PR Newswire | Sep 24, 2020 04:05PM EDT

09/24 15:05 CDT

CalAmp Reports Fiscal 2021 Second Quarter Financial ResultsSaaS revenue of $33.7 million, up 20% sequentially and representing 40% of total revenueSecond quarter consolidated revenue increased 4% sequentially to $83.5 million IRVINE, Calif., Sept. 24, 2020

IRVINE, Calif., Sept. 24, 2020 /PRNewswire/ -- CalAmp (Nasdaq: CAMP), a global technology solutions pioneer transforming the mobile connected economy, today reported financial results for its second quarter ended August 31, 2020.

"Our second quarter results reflect strong sequential growth in our Software and Subscription Services revenue primarily due to increased installation activity across our geographies as automotive dealerships and school districts advanced plans for reopening, and further supported by solid demand for our K-12 fleet management and LoJack International services," said Jeff Gardner, CalAmp's president and chief executive officer. "Additionally, our largest customer, Caterpillar, had a strong quarter as we continue to support their 3G-to-4G LTE upgrade."

Second Quarter Fiscal Year 2021 Financial Overview

* Consolidated revenue was $83.5 million, up 4.1% sequentially and down 10.4% year-over-year due to a decline in Telematics Systems revenue largely attributable to the COVID-19 impact on MRM Telematics and LoJack U.S. SVR (Stolen Vehicle Recovery) product sales. * Software & Subscription Services revenue was $33.7 million, up 20.2% sequentially and 8.0% year-over-year and representing 40.3% of consolidated revenue. * Network & OEM products revenue increased to $17.2 million, due to strong sequential growth with its largest customer. * LoJack U.S. SVR products revenue was $9.1 million, up 37.0% sequentially, due to an increase in product installations as U.S. auto dealerships reopened from government-imposed pandemic shutdowns. * Gross margin was 36.9%, reflecting the decline in Telematics Systems revenue as well as a one-time charge for the resolution of a product performance matter. * GAAP net loss was $9.5 million, or a loss of $0.28 per share, with adjusted basis non-GAAP net loss of $1.0 million, or a loss of $0.03 per share. * Operating cash flow was $8.2 million, with adjusted EBITDA of $5.4 million and an adjusted EBITDA margin of 6.5%. * Ended the quarter with $107.1 million in cash and cash equivalents and approximately $262.6 million in outstanding debt, including $230 million of the 2.0% Convertible Senior Notes due in August 2025.

Business and Recent Highlights

* Received OCTANe's Best Consumer Innovation Award for Here Comes The Bus, as well as the 2020 IoT Evolution Product of the Year Award for CalAmp iOn Vision(tm) video intelligence solutions, and CalAmp iOn(tm) Suite was named to Equipment Today's 2020 Contractors' Top 50 New Products List. * Extended relationship with Caterpillar to accelerate migration of existing fleets to 4G LTE. * Announced an agreement with major Italian dealership, Maldarizzi Automotive, to install LoJack Connect on all Fiat Chrysler Automobiles (FCA), BMW and Mercedes-Benz vehicles sold by the dealership. * Appointed Amal Johnson as Chair of the Board and added new director, Kirsten Wolberg, who has extensive technology and operations experience in the software industry. * Released its highly-regarded Bus Guardian, a suite of digital solutions leveraging contact tracing and hygiene verification to help schools more safely and confidently return students to classrooms.

Summary Financial Information:

(In thousands except pershare amounts)

Three Months Ended Six Months Ended

August 31, August 31,

Description 2020 2019 2020 2019

Revenues:

Software & Subscription $ 33,696 $ 31,205 $ 61,725 $ 56,716Services

Telematics Systems

Telematics Products 40,732 48,934 86,271 100,132

LoJack U.S. SVR Products 9,109 13,097 15,756 25,458

$ 83,537 $ 93,236 $ 163,752 $ 182,306

Gross margin 37 % 40 % 38 % 40 %

Net loss $ (9,478) $ (7,369) $ (23,900) $ (16,062)

Net loss per diluted share $ (0.28) $ (0.22) $ (0.70) $ (0.48)

