investor presentations22.q4cdn.com/221312883/files/doc_presentations/2019/...this presentation may...
TRANSCRIPT
Investor Presentation
July 2019
This presentation may contain forward-looking statements and are intended to qualify for the safe harbor from liability established bythe Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of futureperformance. These forward-looking statements include, but are not limited to, future strategic plans and other statements thatdescribe our business strategy, outlook, objectives, plans, intentions or goals, and any discussion of future operating or financialperformance, including, without limitation, the long-term growth of our revenue and gross margin. The words “may,” “will,” “expect,”“plan,” “anticipate,” “could,” “intend,” “target,” “project,” “estimate,” believe,” “predict,” “potential” or “continue” or the negative ofthese terms or other similar expressions are intended to identify forward-looking statements, although not all forward-lookingstatements contain these identifying words. Factors that could affect the outcome of forward-looking statements are uncertain and tosome extent unpredictable, and involve known and unknown risks, uncertainties and other important factors that could cause actualresults to differ materially from those expressed in such forward-looking statements. Any forward-looking statement is based on currentplans and expectations of our management, expressed in good faith and believed to have a reasonable basis. However, there can be noassurance that anticipated results will be achieved. More information on factors that could cause actual results to differ materially fromthose anticipated is included in the Risk Factors section in our most recent Annual Report on Form 10-K, and other documents filedfrom time to time with the Securities and Exchange Commission. The forward-looking statements included in this presentation speakonly as of the date hereof, and we undertake no obligation to update or revise any forward-looking statements, whether as a result ofnew information, future events or otherwise.
Forward Looking Statements
1
$212$245
$289 $302 $288
$64
$39$36
$62$64 $76
$26
$251 $281
$351 $366 $364
$89
FY15 FY16 FY17 FY18 FY19 Q1 FY20
Telematics Systems SaaS
Company OverviewCalAmp is a telematics pioneer leading transformation in a global connected economy
Nasdaq: CAMPIrvine, CA headquarters
18% SaaS revenue growth CAGR (FY2015-FY2019)
~1,365 Employees (with recent acquisitions)
$89.1M revenue in First Quarter FY2020
SaaS revenue reached 29% of consolidated revenue
2
Revenues ($M)
10% CAGR
CalAmp Model Transition with Increased SaaS RevenueA company with solid foundation for long-term growth and profitability
3
21%
79%
$364M Revenue
41% Gross Margin
13% Adjusted EBITDA
Connected Telematics Solutions
Long Term Target Model
40%
60% SaaS
Telematics Systems
+10% Y/Y Revenue Growth
50% Gross Margin
20% Adjusted EBITDA
SaaS Solutions and Data Monetization
FY19 | Historical Financials
CalAmp Telematics Lifecycle
44
Do
llar
Sale
s
Years
Original Uses
Subsequent Extensions of Life Cycles
A
B
C
D
#1
#2
#3
#4
An overarching strategy to drive increased SaaS revenue and accelerated growth
Transformation to a Global SaaS Solutions Provider
5
M&A Approach Key Transactions
/ Grow SaaS recurring revenue base in the U.S. and International markets
/ Leverage best practices and technology platform to build profitable and sustainable business model
/ Penetrate SaaS verticals including transport &
logistics, connected car, enterprise fleets
/ Establish market leadership in international markets including EMEA and LATAM
/ Scale telematics platform with expanded worldwide subscriber base
Targeted SaaS Verticals: Our Growth OpportunityEnabling Telematics Applications for the Vehicle Area Cloud Solutions
6
PULS
PEG
CalAmp Telematics CloudConnected Car Solutions
Transport and Logistics
Industrial Machines
Government Fleets
$15B $10B
$5B
Large and Growing Market Opportunities
7
Fleet Management products and services
Enterprise Asset Tracking products and services
Ecosystem Opportunities around Vehicle Lifecycle
Targeting $30B+ global industrial IoT and connected vehicle TAM
*Source: James Brehm & Associates; C.J. Driscoll & Associates; and Berg Insight
Platform and Data
Vertical Solutions
Global Base of Connected Telematic Devices
Market Opportunities
Telematics Systems Software & Subscription Services
Representative Customer BaseCalAmp technology - a hub for business critical data and decisions
8
*CalAmp supplies its products, services, and solutions to these representative customers. The trademarks and trade names mentioned are the property of their respective owners.
