		30,259			31,408			27,111
Operating income		373			1,887			4,679
Operating margin		0.6	%		2.9	%		6.9	%
Interest expense, net		1,345			1,402			2,268
Other (income) expense, net		(216	)		295			134
(Loss) income before income taxes		(756	)		190			2,277
Provision for income taxes		82			1,239			415
Net (loss) income	$	(838	)	$	(1,049	)	$	1,862

(Loss) income per share
Basic and diluted	$	(0.03	)	$	(0.04	)	$	0.14
Weighted-average number of shares outstanding to compute net (loss) income per share
Basic and diluted		25,677,179			25,635,050			13,600,411

Share-based compensation included in costs and expenses:
Cost of revenues	$	17		$	15		$	—
Research and development		368			301			—
Sales and marketing		232			204			—
General and administrative		194			270			—
Total share-based compensation expense	$	811		$	790		$	—

CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	March 31, 2020			December 31, 2019
ASSETS	(Unaudited)
Current assets
Cash	$	24,493		$	19,346
Accounts receivable, net of allowance		61,606			58,628
Inventories, net		32,499			41,670
Recoverable income taxes		46			—
Prepaid expenses		4,078			5,323
Other current assets		4,944			4,350
Total current assets		127,666			129,317
Noncurrent assets
Property and equipment, net		8,264			8,314
Software, net		3,185			3,395
Operating lease assets		6,443			6,872
Intangible assets, net		14,548			15,100
Goodwill		9,493			8,552
Deferred tax assets, net		815			929
Other noncurrent assets		417			—
TOTAL ASSETS	$	170,831		$	172,479
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	16,528		$	25,214
Accrued liabilities		15,017			15,034
Employee compensation		5,097			4,652
Current portion of long-term external debt, net		9,454			9,454
Deferred revenues		6,331			7,430
Other current liabilities		7,400			6,084
Total current liabilities		59,827			67,868
Noncurrent liabilities
Long-term external debt, net		61,795			54,158
Deferred revenues		4,337			4,852
Noncurrent operating lease liabilities		4,724			5,335
Deferred tax liabilities, net		61			337
Other noncurrent liabilities		520			—
Total liabilities		131,264			132,550
Shareholders' equity
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2019 and March 31, 2020; 25,753,603 issued and 25,672,983 outstanding at December 31, 2019; 25,768,757 shares issued and 25,680,205 outstanding at March 31, 2020		3			3
Additional paid in capital		105,584			104,773
Treasury shares, at cost, 80,620 shares at December 31, 2019 and 88,552 shares at March 31, 2020		(1,041	)		(1,094	)
Accumulated deficit		(64,212	)		(63,374	)
Accumulated other comprehensive loss		(767	)		(379	)
Total shareholders’ equity		39,567			39,929
TOTAL LIABILITIES AND EQUITY	$	170,831		$	172,479

CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019
Cash flows from operating activities:
Net (loss) income	$	(838	)	$	(1,049	)	$	1,862
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		1,845			2,046			1,360
Amortization of debt issuance costs		137			136			165
Share-based compensation		811			790			—
Deferred income taxes		(162	)		(97	)		310
Other		522			(95	)		866
Change in assets and liabilities:
Receivables		(2,172	)		(31	)		(3,487	)
Inventories		8,698			1,028			(2,651	)
Accounts payable		(8,546	)		3,753			1,830
Accrued employee compensation		547			(329	)		1,391
Other assets and liabilities		(1,633	)		(7	)		1,609
Net cash (used in) provided by operating activities		(791	)		6,145			3,255
Cash flows from investing activities:
Purchase of property and equipment		(1,053	)		(467	)		(1,128	)
Purchase of software		(157	)		(72	)		(383	)
Cash paid for acquisition		(334	)		(2,666	)		—
Net cash used in investing activities		(1,544	)		(3,205	)		(1,511	)
Cash flows from financing activities:
Proceeds from issuance of revolver debt		10,000			—			—
Repayment of term loan		(2,500	)		(2,375	)		(2,375	)
Payment of deferred offering costs		—			(181	)		—
Taxes paid related to net share settlement of equity awards		52			—			—
Net cash provided by (used in) financing activities		7,552			(2,556	)		(2,375	)
Effect of exchange rate on cash		(70	)		12			(9	)
Net increase (decrease) in cash		5,147			396			(640	)
Cash, beginning of period		19,346			18,950			4,441
Cash, end of period	$	24,493		$	19,346		$	3,801

Supplemental disclosure of cash flow information:
Income taxes paid	$	149		$	270		$	201
Interest paid	$	1,117		$	1,185		$	1,950

CAMBIUM NETWORKS CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands)
(Unaudited)

