CAMP - Earnings call transcript Q4 2019

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Operator

Welcome to the CalAmp Fourth Quarter and Fiscal Year 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Nicole Noutsios, Investor Relations for CalAmp. your begin may you conference. Nicole,

Nicole Noutsios

and Good Thank Officer, fourth us Kurt welcome Michael President CalAmp’s Binder. and fiscal you, today and year Financial CalAmp’s With operator. quarter call. XXXX to conference Officer, afternoon financial Chief Executive Chief are Burdiek; results

forward-looking begin, remind contain we this call you Before that let may me statements.

or any forward-looking While subject results uncertainties operational be This these highlights. and cause about today, over actual These to Binder additional to that, our to it's to forward-looking and implied undertake Burdiek on statements differ a the results now future turn Michael projections. that Burdiek. my publicly SEC CalAMP's President company's with pleasure CEO, those call website. in available the provide outlook. question-and-answer current to will best call Kurt and are no of would today's obligation our reflect forward-looking earnings or reflect the financial factors financial risks to these followed With revise details judgment, release are view the by Michael from materially discussed issued they events circumstances. risk periodic session. are We will CalAmp's and could then which by company's begin statement in filings and update

Michael Burdiek

Thank you, Nicole.

impacted product million, was domestic at We revenue in our are Similar disappointed well sales. that ongoing below last as revenue which challenges was as MRM quarter, $XX.X below decline came our expectations fourth quarter supply range. a to in Telematics chain guidance by

cash high XXXX also cash of strong flow $XX diluted $X.XX adjusted with guidance another year free net $XX range. share million. flow operating Fiscal strong of was this However, with our was with of and and the at of balanced million per of flow cash end profitability income

minutes, strategic last a growth from look in faced challenges growth in ongoing acquisitions challenges, I driven discussed timing the outlook provider transformation as we recent in solutions strong as will provided financial announced. quarter, a transformation by like our cautious I organic recent to the XXXX, track we address on elaborate we our a risks the recently few associated the to around to well remain SaaS well ahead fiscal quarter. SaaS outlook. on As we as Chinese to solutions but macroeconomic When our three more our operational of concerns New with we first we most as would Year provider

impacted challenges shift to some demand. in fourth and significant marginal adversely ability we remain performance, While improvement CalAmp's certain our to operational saw supply products quarter chain customer meet

We new have stabilize synchronization interim performance improve leadership, with taken suppliers. operational new processes and steps with key chain supply and tighter to

with organic last on and a at are these a driven possible. these earnings related a on As and those service XXXX and remain short-term Despite year-over-year. challenges, fleet quarters the management quarter, especially growth as software of resolving XX% level provider. growth LoJack service issues subscription to by will software of focused chain SaaS few and subscription call, supply long-term issues least and take in revenue CalAmp's revenue in consolidated fourth reached market to transformation the intact, services. and reached growth XX% we drivers mentioned record the of opportunities solutions In resolution fiscal quickly revenue CalAmp's subscription we as our methodically

Synovia past quarter, America. Solutions North delivering We acquisitions Tracker three worldwide latest in in strong in Mexico organic our the UK, acquired making by based to to growth we addition three the based in months. expand in base based the Car In subscriber strategic Mart continue and

a half expect service run per rate base driven in a of than $XX the of to our we second by more and million revenue quarter subscribers With worldwide. million fiscal to subscription these acquisitions, software increase X XXXX of

We also to to into Mexico, would and reach SaaS UK, I believe United as subscription telematics our offer into expect case customer other drive and global States, provider. insights market our highlight these a some solutions that will the I expand targeted CalAmp's vertical the like verticals. services studies significantly geographies acquisitions that transformation within our strategy

very was study our pilot Dropbox monitoring solution relates SaaS success First to the case at Dropbox deploying early it across customer this their package our as Though phase, This service for a detection nearly around incremental XX,XXX just to this in to an if getting of locations the United could their freight a with the early successful, to underway locations for U.S. deployed global a subscription detect solution investigate trailers for is parceled customer XXX North drops transport Dropbox States. spawned America. a project solution up spread by large trailer all across be viability

of two their America. Another our North for machines service across plans level heavy case study OEM security that a relates deploy to to second equipment subset a largest

could and look CalAmp the our into Telematics These security in It beyond time, dating a they and to subscription only opportunities just to greenfield as was line service. the service their an options an other and in as to details additional that encryption customer's these future end two adopt margin two opportunities industrial opportunities solutions, important to but but opportunity this SaaS are and we deploy. at exciting Given entrée device for sharing and go vertical an deployed this pipeline mature. forward software subscription feature begin a several down machine customer, telematic be quickly represents level Up subscription over CalAmp level this additional in layer top will desire expansion security the to asked end the two solution point new simple they data the for one for sector.

