CAMP - Earnings call transcript Q1 2020

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Operator

Welcome to the CalAmp's First Quarter 2020 Financial Results Conference Call.

As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call, Leanne Sievers of Shelton Group, CalAmp's Investor Relations firm. Leanne, you may begin.

Leanne Sievers

Good afternoon. first financial CalAmp's conference to welcome quarter results XXXX call. And Group, Sievers, Relations President Leanne CalAmp's of I'm Shelton Investor firm.

Officer, With us Michael Binder. Financial Officer, Chief and Kurt today are Burdiek; CalAmp's and President Executive Chief

like we statements. forward-looking to Before I'd remind that may this you contain call begin,

uncertainties statements differ and from by forward-looking could While those to these judgment, subject results projections. CalAmp's implied reflect forward-looking cause current actual best they're risks that materially to these

today, and factors are are our the discussed our earnings available which filings website. issued risk on These periodic release in SEC

undertake obligation statement or We no update to any to circumstances. revise forward-looking or events reflect future

Michael session. will Kurt company's will with followed financial review then financial details additional of outlook about the begin the today's call provide results highlights, question-and-answer and a operational and a by

turn it's over Michael pleasure call CEO, and that, to Michael, President my please ahead. Burdiek. to the go CalAmp's With

Michael Burdiek

you, Thank Leanne.

results our million, of pleased with which We at first our the was $XX.X are consolidated end high quarter revenue of range. guidance with

services acquisitions. with year-over-year driven subscription our XX% performance our from and expectations strong up revenue recent three record of to million, by exceeded Software close $XX SaaS

We per also at share, profitability delivered high income range. the diluted guidance of end our also million or non-GAAP was net $X.X solid $X.XX as

results quarter Collectively, our minutes. on elaborate transformation provider, our on which will a strategic further first demonstrate global progress to I solutions few SaaS in a

made progress First, our supply on I initiatives. the chain would we to like address

expectations chain in supported near-term methodical at more our During the to performance diversification to on million, with executed our demand. revenue our efforts quarter, we plan $XX.X line in Systems marked in customer meet as improvement Telematics by was in order supply be

processes suppliers shorter resulted took more supply in has our synchronization and we with tighter to and The chain implement a stabilized new times. lead operational steps key

continue it delivery levels diversification benefits supply optimize to lead realize While substantial take we optimum structure more quarters latest inventory fully and chain with full of progress in will global our to two believe we and quarter, made the the times.

provider. like to now in recent CalAmp's would highlight to our progress driving solutions transformation I SaaS global a

software revenue LoJack or mentioned, services of and saw record strong management I fleet quarter applications services. subscription $XX.X iOn million We consolidated level particularly revenue. CalAmp's and subscription As traction first XX% previously from a our reached at

of which the Car Track acquisitions, include Solutions integration progressing our Synovia the Mexico, North Additionally, and recent in America UK, Tracker in in well. is

our total. addition with consolidated global and XX% SaaS record across strategy the drive entire The international help these businesses business to of expansion our revenue a aligns of

from believe pleased and and Additionally, revenue far with identified will incremental acquisitions which we quarters. have bolster the very we our further synergies coming in the are both these thus software internationally domestically we revenue services subscription

now inclusion recent subscriber our base over the X.X and subscribers. dramatically reached of our expanded With worldwide acquisitions, has million

of recurring target more towards this long-term toward to $XX substantial fiscal exiting drive a more target us base expect our million revenue $XXX quarter We than annual subscription advance this our us in revenue. of and million year, subscriber importantly,

to highlight drive studies and quarter, I transformation. customer believe offer strategy into our that to would a insights I Similar CalAmp's some to to minutes few last case global take like software services

management involves The fleet Agency. Transportation a study first contract of the case Department with State recent Mid-Atlantic win

