CMBM
$48.83
Cambium Networks
$3.55
7.84%
Earnings Details
1st Quarter March 2021
Thursday, May 6, 2021 4:01:00 PM
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Summary

Cambium Networks Raises Guidance

Cambium Networks (CMBM) reported 1st Quarter March 2021 earnings of $0.70 per share on revenue of $88.5 million. The consensus earnings estimate was $0.31 per share on revenue of $83.1 million. Revenue grew 46.5% on a year-over-year basis.

The company said it expects second quarter non-GAAP earnings of $0.29 to $0.35 per share on revenue of $85.0 million to $90.0 million. The current consensus earnings estimate is $0.30 per share on revenue of $82.81 million for the quarter ending June 30, 2021. The company also said it now expects 2021 revenue of $345.0 million to $359.0 million. The company's previous guidance was revenue of $317.0 million to $331.4 million and the current consensus revenue estimate is $334.1 million for the year ending December 31, 2021.

Cambium Networks delivers wireless communications that work for businesses, communities, and cities worldwide.

Results
Reported Earnings
$0.70
Earnings Whisper
-
Consensus Estimate
$0.31
Reported Revenue
$88.5 Mil
Revenue Estimate
$83.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Cambium Networks Reports First Quarter 2021 Financial Results

  • Record revenues of $88.5 million, increased 7% sequentially, up 46% year-over-year
  • Gross margin of 49.9%, non-GAAP(1) gross margin of 50.1%
  • Record operating income of $13.4 million, record non-GAAP operating income of $15.5 million
  • Record net income of $19.9 million or $0.70 per diluted share, record non-GAAP(1) net income of $11.7 million or $0.41 per diluted share
  • Record Adjusted EBITDA(1) of $16.5 million or 18.6% of revenues

ROLLING MEADOWS, Ill., May 06, 2021 (GLOBE NEWSWIRE) -- Cambium Networks Corporation (“Cambium Networks”) (NASDAQ: CMBM), a leading provider of wireless networking infrastructure solutions, today announced financial results for the first quarter 2021 ended March 31, 2021.

              
  GAAP Non-GAAP (1)
(in millions, except percentages) Q1 2021 Q4 2020 Q1 2020  Q1 2021 Q4 2020 Q1 2020
Revenues $88.5  $82.8  $60.4   $88.5  $82.8  $60.4 
Gross margin  49.9%  51.0%  50.7%   50.1%  51.2%  51.0%
Operating margin  15.1%  13.8%  0.6%   17.5%  16.0%  5.0%
Adjusted EBITDA margin         18.6%  16.8%  7.3%

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 first quarter ended March 31, 2021.

“We continued to deliver record breaking results during the first quarter due to robust demand for wireless broadband connectivity, the need for improved networking infrastructure, and the acceptance of our new product introductions,” said Atul Bhatnagar, president and CEO. “During the first quarter, Cambium Networks shipped our 9 millionth radio since becoming a standalone company. We have built Cambium into a next generation global wireless infrastructure leader for broadband communications and the results are clearly demonstrated in our financial performance.”

Bhatnagar continued, “Wireless broadband solutions are becoming mainstream as performance matches that of fiber and the attractive cost of ownership of our solutions make Cambium a competitive and economically attractive solution for wireless infrastructure projects around the world. Our wireless technologies, including Point-to-Multi-Point with CBRS compatible products, gigabit wireless solutions such as our 60 GHz millimeter wave products, and enterprise Wi-Fi 6 solutions continued to build momentum. When combined with our cloud-first cnMaestro X software solution, Cambium provides a key differentiator for network operators to increase efficiency, scale, and security, while improving quality of service from a single-pane-of-glass. We remain excited for the addition of Fixed 5G technology with our new 28 GHz millimeter wave products, as we expand our serviceable available market by reaching new customers and geographies, and entering new markets demanding higher performance at an affordable price.”  

Revenues of $88.5 million for the first quarter 2021 increased $28.1 million year-over-year as a result of strong demand for Point-to-Multi-Point, Point-to-Point, and enterprise Wi-Fi solutions. Revenues for the first quarter 2021 increased by $5.7 million compared to $82.8 million for the fourth quarter 2020, due to higher Point-to-Multi-Point revenues from service providers continuing to scale networks due to requests for increased capacity and new product introductions, increased demand for Point-to-Point products for backhaul, and record demand for enterprise Wi-Fi solutions.