driver's features. to to customers to instant grow our certain content base our scoring services to select installed subscription a we end addition adding with recurring as vertically such Telematics end value revenues transition SaaS reporting, process In to strategic security model. solutions, detection focused CalAmp this continue on products initiatives work to will to MRM and and In conversion for focus crash with

modest remains negative it several expected we this in the the As wholly-owned relates of to the year-over-year. as our revenue reported mentioned to expand to and we building fiscal global occurring towards consumer later last UK quarter. effort, with a licensee growth year Car customers fleet revenue. our and the million. recurring telematics the with once Global expect long-term for transition revenues. program Europe, from see Italian of transition Mart CalAmp's we to in impact In new of of revenue key with this focus of of in diversification XX% quarter $XXX launch with offset our our of earnings in software some current solutions contribution acquisitions target hardware especially upfront official subscription engaging loss meaningful in area management expansion the this in LoJack company, the Early revenue the make strong portfolio near-term again and in service growth Tracker and are for an The revenue important help Mexico results in and latest recurring financial annual are call,

of stronger the network expected than with international strong Systems from driven saw fourth another customers Telematics our products signs OEM stronger from to lower once products with in by Caterpillar the demand. again by MRM for encouraging turning OEM. States United year-over-year quarter, in along also Revenue a demand partially bit growth and offset we business, Now was

opportunities Looking subscription wins, the our opportunities to reach industrial for but device machine with see growth marketplace, related future, the and services. only expand to also not design in global rental we Telematics equipment additional

challenges, Before I our turn long-term solutions results Kurt, strategy a increasing announced turn a to the revenue fiscal strong guidance. our our recurring XXXX coupled call fiscal the I SaaS global recent to would I like growth over provider. over acquisitions, our transformation Officer, give call us that Kurt look now despite Financial profitable that Binder, XXXX to with QX financial organic closer in our QX growth for our With and emphasize confidence and to Chief will recently at

Kurt Binder

non-GAAP My release our issued adjusted measures A EBITDA non-GAAP of Michael. fourth basis EBITDA the year to reference reconciliation margin. and the quarter will press net commentary included full adjusted earnings earlier and measures today. was you, fiscal measures basis GAAP of corresponding Thank include in income, adjusted closest that announcing the is with financial these

in quarter we decrease continue fourth Michael but consolidated coupled full revenue we revenue supply to in is in revenue the recurring year-over-year our a mentioned, of lingering performance a are disappointed decline provider chain due million, very product chain challenges sales. strong to the to year, make our was our for for a Systems with Telematics SaaS in the with transformation $XX.X As improvements well. solutions proceeding and and a supply Consolidated fourth quarter base operation XX% global

was revenue of X%. million, consolidated fiscal less In approximately million, $XX.X XXXX, XX% or was international XXXX, year For fiscal revenue. of decrease revenue a than $XXX.X consolidated

organic up services XX% freight for million quarter in fourth additions the compared had into generated well to the subscription the business both of to Our up year-over-year. principal the LoJack contributors transport generating The and initiatives fourth revenue revenue of and services XX% Italy in subscriptions software last a $X.X performed transform and the remained another year subscriber in SaaS was driven software quarter we LoJack throughout exceptional and business with focus global growth fiscal provider. and as company being our steadfast year. The year. growth solutions revenue subscription the by $XX quarter was same quarter million quarter, fourth

same year-over-year. by vehicle year. Italy expanding LoJack LoJack’s services management and within strong of and and progress recent as made million, subscriber our approximately well SureDrive acquired domestic well of as was services, create XXX,XXX additions in international continued recurring contributed strong SaaS XX% growth XX% activation. in last XXXX, and LoJack success $XX.X period recovery businesses XXXX year-over-year telematics revenue in subscribers new revenue solutions up for subscribers base a stolen our as LotSmart compared subscribers business. unique as XXX,XXX driven foundation with the We ended The in fiscal for increase to fiscal For Italy our software subscription fleet

head build XXXX. to base expect as solid subscriber We on we fiscal this into

of contribute of February, end and course the to services our of which around The by first Synovia revenue a of expect the very sheet these fourth well the diminishes coupled ramp base in incremental the to revenue at with $X discount organic by also Mexico put upwards targets fiscal to GAAP in acquired the to we consolidator we revenue Track Tracker date the growth balances. LoJack accelerate deferred course the revenue on revenue These as creating of efforts fiscal assumed or as few minimal of three SaaS them haircut purchase believe predictable We years balance long-term fourth million opening the over billings will XX% of fiscal with to as on QX, XXXX. time. basis balance UK, revenue, revenue global which Solutions. impact established in XX% $XX a revenue Subsequent first – up newly annual subscription the acquired us to help million company. contributed revenues acquisitions from and is normalizing quarter, activity compared and adjustments, thereby our the affected combined ownership ramping the This services Towards deferred reach actual accounting quarter. software subscription million approximately over in recurring expansion the acquisitions pre-acquisition and we Car quarter for of $XXX strong of software over

meaningful long-term objectives, EBITDA progress and these we expect towards progressed towards see our targets. margin XX% XX% to we margin gross As

as Telematics looking $XX.X chain in fourth million, was MRM decline the to to the SVR systems LoJack was decline challenges revenue product lingering business performance The due quarter, down supply revenue our Telematics well in year-over-year. and XX% legacy as Now sales.

revenue legacy year telematics This of X% by through between licensees. was including XXXX, these split was decline approximately full an by well licensees, evenly SVR products quarter, million we’re decline solution increase Telematics LoJack dealers sold for subscription to down a as year-over-year. about as to of sales the The $XX channels year-over-year. fourth LoJack and Network approximately decrease increase systems Sales auto or fiscal U.S. LoJack an products whole, was a in the revenues. related Telematics XX% year international $XXX.X million legacy sales partially $XX in and year-over-year. international as product growth CalAmp in OEM revenue million, for X% a SVR sales For decline representing of was offset to or

