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CalAmp Reports Fiscal 2019 First Quarter Financial Results

Record quarterly revenue of $94.9 million, up 8% year-over-year

Q1 Software & Subscription Services revenue of $18.5 million, up 15% sequentially

IRVINE, Calif., June 27, 2018 /PRNewswire/ -- CalAmp (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 (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,

2018



February 28,
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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