CalAmp Corp. (Nasdaq: CAMP), a leading provider of wireless
products, services and solutions, today reported results for its
fiscal 2009 second quarter ended August 31, 2008. Key elements
include: Consolidated second quarter revenues of $23.3 million;
wireless datacom revenues of $20.1 million. GAAP loss from
continuing operations of $1.5 million, or $0.06 loss per basic and
diluted share, within expectations; Adjusted Basis (non-GAAP) loss
from continuing operations of $0.5 million or $0.02 loss per basic
and diluted share, also within expectations. Consolidated gross
margin percentage of 32.0%; wireless datacom gross margin
percentage of 37.5%. Unit volumes of Direct Broadcast Satellite
(DBS) product shipments to historically largest customer beginning
to ramp up. Rick Gold, CalAmp�s President and Chief Executive
Officer, commented, �Similar to last quarter, our operating results
were driven by the continued strong performance of our wireless
datacom business, which generated revenues of $20.1 million and
accounted for 86% of our consolidated revenue. I am particularly
pleased with the contributions from our mobile resource
management�or MRM�product lines that continue to gain customer
acceptance in applications targeted for high value asset tracking
and fleet management.� Mr. Gold continued, �Satellite product sales
were modest for most of the second quarter. However, I was
encouraged to see unit volumes to our historically largest DBS
customer begin ramping up significantly at the end of the quarter
and we expect this will continue throughout the second half of
fiscal 2009. We are committed to rebuilding our competitive
position in the DBS market and I believe our recent efforts will
help us achieve this goal and return CalAmp to profitability.�
Fiscal 2009 Second Quarter Results Total revenue for the fiscal
2009 second quarter was $23.3 million compared to $32.7 million for
the second quarter of fiscal 2008. The reduction in revenues was
due primarily to significantly lower sales of the Company�s
satellite products. Gross profit for the fiscal 2009 second quarter
was $7.5 million, or 32.0% of revenues compared to gross profit of
$6.3 million, or 19.3% of revenue for the same period last year.
The improvement in gross profit and gross margin percentage in the
latest quarter was due primarily to higher MRM revenues and gross
margin, and a charge included in last year�s second quarter of $1.5
million for estimated expenses to correct a product performance
issue with a key DBS customer. Results of operations for the fiscal
2009 second quarter as determined in accordance with U.S. Generally
Accepted Accounting Principles (�GAAP�) was a loss from continuing
operations of $1.5 million, or $0.06 loss per basic and diluted
share. This compares to a loss from continuing operations of $3.3
million, or $0.14 loss per basic and diluted share, in the second
quarter of last year. The lower loss in the latest quarter was
attributable to higher gross profit as discussed above. The
Adjusted Basis (non-GAAP) loss from continuing operations for the
fiscal 2009 second quarter was $0.5 million, or $0.02 loss per
basic and diluted share compared to an Adjusted Basis loss from
continuing operations of $2.0 million or $0.08 loss per basic and
diluted share for the same period last year. Adjusted Basis income
(loss) from continuing operations excludes the impact of
amortization of intangible assets, stock-based compensation expense
and in-process research and development, each net of tax. A
reconciliation of the GAAP basis income (loss) from continuing
operations to Adjusted Basis income (loss) from continuing
operations is provided in the table at the end of this press
release. Liquidity At August 31, 2008, the Company had total cash
of $4.7 million, with $26.0 million in total outstanding bank debt
and a $5 million note payable to a key DBS customer. Net cash used
by operating activities was $1.1 million for the three months ended