Caterpillar as full continues a full revenue in Consolidated and $XX.X in another reflecting the revenue. facility. the obsolete consolidated slightly contract in heavy This OEM. Caterpillar global quarter, $XX.X year, million, was our On manufacturing customer of of the manage well down For XX% quarter, our was product was primarily with XX% representing from continued demand from to equipment year fourth increase XX% margin million, due the suppliers an network XX% OEM increase $XX.X as we to slightly revenue and of largest of to products record be Caterpillar year-over-year. our basis, revenue year-over-year. due and gross margin fourth down Gross reached last year. revenue a manufacturers increase a as from transitioned performance inventory approximately XX% and higher excess was closure million

percentages XX% In revenue and XXXX, sales margin the prior the as in marketing in or in XX% full respectively. as basis approximately year of gross and and our roughly approximately fourth R&D For the X% was consolidated fiscal were year. expenses year quarter same the OpEx, GAAP

Jury's the decreased for expenses patent the Federal portion vacated the contingency that a remanded of compensatory the April accrual to the significant of and On aside of Court as also enhanced damages the G&A reversal Federal trial. Appeals to Omega. the and Infringement alleged Omega for set Verdict for Court due willful court trial fees new X, a XXXX, the Circuit Our infringement case established quarter attorneys' The by was awarded loss claim. the as in the well

and GAAP respectively. expenses and marketing R&D, fiscal sales were of XX% For approximately and as basis, X%, percentages XXXX revenue X% G&A

of Additionally, and OpEx XXXX G&A a sales for respectively. for X%, expenses revenue and as were XX% and our non-GAAP fiscal XX% basis percentage R&D, marketing

been recorded our charge operational increased plan and diversity, reduce operating on sales have $X organization outsource efficiency, order during integrate in of million we quarters, functions to our a executing geographic we related to manufacturing few plan. global past the the to Over restructuring fiscal further drive expenses. and XXXX Accordingly, supplier

quarter $X.X intent period. the that reversal on cost basis our was result share loss $X.XX is we compared year Omega the $XX.X diluted a a per in $X.XX with XXXX, the was in The the reduced $X.XX, by or accrual net fourth on mentioned favorable quarter year diluted compared basis $XX.X The net remain million, attributable net prior realized net Omega in basis $X.XX loss without the fourth compared to share the quarter income contingency former on of XXXX to of gain net supplier. $X.X of $X.XX diluted we GAAP $XX.X sacrificing $X.XX income same year earlier. LoJack The same income basis per for million, fourth settlement share growth was GAAP in million, The million, fiscal increase in or of offset the prior fixed diluted or share, in year income matters patent for the period. structure million, share look initiatives. Non-GAAP net million, As the share income reversal on income or or diluted GAAP for GAAP matter a $XX.X the per in accrual improvement is full per contingency the period. per I the our fiscal net the the optimizing investment same to for fiscal the year XXXX to in infringement the prior of to loss per or

same million quarter the the For adjusted $X.XX, in EBITDA same to cents to of prior non-GAAP decline was is a compared adjusted $XX.X compared decrease or and $XX.X to of the adjusted $XX.X diluted income The XX% EBITDA gross decrease of the per attributable margin million share net million, EBITDA million period. margin to period. per prior net share Adjusted an income non-GAAP $XX.X in in in fiscal year. an $X.XX profit slight experienced in or EBITDA due XXXX, year the fourth during with revenue was XX% year

the sheet and XX%. now XXXX, end million EBITDA debt and $XX.X At $XXX activities XXXX. settlement in the related items of fourth fiscal for of we an the proceeds The of plus as LoJack marketable prior margin total XXXX completing July aggregate which supplier. that our the with notes operations period and balance position to adjusted outstanding a and quarter, EBITDA payment of this net EBITDA all final EBITDA by adjusted details I of from additional cash million total unsecured for For issued was strong $XX.X million fiscal our the XXXX, May cash favorable liquidity our was February was $XXX year settlement $XX.X carrying was million, XXXX, value adjusted year we on was of end. received operating fiscal matter. to Net outstanding the provided represents convertible will of million securities and of and with in some XX% thereby our former cash had from million the attributable adjusted is margin provide which same $XX.X flows

quarter, of for XXth fourth two purchased purchase the we During hand. cash effective with just the were using February $XX businesses other Tracker acquired UK acquired Tracker along million. on a UK net price

repurchase common million by Additionally, we million authorized of directors share used approximately outstanding board under the program in December $XX to of $XX repurchase our stock XXXX.

end fiscal the million to have approximately we we share X.X the our had purchase existing common shares $XX used under million During At approximately the million year, remain repurchase of of year, authorization. stock. the $XX

at the consolidated inventory period total fourth annualized while of collection net accounts $XX representing the fourth of quarter, end was turns million, an Our receivable quarter of the times. inventory the days of million was XX balance at $XX.X representing average the X.X end

of XX time year. days the of the end the end at latest to compared cash at XX days quarter Our cycle conversion last was

year the growth with of recognition attributable million ASC to we of units at compared million our prior year, deferred impact at revenue to the coupled customer. XXX global contract was the the as and of is transport standards our Additionally, adopting backlog, especially revenue end for deployed $XX.X end our which balance $XX.X

recorded tax which against million, $X.X tax assets. deferred foreign an For fiscal decrease is of in certain valuation our attributable benefit XXXX, and a to applied year we allowance income tax credits R&D