SaaS an by encompassing leveraging the announced fleet approximately vehicles and the operations Pennsylvania, vehicles iOn removal technology statewide. reduce snowplow with new win Similar manage snow last initiative streamline Commonwealth is customer year to assets and of contract this to costs launching CalAmp's early fleet XX,XXX to

resources governments new manage fleet iOn their This management and help and roll reliability. fleet to CalAmp's its out customer asset accountability, local efficiency will increase service

most better and technology safety innovative and CalAmp that initiatives. customer The viewed important this deliver transportation iOn could road support by new solution service the citizen was statewide progressive as

next the and over quarter will term. this $XX this new continue under total initial approximately XX an value months. contract begin are million The late in current deployments our expected five-year contract award over Vehicle for to is

highlight would is engagement of study aid disasters. poverty to and natural like a people with I is case the a affected Another provide organization, global recent by improve relief health to whose during humanitarian mission aid

cold This partnership land air this disaster chain shipments. shipments pharmaceuticals of temperature CalAmp's will enables In iOn of safe supply other application, package supplies. tracking chain and solution pharmaceutical and vaccine and monitoring relief and reliable and SC real-time Command global provide

due compromised extreme helps conditions. under solution integrated environmental quality products control, won't compliance ensure and so This to proper become exposure

result, can delivered or have to to a vaccines otherwise and who life patients not critical sustaining disaster more medications. As be aid access would efficient in effective areas

required the shipment is pharma shippers range overall temperature industry the increasingly the the manufacturer. with and pharma are by temperature-controlled a to volume specified rate products demonstrate The twice of growing as compliance of whole, at

new This in customer growing our SaaS aid while humanitarian momentum continued CalAmp's visibility addressing supply chain partnership demonstrates on building the market, base.

continue In hardware grow addition select MRM SaaS to to we subscription to work certain model. revenues products to transition strategic our with initiatives end-to-end a with customers Telematics solutions, recurring vertically-focused, to

focused installed this and conversion reporting, instant is security base. detection scoring CalAmp In process, and to crash adding features as such content value driver on our existing

DaaS previous we with to are officially of program, this actively which engaged As quarter. our part as call, several Device a this key customers as we sService, launch we on of mentioned our or plan

period from number recurring of to and revenue increasing mix As the this a go exceeds a an time contribution prior from builds such model, hardware of revenue sales. part transitional converted customers software-based through hardware across and that the until upfront of timing will shift the

a our greater business. for generate This is amount revenue predictability for increasing our of shift recurring of and across aligns with our to visibility overall vision and an part key the initiative company

the our expectations, revenue with period albeit as to to Telematics in business, compared same line lower year. Systems turning last was Now,

flow and from US XG We are sunset. LTE for network to due increased customers some the products encouraged order by tailwinds demand developing transitioning anticipate products to LTE-based impending

period. to XX% to revenue Telematics of increased compared demand, the an indication As Systems prior-year of approximately sales of shifting as in technology-based the in devices quarter LTE first XX%

products quarter, with the Caterpillar line network in first from in expectations from by and another was driven customer solid Revenue OEM. demand with along OEM

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

Before like global I progress supply to to thank I Kurt, their improved turn announced call our solid team would resulting recently and financial strong the the and quarter, in for CalAmp with on over this markedly dedication chain acquisitions. performance efforts results

us our increased first Our SaaS and to results strategy provider. give a solutions in long-term growth transformation confidence global quarter

results XXXX Kurt to With that, I QX over call Binder, a at QX closer and the guidance. financial now CFO, will look our for our turn fiscal

Kurt Binder

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

Michael consolidated the As with are progress pleased making mentioned, on fiscal our are we operations. revenue we as chain the well supply in performance as our of first continuous XXXX, quarter

further transformation our of Additionally, recent three to provider by well, solutions SaaS acquisitions. our is complemented a integration the global progressing

increase sequentially our Systems to due the due services. to product million, for quarter subscription year-over-year an in Consolidated and a anticipated Telematics increased revenue of software services offset X% by Consolidated in subscription an sales, decline $XX.X up revenue but X% revenue. partially decrease was first was

revenue to subscription million, three acquisitions prior-year services organic and The contribution from by driven initiatives. $XX.X and, a XX% the recent increased over lesser period the to our extent, software

Our first in million LoJack quarter, up XX% an exceptional the revenue quarter, year-over-year. services generating subscription had of $XX

business Italy LoJack the represents well UK services Tracker businesses, SaaS subscription Mexico. LoJack our LoJack as Our recently-acquired as and

strong provide contribute and recurring and software aggregate to expansion in expected are These three subscription revenue foundation of entities a for business. continued our services to

