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SEGMENT INFORMATION AND GEOGRAPHIC DATA
3 Months Ended
May 31, 2019
Segment Reporting [Abstract]  
SEGMENT INFORMATION AND GEOGRAPHIC DATA

NOTE 17 - SEGMENT INFORMATION AND GEOGRAPHIC DATA

Our business activities are organized into two reportable segments – Telematics Systems and Software & Subscription Services. Our organizational structure is based on a number of factors that our CEO, the Chief Operating Decision Maker (“CODM”), uses to evaluate and operate the business, which include, but are not limited to, customer base, homogeneity of products and technology.

The Telematics Systems segment offers a portfolio of wireless data communications products, which includes asset tracking units, mobile telematics devices, fixed and mobile wireless gateways and routers. These wireless networking devices underpin a wide range of our own- and third-party software and service solutions worldwide and are critical for applications demanding secure, reliable and business-critical communications. Telematics Systems segment revenues consist primarily of stand-alone product sales.

The Software & Subscription Services segment offers cloud-based, application enablement and telematics service platforms that facilitate integration of our own applications, as well as those of third parties, through open Applications Programing Interfaces (“APIs”) to deliver full-featured IoT solutions to a wide range of customers and markets. Our scalable proprietary SaaS offerings enable rapid and cost-effective deployment of high-value solutions for customers all around the globe. Software & Subscription Services segment revenues include SaaS, professional services, devices sold with monitoring services and amortization of deferred revenue for customized devices functional only with application subscriptions that are not sold separately.

Segment information for the three months ended May 31, 2019 and 2018 is as follows (in thousands):

 

 

 

Three Months Ended May 31, 2019

 

 

Three Months Ended May 31, 2018

 

 

 

Operating Segments

 

 

 

 

 

 

 

 

 

 

Operating Segments

 

 

 

 

 

 

 

 

 

 

 

Telematics Systems

 

 

Software & Subscription Services

 

 

Corporate Expenses

 

 

Total

 

 

Telematics Systems

 

 

Software & Subscription Services

 

 

Corporate Expenses

 

 

Total

 

Revenues

 

$

63,559

 

 

$

25,511

 

 

$

 

 

$

89,070

 

 

$

76,352

 

 

$

18,536

 

 

$

 

 

$

94,888

 

Gross profit

 

$

25,011

 

 

$

10,400

 

 

$

 

 

$

35,411

 

 

$

29,509

 

 

$

8,582

 

 

$

 

 

$

38,091

 

Gross margin

 

 

39

%

 

 

41

%

 

 

0

%

 

 

40

%

 

 

39

%

 

 

46

%

 

 

0

%

 

 

40

%

Adjusted EBITDA

 

$

6,993

 

 

$

2,374

 

 

$

(1,798

)

 

$

7,569

 

 

$

10,814

 

 

$

2,922

 

 

$

(1,559

)

 

$

12,177

 

 

 

The amount shown for each period in the “Corporate Expenses” column above consists of expenses that are not allocated to the business segments. These non-allocated corporate expenses include salaries and benefits of certain corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability insurance, and director fees and expenses.

Our CODM evaluates each segment based on earnings before interest, taxes, depreciation, amortization and certain other charges (“Adjusted EBITDA”) and we therefore consider Adjusted EBITDA to be a primary measure of operating performance of our operating segments. The adjustments to our net income (losses) prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) to calculate Adjusted EBITDA are itemized below (in thousands):

 

 

Three Months Ended

May 31,

 

 

2019

 

 

2018

 

Net income (loss)

$

(8,693

)

 

$

8,511

 

Investment income

 

(2,081

)

 

 

(853

)

Interest expense

 

5,456

 

 

 

2,665

 

Income tax provision

 

(2,257

)

 

 

1,771

 

Depreciation

 

3,845

 

 

 

2,043

 

Amortization of intangible assets

 

3,040

 

 

 

2,748

 

Stock-based compensation

 

2,543

 

 

 

2,467

 

Impairment loss and equity in net loss of affiliate

 

530

 

 

 

439

 

Restructuring charges

 

 

 

 

3,383

 

Non-recurring legal expenses

 

3,807

 

 

 

2,114

 

Acquisition and integration related expenses

 

1,144

 

 

 

 

Gain on LoJack battery performance legal Settlement

 

 

 

 

(13,333

)

Other

 

235

 

 

 

222

 

Adjusted EBITDA

$

7,569

 

 

$

12,177

 

 

It is not practicable for us to report identifiable assets by segment because these business units share resources, functions and facilities.

We do not have significant long-lived assets outside the United States.

Revenues by geographic area are as follows (in thousands):

 

 

 

Three Months Ended

 

 

 

May 31,

 

 

 

2019

 

 

2018

 

United States

 

$

63,122

 

 

$

70,417

 

Europe, Middle East and Africa

 

 

13,426

 

 

 

13,344

 

Latin America

 

 

3,486

 

 

 

4,167

 

Canada

 

 

2,836

 

 

 

1,364

 

Asia and Pacific Rim

 

 

2,409

 

 

 

3,759

 

All other

 

 

3,791

 

 

 

1,837

 

 

 

$

89,070

 

 

$

94,888

 

 

Revenues by geographic area are based upon the country of billing. The geographic location of distributors and OEM customers may be different from the geographic location of the ultimate end users of the products and services provided by us. No single non-U.S. country accounted for more than 10% of our revenue in the three months ended May 31, 2019 and 2018.