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Cambium (CMBM) Beats on Q1 Earnings Despite Soft Revenues

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Cambium Networks Corporation CMBM reported relatively modest first-quarter 2022 results, with the bottom line beating the Zacks Consensus Estimate despite supply chain headwinds that resulted in top-line contraction. The company expects the supply chain disruptions to affect the second-quarter performance as well, despite solid demand trends and secular growth drivers.

Net Income

On a GAAP basis, net loss in the March quarter was $1.6 million or a loss of 6 cents per share against net income of $19.9 million or 70 cents per share in the prior-year quarter. The year-over-year decline was primarily attributable to top-line contraction owing to global supply constraints and lower shipments due to component shortage.

Non-GAAP net income came in at $0.3 million or 1 cent per share compared with $11.7 million or 41 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents.

Cambium Networks Corporation Price, Consensus and EPS Surprise

Cambium Networks Corporation Price, Consensus and EPS Surprise
Cambium Networks Corporation Price, Consensus and EPS Surprise

Cambium Networks Corporation price-consensus-eps-surprise-chart | Cambium Networks Corporation Quote

Revenues

Quarterly revenues decreased to $61.9 million from $88.5 million in the year-ago quarter. Despite solid demand for Point-to-Multi-Point and enterprise Wi-Fi solutions owing to capacity extensions and new product introductions, product shipments were adversely impacted by supply chain disruptions and raw material scarcity. In addition, revenues were affected by fresh COVID lockdown and restrictions in Shenzhen and Shanghai in China. The top line missed the consensus estimate of $64 million.

By product category, quarterly revenues at Point-to-Multi-Point came in at $30.9 million compared with $57.8 million a year ago. Point-to-Point revenues declined to $14.7 million from $17.5 million, and revenues at Wi-Fi decreased to $15.5 million from $25.8 million. Despite strong momentum in network traffic, higher demand for CBRS solutions and healthy traction from new launches, various component shortages affected Point-to-Multi-Point and Point-to-Point product shipments. The factory operations were also affected by lockdown restrictions that adversely impacted the delivery schedule.

By region, revenues in North America came in at $28.3 million compared with $54.2 million in the prior-year quarter. Europe, Middle East and Africa revenues were $20.3 million compared with $18.7 million while the same from the Caribbean and Latin America declined to $5.1 million from $10.5 million. Asia Pacific revenues were $8.2 million, up from $5.1 million a year ago.

Other Details

Non-GAAP gross profit decreased to $29.6 million from $44.3 million for respective margins of 47.8% and 50.1%, owing to lower revenues and higher freight and distribution costs caused by expedited shipping. Total operating expenses were $31.4 million compared with $30.8 million in the prior-year quarter. Non-GAAP operating income fell to $1 million from $15.5 million for respective margins of 1.6% and 17.5%. Adjusted EBITDA totaled $1.9 million compared with $16.5 million a year ago, with respective margins of 3.1% and 18.6%.

Cash Flow & Liquidity

During the quarter, Cambium utilized $19.2 million of cash in operating activities compared with $7.6 million in the year-ago quarter. As of Mar 31, 2022, the company had a $38.4 million cash balance with $26.4 million of long-term debt.

Guidance

Cambium has provided outlook for the second quarter and full-year 2022. For the ongoing quarter, revenues are expected to be in the range of $65-$73 million. Non-GAAP earnings are anticipated to be in the band of $0.4-$3.2 million or 1-11 cents per share. Non-GAAP operating income is projected between $1.2 million and $4.7 million, while adjusted EBITDA is likely to be in the range of $2.2-$5.8 million with a corresponding margin between 3.4% and 7.9%.

For 2022, revenues are expected to be in the range of $280-$300 million. Non-GAAP earnings is anticipated to be in the band of $8.1-$20.1 million or 28-70 cents per share. Adjusted EBITDA margin is expected to be between 6% and 10.8%.

Zacks Rank & Stocks to Consider

Cambium currently has a Zacks Rank #4 (Sell).

Viavi Solutions Inc. VIAV, carrying a Zacks Rank #2 (Buy), is a solid pick for investors in the broader industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Viavi delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 8.2% since May 2021, while that for the next year is up 11.6%. Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. It expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.

KVH Industries, Inc. KVHI, a Zacks Rank #2 stock, delivered an earnings surprise of 20%, on average, in the trailing four quarters.

Despite global supply chain disruptions, KVH Industries is driving growth and margin expansion through new product introduction and subscriber migration to High-Throughput Satellites. The company aims to make decisive inroads into the still-nascent autonomous transportation markets with a strong balance sheet and zero debt. If KVH Industries manages to effectively mitigate supply chain woes, there could be room for cash flow expansion.

Spirent Communications plc SPMYY carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 9.2% since May 2021, while that for the next year is up 10.3%.

Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces cost of ownership. It is a leading provider of Ethernet validation solutions in the market.


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