Non-GAAP measures:

Adjusted basis net income $ (1,025) $ 4,757 $ (473) $ 8,925(loss)

Adjusted basis net income $ (0.03) $ 0.14 $ (0.01) $ 0.26(loss) per diluted share

Adjusted EBITDA $ 5,403 $ 10,647 $ 11,910 $ 18,216

Adjusted EBITDA margin 6 % 11 % 7 % 10 %

August February 31, 29,

Description 2020 2020

Cash and cash equivalents $ 107,145 $ 107,404

Working capital 128,284 116,391

Deferred revenue 60,105 62,156

Total debt (carrying 204,466 210,207value)

Third 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 second quarter fiscal year 2021 results 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 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 # 5650228. 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# 5650228. The audio replay will be available through October 1, 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; 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; 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 Six Months Ended

August 31, August 31,

2020 2019 2020 2019

Revenues $ 83,537 $ 93,236 $ 163,752 $ 182,306

Cost of revenues 52,727 55,566 101,889 109,225

Gross profit 30,810 37,670 61,863 73,081

Operating expenses:

Research and development 6,989 7,924 13,313 14,810

Selling and marketing 13,493 15,868 26,379 30,515

General and administrative 13,899 12,893 27,568 30,377

Intangible asset 1,844 3,318 3,736 6,358amortization

Restructuring 551 2,272 2,459 2,272

Impairment loss 286 - 4,575 -

37,062 42,275 78,030 84,332

Operating loss (6,252) (4,605) (16,167) (11,251)

Non-operating income(expense):

Investment income 680 1,256 698 3,337

Interest expense (3,857) (5,555) (7,934) (11,011)

Other expense 217 193 9 (206)

(2,960) (4,106) (7,227) (7,880)

Loss before income taxesand impairment loss in (9,212) (8,711) (23,394) (19,131)investment of affiliate

Income tax benefit (266) 1,342 (506) 3,599(provision)

Loss before impairmentloss in investment of (9,478) (7,369) (23,900) (15,532)affiliate

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

Net loss $ (9,478) $ (7,369) $ (23,900) $ (16,062)

Loss per share:

Basic $ (0.28) $ (0.22) $ (0.70) $ (0.48)

Diluted $ (0.28) $ (0.22) $ (0.70) $ (0.48)

Shares used in computingloss per share:

Basic 34,256 33,568 34,140 33,475

Diluted 34,256 33,568 34,140 33,475

- more -

CALAMP CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

August 31, February 29,

2020 2020

Assets

Current assets:

Cash and cash equivalents $ 107,145 $ 107,404

Accounts receivable, net 68,387 72,273

Inventories 31,495 36,778

Prepaid expenses and other current assets 24,274 21,411

Total current assets 231,301 237,866

Property and equipment, net 53,640 55,878

Operating lease right-of-use assets 23,428 20,626

Deferred income tax assets 4,565 4,437

Goodwill 102,162 106,335

Other intangible assets, net 41,404 45,895

Other assets 25,032 24,768

$ 481,532 $ 495,805

Liabilities andStockholders' Equity

Current liabilities:

Current portion of long-term debt $ 5,184 $ 33,119

Accounts payable 31,214 28,450

Accrued payroll and employee benefits 10,599 9,049

Deferred revenue 35,001 34,704

Other current liabilities 21,019 16,153

Total current liabilities 103,017 121,475

Long-term debt, net of current portion 199,282 177,088

Operating lease liabilities 25,225 24,279

Other non-current liabilities 35,030 35,044

Stockholders' equity:

Common stock 350 343

Additional paid-in capital 226,368 220,482

Accumulated deficit (105,565) (81,531)

Accumulated other comprehensive loss (2,175) (1,375)

Total stockholders' equity 118,978 137,919

$ 481,532 $ 495,805

- more -

CALAMP CORP.

