PR Newswire | Dec 17, 2020 07:01AM EST

12/17 06:00 CST

CalAmp Reports Fiscal 2021 Third Quarter Financial ResultsAchieves consolidated revenue of $88 million, including SaaS revenue of $34.4 million, or 39% of the totalBegins the wind down of its LoJack U.S. operations IRVINE, Calif., Dec. 17, 2020

IRVINE, Calif., Dec. 17, 2020 /PRNewswire/ --CalAmp (Nasdaq: CAMP), a global technology solutions pioneer transforming the mobile connected economy, today reported financial results for its third quarter ended November 30, 2020.

"Our results reflect another quarter of revenue growth from continued strong demand for our global SaaS solutions," commented Jeff Gardner, CalAmp's president and chief executive officer. "As we navigate the challenges related to the global pandemic, there are a number of growth trends driving opportunities across our business including the 3G-to-4G transition underway in the U.S. as well as the increasing need for fleet management solutions, especially for municipalities and school districts where we offer leading software solutions."

"Our business continues to demonstrate strong resiliency and momentum, supported by a solid cash position and balance sheet, as we continue to execute on our operating plan and sharpen the focus on our most profitable lines of business. To that end, after an extensive review of alternatives, we have decided to wind down our LoJack U.S. operations. This decision allows us to focus on our SaaS-based telematics business that we expect to drive faster growth and more predictable revenue streams. This action represents another step towards becoming the global solutions leader in tracking, monitoring and recovering highly-valued mobile assets."

Third Quarter Fiscal Year 2021 Financial Overview

* Consolidated revenue was $88.0 million, up 5.4% sequentially and down year-over-year due to the ongoing impact of the global pandemic. * Software & Subscription Services revenue was $34.4 million, up 2.1% sequentially and 3.0% year-over-year, while representing 39.0% of consolidated revenue. * Telematics Products revenue was $44.1 million, up 8.1% sequentially due to continued strong demand from the 3G-to-4G transition with large customers. * Sales to its largest customer reached a quarterly record of $16.4 million, representing growth of 19.8% sequentially and 20.5% year-over-year. * Gross margin increased 290 basis points sequentially to 39.8%, a marked improvement toward the Company's longer-term gross margin target. * GAAP net loss was $23.7 million, or a loss of $0.68 per share, which includes a $18.0 million one-time charge for the wind down of its LoJack U.S. operations reflecting a non-cash write down of goodwill, intangibles and other long-lived assets. * Adjusted basis non-GAAP net income was $2.6 million, or $0.07 per diluted share. * Operating cash flow was $10.2 million, with adjusted EBITDA increasing to $8.8 million and an adjusted EBITDA margin of 10.0%. * Ended the quarter with $91.7 million in cash and cash equivalents, after a $20 million pay-down of the remaining balance on its line of credit, and achieved another quarter of positive free cash flow in the amount of $6.7 million.

Update on LoJack U.S. Operations

CalAmp has begun the process to wind down its LoJack U.S. operations, which has historically provided stolen vehicle recovery (SVR) products operating on a radio frequency allocated by the FCC. These products and related services were provided predominately as a hardware-based offering sold only to independent automotive dealerships in the U.S., which no longer aligns to the Company's core strategy. CalAmp will continue supporting law enforcement partners as part of its commitment to public safety and will orchestrate the wind down in a responsible way, while allowing sufficient time for an orderly transition by existing dealer customers. The Company will continue operating and investing in its highly successful LoJack international business, which operates as a subscription-based business model and is well aligned with the core SaaS strategy. CalAmp believes today's action will lead to higher revenue growth rates and enhanced profitability.

Other Business and Recent Highlights

* Unveiled iOn(tm) Tag in Europe and iOn(tm) Vision initially for U.S. commercial fleets providing an actionable video intelligence solution for fleet safety, reducing insurance premiums, and mitigating liabilities. * Major North Carolina school district adopted CalAmp's full suite of school bus tracking, contact tracing and fleet management solutions. * Partnered with Coastr to revolutionize the car rental industry in the UK with contactless features and on-demand fleet insurance. * Partnered with Grove & Dean to protect vehicles across Europe and reduce insurance premiums in the U.K. * Launched predictive maintenance services with PluService in Italy to make public and private transport vehicle maintenance smarter and prevent mechanical downtime.