XXX,XXX quarter X.X May strong million XXst approximately base unique acquisitions. in global same compared with recent added period our the XXX,XXX ended progress for Additionally, with XXXX of subscribers we our year, made last the to subscriber expanding as with

to subscribers these from our from and acquisitions, telematics new we new fleet addition solutions. international vehicle subscribers also services, added recovery stolen management In

to on continue solid fiscal expect this as XXXX. throughout progress the build remainder subscriber to of base We we

followed our QX SaaS a basis, we revenue meaningful As current of to in efforts fiscal believe to our quarter of each by and acquisitions We XXXX the we global Solutions. and, previously acquisitions on be Tracker our in Synovia combined these contributors three LoJack them of expect fiscal accelerate discussed, acquired Mexico expansion UK XXXX.

As within of on XX% discount which software to ramp businesses I subscription acquired business compared services balance our by balances. from adjustments, assumed is affected quarter, sheet the revenue mentioned revenue pre-acquisition as last the the and upwards the opening balance purchase accounting the by deferred

deferred over first of course the with so time. normalizing to haircut or The of revenue impact of diminishes year over ownership, actual billings activity revenue GAAP the

quarter. business performance Systems Now looking to in our first the Telematics

a decrease reflecting to As the volume to SVR legacy in was down year-over-year MRM expected, sales XX% sales $XX.X product and million, States due United revenue Telematics and internationally. reduced in both LoJack

isolated few a was of impact including top April decrease to sales our acquired Solutions, we Synovia which XXXX. in The customers,

to to licensees, year-over-year sales XX% result licensees, of LoJack Legacy as quarter lower including a products, LoJack through Telematics or dealers revenue international Mexico. consolidation were auto Tracker UK approximately down international the million for lost by and LoJack and US $X SVR the of including sales sales the

Telematics subscription was well as increase offset revenue. through growth LoJack-related partially This Solutions in in sold CalAmp our by an channels, as these

this quarter, representing line year-over-year $XX.X The with the year-over-year. XX% increase products Network revenue first for by increased was expectations. in from demand category was continued supported Caterpillar, OEM and product revenue million for a and slight which

in our be our million consolidated representing with XX% largest revenue. revenue to the $XX.X customer of of quarter, continues Caterpillar first

the first managing recent manufacturers, closure with expected is facility. Gross performance as complete was Consolidated transition year. approximately integrate the and margin while our with further XX% and gross contract in to and acquisitions overall last line our suppliers manufacturing of margin our in improve US quarter the we

we to and margin progress margin targets. targets, gross progress long-term our EBITDA we make as toward toward expect SaaS see revenue higher Additionally, meaningful

revenue the In and XXXX basis XX% and G&A fiscal were first expenses quarter in as marketing OpEx, of of X%, our respectively. R&D, and percentages XX%, GAAP approximately sales

expenses and marketing purchase in haircut due mentioned significant deferred The adjustments litigation increase of earlier. that is accounting and I compounded and to or percentages non-recurring by expenses, the revenue as G&A revenue sales legal

the we a As our decrease integrate these revenue. fully percentage from consolidated and OpEx expect to will revenue of as normalize begins we acquisitions that our businesses,

was X%, our basis, G&A for the percentages non-GAAP R&D, XX% respectively. and sales of as first revenue a On marketing and and XX% for expense quarter OpEx

we full of XX% R&D, revenue percentages sales year For XX% percentages respectively. to And XX% revenue we XX% G&A expect expenses as G&A be X%, expenses and XXXX, respectively. X%, sales to and of R&D, be the and and basis and GAAP marketing and non-GAAP as marketing expect of fiscal

was the share basis or $X.X $X.X net prior-year income a to loss compared million in million GAAP share per in The the first same per net period. diluted of $X.XX quarter $X.XX or

due settlement OpEx fiscal legal in litigation increase with on an to first gain the attributable quarter and in is the quarter comparison non-recurring fiscal to XXXX, the with of XXXX first realized a loss net favorable that basis was former coupled of supplier. a LoJack million GAAP The expenses in $XX.X

was guidance range, diluted the Non-GAAP the period. quarter net share the or diluted and income $X.XX million the compared $X.X $X.XX for high or same share, per at first of in $XX.X prior-year per end million to

