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CalAmp Reports Fiscal 2020 Third Quarter Financial Results

12/19/19
Third quarter consolidated revenue increases to a record $96.6 million, up 9% year-over-year
Record quarterly SaaS revenue of $33.4 million, up 68% year-over-year

IRVINE, Calif., Dec. 19, 2019 /PRNewswire/ -- CalAmp (Nasdaq: CAMP), a global technology solutions pioneer transforming the mobile connected economy, today reported its financial results for the fiscal 2020 third quarter ended November 30, 2019. 

"We had another solid quarter with consolidated revenue above the midpoint of guidance and reaching a quarterly record. Software & Subscription Services revenue also set a new record, representing 35% of total revenue as we continue to track towards our longer-term target of 40%," said Michael Burdiek, president and chief executive officer. "Underpinning this growth in our SaaS business was strong performance from our recent acquisitions, and in particular, Synovia Solutions. Additionally, despite recent tariff headwinds, we saw increasing orders from certain key enterprise customers, including strong sequential growth at our largest OEM customer. CalAmp's transformation to a global SaaS solutions provider continues to advance as evidenced by our performance this quarter and year-to-date."

Third Quarter Fiscal 2020 Financial Overview

  • Consolidated revenue was a record $96.6 million, up 9% year-over-year and 4% sequentially due to an increase in Software & Subscription Services revenue.
  • Software & Subscriptions Services revenue increased 68% year-over-year to a record $33.4 million, or 35% of consolidated revenue, driven by the recent acquisitions combined with strong growth from LoJack® Italy and Supply Chain Integrity (SCI) services.
  • Telematics Systems revenue was $63.2 million, up 2% sequentially, and included a 39% sequential increase in Network & OEM products revenue.
  • Gross margin was 38% including the impact of unfavorable product mix coupled with incremental charges for excess and obsolete inventory and manufacturing variances related to the closure of the U.S. manufacturing facility.
  • GAAP net loss was $7.4 million, or $0.22 per share, which includes a $2.4 million pre-tax charge for the early retirement of debt and purchase accounting adjustments related to the recent acquisitions.
  • Adjusted basis non-GAAP net income was $5.0 million, or $0.15 per diluted share.
  • Operating cash flow was $3.7 million, with adjusted EBITDA of $10.9 million and adjusted EBITDA margin of 11%.
  • Repurchased $94.9 million in aggregate principal amount of the 1.625% Convertible Senior Notes due in May 2020, plus accrued interest of $0.7 million.

Business and Recent Highlights

  • LoJack M éxico established a strategic alliance with Hertz, locally represented by AVASA, one of the largest rental car franchises in México. AVASA-Hertz will deploy LoJack México's stolen vehicle location assist and connected car telematics across select fleets at more than 170 offices throughout México, with the goal to complete installations by year-end 2020.
  • LoJack M éxico established a strategic alliance with the Volkswagen Group's truck and bus manufacturing division, MAN Truck & Bus México, to deliver advanced telematics and surveillance video services on truck and bus vehicles sold in México.
  • Announced the CalAmp iOn™ Suite of Telematics Services, the first and only suite of telematics services with integrated CrashBoxx™ crash response, driver behavior scoring and iOn Tag asset management. iOn Suite is an all-inclusive SaaS subscription service available through a simple web-based fleet and asset management application.
  • Partnered with Pallet Alliance to incorporate CalAmp's iOn™ Tags, gateways and CalAmp's Telematics Cloud (CTC) with wooden pallets to track shipments and assets that travel across sea, land and air.
  • TRACKER U.K. partnered with London-based Auto Capital to provide commercial van fleet operator customers with automated intelligence using SmartDealer™ lot management and SmartDrive™ connected vehicle applications.
  • TRACKER U.K. also partnered with NG Bailey to deploy SmartFleet™ across its fleet of 240 service vehicles to improve driver behavior and fleet/fuel efficiencies.