Summary Financial Information:

(In thousands except per share amounts)

Three Months Ended Nine Months Ended

November 30, November 30,

Description 2020 2019 2020 2019

Revenues:

Software &Subscription $ 34,396 $ 33,405 $ 96,121 $ 90,121Services

Telematics Systems

Telematics Products 44,071 51,895 130,342 152,027

LoJack U.S. SVR 9,545 11,297 25,301 36,755Products

$ 88,012 $ 96,597 $ 251,764 $ 278,903

Gross margin 40 % 38 % 38 % 39 %

Net loss $ (23,680) $ (7,415) $ (47,580) $ (23,477)

Net loss per diluted $ (0.68) $ (0.22) $ (1.39) $ (0.70)share

Non-GAAP measures:

Adjusted basis net $ 2,613 $ 4,998 $ 2,140 $ 13,923income

Adjusted basis netincome per diluted $ 0.07 $ 0.15 $ 0.06 $ 0.41share

Adjusted EBITDA $ 8,771 $ 10,905 $ 20,681 $ 29,121

Adjusted EBITDA 10 % 11 % 8 % 10 %margin

November 30, February 29,

Description 2020 2020

Cash and cash $ 91,692 $ 107,404equivalents

Working capital 107,842 116,391

Deferred revenue 60,217 62,156

Total debt (carrying 185,436 210,207value)

Fourth Quarter Fiscal 2021 Business Outlook

The Company is maintaining its policy of not providing quarterly guidance as visibility into customer demand and product shipments remains uncertain due to the ongoing effects of the COVID-19 pandemic.

Conference Call and Webcast

CalAmp is hosting a conference call for analysts and investors to discuss its third quarter fiscal year 2021 results at 5:30 a.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 90 days after the call. The conference call can also be accessed by dialing 833-714-0868 (+1-778-560-2625 for international callers) and using the Conference ID # 4587228. Following the call, an audio replay will also be available by calling 800-585-8367 or +1-416-621-4642 and entering the Conference ID# 4587228. The audio replay will be available through December 24, 2020.

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 and has 20 million products installed and over 1.3 million software and services subscribers worldwide. LoJack(r),Tracker(tm) and Here Comes The Bus(r) and Bus Guardian are CalAmp brands. 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; the effects of global outbreaks of pandemics or contagious diseases or fear of such outbreaks, such as the recent coronavirus (COVID-19) pandemic; disruptions in sales, operations, relationships with customers, suppliers, employees, and consumers given our decision to wind down LoJack U.S. operations, as well as unanticipated developments that may prevent or delay our wind down activities; our ability to successfully and timely accomplish our transformation to a SaaS company; our transition out of the automotive vehicle financing business; competitive pressures; pricing declines; demand for our MRM products; rates of growth in our target markets; prolonged disruptions of our contract manufacturers' facilities or other significant operations; force majeure or force-majeure-like events at our contract manufacturers' facilities; the ongoing diversification of our global supply chain; our dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our ability to 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; the impact on our business and reputation from information technology system failures, network disruptions or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data protection; 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. More information on these risks and other potential factors that could affect our financial results is included in our filings with the U.S. Securities and Exchange Commission ("SEC"), including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings, which you may obtain for free 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, which speak as of their respective dates 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 (loss), Adjusted basis net income (loss) 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, impairment loss and certain other adjustments as detailed in the accompanying non-GAAP reconciliation), and Adjusted EBITDA margin. Adjusted basis net income (loss) 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, income tax provision adjustments, impairment loss 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.

CalAmp, LoJack, TRACKER, Here Comes The Bus, Bus Guardian, iOn Vision and associated logos are among the trademarks of CalAmp and/or its affiliates in the United States, certain other countries and/or the EU. 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,

2020 2019 2020 2019

Revenues $ 88,012 $ 96,597 $ 251,764 $ 278,903

Cost of revenues 53,007 59,713 154,896 168,938

Gross profit 35,005 36,884 96,868 109,965

Operating expenses:

Research and development 6,783 7,742 20,096 22,552

Selling and marketing 14,647 14,683 41,026 45,198

General and 13,642 14,283 41,210 44,660administrative

Intangible asset 1,855 3,325 5,591 9,683amortization

Restructuring 92 848 2,551 3,120

Impairment loss 17,999 - 22,574 -

55,018 40,881 133,048 125,213

Operating loss (20,013) (3,997) (36,180) (15,248)

