CalAmp Reports Third Quarter Fiscal Year 2022 Financial Results

Published on December 21, 2021

Software and Subscription Services revenue increases 7% over prior year to $37 million, representing 53% of total revenue
Customer demand remains strong with backlog still high despite continuing global supply chain challenges

IRVINE, Calif., Dec. 21, 2021 /PRNewswire/ -- CalAmp (Nasdaq: CAMP), a connected intelligence company helping businesses and people track, monitor and recover vital assets with real-time visibility and insights, today reported financial results for its third quarter of fiscal year 2022 ended November 30, 2021.

"As indicated in the business update announcement last month, the ongoing global component shortages have been more pronounced than expected, causing a significant reduction in our shipments during the quarter," said Jeff Gardner, CalAmp's president and CEO. "We are working closely with our suppliers to source the needed parts, qualify additional components and even redesign certain devices when possible. Despite this challenging situation, we are encouraged with the strong customer demand as evidenced by the consistent high level of customer backlog over the past few quarters as we continue our transformation to a SaaS enterprise."

Third Quarter Fiscal Year 2022 Financial Overview

Total revenue decreased 12% from the prior year quarter to $69 million.
Software and Subscription Services (S&SS) revenue was $37 million, which was up 7% from the prior year quarter and represented 53% of consolidated revenue.
Telematics Products revenue was down 14% sequentially to $32 million as supply chain shortages affected shipments despite continuing strong customer demand.
Sales to our largest customer were $14 million, up 3% sequentially.
Gross margin was 41% compared to 40% in the prior year quarter.
GAAP net loss from continuing operations was $11 million, or a loss of $0.30 per share.
Adjusted basis non-GAAP net loss was $3 million, or $0.08 per diluted share.
Adjusted EBITDA was $3 million, or 4% of revenue compared to Adjusted EBITDA of $9 million, or 11% of revenue in the prior year quarter.
Total core S&SS subscribers were 1 million, a 3% increase from the prior quarter, excluding the Automotive Vehicle Finance business.
Ended the quarter with $91 million in cash and cash equivalents.

Other Business and Recent Highlights

Announced that our subsidiary, LoJack® España, has partnered with Bipi, an innovative car subscription services company operating in Spain, Italy and France, to equip its multi-brand car fleet with LoJack España's connected car solutions to improve Bipi's customers' experiences while also allowing it to manage fleet operations more effectively.
Announced another partnership with FAIRWAYiQ to provide golf course operators with real-time visibility over gameplay and operations through its connected intelligence solutions at the edge.
CalAmp's subsidiary, Tracker Network (UK) Limited, launched CalAmp's iOn™ fleet and asset management software in the U.K. to enable commercial fleet operators to track driver behavior and vehicle usage.

Summary Financial Information From Continuing Operations: (In thousands except per share amounts)

	Three Months Ended						Nine Months Ended
	November 30,						November 30,
Description	2021			2020			2021			2020
Revenues:
Software & Subscription Services (S&SS)	$	36,602		$	34,052		$	113,079		$	95,265
Telematics Products		32,175			44,460			114,383			131,375
	$	68,777		$	78,512		$	227,462		$	226,640
Gross margin		41	%		40	%		41	%		39	%

Net loss	$	(10,542)		$	(3,738)		$	(21,967)		$	(17,936)
Net loss per diluted share	$	(0.30)		$	(0.11)		$	(0.62)		$	(0.52)
Non-GAAP measures:
Adjusted basis net income	$	(2,671)		$	3,326		$	3,178		$	5,705
Adjusted basis net income per diluted share	$	(0.08)		$	0.10		$	0.09		$	0.17
Adjusted EBITDA	$	2,991		$	8,863		$	19,677		$	22,202
Adjusted EBITDA margin		4	%		11	%		9	%		10	%

							November 30,			February 28,
Description							2021			2021
Cash and cash equivalents							$	91,114		$	94,624
Working capital								98,709			103,267
Deferred revenue								43,708			52,817
Total debt (carrying value)								190,596			186,471


							November 30,
							2021			2020
S&SS trailing twelve month ("TTM") recurring revenue							$	93,835		$	95,359
Less: Automotive vehicle finance and other								(8,338)			(10,145)
Core S&SS TTM recurring revenue							$	85,497		$	85,214

S&SS Supplemental Information:
S&SS remaining performance obligation							$	149,942		$	135,161
Less: Automotive vehicle finance and other								(3,532)			(10,869)
Core S&SS remaining performance obligation							$	146,410		$	124,292

Total S&SS subscribers								1,161			1,276
Less: Automotive vehicle finance								(147)			(344)
Core S&SS subscribers								1,014			932

Fourth Quarter Fiscal 2022 Business Outlook

The Company is maintaining its policy of not providing quarterly guidance. Visibility into product shipments still remains uncertain due to the global component supply shortages coupled with the timing of Chinese New Year in February.