 

Summary Financial Information:


(In thousands except per share amounts)









Three Months Ended



November 30,


Description

2019



2018


Revenues:








Telematics Systems

$

63,192



$

68,552


Software & Subscription Services


33,405




19,943



$

96,597



$

88,495


Gross margin


38

%



41

%









Net loss

$

(7,415)



$

(522)


Net loss per diluted share

$

(0.22)



$

(0.02)


Non-GAAP measures:








Adjusted basis net income

$

4,998



$

8,905


Adjusted basis net income per diluted share

$

0.15



$

0.25


Adjusted EBITDA

$

10,905



$

11,423


Adjusted EBITDA margin


11

%



13

%


















November 30,



February 28,


Description

2019



2019


Cash and marketable securities

$

103,560



$

274,012


Working capital


123,422




319,905


Deferred revenue


63,985




51,370


Total debt (carrying value)


209,333




275,905


 

Fourth Quarter Fiscal 2020 Business Outlook


(In thousands except per share amounts)


Range


Description

Low



High










GAAP financial information:








Revenues

$

95,000



$

100,000


Net loss per diluted share

$

(0.19)



$

(0.13)










Non-GAAP financial information:








Adjusted EBITDA

$

8,500



$

13,500


Adjusted basis net income per diluted share

$

0.10



$

0.16


Conference Call and Webcast

CalAmp is hosting a conference call for analysts and investors to discuss its third quarter fiscal 2020 results and outlook for the fourth quarter of fiscal 2020 at 1:30 p.m. Pacific Time today.  Participants can listen in via webcast by visiting the Investor Relations section of the 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 90 days after the call.  The conference call can also be accessed by dialing 833-868-3300 (+1-918-398-8110 for international callers) and using the Conference ID #8267918. 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#8267918. The audio replay will be available through December 26, 2019.

About CalAmp

CalAmp (Nasdaq: CAMP) is a global technology solutions pioneer transforming the mobile connected economy. We help reinvent business and improve lives around the globe with technology solutions that streamline complex mobile IoT deployments and bring intelligence to the edge. Our software and subscription-based services, scalable cloud platform and intelligent devices collect and assess business-critical data from mobile assets and their contents. We call this The New How, facilitating efficient decision making, optimizing mobile asset utilization and improving road safety.  CalAmp, headquartered in Irvine, California, has been publicly traded since 1983. LoJack® is a brand of CalAmp and a leader in stolen vehicle recovery and innovative automotive services. For more information, visit calamp.com, or LinkedIn, Facebook, Twitter, YouTube or CalAmp Blog

Forward-Looking Statements

This announcement contains forward-looking statements (including within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and Section 27A of the U.S. Securities Act of 1933, as amended) concerning CalAmp . These statements include, but are not limited to, statements that address our expected future business and financial performance and statements about (i) our plans, objectives and intentions with respect to future operations, services and products, (ii)  our competitive position and opportunities, and (iii) other statements identified by words such as such as "may", "will", "expect", "intend", "plan", "potential", "believe", "seek", "could", "estimate", "judgment", "targeting", "should", "anticipate", " predict" "project", "aim", "goal", and similar words, phrases or expressions. These forward-looking statements are based on management's current expectations and beliefs, as well as assumptions made by, and information currently available to, management, current market trends and market conditions, and involve risks and uncertainties, many of which are outside of our control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements. Particular uncertainties that could materially affect future results include any risks associated with global economic conditions and concerns; competitive pressures; pricing declines; rates of growth in our target markets; prolonged disruptions of our contract manufacturers' facilities or other significant operations; our dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our ability to maintain or improve gross margin; cost-containment measures; legislative, trade, tariff, and regulatory actions; integration, unexpected charges or expenses in connection with our recent acquisitions; the impact of legal proceedings and compliance risks; implementation of our new ERP system; our ability to protect our intellectual property and the unpredictability of any associated litigation expenses; any expenses or reputational damage associated with resolving customer product and warranty and indemnification claims; our ability to sell to new types of customers and to keep pace with technological advances; market acceptance of the end products into which our products are designed; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature. Our filings with the U.S. Securities and Exchange Commission ( "SEC"), which you may obtain for free at the SEC's website at http://www.sec.gov, discuss some of the important risk factors that may affect our business, results of operations, and financial condition.  We undertake no intent or obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law .

