CAMP - Earnings call transcript Q3 2020

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Operator

Welcome to CalAmp's Third 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, Joel Achramowicz of Shelton Group, CalAmp's Investor Relations firm. Joel, you may begin.

Joel Achramowicz

Thank you. to third welcome results XXXX and call. conference afternoon, CalAmp's quarter fiscal financial Good Managing Shelton Director Relations Achramowicz, Joel I'm of firm. Group, Investor CalAmp's Michael With Chief Officer, CalAmp's are Binder. Burdiek Officer, Kurt us Financial and President Chief today Executive and

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

in and judgment, projections. those could are these results cause factors While current to looking and These implied issued our risks to differ site. reflect the today, statements subject forward circumstances. to from by forward-looking actual forward-looking these and risk best materially in which CalAmp's no they're or Web events any revise undertake SEC our uncertainties discussed statements periodic that filings future earnings to or update are release available We reflect obligation on

begin by call Company's please great it's session. provide President Michael, additional my go review of will over to Burdiek. operational Then results Michael ahead. and financial a turn pleasure followed the CalAmp's CEO, to a today's and Kurt Michael the highlights. with outlook, question-and-answer details will the and call financial that, Now With about

Michael Burdiek

Thank you, Joel.

and quarter a $XX.X consolidated revenue quarter the record. exceeded of quarterly guidance first for third consecutive million our the Our midpoint of reached

to revenue closer services our Software and and revenue long total million, and target at record represented of us was $XX.X term reached XX%. subscription also up a which XX% year-over-year quarter XX% for moving of the

LTE from cycle. well customer our by significant sequentially, upgrade in customers, expected our growth business enterprise network up Our in slightly XG of increasing OEM their Caterpillar highlighted the with top Telematic business largest as to support from Systems was product as sequential products and rebound orders our

acquisitions our subscription Chain Italy driven growth in our a Our and from strong Integrity once business were recent LoJack particular performance strong again quarter as solid from Solutions Synovia services. with software our results combined and by result of and services this Supply

prior base. relatively year over period up up was XX% a SCI business than was than and Italy LoJack more low fact, emerging more from In our the XX% revenue albeit year-over-year,

We're as Carolina, to seeing Georgia others, including school safety United Solutions' York, in from to North Florida, Comes Virginia Here appeals the districts directly States, and and Bus across route application momentum among Minnesota, major New Synovia recent enhance optimization. continued The bus student installations it

Here Comes The additional more many X.X school we're opportunities districts on than Bus and with more now the across users, million has municipalities working nation. and

new its in its with Our Tracker recent applications, including intelligence. aftermarket UK manage Auto solutions also and with with and and London, SmartDealer adding to provide fleet Capital automated recurring subsidiary SmartDrive opportunities is connectivity customers a subscription partnership in-van

customer, Additionally, success with Bailey, application fleet large to manage our saw its improve monitor vehicles driver Tracker solution NG behavior. fleet of adopting a to service XXX SmartFleet that's and

truck a announced vehicles bus advanced and MAN subsidiary LoJack across recently manufacturing Volkswagen bus with in CalAmp's and video Mexico to Group's deliver & Mexico. Truck division, Further, its and telematics alliance of New strategic truck range Bus sold services Mexico,

improve security, CalAmp a on customers Bus developed to Truck & safety solution road that built LoJack and Mexico vehicle operational stack robust MAN top connected drivers. the technology for and efficiency customized and focuses fleet

of which of throughout Mexico also LoJack security and enforcement services a best-in-class law will our only Bus services. customers Stolen part by technology MAN is As supported Vehicle all its Truck state-of-the-art service agreement, offer on the Recovery SVR vehicles, as & result the

