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 CalAmp Reports Fiscal 2018 Third Quarter Financial Results
   Thursday, December 21, 2017 4:05:00 PM ET

CalAmp (CAMP ), a telematics pioneer leading transformation in a global connected economy, today reported its financial results for the third quarter ended November 30, 2017.

"We achieved record consolidated revenue and adjusted EBITDA in the quarter, while continuing to make steady progress on our strategic initiatives," said Michael Burdiek, President and Chief Executive Officer. "We expanded our product portfolio and are uniquely positioned in the Connected Vehicle and Industrial Internet of Things market. Our Telematics Systems business sustained its recent strength, building upon our base of blue-chip customers, including Caterpillar. Our software and subscription opportunity pipeline strengthened as we broadened our technology portfolio to expand into highly attractive verticals."

Business and Q3 2018 Financial Highlights

-- Consolidated revenue of $93.7 million, up 12% year over year, and at the high end of our guidance range.

-- International revenue reached a quarterly record of $26.2 million, representing 28% of consolidated revenue.

-- GAAP net income was $0.33 per diluted share while non-GAAP net income was $0.31 per diluted share.

-- Adjusted EBITDA was $13.8 million, a new record for the company, representing 15% of revenue.

-- Our MRM Telematics product revenue grew 24% year over year and was a key growth driver for the Telematics Systems business.

-- Caterpillar revenue grew 24% sequentially to $13.2 million, a new quarterly record.

-- We commenced services on an end-to-end SaaS fleet management solution to a large state government agency that is expected to contribute over 5,000 new subscribers in the next several quarters.

-- We expanded our channel partners and global sales distribution by announcing the launch of the CalAmp V-Series electronic logging device (ELD) bundle solution available through SYNNEX.

-- LoJack Italia announced its LoJack Connect, a SaaS fleet management solution targeting car rental agencies and insurance providers throughout Europe, leveraging CrashBoxx(TM), the CalAmp Telematics Cloud and device portfolio.

-- We received $13.3 million of net proceeds in November 2017 from a legal settlement with a former LoJack battery supplier, contributing to strong operating cash flow of $58.7 million for the nine-month period ended November 30, 2017. We expect to receive approximately $18 million of additional net proceeds over the next three quarters thereby further contributing to our strong free cash flows.

Fiscal 2018 Third Quarter Financial Highlights
Quarterly Financial Information for the three months ended:
(In thousands except per share amounts)
                                                  November 30,
Description                                       2017                                    2016
Revenues:
Telematics Systems                                $    77,775                             $    67,463
Software & Subscription Services                  15,894                                  15,887
                                                  $    93,669                             $    83,350
Gross margin                                      41%                                     42%
Net income (loss)                                 $    11,806                             $    (1,527)
Net income (loss) per diluted share               $        0.33                           $      (0.04)
Non-GAAP measures:
Adjusted basis net income                         $    11,241                             $      7,561
Adjusted basis net income per diluted share       $        0.31                           $        0.21
Adjusted EBITDA                                   $    13,838                             $      9,955
Adjusted EBITDA margin                            15%                                     12%
At November 30, 2017, we had total cash and marketable securities of $151.2 million and total debt outstanding of $152.4 million, which is the carrying amount of our 1.625% convertible notes in the face amount of $172.5 million.
Fiscal 2018 Fourth Quarter Business Outlook
(In thousands except per share amounts)
                                                  Range
Description                                       Low                                     High
GAAP financial information:
Revenues                                          $    91,000                             $    96,000
Net income per diluted share                      $        0.26                           $        0.32
Non-GAAP financial information:
Adjusted EBITDA                                   $    12,000                             $    15,000
Adjusted basis net income per diluted share       $        0.27                           $        0.33

Fourth quarter GAAP-basis net income per diluted share above includes approximately $13 million associated with the estimated gain from the expected receipt of the third installment of the legal settlement with a former LoJack battery supplier. This expected fourth quarter gain is excluded from Adjusted basis (Non-GAAP) net income per diluted share above.

Conference Call and Webcast

We are hosting a conference call for analysts and investors to discuss our fiscal 2018 third quarter results and outlook for our fourth 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# 6197618. 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# 6197618. The audio replay will be available through January 4, 2018.