in specifically, income The solutions. adjustments expense the the with recent acquisitions accounting purchase and, non-GAAP incremental primarily hardware associated depreciation and bundled net from more revenue the decrease acquisitions reflects impact the deferred Synovia of

same million margin million and the adjusted adjusted margin EBITDA $X.X of an quarter adjusted EBITDA X% with $XX.X EBITDA XX% compared in EBITDA prior-year of was an the in Adjusted to period. first of

to profitability effect in in adjusted mid-teens improve fiscal diminishes of of as We year. overall EBITDA second the expect accounting the half adjustments the purchase with the margin

our As of XX%. margin on we long-term towards expect objectives EBITDA SaaS to we business, our make meaningful revenue see target towards progress our progress

acquisition which and $XXX with debt assumed cash now fiscal the due notes first the will aggregate on carrying liquidity million, had balance of additional of I we quarter-end. some and At securities unsecured end to which our of provide total million $XX.X as Synovia. of quarter, of $XXX in total outstanding sheet was marketable our value coupled factors, convertible and the our million details of represents position amounts the of

us acquisition, the certain future by basis under sold to subscription on approved opening credit of contracts rights The amount non-recourse Prior entitled the reported this for balance to revenue acquisition. accounts. due sheet Synovia factors the to for as a was

overall our the of coupled to operating $X.X million first million outflow XXXX, cash an for is for net $X.X fiscal requirements. for capital activities of the attributable in used Net which quarter net cash loss quarter with was working

which the LoJack using on both Synovia quarter, During we first Mexico acquired and Solutions, hand. were of purchased cash

period the of was the average end Our XX consolidated of representing $XX.X collection net an accounts million receivable first days. at quarter, balance

While chain total approximately in inventory improve efforts our stock times. of The first inventory with million, inventory is supply build overall to at buffer annualized representing the X.X performance. end quarter was aligned increase $XX.X of to turns the our and an

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

$XX.X revenue XXXX our Additionally, balance to acquisitions. deferred the to is million year, the fiscal $XX.X was which the compared at at end recent quarter-end of attributable million

the tax along decline to with which restructuring. offset a benefit an one-time and income For pre-tax quarter, tax by foreign is recorded related $X.X attributable to income first a we available but foreign tax credits, partially million in tax charge R&D of

$X.X net XX% our the provision same income. tax For year, GAAP we last million, representing of recorded period an pre-tax basis income of reported

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

quarter XXXX of million a between expect second outlook, Now turning our million. revenue increase to range to we $XX.X quarter fiscal consolidated to second $XX.X to

second to share $X.XX per net bottom acquisitions. line, reflecting diluted to range income incremental per per GAAP $X.X million $X.XX we of the At share non-GAAP in associated principally to of expect range net the depreciation $X.XX be an to be quarter with per share, diluted $X.XX recent the the in of the expense and basis loss share

quarter We $X.X EBITDA the range be million second to of million. adjusted $XX.X expect also in to

final to for turn the call I'll that, open over With before provide the up to we back Michael some questions. call comments

Michael Burdiek

Thank Kurt. you,

an of fiscal revenue with our move the Looking and of forward, into the growth first we increasing in business EBITDA outlook represents point fiscal positive we the a half second as year. quarter believe inflection

are We revenue. service a target our of million recurring well in building quarter we tracking and of long-term made revenue substantial software towards progress of this solid annual base believe $XXX subscription and that

up to we questions. With will Operator? now the that, open call

Operator

Instructions]. [Operator

from Genuity. question first Your Walkley from Mike Canaccord is

line is Your now open.

Michael Walkley

how from on you some so seeing Michael, maybe going just give some Can mentioned and color far Great. revenue what you're integration Tracker, acquisitions. mentioning you. on you Track Thank discuss revenue Synovia synergies Car you're the potential and more synergies? us is

Michael Burdiek

Sure. integration short really And going a tried revenue Thank marketing see synergies, Well, sales to in medium of our relates different market that really and very to recurring the prepared to verticals to as well. activities you. in express is we combine remarks. We term. revenue to number drive opportunities