Conference Call and Webcast

CalAmp is hosting a conference call for analysts and investors to discuss its third quarter fiscal year 2022 results at 2:00 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 #6375499. 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#6375499. The audio replay will be available through January 1, 2022.

About CalAmp

CalAmp (Nasdaq: CAMP) is a connected intelligence company that helps people and businesses work smarter. We partner with transportation and logistics, industrial equipment, government and automotive industries to deliver insights that enable businesses to make the right decisions. Our applications, cloud platform and smart devices allow them to track, monitor and recover their vital assets with real-time visibility that reduces costs, maximizes productivity and improves safety. Headquartered in Irvine, California, CalAmp has been publicly traded since 1983. We have one million core software and services subscribers and over 20 million products installed worldwide. 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; global component shortages due to supply chain constraints caused by the COVID-19 pandemic; disruptions in sales, operations, relationships with customers, suppliers, employees, and consumers given our sale of LoJack North America operations; our ability to successfully and timely accomplish our transformation to a SaaS solutions provider; our transition out of the automotive vehicle financing business; competitive pressures; pricing declines; demand for our telematics 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 including component shortages; 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 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, cyber-attacks, 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, 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, impairment losses 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 asset 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 losses 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, CrashBoxx and associated logos are among the trademarks of CalAmp and/or its affiliates in the United States, certain other countries and/or the EU. Spireon acquired the LoJack® North America Stolen Vehicle Recovery (SVR) business from CalAmp and holds an exclusive license to the LoJack mark in the United States and Canada. 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,
		2021			2020			2021			2020

Revenues	$		68,777	$		78,512	$		227,462			226,640
Cost of revenues			40,757			47,274			133,625			138,835
Gross profit			28,020			31,238			93,837			87,805
Operating expenses:
Research and development			7,179			6,416			21,848			18,925
Selling and marketing			13,239			11,830			37,748			33,743
General and administrative			12,775			11,962			38,659			35,903
Intangible asset amortization			1,386			1,201			4,033			3,567
Restructuring			-			(100)			336			1,917
Impairment losses			-			-			-			286
			34,579			31,309			102,624			94,341
Operating loss			(6,559)			(71)			(8,787)			(6,536)
Non-operating income (expense):
Investment income			150			584			1,218			1,282
Interest expense			(3,830)			(3,880)			(11,483)			(11,814)
Other expense, net			(98)			(52)			(2,084)			(43)
			(3,778)			(3,348)			(12,349)			(10,575)
Loss from continuing operations before income taxes			(10,337)			(3,419)			(21,136)			(17,111)
Income tax provision from continuing operations			(205)			(319)			(831)			(825)
Net loss from continuing operations			(10,542)			(3,738)			(21,967)			(17,936)
Net income (loss) from discontinued operations, net of tax			(895)			(19,942)			3,157			(29,644)
Net loss	$		(11,437)	$		(23,680)	$		(18,810)	$		(47,580)
Loss per share - continuing operations:
Basic	$		(0.30)	$		(0.11)	$		(0.62)	$		(0.52)
Diluted	$		(0.30)	$		(0.11)	$		(0.62)	$		(0.52)
Income (loss) per share - discontinued operations:
Basic	$		(0.03)	$		(0.57)	$		0.09	$		(0.87)
Diluted	$		(0.03)	$		(0.57)	$		0.09	$		(0.87)
Shares used in computing income (loss) per share:
Basic			35,475			34,599			35,156			34,292
Diluted			35,475			34,599			35,156			34,292

CALAMP CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) (Unaudited)

	November 30,		February 28,
	2021		2021
Assets

Current assets:
Cash and cash equivalents	$	91,114	$	94,624
Accounts receivable, net		58,589		63,325
Inventories		20,180		23,663
Prepaid expenses and other current assets		23,705		24,804
Current assets of discontinued operations		-		7,872
Total current assets		193,588		214,288

Property and equipment, net		37,962		41,081
Operating lease right-of-use assets		12,099		14,273
Deferred income tax assets		4,230		4,889
Goodwill		94,001		94,617
Other intangible assets, net		33,014		37,488
Other assets		27,397		27,169
Total assets	$	402,291	$	433,805

Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term debt	$	2,917	$	4,317
Accounts payable		30,780		35,767
Accrued payroll and employee benefits		10,463		12,761
Deferred revenue		29,217		32,924
Other current liabilities		21,502		17,380
Current liabilities of discontinued operations		-		4,096
Total current liabilities		94,879		107,245

Long-term debt, net of current portion		187,679		182,154
Operating lease liabilities		13,751		17,061
Other non-current liabilities		25,801		30,487
Non-current liabilities of discontinued operations		-		1,773
Total liabilities		322,110		338,720
Stockholders' equity:
Common stock		359		352
Additional paid-in capital		239,043		233,692
Accumulated deficit		(156,784)		(137,974)
Accumulated other comprehensive loss		(2,437)		(985)
Total stockholders' equity		80,181		95,085
Total liabilities and stockholders' equity	$	402,291	$	433,805

CALAMP CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)

