SOURCE: CalAmp Corp.

CalAmp Corp.

December 22, 2015 16:01 ET

CalAmp Reports Record Fiscal 2016 Third Quarter Financial Results

OXNARD, CA--(Marketwired - Dec 22, 2015) - CalAmp (NASDAQ: CAMP), a leading provider of wireless products, services and solutions, today reported results for its third quarter ended November 30, 2015. Highlights include:

  • Consolidated revenue up 18% year-over-year to a record $74.7 million
  • Wireless Datacom revenue up 15% year-over-year to a record $62.8 million
  • Adjusted EBITDA up 29% year-over-year to a record $12.8 million
  • Adjusted Basis (non-GAAP) net income up 24% with diluted non-GAAP EPS of $0.31
  • Operating cash flow of $9.1 million compared to $5.4 million in the third quarter last year
  • Total cash and marketable securities balance at November 30, 2015 of $223 million

Commenting on the third quarter fiscal 2016 results, Michael Burdiek, CalAmp's President and Chief Executive Officer, said, "Broad-based customer demand drove excellent third quarter results, with consolidated revenue, Wireless Datacom segment revenue and Adjusted EBITDA each at all-time record levels for a single quarter. In addition, focused execution helped generate cash flow from operating activities of $9.1 million in the quarter and $37.9 million on a year-to-date basis, while third quarter non-GAAP EPS of $0.31 per share exceeded the upper end of our original guidance range. During the quarter we experienced strong growth in shipments to our key customer in the heavy equipment industry, coupled with solid demand for our Mobile Resource Management (MRM) and Wireless Network products. Our Satellite segment revenue at $11.8 million was somewhat better than expected and added meaningfully to our bottom line profitability and operating cash flow. Overall, we are extremely pleased with our third quarter performance and expect sustained momentum through the balance of the fiscal year." 

Mr. Burdiek continued, "Subsequent to the end of the quarter, we announced an offer to acquire all of the outstanding shares of LoJack Corporation, a provider of vehicle theft recovery systems, for $5.50 per share in cash, in a transaction valued at approximately $113 million. We believe the combination of LoJack's world-renowned brand and strong auto dealer relationships, coupled with CalAmp's leading portfolio of wireless connectivity devices, software, services and applications would create a market leader well-positioned to drive the broad adoption of vehicle telematics technologies and applications worldwide. We remain hopeful that we can execute a definitive agreement in the near term."

Fiscal 2016 Third Quarter Results
Total revenue for the fiscal 2016 third quarter was a record $74.7 million compared to $63.2 million for the third quarter of fiscal 2015. Wireless Datacom revenue increased to $62.8 million from $54.6 million in the same period last year, while Satellite revenue was $11.8 million in the third quarter compared to $8.6 million in the comparable quarter last year.

Consolidated gross profit for the fiscal 2016 third quarter was $26.6 million, an increase of $4.5 million over the same quarter last year, attributable to both higher Wireless Datacom and Satellite revenues. Consolidated gross margin was 35.6% in the fiscal 2016 third quarter, compared to 35.0% in the third quarter last year.

GAAP net income for the fiscal 2016 third quarter was $3.9 million, or $0.11 per diluted share, which was flat in comparison to the third quarter of last year. Although the Company's GAAP-basis effective tax rate of 38.3% in the latest quarter approximates the combined US federal and state statutory tax rate, the Company's pretax income is still largely sheltered from taxation by net operating loss and research and development tax credit carryforwards, and is expected to remain so for the next several years.

Non-GAAP net income for the fiscal 2016 third quarter was $11.4 million, or $0.31 per diluted share, compared to non-GAAP earnings of $9.2 million, or $0.25 per diluted share, for the third quarter last year. Non-GAAP net income excludes the impact of intangibles amortization expense, stock-based compensation, non-cash interest expense in the form of debt discount amortization and the non-operational equity in net loss of affiliate, and includes an income tax provision for cash taxes paid or payable for the period. A reconciliation of GAAP-basis pretax income to non-GAAP net income and earnings per diluted share is provided in the table at the end of this press release.

Liquidity
As of November 30, 2015, the Company had total cash and marketable securities of $223 million and total debt outstanding of $138 million. Net cash provided by operating activities was $9.1 million during the third quarter and $37.9 million for the first nine months of fiscal 2016, up from $21.5 million for the first nine months of fiscal 2015. The unused borrowing capacity on CalAmp's bank revolver at quarter-end was $15 million.