GAAP gross margin for the first quarter 2021 was 49.9%, compared to 50.7% for the first quarter 2020, and 51.0% for the fourth quarter 2020. Record GAAP operating income for the first quarter 2021 was $13.4 million, compared to $0.4 million for the first quarter 2020, and $11.4 million for the fourth quarter 2020. Record GAAP net income for the first quarter 2021 was $19.9 million, which includes a $7.6 million tax benefit, or net earnings of $0.70 per diluted share, compared to net loss of $0.8 million, or a net loss of $0.03 per diluted share for the first quarter 2020, and net income of $10.5 million, or net earnings of $0.38 per diluted share for the fourth quarter 2020.

Non-GAAP gross margin for the first quarter 2021 was 50.1%, compared to 51.0% for the first quarter 2020, and 51.2% for the fourth quarter 2020. Non-GAAP operating income for the first quarter 2021 was a record $15.5 million, compared to $3.0 million for the first quarter 2020, and $13.3 million for the fourth quarter 2020. Non-GAAP net income for the first quarter 2021 was a record $11.7 million, or $0.41 per diluted share, compared to $1.4 million, or $0.05 per diluted share for the first quarter 2020, and $10.7 million, or $0.38 per diluted share for the fourth quarter 2020. For the first quarter 2021, adjusted EBITDA was a record $16.5 million or 18.6% of revenues, compared to adjusted EBITDA of $4.4 million or 7.3% of revenues for the first quarter 2020, and $13.9 million or 16.8% of revenues for the fourth quarter 2020.

Cash used in operating activities was $7.6 million for the first quarter 2021, compared to cash used in operating activities of $0.8 million for the first quarter 2020, and cash provided by operating activities of $15.1 million for the fourth quarter 2020. Cash totaled $51.2 million as of March 31, 2021, $26.7 million higher than March 31, 2020, due primarily to higher net income, and strong working capital management. The $11.3 million decrease in cash balance from December 31, 2020 was primarily the result of payment for variable compensation, and supply-constraints which delayed some shipments to later in the first quarter affecting receivables, offset by improved net income.

First Quarter 2021 Highlights

  • Record revenues of $88.5 million, up 7% sequentially, an increase of 46% year-over-year.
  • Record GAAP net income of $19.9 million or $0.70 per diluted share, and record non-GAAP net income of $11.7 million or $0.41 per diluted share.
  • Record Adjusted EBITDA of $16.5 million or 18.6% of revenues, compared to $4.4 million or 7.3% of revenues for the first quarter 2020, and $13.9 million or 16.8% of revenues for the fourth quarter 2020.
  • Record Point-to-Multi-Point revenues of $57.8 million, increased 66% year-over-year.
  • Point-to-Point revenues of $17.5 million, increased 33% year-over-year.
  • Record enterprise Wi-Fi revenues of $12.1 million, increased 6% year-over-year.
  • Increased net new channel partners by over 2,280 year-over-year, an increase of 31%.
  • Devices under cnMaestro® Cloud management increased 40% year-over-year.

Taking into account our current visibility, the financial outlook as of May 6, 2021 for the second quarter ending June 30, 2021 and full year ending December 31, 2021 is expected to be as follows:

Second Quarter 2021 Financial Outlook

  • Revenues between $85.0-$90.0 million
  • GAAP gross margin between 48.8%-49.8%; and non-GAAP gross margin between 49.0%-50.0%
  • GAAP operating expenses between $32.9-$33.9 million; and non-GAAP operating expenses between $30.2-$31.2 million
  • GAAP operating income between $8.6-$11.0 million; and non-GAAP operating income between $11.4-$13.8 million
  • Interest expense, net of approximately $1.1 million
  • GAAP net income between $6.3-$8.0 million or between $0.22 and $0.27 per diluted share; and non-GAAP net income between $8.6-$10.3 million or between $0.29 and $0.35 per diluted share
  • Adjusted EBITDA between $12.4-$14.8 million; and adjusted EBITDA margin between 14.6%-16.4%
  • GAAP and non-GAAP effective tax rate of approximately 17.0%-19.0%
  • Approximately 29.2 million weighted average diluted shares outstanding

Cash requirements are expected to be as follows:

  • Paydown of debt: $2.5 million scheduled debt and an additional $19.6 million reduction in term loan principal as required by the excess cash flow provision in the term credit agreement
  • Cash flow interest expense: approximately $0.8 million
  • Capital expenditures: $2.5-$2.9 million

Full Year 2021 Financial Outlook

  • Revenues between $345.0-$359.0 million, increasing between 24%-29%
  • Adjusted EBITDA margin between 15.0%-17.0%

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 reasonable; 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, Thursday May 6, 2021. 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 7248913. 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 7248913.