United Canada government the with the we of here States And Synovia, one the even real market now opportunities acquisition think market a I is relates certain greatest And as the scale United have of in state municipal extent. into the to in to States. it across coverage and

remarks. the of So, contract to we focus we this I Department look similar TransportationAgency that's And to our would of say for us. areas for to drive of forward one one in win described continuing prepared the biggest

Michael Walkley

losses any for on customers is at Great, which you customers but that, MRM thank obviously discuss you. large trends to Synovia mentioned And follow-up business, on the you share just are demand your business? MRM just maybe seeing now, the can company one part you being some of weak, or

Michael Burdiek

concerned our challenges last as of over relates were We of quarters. couple the supply it share loss chain some Yes. to about

about quarter, pretty I felt think, retain even certain Latin to latest especially the this extent and ability our some back we existing markets. share American customers potentially in losses, to a claw good

the of that in say, to pretty good to and we would we where QX were issues I some prior So, faced we we're almost feel back that QX.

two issue, we in XG end the XXXX. think could of encouraging customer the we're and United imminent especially over see of the starting produce quarters, is next becomes tailwinds large I our coming that the take very side, seriously demand for as States the On years, to that a at population that the sunset over signs feeling percentage here some good sunset that us

Michael Walkley

Last question Okay, thanks. and for on. it me I'll pass

if just Just fiscal year? purchase Thank slope and higher? you given help the how year we so, And you. think should think about maybe the the the the think the start EBITDA last adjusted to adjusted rest ramp slightly year? about the similar on you Do year of with throughout EBITDA the can for us it's still the guidance, accounting, to

Michael Burdiek

given that of approximately EBITDA for marginal our of Yes. million midpoint revenue $X.X million at profitability on midpoint revenue operating in $XX – in model that there's suggests an the adjusted incremental of Well, and guidance producing $X strong pretty million QX, QX roughly EBITDA. the $X at adjusted incremental million of

would mid-teens of express in expect we we through would in leverage through as So, software year. Kurt as the grows that that that especially revenue and services working terms the earnings category year, half see And the expect as and the to way into margin as second year. into pointed the we relates back our the especially EBITDA out, work we to neighborhood year exit it we as get of the

Michael Walkley

you. Thank Great.

Operator

Ho from Blair. Your question next from is Jonathan William

Your line is now open.

Jonathan Ho

a wanted there customers be you roll Good XG on or start pricing just with opportunity bit enlarged that I more should the to to and talk maybe XG out content the out their may start about and with little Clearly, be results. as strong the Hi. upgrades congrats afternoon Can there to systems? whether to transition. contemplate uplift as well. capability bandwidth a

Michael Burdiek

going Sure. United X.X of two over next of units Friday, States, opportunity, the customers the to of of to in be XG quantify go the replaced as or all either Well, upgraded which last going the in just years that service there scope to CalAmp have are so. were course with million kind dark to of or and

even addressable sales so. coming million market market a of setting of our about over get the part course quarters upgrades. course, but to of normal device or unit relates Telematics around in would or tailwinds those opportunity MRM it the eight $XX so half that's replaced than terms that's are units a addressable opportunity those more in And as subscription that of XG assuming aside, those of population, million Some a

that headwinds good us transition of model believe tailwind to deal We certain our the of recognition as through sort as revenue standpoint a of we'll a program. face some gives service of we a subscription-only to a from our offset device products

gives us a we products device as to this the upgrade certain of tailwind certain a as is of think for room model a we and for with us LTE transition from positive more service So, perspective growth our thing breathing very customers. revenue some

Jonathan Ho

of or you've Got terms the is of issues my that it. of about a supply much when follow-up, sort in there And just we left you chain think of us and bit of to quantification little financial impact then, that resolved margin when sort a do, give what's over back you see can improvement of next get gross of quarters terms you to normal? the in couple the

Kurt Binder

Jonathan. Yeah,

we look chain we sophisticated we kind potentially that we this some reason honestly, suppliers we're as in approach are getting in at So, our The transition, assume is the supply ensuring looking tier have that these possible. pricing that's a uplift that X of taking best at and more will margin.

happening see year, combination happen The the that biggest to the us is which you'll impact couple haircut things help. burn of this will a But next throughout off thing we going revenue the deferred will quarters. which over of is also of think

you gross do in net-net, improvement see our look year, margin. overall So, the as we of base the through some

tip to thereabouts quarter communicated as we that would too we XX% think XX% exit margins year. the that I thought the last up over we

Jonathan Ho

Thank you. Great.

