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CalAmp Reports Fiscal 2014 Third Quarter Results

OXNARD, CA--(Marketwired - Dec 23, 2013) - CalAmp Corp. ( NASDAQ : CAMP ), a leading provider of wireless products, services and solutions, today reported results for its third quarter ended November 30, 2013. Highlights for the quarter include:

  • Consolidated third quarter revenue of $63.5 million, up 43% compared to the third quarter last year with Wireless Datacom revenue up 37% over prior year third quarter to $49.7 million and Satellite revenue up 72% to $13.8 million.
  • Third quarter GAAP net income of $4.2 million, or $0.12 per diluted share, compared to $4.2 million, or $0.14 per diluted share, for the third quarter last year.
  • Adjusted Basis (non-GAAP) net income of $8.2 million, or $0.23 per diluted share, compared to $5.3 million, or $0.17 per diluted share, for the same period last year.
  • Net cash provided by operations for the third quarter of $5.6 million, and total cash balance at November 30, 2013 of $31.1 million.

Commenting on results in the latest quarter, Michael Burdiek, CalAmp's President and Chief Executive Officer, said, "CalAmp is on-track for a very strong second half of fiscal 2014. During the third quarter, Wireless Datacom segment revenue increased 37% year-over-year. In addition, Satellite segment revenue improved 72% compared to the third quarter of last year. Within the Wireless Datacom segment, our Mobile Resource Management (MRM) products continued to experience strong demand from our fleet management and asset tracking customers. Meaningful contributions from the emerging auto insurance telematics vertical also helped drive growth in the quarter. Our Wireless Networks business, which comprises the remainder of our Wireless Datacom segment, benefitted from strength in the energy markets, while our expanding pipeline of opportunities from the acquired operations of Wireless Matrix are expected to support future growth and margin expansion. In our Satellite segment, the increase in revenue and improved margins helped further expand CalAmp's consolidated cash flow and bottom-line profitability. Also during the quarter, our strong cash flow and growing cash balance allowed us to pay off our bank term loan."

Mr. Burdiek continued, "Subsequent to the end of the third quarter, we announced the acquisition of Radio Satellite Integrators, Inc. (RSI), a privately-held provider of fleet management solutions primarily to municipal government agencies supporting applications targeted at public works, waste management, transit and public safety. This transaction improves CalAmp's competitive position and growth prospects in the state and local government market by augmenting CalAmp's current range of public safety solutions. Importantly, RSI's SaaS-based high margin revenue is expected to be accretive to CalAmp's overall margins and non-GAAP earnings per share for our coming fiscal year."

Fiscal 2014 Third Quarter Results
Total revenue for the fiscal 2014 third quarter was $63.5 million compared to $44.3 million for the third quarter of fiscal 2013, an increase of 43%. Wireless Datacom revenue increased to $49.7 million from $36.3 million in the same period last year, and Satellite revenue was $13.8 million compared to $8.0 million in the third quarter last year.

Consolidated gross profit for the fiscal 2014 third quarter was $21.0 million, an increase of $7.0 million over the same quarter last year, primarily attributable to higher revenue. The consolidated gross margin was 33.1% in the fiscal 2014 third quarter, up from 31.6% in the third quarter last year. The increase in consolidated gross margin is due primarily to the contribution of the higher margin Software-as-a-Service (SaaS) revenue from the Wireless Matrix acquisition and margin improvement in the Satellite segment.

GAAP net income for the fiscal 2014 third quarter was $4.2 million, or $0.12 per diluted share, compared to net income of $4.2 million, or $0.14 per diluted share, in the third quarter of last year. The lower GAAP earnings per share is due in part to the elimination of substantially all of the Company's deferred income tax asset valuation allowance at the end of fiscal 2013, which caused the Company's effective income tax rate to revert to a level that is much closer to full statutory tax rates beginning in fiscal 2014. Despite this, on a cash basis, the Company's pretax income is still largely sheltered from taxation by net operating loss (NOL) carryforwards, and is expected to remain so for about the next two years.

Non-GAAP net income for the fiscal 2014 third quarter was $8.2 million, or $0.23 per diluted share, compared to non-GAAP net income of $5.3 million, or $0.17 per diluted share, for the same quarter last year. Non-GAAP earnings exclude the impact of intangibles amortization and stock-based compensation expense, and includes an income tax provision for cash taxes paid or payable for the period. A reconciliation of the GAAP-basis pretax income to the non-GAAP net income and earnings per diluted share is provided in the table at the end of this press release.