Systems third Revenue $XX.X Turning for sequentially. to quarter or business. Telematic was X% up our million the

generation due during increased ramped and the return LTE-based for As grow orders our mentioned revenue OEM family. previously, quarter products' from to which a next largest customer to network Caterpillar, product our

across tailwind and for in throughout XXXX. to coming the product our this transition provide quarter install expect a our We business base

our pallets forward and wooden throughout tags in SCI is from to will recently powerful Alliance Another important the onboard that these equipment. entered utilize dock gateways Telematics opportunities, into combination diagnostic CalAmp going our to Pallet agreement deploying on an to logistical be supply with track dock. tags roadmap integrity with to area and our Cloud We CalAmp's chain the

one example of types only contribute can supply in can from I the opportunity that global The iOn of applications benefit our this ahead. use is meaningfully are for extensive. This the years growth And CalAmp's to of believe intelligent automation and chain Tags. technology accounts the commercial

for next availability of technologies of well iOn innovative generation scoring and service part management, CalAmp recently CrashBoxx As visibility services the additional safety the bundle. Suite, efforts, an iOn latest CalAmp we Suite This of of fleet service. embodies for version includes which our these the as micro as Tag our asset as announced iOn latest integrated technology, driver

These technologies comprehensive vehicle, provide real-time in and visibility their locations fleet contents anywhere at and combination on anytime.

loss or of With the tagged Suite, instant can to potential monitor receive operators and drivers can be iOn cost. now or all the vehicle the of real-time its any contents, theft electronically crash fleet low which incidents fleet the or safety respond at of at of notification

micro iOn the for will à services iOn thereby Suite an a CalAmp's services preview scoring subscription through services. Telematics the fleet basis of by mitigating release customers fleet be services available services on ROI and bundle, driver the base aggregated and or device These the Cloud lost to customers hours including install our increasing Tag tools and micro or CalAmp's la carte other fiscal telematic this offers on later an plan activated Suite telematics as year. micro valuable roadmap, tools assets. CalAmp's lost uniquely The truck searching stolen micro for iOn Tag addresses iOn or spent The with iOn for use case, device

and case pursuing connected with Firefly Thrifty, our by would franchise many to Hertz, represented recently car Carshop a We one I telematics we're opportunities with to operations. announcement study strategic operator. like Now, services Hertz international the that a Mexico LoJack of made concert developing on related an alliance customer highlight AVASA, Dollar, locally in

location Hertz Mexico this part LoJack stolen driver As car to and car connected safety rental telematics vehicle mind to reinforce of bring Mexico peace of customers. engagement, and leverage assist will its

at Hertz than which were throughout Mexico; reputation calendar selection for a be fleet and undergoing and performance operating LoJack process, thorough with CalAmp. second, the in LoJack's Mexico three selected brand telematics first, consistent We offices telematics after solid of by more technology XXXX. this in financial of power completion year-end opportunity of and will strength select highlighted the XXX installed Mexico CalAmp's our scalability strengths; technology; third, and

operational know was logistics, It's Services inventory Telematics able management to tracking, incumbent initiatives, including vehicle vehicles. we customer new an exacting expectations. important or support recovery meet replaced utilize on and stranded This Hertz also not instructive reliability to performance will and that assistance who stolen efficiency to

the data ramp by opportunity The LoJack are million our to under most recent collection is The units stack, telematic supported travel status. on solution full by end miles to expand value alerts, and and to speed driven, Deployments commenced thousand end vehicle contract be initial several will of CalAmp enable and history technology fiscal at of with the just expected current quarter to year. the overtime. $X the is estimated the

industry. out unique his Kurt strategic the wanted value the Now telematics financial point to onto I call that CalAmp's something review, for elucidates before in passing