Business Outlook
Commenting on the Company's business outlook, Mr. Burdiek said, "Looking at our fiscal 2016 fourth quarter, we expect to achieve consolidated revenue in the range of $73 to $78 million. We expect our Satellite segment revenue to be down slightly on a sequential quarter basis, with our Wireless Datacom segment revenue up sequentially in the fourth quarter and solidly higher on a year-over-year basis. At the bottom line, we expect fourth quarter GAAP-basis net income in the range of $0.09 to $0.13 per diluted share and non-GAAP net income in the range of $0.28 to $0.32 per diluted share. We are pleased with our recent performance and anticipate that our continued focused execution and investments in key strategic initiatives will help drive profitable growth into fiscal 2017 and beyond."

Conference Call and Webcast
A conference call and simultaneous webcast to discuss the fiscal 2016 third quarter financial results and business outlook will be held today at 4:30 p.m. Eastern / 1:30 p.m. Pacific. CalAmp's President and CEO Michael Burdiek and CFO Rick Vitelle will host the conference call. Participants can listen in via webcast by visiting the Investor Relations section of CalAmp's 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 877-407-0784 (+1-201-689-8560 for international callers) and using the Conference ID# 13625103. Following the call, an audio replay will also be available by calling 877-870-5176 or +1-858-384-5517 and entering the Conference ID# 13625103. The audio replay will be available through December 29, 2015.

About CalAmp
CalAmp (NASDAQ: CAMP) is a proven leader in providing wireless communications solutions to a broad array of vertical market applications and customers. CalAmp's extensive portfolio of intelligent communications devices, robust and scalable cloud service platform, and targeted software applications streamline otherwise complex Machine-to-Machine (M2M) deployments. These solutions enable customers to optimize their operations by collecting, monitoring and efficiently reporting business critical data and desired intelligence from high-value mobile and remote assets. For more information, please visit www.calamp.com.

Forward-Looking Statements
Statements in this press release that are not historical in nature are forward-looking statements that, within the meaning of the federal securities laws including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, involve known and unknown risks and uncertainties. Words such as "may", "will", "expect", "intend", "plan", "believe", "seek", "could", "estimate", "judgment", "targeting", "should", "anticipate", "goal" and variations of these words and similar expressions, are intended to identify forward-looking statements. The forward-looking statements in this press release address a variety of subjects, including the outlook on our fiscal 2016 fourth quarter and fiscal 2017 growth prospects, and the potential market leadership resulting from the Company's proposed business combination with LoJack Corporation and the anticipated broad global adoption of vehicle telematics technologies and applications. Readers are cautioned that actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including global economic conditions and uncertainties in the geopolitical environment, product demand, competitive pressures and pricing declines in our Wireless Datacom and Satellite segments, fluctuations in product demand from a key OEM customer in the heavy equipment industry, the timing and acceptance of customer approvals of new product designs, intellectual property infringement claims, interruption or failure of our Internet-based systems used to wirelessly configure and communicate with the tracking and monitoring devices that we sell, changes in wireless transmission standards and technologies including 3G and 4G standards, dependence on third-party manufacturers and component suppliers in foreign countries, the risk that if acquired, LoJack's business will not be successfully integrated with CalAmp's business or complement our products, services, and applications, the incurrence of higher than anticipated costs in connection with this proposed business acquisition with no assurance of success, and other risks or uncertainties that are described in in Part I, Item 1A of the our Annual Report on Form 10-K for fiscal 2015 as filed on April 21, 2015 with the Securities and Exchange Commission. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurances that our expectations will be attained. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                                 
CAL AMP CORP.  
CONSOLIDATED INCOME STATEMENTS  
(Unaudited, in thousands except per share amounts)  
                                 
    Three Months Ended     Nine Months Ended  
    November 30,     November 30,  
      2015       2014       2015       2014  
                                 
Revenues   $ 74,675     $ 63,225     $ 209,912     $ 181,416  
                                 
Cost of revenues     48,101       41,121       134,509       118,597  
                                 
Gross profit     26,574       22,104       75,403       62,819  
                                 
Operating expenses:                                
  Research and development     5,121       4,852       14,681       14,986  
  Selling     5,975       5,162       17,320       15,260  
  General and administrative     5,202       4,000       14,885       11,529  
  Intangible asset amortization     1,663       1,635       4,962       4,952  
      17,961       15,649       51,848       46,727  
                                 