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(Amounts in thousands)

(Unaudited)

Six Months Ended

August 31,

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (23,900) $ (16,062)

Depreciation 9,983 9,036

Intangible asset amortization expense 3,736 6,358

Stock-based compensation expense 6,469 5,726

Amortization of debt issue costs and discount 5,219 7,606

Impairment losses 4,575 1,210

Noncash operating lease cost 2,588 3,100

Revenue assigned to factors (3,349) (3,109)

Deferred tax assets, net (105) (3,437)

Other 301 986

Changes in operating assets and liabilities 8,604 (11,794)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 14,121 (380)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities and sale of marketable 6,264 27,340 securities

Purchases of marketable securities (6,264) (17,617)

Capital expenditures (7,563) (10,720)

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

Other - (527)

NET CASH USED IN INVESTING ACTIVITIES (7,563) (62,158)

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 20,000 -

Repayment of 2020 Convertible Notes (27,599) -

Payments of issuance cost of the revolving credit (56) - facility

Taxes paid related to net share settlement of vested (1,485) (1,729) equity awards

Proceeds from exercise of stock options and 909 995 contributions to ESPP

NET CASH USED IN FINANCING ACTIVITIES (8,231) (734)

EFFECT OF EXCHANGE RATE CHANGE ON CASH 1,414 456

Net change in cash and cash equivalents (259) (62,816)

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

Cash and cash equivalents at end of period $ 107,145 $ 193,684

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 Six Months Ended

August 31, August 31,

2020 2019 2020 2019

GAAP basis net loss $ (9,478) $ (7,369) $ (23,900) $ (16,062)

Intangible assets 1,844 3,318 3,736 6,358amortization expense

Stock-based compensation 2,846 3,183 5,594 5,726expense

Non-cash interest expense 2,466 3,863 5,219 7,606

GAAP basis income tax 266 (1,342) 506 (3,599)provision (benefit)

Acquisition andintegration related - 46 - 1,190expenses

Litigation andnon-recurring legal 170 777 963 4,584expenses

Impairment loss 286 - 4,575 -

Restructuring 551 2,272 2,459 2,272

Other 174 459 655 1,450

Adjusted basis income (875) 5,207 (193) 9,525(loss) before income taxes

Income tax provision (150) (450) (280) (600)(non-GAAP basis) (a)

Adjusted basis net income $ (1,025) $ 4,757 $ (473) $ 8,925(loss)

Adjusted basis net income $ (0.03) $ 0.14 $ (0.01) $ 0.26(loss) per diluted share

Weighted average commonshares outstanding on a 34,256 33,799 34,140 33,766diluted basis

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

Deferred revenue purchase $ (816) $ (2,524) $ (1,757) $ (5,198)accounting adjustment

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

Inventory excess and - - (596) -obsolescence

Total other favorable(unfavorable) impacts to $ (2,216) $ (2,524) $ (3,753) $ (5,198)Adjusted basis net income(loss)

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 Six Months Ended

August 31, August 31,

2020 2019 2020 2019

GAAP basis net income $ (9,478) $ (7,369) $ (23,900) $ (16,062)(loss)

Investment income (680) (1,256) (698) (3,337)

Interest expense 3,857 5,555 7,934 11,011

Income tax provision 266 (1,342) 506 (3,599)(benefit)

Depreciation and 6,917 8,509 13,719 15,394amortization

Stock-based 2,846 3,183 5,594 5,726compensation

Acquisition andintegration related - 46 - 1,190expenses

Litigation andnon-recurring legal 170 777 963 4,584expenses

Impairment loss 286 - 4,575 -

Restructuring 551 2,272 2,459 2,272

Other 668 272 758 1,037

Adjusted EBITDA $ 5,403 $ 10,647 $ 11,910 $ 18,216

Other favorable(unfavorable) impactsto Adjusted EBITDA (b)

Deferred revenuepurchase accounting $ (816) $ (2,524) $ (1,757) $ (5,198)adjustment

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

Inventory excess and - - (596) -obsolescence

Total other favorable(unfavorable) impacts $ (2,216) $ (2,524) $ (3,753) $ (5,198)to Adjusted EBITDA

Revenue $ 83,537 $ 93,236 $ 163,752 $ 182,306

Adjusted EBITDA margin 6 % 11 % 7 % 10 %

(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.

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(b) insights into underlying operational earnings for the periods presented above. These 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