camp-ex991

Second quarter consolidated revenue increased to $93 million, up 5% quarter-over-quarter

IRVINE, CA, September 26, 2019 -- CalAmp (Nasdaq: CAMP), a technology solutions pioneer transforming the mobile connected economy, today reported its financial results for the fiscal 2020 second quarter ended August 31, 2019.

“We posted a solid quarter with consolidated revenue, adjusted EBITDA and non-GAAP EPS all within the higher end of the guidance range and further highlighted by a record quarter of Software and Subscription Services revenue that expanded to $31 million, or 33% of total revenue,” said Michael Burdiek, president and chief executive officer. “Our recent acquisitions performed well, generating both increased revenue opportunities as well as newly identified cost synergies. Additionally, we are beginning to see the benefits from the 3G to LTE transitions by our Telematics Systems customers, which helped contribute to solid bookings in the quarter. Overall, I am pleased with our progress on key initiatives as we advance our strategic transformation to a global SaaS solutions provider.”

Summary Financial Information:
(In thousands except per share amounts)
	Three Months Ended
	August 31,
Description	2019			2018
Revenues:
Telematics Systems	$	62,031		$	77,100
Software & Subscription Services		31,205			18,937
	$	93,236		$	96,037
Gross margin		40	%		41	%

Net loss	$	(7,369	)	$	(854	)
Net loss per diluted share	$	(0.22	)	$	(0.02	)
Non-GAAP measures:
Adjusted basis net income	$	4,757		$	10,976
Adjusted basis net income per diluted share	$	0.14		$	0.31
Adjusted EBITDA	$	10,647		$	13,689
Adjusted EBITDA margin		11	%		14	%


	August 31,			February 28,
Description	2019			2019
Cash and marketable securities	$	201,473		$	274,012
Working capital		130,175			319,905
Deferred revenue		61,899			51,370
Total debt (carrying value)		300,097			275,905

CalAmp is hosting a conference call for analysts and investors to discuss its second quarter fiscal 2020 results and outlook for the third quarter of fiscal 2020 at 1:30 p.m. Pacific Time today. Participants can listen in via webcast by visiting the Investor Relations section of the 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 833-868-3300 (+1-918-398-8110 for international callers) and using the Conference ID#2990451. 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#2990451. The audio replay will be available through October 3, 2019.

CalAmp (Nasdaq: CAMP) is a 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. LoJack® is a brand of CalAmp and a leader in stolen vehicle recovery and innovative automotive services. For more information, visit calamp.com, or LinkedIn, Facebook, Twitter, YouTube or CalAmp Blog.

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;

competitive pressures; pricing declines; rates of growth in our target markets; prolonged disruptions of our contract manufacturers’ 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; cost-containment measures; legislative, trade, tariffs, 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; 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 of these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

“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, 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 expense, 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 announcement. 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. 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. We have not included a quantitative reconciliation of our quarterly financial guidance for Adjusted EBITDA and Adjusted basis net income per diluted share to revenues and net loss per share, respectively, as the GAAP measures that we exclude from our non-GAAP financial information are difficult to reliably provide at this time without unreasonable effort.

CalAmp and LoJack and the related logos are among the trademarks of CalAmp Corp. and/or its affiliates in the United States, certain other countries, and/or the European Union. 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,
		2019				2018				2019				2018

