false0001738177CAMBIUM NETWORKS CORP00017381772023-02-162023-02-16

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 16, 2023

 

 

CAMBIUM NETWORKS CORPORATION

(Exact name of Registrant as Specified in Its Charter)

 

 

Cayman Islands			001-38952	00-0000000
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
c/o Cambium Networks, Inc. 3800 Golf Road, Suite 360
Rolling Meadows, Illinois				60008
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 345 943-3100

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

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:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary shares, $0.0001 par value		CMBM		Nasdaq Global Market

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. ☒

 

 

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Item 2.02 Results of Operations and Financial Condition.

On February 16, 2023, Cambium Networks Corporation (the "Company") issued a press release announcing financial results for the three-month period and year ended December 31, 2022. The press release contains forward-looking statements regarding the Company, and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

The press release dated February 16, 2023 is furnished herewith as Exhibit 99.1. The information in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liability of that Section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.		Description
99.1		Press release dated February 16, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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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.

			CAMBIUM NETWORKS CORPORATION
Date:	February 16, 2023	By:	/s/ Andrew P. Bronstein
		Name: Title:	Andrew P. Bronstein Chief Financial Officer

 

 

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Exhibit 99.1

 

Cambium Networks Reports Fourth Quarter and Full Year 2022 Financial Results

ROLLING MEADOWS, Ill., Feb. 16, 2023 — 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 2022 ended December 31, 2022.

		GAAP												Non-GAAP (1)
(in millions, except percentages)		Q4 2022				Q3 2022				Q4 2021				Q4 2022				Q3 2022				Q4 2021
Revenues		$	84.5			$	81.2			$	78.7			$	84.5			$	81.2			$	78.7
Gross margin			49.0	%			50.7	%			43.8	%			49.6	%			51.3	%			44.2	%
Operating margin			11.2	%			12.3	%			3.7	%			15.6	%			17.0	%			7.3	%
Net Income		$	10.0			$	9.4			$	1.4			$	10.3			$	11.3			$	4.4
Adjusted EBITDA margin															16.9	%			18.2	%			8.6	%

 

		GAAP								Non-GAAP (1)
(in millions, except percentages)		2022				2021				2022				2021
Revenues		$	296.9			$	335.9			$	296.9			$	335.9
Gross margin			48.9	%			47.9	%			49.5	%			48.2	%
Operating margin			6.7	%			10.8	%			11.6	%			14.1	%
Net Income		$	20.2			$	37.4			$	26.9			$	35.6
Adjusted EBITDA margin											13.1	%			15.3	%

(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 fourth quarter and full year 2022 ended December 31, 2022.

“Our fourth quarter included healthy growth in revenues, solid profitability, and improved cash generation,” said Atul Bhatnagar, president and CEO. “The Point-to-Multi-Point business returned to sequential growth, and we had a strong quarter for the Point-to-Point business from global defense spending.”

Bhatnagar continued, “Cambium’s innovation in wireless broadband continues to benefit service providers, enterprises, industrial customers, and government agencies around the world with our broadening portfolio of gigabit wireless products and solutions. Our high-quality, yet affordable solutions, allow our customers to dramatically improve performance and quality of service. During 2023, Cambium expects to grow revenues and increase profitability as we continue to have healthy growth in the Enterprise business, ramp our next generation of multi-gigabit fixed wireless solutions in the Point-to-Multi-Point business, and benefit from increased global defense spending for our Point-to-Point products.”

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Revenues of $84.5 million for the fourth quarter 2022 increased $5.8 million year-over-year primarily as a result of higher revenues for Enterprise and Point-to-Point products, partially offset by lower Point-to-Multi-Point revenues primarily due to less demand from service providers ahead of the ramp of product transitions to new technologies. Revenues for the fourth quarter 2022 increased by $3.3 million compared to $81.2 million for the third quarter 2022, due to record Point-to-Point revenues, and higher Point-to-Multi-Point revenues, offset by lower Enterprise revenues.

GAAP gross margin for the fourth quarter 2022 was 49.0%, compared to 43.8% for the fourth quarter 2021, and 50.7% for the third quarter 2022. GAAP operating income for the fourth quarter 2022 was $9.5 million, compared to $2.9 million for the fourth quarter 2021, and $10.0 million for the third quarter 2022. GAAP net income for the fourth quarter 2022 was $10.0 million, or net earnings of $0.35 per diluted share, compared to $1.4 million, or net earnings of $0.05 per diluted share for the fourth quarter 2021, and $9.4 million, or net earnings of $0.34 per diluted share for the third quarter 2022.