We of a of be and micro platform is underpins SaaS long current built that or CTC. services. CTC time, the reliable the extensible, service Telematics our supports This all and proprietary applications, For powerful, CalAmp future scalable. globally we delivery to our Cloud, mentioned and

leader is As significant proprietary building social world we blog media World Amazon a CTC and of BXB confidence believe onto Web critical telematics and mentioned the which work flexible of Telematics has around resilient, the Americas, powerful team Services a this endorsement accomplished strategy. mission vote in in years application a platform, its commerce has of the our is enablement Congress Mobile BXC one over this platform. recent our Internet applications in built our from technical exceptional Cloud of validation business We

software performance for global position provider. in New CalAmp In customers continued growth transformation fourth further three growth serving am leading the solutions last our enterprise Year. guidance, significant global expect our supply telematics quarter the global the as we drive closing, a the fiscal out We and pleased placing I on our chain consistent with Based challenges. navigated solutions industry through year, focused remain just our in SaaS to with on trade having to transition strong uncertainties continued we quarters, close over

With a up Then, guidance. look call for that, our Kurt third fiscal closer over quarter call quarter financial now to the I open will turn at to questions. the and fourth we results will

Kurt Binder

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

guidance As as midpoint on our exceeded global to Michael for consecutive the our $XX.X SaaS traction we a quarter, third gain quarter third of our solutions mentioned, million the continued transformation was and revenue consolidated OEM services in business. to to This and solid from network the growth record and sequentially subscription quarter prior X% products provider. due up another period X% in year revenue up software our and of of

from Solutions. of Software revenue, increasing $XX.X particular and to by acquisitions record Synovia contributions driven subscription services revenue year-over-year our million and a increased XX% recent XX% in

up $XX.X TRACKER XX% as LoJack Mexico Integrity the strong LoJack UK revenue, and expected million which well third X% $XX.X subscription sequentially saw down revenue. from from million Chain growth services also sequentially. Telematics Supply the LoJack Italy, year Systems quarter was services X% in LoJack in up as quarter, period. We was the prior and Italy our includes as revenue and

$XX.X $XX.X XX% the from at consolidated to prior customer, prior to increased and Caterpillar. to from representing quarter by revenue largest products increased million, XX% over Cat million to third OEM and return revenue. in in Revenue quarter, million compared our million sequentially $X.X the quarter the approximately Network driven $XX.X of in growth a

generation during quarter, their Cat these continue family product in of ramping quarters coming transition. expect next support orders in LTE-based of As our Michael we product the and to mentioned, begun orders the

and the period. Consolidated gross margin XX% prior in prior from was third the year quarter quarter down approximately

was variances, access charges Oxnard, and product we days. next with as over with manufacturing by closure gross unfavorable with Our personally facility obsolete performance the coupled unfavorable impacted XX customers, the our mix California proceed of manufacturing margin and in incremental inventory certain for

items of the expect few over impact to diminish We the next these quarter.

with fiscal accounting consolidator quarters. a approximately revenue recently percentage and of combined XXXX expect over third revenue increased to decrease our haircut due our a of the In is basis as we and XX% revenue higher as a from OpEx of as begin percentages that acquisition sales G&A In revenue haircut respectively. normalizing were expenses businesses, general, in marketing will or GAAP and a X%, quarter few purchase OpEx, our next from OpEx deferred acquired revenue The the our adjustments. to XX% expenses and basis percent R&D,

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

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

The or $X.XX GAAP $X.X the reflects accounting current increases retirement I of as along in for $X.XX as third for earlier loss compared per discussed or share, to loss quarter. million early with $X.X OpEx adjustment year previous loss net million basis of a million was GAAP net purchase well The basis in due net the the the acquisitions. for quarter per share that a $X.X charge the adjustments debt to

quarter million for $X.XX $XX.X $X.X XX% the compared was million third EBITDA the income diluted third or to net of EBITDA $XX.X midpoint quarter. margin million XX% Adjusted slightly and guidance EBITDA per quarter. diluted adjusted $X.XX $X last margin share, adjusted above fiscal the of quarter with million, adjusted in per EBITDA and compared or second an as share in to was of Non-GAAP the of

position had the will cash and of we our total a provide now as end. of third on securities At our sheet end I marketable and additional of quarter balance some details quarter, the liquidity million, which convertible senior X.XXX% $XX.X $XXX $X.X crude aggregate $XXX of the our million total XXXX May repurchase of outstanding a due amount principal in interest million plus reflects and of notes debt million. in fiscal

aggregate was in assignees, factors carrying convertible the Additionally, Synovia. coupled notes of $XX.X which to acquisition represent these million of due our unsecured of with amount assumed or value the amounts

loss items compensation operating activities noncash the third adjusted changes fiscal for in $X.X generated such depreciation, of which stock-based as cash million in of for our Net as net as quarter XXXX, capital. million well was working amortization $X.X reflects and certain

