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CalAmp Reports Fiscal 2017 Second Quarter Financial Results

09/29/16
Revenue was $90.5 million, a 30% year-over-year increase
Consolidated gross margin of 42%

IRVINE, Calif. , Sept. 29, 2016 /PRNewswire/ --  CalAmp (NASDAQ: CAMP), a leading provider of wireless products, services and solutions, today reported results for its fiscal 2017 second quarter ended August 31, 2016 .

Michael Burdiek, CalAmp's President and Chief Executive Officer, said, "The company continues its rapid pace of innovation, expanding its product portfolio and leadership position in the connected vehicle marketplace.  Our pipeline of opportunities is very healthy, and we recently won two significant MRM telematics device customers who are expected to contribute to our long-term growth.  Although we have been impacted by tough macro conditions in North America , we continue to invest in market-leading telematics solutions, and we remain optimistic that we will see a pick-up in growth from CalAmp's core businesses and new opportunities emerging through LoJack channels."

Revenue for the second quarter of fiscal 2017 was $90.5 million , an increase of 30% from the second quarter of fiscal 2016. Revenue in the second quarter of fiscal 2017 included $31.9 million from LoJack products and services and $6.7 million from the Satellite segment.   

Gross profit for the second quarter of fiscal 2017 was $37.6 million , an increase of $12.3 million over the same quarter last year. Gross margin was 42% in the second quarter of fiscal 2017, up from 36% in the second quarter of fiscal 2016.  

GAAP net income for the second quarter of fiscal 2017 was $0.5 million , or $0.01 per diluted share, compared to net income of $3.5 million , or $0.10 per diluted share, in the second quarter of fiscal 2016.  Non-GAAP adjusted basis net income for the second quarter of fiscal 2017 was $10.1 million , or $0.27 per diluted share, compared to non-GAAP adjusted net income of $9.8 million , or $0.27 per diluted share, in the second quarter of fiscal 2016.   Adjusted EBITDA for the second quarter of fiscal 2017 was $12.9 million and Adjusted EBITDA margin was 14.2%.

As of August 31, 2016 , the Company had total cash and marketable securities of $117 million and total debt outstanding of $143 million , which is the carrying amount of the Company's 1.625% convertible notes in the face amount of $172.5 million . Net cash provided by operating activities was $11.0 million during the second quarter of fiscal 2017. 

During the second quarter, the company purchased and retired approximately 580,000 shares of its common stock at an aggregate cost of $8.5 million pursuant to a stock repurchase plan adopted in June 2016.  As of August 31, 2016 , the remaining authorization for additional share purchases under this plan is $16.5 million .

Recent Business Highlights

  • One of the largest telematics service providers in North America has chosen various CalAmp LMU and TTU telematics device lines for its range of fleet and asset management solutions. This recent development follows another significant customer win in the first quarter with Omnitracs.
  • The company launched the LoJack-branded LotSmart™ and SureDrive™ telematics applications. 
  • CalAmp received certification of its Instant Crash Notification (ICN) service by independent insurance industry research company CESVIMAP, which provides objective evaluations of crash test results for vehicle repair and other collision damage services to insurance companies in Europe , Latin America and China .
  • The company announced that two customers, MapAnything and Chevin, have chosen the CalAmp Telematics Cloud suite of services to enable their respective telematics applications offerings. With these additional customers, CalAmp now has six companies that rely on this innovative service platform to power their telematics solutions.
  • LoJack Italy, the wholly-owned LoJack licensee, maintained its rapid growth at over 60% year-over-year.

Business Outlook
The Company remains cautious in the very near-term as macro conditions in North America have continued to result in softer-than-expected demand from key customers for MRM telematics products.   Though CalAmp has experienced weakness through the first half of this year, the company is seeing some firming of demand and is optimistic that the company will see MRM product revenues begin to improve later this fiscal year and into fiscal 2018. 

Excluding CalAmp's Satellite business, which contributed $6.7 million of revenue in the second fiscal quarter and ceased operations at quarter-end, the outlook for the third quarter ending November 30, 2016 is:

  • Consolidated revenue in the range of $81 to $87 million , along with GAAP basis results of operations in the range of ($0.02) net loss to $0.02 net income per diluted share and non-GAAP net income in the range of $0.24 to $0.30 per diluted share.
  • Adjusted EBITDA in the range of $11 to $14 million .

In addition, the Company expects its core business to steadily strengthen through the balance of this year, with momentum building into fiscal 2018.

