camp-ex991

IRVINE, CA, April 30, 2019 -- CalAmp (Nasdaq: CAMP), a telematics solutions pioneer leading transformation in a global connected economy, today reported its financial results for the fourth quarter and fiscal year ended February 28, 2019.

“While we are disappointed by our fourth quarter revenue coming in below guidance, we remain on track in our transformation to a SaaS solutions provider with 20% organic revenue growth for the year,” said Michael Burdiek, President and Chief Executive Officer. “Organic growth initiatives, in addition to our three recent acquisitions, put us on course to record $30 million a quarter in Software and Subscription Services recurring revenue by the second half of our current fiscal year, supported by a base of more than one million subscribers worldwide.”

Summary Financial Information:
(In thousands except per share amounts)
	Three Months Ended						Year Ended
	February 28,						February 28,
Description	2019			2018			2019			2018
Revenues:
Telematics Systems	$	65,366		$	78,285		$	287,370		$	302,126
Software & Subscription Services (1)		19,014			16,110			76,430			63,786
	$	84,380		$	94,395		$	363,800		$	365,912
Gross margin		40	%		41	%		41	%		41	%
Net income (loss)	$	11,263		$	(4,767	)	$	18,398		$	16,617
Net income (loss) per diluted share	$	0.33		$	(0.13	)	$	0.52		$	0.46
Non-GAAP measures:
Adjusted basis net income	$	9,441		$	10,949		$	39,808		$	42,161
Adjusted basis net income per diluted share	$	0.28		$	0.30		$	1.13		$	1.17
Adjusted EBITDA	$	10,926		$	13,062		$	48,215		$	52,382
Adjusted EBITDA margin		13	%		14	%		13	%		14	%

(1) SaaS revenue for the three months ended February 28, 2019 includes an immaterial amount of revenue from the acquisition of Tracker effective February 25, 2019.

	As of February 28,
Description	2019			2018
Cash and marketable securities	$	274,012		$	156,003
Working capital		319,905			180,356
Deferred revenue		51,370			34,520
Convertible senior notes (carrying value)		275,905			154,299

For fiscal 2020 as a whole, we expect Software and Subscription Services revenue to increase to approximately $120.0 million and represent more than 30% of consolidated revenue. We expect Telematics Systems revenue to decline between $25 and $30 million, due primarily to product revenue lost in consolidation with the acquisition of three former customers as well as the transition of certain MRM product lines to a subscription based revenue recognition model. Also included in this outlook is the ongoing secular decline in legacy product revenue. Additionally, we expect our Adjusted EBITDA in fiscal 2020 to be greater than the Adjusted EBITDA recorded in Fiscal 2019.

We are hosting a conference call for analysts and investors to discuss our fourth quarter and fiscal year 2019 results and outlook for our first 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 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#4492058. 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#4492058. The audio replay will be available through May 8, 2019.

CalAmp (Nasdaq: CAMP) is a telematics solutions 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 brand of CalAmp and a leader in stolen vehicle recovery and innovative automotive services. For more information, visit calamp.com, or LinkedIn, 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 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; cost-containment measures; legislative, trade and regulatory actions; unexpected charges or expenses in connection with recent acquisitions; unexpected difficulties in integrating and realizing the expected benefits of the acquisitions; the impact of legal proceedings and compliance risks; 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 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 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 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. Management does not believe that these items are reflective of our underlying performance. 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 income (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								Year Ended
	February 28,								February 28,
		2019				2018				2019				2018

Revenues	$		84,380		$		94,395		$		363,800		$		365,912
Cost of revenues			50,909				55,973				216,036				215,022
Gross profit			33,471				38,422				147,764				150,890
Operating expenses:
Research and development			6,279				6,908				27,656				25,761
Selling and marketing			12,126				11,929				49,892				50,096
General and administrative			(6,076	)			13,930				31,070				52,089
Restructuring			2,819				-				8,015				-
Intangible asset amortization			2,902				3,711				11,436				14,989
			18,050				36,478				128,069				142,935
Operating income			15,421				1,944				19,695				7,955
Non-operating income (expense):
Investment income			2,000				908				5,258				2,256
Interest expense			(5,160	)			(2,622	)			(16,726	)			(10,280	)
Gain on legal settlement			2,500				-				18,333				28,333
Loss on extinguishment of debt			-				-				(2,033	)			-
Other income (expense)			49				3				(672	)			445
			(611	)			(1,711	)			4,160				20,754
Income before income taxes and impairment loss and equity in net loss of affiliate			14,810				233				23,855				28,709
Income tax provision (benefit)			1,826				(4,711	)			1,330				(10,681	)
Income (loss) before impairment loss and equity in net loss of affiliate			16,636				(4,478	)			25,185				18,028
Impairment loss and equity in net loss of affiliate			(5,373	)			(289	)			(6,787	)			(1,411	)
Net income (loss)	$		11,263		$		(4,767	)	$		18,398		$		16,617
Earnings (loss) per share:
Basic	$		0.33		$		(0.13	)	$		0.53		$		0.47
Diluted	$		0.33		$		(0.13	)	$		0.52		$		0.46

Shares used in computing earnings
(loss) per share:
Basic			33,727				35,388				34,589				35,250
Diluted			34,087				35,388				35,294				36,139

- more -

CALAMP CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
	February 28,
	2019			2018
Assets

Current assets:
Cash and cash equivalents	$	256,500		$	132,603
Short-term marketable securities		17,512			23,400
Accounts receivable, net		78,079			71,580
Inventories		32,033			36,302
Prepaid expenses and other current assets		19,373			12,000
Total current assets		403,497			275,885

Property and equipment, net		27,023			21,262
Deferred income tax assets		22,626			31,581
Goodwill		80,805			72,980
Other intangible assets, net		47,165			52,456
Other assets		22,510			18,829