Non-GAAP Financial Measures

"GAAP" refers to financial information presented in accordance with U.S. Generally Accepted Accounting Principles. This announcement includes non-GAAP financial measures, as defined in Regulation G promulgated by the SEC. We believe that our presentation of non-GAAP financial measures provides useful supplementary information to investors. These non-GAAP financial measures are provided in addition to, and not as a substitute for measures of financial performance prepared in accordance with GAAP.

In this announcement, we report the non-GAAP financial measures of Adjusted basis net income, Adjusted basis net income per diluted share, Adjusted EBITDA (Earnings Before Investment Income, Interest Expense, Taxes, Depreciation, Amortization, stock-based compensation, acquisition and integration expenses, non-cash costs and expenses arising from purchase accounting adjustments, litigation provisions, gain from legal settlement and certain other adjustments as detailed in the accompanying non-GAAP reconciliation), and Adjusted EBITDA margin. Adjusted basis net income excludes the impact of intangible assets amortization expense, stock-based compensation, non-cash interest expense, acquisition and integration expenses, non-cash costs and expenses arising from purchase accounting adjustments, litigation provisions, gain on legal settlement, income tax provision adjustments and certain other adjustments as shown in the non-GAAP reconciliation provided in the table at the end of this announcement.  We use these non-GAAP financial measures to provide investors with additional information about our financial performance and future prospects of our core business activities. Internally, these non-GAAP measures are significant measures used by management for purposes of evaluating our core operating performance, establishing internal budgets, calculating return on investment for development programs and growth initiatives, comparing performance with internal forecasts and targeted business models, strategic planning, evaluating and valuing potential acquisition candidates and how their operations compare to our operations, and benchmarking performance externally against our competitors. We believe this non-GAAP financial information provides additional insight into our ongoing performance and have therefore chosen to provide this information to investors to help them evaluate our results of ongoing operations and enable additional period-to-period comparisons. The presentation of these and other similar items in our non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. We have not included a quantitative reconciliation of our quarterly financial guidance for Adjusted EBITDA and Adjusted basis net income per diluted share to revenues and net loss per share, respectively, as the GAAP measures that we exclude from our non-GAAP financial information are difficult to reliably provide at this time without unreasonable effort.

CalAmp and LoJack and the related logos are among the trademarks of CalAmp Corp. and/or its affiliates in the United States, certain other countries, and/or the European Union. Any other trademarks or trade names mentioned are the property of their respective owners.

CALAMP CORP.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Amounts in thousands, except per share amounts)


(Unaudited)























Three Months Ended



Nine Months Ended



November 30,



November 30,




2019




2018




2019




2018






















Revenues

$


96,597



$


88,495



$


278,903



$


279,420


Cost of revenues



59,713





52,114





168,938





165,127


Gross profit



36,884





36,381





109,965





114,293


Operating expenses:




















Research and development



7,742





7,177





22,552





21,377


Selling and marketing



14,683





12,746





45,198





37,766


General and administrative



14,283





11,719





44,660





37,146


Restructuring



848





1,247





3,120





5,196


Intangible asset amortization



3,325





2,893





9,683





8,534





40,881





35,782





125,213





110,019


Operating (loss) income



(3,997)





599





(15,248)





4,274


Non-operating income (expense):




















Investment income



1,108





1,398





4,445





3,258


Interest expense



(4,987)





(5,134)





(15,998)





(11,566)


Gain on legal settlement



-





2,500





-





15,833


Loss on extinguishment of debt



(2,408)





-





(2,408)





(2,033)


Other income (expense)



232





(218)





26





(721)





(6,055)





(1,454)





(13,935)





4,771


Income (loss) before income taxes and impairment loss and equity in net loss of affiliate



(10,052)





(855)





(29,183)





9,045


Income tax benefit (provision)