Operating income     8,613       6,455       23,555       16,092  
                                 
Non-operating income (expense):                                
  Investment income     438       37       423       128  
  Interest expense     (2,252 )     (49 )     (5,180 )     (236 )
  Other income (expense)     6       (22 )     (23 )     (17 )
      (1,808 )     (34 )     (4,780 )     (125 )
                                 
Income before income taxes and equity in net loss of affiliate     6,805       6,421       18,775       15,967  
                                 
Income tax provision     (2,603 )     (2,400 )     (7,015 )     (5,975 )
                                 
Income before equity in net loss of affiliate     4,202       4,021       11,760       9,992  
                                 
Equity in net loss of affiliate     (326 )     -       (326 )     -  
                                 
Net income   $ 3,876     $ 4,021     $ 11,434     $ 9,992  
                                 
Earnings per share:                                
  Basic   $ 0.11     $ 0.11     $ 0.32     $ 0.28  
  Diluted   $ 0.11     $ 0.11     $ 0.31     $ 0.27  
                                 
Shares used in computing earnings per share:                                
  Basic     36,319       35,901       36,138       35,735  
  Diluted     36,803       36,526       36,728       36,508  
                                 
BUSINESS SEGMENT INFORMATION  
(Unaudited, in thousands)  
                                 
    Three Months Ended     Nine Months Ended  
    November 30,     November 30,  
      2015       2014       2015       2014  
Revenues                                
  Wireless DataCom   $ 62,842     $ 54,580     $ 182,487     $ 152,631  
  Satellite     11,833       8,645       27,425       28,785  
    Total revenues   $ 74,675     $ 63,225     $ 209,912     $ 181,416  
                                   
Gross profit                                
  Wireless DataCom   $ 23,416     $ 20,078     $ 68,102     $ 55,440  
  Satellite     3,158       2,026       7,301       7,379  
    Total gross profit   $ 26,574     $ 22,104     $ 75,403     $ 62,819  
                                   
Operating income                                
  Wireless DataCom   $ 7,821     $ 6,579     $ 23,036     $ 14,904  
  Satellite     1,983       914       3,964       4,070  
  Corporate expenses     (1,191 )     (1,038 )     (3,445 )     (2,882 )
    Total operating income   $ 8,613     $ 6,455     $ 23,555     $ 16,092  
                                 
   
                 
CAL AMP CORP.  
CONSOLIDATED BALANCE SHEETS  
(In thousands)  
                 
    November 30,     February 28,  
    2015     2015  
Assets   (Unaudited)          
Current assets:                
  Cash and cash equivalents   $ 106,678     $ 34,184  
  Short-term marketable securities     116,657       10,177  
  Accounts receivable, net     44,950       47,917  
  Inventories     18,103       18,666  
  Prepaid expenses and other current assets     3,818       5,110  
    Total current assets     290,206       116,054  
                 
Property, equipment and improvements, net     11,285       10,525  
Deferred income tax assets     27,740       34,822  
Goodwill     16,508       15,483  
Other intangible assets, net     18,660       22,596  
Other assets     5,987       3,137  
                 
    $ 370,386     $ 202,617  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
  Accounts payable     24,919       24,012  
  Accrued payroll and employee benefits     6,036       5,522  
  Deferred revenue     8,396       10,748  
  Other current liabilities     5,241       6,723  
    Total current liabilities     44,592       47,005  
                 
1.625% Convertible senior unsecured notes     138,101       -  
Other non-current liabilities     5,866       4,227  
                 
Stockholders' equity:                
Common stock     366       362  
Additional paid-in capital     226,931       207,881  
Accumulated deficit     (45,359 )     (56,793 )
Accumulated other comprehensive loss     (111 )     (65 )
                 
Total stockholders' equity     181,827       151,385  
                 
    $ 370,386     $ 202,617  
                 
   
                 
CAL AMP CORP.  
CONSOLIDATED CASH FLOW STATEMENTS  
(Unaudited - In thousands)  
                 