Michael Burdiek

you. Thank

Operator

from Your Analysis. next Howard question is First from Smith

now line open. Your is

Howard Smith

my for you taking Good Thank afternoon. questions.

flow is, income? generation cetera. now we basis, et with free terms it? the of level, should net I relative about should as correct to used cash of think you parts lot a business moving has But do term, how to to to model inventory, think be on A generation flow about cash normalized whatever we you longer more factoring the and whatever think a about do at in But how the question capability. First thinking high metrics it non-GAAP adjusted metric with

Kurt Binder

Yes.

So, first we this think should address quarter. I first

of we we factoring of of initial a I capital, in did two well anomaly, particular One, obligation shore caused as up an the purchase, their of have businesses, to kind working which think cash bit Tracker for the a UK, quarter was a an you acquired as outflow. when this first of upon the reasons. was Synovia noted and receivables couple

make wanted resulted reduced you And we days, Additionally, sufficient we buffer make meet that, stock took saw, sure we which chain were our some doing as of inventory. steps, also improving in our AP and supply had trying sure that an optimize that in to in to outflow. also product our demand. we We overall to

see we at more So, is of a to bit of QX excuse perspective kind in a we look as things QX me. an QX, progressing to Where historical of anomaly.

I flow in one-time generation to we substantially of anything a some you out remember we've lot supplier the ordinary. the out know that we've change were that the LoJack from past, don't these that that if had So, of historical experienced expect items if the cash things factor of you with the

the would we're historical with pleased we QX So, quite way that the think the we'd be cash flow to QX. is the levels progressing in past and back to

Howard Smith

you or break very out in terms puts the given businesses you mentioned, subscription then, takes organic And in – Great. you mentioned like rate by you growth the strong about general looking subscription growth in SaaS are exactly the the can and can precisely terms? know I growth. don't either and talk business, obviously, the also acquisitions it what organic but all software if of the for subscription and helped line,

Michael Burdiek

Yes.

customer initial prepared talked a we had revenue to transport not the general, and that as a the numbers last in uptake global But, break driven about we calls, we're which specifically. couple pretty that in the deployment made completed in freight reached project. So, subscribers significant year, our out and both as plateau of last subscription

until the not but level expands that this half of sort year So, applications. run its we second into expect number program of potentially that in new only fiscal maintain existing increased assets, terms to as of of rate an

business that QX – to subscriber negative obviously lower of in And were considerably more organic the in to and QX it of is indicator these as subscribers declining adds a tracking. like XX,XXX, about organic somewhat relates other attractive finance our some ARPU effects than you our vehicle leading in and our of activities, adds categories subscriber approximately give fleet includes net asset which X,XXX net

So, work the an on growth our through and growth indicator this of trends revenue way are organic think as subscriber basis growth I and an subscriber positive ongoing we year.

Howard Smith

much. you color. Helpful very Thank

Michael Burdiek

You're welcome.

Operator

is Searle question ROTH next from Scott Capital. from Your

now is open. line Your

Scott Searle

for good questions. sales? you did the Thanks break my services Hey, it, afternoon. the OEM then the quarter? but I the front, hardware the for taking give SaaS I on organic quick just Hey, think contribution also did housekeeping, versus I within a And a on And and figure you missed network out the had follow-up M&A growth front.

Michael Burdiek

We break expectations. about as explicitly and of did out up prior a in quarter being did Systems. part with products Telematics the not the from specifically talk basis Caterpillar We and down year-over-year OEM and on slightly network Caterpillar line number

software acquisition-related on relates then, But growth. the overall was than did subscription M&A to no, was we earnings we it what guided and and better software subscription not last what the And the I and to revenue side, had call. what that expected revenue specifically would contribution had break from as bit we our contribution out say the on a

Kurt Binder

increase correct indicate did network think original my in product Scott, was remarks and $XX.X about a million, one I because OEM slight was year-over-year. But… that let representing I me and just

