CalAmp Reports Fiscal 2020 Third Quarter Financial Results
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 México 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 México 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(TM) Suite of Telematics Services, the first and
only suite of telematics services with integrated CrashBoxx(TM) 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(TM) 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(TM) lot management and SmartDrive(TM) connected
vehicle applications.
-- TRACKER U.K. also partnered with NG Bailey to deploy SmartFleet(TM)
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
% % % %
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SOURCE CalAmp