Non-operating income(expense):

Investment income 584 1,108 1,282 4,445

Interest expense (3,880) (4,987) (11,814) (15,998)

Loss on extinguishment - (2,408) - (2,408)of debt

Other income (expense) (52) 232 (43) 26

(3,348) (6,055) (10,575) (13,935)

Loss before income taxesand impairment loss in (23,361) (10,052) (46,755) (29,183)investment of affiliate

Income tax benefit (319) 2,637 (825) 6,236(provision)

Loss before impairmentloss in investment of (23,680) (7,415) (47,580) (22,947)affiliate

Impairment loss in - - - (530)investment of affiliate

Net loss $ (23,680) $ (7,415) $ (47,580) $ (23,477)

Loss per share:

Basic $ (0.68) $ (0.22) $ (1.39) $ (0.70)

Diluted $ (0.68) $ (0.22) $ (1.39) $ (0.70)

Shares used in computingloss per share:

Basic 34,599 33,822 34,292 33,589

Diluted 34,599 33,822 34,292 33,589

CALAMP CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

November 30, February 29,

2020 2020

Assets

Current assets:

Cash and cash equivalents $ 91,692 $ 107,404

Accounts receivable, net 67,852 72,273

Inventories 32,162 36,778

Prepaid expenses and other current assets 23,520 21,411

Total current assets 215,226 237,866

Property and equipment, net 44,576 55,878

Operating lease right-of-use assets 17,653 20,626

Deferred income tax assets 4,441 4,437

Goodwill 94,468 106,335

Other intangible assets, net 38,943 45,895

Other assets 26,516 24,768

$ 441,823 $ 495,805

Liabilities andStockholders' Equity

Current liabilities:

Current portion of long-term debt $ 4,790 $ 33,119

Accounts payable 36,834 28,450

Accrued payroll and employee benefits 8,641 9,049

Deferred revenue 36,003 34,704

Other current liabilities 21,116 16,153

Total current liabilities 107,384 121,475

Long-term debt, net of current portion 180,646 177,088

Operating lease liabilities 19,217 24,279

Other non-current liabilities 35,258 35,044

Stockholders' equity:

Common stock 350 343

Additional paid-in capital 229,326 220,482

Accumulated deficit (129,245) (81,531)

Accumulated other comprehensive loss (1,113) (1,375)

Total stockholders' equity 99,318 137,919

$ 441,823 $ 495,805

CALAMP CORP.

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(Amounts in thousands)

(Unaudited)

Nine Months Ended

November 30,

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (47,580) $ (23,477)

Depreciation 15,008 14,054

Intangible asset amortization expense 5,591 9,683

Stock-based compensation expense 9,499 9,378

Amortization of debt issue costs and discount 7,712 11,031

Impairment losses 22,574 1,210

Noncash operating lease cost 3,943 3,440

Revenue assigned to factors (4,864) (5,016)

Loss on extinguishment of debt - 2,408

Deferred tax assets, net 372 (5,701)

Other 397 1,342

Changes in operating assets and liabilities 11,691 (15,049)

NET CASH PROVIDED BY OPERATING ACTIVITIES 24,343 3,303

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities and sale of marketable 6,264 35,129 securities

Purchases of marketable securities (6,264) (19,543)

Capital expenditures (11,090) (17,637)

Acquisition, net of cash acquired - (60,634)

Other - 371

NET CASH USED IN INVESTING ACTIVITIES (11,090) (62,314)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Paycheck Protection Program Loan 10,000 -

Repayment of Paycheck Protection Program Loan (10,000) -

Proceeds from revolving credit facility, net of 19,944 - issuance cost

Repayment of 2020 Convertible Notes (27,599) -

Repurchase of 2020 Convertible Notes - (94,683)

Repayment of revolving credit facility (20,000) -

Taxes paid related to net share settlement of (1,557) (1,827) vested equity awards

Proceeds from exercise of stock options and 909 1,048 contributions to ESPP

NET CASH USED IN FINANCING ACTIVITIES (28,303) (95,462)

EFFECT OF EXCHANGE RATE CHANGES ON CASH (662) (393)