Revenues	$		93,236		$		96,037		$		182,306		$		190,925
Cost of revenues			55,566				56,216				109,225				113,013
Gross profit			37,670				39,821				73,081				77,912
Operating expenses:
Research and development			7,924				7,599				14,810				14,200
Selling and marketing			15,868				12,523				30,515				25,020
General and administrative			12,893				11,991				30,377				25,427
Restructuring			2,272				566				2,272				3,949
Intangible asset amortization			3,318				2,893				6,358				5,641
			42,275				35,572				84,332				74,237
Operating (loss) income			(4,605	)			4,249				(11,251	)			3,675
Non-operating income (expense):
Investment income			1,256				1,007				3,337				1,860
Interest expense			(5,555	)			(3,767	)			(11,011	)			(6,432	)
Gain on legal settlement			-				-				-				13,333
Loss on extinguishment of debt			-				(2,033	)			-				(2,033	)
Other income (expense)			193				(277	)			(206	)			(503	)
			(4,106	)			(5,070	)			(7,880	)			6,225
Income (loss) before income taxes and impairment loss and equity in net loss of affiliate			(8,711	)			(821	)			(19,131	)			9,900
Income tax benefit (provision)			1,342				497				3,599				(1,274	)
Income (loss) before impairment loss and equity in net loss of affiliate			(7,369	)			(324	)			(15,532	)			8,626
Impairment loss and equity in net loss of affiliate			-				(530	)			(530	)			(969	)
Net income (loss)	$		(7,369	)	$		(854	)	$		(16,062	)	$		7,657
Earnings (loss) per share:
Basic	$		(0.22	)	$		(0.02	)	$		(0.48	)	$		0.22
Diluted	$		(0.22	)	$		(0.02	)	$		(0.48	)	$		0.21

Shares used in computing earnings
(loss) per share:
Basic			33,568				34,850				33,475				35,141
Diluted			33,568				34,850				33,475				36,073

- more -

CALAMP CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
	August 31,			February 28,
	2019			2019
Assets

Current assets:
Cash and cash equivalents	$	193,684		$	256,500
Short-term marketable securities		7,789			17,512
Accounts receivable, net		75,600			78,079
Inventories		49,541			32,033
Prepaid expenses and other current assets		24,555			19,373
Total current assets		351,169			403,497

Property and equipment, net		56,920			27,023
Operating lease right-of-use assets		27,977			-
Deferred income tax assets		27,863			22,626
Goodwill		104,037			80,805
Other intangible assets, net		69,322			47,165
Other assets		22,154			22,510

	$	659,442		$	603,626

Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term debt	$	124,181		$	-
Accounts payable		40,270			39,898
Accrued payroll and employee benefits		9,329			8,808
Deferred revenue		31,889			24,264
Other current liabilities		15,325			10,622
Total current liabilities		220,994			83,592

Long-term debt, net of current portion		175,916			275,905
Operating lease liabilities		29,780			-
Other non-current liabilities		39,456			38,476

Stockholders' equity:
Common stock		341			336
Additional paid-in capital		213,192			208,205
Accumulated deficit		(18,289	)		(2,227	)
Accumulated other comprehensive loss		(1,948	)		(661	)
Total stockholders' equity		193,296			205,653
	$	659,442		$	603,626

- more -

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

		Six Months Ended
		August 31,
			2019				2018
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)	$		(16,062	)	$		7,657
	Depreciation			9,036				4,341
	Intangible asset amortization expense			6,358				5,641
	Stock-based compensation expense			5,726				5,147
	Amortization of debt issue costs and discount			7,606				4,537
	Impairment of operating lease right-of-use (ROU) assets			1,210				-
	Noncash operating lease cost			3,100				-
	Revenue assigned to factors			(3,109	)			-
	Loss on extinguishment of debt			-				2,033
	Impairment loss on cost method investment			-				326
	Tax benefits on vested and exercised equity awards			-				525
	Deferred tax assets, net			(3,437	)			(211	)
	Impairment loss and equity in net loss of affiliate			530				969
	Other			456				115
	Changes in operating assets and liabilities			(11,794	)			5,753
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES				(380	)			36,833

CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from maturities and sale of marketable securities			27,340				32,792
	Purchases of marketable securities			(17,617	)			(40,312	)
	Capital expenditures			(10,720	)			(5,770	)
	Acquisition, net of cash acquired			(60,634	)			-
	Advances to affiliate			(530	)			(1,063	)
	Other			3				(78	)
NET CASH USED IN INVESTING ACTIVITIES				(62,158	)			(14,431	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from issuance of 2025 Convertible Notes			-				230,000
	Payment of debt issuance costs of 2025 Convertible Notes			-				(7,305	)
	Purchase of capped call on 2025 Convertible Notes			-				(21,160	)
	Repurchase of 2020 Convertible Notes			-				(53,683	)
	Proceeds on unwind of note hedge and warrants on 2020 Convertible Notes			-				3,122
	Taxes paid related to net share settlement of vested equity awards			(1,729	)			(3,347	)
	Proceeds from exercise of stock options and contributions to employee stock purchase plan			995				101
	Repurchases of common stock			-				(28,564	)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES				(734	)			119,164