REVENUES BY PRODUCT TYPE
	Three Months Ended
	March 31, 2020		December 31, 2019		March 31, 2019
Point-to-Multi-Point	$	34,867	$	33,244	$	42,327
Point-to-Point		13,110		18,178		19,634
Wi-Fi		11,481		11,521		5,586
Other		971		1,119		565
Total Revenues	$	60,429	$	64,062	$	68,112

REVENUES BY REGION
	Three Months Ended
	March 31, 2020		December 31, 2019		March 31, 2019
North America	$	31,035	$	29,113	$	34,364
Europe, Middle East and Africa		18,744		19,217		21,970
Caribbean and Latin America		5,230		8,240		7,099
Asia Pacific		5,420		7,492		4,679
Total Revenues	$	60,429	$	64,062	$	68,112

CAMBIUM NETWORKS CORPORATION
SUPPLEMENTAL SCHEDULE OF NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
	Three months ended
	March 31, 2020			December 31, 2019			March 31, 2019
Net (loss) income	$	(838	)	$	(1,049	)	$	1,862
Interest expense, net		1,345			1,402			2,268
Provision for income taxes		82			1,239			415
Depreciation and amortization		1,845			2,046			1,360
EBITDA		2,434			3,638			5,905
Share-based compensation		811			915			—
Sponsor management fee		—			—			125
Xirrus one-time acquisition charges		—			74			—
Restructuring expense		1,152			644			—
Adjusted EBITDA	$	4,397		$	5,271		$	6,030

Adjusted EBITDA Margin		7.3	%		8.2	%		8.9	%

CAMBIUM NETWORKS CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
	Three Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019
GAAP gross profit	$	30,632		$	33,295		$	31,790
Share-based compensation expense		17			15			—
Amortization of capitalized software costs		150			145			79
Restructuring expense		—			117			—
Non-GAAP gross profit	$	30,799		$	33,572		$	31,869
Non-GAAP gross margin		51.0	%		52.4	%		46.8	%

GAAP research and development expense	$	11,814		$	12,126		$	10,482
Share-based compensation expense		368			426			—
Restructuring expense		639			131			—
Non-GAAP research and development expense	$	10,807		$	11,569		$	10,482

GAAP sales and marketing expense	$	10,304		$	11,445		$	10,218
Share-based compensation expense		232			204			—
Restructuring expense		513			362			—
Non-GAAP sales and marketing expense	$	9,559		$	10,879		$	10,218

GAAP general and administrative expense	$	6,446		$	5,936		$	5,130
Share-based compensation expense		194			270			—
Xirrus one-time acquisition charges		—			74			—
Restructuring expense		—			34			—
Non-GAAP general and administrative expense	$	6,252		$	5,558		$	5,130

GAAP depreciation and amortization	$	1,695		$	1,901		$	1,281
Amortization of acquired intangibles		551			593			293
Non-GAAP depreciation and amortization	$	1,144		$	1,308		$	988

GAAP operating income	$	373		$	1,887		$	4,679
Share-based compensation expense		811			915			—
Amortization of capitalized software costs		150			145			79
Amortization of acquired intangibles		551			593			293
Xirrus one-time acquisition charges		—			74			—
Restructuring expense		1,152			644			—
Non-GAAP operating income	$	3,037		$	4,258		$	5,051

GAAP pre-tax income (loss)	$	(756	)	$	190		$	2,277
Share-based compensation expense		811			915			—
Amortization of capitalized software costs		150			145			79
Amortization of acquired intangibles		551			593			293
Xirrus one-time acquisition charges		—			74			—
Restructuring expense		1,152			644			—
Non-GAAP pre-tax income	$	1,908		$	2,561		$	2,649

GAAP provision (benefit) for income taxes	$	82		$	1,239		$	415
Valuation allowance impacts		—			1,361			—
Tax impacts of share vesting		3			277			—
Tax effect of share-based compensation expense, amortization of acquired intangibles, Xirrus one-time acquisition, restructuring expense using non-GAAP ETR		(533	)		(688	)		(67	)
All other discrete items		61			—			6
Non-GAAP provision for income taxes	$	551		$	289		$	476
Non-GAAP ETR		28.9	%		11.3	%		18.0	%

GAAP net (loss) income	$	(838	)	$	(1,049	)	$	1,862
Share-based compensation expense		811			915			—
Amortization of capitalized software costs		150			145			79
Amortization of acquired intangibles		551			593			293
Xirrus one-time acquisition charges		—			74			—
Restructuring expense		1,152			644			—
Non-GAAP adjustments to tax		64			1,638			6
Tax effect of share-based compensation expense, amortization of acquired intangibles, Xirrus one-time acquisition charges, restructuring expense using non-GAAP ETR		(533	)		(688	)		(67	)
Non-GAAP net income	$	1,357		$	2,272		$	2,173

Non-GAAP fully weighted basic and diluted shares		25,680			25,673			13,600

Non-GAAP net income per Non-GAAP fully weighted basic and diluted shares	$	0.05		$	0.09		$	0.16