In addition, Cambium Networks President and CEO, Atul Bhatnagar, will present and hold one-on-one meetings with investors including Tuesday May 18, 2021 at the Needham Virtual Technology & Media Conference; Wednesday May 26, 2021 at the J.P. Morgan Global Technology, Media and Communications Conference; Thursday May 27, 2021 at the Barrington Research Virtual Spring Investment Conference; and on Friday May 28, 2021 with the Raymond James Virtual Bus Tour. All conferences and meetings will be held virtually. 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. 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 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2021. 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; and the impact of the global shortage of certain components including semiconductor chipsets; our inability to predict and respond to emerging technological trends and network operators’ changing needs; risks presented by the global COVID-19 pandemic, which could significantly disrupt our manufacturing, sales and other operations and negatively impact our financial results; 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 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 OPERATION
(In thousands, except share and per share amounts)
(Unaudited)
  Three months ended
  March 31, 2021 December 31, 2020 March 31, 2020
       
Revenues $88,515  $82,805  $60,429 
Cost of revenues  44,345   40,568   29,797 
Gross profit  44,170   42,237   30,632 
Gross margin  49.9%  51.0%  50.7%
Operating expenses      
Research and development  11,603   11,862   11,814 
Sales and marketing  10,040   10,152   10,304 
General and administrative  7,529   7,176   6,446 
Depreciation and amortization  1,595   1,601   1,695 
Total operating expenses  30,767   30,791   30,259 
Operating income  13,403   11,446   373 
Operating margin  15.1%  13.8%  0.6%
Interest expense, net  1,140   1,197   1,345 
Other expense (income), net  42   411   (216)
Income (loss) before income taxes  12,221   9,838   (756)
(Benefit) provision for income taxes  (7,639)  (668)  82 
Net income (loss) $ 19,860  $ 10,506  $ (838)
       
Earnings (loss) per share      
Basic $0.76  $0.41  $(0.03)
Diluted $0.70  $0.38  $(0.03)
Weighted-average number of shares outstanding to compute earnings (loss) per share      
Basic  26,115,615   25,775,954   25,677,179 
Diluted  28,517,713   27,582,283   25,677,179 
       
Share-based compensation included in costs and expenses:      
Cost of revenues $19  $16  $17 
Research and development  517   413   368 
Sales and marketing  295   254   232 
General and administrative  579   48   194 
Total share-based compensation expense $1,410  $731  $811 


CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)
  March 31, 2021 December 31, 2020
ASSETS    
Current assets    
Cash $51,182  $62,472 
Accounts receivable, net of allowance of $874 and $919  69,027   58,114 
Inventories, net  31,435   33,962 
Recoverable income taxes  2,637   1,420 
Prepaid expenses  7,238   4,143 
Other current assets  3,827   5,024 
Total current assets  165,346   165,135 
     
Noncurrent assets    
Property and equipment, net  7,891   7,535 
Software, net  3,932   3,438 
Operating lease assets  4,625   5,083 
Intangible assets, net  12,343   12,895 
Goodwill  9,842   9,842 
Deferred tax assets, net  7,904   1,537 
Other noncurrent assets  336   288 
TOTAL ASSETS $212,219  $205,753 
LIABILITIES AND EQUITY     
Current liabilities    
Accounts payable $24,487  $30,859 
Accrued liabilities  20,803   20,160 
Employee compensation  9,418   14,911 
Current portion of long-term external debt, net  29,026   29,201 
Deferred revenues  6,237   6,471 
Other current liabilities  5,493   6,009 
Total current liabilities  95,464   107,611 
Noncurrent liabilities    
Long-term external debt, net  22,769   24,957 
Deferred revenues  4,553   4,448 
Noncurrent operating lease liabilities  3,042   3,332 
Deferred tax liabilities, net  9   9 
Other noncurrent liabilities  1,981   2,009 
Total liabilities  127,818   142,366 
Shareholders' equity     
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2020 and March 31,
2021; 26,034,629 outstanding at December 31, 2020 and 26,298,501 shares outstanding at March 31, 2021
  3   3 
Additional paid in capital  113,067   109,837 
Treasury shares, at cost, 133,025 shares at March 31, 2021 and 92,146 shares at December 31, 2020  (3,101)  (1,090)
Accumulated deficit  (24,939)  (44,799)
Accumulated other comprehensive loss  (629)  (564)
Total shareholders’ equity   84,401   63,387 
TOTAL LIABILITIES AND EQUITY $212,219  $205,753 