XXXX. provision prior income provision our tax re-measuring result income. same and of the net recorded of $XX.X enacted transition in the a taxes of of pre basis law tax tax For attributable period, income to was representing one-time GAAP a of year This an we tax as million December deferred reported XX% new our

any net and fiscal into expect losses available remain we due Moving operating credits. cash other tax federal not do to XXXX, taxes our changes material to

turning XXXX fiscal to Now QX outlook.

first We in $XX.X the of million million. expect quarter revenue range consolidated to $XX.X

share. We process are assumed quarter. the into balance $X.XX the the contribution minimal deferred our from loss we revenue At of quarter integrating still acquisitions and of the for basis three bottom upcoming first contribution $X.XX for QX in the be per and beyond GAAP to the net expect discount business have to the range line, revenue in

We range million. first and the quarter share $X.XX also range EBITDA in diluted to net non-GAAP expect of in per million of $X.X to $X.X adjusted income $X.XX the

as increase software and represent million expect For more consolidated we subscription approximately XX% to fiscal revenue $XXX of a and than services whole, XXXX to revenue.

of We is $XX to included loss expect product in the ongoing in and to the telematics acquisition Also three product as decline with transition a revenue. revenue systems based secular primarily model. well this due outlook and decline revenue as revenue $XX of recognition former subscription line customers legacy product million MRM between the to certain consolidation million

open adjusted greater provide expect final in turn EBITDA the before back recorded XXXX. questions. call the fiscal some to in over that, fiscal than up our comments I'll to to we With be for Additionally, Michael call we XXXX the adjusted EBITDA

Michael Burdiek

Kurt. you, Thank

progress quarter's making addressing to our few issues next in While the we in behind were hope over disappointed challenges latest us have we quarters. these short-term are this and results,

accelerated now optimism up new are margin, We year higher we that as will CalAmp’s open solid of that, will increased SaaS the the revenues services. growth creation With global innovative transformation a Operator? and to entering through solutions base telematics value in a provider with questions. subscription call fiscal drive recurring

Operator

Your Instructions] with comes Genuity. first Walkley [Operator you. Canaccord Thank Mike question from

Your line is open.

Mike Walkley

certainly recurring help you’re us Michael Great, customers revenue. the I hardware customers transformation coming are the Can to the to to thank higher just and the – these three acquisitions a through several of sales were as the that this you of customer maybe mix sales out hardware of hardware recent accelerating acquisitions acquisitions all for you. with CalAmp? of different three mean – your walk

Michael Burdiek

we products. acquired Correct. Yes, all And the were obviously, those the each part continue of revenue consolidation, Tracker, consequence a we Synovia Mexico products the but product as making we bundling acquisitions, particularly of for LoJack own as in use with our margin Hello, customer Mike. was good the to good course MRM bundled a to and get world solutions, customers. activities. of the entities associated retain of lose Synovia as our

of a short-term levels little bit drive impact, good So ability a of to in going but off of trade recurring forward, obviously, a increased our terms obviously revenue.

Mike Walkley

to change I Yeah, million decline. talked call? for the weaknesses other am it on just the see decline of macro the thanks. Okay, $XX to just versus due other was much you just what How overall to and bundled of trying $XX about million accounting

Michael Burdiek

Yeah, on some give directional that. I you kind could of feedback

eliminated telematics approximately it relates the million how sort to revenue anticipated sort As is $XX three out decreased entities. third in of that about to be a the system parsed of million consolidation of is outlook $XX to

Mike Walkley

walk can Okay, from – the the just platforms overall the great. together application us through you're bus longer term for the are on maybe synergies applications there how and just And CrashBoxx ties their with That's acquiring? any you of helpful. just Synovia, And that LoJack?

Michael Burdiek

good questions. well, Yes,

developed the to close when very, innovative share. interesting So marketplace they did really some Synovia level as marketplace. important this. very terms I bus something described number a And in of in the they not if one school a player fact position in we And announced one that acquisition in obviously being when fleet is of in think number management probably are they detail, and we

and might track of buses, And a is system are app actually access district part at school surface that to seem a published it's the fleet where Here where bus school of comes has schedule. parents that school that of the it's rights that the services. to parents it's anybody and their it an allows be bus very able be districts supposed the to the the but where that's part to management relative they complex given analysis for provide app simplistic school

parents lot that's where to allowing there's done on only with app potentially work to is, that and LoJack where analytics to the by some child integrity to We chain the years ago. but an of been know opportunity application are. not actually that So here know actually LoJack to in to about background of a our integrated feed know the really of consumer the buses that people some that those into to technology bus leveraging technology we see has acquired allow take three get bus the comes the able supply bus

Solution that the place. competitive so asset that of of have a bus to overall opportunity – tags called plan continue sources relates fleet We can so have alternative that Synovia K-XX as in it the services provide to market management our advantage important we part to pass we as interesting to introduce as

additional Now brand that that chose it introduced Bus years Here as they to Comes ago. when synergies, The it's app potential it a few LoJack not Synovia interesting relates to

security. XXX,XXX relates safety to blank the a day Here child The and Bus concerned who obviously canvas So, is opportunities Bus a are as the and Here use very parents do, there's App app essentially, who it about roughly branding Comes and interested and Comes The The

parents to through into it's ecosystem children So, fabulous sort teen all opportunity introduce students LoJack of a up the they secure journey for students high they we LoJack of safe and and perspective. and to become journey that fundamental as part opportunities the brand and branding their drivers be offer that of the think from able when way kindergarten a school the from have monitor

