All right, we're good to go. So thank you all for joining us here this morning. Great to see you. I'm Erik Suppiger, Citizens JMP's Communications and Infrastructure Analyst. For the first session of the day here, we have Cambium. To my right is Morgan Kurk, President and CEO of Cambium. I'm going to be asking the questions to start it off. Please feel free to raise your hand. We'd love to get audience participation. This is an opportunity for you to take care of any questions and concerns that you have. So please do feel free to raise your hand at any point, and we'll be glad to take questions. So Morgan, you started at Cambium about six months ago. At that time, it became apparent that there were issues with excess inventory, either at customers or at channels. First off, can you just discuss what steps you've taken since you joined to address inventory management? And secondly, talk a little bit about what has surprised you since you've been at Cambium. Sure. Well, thanks for having me. So yeah, I started about six months ago and recognized that the market dynamics had changed. We were coming out of our, I'll call it, COVID bubble. And really, that's, I'll call it, the supply chain challenges. And when you have a supply chain that involves manufacturer, middlemen, and customers, you end up, when you have longer lead times, having what I call supply-generated demand, not demand-generated demand. So the fact that your lead times get longer indicates that you get more orders, which means your lead times get longer. And it kind of goes until all of a sudden, this bubble pops. And that's what we really recognized was that once the order book had been run out, that the channel was full of inventory. So I took a couple of steps. Immediately, we recognized and we took down our forecasts of what would happen and did everything in our power and have done a very good job, I think, of driving inventory out of channel. So you have three challenges when you start with an inventory problem. The first one is in your channel because that's the closest to the customer. And so you drive as much inventory out of your channel as you can until it's well-functioning. The reason why you need that inventory to be well-functioning is because that helps drive profitability for your distributors for you, which then, in turn, makes them more loyal to your product. So really important. The next step that we did was we looked at what our inventory in-house was and said, OK, let's be realistic about, because our channel is full, what we're going to generate out of house. And then we looked back at our suppliers and recognized what commitments we had on our suppliers. And so we've been working with our suppliers to try to reduce our commitment. We've worked with our channel to get rid of our excess inventory. And over time, we will then convert that inventory into cash by having it flow through channel. Simultaneously, we've set up different forecasting processes that look both at the supply side of the market and the demand side of the market. And I think previously, really, the look had been at the demand side of the market, what are future orders looking at. I really look at point of sale for that, so how much is not going into channel, but how much is going out of channel, and then what's happening with lead times of components back in your supply chain. What we're starting to see is memory is getting a little bit tighter, but general processors are still very openly available. The chip market tends to operate on a six-year-ish cyclicality from boom to bust. We've obviously just gone through the boom. We have a couple of years. We've gone through the boom and then the bust. Then we have a couple of years before we go to the boom again. OK. What about surprises? What has surprised you since you got to Cambium? So on the positive side, I've been surprised pleasantly at the capabilities that we have in the company. The company isn't huge, both the technical capabilities and, I'll call it, some of the brand recognition that existed within the point-to-multipoint market. On the negative side of the world, it really is about certain types of processes. And it starts with inventory, but it's other things that can be improved that, as a public company, I would have thought would have been more mature. But all things that are fixable, and we're working on them. Just to come back to the prior question, so can we assume that the channel inventory is at a normal level at this point? At what point do the inventories become normal? Normal. And so I'll consider normal to be when your point of sale, the amount out of your channel and amount into the channel, is the same. We've said that that would finish in the first half of this year. We've done yeoman's work last year, so the majority has been taken care of. But we still have little ways to go. The other thing that impacts the amount of inventory in channel is what your lead times are. So before, lead times were really long. Channel was really high. Now, lead times are really short. So I think we've said that our channel inventory is approaching what it was before COVID. And the question is whether it will go below where it was before normal times because lead times are so much shorter now. But we're getting back to normal. It will be fully normalized in the first half of this year, I'm pretty confident. What is your comfort level with your visibility into channel inventories? Yeah, so we get reported channel inventory regularly. It's as good as the reports that we get from our distributors. We have a number of them. The top 20 distributors pretty much make up the lion's share of our