Strong International ExpansionCalAmp presence and International growth opportunities in key markets
9
Revenue
U.S.&
CanadaEMEA
LatinAmerica
APAC
Company HQ
Investments for Growth
SalesforceRealignment
Geo-specificInvestment
5-year CAGR
16%FY2019 revenue
$95M
Driving Strong Results
LoJack Expands Its Services to Various Partners
10
SVR and Crash response CTC LoJack SureDriveRecognized Brand
Superstores Direct Dealers Distributors
CalAmp Global Growth DriversUniquely positioned to drive adoption of telematics for emerging applications
11
Drive SaaS applications across vertical markets
Monetize Installed base of telematics devices
Continue International expansion
Financial Slides
Accelerated SaaS Revenue Growth
Growth in Worldwide Subscriber Base
Strong Free Cash Flow Generation
Path to Margin Expansion
Well-Capitalized Balance Sheet
1
2
3
4
5
Financial Highlights
13
Top Line Revenue and Margin Performance
Solid track record of stable revenue and margin performance
14
Note: Fiscal First Quarter 2020 ended 5/31/2019. See Appendix for reconciliation of GAAP to Non-GAAP figures.
$251
$281
$351$366 $364
$89
FY15 FY16 FY17 FY18 FY19 1Q20
Revenues ($M)
35%37%
41% 41% 41% 40%
FY15 FY16 FY17 FY18 FY19 1Q20
Gross Margin %
Revenue Gross Margin Adjusted EBITDA
$38
$49 $49$52
$48
$8
FY15 FY16 FY17 FY18 FY19 1Q20
Adjusted EBITDA ($M)
Growing Global Software and Subscription BaseDriving long-term predictable revenues
15
Application Subscriptions & Other Services Revenue
Global Subscriber Base
($ in Millions)
(in Thousands)
482628 730
9371,237
FY16 FY17 FY18 FY19 1Q FY20
$43$59 $64
$78
$26
FY16 FY17 FY18 FY19 1Q FY20
25% CAGR
22% CAGR
Strong Historical Free Cash Flow (FCF) GenerationStrong profitability and free-cash-flow conversion
16
Note: Free cash flow is calculated as: net cash flow from operating activities less capital expenditures. See Appendix for reconciliation of GAAP to Non-GAAP figures. Free cash flow was negative in the first quarter of FY20 due to our GAAP net loss of $8.7 million coupled with net cash outflow for working capital requirements and capital expenditures. The free cash flow metric for the quarter was not included in the presentation as we believe it is not representative of our continuing operations.
$35
$42$39
$42$40
$4
FY15 FY16 FY17 FY18 FY19 1Q20
Adj. Basis Net Income
$21
$43
$18
$59
$36
FY15 FY16 FY17 FY18 FY19
Free Cash Flow
Adj. BasisNet Income
Free Cash Flow FCF as a % ofAdj. Basis Net Income
60%
102%
46%
139%
90%
FY15 FY16 FY17 FY18 FY19
FCF as a % of Adj. Basis Net Income
Guidance and Outlook
17
Fiscal Year 2020 Guidance
• Telematics revenue to decline by $25 to $30 Million
• SaaS revenue to increase to ~ $120 Million
• Adjusted EBITDA to be equal or greater than $48.2 Million
• GAAP revenue of $89.5 to $94.5 Million
• Non-GAAP EPS of $0.08 to $0.14 per diluted share
• Adjusted EBITDA of $7.5 to $11.5 Million
Second Quarter 2020 Guidance
Appendix
19
Appendix: Non-GAAP Reconciliations (1 of 2)(Unaudited; amounts in thousands except per share amounts)
CalAmp Corp. Reconciliation of Non-GAAP Measures to GAAP
(Unaudited)
"GAAP" refers to financial information presented in accordance with U.S. Generally Accepted Accounting Principles. This presentation 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 forresults prepared in accordance with GAAP.