Mike Walkley

going you. quarter? or business question very think long you some and the to impact maybe much you, your Kurt on me of supply how impact helpful. on they're and sales just I'll it pass the the what that's in both of was And Thanks Right. fourth last issues, to for maybe Thank for

Michael Burdiek

I'll prepared said did color chooses. that remarks a completely be few the quarters Well, resolved. that Yes. add bit we expected part little and Kurt But, a we the QX. We of of can he take as to progress to in in take make on

in talked when last related expect was QX in did estimated continue that it related about material about issues. our demand issues make we of And say is would we to a we face to specific as XX% results revenue on have was to we related that is I matters the this that to QX. roughly And what announced talked our quarter. to XX% results, We we impact our chain, and guidance progress but QX, customer related supply face we about quarter roughly situation our

Kurt Binder

highest had backlog quarter, That our we quarter the the had we have there probably level history. only thing last left communicated that the third I would add, with Mike, is that in we ever as

did at not This as improvement We bad. unfortunately, was it but an unacceptable was make level. quarter there,

manufacturers the ourselves have are process, aligning better we working contract so that chain. still visibility in complete and through And ensuring our we supply with

significantly down next the So quarters. over come that levels backlog few these

Mike Walkley

you thank much. very Okay,

Michael Burdiek

Thank you.

Operator

Markets]. comes from question Mike [Northland next Your Capital Latimore

Your open. line is

Unidentified Analyst

This Hi, Mike on for guys. is Ton Latimore. [ph]

Michael Burdiek

Hello.

Unidentified Analyst

– Do related hello. is you question me? hear My

Michael Burdiek

Yes.

Unidentified Analyst

This have is quarter? Ton to on two LotSmart contribute this I for Like Latimore. and questions. did SureDrive what

Michael Burdiek

XX,XXX I drive around more respectable think around and those a subscribers up actually to QX. $XXX,XXX. Both the XX,XXX, X,XXX on the sequential SureDrive, was and I to I was to subscribers, LotSmart year-over-year than ticked in with a actually hovering amount basis. and as over for of XX,XXX believe numbers And it combination, approximately of LotSmart little end bit at X,XXX time considerably was first a it believe revenue relates $XXX,XXX SureDrive right were up

Group also of giving boost get not I lines. a great So to and and dealer we playing channel, they I bottom how in making And in there. gaining a encouraged about sell making think with terms traction is managing see announcement we're very opportunity help the and through only that Trophy there a critical just the them some taking to the operations, to expression ago, Telematics consumers by products time we're we're traction of made progress but we're great week their the role dealers our think the

Unidentified Analyst

where run rate And go could it. got Okay, that this year?

Michael Burdiek

– obviously as Tracker Telematics think UK, separately, traction gaining. as situation And our to to entities, similar LoJack We for out to all it in we're in Mexico. relates by break encouraged and of Italy, well I really it's international as don't the a able both we're position be that domestic but a opportunities we're LoJack

Unidentified Analyst

Okay, that's all you. Thank for me.

Michael Burdiek

welcome. You're

Operator

Revich comes Sachs].Your question is open. Your line [Goldman from next Jerry

Ben Burud

everyone. Burud Jerry. on Hi, This Ben for is

Michael Burdiek

Hello.

Ben Burud

– I can you kind to idea the the LoJack outlook what just business driving of and of million the MRM in was SVR? the and the that? outlook business us of $XX and Hi, idea million growth specifically $XX an for the obviously But for XXXX. the an to You in what's you you more embedded give discuss give Can organic what is hoping fiscal decline MRM is discussed SVR? for and the release guys just outlook us LoJack Telematics

Michael Burdiek

because Telematics customers. but loss consolidation expect device it impacted device associated relates the MRM it as be also to specifically LoJack outlook licensees we of with well as revenue to other SVR Synovia as MRM as well Well, customers they the were obviously, by the

So, obviously, that's an impact.

lines model. to a blast in some percentage or number continue estimate in some sort consolidation, also including, notices products $XX revenue channel to third to licensees fact program a our is $XX to a million. the remaining a lost see the of about different including week. essentially our level as I U.S. this in systems. well public subscription And to as of And to legacy another only product related them discreet million to safety the of sales, SVR some estimated SVR what's we of And through that around the related and elements really then communication life transition with it of in the decline some first sales secular of transition some associated the expect dealer We the expectation, third as also we'll breakdown of products MRM MRM products made I radios, the just balance we time of radio some would – private launched PTC end our for only of relates of subscription old to to

the companies the we for we or to revenue associated LoJack around As transportation one through XXXX. relationship product solutions growth to service relates with chain partnership that growth, organic see noticeable device like expect services a our through as various it back we transition obviously, MRM well supply MRM our we're [ph] see related in growth recurring and pretty as categories in those LoJack selling expect that SCI Telematics the with and time to line product Pioneer, offsets, as some and dealers fiscal some initiatives announced the for also Telematics logistics

Ben Burud

those out, items well But you – for very adjusting but them understood. like? at it, if foundational is underlying what organic to if look MRM going outlook I and the list what on all trying positive get trying for out, SVR we I'm the CAT think is to you get just one-off story I where Got all what's for just MRM? get I'm those I adjust is, think guess items, organic at the is outlook LoJack

Michael Burdiek

really the fiscal as That's a new enter our prudent question, to very we cautious it's difficult be But answer. and outlook. in year, to good trying we're and

in in FY in at Telematics are So, organic time, not MRM I significant products think demand growth XXXX. we for this point expecting