Non-GAAP gross margin for the fourth quarter 2022 was 49.6%, compared to 44.2% for the fourth quarter 2021, and 51.3% for the third quarter 2022. Non-GAAP operating income for the fourth quarter 2022 was $13.2 million, compared to $5.8 million for the fourth quarter 2021, and $13.8 million for the third quarter 2022. Non-GAAP net income for the fourth quarter 2022 was $10.3 million, or $0.36 per diluted share, compared to $4.4 million, or $0.16 per diluted share for the fourth quarter 2021, and $11.3 million, or $0.40 per diluted share, for the third quarter 2022. For the fourth quarter 2022, adjusted EBITDA was $14.3 million or 16.9% of revenues, compared to adjusted EBITDA of $6.7 million or 8.6% of revenues for the fourth quarter 2021, and $14.7 million or 18.2% of revenues for the third quarter 2022.

For full year 2022, revenues of $296.9 million decreased by $39.0 million compared to full year 2021. GAAP gross margin was 48.9% for full year 2022 compared to 47.9% for 2021. Non-GAAP gross margin was 49.5% of revenues for full year 2022, compared to 48.2% of revenues for 2021. GAAP operating income of $19.9 million for full year 2022 compared to $36.4 million for 2021. Non-GAAP operating income was $34.3 million or 11.6% of revenues for full year 2022, compared to $47.4 million or 14.1% of revenues during 2021. GAAP net income for full year 2022 was $20.2 million, or net earnings of $0.72 per diluted share, compared to GAAP net income of $37.4 million, or net earnings of $1.31 per diluted share, for 2021. For full year 2022, non-GAAP net income was $26.9 million or $0.94 per diluted share, compared to $35.6 million or $1.26 per diluted share for 2021. Adjusted EBITDA for full year 2022 was $38.8 million or 13.1% of revenues, compared to $51.2 million or 15.3% of revenues for 2021.

Cash provided by operating activities was $4.0 million for the fourth quarter 2022, compared to $5.6 million for the fourth quarter 2021, and $2.2 million for the third quarter 2022. Cash totaled $48.2 million as of December 31, 2022, $11.1 million lower than December 31, 2021, due primarily to higher inventories and the paydown of debt, offset by earnings.

Fourth Quarter 2022 Highlights

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Full Year 2022 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 2023 Financial Outlook

Taking into account our current visibility, the financial outlook as of February 16, 2023, for the first quarter ending March 31, 2023, is expected to be as follows:

Cash requirements are expected to be as follows:

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Full Year 2023 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 16, 2023. 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/BIe42a17d8cf414d09a006e67a8b042659. 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 and CEO, Atul Bhatnagar, and CFO, Andrew Bronstein, will present and hold one-on-one meetings with investors on Tuesday, March 7, 2023, at the JMP Securities Technology Conference in San Francisco; and on Tuesday, March 14, 2023, 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 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

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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 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2022, and most recent Quarterly Report on Form 10-Q filed on November 4, 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, 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 political tensions between the United States and other countries such as the war between Russia and Ukraine and tensions with China; 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; 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.

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CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
		Three months ended												Year ended
		December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
Revenues		$	84,507			$	81,200			$	78,710			$	296,899			$	335,854
Cost of revenues			43,138				40,034				44,196				151,759				175,058
Gross profit			41,369				41,166				34,514				145,140				160,796
Gross margin			49.0	%			50.7	%			43.8	%			48.9	%			47.9	%
Operating expenses
Research and development			12,874				12,609				12,492				49,865				51,322
Sales and marketing			12,148				11,033				11,367				44,452				41,819
General and administrative			5,422				6,058				6,284				24,982				25,065
Depreciation and amortization			1,475				1,506				1,464				5,961				6,171
Total operating expenses			31,919				31,206				31,607				125,260				124,377
Operating income			9,450				9,960				2,907				19,880				36,419
Operating margin			11.2	%			12.3	%			3.7	%			6.7	%			10.8	%
Interest expense, net			559				514				1,061				1,977				4,269
Other expense (income), net			15				165				35				(114	)			244
Income before income taxes			8,876				9,281				1,811				18,017				31,906
(Benefit) provision for income taxes			(1,135	)			(154	)			384				(2,183	)			(5,515	)
Net income		$	10,011			$	9,435			$	1,427			$	20,200			$	37,421
Earnings per share
Basic		$	0.37			$	0.35			$	0.05			$	0.75			$	1.42
Diluted		$	0.35			$	0.34			$	0.05			$	0.72			$	1.31
Weighted-average number of shares outstanding to compute earnings per share
Basic			27,109,926				26,977,155				26,655,437				26,919,550				26,421,087
Diluted			28,273,786				27,979,575				28,313,291				28,025,278				28,628,136
Share-based compensation included in costs and expenses:
Cost of revenues		$	56			$	56			$	44			$	219			$	152
Research and development			1,258				1,241				851				4,532				3,044
Sales and marketing			702				696				561				2,603				1,935
General and administrative			879				855				677				3,326				2,586
Total share-based compensation expense		$	2,895			$	2,848			$	2,133			$	10,680			$	7,717

Certain revisions were made within operating expenses in prior periods to conform to the current period. These revisions had no impact to operating income.