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

times. sequentially the turns was down quarter million of The $XX and annualized total of which third million, approximately $X.X end X.X inventory at represents the inventory was

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

revenue deferred at last to our quarter Additionally, million quarter. balance million $XX.X compared was end $XX

For third income pretax our quarter, R&D the to attributable other of offset with an benefit $X.X tax available is items. tax credits, we recorded partially law which million, by along discrete

recorded the current just that for quarter. I For tax an period for income similar same year, last reasons the we of $XXX,XXX cited benefit

For the we operating cash our taxes XXXX, available any changes tax expect remainder of to material losses other not our and fiscal do net credits. remaining due Federal to

of of consolidator million at the to $XX turning to expect fiscal Now we year year midpoint. a representing growth quarter the range to fourth quarter outward, million our to XXXX $XXX fourth XX%. revenue increase over

momentum a business across upgrade LTE SaaS reflects to cycle. Our our tailwinds fourth continued XG expected outlook from and quarter

expect net in income range loss and diluted range share to in bottom the GAAP be the to quarter to the $X.XX of At $X.XX basis non-GAAP line, $X.XX $X.XX we per share. per of fourth net

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

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

Michael Burdiek

revenue, reiterate leading Thank transform you, once made SaaS expanding subscription quarter our that and like this to as service past CalAmp Kurt. I'd services great a progress to into software continue provider. we we again

expect in to finish Year. about year the our excited New and growth, with additional prospects We the we're

the With questions. call Operator? like to to open that, up we'd

Operator

Walkley Genuity. Canaccord Mike from comes of question first Your Instructions] [Operator

is line open. Your

Mike Walkley

for just know on you Can and the end trailer you're truck I seeing has Michael, been talked me, the what some about piece, of from there you've soft Systems in and kind new Question Telematics that especially to forward, business, that given, we kind XG your about you how MRM some trends on builds business? LTE. and trends customers overall, builds. bundling run should on going going customers? telematics in business from your you've about think you. rate for Thank talked the can bought couple a about But and just of systems end talk

Michael Burdiek

of worked So as out a was important Telmatics QX, think And we we way around our it's addressing our supply I into explained number in significant were chain that remarks, business specifically sequentially. the headwinds to we Systems our prepared point of despite our up were the United those products did applied transitions Xst, to imported and the that But customers tariffs China. went a significant September portion headwinds, in to into effect base in growth see which we from in manufacturing our States incremental revenue. as

than Our sales. upgrade QX was headwinds little bit tariff expected, a the that in related during And bookings new better to Caterpillar faced. product various recovery initiatives quarter with given the activity we their LTE nice saw probably a we and

factors. deterioration not it I outlook. overall, I And we're impression the encouraged that significant in given the all-in-all, relates would very those it of was relates any So markets described. QX into and say of to good our some it as to a end macro say revenue quarter factors some going I'm we you as saw sure would

Mike Walkley

And up me. follow for

you of business they within things we and the How mix. in and trend? dip should kind of recover staying talked do gross think should And they about headwinds the Some margins to Where these QX that maybe QX? overtime? how about