	$	603,626		$	472,993

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable	$	39,898		$	35,478
Accrued payroll and employee benefits		8,808			10,606
Deferred revenue		24,264			17,757
Other current liabilities		10,622			31,688
Total current liabilities		83,592			95,529

Convertible senior unsecured notes		275,905			154,299
Other non-current liabilities		38,476			24,249

Stockholders' equity:

Common stock		336			357
Additional paid-in capital		208,205			218,217
Accumulated deficit		(2,227	)		(19,459	)
Accumulated other comprehensive loss		(661	)		(199	)
Total stockholders' equity		205,653			198,916
	$	603,626		$	472,993

- more -

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

		Year Ended
		February 28
			2019				2018
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income	$		18,398		$		16,617
	Depreciation			8,580				7,968
	Intangible assets amortization expense			11,436				14,989
	Stock-based compensation expense			11,029				9,298
	Amortization of convertible debt issue costs and discount			11,492				7,472
	Loss on extinguishment of debt			2,033				-
	Tax benefits on vested and exercised equity awards			758				937
	Deferred tax assets, net			(1,244	)			6,372
	Unrealized foreign currency transaction gains (loss)			404				(524	)
	Impairment loss and equity in net loss of affiliate			6,787				1,411
	Other			366				8
	Changes in operating assets and liabilities			(22,299	)			2,346
NET CASH PROVIDED BY OPERATING ACTIVITIES				47,740				66,894

CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from maturities and sale of marketable securities			56,358				22,382
	Purchases of marketable securities			(50,364	)			(38,077	)
	Capital expenditures			(12,007	)			(8,339	)
	Acquisition, net of cash acquired			(13,031	)			-
	Advances to affiliate			(2,631	)			(2,281	)
	Other			(110	)			(136	)
NET CASH USED IN INVESTING ACTIVITIES				(21,785	)			(26,451	)

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 from unwind of note hedges and warrants on 2020 Convertible Notes			3,122				-
	Taxes paid related to net share settlement of vested equity awards			(3,603	)			(2,594	)
	Proceeds from exercise of stock options			124				330
	Repurchases of common stock			(49,000	)			-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES				98,495				(2,264	)

EFFECT OF EXCHANGE RATE CHANGE ON CASH				(553	)			718
Net change in cash and cash equivalents				123,897				38,897
Cash and cash equivalents at beginning of period				132,603				93,706

Cash and cash equivalents at end of period		$		256,500		$		132,603

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						Year Ended
	February 28,						February 28,
	2019			2018			2019			2018
GAAP basis net income (loss)	$	11,263		$	(4,767	)	$	18,398		$	16,617

Intangible assets amortization expense		2,902			3,711			11,436			14,989
Stock-based compensation expense		2,941			2,634			11,029			9,298
Non-cash interest expense from amortization of debt discount		3,182			1,703			10,406			6,627
GAAP basis income tax provision (benefit)		(1,826	)		4,711			(1,330	)		10,681
Impairment loss and equity in net loss of affiliate		5,373			289			6,787			1,411
Acquisition and integration related expenses		935			-			935			-
Loss on extinguishment of debt		-			-			2,033			-
Realized gain on investment of equity securities		-			-			629			-
Gain on legal settlement		(2,500	)		-			(18,333	)		(28,333	)
Non-recurring legal expenses, net of reversal of litigation provision		(16,273	)		2,349			(11,020	)		10,738
Restructuring		2,819			-			8,015			-
Other		103			494			901			1,008
Adjusted basis income before income taxes		8,919			11,124			39,886			43,036
Income tax provision (non-GAAP basis) (a)		522			(175	)		(78	)		(875	)
Adjusted basis net income	$	9,441		$	10,949		$	39,808		$	42,161

Adjusted basis net income per diluted share	$	0.28		$	0.30		$	1.13		$	1.17

Weighted average common shares outstanding on diluted basis		34,087			36,370			35,294			36,139

(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						Year Ended
	February 28,						February 28,
	2019			2018			2019			2018

GAAP basis net income (loss)	$	11,263		$	(4,767	)	$	18,398		$	16,617

Investment income		(2,000	)		(908	)		(5,258	)		(2,256	)
Interest expense		5,160			2,622			16,726			10,280
Income tax provision (benefit)		(1,826	)		4,711			(1,330	)		10,681
Depreciation and amortization		4,880			5,726			20,016			22,957
Stock-based compensation		2,941			2,634			11,029			9,298
Impairment loss and equity in net loss of affiliate		5,373			289			6,787			1,411
Loss on extinguishment of debt		-			-			2,033			-
Acquisition and integration related expenses		935			-			935			-
Non-recurring legal expenses, net of reversal of litigation provision		(16,273	)		2,349			(11,020	)		10,738
Gain on legal settlement		(2,500	)		-			(18,333	)		(28,333	)
Restructuring		2,819			-			8,015			-
Other		154			406			217			989

Adjusted EBITDA	$	10,926		$	13,062		$	48,215		$	52,382

Revenue	$	84,380		$	94,395		$	363,800		$	365,912

Adjusted EBITDA margin		13	%		14	%		13	%		14	%

Fiscal 2020 First Quarter Business Outlook
(In thousands except per share amounts)
	Range
Description	Low			High

GAAP financial information:
Revenues	$	84,500		$	89,500
Net loss per diluted share	$	(0.37	)	$	(0.31	)

Non-GAAP financial information:
Adjusted EBITDA	$	6,500		$	9,500
Adjusted basis net income per diluted share	$	0.06		$	0.12


AT CALAMP:	AT NMN ADVISORS:
Kurtis Binder	Nicole Noutsios
EVP & CFO	(510) 315-1003
ir@calamp.com	nicole@nmnadvisors.com