business. It's an 80/20 exercise there. I'm comfortable. In aggregate, we know pretty well what the dollar figures are. We know where it is at. So we're able to do a better job of predicting how much will flow through. So I'm reasonably comfortable. I don't think it gets much better than what we have today. We could get a little bit better reporting on a monthly basis, but certainly on a quarterly basis. We have a very good look at our inventory. OK. And then last one on this point, you had a significant write-down of inventory in the December quarter. Should we be comfortable or confident that we're not going to have any more? Or is there still some fine-tuning? Yeah, so look, there were two things that we did. We made an adjustment to our rebates and incentives in Q4. And we wrote down largely materials that would not be turned into products. In terms of the incentives we put in, I'm reasonably comfortable with our channel that, in combination with all of the other discounting we're doing and all the things that we're doing, that we're in decent shape there. In terms of the inventory in our house and inventory in channel, we still have a lot of work to do. We still have to convert a lot of this to cash. So I wouldn't say I feel I sleep perfectly at night. But we've done the vast majority of it. We've done whatever we felt we could, both legally and what we were supposed to do in Q4. I don't believe bad news gets better if you wait. So you hear about it as soon as I know. All right, very good. Talk a little bit about some of the individual products. What are your expectations for revenues for PMP, which is point-to-multipoint, PTP, which is point-to-point, and then your enterprise products? How do you think of those individually as you look to 2024? Sure. Clearly, with really easy comps from a 2023, enterprise will be growing sequentially during the year. Each quarter. Each quarter, we will grow. We'll have larger enterprise revenues than the quarter before, back to a normalized level by the end of the year and in an area of focus for us, something which we're attempting to grow. Normalized, you said, was maybe in the $15-$20. $15-$20 million per quarter. Exactly. And our point-to-point business is kind of, I'll call it mixed. It has commercial and it has government. Government's a little bit stronger. Commercial's a little bit weaker. So it's going to be flattish. And then point-to-multipoint, similar, a little bit up with 6 gigahertz, a little bit down in other areas. Some of that business is very lumpy and pretty hard to predict because it's a large network rollout. And it either happens or it doesn't. So it's a 1 or a 0. But we believe that 6 gigahertz will have strength this year. OK, good. I do want to remind you, please feel free to raise your hand if you have questions. And then on cash, I think you exited 2023 with $19 million. You have a $45 million revolver that I don't think you've tapped into as of the end of last year. What are your expectations for cash usage? Yeah, so as you've seen from our forecast, we've said publicly our break-even is currently around $60 million a quarter. When you're not doing $60 million as we're not doing this quarter, you're going to be a cash consumer. And so I expect we will consume cash in the first half of the year and start turning it back in the second half of the year. And we will end up using some portion of our revolver. OK. And then just I want to be clear on the can you just talk a little bit about point of sale, kind of revenue recognition with point of sale versus sell-in, and then discuss the underlying demand that you're seeing across those? Sure. So point of sale, this is the true metric of the use of your product. So when you have a channel between you and the end user, you sell in. And you recognize revenue as you sell into your distribution channel. You recognize the use of your product on point of sale. So point of sale is the leading indicator of what will happen. Now, it can be constrained because there's no inventory in channel. That happened actually at the very beginning of the pandemic. You couldn't get any product. So you could constrain your point of sale. But in general, it kind of tells you where the future is going. And we've said, including last quarter, we've said that point of sale is held up very well, sort of at around historical averages, even though our revenues were much lower. That's just an indication that channel is being cleared out. It's not an indication that it's lower in demand. So I have to look at both of them. Of course, revenue is what pays the bills today. Point of sale is what's going to happen tomorrow. OK. Demand, why don't you talk a little bit about the demand as it relates to enterprise products because that's where we've had the biggest volatility? Yep. So let's just kind of take a look at the macroeconomics of this. I think enterprise is this enormous market, $20-ish billion on our addressable side. But it's a whole bunch of different markets. So you could have large businesses. Well, not a lot of refreshes going on there because not a huge drive to get everybody back to the office in aggregate. Certainly, some companies are. But we don't actually play in that space. So yay for us. Where we do play is we play in education, which is government-funded. Generally, that tends to be pretty OK. Governments tend to fund this every year. Hospitality. And people are traveling a lot more. So that's still a healthy market. And I'll call it small to medium business and then multi-tenant sort of service providers, people providing service for somebody else. So if you look, the places that we play actually