CAMBIUM NETWORKS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
       
  Three Months Ended
  March 31, 2021 December 31, 2020 March 31, 2020
Cash flows from operating activities:      
Net income (loss) $19,860  $10,506  $(838)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating
 activities:
      
Depreciation and amortization  1,720   1,763   1,845 
Amortization of debt issuance costs  137   137   137 
Share-based compensation  1,410   731   811 
Deferred income taxes  (6,367)  (388)  (162)
Provision for inventory excess and obsolescence  (709)  (37)  357 
Other  (31)  (31)  165 
Change in assets and liabilities:      
Receivables  (11,700)  (4,766)  (2,172)
Inventories  3,236   (4,871)  8,698 
Prepaid expenses  (3,099)  (100)  1,217 
Accounts payable  (6,777)  5,922   (8,546)
Accrued employee compensation  (6,003)  5,803   547 
Other assets and liabilities  761   413   (2,850)
Net cash (used in) provided by operating activities  (7,562)  15,082   (791)
Cash flows from investing activities:      
Purchase of property and equipment  (814)  (975)  (1,053)
Purchase of software  (798)  (738)  (157)
Cash paid for acquisition        (334)
Net cash used in investing activities  (1,612)  (1,713)  (1,544)
Cash flows from financing activities:      
Proceeds from issuance of revolver debt        10,000 
Repayment of term loan  (2,500)  (2,500)  (2,500)
Taxes paid related to net share settlement of equity awards  (1,563)  (27)  52 
Proceeds from share option exercises  1,971   1,465    
Net cash (used in) provided by financing activities  (2,092)  (1,062)  7,552 
Effect of exchange rate on cash  (24)  45   (70)
Net (decrease) increase in cash  (11,290)  12,352   5,147 
Cash, beginning of period  62,472   50,120   19,346 
Cash, end of period $51,182  $62,472  $24,493 
       
Supplemental disclosure of cash flow information:      
Income taxes paid $92  $606  $149 
Interest paid $773  $860  $1,117 
       

 

CAMBIUM NETWORKS CORPORATION 
SUPPLEMENTAL FINANCIAL INFORMATION  
(In thousands) 
(Unaudited) 
        
REVENUES BY PRODUCT CATEGORY       
  Three Months Ended 
  March 31, 2021 December 31, 2020 March 31, 2020 
Point-to-Multi-Point $57,799 $53,828 $34,867 
Point-to-Point  17,476  16,756  13,110 
Wi-Fi  12,123  10,920  11,481 
Other  1,117  1,301  971 
Total Revenues $88,515 $82,805 $60,429 
        
REVENUES BY REGION       
  Three Months Ended 
  March 31, 2021 December 31, 2020 March 31, 2020 
North America $54,195 $45,183 $31,035 
Europe, Middle East and Africa  18,690  21,509  18,744 
Caribbean and Latin America  10,515  10,397  5,230 
Asia Pacific  5,115  5,716  5,420 
Total Revenues $88,515 $82,805 $60,429 


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 useful 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 income as reported in our consolidated statements of income excluding the impact of (i) interest expense (income), net; (ii) income tax provision (benefit); (iii) depreciation and amortization expense; (iv) nonrecurring legal expenses, (v) share-based compensation expense, (vi) secondary offering expenses, (vii) one-time acquisition costs, (viii) restructuring expenses, (ix) and non-recurring legal 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 legal 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 one-time acquisition costs and restructuring expenses and offering 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, 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 expense and associated employment taxes paid are excluded. Management may issue different types of awards, including share options, restricted share awards and restricted share units, as well as awards with performance or other market characteristics, 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 while the associated employment taxes are cash-based expenses that vary in amount from period-to-period and are dependent on market forces as well as jurisdictional tax regulations that are often beyond Cambium Networks control.

Nonrecurring legal expenses include settlements of existing or threatened litigation. Secondary offering expenses were incurred by Cambium Networks associated with the registration and sale in December 2020 of 2,500,000 ordinary shares held by Vector Capital. Cambium Networks did not raise any additional capital in the offering and the expenses are excluded as not part of continuing operations.

Amortization of acquired intangibles includes customer relationships, unpatented technology, patents, software, and trademarks, and are 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.

Acquisition and integration costs consist of legal and professional fees relating to the acquisition of Xirrus. Cambium Networks excludes these expenses since they result from an event that is outside the ordinary course of continuing operations.