Scott Searle

like as second through some terms which going model, us some of through could of follow-up take customers, to impact being overall just XG supply then better of a and business chain of you is also that's and opportunities up them like for of sunsetting seems that that with net you to kind there's the of the that quarter, parts DaaS cetera? of quarter, et starting there's could I core fold hardware, of both some things growth seems cannibalization, like the obscuring Hey, able perfect. you the natural out Systems acquisition some on call the to now industry the growth Telematics customers, your on some really of of some Because ramp looks that into have and backdrop thinking but transition LoJack moving the those these, front, and the on that's this Systems that the then Thanks. DaaS outlook the what just it impact within recapture lot combine net in of and sales Systems you a going but in good Okay, getting to for organic it Telematics are in kind sales, Telematics Synovia issues, kind there you're out to and year? terms you don't when

Michael Burdiek

Yes.

you revenue our call, on bit number little million. to $XXX if from annualize would we $XXX outlook Systems last million. was So, from QX, QX gave guidance the The below which annualized as you're earnings Telematics approximately a million $XXX be

call guidance would as as somewhat be to into expect do full-year the QX. of to the there. we on last we we So, outlook expect our QX way modest some linear the QX, Telematics in And we Systems progression, that earnings work we growth relates with our through year because feel a and gave comfortable pretty

Scott Searle

you. thank Great,

Michael Burdiek

welcome. You're

Operator

from question Jerry Revich is next Your Goldman Sachs. from

open. now is line Your

Jerry Revich

revenue. acquired, the growth trajectory? afternoon. like-for-like accounting I'm growth with So, their organic Good the organic talk Hi. could of the basis? that businesses on a what's about, businesses in a deferred basis, noisy the obviously, for quarter is On were if this what's wondering profile you first like-for-like

Kurt Binder

Yeah, Jerry.

we respond growth initial the think to it is pretty way rates. were best to conservative question, your our in to answer I So, forecasted

other Tracker to UK to and businesses to mid-teens was two range on the prior X%. basis the slightly prior Mexico, businesses, billings you had up, in whereas at Looking Synovia acquisition a flat growing maybe the were that acquisition, X% to

accounting, range noise the kind is we the our looked was X%. the and all but of characterize a In from in perspective. of general, an X% it of best acceptable, rate based to to said, upon be growth in would think what And conservative I billings way the somewhere well, assumption purchase

be fairly growth and more to apply just where went of before started to understand conservative are these to ahead get wanted out some we businesses, rates. we as So, we synergies the revenue aggressive figure the

Jerry Revich

double tracking digits, have you so, but comments that modeled is And imply? the what X% X%, it's to

Kurt Binder

on growth X% until We that The no. to double the to us. No, basis, won't are that rate X% we rate. that, consideration. a just saying, know billings revenue do into synergies at a I'm was didn't take historical that probably we available forecasted of all we, fully understand but and

Michael Burdiek

with would having And almost with that a businesses, experience encouraged thus color. full three these performance we're this I far. quarter is, add of very their

Jerry Revich

your would other specifically? opportunities how business M&A at this characterize have fit pipeline looked Synovia and profile point? similar you similar And the that with Any a that like

Michael Burdiek

say focused in would much on mode now we've and trying out we're integration to these investments that value of extract very made. I maximum Well, very

wouldn't active I be terms realized pipeline. of suggest recognition they in both potential I to revenue also we are digested M&A think fully acquisitions, terms we've and to And once in start an in trying build of terms these So, of impact. that

get have growth we think appropriate that inorganic to to these now, platforms. options very focused on But, given right as initiatives. I we're making some new synergies we revenue integration very, the start right sure some pursue consider the and we

Jerry Revich

we subscriber base about the What's legacy subscriber mentioned, the for for the outlook should subscription ads sequentially. here up business, Is count the that baseline you was business? growth? thinking how Michael, And, be the for XX,XXX from

Michael Burdiek

most growth vertical in going pipeline there. space, think forecast. any categories. – opportunities forward in the and But transportation have never we're would the given I the expect subscriber in would in encouraged freight we Yeah. Well, we've any And market fact, municipal those of or outlook think given and of government subscriber growth not by two I we that marketplace the come

Jerry Revich

the And tough lastly, Telematics, customers with in part your obviously of to platform. becoming tell MRM it's

this those If out you sales, adjustments? sales what for intercompany other quarter, the stripping were like-for-like, and MRM out Synovia performance the would any organic strip to