are okay, are pretty decent. But there's a lot of competition there. And you have to offer a valued product that works well. And I think we do. And you have to get your channel to work with you, which I think we're trying to do a better job of and have not done as well as we can in the past. But in terms of the health of the particular areas that we're working, it's decent. It's not under the duress of sort of large offices and people not going back to work. Okay. Then you mentioned the competition. In the past, you've referenced discounting, pretty aggressive discounting. Where are we from a discounting perspective? Yep. So I think there's an interesting thing that goes on. Every time you have a refresh cycle, you get to reset price points. I think Wi-Fi 6, which will be the dominant term this year and maybe even next year of sales across the industry and certainly for us, will continue to have aggressive discounting. I won't say it's an all-out price war. But everybody has the same problem. Everybody has too much inventory. And until that normalizes, you'll continue to have challenges with price. And I think as well, some of the players that were in the home space when people were working out of the home are trying to find other places for their market because people aren't working as much at home. And they aren't upgrading their devices as quickly. And so they're trying to push into the small to medium business side of the world. And then you have the usual players like ourselves and many others. So it's a competitive environment. Very good. Then there's a pretty interesting development in the point-to-multipoint space with the FCC, is just a week or so ago, they approved AFCs. These are organizations that start to allocate frequency as this frequency gets deregulated, the 6 gigahertz frequency. How do you think the demand environment is looking for point-to-multipoint demand? Yeah, so this is where I see strength. It's predominantly in the U.S. because that's really where this market is opening up. Canada opened up. And actually, we've seen some demand already pick up there. This is actually, I'll call it point-to-multipoint's finest moment since the beginning of the pandemic. With a gigahertz of spectrum opening up and products like ePMP 4600, which can utilize up to 160 MHz of this spectrum at a time, you can get gigabit speeds. Now, why is that important? Because nobody uses gigabit in the home. And this is predominantly for the home. But you have a marketing environment where lots of people compete. And the competition is fiber. And how do you economically provide a service level that's equivalent to, I'll call it fiber? And so one of the parameters is speed. Can I get sort of 500 megabit, 300 megabit? Can I get other government funding because I can reach 800 and 400 Mbps? And so I think it's a huge enabler. Also, I've been in the wireless space for virtually my entire 30-year career. Spectrum is lifeblood of any industry. So when you get spectrum and this is the largest grant of spectrum in the history of anything that I'm aware of, certainly in the commercial history, you'd open up all sorts of possibilities for economics. And so I think it's going to. We predicted that it would happen. We thought it would happen in December. It happened 2 months late. But it's going to have a marked improvement for Q2, Q3, and Q4 this year. So that was my next question is, how do you think this will play out? One, the FCC has just approved organizations to provision or to authorize frequencies. Now, products need to be approved. Where are you in that? Yeah, so our products, we're waiting for the houses to go on. So all the documentation is done. We'll be waiting for approval, I'm hopeful, this month. Is that right? Yeah. OK. It's not long. We've done all the testing that's necessary for the 4600. And so we expect that will happen in the next couple of weeks. How quickly do things ramp up? This is more dictated on whether people are planning ahead. Then how quickly it always flips from product availability, which is the first thing, to crew availability, which is how quickly can you actually upgrade things. That will happen. It'll be crew-limited in a matter of months. Do you think that this is going to unleash some pent-up demand where previously, WISPs, wireless ISPs, were not deploying? Now, they will start to deploy more rapidly? Yeah, so I would imagine that that's exactly what it does, that people go and they say, look, we can we're kind of this has been going on for at least six months. I got here. I was immediately told, yep, expect it any day. Yes. Yeah. So if you expect new spectrum, do you invest in equipment that doesn't cover that spectrum? Or do you delay your investment and wait? So I expect some pent-up demand from this. And I expect some aggressiveness because fiber has been pushed in places where perhaps it's not economic. But if you can't provide higher data rates, and consumers think higher data rates are equivalent to better performance, whether that's true or not, if that's what they think, then you have a competitive problem. And so I expect that that will help everybody in the space this year. You talked about now it's going to go now, the bottleneck is probably going to be WISP labor or expertise for deployment. How elastic is that? It's a good question. And I'm not sure I've been in this particular portion of the industry for long enough to know. Installation times, people climbing towers has always been a problem when you get new spectrum. I'm not sure how much labor can move over from, say, the cellular carriers that are not deploying a lot right now into these when it's