Ben Burud

last then were assets? what just appetite is just multiple these for pipeline the the – Got shaping you few us going give was for the months at it. of are up? forward? is deals you acquisitions, M&A can going And And on your And bidding for forward, how there that? how an you idea give Can an us bidders you in intensity then looking the multitude idea, did

Michael Burdiek

question. good really Really,

as had else. made to We into that those better As difficult businesses. our the it or our mean nature relationship might bit say process. opportunity relates could Tracker wasn't therefore, license to M&A obviously I great sort would would very we and of away with unique understood a term the viable our LoJack entities. have those a what it run were it as we from that stole it to I us a a to one good of position little than say mile acquisitions. And unique relates And insights normal of there integrate agreements I to was – another those anybody alternative. relates as it Mexico, in

from a basis to great view relatively and lot get including they And They that doing recently. process they the to was remind in ran say marketplace. those They shareholders better have company were more only that ago, thought a but as a them on had the years outbid with were school it's valuation to would was given deal solid to of process, very deal $XX process get with private story, insights run fleet what and into every order to different you versus participant we way of equity I bus might CalAmp potential firms, associated in business a asset. do that year So, expect much a another we than combined to want these decided few relates bidders. that CalAmp the growing. expected. all synergies business unique minimal management that with assets. not Synovia and values, million necessarily able the if other competition, others it a a the pre-acquisition businesses in were doing that those strategic alternative We a consider important And two – this well-known they was about the were felt I to their our them. and others couldn't the very, We with think million each revenue they didn't everybody think a $XX be one

to as sit you it then for to total $XX got various that consider strategic trying to relates find avenues the great expect we're the integrating them we to the businesses And of be would very you managing question, find. three think follow-up going I M&A so trying and to of paid to I build consideration or there synergy able we So, time these and focused I certainly we think a had lot of look was at on in the active necessarily say relative pipeline work ongoing appetite being, particularly a opportunity. integrating wouldn't the to do like? say and we're deal much for the businesses, acquisitions. we what's this roughly our three hands not a what and and stage There's is million M&A our very robust to of pipeline we're

Ben Burud

Thank it. much. you Got very

Michael Burdiek

You're welcome.

Operator

from next Your Searle question Capital]. [Roth comes Scott

Your open. line is

Scott Searle

sure missed of wanted to for structure you both but – expecting And from I'm give afternoon. guys, kind I good first those standpoint? the it, of Thanks a in for now question. acquisitions OpEx Hey as growth did things you're for not follow-up, the couple the my with contribution what and what outlook OpEx just of Hi, business going if terms get taking quarter an when OEM fully we like, from look to the three a year, well non-GAAP the businesses? loaded a three is full quarter

Michael Burdiek

That's what it's well Last year I in year. engagement been give has of with and We OEM to our separately, FYXXXX services on outlook. see guidance with We a them And for fiscal that. as be not little do don't our you to to questions. expect to Good of continue last year and it's this of a think the very terms fiscal second what's around relationship. a to that I good I material prepared terms that be year OEM FYXXXX very, been of that to was that we us what and that products be sell year. exceptional opportunity the equipment outlook did going security do we cautious in sort to the bit of we expect growing Cat with expect And this products great to alluded to Caterpillar OEM their the other very prudent out results layer not we in although expect break network subscription as heavy plan color contribution do as terms coming would obviously as saw little remarks see that's in year. We of we're cautious in OEM. revenue for year. we to in a in the other currently implied would we we our to to relates the will outlook is a for to grow. related an think some and be activity reluctant think

Scott Searle

you're terms dollars of – clarify it you as in terms it. of in is as Got when talking as Hey, growth that absolute though you not Mike to just so to certainly relates good year, say last talk capital? or

Michael Burdiek

terms – of dollars. would that was in I reference absolute

Scott Searle

of with the Okay. loaded And acquisitions? terms structure OpEx in the fully three

Michael Burdiek

I'll that Kurt take question. let Good one.

Kurt Binder

right integrating still operating area. and robust and Yes, that all of in of Scott, these doing G&A so we're the evaluating now sales in expense. process marketing businesses as three very tell And you know kind I spending the overall in three can businesses you had the

then non-GAAP we're OpEx loaded will in XX% If range probably you somewhere are and year. for the be fully throughout non-GAAP where QX of look the on to a XX% at estimating standpoint, say starting we that normalize to

that owned in play a will half, opening get balance the to say potentially and revenue the under we this XX%, of previous we as year XX% And that we is accounting haircut benefit. to sheet. accounting deferred next business essentially required have I essentially have the you that on are over purchase the we balance part out purchase is keep when mind Something to anomaly – don't the a – that profit eliminating earned haircut to ownership, of that acquired margin period year

So on XX%, it's number. XX% when say I haircuted obviously revenue to a

half will the year, year number drop significantly. and So, a that over

at what now. we’re that’s right looking So

Scott Searle

I of to half a $XX to year. in contribution the thought million Okay. And that just point SaaS follow-up ramping from back the a standpoint, that million $X to the you closer acquisitions in first about in call Is up earlier from quarter from in Kurt referenced fiscal the on the correct?