Michael Burdiek

down been it we remarks, get has U.S. actually about the wind to the Kurt way product producing we activities can as down. of we a generations. But relates expenses Tier to of Kurt up And it facility a facility that move business X qualitatively of partners obviously things as manufacturing our unexpected explained for of manufacturing other had cleaning and activity talk to prepared proactive lot on CalAmp in I'll in expenses, significant into two related in more that we're very world. addressing some almost That and as pass-ins details. and some for some our as the wind parts

considered would gross and a margin, couple and of were that So next the where expect the in of less expect around or the revenue the purchase somewhat the more bottom as things to few terms back course impetus of where headwind fiscal see us work relates QX of to of improve deferred also quarters sort as dissipates the we get to provide incrementally as accounting the that of way especially, we we and acquisitions quarters continued for that our we an haircut it margin was fact ago; over should probably some into next the expansion year.

two had the products a the And those profile, with cost couple launched we would were Each of parts partners than and to factor, in optimized strongly launched of QX. other of new new mix launched they LTE with products we it much key relates ramped not I anticipated it world. more customers. say, As and

products. And so, that the had over which the will yet of we mix opportunity will be year. fiscal should even current same of optimize first next couple really next those an of help demand roughly going of in underway that if an to really haven't the also effort And part quarters, QX stays course into be the the

Mike Walkley

Last I'll pass question to on. it and me

into You've Thank pipeline that growth talked business going business? Any overall should good business. about and is year-end the for SaaS about in you. with seasonality we forward? think How outlook some momentum and overall and Synovia just that

Michael Burdiek

bit LoJack exceptional international an off of expect Sure. of I operations. seasonality Italy. will a some that would relates and in coming there We're to as quarter be little it LoJack those

also QX, opportunities our to programs terrific software into service carrying overall sorry, We've bit sort really all we I subscription but QX same of we strong saw be a and on QX pipeline of that across in portfolio. is Mexico carrying -- into fronts, expect am in the to but new QX. got little growth wouldn't QX softer. the quite expect was see ramping, in We LoJack some

Kurt Binder

would Mike really that category, very the well. seem with quarter through strong products there. pleased I saw the that fourth rebound and we're the quarter. a the XG as way And look progressing we transition, Cat we OEM bookings more in with network also the And add into nice as in rapidly move and is XG third to the is they

Operator

of question Blair. Jonathan next Ho from comes Your William

is open. line Your

Jonathan Ho

understand your to help quantify impact just there's your and there comments I there you. Is here? the out do with any could trade start China, wanted we a resolution recent business, given us maybe you potential way a just around see deal be could out if there what on that or

Michael Burdiek

As in impacted about and tariffs. we were products to the in I XX% mentioned, between by shipped XX% And MRM States tariffs affected QX. of by somewhere were customers our United

had supplier we we've about China try on concentration transition on that other that initiative transition well the As to world around talked of and underway calls, away period conference partners for from time some to underway program an earlier to track. and is in

of the of lower the on our the for China relaxation a So are pretty XX%, us. called is trajectory almost September the into supposedly even that. so our fiscal going affected is but QX suppliers in tariffs that we of from one phase those If there minimis reduced, year. away on, are isn't world specific expect the we, to The any of the in tariffs considerably But reduce be parts to effect on from which and circumstance. next transitioning have it's China drop tariff that continue going details of QX off de would few any imported than in percentage current under to on to we have we other don't products X went if products and plus terms trade in rates details States, that United a agreement, obviously, rate in

Kurt Binder

anticipating our a the was program were did we year the and past received, Jonathan of to feedback I'm And month, say a the I we there, well all they when it. started that on add our September customers think, with over path just program, this had And we pleased to customers. through given institute that to with guidance

And so accomplishment that success had we in and actually good pass-through.

