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Cambium (CMBM) Beats on Q4 Earnings Despite Supply Chain Woes

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Cambium Networks Corporation (CMBM - Free Report) reported relatively modest fourth-quarter 2021 results, with the bottom line and the top line beating the respective 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 2022 and beyond.

Net Income

On a GAAP basis, net income in the December quarter was $1.4 million or 5 cents per share compared with $10.5 million or 38 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 $4.4 million or 16 cents per share compared with $10.7 million or 38 cents per share in the year-ago quarter. Non-GAAP earnings were within the guided range of $3.3-$4.8 million or 11-17 cents per share. The bottom line beat the Zacks Consensus Estimate by a penny.

In 2021, Cambium reported GAAP earnings of $37.4 million or $1.31 per share compared with $18.6 million or 70 cents per share in 2020, primarily driven by higher revenues on solid demand trends. Non-GAAP earnings improved to $35.6 million or $1.26 per share from $24.1 million or 86 cents per share in 2020.

Revenues

Quarterly revenues decreased to $78.7 million from $82.8 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. Nevertheless, the top line surpassed the guided range of $73.5-$77.5 million and the consensus estimate of $76 million. In 2021, revenues improved 21.6% to $335.8 million driven by solid demand for Point-to-Multi-Point (up 18.7% year over year to $204.8 million) and enterprise Wi-Fi solutions (up 67.3% to $66.9 million)

By product category, quarterly revenues at Point-to-Multi-Point came in at $37 million compared with $53.8 million a year ago. Point-to-Point revenues declined to $15.3 million from $16.8 million, and revenues at Wi-Fi increased to $25.8 million from $10.9 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. However, the enterprise Wi-Fi business had a breakthrough quarter with record revenues due to improved supply conditions and pent-up demand from diverse customers.

By region, revenues in North America came in at $33.4 million compared with $45.2 million in the prior-year quarter. Europe, Middle East and Africa revenues were $26 million compared with $21.5 million while the same from the Caribbean and Latin America remained relatively flat at $10.3 million. Asia Pacific revenues were up 56.1% to $8.9 million.

Other Details

Non-GAAP gross profit decreased to $34.8 million from $42.4 million for respective margins of 44.2% and 51.2%, owing to lower revenues and higher freight and distribution costs caused by expedited shipping. Total operating expenses were $31.6 million compared with $30.8 million in the prior-year quarter. Non-GAAP operating income fell to $5.8 million from $13.3 million for respective margins of 7.3% and 16%. Adjusted EBITDA totaled $6.7 million compared with $13.9 million a year ago with respective margins of 8.6% and 16.8%.

Cash Flow & Liquidity

During the quarter, Cambium generated $5.6 million of cash from operating activities compared with $15.1 million in the year-ago quarter, bringing the respective tallies for 2021 and 2020 to $30 million and $56.9 million. As of Dec 31, 2021, the company had a $59.3 million cash balance with $27 million of long-term debt compared with respective tallies of $62.5 million and $24.9 million in the prior-year period.

Guidance

Cambium has provided an outlook for the first quarter and full-year 2022. For the ongoing quarter, revenues are expected to be in the range of $77.5-$81.5 million. Non-GAAP earnings are anticipated to be in the range of $2.9-$4.4 million or 10-15 cents per share, with GAAP earnings in the band of $0.3-$1.9 million or 1-7 cents per share. Non-GAAP operating income is projected between $4.2 million and $6.2 million, while adjusted EBITDA is likely to be in the range of $5.2-$7.2 million with a corresponding margin between 6.7% and 8.8%.

For 2022, revenues are expected to be in the range of $355-$365 million. Non-GAAP earnings is anticipated to be in the range of $35.5-$39.5 million or 10-15 cents per share, with GAAP earnings in the band of $0.3-$1.9 million or $1.23-$1.36 per share. Adjusted EBITDA margin is expected between 14% and 16%.

Zacks Rank & Stocks to Consider

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

Viavi Solutions Inc. (VIAV - Free Report) , carrying a Zacks Rank #2 (Buy), is a solid pick for investors. 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 10.8% since February 2021, while that for the next year is up 9.2%.

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. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.

Vocera Communications, Inc. (VCRA - Free Report) , carrying a Zacks Rank #2, is another key pick. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 115.4%, on average, in the trailing four quarters.

Over the past year, Vocera has gained 75.5%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.

Knowles Corporation (KN - Free Report) sports a Zacks Rank #1. It has a long-term earnings growth expectation of 10% and delivered a modest earnings surprise of 14.9%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 21% since February 2021.

The transformation from an acoustic component supplier to an audio solutions provider has enabled Knowles to migrate to higher-value solutions and increase content per device. This, in turn, has empowered the company to capitalize on the positive macro trends in audio and edge processing solutions.