About CalAmp

CalAmp (CAMP ) is a telematics pioneer leading transformation in a global connected economy. We help reinvent businesses 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 critical data from mobile and fixed assets for enterprises and consumers. We call this The New How, powering autonomous IoT interaction, facilitating efficient decision making, optimizing resource utilization, and improving road safety. We are headquartered in Irvine, California and have 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 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 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 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 margin; our ability to maintain tax concessions in certain jurisdictions; 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. Our filings with the U.S. Securities and Exchange Commission ("SEC"), which you may obtain for free at the SEC’s website at http://www.sec.gov, discuss some of the important risk factors that may affect our business, results of operations, and financial condition. We undertake no intent or obligation to publicly update or revise any 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, or superior to, 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, gain from legal settlement 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 assets 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 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 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 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 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 CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
                                    Three Months Ended          Nine Months Ended
                                    November 30,                November 30,
                                    2017          2016          2017          2016
Revenues                            $    93,669   $    83,350   $    271,517  $    264,976
Cost of revenues                         55,482        48,233        159,049       157,411
Gross profit                             38,187        35,117        112,468       107,565
Operating expenses:
Research and development                 6,296         5,297         18,853        17,273
Selling and marketing                    12,981        12,818        38,167        36,809
General and administrative               10,993        11,352        38,159        38,619
Intangible asset amortization            3,710         3,857         11,278        11,203
                                         33,980        33,324        106,457       103,904
Operating income                         4,207         1,793         6,011         3,661
Non-operating income (expense):
Investment income                        619           201           1,348         1,109
Interest expense                         (2,573)       (2,479)       (7,658)       (7,377)
Gain on legal settlement                 13,301        -             28,333        -
Other income (expense)                   12            (587)         442           (174)
                                         11,359        (2,865)       22,465        (6,442)
Income (loss) before income taxes
and equity in net loss of affiliate      15,566        (1,072)       28,476        (2,781)
Income tax benefit (provision)           (3,351)       (135)         (5,970)       120
Income (loss) before equity in net
loss of affiliate                        12,215        (1,207)       22,506        (2,661)
Equity in net loss of affiliate          (409)         (320)         (1,122)       (1,004)
Net income (loss)                   $    11,806   $    (1,527)  $    21,384   $    (3,665)
Earnings (loss) per share:
Basic                               $    0.33     $    (0.04)   $    0.61     $    (0.10)
Diluted                             $    0.33     $    (0.04)   $    0.59     $    (0.10)
Shares used in computing earnings
(loss) per share:
Basic                                    35,347        35,731        35,206        36,196
Diluted                                  36,247        35,731        36,064        36,196
CALAMP CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
                                             November 30,     February 28,
                                             2017             2017
Assets
Current assets:
Cash and cash equivalents                    $      138,095   $      93,706
Short-term marketable securities                    13,144           6,722
Accounts receivable, net                            70,190           67,403
Inventories                                         39,115           29,279
Prepaid expenses and other current assets           11,433           9,595
Total current assets                                271,977          206,705
Property, equipment and improvements, net           21,217           21,162
Deferred income tax assets                          35,923           27,504
Goodwill                                            72,980           72,980
Other intangible assets, net                        56,098           67,223
Other assets                                        17,203           12,565
                                             $      475,398   $      408,139
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable                             $      42,399    $      30,266
Accrued payroll and employee benefits               8,831            7,955
Deferred revenue                                    15,843           14,662
Other current liabilities                           31,398           24,958
Total current liabilities                           98,471           77,841
1.625% convertible senior unsecured notes           152,378          146,827
Other non-current liabilities                       23,471           20,229
Stockholders’ equity:
Common stock                                        356              353
Additional paid-in capital                          215,541          211,187
Accumulated deficit                                 (14,692)         (47,757)
Accumulated other comprehensive loss                (127)            (541)
Total stockholders’ equity                          201,078          163,242
                                             $      475,398   $      408,139
CALAMP CORP.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Amounts in thousands)
(Unaudited)
                                                                    Nine Months Ended
                                                                    November 30,
                                                                        2017          2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                   $   21,384    $   (3,665)
Depreciation expense                                                    5,953         6,034
Intangible assets amortization expense                                  11,278        11,203
Stock-based compensation expense                                        6,664         5,669
Tax benefits on vested and exercised equity awards                      328           -
Amortization of convertible debt issue costs and discount               5,551         5,221
Unrealized foreign currency transaction gains                           (404)         -
Deferred tax assets, net                                                2,873         (511)
Equity in net loss of affiliate                                         1,122         1,004
Impairment of internal use software                                     -             1,364
Other                                                                   59            (12)
Changes in assets and liabilities                                       3,923         (6,512)
NET CASH PROVIDED BY OPERATING ACTIVITIES                               58,731        19,795
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities                       11,273        88,742
Purchases of marketable securities                                      (17,209)      (25,699)
Capital expenditures                                                    (5,970)       (5,818)
Acquisition of LoJack, net of cash acquired                             -             (116,982)
Advances to affiliate                                                   (1,312)       (1,401)
Other                                                                   (152)         (51)
NET CASH USED IN INVESTING ACTIVITIES                                   (13,370)      (61,209)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock                                             -             (21,923)
Taxes paid related to net share settlement of vested equity awards      (2,452)       (1,614)
Proceeds from exercise of stock options                                 145           834
NET CASH USED IN FINANCING ACTIVITIES                                   (2,307)       (22,703)
EFFECT OF EXCHANGE RATE CHANGE ON CASH                                  1,335         (124)
Net change in cash and cash equivalents                                 44,389        (64,241)
Cash and cash equivalents at beginning of period                        93,706        139,388
Cash and cash equivalents at end of period                          $   138,095   $   75,147

