CalAmp Reports Fiscal 2019 First Quarter Financial Results
IRVINE, Calif., June 27, 2018 /PRNewswire/ -- CalAmp (Nasdaq: CAMP), a technology solutions pioneer transforming the global connected economy, today reported its financial results for its fiscal 2019 first quarter ended May 31, 2018.
"We are pleased to be off to a solid start in the new fiscal year. We experienced strong momentum in our Software and Subscription Services (SaaS) business, which helped drive our revenue to a new quarterly record. Our SaaS contract backlog along with continued strength in our LoJack Italia operations, have set the stage for strong growth in subscription revenue through this fiscal year," said Michael Burdiek, President and Chief Executive Officer. "Further, we continue to experience consistent revenue growth in our Telematics Systems business, due to persistent demand for MRM Telematics and Network and OEM products."
Q1 2019 Financial & Business Highlights
-- Consolidated revenue of $94.9 million, up 8% year over year, and at the
high end of our guidance range.
-- GAAP net income of $8.5 million or $0.23 per diluted share, compared to
a net loss of $2.7 million or $(0.08) per diluted share for the prior
year period.
-- Adjusted basis net income of $10.5 million or $0.29 per diluted share,
compared to $10.4 million or $0.29 per diluted share for the prior year
period.
-- Telematics Systems revenue for the first quarter was $76.4 million
driven by continued growth in our MRM Telematics product revenue, which
was up 24% year-over-year.
-- Software & Subscription Services revenue for the first quarter was $18.5
million or 20% of total revenue and up 15% sequentially. Revenue growth
was driven by our LoJack Italia business and freight transport
subscriber additions.
-- Operating cash flow for the first quarter was $30.9 million, an increase
of 183% over the prior year.
-- Adjusted EBITDA for the first quarter was $12.2 million and Adjusted
EBITDA margin was 13%.
-- Free cash flow for the first quarter was $28.8 million including a
non-operating gain of $13.3 million from a settlement with a former
LoJack supplier, which represents an increase of 226% over the prior
year period.
-- Our Board of Directors authorized a one year share repurchase program
under which we may repurchase up to $30 million of outstanding common
stock. Under this program, we repurchased 270,000 shares at an average
share price of $21.15 for a total cost of $5.7 million during the first
quarter.
-- We announced a CrashBoxx land and expand program for all compatible
CalAmp devices, enabling the vast majority of customers to receive
automated crash notifications and CrashBoxx Portal access for the
on-line purchase of accident reconstruction reports.
-- We commenced a plan to accelerate the realignment of our global
operations and sales organization to drive synergies and further
establish a foundation for future growth.
Summary
Financial
Information:
(In
thousands
except
per
share
amounts)
Three Months Ended
May 31,
-------
Description 2018 2017
----------- ---- ----
Revenues:
Telematics
Systems $76,352 $71,996
Software
&
Subscription
Services 18,536 16,085
------ ------
$94,888 $88,081
======= =======
Gross
margin 40% 43%
Net
income
(loss) $8,511 $(2,654)
Net
income
(loss)
per
diluted
share $0.23 $(0.08)
Non-
GAAP
measures:
Adjusted
basis
net
income $10,486 $10,396
Adjusted
basis
net
income
per
diluted
share $0.29 $0.29
Adjusted
EBITDA $12,177 $13,181
Adjusted
EBITDA
margin 13% 15%
As of May 31, As of February 28,
Description 2018 2018
----------- ---- ----
Cash
and
marketable
securities $178,770 $156,003
Working
capital 193,034 180,356
Deferred
revenue 43,765 34,520
1.625%
convertible
senior
unsecured
notes
(carrying
value) 156,230 154,299
Fiscal 2019 Second Quarter Business Outlook
(In thousands except per share
amounts)
Range
-----
Description Low High
----------- --- ----
GAAP financial information:
Revenues $93,000 $98,000
Net income per diluted share $0.10 $0.16
Non-GAAP financial information:
Adjusted EBITDA $11,000 $15,000
Adjusted basis net income per
diluted share $0.25 $0.31
Effective March 1, 2018, we adopted the new revenue recognition standard entitled Accounting Standards Update 2014-09, Revenue from Contracts with Customers ("ASC 606"). The Fiscal 2019 Second Quarter Business Outlook reflects the effects of adopting this new accounting standard. In the second quarter and fiscal year 2019, we do not expect ASC 606 to have a material impact on our revenue.
