CASA SYSTEMS, INC. Company Accelerates Transformation as a Leader in
Reports Revenue of
Total Backlog Increased, Sales Pipeline Growing
Temporarily Suspending Fiscal Year 2022 Guidance
First Quarter 2022 Financial & Operational Highlights
- Revenue of
$64.4 million - Gross margin of 41.4%
- GAAP net loss of
$(32.6) million , including$10.4 million tax provision - Non-GAAP net loss of
$(29.6) million - GAAP net loss per fully diluted share of
$(0.39) - Non-GAAP net loss per fully diluted share of
$(0.35) - Adjusted EBITDA of
$(12.1) million - Positive Operating Q1 Cash Flow of
$18.1 million - Cash and Cash Equivalents of
$168.6 million at quarter end
"While the significant supply chain headwinds were a disruption to our near-term financial results, our underlying business fundamentals and the overall demand for our products remains very healthy,” said
Financial Outlook
Due to various uncertainties, including most significantly supply chain challenges and its potential impact on 2022 revenue,
Conference Call Information
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this press release, including statements regarding the projected results of operations and financial position of
COVID-19 Pandemic
The ongoing COVID-19 pandemic presents various risks to us, which could continue to have a material effect upon the estimates and judgments relied upon by management in preparing these condensed consolidated financial statements. While we remain fully operational, during the three months ended
Due to the above circumstances, our results of operations for the three months ended
Non-GAAP Financial Measures
To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), we are presenting the following non-GAAP financial measures in this press release and the related earnings conference call: non-GAAP net income, non-GAAP diluted net income per share, adjusted EBITDA and free cash flow. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies.
Non-GAAP net income and non-GAAP diluted net income per share. We define non-GAAP net income as net (loss) income as reported in our condensed consolidated statements of operations, excluding the impact of stock-based compensation expense and amortization of acquired intangible assets, which are non-cash charges; and the tax effect on these excluded items. The tax effect of the excluded items was calculated based on specific calculations of each item’s effect on the tax provision. We believe that excluding these discrete tax benefits from our effective income tax rate results in more useful disclosure to investors and others regarding income tax effects of excluded items as these amounts may vary from period to period independent of the operating performance of our business. We define non-GAAP diluted net income per share as diluted net (loss) income per share reported in our condensed consolidated statements of operations, excluding the impact of items that we exclude in calculating non-GAAP net income. We have presented non-GAAP net income and non-GAAP diluted net income per share because they are key measures used by our management and board of directors to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. The presentation of non-GAAP net income and non-GAAP diluted net income per share also allows our management and board of directors to make additional comparisons of our results of operations to other companies in our industry.
Adjusted EBITDA. We define adjusted EBITDA as our net (loss) income, excluding the impact of stock-based compensation expense; other income (expense), net; depreciation and amortization expense; and our (benefit from) provision for income taxes. We have presented adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. In particular, we believe that, by excluding the impact of these expenses, adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance.
Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures. We believe free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that, after purchases of property, equipment and software licenses, can be used for strategic opportunities, including investing in our business, making strategic acquisitions and strengthening our balance sheet.
We use these non-GAAP financial measures to evaluate our operating performance and trends and to make planning decisions. We believe that each of these non-GAAP financial measures helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of each non-GAAP financial measure. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results and enhance the overall understanding of our past performance and future prospects.
Our non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures rather than the most directly comparable financial measures calculated and presented in accordance with GAAP. Some of these limitations are:
- each of non-GAAP net income, non-GAAP diluted net income per share and adjusted EBITDA exclude stock-based compensation expense and amortization of acquired intangible assets because they have recently been, and will continue to be for the foreseeable future, a significant recurring non-cash expense for our business;
- adjusted EBITDA excludes depreciation and amortization expense, and although this is a non-cash expense, the assets being depreciated and amortized may have to be replaced in the future;
- adjusted EBITDA does not reflect the cash requirements necessary to service interest on our debt or the cash received from our interest-bearing financial assets, both of which impact the cash available to us;
- adjusted EBITDA does not reflect foreign currency transaction gains and losses, which are reflected in other income (expense), net;
- adjusted EBITDA does not reflect income tax payments that reduce cash available to us;
- free cash flow may not represent our residual cash flow available for discretionary expenditures, since we may have other non-discretionary expenditures that are not deducted from this measure;
- free cash flow may not represent the total increase or decrease in cash and cash equivalents for any given period because it excludes cash provided by or used for other investing and financing activities; and
- other companies, including companies in our industry, may not use or report non-GAAP net income, non-GAAP diluted net income per share, adjusted EBITDA or free cash flow, or may calculate such non-GAAP financial measures in a different manner than we do, or may use other non-GAAP financial measures to evaluate their performance, all of which could reduce the usefulness of these non-GAAP financial measures as comparative measures.
For the reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Selected GAAP and Non-GAAP Financial Measures.”