    Nine Months Ended  
    November 30,  
      2015       2014  
Cash flows from operating activities:                
  Net income   $ 11,434     $ 9,992  
  Depreciation expense     2,608       2,043  
  Intangible assets amortization expense     4,962       4,952  
  Stock-based compensation expense     4,211       2,924  
  Amortization of debt issuance costs and note discount     3,396       380  
  Deferred tax assets, net     6,595       5,770  
  Equity in net loss of affiliate     326       -  
  Other     19       14  
  Changes in operating working capital     4,320       (4,618 )
                   
    Net cash provided by operating activities     37,871       21,457  
                 
Cash flows from investing activities:                
  Purchases of marketable securities, net of redemptions     (106,480 )     (6,989 )
  Capital expenditures     (3,388 )     (4,890 )
  Acquisition of Crashboxx     (1,500 )     -  
  Equity investment in affiliate     (2,156 )     -  
  Other     (95 )     (44 )
                   
    Net cash used in investing activities     (113,619 )     (11,923 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of convertible notes     172,500       -  
  Payments of debt issuance costs     (5,291 )     -  
  Purchase of convertible note hedges     (31,343 )     -  
  Proceeds from issuance of warrants     15,991       -  
  Payment of acquisition-related note and contingent consideration     (1,687 )     (2,299 )
  Taxes paid related to net share settlement of vested equity awards     (2,520 )     (3,045 )
  Proceeds from exercise of stock options     592       541  
                   
    Net cash provided (used) by financing activities     148,242       (4,803 )
                 
Net change in cash and cash equivalents     72,494       4,731  
                 
Cash and cash equivalents at beginning of period     34,184       19,233  
                 
Cash and cash equivalents at end of period   $ 106,678     $ 23,964  
                 
                 
CAL AMP 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. CalAmp believes that its 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, CalAmp reports 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), and Adjusted EBITDA Margin. CalAmp uses these non-GAAP financial measures to enhance the investor's overall understanding of the financial performance and future prospects of CalAmp's core business activities. Specifically, CalAmp believes that the use of these non-GAAP measures facilitates the comparison of results of core business operations between its current and past periods. In addition to the reconciling adjustments shown in the tables below, equity in net loss of affiliate is treated as a non-GAAP adjustment because of its non-operational nature, but this item is not shown as an adjustment in the following tables because the starting point for these reconciliations is GAAP basis income before income taxes and equity in net loss of affiliate.

The reconciliation of the GAAP Basis Pretax Income 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,  
      2015       2014       2015       2014  
                                 
GAAP basis income before income taxes and equity in net loss of affiliate   $ 6,805     $ 6,421     $ 18,775     $ 15,967  
                                 
Intangible assets amortization expense     1,663       1,635       4,962       4,952  
Stock-based compensation expense     1,602       1,168       4,211       2,924  
Non-cash interest expense from amortization of debt discount     1,370       -       3,106       -  
                                 
Pretax income (non-GAAP basis)     11,440       9,224       31,054       23,843  
                                 
Income tax provision (non-GAAP basis) (a)     (57 )     (52 )     (344 )     (242 )
                                 
Adjusted Basis net income   $ 11,383     $ 9,172     $ 30,710     $ 23,601  
                                 
Adjusted Basis net income per diluted share   $ 0.31     $ 0.25     $ 0.84     $ 0.65  
                                 
Weighted average common shares outstanding on diluted basis     36,803       36,526       36,728       36,508  
                                 
     
(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 loss and tax credit carryforwards.
     
     

The reconciliation of pretax income, the most directly comparable GAAP financial measure, 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,  
      2015       2014       2015       2014  
                                 
GAAP basis income before income taxes and equity in net loss of affiliate   $ 6,805     $ 6,421     $ 18,775     $ 15,967  
                                 
Investment income     (438 )     (37 )     (423 )     (128 )
Interest expense     2,252       49       5,180       236  
Depreciation expense     933       720       2,608       2,043  
Intangible assets amortization expense     1,663       1,635       4,962       4,952  
Stock-based compensation expense     1,602       1,168       4,211       2,924  
                                 
Adjusted EBITDA   $ 12,817     $ 9,956     $ 35,313     $ 25,994  
                                 
Revenue   $ 74,675     $ 63,225     $ 209,912     $ 181,416  
                                 
EBITDA Margin     17.2 %     15.7 %     16.8 %     14.3 %
                                 
                                 

Contact Information

  • AT CALAMP:
    Garo Sarkissian
    SVP, Corporate Development
    (805) 987-9000

    AT ADDO COMMUNICATIONS:
    Lasse Glassen
    (424) 238-6249