Conference Call and Webcast  
CalAmp is hosting a conference call for analysts and investors to discuss its fiscal 2017 second quarter results and outlook for its fiscal 2017 third quarter at 1:30 p.m. Pacific Time today.  Participants can listen in via webcast by visiting the Investor Relations section of CalAmp's website at www.calamp.com. Please go to the website at least 15 minutes early to register, download and install any necessary audio software. A replay of the webcast will be available for 30 days after the call.  The conference call can also be accessed by dialing 855-302-8830 (+1-330-871-6073 for international callers) and using the Conference ID# 80479544. Following the call, an audio replay will also be available by calling 855-859-2056 or +1-404-537-3406 and entering the Conference ID# 80479544. The audio replay will be available through October 6, 2016 .

About CalAmp
CalAmp (NASDAQ: CAMP) is a proven leader in providing wireless communications solutions to a broad array of vertical market applications and customers. CalAmp's extensive portfolio of intelligent communications devices, robust and scalable cloud service platform, and targeted software applications streamline otherwise complex Machine-to-Machine (M2M) deployments. These solutions enable customers to optimize their operations by collecting, monitoring and efficiently reporting business critical data and desired intelligence from high-value mobile and remote assets. For more information, please visit www.calamp.com

Forward-Looking Statements
Statements in this press release that are not historical in nature are forward-looking statements that, within the meaning of the federal securities laws including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, involve known and unknown risks and uncertainties. Words such as "may", "will", "expect", "intend", "plan", "believe", "seek", "could", "estimate", "judgment", "targeting", "should", "anticipate", "goal" and variations of these words and similar expressions, are intended to identify forward-looking statements. The forward-looking statements in this press release address a variety of subjects, including the outlook for our fiscal 2017 third and fourth quarter operating results. Readers are cautioned that actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including global economic conditions (including Brexit), competitive pressures and pricing declines, softer-than-expected demand from key customers, intellectual property infringement claims, and other risks or uncertainties that are described in Part I, Item 1A of our Annual Report on Form 10-K for fiscal 2016 as filed on April 20, 2016 with the Securities and Exchange Commission . Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurances that our expectations will be attained. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures 
"GAAP" refers to financial information presented in accordance with U.S. Generally Accepted Accounting Principles. This press release includes historical non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission . CalAmp believes that its presentation of historical non-GAAP financial measures provides useful supplementary information to investors. The presentation of historical non-GAAP financial measures is not meant to be considered in isolation from or as a substitute for results prepared in accordance with GAAP.

In this press release, CalAmp reports the non-GAAP financial measures of Adjusted Basis net income, Adjusted basis net income per diluted share, non-GAAP gross margin, Adjusted EBITDA (Earnings Before Investment Income, Interest Expense, Taxes, Depreciation, Amortization, Stock-Based Compensation and certain other adjustments as detailed in the accompanying non-GAAP reconciliation), and Adjusted EBITDA margin. Adjusted Basis net income excludes the impact of intangibles amortization expense, stock-based compensation, acquisition and integration expenses, and certain other adjustments as shown in the non-GAAP reconciliation provided in the table at the end of this press release.  CalAmp uses these non-GAAP financial measures to enhance the investor's overall understanding of the financial performance and future prospects of CalAmp's core business activities. Specifically, CalAmp believes that the use of these non-GAAP measures facilitates the comparison of results of core business operations between its current and past periods.

AT CALAMP: 

AT NMN ADVISORS:

Garo Sarkissian

Nicole Noutsios         

SVP, Corporate Development

(510) 315-1003    

(949) 600-5600

nicole@nmnadvisors.com

 














CAL AMP CORP.

CONSOLIDATED INCOME STATEMENTS 

(Unaudited, in thousands except per share amounts)
















Three Months Ended


Six Months Ended



August 31,


August 31,



2016


2015


2016


2015














Revenues


$

90,479


$

69,808


$

181,626


$

135,237














Cost of revenues



52,865



44,505



109,178



86,408














Gross profit



37,614



25,303



72,448



48,829














Operating expenses:













  Research and development



5,885



4,995



11,976



9,560

  Selling



12,683



5,847



23,991



11,345

  General and administrative



11,284



4,908



27,267



9,683

  Intangible asset amortization



3,856



1,655



7,346



3,299




33,708



17,405



70,580



33,887














Operating income



3,906



7,898



1,868



14,942














Non-operating income (expense):













  Investment income (loss)



455



(43)



908



(15)

  Interest expense



(2,474)



(2,280)



(4,898)



(2,928)

  Other income (expense)



(130)



(18)



413



(29)




(2,149)



(2,341)



(3,577)



(2,972)














Income (loss) before income taxes and













equity in net loss of affiliate



1,757



5,557



(1,709)



11,970














Income tax benefit (provision)



(864)



(2,058)



255



(4,412)














Income (loss) before equity in net 













loss of affiliate



893



3,499



(1,454)



7,558














Equity in net loss of affiliate



(372)