The second quarter GAAP-basis net income per diluted share guidance range above includes the expected gain of approximately $5.0 million for the final installment of the legal settlement with a former LoJack supplier. This expected fiscal 2019 second quarter non-operating gain is excluded from the Non-GAAP Adjusted EBITDA and Adjusted basis net income per diluted share guidance range above. In addition, the total expense incurred in relation to our cost savings plan was $3.4 million for the first quarter of fiscal 2019. For the second quarter of this fiscal year, we do not expect this plan will have any material impact on our financial results.
Conference Call and Webcast
We are hosting a conference call for analysts and investors to discuss our fiscal 2019 first quarter results and outlook for our second quarter at 1:30 p.m. Pacific Time today. Participants can listen in via webcast by visiting the Investor Relations section of our 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# 4685079. 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# 4685079. The audio replay will be available through July 11, 2018.
About CalAmp
CalAmp (Nasdaq: CAMP) is a technology solutions pioneer transforming the global connected economy. We help reinvent business and improve lives around the globe with technology solutions that streamline complex IoT deployments and bring intelligence to the edge. Our software applications, scalable cloud services, and intelligent devices collect and assess business-critical data from mobile assets, cargo, companies, cities and people. We call this The New How, powering autonomous IoT interaction, facilitating efficient decision making, optimizing resource utilization, and improving road safety. CalAmp is headquartered in Irvine, California and has been publicly traded since 1983. LoJack is a wholly owned subsidiary of CalAmp. For more information, visit calamp.com, or LinkedIn, Twitter, YouTube or CalAmp Blog.
Forward-Looking Statements
This press release 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 and products, (ii) our competitive position and opportunities, and (iii) other statements identified by words such as "may", "will", "expect", "intend", "plan", "potential", "believe", "seek", "could", "estimate", "judgment", "targeting", "should", "anticipate", "predict" "project", "aim", "goal", "outlook" 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 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 or our contract manufacturers' manufacturing 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 margins; 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, warranty and indemnification claims; our ability to sell to new types of customers and to keep pace with technological advances; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive, and regulatory nature. Other risks and uncertainties are detailed in our periodic public filings with the U.S. Securities and Exchange Commission ("SEC"), including but not limited to, our Annual Report on Form 10-K for the year ended February 28, 2018, filed with the SEC on May 10, 2018. You may obtain these filings at the SEC's website at http://www.sec.gov. 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 Interest Income, Interest Expense, Income 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, restructuring charges 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 asset amortization expense, stock-based compensation, non-cash interest from amortization of debt discount, acquisition and integration expenses, non-cash costs and expenses arising from purchase accounting adjustments, litigation provisions, gain on legal settlement, restructuring charges and certain other adjustments as shown in the non-GAAP reconciliation provided in the table at the end of this press release. We use these non-GAAP financial measures to enhance the investor's overall understanding of the financial performance and future prospects of our core business activities. Management does not believe that these items are reflective of our underlying performance. However, 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 our performance 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 for a more consistent basis of comparison and to help them evaluate our results of ongoing operations and enable more meaningful period-to-period comparisons. The reconciling adjustments in our non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual.
CALAMP CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended
May 31
------
2018 2017
---- ----
Revenues $94,888 $88,081
Cost of revenues 56,797 50,638
------ ------
Gross profit 38,091 37,443
Operating expenses:
Research and development 6,601 5,832
Selling and marketing 12,497 12,671
General and administrative 13,436 16,410
Restructuring 3,383 -
Intangible asset amortization 2,748 3,858
----- -----
38,665 38,771
------ ------
Operating income (loss) (574) (1,328)
Non-operating income (expense):
Investment income 853 333
Interest expense (2,665) (2,518)
Gain on legal settlement 13,333 -
Other income (expense) (226) 116
---- ---
11,295 (2,069)
------ ------
Income (loss) before income
taxes and equity in net loss
of affiliate
10,721 (3,397)
Income tax benefit (provision) (1,771) 1,080
------ -----
Income (loss) before equity in
net loss of affiliate
8,950 (2,317)
Equity in net loss of affiliate (439) (337)
---- ----