In this presentation, CalAmp uses 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-BasedCompensation, gain on legal settlement and other adjustments as identified below), as a substitute for results prepared in accordance with GAAP. Adjusted EBITDA margin and Free Cash Flow. CalAmp uses these non-GAAP financial measures to enhance the investor'soverall understanding of the financial performance and future prospects of CalAmp's core business activities. Specifically, CalAmp believes that the use of these non-GAAP measures facilitates the comparison of results of core business operations between its currentand past periods.
Adjusted Basis Net Income and Net Income per Diluted ShareThe reconciliation of GAAP basis net income (loss) to Adjusted basis (non-GAAP) net income is as follows (in thousands except per share amounts):
GAAP basis net income (loss) $ 16,508 $ 16,940 $ (7,904) $ 16,617 $ 18,398 $ (8,693)
Intangible assets amortization expense 6,590 6,626 15,061 14,989 11,436 3,040
Stock-based compensation expense 4,100 5,854 7,833 9,298 11,029 2,543
Non-cash interest expense from amortization of debt discount - 4,613 6,232 6,627 10,406 3,743
GAAP basis income tax provision (benefit) 8,292 4,572 (1,563) 10,681 (1,330) (2,257)
Impairment loss and quity in net loss of affiliate - 829 1,284 1,411 6,787 530
Loss on extinguishment of debt - - - - 2,033 -
Acquisition and integration expenses - 1,980 4,513 - 935 1,144
Realized gain on investment of equity securities - - - - 629 -
Non-recurring legal expenses, net of reversal of litigation provision - 2,900 9,192 10,738 (11,020) 3,807
Unrealized gain on investment in LoJack common stock - (1,416) - - - -
Gain on legal settlement - - - (28,333) (18,333) -
Restructuring - - - - 8,015 -
Other - - 5,073 1,008 901 461
Adjusted basis income before income taxes 35,490 42,898 39,721 43,036 39,886 4,318
Income tax provision (non-GAAP basis) (a) (328) (499) (1,164) (875) (78) (150)
Adjusted basis net income $ 35,162 $ 42,399 $ 38,557 $ 42,161 $ 39,808 $ 4,168
Adjusted basis net income per diluted share $ 0.96 $ 1.15 $ 1.06 $ 1.17 $ 1.13 $ 0.12
Weighted average common shares outstanding on diluted basis 36,530 36,950 36,397 36,139 35,294 33,733
Year Ended February 28,
(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 carry forwards.
Three Months Ended
May 31, 20192015 2016 2017 2018 2019
20
(Unaudited; amounts in thousands except per share amounts)
Appendix: Non-GAAP Reconciliations (2 of 2)Adjusted EBITDA and Adjusted EBITDA MarginThe reconciliation of GAAP basis net income (loss) to Adjusted EBITDA, and the calculation of Adjusted EBITDA margin, are as follows (dollars in thousands):
GAAP basis net income (loss) $ 16,508 $ 16,940 $ (7,904) $ 16,617 $ 18,398 $ (8,693)
Investment income (224) (1,871) (1,691) (2,256) (5,258) (2,081)
Interest expense 296 7,595 9,896 10,280 16,726 5,456
GAAP basis income tax provision (benefit) 8,292 4,572 (1,563) 10,681 (1,330) (2,257)
Depreciation and amortization 9,386 10,208 23,469 22,957 20,016 6,885
Stock-based compensation expense 4,100 5,854 7,833 9,298 11,029 2,543
Impairment loss and quity in net loss of affiliate - 829 1,284 1,411 6,787 530
Loss on extinguishment of debt - - - - 2,033 -
Acquisition and integration expenses - 1,980 4,513 - 935 1,144
Non-recurring legal expenses, net of reversal of litigation provision - 2,900 9,192 10,738 (11,020) 3,807
Restructuring - - - - 8,015 -
Gain on legal settlement - - - (28,333) (18,333) -
Other - - 4,339 989 217 235
Adjusted EBITDA $ 38,358 $ 49,007 $ 49,368 $ 52,382 $ 48,215 $ 7,569
Revenue $ 250,606 $ 280,719 $ 351,102 $ 365,912 $ 363,800 $ 89,070