August 31, 2008, primarily for working capital. For the six month
period ended August 31, 2008, net cash generated by operating
activities was approximately $700,000. During the latest quarter,
bank term loan principal was paid down by $1.0 million. The bank
term loan has a maturity date of June 30, 2009, and consequently
the entire term loan balance of $26 million is classified as a
current liability in the August 31, 2008 balance sheet. The Company
has requested an extension of the maturity date, and is currently
in discussions with the banks on this matter. Business Outlook
Commenting on the Company�s business outlook, Mr. Gold said, �Our
third quarter outlook remains cautious due in part to continued
uncertainty surrounding the U.S. economy, which may impact purchase
decisions by key customers. That said, we expect sales of our
satellite products to increase materially compared to the second
quarter as unit volumes shipped to our historically largest DBS
customer continue to ramp higher. Based on our current forecast, we
believe fiscal 2009 third quarter consolidated revenues will be in
the range of $26 to $30 million, with a GAAP basis net loss in the
range of $0.03 to $0.07 per diluted share. The Adjusted Basis
(non-GAAP) results of operations for the third quarter, which
exclude amortization of intangible assets and stock-based
compensation expense net of tax, are expected to be in the range of
a $0.03 loss to $0.01 income per diluted share.� Conference Call
and Webcast A conference call and simultaneous webcast to discuss
fiscal 2009 second quarter financial results and business outlook
will be held today at 4:30 p.m. Eastern / 1:30 p.m. Pacific. The
live webcast of the call is available on CalAmp�s web site at
www.calamp.com. Participants are encouraged to visit the web site
at least 15 minutes prior to the start of the call to register,
download and install any necessary audio software. CalAmp�s
President and CEO Rick Gold and CFO Rick Vitelle will host the
conference call. After the live webcast, a replay will remain
available until the next quarterly conference call in the Investor
Relations section of CalAmp�s web site. About CalAmp Corp. CalAmp
provides wireless communications solutions that enable
anytime/anywhere access to critical data and content. The Company
serves customers in the public safety, industrial monitoring and
controls, mobile resource management, and direct broadcast
satellite markets. The Company�s products are marketed under the
CalAmp, Dataradio, SmartLink, Aercept, LandCell and Omega trade
names. 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
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.
Actual results could differ materially from those implied by such
forward-looking statements due to a variety of factors, including
general and industry economic conditions, product demand, increased
competition, competitive pricing and continued pricing declines in
the DBS market, the timing of customer approvals of new product
designs, operating costs, the Company�s ability to efficiently and
cost-effectively integrate its acquired businesses, the risk that
the ultimate cost of resolving a product performance issue with one
of the Company�s key DBS customers may exceed the amount of
reserves established for that purpose, the length and extent of the
U.S. market downturn stemming from the recent tightening of credit
markets that may impact the Company�s business and that of its
customers and which may constrain the Company�s ability to
refinance its bank term loan, and other risks or uncertainties that
are described in the Company�s fiscal 2008 Annual Report on Form
10-K as filed with the Securities and Exchange Commission on May
15, 2008. Although the Company believes the expectations reflected
in such forward-looking statements are based upon reasonable
assumptions, it can give no assurance that its expectations will be
attained. The Company undertakes 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