Net change in cash and cash equivalents (15,712) (154,866)

Cash and cash equivalents at beginning of period 107,404 256,500

Cash and cash equivalents at end of period $ 91,692 $ 101,634

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 (loss), Adjusted basis net income (loss) per diluted share, Adjusted EBITDA (Earnings Before Investment Income, Interest Expense, Taxes, Depreciation, Amortization and stock-based compensation, impairment loss 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 loss to Adjusted basis (non-GAAP) net income (loss) is as follows (in thousands except per share amounts):

Three Months Ended Nine Months Ended

November 30, November 30,

2020 2019 2020 2019

GAAP basis net loss $ (23,680) $ (7,415) $ (47,580) $ (23,477)

Intangible assets 1,855 3,325 5,591 9,683amortization expense

Stock-based compensation 3,030 3,652 8,624 9,378expense

Non-cash interest expense 2,493 3,435 7,712 11,041

GAAP basis income tax 319 (2,637) 825 (6,236)provision (benefit)

Acquisition andintegration related - 382 - 1,572expenses

Loss on extinguishment of - 2,408 - 2,408debt

Litigation andnon-recurring legal 205 957 1,168 5,541expenses

Impairment loss 17,999 - 22,574 -

Restructuring 92 848 2,551 3,120

Other 450 343 1,105 1,793

Adjusted basis income 2,763 5,298 2,570 14,823before income taxes

Income tax provision (150) (300) (430) (900)(non-GAAP basis) (a)

Adjusted basis net income $ 2,613 $ 4,998 $ 2,140 $ 13,923

Adjusted basis net income $ 0.07 $ 0.15 $ 0.06 $ 0.41per diluted share

Weighted average commonshares outstanding on a 34,873 34,047 34,490 33,859diluted basis

Other favorable(unfavorable) impacts toAdjusted basis net income(b)

Deferred revenue purchase $ (778) $ (1,974) $ (2,535) $ (7,172)accounting adjustment

Resolution of a product - - (1,400) -performance matter

Inventory excess and - - (596) -obsolescence

Total other favorable(unfavorable) impacts to $ (778) $ (1,974) $ (4,531) $ (7,172)Adjusted basis net income

The reconciliation of GAAP-basis net 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,

2020 2019 2020 2019

GAAP basis net loss $ (23,680) $ (7,415) $ (47,580) $ (23,477)

Investment income (584) (1,108) (1,282) (4,445)

Interest expense 3,880 4,987 11,814 15,998

Income tax provision 319 (2,637) 825 (6,236)(benefit)

Depreciation and 6,880 8,343 20,599 23,737amortization

Stock-based 3,030 3,652 8,624 9,378compensation

Loss onextinguishment of - 2,408 - 2,408debt

Acquisition andintegration related - 382 - 1,572expenses

Litigation andnon-recurring legal 205 957 1,168 5,541expenses

Impairment loss 17,999 - 22,574 -

Restructuring 92 848 2,551 3,120

Other 630 488 1,388 1,525

Adjusted EBITDA $ 8,771 $ 10,905 $ 20,681 $ 29,121

Other favorable(unfavorable) impactsto Adjusted EBITDA(b)

Deferred revenuepurchase accounting $ (778) $ (1,974) $ (2,535) $ (7,172)adjustment

Resolution of aproduct performance - - (1,400) -matter

Inventory excess and - - (596) -obsolescence

Total other favorable(unfavorable) impacts $ (778) $ (1,974) $ (4,531) $ (7,172)to Adjusted EBITDA

Revenue $ 88,012 $ 96,597 $ 251,764 $ 278,903

Adjusted EBITDA 10 % 11 % 8 % 10 %margin

The non-GAAP income tax provision represents cash taxes paid or payable for(a) the period after giving effect to the utilization of net operating losses and tax credit carryforwards.

Other favorable (unfavorable) impacts to Adjusted basis net income (loss) and Adjusted EBITDA represent financial impacts that cannot be included in these Non-GAAP measures, but management believes can provide insights into underlying operational earnings for the periods presented above. These(b) items include deferred revenue purchase accounting adjustment resulting from business acquisitions which reduces revenue and gross profit, resolution of a product performance matter with a customer and inventories related to the automotive vehicle financing business that are obsolete or in excess of demand forecast.

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SOURCE CalAmp