Net income (loss) $8,511 $(2,654)
====== =======
Earnings (loss) per share:
Basic $0.24 $(0.08)
Diluted $0.23 $(0.08)
Shares used in computing
earnings
(loss) per share:
Basic 35,458 35,068
Diluted 36,453 35,068
CALAMP CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
May 31, February 28,
2018
2018
----
Assets
Current assets:
Cash and cash equivalents $169,509 $132,603
Short-term marketable securities 9,261 23,400
Accounts receivable, net 69,814 71,580
Inventories 32,557 36,302
Prepaid expenses and other current
assets 13,076 12,000
------ ------
Total current assets 294,217 275,885
Property and equipment, net 21,087 21,262
Deferred income tax assets 32,200 31,581
Goodwill 73,284 72,980
Other intangible assets, net 49,227 52,456
Other assets 23,407 18,829
------ ------
$493,422 $472,993
======== ========
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $42,939 $35,478
Accrued payroll and employee
benefits 6,471 10,606
Deferred revenue 20,232 17,757
Other current liabilities 31,541 31,688
------ ------
Total current liabilities 101,183 95,529
1.625% convertible senior
unsecured notes 156,230 154,299
Other non-current liabilities 33,568 24,249
Stockholders' equity:
Common stock 355 357
Additional paid-in capital 214,811 218,217
Accumulated deficit (12,109) (19,459)
Accumulated other comprehensive
loss (616) (199)
---- ----
Total stockholders' equity 202,441 198,916
------- -------
$493,422 $472,993
======== ========
CALAMP CORP.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Amounts in thousands)
(Unaudited)
Three Months Ended
May 31,
-------
2018 2017
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $8,511 $(2,654)
Depreciation expense 2,043 2,025
Intangible assets amortization
expense 2,748 3,858
Stock-based compensation expense 2,467 1,817
Amortization of convertible debt
issue costs and discount 1,931 1,816
Tax benefits on vested and
exercised equity awards 220 157
Deferred tax assets, net 772 (1,609)
Unrealized foreign currency
transaction gains 137 -
Equity in net loss of affiliate 439 337
Other (99) (319)
Changes in operating assets and
liabilities 11,743 5,480
------ -----
NET CASH PROVIDED BY OPERATING
ACTIVITIES 30,912 10,908
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from maturities and
sale of marketable securities 23,507 6,722
Purchases of marketable
securities (9,262) (546)
Capital expenditures (2,121) (2,079)
Other (26) (69)
--- ---
NET CASH USED IN INVESTING
ACTIVITIES 12,098 4,028
CASH FLOWS FROM FINANCING
ACTIVITIES:
Taxes paid related to net share
settlement of vested equity
awards (233) (156)
Proceeds from exercise of stock
options 68 96
Repurchases of common stock (5,710) -
------ ---
NET CASH USED IN FINANCING
ACTIVITIES (5,875) (60)
EFFECT OF EXCHANGE RATE CHANGE
ON CASH (229) 108
---- ---
Net change in cash and cash
equivalents 36,906 14,984
Cash and cash equivalents at
beginning of period 132,603 93,706
------- ------
Cash and cash equivalents at end
of period $169,509 $108,690
======== ========
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 press release includes historical non-GAAP financial measures, as defined in Regulation G promulgated by the SEC. 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 press release, we report the non-GAAP financial measures of Adjusted basis net income, Adjusted basis net income per diluted share, Adjusted EBITDA (Earnings Before Interest Income, Interest Expense, Income Taxes, Depreciation, Amortization and stock-based compensation, gain on legal settlement, restructuring charges and other adjustments as identified below), and Adjusted EBITDA margin. We use these non-GAAP financial measures to enhance the investor's 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 our core business operations between 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
May 31
------
2018 2017
---- ----
GAAP basis net income (loss) $8,511 $(2,654)
Intangible assets
amortization expense 2,748 3,858
Stock-based compensation
expense 2,467 1,817
Non-cash interest expense
from amortization of debt
discount 1,712 1,610
GAAP basis income tax
provision (benefit) 1,771 (1,080)
Equity in net loss of
affiliate 439 337
Realized gain on investment
of equity securities 629 -
Gain on legal settlement (13,333) -
Litigation provision 428 6,075
Legal expense for LoJack
battery performance issue 1,686 497
Restructuring 3,383 -
Other 245 186
--- ---
Adjusted basis income before
income taxes 10,686 10,646
Income tax provision (non-
GAAP basis) (a) (200) (250)
---- ----
Adjusted basis net income $10,486 $10,396
======= =======
Adjusted basis net income
per diluted share $0.29 $0.29
Weighted average common
shares outstanding on
diluted basis 36,453 35,926
(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
May 31
------
2018 2017
---- ----
GAAP basis net income (loss) $8,511 $(2,654)
Investment income (853) (333)
Interest expense 2,665 2,518
Income tax provision
(benefit) 1,771 (1,080)
Depreciation 2,043 2,025
Amortization of intangible
assets 2,748 3,858
Stock-based compensation 2,467 1,817
Equity in net loss of
affiliate 439 337
Legal expense for LoJack
battery performance issue 1,686 497
Litigation provision 428 6,075
Gain on legal settlement (13,333) -
Restructuring 3,383 -
Other 222 121
Adjusted EBITDA $12,177 $13,181
======= =======
Revenue $94,888 $88,081
Adjusted EBITDA margin 13% 15%
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SOURCE CalAmp