STATEMENTS OF OPERATIONS (Unaudited, in thousands except per share
amounts) � � Three Months Ended � Six Months Ended August 31,
August 31, 2008 � 2007 2008 � 2007 � Revenues $ 23,308 $ 32,668 $
51,209 $ 79,061 � Cost of revenues � 15,840 � � 26,353 � � 34,312 �
� 78,132 � � Gross profit � 7,468 � � 6,315 � � 16,897 � � 929 � �
Operating expenses: Research and development 3,131 3,795 6,331
8,114 Selling 1,647 2,373 3,919 4,642 General and administrative
3,266 3,457 6,362 6,659 Intangible asset amortization 1,240 1,558
2,572 3,302 In-process research and development � - � � - � � - � �
310 � � 9,284 � � 11,183 � � 19,184 � � 23,027 � � Operating loss
(1,816 ) (4,868 ) (2,287 ) (22,098 ) � Non-operating expense, net �
(334 ) � (507 ) � (750 ) � (1,090 ) � Loss from continuing
operations before income taxes (2,150 ) (5,375 ) (3,037 ) (23,188 )
� Income tax benefit � 652 � � 2,117 � � 1,042 � � 8,985 � � Loss
from continuing operations (1,498 ) (3,258 ) (1,995 ) (14,203 ) �
Loss from discontinued operations, net of tax - � (1,115 ) - �
(1,532 ) � � Net loss $ (1,498 ) $ (4,373 ) $ (1,995 ) $ (15,735 )
� � Basic and diluted loss per share: Loss from continuing
operations $ (0.06 ) $ (0.14 ) $ (0.08 ) $ (0.60 ) Loss from
discontinued operations � - � � (0.05 ) � - � � (0.07 ) � Total
basic and diluted loss per share $ (0.06 ) $ (0.19 ) $ (0.08 ) $
(0.67 ) � � Shares used in per share calculations: Basic 24,737
23,623 24,720 23,612 Diluted 24,737 23,623 24,720 23,612 CAL AMP
CORP. BUSINESS SEGMENT INFORMATION (Unaudited, in thousands) � �
Three Months Ended � Six Months Ended August 31, August 31, 2008 �
2007 2008 � 2007 Revenue Satellite $ 3,176 $ 9,851 $ 10,817 $
32,882 Wireless DataCom � 20,132 � � 22,817 � � 40,392 � � 46,179 �
� Total revenue $ 23,308 � $ 32,668 � $ 51,209 � $ 79,061 � � Gross
profit (loss) Satellite $ (81 ) $ (1,835 ) $ 652 $ (15,751 )
Wireless DataCom � 7,549 � � 8,150 � � 16,245 � � 16,680 � � Total
gross profit $ 7,468 � $ 6,315 � $ 16,897 � $ 929 � � Operating
income (loss) Satellite $ (1,324 ) $ (3,064 ) (a) $ (1,656 ) $
(18,295 ) (a) Wireless DataCom 916 (b) (500 ) (c) 1,973 (b) (1,146
) (c) Corporate expenses � (1,408 ) � (1,304 ) � (2,604 ) � (2,657
) � Total operating loss $ (1,816 ) $ (4,868 ) $ (2,287 ) $ (22,098
) � (a) Includes charges for estimated product warranty and related
costs in the three and six-month periods ended August 31, 2007 of
$1.5 million and $17.8 million, respectively. � (b) Includes
intangible asset amortization expense in the three and six-month
periods ended August 31, 2008 of $1.2 million and $2.6 million,
respectively. � (c) Includes intangible asset amortization expense
in the three and six-month periods ended August 31, 2007 of $1.6
million and $3.3 million, respectively. CAL AMP CORP. CONSOLIDATED
BALANCE SHEETS (Unaudited - In thousands) � � August 31, � February
28, 2008 2008 Assets Current assets: Cash and cash equivalents $
4,697 $ 6,588 Accounts receivable, net 16,612 20,043 Inventories
23,977 25,097 Deferred income tax assets 4,698 5,306 Prepaid
expenses and other current assets � 10,213 � � 9,733 � � Total
current assets 60,197 66,767 � Equipment and improvements, net
4,398 5,070 � Deferred income tax assets, less current portion
16,289 14,802 � Goodwill 28,224 28,520 � Other intangible assets,
net 21,852 24,424 � Other assets � 3,491 � � 3,458 � � $ 134,451 �
$ 143,041 � Liabilities and Stockholders' Equity Current
liabilities: Current portion of long-term debt $ 31,030 $ 5,343
Accounts payable 9,708 10,875 Accrued payroll and employee benefits
3,535 4,218 Accrued warranty costs 4,867 3,818 Other accrued
liabilities 10,198 11,800 Deferred revenue � 3,085 � � 4,005 � �
Total current liabilities � 62,423 � � 40,059 � � Long-term debt,
less current portion - 27,187 � Other non-current liabilities 1,090
2,375 � Stockholders' equity: Common stock 252 250 Additional
paid-in capital 144,252 144,318 Accumulated deficit (73,144 )
(71,149 ) Accumulated other comprehensive income (loss) � (422 ) �
1 � � Total stockholders' equity � 70,938 � � 73,420 � � $ 134,451
� $ 143,041 � � CAL AMP CORP. � � CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited - In thousands) � Six Months Ended August 31, 2008 2007
Cash flows from operating activities: Net loss $ (1,995 ) $ (15,735
) Depreciation and amortization 3,770 5,201 Stock-based
compensation expense 361 1,027 Write-off of in-process research and
development costs - 310 Excess tax benefit from stock-based
compensation - (55 ) Deferred tax assets, net (1,046 ) (14,388 )
Loss on sale of discontinued operations, net of tax - 935 Gain on
sale of investment - (331 ) Changes in operating working capital
(376 ) 20,934 Other � - � � (2 ) � Net cash provided (used) by
operating activities � 714 � � (2,104 ) � Cash flows from investing
activities: Capital expenditures (561 ) (920 ) Earn-out payments on
TechnoCom acquisition (872 ) - Proceeds from sale of discontinued
operations 420 4,000 Proceeds from sale of property and equipment -
4 Proceeds from sale of investment - 1,045 Acquisition of Aercept -
(19,315 ) Acquisition of SmartLink, net of refunds from escrow fund
296 (7,944 ) Cash restricted for repayment of debt � - � � (3,309 )
� Net cash used in investing activities � (717 ) � (26,439 ) � Cash
flows from financing activities: Debt repayments (1,500 ) (1,476 )
Proceeds from stock option exercises - 157 Excess tax benefit from
stock-based compensation � - � � 55 � � Net cash used in financing
activities � (1,500 ) � (1,264 ) � Effect of exchange rate changes
on cash � (388 ) � 640 � � Net change in cash and cash equivalents
(1,891 ) (29,167 ) � Cash and cash equivalents at beginning of
period � 6,588 � � 37,537 � � Cash and cash equivalents at end of
period $ 4,697 � $ 8,370 � CAL AMP CORP. NON-GAAP EARNINGS
RECONCILIATION (Unaudited, in thousands except per share amounts) �
Non-GAAP Earnings Reconciliation "GAAP" refers to financial
information presented in accordance with Generally Accepted
Accounting Principles in the United States. 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 accounting
principles generally accepted in the United States. � In this press
release, CalAmp reports the non-GAAP financial measures of Adjusted
Basis Loss from Continuing Operations and Adjusted Basis Loss from
Continuing Operations Per Diluted Share. 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 a report of
Adjusted Basis (non-GAAP) Loss from Continuing Operations and
Adjusted Basis Loss from Continuing Operations Per Diluted Share
provides consistency in its financial reporting and facilitates the
comparison of results of core business operations between its
current and past periods. � The reconciliation of the GAAP Basis
Loss from Continuing Operations to Adjusted Basis (non-GAAP) Loss
from Continuing Operations is as follows: � Three Months Ended �
Six Months Ended August 31, August 31, 2008 � 2007 2008 � 2007 �
GAAP Basis Loss from Continuing Operations $ (1,498 ) $ (3,258 ) $
(1,995 ) $ (14,203 ) � Adjustments to reconcile to Adjusted Basis
Loss from Continuing Operations: Amortization of intangible assets,
net of tax 815 955 1,690 2,024 Stock-based compensation expense,
net of tax 231 315 237 597 In-process R&D, net of tax - - - 190
� � � � � � � � � Adjusted Basis Loss from Continuing Operations $
(452 ) $ (1,988 ) $ (68 ) $ (11,392 ) � Adjusted Basis Loss from
Continuing Operations per Diluted Share $ (0.02 ) $ (0.08 ) $ - $
(0.48 ) � Weighted average common shares outstanding on diluted
basis 24,737 23,623 24,720 23,612 � The reconciling items above are
tax effected using the year-to-date effective tax rate. The
computation of the year-to-date effective income tax rate is as
follows: � Six Months Ended August 31, 2008 2007 Pretax loss from
continuing operations, as reported $ (3,037 ) $ (23,188 ) � Income
tax benefit, as reported 1,042 � 8,985 � � Effective income tax
rate 34.3 % 38.7 %
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