EFFECT OF EXCHANGE RATE CHANGE ON CASH				456				(197	)
Net change in cash and cash equivalents				(62,816	)			141,369
Cash and cash equivalents at beginning of period				256,500				132,603
Cash and cash equivalents at end of period		$		193,684		$		273,972

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 income (loss) to Adjusted basis (non-GAAP) net income is as follows (in thousands except per share amounts):

	Three Months Ended						Six Months Ended
	August 31,						August 31,
	2019			2018			2019			2018
GAAP basis net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657

Intangible assets amortization expense		3,318			2,893			6,358			5,641
Stock-based compensation expense		3,183			2,680			5,726			5,147
Non-cash interest expense		3,863			2,355			7,606			4,067
GAAP basis income tax provision (benefit)		(1,342	)		(497	)		(3,599	)		1,274
Impairment loss and equity in net loss of affiliate		-			530			530			969
Acquisition and integration related expenses		46			-			1,190			-
Loss on extinguishment of debt		-			2,033			-			2,033
Realized gain on investment of equity securities		-			-			-			629
Gain on legal settlement		-			-			-			(13,333	)
Litigation and non-recurring legal expenses		777			1,023			4,584			3,137
Restructuring		2,272			566			2,272			3,949
Other		459			447			920			692
Adjusted basis income before income taxes		5,207			11,176			9,525			21,862
Income tax provision (non-GAAP basis) (a)		(450	)		(200	)		(600	)		(400	)
Adjusted basis net income	$	4,757		$	10,976		$	8,925		$	21,462

Adjusted basis net income per diluted share	$	0.14		$	0.31		$	0.26		$	0.59

Weighted average common shares outstanding on diluted basis		33,799			35,718			33,766			36,073

(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						Six Months Ended
	August 31,						August 31,
	2019			2018			2019			2018

GAAP basis net income (loss)	$	(7,369	)	$	(854	)	$	(16,062	)	$	7,657

Investment income		(1,256	)		(1,007	)		(3,337	)		(1,860	)
Interest expense		5,555			3,767			11,011			6,432
Income tax provision (benefit)		(1,342	)		(497	)		(3,599	)		1,274
Depreciation and amortization		8,509			5,191			15,394			9,982
Stock-based compensation		3,183			2,680			5,726			5,147
Impairment loss and equity in net loss of affiliate		-			530			530			969
Loss on extinguishment of debt		-			2,033			-			2,033
Acquisition and integration related expenses		46			-			1,190			-
Litigation and non-recurring legal expenses		777			1,023			4,584			3,137
Gain on legal settlement		-			-			-			(13,333	)
Restructuring		2,272			566			2,272			3,949
Other		272			257			507			479
Adjusted EBITDA	$	10,647		$	13,689		$	18,216		$	25,866

Revenue	$	93,236		$	96,037		$	182,306		$	190,925

Adjusted EBITDA margin		11	%		14	%		10	%		14	%

(In thousands except per share amounts)
	Range
Description	Low			High

GAAP financial information:
Revenues	$	92,000		$	98,000
Net loss per diluted share	$	(0.23	)	$	(0.17	)

Non-GAAP financial information:
Adjusted EBITDA	$	9,500		$	13,500
Adjusted basis net income per diluted share	$	0.11		$	0.17


AT CALAMP:	AT SHELTON GROUP:
Kurtis Binder	Leanne K. Sievers
EVP & CFO	(949) 224.3874
ir@calamp.com	sheltonir@sheltongroup.com