-



(684)



-














Net income (loss)


$

521


$

3,499


$

(2,138)


$

7,558














Earnings (loss) per share:













  Basic


$

0.01


$

0.10


$

(0.06)


$

0.21

  Diluted


$

0.01


$

0.10


$

(0.06)


$

0.21














Shares used in computing earnings (loss) per share:













  Basic



36,390



36,135



36,425



36,049

  Diluted



36,849



36,716



36,425



36,691














BUSINESS SEGMENT INFORMATION

(Unaudited, in thousands)
















Three Months Ended


Six Months Ended



August 31,


August 31,



2016


2015


2016


2015

Revenues













  Wireless DataCom


$

83,807


$

61,819


$

166,557


$

119,645

  Satellite



6,672



7,989



15,069



15,592

    Total revenues


$

90,479


$

69,808


$

181,626


$

135,237














Gross profit 













  Wireless DataCom


$

36,209


$

23,098


$

68,719


$

44,686

  Satellite



1,405



2,205



3,729



4,143

    Total gross profit


$

37,614


$

25,303


$

72,448


$

48,829














Operating income 













  Wireless DataCom


$

5,035


$

7,529


$

6,072


$

14,419

  Satellite



139



1,557



1,547



2,777

  Corporate expenses



(1,268)



(1,188)



(5,751)



(2,254)

    Total operating income


$

3,906


$

7,898


$

1,868


$

14,942














- more -

 

 












CAL AMP CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands)
















August 31,


February 29,







2016


2016



                                Assets




(Unaudited)






Current assets:











  Cash and cash equivalents




$

94,705


$

139,388



  Short-term marketable securities





22,299



88,718



  Accounts receivable, net





68,766



49,432



  Inventories





27,999



16,731



  Prepaid expenses and other current assets



7,314



4,498














       Total current assets





221,083



298,767

























Property, equipment and improvements, net




21,599



11,225














Deferred income tax assets





28,604



30,213














Goodwill





63,180



16,508














Other intangible assets, net





74,916



17,010














Other assets





10,777



10,640


















$

420,159


$

384,363














                      Liabilities and Stockholders' Equity









Current liabilities:











  Accounts payable




$

36,604


$

24,938



  Accrued payroll and employee benefits





10,800



6,814



  Deferred revenue





16,855



9,438



  Other current liabilities





17,945



8,375














      Total current liabilities





82,204



49,565














1.625% convertible senior unsecured notes




143,260



139,800



Other non-current liabilities





13,500



5,551














Stockholders' equity:











  Common stock





364



367



  Additional paid-in capital





223,680



229,159



  Accumulated deficit





(41,991)



(39,853)



  Accumulated other comprehensive loss





(858)



(226)














      Total stockholders' equity





181,195



189,447


















$

420,159


$

384,363














- more -

 














CAL AMP CORP.


CONSOLIDATED CASH FLOW STATEMENTS


(Unaudited - In thousands)


















Six Months Ended








August 31,








2016


2015



Cash flows from operating activities:












Net income (loss)




$

(2,138)


$

7,558




Depreciation expense





4,032



1,675




Intangible assets amortization expense





7,346



3,299




Stock-based compensation expense





3,605



2,609




Amortization of convertible debt issue costs and discount





3,460



2,019




Foreign currency remeasurement gains





(460)



-




Deferred tax assets, net





(1,091)



4,106




Equity in net loss of affiliate





684



-




Impairment of internal use software





1,364



-




Other





14



7




Changes in operating working capital





2,500



7,489
















   Net cash provided by operating activities





19,316



28,762















Cash flows from investing activities:












Proceeds from maturities of marketable securities





66,419



6,634




Purchases of marketable securities





-



(114,010)




Capital expenditures





(3,527)



(2,576)




Acquisition of Crashboxx





-



(1,500)




Acquisition of LoJack, net of cash acquired





(116,982)



-




Advances to unconsolidated subsidiary





(737)



-




Other





(36)



-
















   Net cash used in investing activities





(54,863)



(111,452)















Cash flows from financing activities:












Proceeds from issuance of convertible notes





-



172,500




Payments of debt issuance costs





-



(5,291)




Purchase of convertible note hedges





-



(31,343)




Proceeds from issuance of warrants





-



15,991




Payment of acquisition-related note and contingent consideration



-



(1,262)




Repurchases of common stock





(8,451)



-




Taxes paid related to net share settlement of vested equity awards


(1,416)



(2,478)




Proceeds from exercise of stock options





780



487
















   Net cash provided (used) by financing activities





(9,087)



148,604















Effect of exchange rate changes on cash





(49)



-















Net change in cash and cash equivalents





(44,683)



65,914















Cash and cash equivalents at beginning of period





139,388



34,184















Cash and cash equivalents at end of period




$

94,705


$

100,098
















- more -


 


CAL AMP CORP.