2,637





778





6,236





(496)


Income (loss) before impairment loss and equity in net loss of affiliate



(7,415)





(77)





(22,947)





8,549


Impairment loss and equity in net loss of affiliate



-





(445)





(530)





(1,414)


Net income (loss)

$


(7,415)



$


(522)



$


(23,477)



$


7,135


Earnings (loss) per share:




















  Basic

$


(0.22)



$


(0.02)



$


(0.70)



$


0.20


  Diluted

$


(0.22)



$


(0.02)



$


(0.70)



$


0.20






















Shares used in computing earnings (loss) per share:




















  Basic



33,822





34,561





33,589





34,950


  Diluted



33,822





34,561





33,589





35,769






















- more -


 

CALAMP CORP.


CONDENSED CONSOLIDATED BALANCE SHEETS


(Amounts in thousands)


(Unaudited)






November 30,



February 28,






2019



2019


Assets
























Current assets:













  Cash and cash equivalents




$


101,634



$


256,500


  Short-term marketable securities






1,926





17,512


  Accounts receivable, net






83,462





78,079


  Inventories






44,035





32,033


  Prepaid expenses and other current assets






22,196





19,373


       Total current assets






253,253





403,497















Property and equipment, net






57,127





27,023


Operating lease right-of-use assets






24,108





-


Deferred income tax assets






30,372





22,626


Goodwill






105,584





80,805


Other intangible assets, net






66,501





47,165


Other assets






25,466





22,510



















$


562,411



$


603,626















Liabilities and Stockholders' Equity


























Current liabilities:













  Current portion of long-term debt




$


32,955



$


-


  Accounts payable






36,993





39,898


  Accrued payroll and employee benefits






9,707





8,808


  Deferred revenue






34,939





24,264


  Other current liabilities






15,237





10,622


      Total current liabilities






129,831





83,592















Long-term debt, net of current portion






176,378





275,905


Operating lease liabilities






27,090





-


Other non-current liabilities






38,459





38,476















Stockholders' equity:













  Common stock






342





336


  Additional paid-in capital






216,798





208,205


  Accumulated deficit






(25,704)





(2,227)


  Accumulated other comprehensive loss






(783)





(661)


      Total stockholders' equity






190,653





205,653






$


562,411



$


603,626















- more -


 


CALAMP CORP.



CONDENSED CONSOLIDATED CASH FLOW STATEMENTS



(Amounts in thousands)



(Unaudited)















Nine Months Ended




November 30,





2019




2018


CASH FLOWS FROM OPERATING ACTIVITIES:











Net income (loss)

$


(23,477)



$


7,135



Depreciation



14,054





6,602



Intangible asset amortization expense



9,683





8,534



Stock-based compensation expense



9,378





8,088



Amortization of debt issue costs and discount



11,031





7,999



Impairment of operating lease right-of-use (ROU) assets



1,210





-



Noncash operating lease cost



3,440





-



Revenue assigned to factors



(5,016)





-



Loss on extinguishment of debt



2,408





2,033



Tax benefits on vested and exercised equity awards



-





591



Deferred tax assets, net



(5,701)





(716)



Impairment loss and equity in net loss of affiliate



530





1,414



Other



812





691



Changes in operating assets and liabilities



(15,049)





5,722


NET CASH PROVIDED BY OPERATING ACTIVITIES



3,303





48,093













CASH FLOWS FROM INVESTING ACTIVITIES:











Proceeds from maturities and sale of marketable securities



35,129





36,461



Purchases of marketable securities



(19,543)





(43,103)



Capital expenditures



(17,637)





(8,884)



Acquisition, net of cash acquired



(60,634)





-



Advances to affiliate



(530)





(1,519)



Other



901





(103)


NET CASH USED IN INVESTING ACTIVITIES



(62,314)





(17,148)













CASH FLOWS FROM FINANCING ACTIVITIES:











Proceeds from issuance of 2025 Convertible Notes



-





230,000



Payment of debt issuance costs of 2025 Convertible Notes



-





(7,305)



