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Cambium (CMBM) Beats on Q3 Earnings Despite Supply Chain Woes

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Cambium Networks Corporation (CMBM - Free Report) reported relatively modest third-quarter 2021 results with the bottom line beating the Zacks Consensus Estimate despite supply chain headwinds. With solid demand trends and secular growth drivers, the company is likely to witness healthy growth momentum in the remainder of 2021 and beyond.

Net Income

On a GAAP basis, net income in the September quarter was $4.6 million or 16 cents per share compared with $5.6 million or 21 cents per share in the prior-year quarter. The decline despite top-line growth was primarily attributable to higher operating expenses.

Non-GAAP net income came in at $6.7 million or 23 cents per share compared with $7.8 million or 29 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 10 cents, delivering a surprise of 76.9%.

Revenues

Quarterly revenues improved to $75.9 million from $73 million in the year-ago quarter. The growth was driven by solid demand for Point-to-Multi-Point and enterprise Wi-Fi solutions owing to higher demand for capacity extensions and new product introductions, partially offset by lower Point-to-Point revenues from a decline in federal business. Product shipments were adversely impacted by supply chain disruptions. The top line surpassed the consensus estimate of $75 million.

By product category, revenues at Point-to-Multi-Point came in at $50.1 million compared with $43.3 million a year ago while Point-to-Point revenues declined to $13.9 million from $18 million and revenues at Wi-Fi increased to $10.7 million from $9.9 million.

By region, revenues in North America came in at $36.6 million compared with $38.7 million in the prior-year quarter. Europe, Middle East and Africa revenues were $23.4 million compared with $20.2 million while the same from the Caribbean and Latin America declined 12.1% to $8 million. Asia Pacific revenues were up 61.3% to $7.9 million.

Other Details

Non-GAAP gross profit remained flat at $36.3 million for a margin of 47.8%. Total operating expenses were $30.2 million compared with $28.8 million in the prior-year quarter.

Non-GAAP operating income fell to $8.7 million from $10.6 million. Adjusted EBITDA totaled $9.6 million compared with $11.4 million a year ago with respective margins of 12.6% and 15.6%.

Cash Flow & Liquidity

During the quarter, Cambium generated $11.8 million of cash from operating activities compared with $16.4 million in the year-ago quarter. As of Sep 30, 2021, the company had a $58.6 million cash balance with $30.2 million of long-term debt.

Q4 Guidance

Cambium has provided an outlook for the fourth quarter. For the ongoing quarter, revenues are expected to be in the range of $73.5-$77.5 million. Non-GAAP earnings is anticipated to be in the range of $3.3-$4.8 million or 11-17 cents per share, with GAAP earnings in the band of $1.2-$2.9 million or 4-10 cents per share. Non-GAAP operating income is projected between $4.9 million and $6.9 million while adjusted EBITDA is likely to be in the range of $5.8-$7.8 million with corresponding margin between 7.9% and 10.1%.

Zacks Rank & Stocks to Consider

Cambium currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry are Clearfield, Inc. (CLFD - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Aviat Networks, Inc. (AVNW - Free Report) and SeaChange International, Inc. (SEAC - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered an earnings surprise of 49%, on average, in the trailing four quarters.

Aviat delivered an earnings surprise of 32.1%, on average, in the trailing four quarters.

SeaChange has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 28.9%, on average, in the trailing four quarters.