Adjusted EBITDA margin 15% 17% 14% 14% 13% 8%
Free Cash Flow
Free Cash Flow is calculated as follows (dollars in thousands):
Net cash provided (used) by operating activities $ 28,645 $ 47,400 $ 25,796 $ 66,894 $ 47,740 $ (5,552)
Less capital expenditures (7,437) (4,317) (7,962) (8,339) (12,007) (4,954)
Free Cash Flow $ 21,208 $ 43,083 $ 17,834 $ 58,555 $ 35,733 $ (10,506)
Year Ended February 28,
Year Ended February 28, Three Months Ended
May 31, 20192015 2016 2017 2018 2019
Three Months Ended
May 31, 20192015 2016 2017 2018 2019
Business Cases
The Student Journey – Here Comes The Bus / SureDrive + CrashBoxx
22
7:40 am –• Parent receives alert via SureDrive that
bus is approaching bus stop• Parent communicates to child to leave
for bus stop
7:55 am –• Bus arrives at bus stop7:56 am –• Parent receives alert that
child got on bus
8:15 am –• Parent receives alert that
bus arrived• Child gets off the bus
After school
Before school
3:45 pm –• Parent checks in on
children through SureDrive app
3:35 pm –• Teen sibling picks up child from school
4:00 pm –• Parent learns that teen has a minor fender
bender via CrashBoxx Instant Crash Alerts
4:45 pm –• Children arrive home and
alert is sent to Parent
1:30 pm –• School fundraiser for
the sale of SureDrive
The Tool Journey – CalAmp iOn for Service Fleet
23
6:00 am –• Driver logs in mobile app• App automatically pairs driver
with vehicle based on skill set
• Van has appropriate tools for job
6:15 am –• Departing from yard
7: 00 am –• Driver arrived
at worksite
EXIT
2:00 pm –• Driver leaving worksite
• Alert sent to driver on app saying item is missing
3: 00 pm –• Driver arrived back to yard and
disconnected from vehicle
2:02 pm –• Driver heads back to
worksite to retrieve tool
The Cargo Journey – CalAmp iOn for Asset Management
24
6:30 am –• In-Transit Validation
6:00 am –Deployment Validation
6:51 am –• Shock Logging
7:02 am –• Temperature Logging
7:23 am –• Location Logging
7:27 am –• Light Logging
7:30 am –• Delivery Validation
Case Study
ChallengeA major logistics company was struggling to find and provide status updates for each one of their trailers to optimize integration for their delivery service. It required significant amounts of staff to scour depots nationwide to continuously capture utilization data
SolutionCalAmp’s asset telematics solution was selected to help streamline the management of thousands of trailers, providing location and other data to the CalAmp Telematics Cloud for reporting and notification alerts. CalAmp’s TTU devices were installed on the trailers in a weekly rotation
ResultsThe company has benefited from real-time information, while reducing manual labor. They are now better able to schedule the trailers based on location and reduce idle time. The data helps them right-size their fleet and optimize utilization
Case Study
ChallengeA major insurance company was seeking to improve the manual processes of managing accident reporting by drivers and vehicle damage for almost 1,000 company taxis. Since drivers are liable for damages, the incidence rate of false reports filed was very high
SolutionLMU-3050 telematics devices were installed on the taxis for a controlled pilot. The accident data was transmitted to two accident management systems, CalAmp’s CrashBoxx™ and an
alternate solution
Results• 1,000 connected taxis• CrashBoxx detected all crash incidents within 90 seconds of
impact. In comparison, the alternate system registered less than half of the crashes
• CrashBoxx identified 6 accidents that were not called in to dispatch
• Our solution provided more location aware data than the driver could iterate
Thank You