CalAmp(CAMP) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Presents the company's unaudited condensed consolidated financial statements and management's analysis for the reporting period Financial Statements Presents CalAmp Corp.'s unaudited condensed consolidated financial statements, including balance sheets, income, cash flow, and equity statements Condensed Consolidated Balance Sheets | Balance Sheet Highlights (In thousands) | Aug 31, 2021 | Feb 28, 2021 | | :--- | :--- | :--- | | Total Current Assets | $205,367 | $214,288 | | Total Assets | $419,189 | $433,805 | | Total Current Liabilities | $99,615 | $107,245 | | Total Liabilities | $328,877 | $338,720 | | Total Stockholders' Equity | $90,312 | $95,085 | Condensed Consolidated Statements of Comprehensive Loss | Income Statement Highlights (In thousands) | Three Months Ended Aug 31, 2021 | Three Months Ended Aug 31, 2020 | Six Months Ended Aug 31, 2021 | Six Months Ended Aug 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $79,011 | $74,397 | $158,685 | $148,128 | | Gross Profit | $33,370 | $27,462 | $65,817 | $56,567 | | Operating Loss | $(998) | $(4,384) | $(2,228) | $(6,465) | | Net Loss from Continuing Operations | $(5,425) | $(7,610) | $(11,425) | $(14,198) | | Net Loss | $(5,425) | $(9,478) | $(7,373) | $(23,900) | | Basic Loss Per Share - Continuing | $(0.15) | $(0.22) | $(0.33) | $(0.42) | Condensed Consolidated Statements of Cash Flows | Cash Flow Highlights (In thousands) | Six Months Ended Aug 31, 2021 | Six Months Ended Aug 31, 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $10,451 | $14,121 | | Net Cash Provided by (Used in) Investing Activities | $47 | $(7,563) | | Net Cash Used in Financing Activities | $(3,117) | $(8,231) | | Net Change in Cash and Cash Equivalents | $6,427 | $(259) | | Cash and Cash Equivalents at End of Period | $101,051 | $107,145 | Notes to Unaudited Condensed Consolidated Financial Statements - The COVID-19 pandemic negatively impacted revenues through fiscal 2021 due to postponed capital expenditures by customers and created global supply shortages for certain components[21] Revenue by Type (In thousands) | Revenue by Type (In thousands) | Three Months Ended Aug 31, 2021 | Six Months Ended Aug 31, 2021 | | :--- | :--- | :--- | | Telematics devices and accessories | $51,529 | $103,526 | | Recurring application subscriptions | $23,987 | $48,054 | | Rental income and other services | $3,495 | $7,105 | | Total | $79,011 | $158,685 | - Estimated remaining performance obligations for contractually committed revenues were $141.2 million as of August 31, 2021, a slight decrease from $145.1 million as of February 28, 2021[40] - The company sold its LoJack North America business to Spireon for approximately $8.0 million on March 15, 2021, recognizing a $5.0 million gain on sale, with operations presented as discontinued[26][57] - One industrial equipment customer accounted for 18% and 20% of consolidated revenue for the three and six months ended August 31, 2021, respectively, with another transportation customer accounting for 12% for the three-month period[106] - Four suppliers accounted for approximately 55% of total inventory purchases for the six months ended August 31, 2021, indicating significant supplier concentration[107] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial performance for the three and six months ended August 31, 2021, covering segment performance, gross profit, and liquidity Operating Results - Three Months Ended August 31, 2021 Revenue by Segment (In thousands) | Revenue by Segment (In thousands) | Q2 FY22 | Q2 FY21 | % Change | | :--- | :--- | :--- | :--- | | Software & Subscription Services | $41,434 | $33,440 | 23.9% | | Telematics Products | $37,577 | $40,957 | (8.3%) | | Total | $79,011 | $74,397 | 6.2% | - Software & Subscription Services revenue grew by $8.0 million (23.9%) year-over-year, primarily from a $7.6 million increase in transportation and logistics revenues due to 3G to 4G equipment upgrades[147] - Telematics Products revenue decreased by $3.4 million (8.3%) year-over-year, attributed to global supply shortages of silicon wafers and other components limiting order fulfillment[148] Gross Profit by Segment (In thousands) | Gross Profit by Segment (In thousands) | Q2 FY22 | Q2 FY21 | % Change | | :--- | :--- | :--- | :--- | | Software & Subscription Services | $21,332 | $16,639 | 28.2% | | Telematics Products | $12,038 | $10,823 | 11.2% | | Total | $33,370 | $27,462 | 21.5% | - Consolidated gross margin increased by 530 basis points year-over-year, driven by a higher proportion of revenue from the higher-margin Software & Subscription Services segment and improved margins in both segments[149] Operating Results - Six Months Ended August 31, 2021 Revenue by Segment (In thousands) | Revenue by Segment (In thousands) | YTD FY22 | YTD FY21 | % Change | | :--- | :--- | :--- | :--- | | Software & Subscription Services | $76,477 | $61,213 | 24.9% | | Telematics Products | $82,208 | $86,915 | (5.4%) | | Total | $158,685 | $148,128 | 7.1% | - For the six-month period, Software & Subscription Services revenue increased by $15.3 million (24.9%), driven by 3G to 4G upgrades and growth in EMEA and LATAM regions[167] Adjusted EBITDA by Segment (In thousands) | Adjusted EBITDA by Segment (In thousands) | YTD FY22 | YTD FY21 | % Change | | :--- | :--- | :--- | :--- | | Software & Subscription Services | $15,532 | $14,168 | 9.6% | | Telematics Products | $3,254 | $1,489 | 118.5% | | Corporate Expenses | $(2,100) | $(2,318) | (9.4%) | | Total | $16,686 | $13,339 | 25.1% | Liquidity and Capital Resources - As of August 31, 2021, the company had $101.1 million in cash and cash equivalents and $50 million available under its revolving credit facility, with no borrowings outstanding[189][191] Cash Flow Summary (In thousands) | Cash Flow Summary (In thousands) | Six Months Ended Aug 31, 2021 | Six Months Ended Aug 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,451 | $14,121 | | Net cash provided by (used in) investing activities | $47 | $(7,563) | | Net cash used in financing activities | $(3,117) | $(8,231) | - Net cash from investing activities for the six months ended August 31, 2021, includes $6.6 million in proceeds from the sale of the LoJack North America business[206] Quantitative and Qualitative Disclosures About Market Risk Outlines the company's exposure to market risks, primarily from foreign currency exchange rates and interest rate fluctuations - The company has foreign currency risk from international operations, with a cumulative foreign currency translation loss of $0.7 million in Accumulated Other Comprehensive Loss as of August 31, 2021[211] - Interest rate risk from the fixed debt securities investment portfolio is not expected to materially affect fair market value or operating results due to its short-term nature[213][214] Controls and Procedures Management concluded that disclosure controls were effective, noting modifications to internal controls due to a phased ERP system implementation - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of August 31, 2021[217] - A phased implementation of a new ERP system has led to modifications and new internal controls over financial reporting[218] PART II – OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, securities sales, and filed exhibits Legal Proceedings This section refers to Note 16 of the financial statements for detailed information regarding ongoing legal proceedings - For information on legal proceedings, the report refers to Note 16 in the Notes to Unaudited Condensed Consolidated Financial Statements[221] Risk Factors Directs readers to the Annual Report on Form 10-K for a comprehensive discussion of factors that could materially affect the business - The report refers readers to the 'Risk Factors' section of its Annual Report on Form 10-K for the year ended February 28, 2021, for a comprehensive discussion of potential risks[222] Unregistered Sales of Securities and Use of Proceeds This section details the company's repurchase of common stock from employees to satisfy tax withholding obligations upon restricted stock vesting Common Stock Repurchase Summary | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | June 1 - 30, 2021 | - | - | | July 1 - 31, 2021 | 38,460 | $12.20 | | August 1 - 31, 2021 | - | - | | Total | 38,460 | $12.20 | - The purchased shares represent common stock surrendered by employees to satisfy tax withholding requirements upon restricted stock vesting[223] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data files - The exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and various Inline XBRL documents[225]