RECONCILIATION OF NON-GAAP MEASURES TO GAAP


(Unaudited)




















"GAAP" refers to financial information presented in accordance with U.S. Generally Accepted Accounting Principles. This press release includes




historical non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission.  CalAmp believes that




its presentation of historical non-GAAP financial measures provides useful supplementary information to investors.  The presentation of historical




non-GAAP financial measures is not meant to be considered in isolation from or as a substitute for results prepared in accordance with GAAP.























In this press release, CalAmp reports the non-GAAP financial measures of Adjusted basis net income, Adjusted basis net income per diluted share,




non-GAAP gross margin, Adjusted EBITDA (Earnings Before Investment Income, Interest Expense, Taxes, Depreciation, Amortization and






Stock-Based Compensation and other adjustments as identified below), and Adjusted EBITDA margin. CalAmp uses these non-GAAP financial




measures to enhance the investor's overall understanding of the financial performance and future prospects of CalAmp's core business activities.




Specifically, CalAmp believes that the use of these non-GAAP measures facilitates the comparison of results of core business operations between its




current and past periods.  



































The reconciliation of the GAAP basis net income (loss) to Adjusted basis (non-GAAP) net income is as follows (in thousands except per




share amounts):





















Three Months Ended


Six Months Ended








August 31,


August 31,








2016


2015


2016


2015




GAAP basis net income (loss)



$

521


$

3,499


$

(2,138)


$

7,558






















Intangible assets amortization expense




3,856



1,655



7,346



3,299




Stock-based compensation expense




1,621



1,389



3,605



2,609




Non-cash interest expense from amortization of debt discount




1,562



1,353



3,069



1,736




GAAP basis income tax provision (benefit) 




864



2,058



(255)



4,412




Equity in net loss of affiliate




372



-



684



-




Acquisition and integration expenses




-



-



3,539



-




Non-cash cost of sales and depreciation on markup of


















 LoJack inventory and fixed assets 




671



-



4,681



-




Legal arbitration expenses for LoJack battery claim




1,080



-



1,460



-






















Adjusted basis income before income taxes




10,547



9,954



21,991



19,614






















Income tax provision (non-GAAP basis) (a)




(463)



(116)



(847)



(287)






















Adjusted basis net income



$

10,084


$

9,838


$

21,144


$

19,327






















Adjusted basis net income per diluted share



$

0.27


$

0.27


$

0.57


$

0.53






















Weighted average common shares outstanding on diluted basis




36,849



36,716



36,931



36,691






















(a)  The non-GAAP income tax provision represents cash taxes paid or payable for the period after giving effect to the utilization of net operating





loss and tax credit carryforwards.



































The reconciliation of GAAP basis net income (loss) to Adjusted EBITDA, and the calculation of Adjusted EBITDA margin, are as follows




(dollars in thousands):





















Three Months Ended


Six Months Ended








August 31,


August 31,








2016


2015


2016


2015






















GAAP basis net income (loss)



$

521


$

3,499


$

(2,138)


$

7,558






















Investment income




(455)



43



(908)



15




Interest expense




2,474



2,280



4,898



2,928




GAAP basis income tax provision (benefit) 




864



2,058



(255)



4,412




Depreciation expense




2,211



883



4,032



1,675




Intangible assets amortization expense




3,856



1,655



7,346



3,299




Stock-based compensation expense




1,621



1,389



3,605



2,609




Equity in net loss of affiliate




372



-



684



-




Acquisition and integration expenses




-



-



3,539



-




Non-cash cost of sales on markup of LoJack inventory




309



-



4,319



-




Legal arbitration expenses for LoJack battery claim




1,080



-



1,460



-






















Adjusted EBITDA



$

12,853


$

11,807


$

26,582


$

22,496






















Revenue



$

90,479


$

69,808


$

181,626


$

135,237






















Adjusted EBITDA margin




14.2%



16.9%



14.6%



16.6%






















The calculation of non-GAAP gross margin is as follows (dollars in thousands):


















Three Months Ended


Six Months Ended








August 31,


August 31,








2016


2015


2016


2015






















GAAP basis gross profit 



$

37,614


$

25,303


$

72,448


$

48,829




Non-cash cost of sales on markup of LoJack inventory and fixed assets



357



-



4,367



-






















Non-GAAP gross profit



$

37,971


$

25,303


$

76,815


$

48,829






















Revenue



$

90,479


$

69,808


$

181,626


$

135,237






















Non-GAAP gross margin




42.0%



36.2%



42.3%



36.1%























# # #

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SOURCE CalAmp

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