As of November 30, 2013, the Company had total cash of $31.1 million and no bank debt outstanding. Net cash provided by operating activities during the third quarter was $5.6 million, and the unused borrowing capacity on the bank revolver as of the end of the third quarter was $15.0 million.

Business Outlook
Commenting on the Company's business outlook, Mr. Burdiek said, "Based on our current forecast, we anticipate that Wireless Datacom fourth quarter revenue will increase solidly on a sequential basis primarily driven by continued demand in our core market verticals, growing insurance telematics revenue and contribution from RSI. Due to normal quarterly fluctuations in demand from our DBS satellite customer, we currently expect Satellite fourth quarter revenues to be substantially lower on a sequential basis, more than offsetting the Wireless Datacom growth. As a result, we expect our fiscal 2014 fourth quarter consolidated revenue to be in the range of $60 to $63 million. At the bottom line, we expect fourth quarter GAAP basis net income in the range of $0.08 to $0.11 per diluted share, and non-GAAP net income in the range of $0.19 to $0.23 per diluted share."

Conference Call and Webcast
A conference call and simultaneous webcast to discuss third quarter results and business outlook will be held today at 4:30 p.m. Eastern / 1:30 p.m. Pacific. CalAmp's President and CEO Michael Burdiek and CFO Rick Vitelle will host the conference call. Participants can dial into the live conference call by calling 1-877-407-0784 (1-201-689-8560 for international callers) and using the Conference ID # 13573343. An audio replay will be available through December 30, 2013 by calling 1-877-870-5176 or 1-858-384-5517 and entering the Conference ID # 13573343.

Additionally, a live webcast of the call will be available on CalAmp's web site at www.calamp.com. Participants are encouraged to visit the web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. After the live webcast, a replay will remain available until the next quarterly conference call in the Investor Relations section of CalAmp's web site.

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 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 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. Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including product demand, competitive pressures and pricing declines in the Company's wireless and satellite markets, the timing of customer approvals of new product designs, intellectual property infringement claims, interruption or failure of our Internet-based systems used to wirelessly configure and communicate with the tracking and monitoring devices that we sell, and other risks or uncertainties that are described in our Annual Report on Form 10-K that was filed on April 25, 2013 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 assurance that our expectations will be attained. We undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