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CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)
		December 31, 2022				December 31, 2021
ASSETS
Current assets
Cash		$	48,162			$	59,291
Accounts receivable, net of allowance of $577 and $683			89,321				69,773
Inventories, net			57,068				33,777
Recoverable income taxes			117				860
Prepaid expenses			11,857				12,170
Other current assets			6,464				4,718
Total current assets			212,989				180,589
Noncurrent assets
Property and equipment, net			11,271				10,490
Software, net			8,439				5,867
Operating lease assets			4,011				5,899
Intangible assets, net			9,173				10,777
Goodwill			9,842				9,842
Deferred tax assets, net			12,782				7,604
Other noncurrent assets			955				1,200
TOTAL ASSETS		$	269,462			$	232,268
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	31,284			$	28,241
Accrued liabilities			28,042				21,948
Employee compensation			7,394				16,601
Current portion of long-term external debt, net			3,158				2,489
Deferred revenues			8,913				6,880
Other current liabilities			8,429				5,981
Total current liabilities			87,220				82,140
Noncurrent liabilities
Long-term external debt, net			24,463				26,965
Deferred revenues			8,617				5,363
Noncurrent operating lease liabilities			2,170				4,112
Other noncurrent liabilities			1,619				1,551
Total liabilities			124,089				120,131
Shareholders' equity
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2022 and December 31, 2021; 27,313,273 outstanding at December 31, 2022 and 26,735,175 outstanding at December 31, 2021			3				3
Additional paid in capital			138,997				124,117
Treasury shares, at cost, 209,461 shares at December 31, 2022 and 156,907 shares at December 31, 2021			(4,922	)			(3,906	)
Accumulated earnings (deficit)			12,822				(7,378	)
Accumulated other comprehensive loss			(1,527	)			(699	)
Total shareholders’ equity			145,373				112,137
TOTAL LIABILITIES AND EQUITY		$	269,462			$	232,268

 

 

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CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Three Months Ended
		December 31, 2022				September 30, 2022				December 31, 2021
Cash flows from operating activities:
Net income		$	10,011			$	9,435			$	1,427
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of software and intangible assets			1,972				1,930				1,731
Amortization of debt issuance costs			75				76				467
Share-based compensation			2,895				2,848				2,133
Deferred income taxes			(3,202	)			(694	)			359
Provision for inventory excess and obsolescence			2,024				1,587				695
Other			(31	)			(88	)			(31	)
Change in assets and liabilities:
Receivables			(3,470	)			(5,506	)			1,315
Inventories			(8,451	)			(4,786	)			(5,683	)
Prepaid expenses			(3,768	)			(4,116	)			(6,931	)
Accounts payable			3,114				(137	)			4,400
Accrued employee compensation			1,293				759				3,671
Other assets and liabilities			1,564				851				2,012
Net cash provided by operating activities			4,026				2,159				5,565
Cash flows from investing activities:
Purchase of property and equipment			(1,332	)			(974	)			(2,062	)
Purchase of software			(1,230	)			(1,440	)			(1,316	)
Net cash used in investing activities			(2,562	)			(2,414	)			(3,378	)
Cash flows from financing activities:
Proceeds from issuance of term loan			—				—				29,812
Repayment of term loan			(657	)			(656	)			(30,678	)
Payment of debt issuance costs			—				—				(1,220	)
Issuance of ordinary shares under ESPP			839				—				923
Taxes paid related to net share settlement of equity awards			(226	)			(231	)			(562	)
Proceeds from share option exercises			1,872				113				266
Payments to extinguish debt			—				—				(42	)
Net cash provided by (used in) financing activities			1,828				(774	)			(1,501	)
Effect of exchange rate on cash			11				(41	)			9
Net increase (decrease) in cash			3,303				(1,070	)			695
Cash, beginning of period			44,859				45,929				58,596
Cash, end of period		$	48,162			$	44,859			$	59,291
Supplemental disclosure of cash flow information:
Income taxes paid		$	438			$	486			$	206
Interest paid		$	310			$	213			$	234

 

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CAMBIUM NETWORKS CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands)
(Unaudited)
REVENUES BY PRODUCT CATEGORY
		Three Months Ended												Year Ended
		December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
Point-to-Multi-Point		$	29,656			$	26,090			$	37,017			$	114,941			$	204,756
Point-to-Point			21,276				15,409				15,329				67,083				60,761
Enterprise			31,992				38,330				25,779				109,844				66,933
Other			1,583				1,371				585				5,031				3,404
Total Revenues		$	84,507			$	81,200			$	78,710			$	296,899			$	335,854
REVENUES BY REGION
		Three Months Ended												Year Ended
		December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
North America		$	44,350			$	30,086			$	33,386			$	133,897			$	173,491
Europe, Middle East and Africa			20,007				29,263				26,035				90,883