necessary or how much is self-perform, how much you have to do at houses. There are a lot of things that go into that equation. But we're prepared from an equipment standpoint to make sure that the equipment is not the limiting factor over the relative near term. Over the next year or two years, at least, you feel pretty comfortable? I do. I think that this is a great upgrade cycle for people. And I think it's going to not just breathe something new into the industry but also show that there are parts of the network which are best covered by most economically and best covered by things other than fiber. There's this big push. And it's not just in the U.S. It's around the world. Fiber, fiber, fiber, fiber. The fiber lobby has done a great job at this. And in fact, we have a fiber play as well. But it's a question of money. If you have to go down a road a mile and you have to run fiber for a single house, the installation cost will never make a business case. And so wireless is a great way of doing this. If you go out even further than that, maybe going from a satellite is the best way to do it. So building a robust network that has all these various components into it is important so that everybody does get connectivity. I always say Cambium is in a great business. We provide connectivity for people. And that's sort of fundamental to economic growth around the world. And so just doing that economically and ensuring that everybody is tied into the network is, well, it's goodness as well as economically beneficial. We've got about less than four minutes. So if there are questions, please feel free to raise your hand. I'm going to run out of time. I know that. But I'd be more than glad. Chris? Can you talk about your balance sheet over the next six months as you kind of sort of increase your cash? Yep. How are you feeling about it? Yeah, so look, the balance sheet comes down to execution. How do we convert our inventory into cash, the materials that we have in-house? How do we delay the requirements from our suppliers for commitments that we've made? And how do we push that through channel? It's a concern for me as it should be. So it really comes down for me to execution. Are we able to execute on the things that we've told you? Can we push the things through channel? Can we deliver to our end customers? If we do those things, then the cash problem takes care of itself. Like I said, we're likely to draw on our revolver. I think we've said this before, not the whole revolver but a fraction of the revolver in the first half before we get to a return place in the second half of the year. Would you hope to be cash neutral by the end of the year? So I believe we put our range as $215-$245. At $240, that would be roughly neutral. So you kind of see where we are. If $230 is the middle, we're not quite there. But it's close. So yeah, that's kind of the way I'd think about the numbers. OK. Also, if you could just talk about in your first six months or so what you've seen about with Ubiquiti and their role in the world. Sure. So Ubiquiti competes with us in a couple of different spaces. And their business model is, quite frankly, unique. And I'll say at least I admire it, so admirable. It's a you don't really use the channel. So you don't use a channel to go into the enterprise market. You play at the low end. So you're trying to keep costs as low as possible. And they're a good competitor. We are trying to play in a slightly different positioning. So I try to position as a high-value, reasonable-cost player, so an economic player with better support, a higher feature set than a Ubiquiti, sort of the feature set of the high tier with the cost of a mid tier. That's kind of where I want to position for the meat of the market. And in enterprise, I think that's actually a really good positioning for us. I think we have the products to do that already. And we continue to invest in them. For the point-to-multipoint market, where you may be thinking about this, it really comes down to can our products perform and produce better results for these end customers than Ubiquiti's products, which provides some sort of basic connectivity? And I think we do have features and functions that make the product work with a higher number of user counts and higher data rates. And we'll be relying on that as well as our support and making sure that the network works. What about Tarana? Yeah, so Tarana plays at the very high end of the market with custom chips. Look, I have admiration for anybody that's done their own chips. It's not an easy thing to do. You get a lot of benefit from it. I tend to believe, however, that in the long run, the correct path is one of a standards path. The reason why I say that is, ultimately, it's the cost per bit per area that wins the day. Your costs of merchant silicon are just by class cheaper. If you look at how all of the standards end up converging from 5G to Wi-Fi, kind of these wireless standards, they're becoming closer and closer and closer together because you're reaching physics limits. If you can take advantage of that, like we do with ePMP, and then build other things on top of it, you kind of get the best of both worlds. Our concept of platforming, where I'm driving the company for point-to-multipoint, comes out with merging sort of the merchant silicon along with proprietary things to create a solution which ends up providing 95% of what you could do if you did it all yourself but at a significantly lower cost. All right. We're going to have to wrap it up there. So again, thank you for joining us. And Morgan, thank you very much. That was a great help. My pleasure. Thank you. Thank you.