(Unaudited, in thousands except per share amounts)  
    Three Months Ended     Nine Months Ended  
    November 30,     November 30,  
    2013     2012     2013     2012  
Revenues   $ 63,503     $ 44,340     $ 176,056     $ 132,188  
Cost of revenues     42,508       30,308       116,741       90,345  
Gross profit     20,995       14,032       59,315       41,843  
Operating expenses:                                
  Research and development     5,267       3,564       15,721       10,393  
  Selling     4,920       2,982       14,789       8,963  
  General and administrative     3,291       2,699       10,521       8,849  
  Intangible asset amortization     1,485       475       4,618       1,267  
      14,963       9,720       45,649       29,472  
Operating income     6,032       4,312       13,666       12,371  
Non-operating expense, net     (77 )     (138 )     (327 )     (330 )
Income before income taxes     5,955       4,174       13,339       12,041  
Income tax provision     (1,748 )     (19 )     (4,603 )     (45 )
Net income   $ 4,207     $ 4,155     $ 8,736     $ 11,996  
Earnings per share - basic and diluted                                
  Basic   $ 0.12     $ 0.14     $ 0.25     $ 0.42  
  Diluted   $ 0.12     $ 0.14     $ 0.24     $ 0.40  
Shares used in computing earnings per share:                                
  Basic     35,171       29,210       34,848       28,537  
  Diluted     36,206       30,096       35,901       29,684  
(Unaudited, in thousands)  
    Three Months Ended     Nine Months Ended  
    November 30,     November 30,  
    2013     2012     2013     2012  
  Wireless DataCom   $ 49,747     $ 36,334     $ 137,808     $ 102,178  
  Satellite     13,756       8,006       38,248       30,010  
    Total revenues   $ 63,503     $ 44,340     $ 176,056     $ 132,188  
Gross profit                                
  Wireless DataCom   $ 18,159     $ 12,612     $ 51,674     $ 36,786  
  Satellite     2,836       1,420       7,641       5,057  
    Total gross profit   $ 20,995     $ 14,032     $ 59,315     $ 41,843  
Operating income                                
  Wireless DataCom   $ 5,026     $ 4,500     $ 11,706     $ 12,893  
  Satellite     1,785       498       4,561       2,327  
  Corporate expenses     (779 )     (686 )     (2,601 )     (2,849 )
    Total operating income   $ 6,032     $ 4,312     $ 13,666     $ 12,371  
(In thousands)  
    November 30,     February 28,  
    2013     2013  
Assets   (Unaudited)        
Current assets:                
  Cash and cash equivalents   $ 31,108     $ 63,101  
  Accounts receivable, net     30,897       19,111  
  Inventories     12,541       13,516  
  Deferred income tax assets     6,363       6,400  
  Prepaid expenses and other current assets     4,326       4,641  
    Total current assets     85,235       106,769  
Property, equipment and improvements, net     4,426       2,778  
Deferred income tax assets, less current portion     30,184       34,616  
Goodwill     18,304       1,112  
Other intangible assets, net     25,667       4,603  
Other assets     1,490       893  
    $ 165,306     $ 150,771  
Liabilities and Stockholders' Equity                
Current liabilities:                
  Current portion of long-term debt   $ 1,238     $ 2,261  
  Accounts payable     17,005       11,871  
  Accrued payroll and employee benefits     5,518       5,298  
  Deferred revenue     6,699       6,410  
  Other current liabilities     3,684       3,109  
    Total current liabilities     34,144       28,949  
Long-term debt     1,131       2,434  
Other non-current liabilities     2,293       1,839  
Stockholders' equity:                
  Common stock     356       350  
  Additional paid-in capital     203,815       202,368  
  Accumulated deficit     (76,368 )     (85,104 )
  Accumulated other comprehensive loss     (65 )     (65 )
    Total stockholders' equity     127,738       117,549  
    $ 165,306     $ 150,771  
(Unaudited - In thousands)  
    Nine Months Ended  
    November 30,  
    2013     2012  
Cash flows from operating activities:                
  Net income   $ 8,736     $ 11,996  
  Depreciation and amortization     5,967       1,995  
  Stock-based compensation expense     2,129       2,292  
  Amortization of debt issue costs and discount     194       248  
  Deferred tax assets, net     4,469       -  
  Changes in operating working capital     (2,090 )     (5,723 )
  Other     -       15  
    Net cash provided by operating activities     19,405       10,823  
Cash flows from investing activities:                
  Capital expenditures     (1,375 )     (1,396 )
  Navman Wireless asset purchase agreement     -       (1,000 )
  Wireless Matrix acquisition, net of cash acquired     (46,837 )     -  
  Collections on note receivable     -       430  
  Other     -       (8 )
    Net cash used in investing activities     (48,212 )     (1,974 )
Cash flows from financing activities:                
  Proceeds from bank term loan     5,000       -  
  Debt repayments     (7,510 )     (960 )
  Taxes paid related to net share settlement of vested equity awards     (3,027 )     (2,551 )
  Proceeds from exercise of stock options and warrants     2,351       2,621  
    Net cash used in financing activities     (3,186 )     (890 )
Net change in cash and cash equivalents     (31,993 )     7,959  
Cash and cash equivalents at beginning of period     63,101       5,601  
Cash and cash equivalents at end of period   $ 31,108     $ 13,560  

"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 and Adjusted
Basis Net Income Per Diluted Share. 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 a report of Adjusted Basis Net Income and Adjusted Basis Net Income Per Diluted Share
provides consistency in its financial reporting and facilitates the comparison of results of core business operations between
its current and past periods.

The reconciliation of the GAAP Basis Pretax Income 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,  
    2013     2012     2013     2012  
GAAP basis pretax income   $ 5,955     $ 4,174     $ 13,339     $ 12,041  
Amortization of intangible assets     1,485       475       4,618       1,267  
Stock-based compensation expense     808       620       2,129       2,292  
Acquisition and integration expenses     -       -       637       -  
Pretax income (non-GAAP basis)     8,248       5,269       20,723       15,600  
Income tax provision (non-GAAP basis) (a)     (82 )     (19 )     (146 )     (45 )
Adjusted Basis net income   $ 8,166     $ 5,250     $ 20,577     $ 15,555  
Adjusted Basis net income per diluted share   $ 0.23     $ 0.17     $ 0.57     $ 0.52  
Weighted average common shares outstanding on diluted basis     36,206       30,096       35,901       29,684  
(a) The non-GAAP income tax provision represents cash taxes paid for the period after giving effect to the utilization of net operating loss and tax credit carryforwards.