		Nine Months Ended
		November 30,
			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss	$		(18,810)	$		(47,580)
	Less: Net income (loss) from discontinued operations, net of tax			3,157			(29,644)
	Net loss from continuing operations			(21,967)			(17,936)

	Depreciation expense			13,053			12,863
	Intangible asset amortization			4,033			3,567
	Stock-based compensation			8,561			8,366
	Amortization of debt issuance costs and discount			7,811			7,712
	Noncash operating lease cost			2,680			1,725
	Revenue assigned to factors			(3,665)			(4,864)
	Deferred tax assets, net			389			372
	Other			209			682
	Changes in operating assets and liabilities of continuing operations			(7,396)			16,033
	Net cash provided by operating activities - continuing operations			3,708			28,520
	Net cash used in operating activities - discontinued operations			(395)			(4,177)
NET CASH PROVIDED BY OPERATING ACTIVITIES				3,313			24,343

CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from maturities and sale of marketable securities			-			6,264
	Purchases of marketable securities			-			(6,264)
	Capital expenditures			(10,342)			(8,973)
	Net cash used in investing activities - continuing operations			(10,342)			(8,973)
	Net cash provided by (used in) investing activities - discontinued operations			5,721			(2,117)
NET CASH USED IN INVESTING ACTIVITIES				(4,621)			(11,090)

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 issuance costs			-			19,944
	Repayment of 2020 Convertible Notes			-			(27,599)
	Repayment of revolving credit facility			-			(20,000)
	Taxes paid related to net share settlement of vested equity awards			(4,128)			(1,557)
	Proceeds from exercise of stock options and contributions to employee stock purchase plan			900			909
NET CASH USED IN FINANCING ACTIVITIES				(3,228)			(28,303)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS				1,026			(662)
Net change in cash and cash equivalents				(3,510)			(15,712)
Cash and cash equivalents at beginning of period				94,624			107,404
Cash and cash equivalents at end of period		$		91,114	$		91,692

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.

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,
	2021		2020		2021		2020

GAAP basis net loss	$	(11,437)	$	(23,680)	$	(18,810)	$	(47,580)

Net (income) loss from discontinued operations, net of tax		895		19,942		(3,157)		29,644
Intangible assets amortization		1,386		1,201		4,033		3,567
Stock-based compensation		3,152		2,646		8,561		7,491
Non-cash interest expense		2,620		2,493		7,811		7,712
GAAP basis income tax provision		205		319		831		825
Litigation and non-recurring legal expenses		213		205		1,332		1,168
Restructuring		-		(100)		336		1,917
Costs incurred in transition of LoJack North America business to acquiror (b)		69		-		1,784		-
Other		421		450		1,047		1,391
Adjusted basis income (loss) before income taxes		(2,476)		3,476		3,768		6,135
Income tax provision (non-GAAP basis) (a)		(195)		(150)		(590)		(430)
Adjusted basis net income (loss)	$	(2,671)	$	3,326	$	3,178	$	5,705

Adjusted basis net income (loss) per diluted share	$	(0.08)	$	0.10	$	0.09	$	0.17

Weighted average common shares outstanding on a diluted basis		35,475		34,873		36,054		34,490

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,
	2021			2020			2021			2020

GAAP basis net loss	$	(11,437)		$	(23,680)		$	(18,810)		$	(47,580)

Net (income) loss from discontinued operations, net of tax		895			19,942			(3,157)			29,644
Investment income		(150)			(584)			(1,218)			(1,282)
Interest expense		3,830			3,880			11,483			11,814
Income tax provision		205			319			831			825
Depreciation and amortization		5,967			5,568			17,086			16,430
Stock-based compensation		3,152			2,646			8,561			7,491
Litigation and non-recurring legal expenses		213			205			1,332			1,168
Restructuring		-			(100)			336			1,917
Costs incurred in transition of LoJack North America business to acquiror (b)		69			-			1,784			-
Other		247			667			1,449			1,775
Adjusted EBITDA	$	2,991		$	8,863		$	19,677		$	22,202

Other favorable (unfavorable) impacts to Adjusted basis net income and Adjusted EBITDA (c)
Deferred revenue purchase accounting adjustment	$	(235)		$	(778)		$	(1,036)		$	(2,535)
Resolution of a product performance matter		-			-			-			(1,400)
Inventory excess and obsolescence		-			-			-			(596)
Total other favorable (unfavorable) impacts	$	(235)		$	(778)		$	(1,036)		$	(4,531)

Revenues	$	68,777		$	78,512		$	227,462		$	226,640

Adjusted EBITDA margin		4	%		11	%		9	%		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.
(b)	Costs incurred in transition of business to acquiror are attributable to the wind-down and transfer of the LoJack North America business to Spireon.
(c)	Other favorable (unfavorable) impacts to Adjusted basis net income 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 items include deferred revenue purchase accounting adjustments 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 finance business that are obsolete or in excess of demand forecast.

SOURCE CalAmp