About
CONTACT INFORMATION:
IR Contact
617-982-0475
investorrelations@casa-systems.com
Source:
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (unaudited) (in thousands, except per share amounts) | ||||||||
| Three Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | 64,399 | $ | 104,277 | ||||
| Cost of revenue | 37,720 | 48,237 | ||||||
| Gross profit | 26,679 | 56,040 | ||||||
| Operating expenses: | ||||||||
| Research and development | 22,673 | 21,606 | ||||||
| Selling, general and administrative | 22,329 | 21,880 | ||||||
| Total operating expenses | 45,002 | 43,486 | ||||||
| (Loss) income from operations | (18,323 | ) | 12,554 | |||||
| Other income (expense): | ||||||||
| Interest income | 34 | 114 | ||||||
| Interest expense | (3,688 | ) | (3,918 | ) | ||||
| Loss on foreign currency, net | (273 | ) | (747 | ) | ||||
| Other income, net | 18 | 72 | ||||||
| Total other income (expense), net | (3,909 | ) | (4,479 | ) | ||||
| (Loss) income before provision for income taxes | (22,232 | ) | 8,075 | |||||
| Provision for income taxes | 10,352 | 2,326 | ||||||
| Net (loss) income | $ | (32,584 | ) | $ | 5,749 | |||
| Net (loss) income per share: | ||||||||
| Basic | $ | (0.39 | ) | $ | 0.07 | |||
| Diluted | $ | (0.39 | ) | $ | 0.06 | |||
| Weighted-average shares used to compute net (loss) income per share: | ||||||||
| Basic | 84,583 | 84,242 | ||||||
| Diluted | 84,583 | 88,568 | ||||||
RECONCILIATION OF SELECTED GAAP AND NON-GAAP FINANCIAL MEASURES (unaudited) (in thousands) | ||||||||
| Three Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Reconciliation of Net (Loss) Income to Non-GAAP Net (Loss) Income: | ||||||||
| Net (loss) income | $ | (32,584 | ) | $ | 5,749 | |||
| Stock-based compensation | 2,628 | 3,453 | ||||||
| Amortization of acquired intangible assets | 1,426 | 1,426 | ||||||
| Tax effect of excluded items | (1,032 | ) | (1,222 | ) | ||||
| Non-GAAP net (loss) income | $ | (29,562 | ) | $ | 9,406 | |||
| Non-GAAP net (loss) income margin | (45.9 | )% | 9.0 | % | ||||
| Reconciliation of Diluted Net (Loss) Income Per Share to Non-GAAP Diluted Net (Loss) Income Per Share: | ||||||||
| Diluted net (loss) income per share | $ | (0.39 | ) | $ | 0.06 | |||
| Non-GAAP adjustments to net (loss) income | 0.04 | 0.05 | ||||||
| Non-GAAP diluted net (loss) income per share | $ | (0.35 | ) | $ | 0.11 | |||
| Weighted-average shares used in computing diluted net (loss) income per share | 84,583 | 88,568 | ||||||
| Reconciliation of Net (Loss) Income to Adjusted EBITDA: | ||||||||
| Net (loss) income | $ | (32,584 | ) | $ | 5,749 | |||
| Stock-based compensation | 2,628 | 3,453 | ||||||
| Amortization of acquired intangible assets | 1,426 | 1,426 | ||||||
| Depreciation and amortization | 2,189 | 2,765 | ||||||
| Other income (expense) | 3,909 | 4,479 | ||||||
| Provision for income taxes | 10,352 | 2,326 | ||||||
| Adjusted EBITDA | $ | (12,080 | ) | $ | 20,198 | |||
| Adjusted EBITDA margin | (18.8 | )% | 19.4 | % | ||||
RECONCILIATION OF SELECTED GAAP AND NON-GAAP FINANCIAL MEASURES (unaudited) (in thousands) | ||||||||
| Three Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Reconciliation of Net Cash Provided by (Used in) OperatingActivities to Free Cash Flow: | ||||||||
| Net cash provided by (used in) operating activities | $ | 18,097 | $ | (5,155 | ) | |||
| Purchases of property and equipment and software licenses | (966 | ) | (2,252 | ) | ||||
| Free cash flow | $ | 17,131 | $ | (7,407 | ) | |||
| Summary of Stock-Based Compensation Expense: | ||||||||
| Cost of revenue | $ | 35 | $ | 33 | ||||
| Research and development | 595 | 871 | ||||||
| Selling, general and administrative | 1,998 | 2,549 | ||||||
| Total | $ | 2,628 | $ | 3,453 | ||||
| Summary of Revenue: | ||||||||
| Product revenue: | ||||||||
| Wireless | 21,056 | 39,688 | ||||||
| Fixed telco | 11,715 | 14,885 | ||||||
| Cable | 19,774 | 39,225 | ||||||
| Product revenue | $ | 52,545 | $ | 93,798 | ||||
| Service revenue: | ||||||||
| Wireless | 1,475 | 591 | ||||||
| Fixed telco | 1,524 | 1,606 | ||||||
| Cable | 8,855 | 8,282 | ||||||
| Service revenue | $ | 11,854 | $ | 10,479 | ||||
| Total revenue | $ | 64,399 | $ | 104,277 | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands) | ||||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 168,580 | $ | 154,703 | ||||
| Accounts receivable, net | 48,106 | 85,774 | ||||||
| Inventory | 85,284 | 84,828 | ||||||