Michael Burdiek

And, think tell. to hard really I would into territory. it's in I very that somewhat think – really trying be Well, question specifically. we're uncharted would frankly, wading that we And very answer don't be to comfortable

Jerry Revich

of a better just Okay. better acquisition MRM, understanding underlying customer. would shows – much of think rough I'm The of I because it performance in been than point have what the performance what's how trying to change it is, was without a the essentially the the get accounting. And

Michael Burdiek

accurate of was And even than the effect. an and revenue clear, to statement. that's think Well, better be we I expected consolidation loss with it

Kurt Binder

revenue line. Yes. Telematics they specifically, board and have does product on and – that very that on they important of so, ours Synovia them were Yeah. an MRM a consolidating impact here customer [ph] moving

Jerry Revich

Okay. you. All thank right,

Michael Burdiek

you. Thank

Operator

[Operator Instructions].

from Mike Northland have Latimore question from Markets. Capital We a

is line now open. Your

Mike Latimore

Thanks. now SaaS I that the questions couple mix is of margin, these here? a just what on you've the profile, guess margin EBITDA business. kind of in Roughly, the acquisitions gross got

Michael Burdiek

to? On product a are you consolidated line or referring which basis

Mike Latimore

– SaaS overall The business. as a software service business subscription

Kurt Binder

Yeah.

of communicated we've in a it been exclusive been probably I past, XX%. that. add perspective way you have in Mike and the new and the as When acquisitions, accretive services – agreement look that think from software at slightly would subscription – the purchase of to those is the historical just at north the is or actually to has

mid-XXs I you all basis, think of out blended probably on adjustments. a are XX%, the they accounting definitely pull north once of purchase

so, be or months phase to for term longer would margin that this expect say, would accretive XX would after, business. SaaS we they the our get percentage once gross past we overall they that So, be

Mike Latimore

it's I said then, business? – And SaaS is the margins, EBITDA right. you maybe XX% or or in been on right think so past, Right, that

Kurt Binder

are our no. accretive These EBITDA to again margin. also overall No,

us I you high-teens, should to think drive margin. say to the we'd mid-teens. would we're the These to the so even mid-teens organic low business, definitely to accretive they at probably look in us, overall EBITDA be our businesses if

Mike Latimore

point? relates or at the service Great. your affect in the to does largely also and terms a MRM network And that as OEM then, here, some category device of strategy it

Michael Burdiek

No, and to portfolio our even couple just product that's lines. to MRM isolated of MRM a within isolated our category;

Mike Latimore

beyond quarterly it? software this of for the organic on I What growth? million to growth $XX then, business being over you exiting then imply of X% that kind think some – growth it. you've and year. then guidance subscription to Are kind sort And a guided acquisitions of the basis a on acquisition X% does from Got and assuming the organic the

Michael Burdiek

see simple on acquired billings growth yes. We to it quarter And relates first especially with of about and which and answer we outlook growth the to acquisition. the was is little businesses for with our both each talked the including organically think I expectation a call bit we're in that this performance. earlier prior as would the the flattish Tracker year the encouraged Tracker

of inorganic front well think both I as we've organic got as the modicum front. momentum the on So, a

Mike Latimore

growing should largely guess assume midpoint you're as I the million, of last, just second And that's we quarter, SaaS sort of the some of a couple on the hardware? category or

Michael Burdiek

modest services. probably expect a subscription little some in and growth and Systems on would more Telematics We software growth

Mike Latimore

you. thank Okay,

Michael Burdiek

You're welcome.

Operator

Burdiek, at remarks. you no time. There this continue your Michael may closing Mr. is with question

Michael Burdiek

Well, thank for joining today. everyone you us

and Boston. conclude Jefferies including be the like Conference in York Before August mention events in attending Xth the Xth I'd we Canaccord the on call, upcoming on New we Conference investor Industrial to will Growth August the

please further of meeting late representative If our the forward Operator, look arrange contact may earnings a call us Shelton We providing you the sales like updates with your events, September. call. you'd either next in or disconnect at these Group. to to on

Operator

conference This Thank concludes call. everyone today's participating. you for

disconnect. now may You

CalAmp (CAMP) 27 Jun 192020 Q1 Earnings call transcript