Kurt Binder

That's correct.

that starts you So year, haircutted the revenue number. over haircut can that's to see And dissipate. a the

Scott Searle

you. Got

go Mike. Sorry, ahead

Michael Burdiek

out specifically, was I did in didn't but talk to we break that prepared say, about. going remarks, Kurt this the

$X around QX So at and was the In midpoint that year being at outlook $XX million we guided EBITDA at FYXXXX million. our full adjusted better around FYXXXX. or than

starting can course creep profitability with fiscal that revenue associated to with this of are the revenue see phenomenon the associated sort over dynamics there You of marginal haircut significant and that year. deferred to the

the to $XX by to least the we going get you for million teens. of that were an at of need if driving extrapolate mid EBITDA So, be the to end adjusted us year margin, number, around sort to

Scott Searle

you to just ahead jumped But, follow-up why that's off so cut so? questions, Mike, my on line that of though did and So me I right. punch you

well right, million. implies year on as you quarter And $XXX that well Is quarter So into in you the the at last that EBITDA exit anything is north by the XXXX. saw third revenue the level your to $XX you're said you for point is which SaaS an greater greater EBITDA of than million correct? rate fiscal certainly fourth get year, the that than in

Michael Burdiek

That is correct.

Scott Searle

there you visibility you that? was business up, Thanks that front And now $XXX rest confidence building on growing, timeline what So that so SaaS the of and the hit certainly in right, associated look with front, of the that much. getting sort follow million on the what last numbers? those the are target maintain you a confidence, businesses that gives also on one gives to the you’re trajectory Mike, all SaaS

Michael Burdiek

a more visibility remarks. year a in much able more time, do mix, which it which I full a consolidated first the bit of very, integration QX in it the and Hey, clearly acquisitions, much has great. the earlier little as so larger Well, for recurring with long revenue, subscription and more as give does a predictability recently there's prepared done software being us and mean, very of outlook, and obviously our will to done relates we've time to revenue in do becomes the percentage

and cautious acquired while any of business of two software on we're we think and the a also to fronts. of it lines have but those relates recently fair these basis, ability to an either outlook as rails So of terms grow of confidence, go I our subscription our our off integrating entities on organic to in not also amount continue

both our as relates there. As relates recently trying sense somewhat cautious been optimistic as I worst revenue, relates But, it we're behind and chain as face to product the would it's we're us. obviously, I would it's use that prudent to think as and side, that on the outlook challenges cautiously optimistic. cautiously word be is short-term volatile around that it say supply to we well our the to that demand an I providing

Scott Searle

Thank you.

Michael Burdiek

welcome. You're

Operator

Your Corporation]. next question comes from David Gearhart Securities [First Analysis

open. Your line is

David Gearhart

for about taking the Hi, this ELD questions. kind year. to guidance mandate December and wanted year. of the my asked I good for Thanks is of to No the afternoon. go one's the Telematics line second back in and ELD

have into the baked Just stage guidance wondering what you for second mandate? of the

Michael Burdiek

the that at second have if outlook anything Thank really We not earmarked it our question much as this you ELD tailwind, discounting we're relates wave but specifically a stage. positive It be do in to that David. for of regulations. may

David Gearhart

solutions I your Telematics providers question bit your existing what conflict has from competing customers. recent feedback quite ask me, acquisitions. from about channel a get with your been know the you the for lastly And wanted I to

channel sense the but I issues? you've how analyst a before your the telling question what about customers and potential been what's that you are you us community, think given answer of feedback to

Michael Burdiek

question. good a really It’s

rental really fleet leasing for companies because businesses companies. other in types well operating verticals of applications those the LoJack concern, were no On side, cars, some insurance long-term enterprise as specific as related specific SVR around and

pretty Synovia of concern school those a players amount market none really so the or not bus fair isolated meaningful level. the the any two side there's fairly I say any is to acquisitions. other there around years, way market really only And it's landscape, players at So, of of three unique. and ever, CalAmp and sort over of a that on there's were Telematics them shakeout of customers. device meaningful really viable relates it as or would been lot

only we opportunity and clients multiple with add an added can able the we no and and as efforts & but percentage to continue to, both concern it them in it's divert a Software Software situation business is ourselves & if to of really end end Service technology away where ever Service concerned Services perspective that we're become larger that a something pay obviously, investments Software from allow clients the give objective Subscription Subscription we also of around & So, to our and services our but our make to hardware of value someone some the to there would there increase wouldn't serve attention revenue value Subscription consolidated us mix, ultimate was to Development. the share think a our Technology about to that increasingly was from either. additional more But

David Gearhart

more. one Okay. If I sneak can in

You had side. demand issues on MRM mentioned some the

that flows takes ebbs anything do puts XG to Just hardware and wondering, with did have getting and the the out.

on ordering be ahead customers I Some like concerned that? if may wondered that. I stuff supplies get or bit color about some a just

Michael Burdiek

to really that's that of do that was question. know part of that early Yes, large a the a trying the contributor in to good a fiscal get We revenue really XXXX, ahead And year amount customer XG the later on the business sunset that issue from then off and first probably had of in up loaded somewhat a the fair tailed on part strong was year. very inventory.

impact that it have and of in that did time an revenue advantage a effort So on a to products up took overt point channel customer had in inventory. was however and could to essentially a and an loaded into not delight that's QX We repeat one really where that buy in build really partner a there, we which contributed we maybe had there up QX QX. made did only amount to significant of QX that last XG we situation try but

effect So there. inverse it's an almost

David Gearhart

the for Thanks color. Okay.