| Prepaid expenses and other current assets | 6,052 | 5,746 | ||||||
| Prepaid income taxes | 2,627 | 23,963 | ||||||
| Total current assets | 310,649 | 355,014 | ||||||
| Property and equipment, net | 22,360 | 23,508 | ||||||
| Accounts receivable, net of current portion | 57 | 115 | ||||||
| Deferred tax assets | 108 | 101 | ||||||
| 50,177 | 50,177 | |||||||
| Intangible assets, net | 29,615 | 31,144 | ||||||
| Other assets | 8,552 | 8,648 | ||||||
| Total assets | $ | 421,518 | $ | 468,707 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 14,031 | $ | 28,087 | ||||
| Accrued expenses and other current liabilities | 27,507 | 41,382 | ||||||
| Accrued income taxes | 11,320 | 4,991 | ||||||
| Deferred revenue | 19,139 | 14,473 | ||||||
| Current portion of long-term debt, net of unamortized debt issuance costs | 1,927 | 1,924 | ||||||
| Total current liabilities | 73,924 | 90,857 | ||||||
| Accrued income taxes, net of current portion | 10,389 | 7,732 | ||||||
| Deferred tax liabilities | 5,666 | 5,293 | ||||||
| Deferred revenue, net of current portion | 6,474 | 7,012 | ||||||
| Long-term debt, net of current portion and unamortized debt issuance costs | 273,710 | 274,193 | ||||||
| Other liabilities, non-current | 1,774 | 1,701 | ||||||
| Total liabilities | 371,937 | 386,788 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 88 | 88 | ||||||
| Treasury Stock | (14,837 | ) | (13,645 | ) | ||||
| Additional paid-in capital | 194,973 | 193,654 | ||||||
| Accumulated other comprehensive income | 997 | 878 | ||||||
| Accumulated deficit | (131,640 | ) | (99,056 | ) | ||||
| Total stockholders’ equity | 49,581 | 81,919 | ||||||
| Total liabilities and stockholders’ equity | $ | 421,518 | $ | 468,707 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) | ||||||||
| Three Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Operating activities: | ||||||||
| Net (loss) income | $ | (32,584 | ) | $ | 5,749 | |||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 3,615 | 4,209 | ||||||
| Stock-based compensation | 2,628 | 3,453 | ||||||
| Deferred income taxes | 369 | 138 | ||||||
| Change in provision for doubtful accounts | 253 | 91 | ||||||
| Change in provision for excess and obsolete inventory | (27 | ) | 113 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 37,487 | 469 | ||||||
| Inventory | (514 | ) | 4,558 | |||||
| Prepaid expenses and other assets | (205 | ) | (5,834 | ) | ||||
| Prepaid income taxes | 21,333 | (680 | ) | |||||
| Accounts payable | (13,661 | ) | (15,607 | ) | ||||
| Accrued expenses and other current liabilities | (13,707 | ) | (10,118 | ) | ||||
| Accrued income taxes | 8,985 | 2,225 | ||||||
| Deferred revenue | 4,125 | 6,079 | ||||||
| Net cash provided by (used in) operating activities | 18,097 | (5,155 | ) | |||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (962 | ) | (852 | ) | ||||
| Purchases of software licenses | (4 | ) | (1,400 | ) | ||||
| Net cash used in investing activities | (966 | ) | (2,252 | ) | ||||
| Financing activities: | ||||||||
| Principal repayments of debt | (750 | ) | (750 | ) | ||||
| Proceeds from exercise of stock options | 79 | 574 | ||||||
| Repurchases of common stock | (1,192 | ) | — | |||||
| Employee taxes paid related to net share settlement of equity awards | (1,490 | ) | (4,630 | ) | ||||
| Payments of dividends and equitable adjustments | (1 | ) | (13 | ) | ||||
| Net cash used in financing activities | (3,354 | ) | (4,819 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 100 | (266 | ) | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 13,877 | (12,492 | ) | |||||
| Cash, cash equivalents and restricted cash at beginning of period | 157,804 | 158,461 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 171,681 | $ | 145,969 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | 3,478 | $ | 3,682 | ||||
| Cash paid for income taxes | $ | 1,806 | $ | 290 | ||||
| Supplemental disclosures of non-cash operating, investingand financing activities: | ||||||||
| Purchases of property and equipment included in accounts payable | $ | 60 | $ | 325 | ||||
| Unpaid equitable adjustments included in accrued expenses and other current liabilities | $ | — | $ | 50 | ||||
| Release of customer incentives included in accounts receivable and accrued expenses and other current liabilities | $ | — | $ | 1,076 | ||||
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