Purchase of capped call on 2025 Convertible Notes



-





(21,160)



Repurchase of 2020 Convertible Notes



(94,683)





(53,683)



Proceeds on unwind of note hedge and warrants on 2020 Convertible Notes



-





3,122



Taxes paid related to net share settlement of vested equity awards



(1,827)





(3,520)



Proceeds from exercise of stock options and contributions to employee stock purchase plan



1,048





124



Repurchases of common stock



-





(39,000)


NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES



(95,462)





108,578













EFFECT OF EXCHANGE RATE CHANGE ON CASH



(393)





(513)


Net change in cash and cash equivalents



(154,866)





139,010


Cash and cash equivalents at beginning of period



256,500





132,603


Cash and cash equivalents at end of period

$


101,634



$


271,613


CALAMP 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 announcement includes historical non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission.  We believe that our 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 announcement, we report the non-GAAP financial measures of Adjusted basis net income, Adjusted basis net income per diluted share, Adjusted EBITDA (Earnings Before Investment Income, Interest Expense, Taxes, Depreciation, Amortization and stock-based compensation, gain on legal settlement and other adjustments as identified below), and Adjusted EBITDA margin. We use these non-GAAP financial measures to provide investors with an overall understanding of the financial performance and future prospects of our core business activities. Specifically, we believe 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 GAAP basis net income (loss) to Adjusted basis (non-GAAP) net income is as follows (in thousands except per share amounts):


Three Months Ended



Nine Months Ended



November 30,



November 30,



2019



2018



2019



2018


GAAP basis net income (loss)

$


(7,415)



$


(522)



$


(23,477)



$


7,135






















Intangible assets amortization expense



3,325





2,893





9,683





8,534


Stock-based compensation expense



3,652





2,941





9,378





8,088


Non-cash interest expense



3,435





3,157





11,041





7,224


GAAP basis income tax provision (benefit)



(2,637)





(778)





(6,236)





496


Impairment loss and equity in net loss of affiliate



-





445





530





1,414


Acquisition and integration related expenses



382





-





1,572





-


Loss on extinguishment of debt



2,408





-





2,408





2,033


Gain on legal settlement



-





(2,500)





-





(15,833)


Litigation and non-recurring legal expenses



957





2,116





5,541





5,253


Restructuring



848





1,247





3,120





5,196


Other



343





106





1,263





1,427


Adjusted basis income before income taxes



5,298





9,105





14,823





30,967


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



(300)





(200)





(900)





(600)


Adjusted basis net income

$


4,998



$


8,905



$


13,923



$


30,367






















Adjusted basis net income per diluted share

$


0.15



$


0.25



$


0.41



$


0.85






















Weighted average common shares outstanding on diluted basis



34,047





35,153





33,859





35,769



(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 losses 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



Nine Months Ended



November 30,



November 30,



2019



2018



2019



2018






















GAAP basis net income (loss)

$


(7,415)



$


(522)



$


(23,477)



$


7,135






















Investment income



(1,108)





(1,398)





(4,445)





(3,258)


Interest expense



4,987





5,134





15,998





11,566


Income tax provision (benefit)



(2,637)





(778)





(6,236)





496


Depreciation and amortization



8,343





5,154





23,737





15,136


Stock-based compensation



3,652





2,941





9,378





8,088


Impairment loss and equity in net loss of affiliate



-





445





530





1,414


Loss on extinguishment of debt



2,408





-





2,408





2,033


Acquisition and integration related expenses



382





-





1,572





-


Litigation and non-recurring legal expenses



957





2,116





5,541





5,253


Gain on legal settlement



-





(2,500)





-





(15,833)


Restructuring



848





1,247





3,120





5,196


Other



488





(416)





995





63


Adjusted EBITDA

$


10,905



$


11,423



$


29,121



$


37,289






















Revenue

$


96,597



$


88,495



$


278,903



$


279,420






















Adjusted EBITDA margin



11

%




13

%




10

%




13

%

 

CalAmp Corp. Logo

 

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