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 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 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 Investment Income, Interest Expense, Taxes, Depreciation, Amortization and Stock-Based Compensation, gain on legal settlement 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 core business operations between its 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                                            Nine Months Ended
                                                                 November 30,                                                  November 30,
                                                                 2017                           2016                           2017                           2016
GAAP basis net income (loss)                                     $              11,806          $              (1,527)         $              21,384          $              (3,665)
Intangible assets amortization expense                                          3,710                          3,857                          11,278                         11,203
Stock-based compensation expense                                                2,620                          2,064                          6,664                          5,669
Non-cash interest expense from amortization of debt discount                    1,661                          1,562                          4,924                          4,631
GAAP basis income tax provision (benefit)                                       3,351                          135                            5,970                          (120)
Equity in net loss of affiliate                                                 409                            320                            1,122                          1,004
Acquisition and integration expenses                                            -                              630                            -                              4,169
Non-cash cost of sales and depreciation on markup of
                               LoJack inventory and fixed assets                159                            186                            514                            4,867
Gain on legal settlement                                                        (13,301)                       -                              (28,333)                       -
Litigation provision                                                            324                            -                              6,810                          -
Legal expense for LoJack battery performance issue                              652                            196                            1,579                          1,656
Adjusted basis income before income taxes                                       11,391                         7,423                          31,912                         29,414
Income tax provision (non-GAAP basis) (a)                                       (150)                          138                            (700)                          (709)
Adjusted basis net income                                        $              11,241          $              7,561           $              31,212          $              28,705
Adjusted basis net income per diluted share                      $              0.31            $              0.21            $              0.87            $              0.78
Weighted average common shares outstanding on diluted basis                     36,247                         36,087                         36,064                         36,651
(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         Nine Months Ended
                                                   November 30,               November 30,
                                                   2017          2016         2017          2016
GAAP basis net income (loss)                       $   11,806    $   (1,527)  $   21,384    $   (3,665)
Investment income                                      (619)         (201)        (1,348)       (1,109)
Interest expense                                       2,573         2,479        7,658         7,377
Income tax provision (benefits)                        3,351         135          5,970         (120)
Depreciation                                           1,970         2,002        5,953         6,034
Amortization of intangible assets                      3,710         3,857        11,278        11,203
Stock-based compensation                               2,620         2,064        6,664         5,669
Equity in net loss of affiliate                        409           320          1,122         1,004
Acquisition and integration expenses                   -             630          -             4,169
Non-cash COGS from inventory fair value write-up       -             -            -             4,319
Legal expense for LoJack battery performance issue     652           196          1,579         1,656
Litigation provision                                   324           -            6,810         -
Gain on legal settlement                               (13,301)      -            (28,333)      -
Other                                                  343           -            583           -
Adjusted EBITDA                                    $   13,838    $   9,955    $   39,320    $   36,537
Revenue                                            $   93,669    $   83,350   $   271,517   $   264,976
Adjusted EBITDA margin                                 15%           12%          14%           14%

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