Michael Burdiek

welcome. You're

Operator

[Jefferies]. next comes Your question from George Notter

is open. line Your

George Notter

to forward? it's just of where terms in give us And top the you for of can of seeing affecting quarters the now more that Thanks for transition? Obviously, wanted narrative couple if kind are here I'm are much. about issues. just a any been line part I how sense ask you very at supply you chain the but curious of going

Michael Burdiek

move regions back world. China around we supply our in production talked other out some in had we initiative fiscal QX, Well, the to Sure. to XXXX in as about diversify fact, of earlier an had chain and underway

to has seemed make for that. avoid world expanded sense businesses China. specific it chain risks supply regional and doing around by grown consider to And a us in our As the really having concentrated just

make along over and complicated on about issues we trying is progress QX. backdrop. to the related it's continue supply we process us embarked most certain tried and last slow the progress. by So, for and course I matters that production the we talked the then of and a diminish China. transition in faced rate to the that pretty to practical seems making the we in of rates to day process was came good accelerate sustaining two What and to of of cause that level stabilize tariff QX we think we're more And process that our chain progress stabilization. as and made quarters that and And probably think last we really tariff probably to consider that And root quarter

past very we're what partnerships, reestablish trying chain supply So, to in a activities we being little in supply geographic methodical and more chain the slowing overall the of to relates of diversity our a around kind we're while reliable the certain sense had strategy. as some also pace other

Operator

FBR]. question Nichols Josh [B. next Riley comes Your from

is open. Your line

Josh Nichols

a that region to things different CalAmp Yes. ARPU America competitive tell ask Hi, into did how the contrast perspective. in moving the market. more you Obviously in thanks taking for the from my U.S? compares and me Could Tracker in like and fits their I the a that dynamics company competitive bit you question. want the what Latin think how acquisition, to

Michael Burdiek

for question. of million, broad was… $XXX making as been it I Well, I believe were international progress almost we year to number Sure, a expansion really $XX we've it mean last million, years. relates

Kurt Binder

XX%...

Michael Burdiek

Yes, revenue. XX% consolidated

various really acquisitions in Latin opportunity Telematics well. of obviously we America but an LoJack Mexico can reach and services. So a sales, been continue where related through also expand as regions platform give just quite build as Europe the those through not we've to provision active hardware into well that in as these And Tracker in the UK to us

complement beachheads in and relates streams. to continue revenue us represents a Tracker it strategy Mexico, successful more as to and very of gives obviously additional expand than for to LoJack LoJack operating that subscription is In a a bit that the ability UK, add into Mexico value our our Italy. and so, as recurring around as different and sort us a operational with entity view services we established a that and little And the better bookend perspective UK expansion LoJack to pan-European

in the going we're So making in for of us align UK of that to us, across give to out footprint progress and to to we Italy that's scale able activities give we're active excellent trying quite broader Europe. very and different those of a play really range terms us clients Tracker’s provide LoJack think and well subscription to be with pan-European and all to the Services software

Operator

comes from Stoss the And [Craig-Hallum Anthony last question Group]. Capital

open. Your line is

Anthony Stoss

once at if more for curious you of on think fiscal us bit to contract if what the side, where chain how end And Mike, much influence also supply you guys. it supply do it. losing them? gross could result of the be mercy then lastly, manufacturer, would the of speed in help also or again And the quarter share transition expect on mind issues, I'm the Kurt, chain margins margins this then any you on the gross the And XXXX? Hey you can OpEx? of be you're a done expanding which at so think might as is little May you transition complete they you a just the

Michael Burdiek

Good Tony. questions

our to to it's huge lead loss choice, but two but what we've lost factor some they and of customers sure As been backlog to revenues, who dramatic our really product impact really the we term some some in supply lead it simply past us levels we there of it's that I'm norms, to might times have And a a the lead extended it and in to times if had of terms look situations, consolidated for historical have And been not extended excessive get is where business they a past deliver situation the we an is to concern. concern additional that can't Because had probably relates to cases, the quarters motivator chain share had and no elsewhere. wait. been historically. have try times have can't get well have and overall back competitors. stabilized

we that can. rely close Our customers possibly have come to get we for time to as want on just to us really And as virtual in delivery.

it's and say, chain to us would supply and to be challenges transitions, effective. and the that partners the relates I As make ongoing up work our to

supply And on they so, our have we've really demand with visibility on have is. engaging visibility down better and that we tried double their to partners, what so chain on activities better our

to they having on where before were to any front that continue we So quality. can without make back any get especially compromise things and try progress to around

Kurt Binder

second XX% question year that XX% four to XX% in your you off because in expansion the bit I I But we occurs of margin. EBITDA range what mainly next on conversations revenue or especially and And as to half off we because towards the We north I quicker. gross the drop that but the give just margin, mentioned we of start of that that kind burns a XX% get will to deferred to sort bit the and of just over or the of discussed haircut all-in some of leverage that EBITDA year probably at and address deferred would of quarters. that that you the year to a the XX% the think to adjusted will the towards to somewhere second margins earlier potentially before, of mirrors result the EBITDA Scott over trajectory parallels think with year again that revenue earnings with just kind the color expand of a haircutting as between half That of additional ended the expect that QX see think gross XX%. occur we base will on the

gives hopefully color that So on… you some

Michael Burdiek

look of Thanks you our joining quarter. forward our to at we'll Well, call today thank the for with and speaking end you. first

Operator

concludes This conference today's call.

disconnect. now may You

CalAmp (CAMP) 30 Apr 192019 Q4 Earnings call transcript