One-time charges associated with the completion of an acquisition include items such as contract termination costs, severance and other acquisition-related restructuring costs; costs incurred in connection with integration activities; and legal and accounting costs. Cambium Networks excludes these expenses since they result from an event that is outside the ordinary course 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 and impacts from the company's income tax valuation allowance initially recognized in the quarter ended June 30, 2019 and as reversed in the quarter ended March 31, 2021. Cambium Networks excludes these amounts to more closely approximate the company’s ongoing effective tax rate after adjusting for one-time or unique reoccurring items. The associated non-GAAP effective tax rate is also applied to the gross amount of non-GAAP adjustments for purposes 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 to 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 (loss) 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
  March 31, 2021 December 31, 2020 March 31, 2020
Net income (loss) $19,860  $10,506  $(838)
Interest expense, net  1,140   1,197   1,345 
(Benefit) provision for income taxes  (7,639)  (668)  82 
Depreciation and amortization  1,720   1,763   1,845 
EBITDA  15,081   12,798   2,434 
Share-based compensation  1,410   731   811 
Secondary offering expenses     381    
Restructuring expense        1,152 
Adjusted EBITDA $16,491  $13,910  $4,397 
       
Adjusted EBITDA Margin  18.6%  16.8%  7.3%


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
  March 31, 2021 December 31, 2020 March 31, 2020
GAAP gross profit $44,170  $42,237  $30,632 
Share-based compensation expense  19   16   17 
Amortization of capitalized software costs  125   163   150 
Non-GAAP gross profit $44,314  $42,416  $30,799 
Non-GAAP gross margin  50.1%  51.2%  51.0%
       
GAAP research and development expense $11,603  $11,862  $11,814 
Share-based compensation expense  517   413   368 
Restructuring expense        639 
Non-GAAP research and development expense $11,086  $11,449  $10,807 
       
GAAP sales and marketing expense $10,040  $10,152  $10,304 
Share-based compensation expense  295   254   232 
Restructuring expense        513 
Non-GAAP sales and marketing expense $9,745  $9,898  $9,559 
       
GAAP general and administrative expense $7,529  $7,176  $6,446 
Share-based compensation expense  579   48   194 
Secondary offering expenses     381    
Non-GAAP general and administrative expense $6,950  $6,747  $6,252 
       
GAAP depreciation and amortization $1,595  $1,601  $1,695 
Amortization of acquired intangibles  552   552   551 
Non-GAAP depreciation and amortization $1,043  $1,049  $1,144 
       
GAAP operating income $13,403  $11,446  $373 
Share-based compensation expense  1,410   731   811 
Secondary offering expenses     381    
Amortization of capitalized software costs  125   163   150 
Amortization of acquired intangibles  552   552   551 
Restructuring expense        1,152 
Non-GAAP operating income $15,490  $13,273  $3,037 
       
GAAP pre-tax income (loss) $12,221  $9,838  $(756)
Share-based compensation expense  1,410   731   811 
Secondary offering expenses     381    
Amortization of capitalized software costs  125   163   150 
Amortization of acquired intangibles  552   552   551 
Restructuring expense        1,152 
Non-GAAP pre-tax income $14,308  $11,665  $1,908 
       
GAAP (benefit) provision for income taxes $(7,639) $(668) $82 
Valuation allowance impacts  (7,816)  (352)   
Tax rate change     (925)   
Tax impacts of share vesting  (1,975)     3 
Tax effect of Non-GAAP adjustments, using non-GAAP ETR  (417)  (365)  (533)
All other discrete items  (19)     61 
Non-GAAP provision for income taxes $2,588  $974  $551 
Non-GAAP ETR  18.1%  8.4%  28.9%
       
GAAP net income (loss) $19,860  $10,506  $(838)
Share-based compensation expense  1,410   731   811 
Secondary offering expenses     381    
Amortization of capitalized software costs  125   163   150 
Amortization of acquired intangibles  552   552   551 
Restructuring expense        1,152 
Non-GAAP adjustments to tax  (9,810)  (1,277)  64 
Tax effect of Non-GAAP adjustments, using non-GAAP ETR  (417)  (365)  (533)
Non-GAAP net income $11,720  $10,691  $1,357 
Non-GAAP fully weighted basic shares  26,299   26,035   25,680 
Non-GAAP fully weighted diluted shares  28,887   27,934   25,680 
Non-GAAP net income per Non-GAAP basic share $0.45  $0.41  $0.05 
Non-GAAP net income per Non-GAAP diluted share $0.41  $0.38  $0.05 


Investor Inquiries:
Peter Schuman, IRC
Sr. Director Investor & Industry Analyst Relations
Cambium Networks
+1 (847) 264-2188
peter.schuman@cambiumnetworks.com


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Source: Cambium Networks