Jonathan Ho

with us a opportunity sense as And of a could you've and you little maybe be then you. that of types up? with conjunction Can doing AWS an Thank quantify you'll quick open follow-up, opportunities bit of or that give mentioned AWS. maybe in just a what what

Michael Burdiek

value a What a we public cloud moved for servers from to about anecdotally somewhat anonymously, being work had data service another. and providing an to with opportunity one talked tracking on provider center and solution high

is. I explained customer think we've that who

that an We have it's to only pretty leader public logistics. a about to be in needless well a not talking world about to that's transportation services, then investment And we us as for area, many an it are relates area cloud engagement. increasingly opportunity. careful around in how We're But exciting details people the key hopefully the the opportunity future. growth as and but focus and great for know, and into say,

Operator

Stoss next question of Anthony from Craig-Hallum. Your comes

line is open. Your

Anthony Stoss

maybe I mix of expect little of on product quarter? what drill then being margin inventory? more versus down the can give XXX you glimpse wanted February a us how if that gross was you can of margin. might the to lower, be follow-ups. from bit had gross Kurt, margin I points two in And And And gross much also, a the just basis you

Kurt Binder

first that to touch Telematic business. it And comment. the on portion around trump extremely the software know, as with subscription Well, profile division. our Services and within to But our you let start and were start of gross business our me as margin off a will we larger your margin off, say, just pleased revenue, becomes

remarks the really earlier in impacted there that noted we that areas was three So margin.

those products product change our number we a products. costs margin did higher lower and but new have the some quarter, off, move volume we customers associated mix into First incurred start with to started of in a up where over

one-third last around, year impact. the characterize probably variances overall was the So cost. The I E&O third margin next manufacturing that was around as of would and

out, Oxnard back in XXXX. we in the were started Michael pointed As facility

ourselves for of this goal there quite executing So we've the calendar end long of a that by been time, for year. set a and facility we

imagine, somewhat that out achieving and as close surprise through of there's have we've either and that costs the were magnitude. sold of inventory moving added a facilities, moved be it or goal. ton those will that can a But other we've terms to in of to we're as assembly you We risen

We mindful once the of into expect going QX. facility XX to next days, is say, want over shut but be that that down, dissipate that XX we to to completely

So we in will we will of ended some ticking that think expect in which We that XX%. do from overall and up slightly will facility QX, manufacturing the here continue. in where costs at QX us result up into mix do QX, the third quarter

Michael Burdiek

add products effect Tony, that is instituted into factor, pass-through it and very, I'd factor one it of of tariffs mentioned things for a minor we earlier but on a went is Kurt September the X. program is customers by affected a very this that those the a and tariff that those is had

that objective and to margin. into pass at to be those close profit zero a our So, was our through center turn customers not fair to transparent with and

as minor very substantial there, not factors these that described. was effect but other there a Curtis as So

Anthony Stoss

February and you quarters? but level and if wouldn't for up May guidance said think were back they one expect be can do to Caterpillar negative you August several impacts sequentially, Do gross or on to XX% not margins. the And curious. know, you you above do looking Michael, either the be expect then, sequentially in get I you I'm margin, mind you them clearly, gross And like quarter? of quarters,

Michael Burdiek

were margin we unreasonable the we careful. were gross QX. up recent where midpoint history. that by we where do in to want would we of year, in the expect to I to pick be margins don't We gross to from to guidance, pretty think expect of back sort next it it's be As relates

good LTE margin were with newly I of to these cost less activities of little Cat, some some be for it improved say, more somewhat outlook could or given we or And bit little but around line consistent then the launched I of in would a think with QX less higher, could lower, And profile, And reduction as is where a should relates QX. solid. the be we in bit have products. an more be

Anthony Stoss

just recurring your million. Hertz to If some to revenue one product attached $X primarily amount there or engagement revenue I sneak mentioned could you that more, Is about is Mexico that?

Michael Burdiek

that's subscription No, arrangement. a bundled

Operator

Your Gearhart comes David Analysis. next question of First from

open. is line Your

David Gearhart

us housekeeping I quarter? QX? us the start you questions. with couple revenue also, then you can in wanted to subscriber And the acquired for a give Can fiscal count give the

Michael Burdiek

to be easier. going hard one is question second the to first answer, is the Well,

Our our was And XX,XXX were it's prior and subscription that in was growth. in roughly across almost at terms well, forward was And looking spread think right talked We worth it subscriber but I subscribers. X.X pointing subscribers right figure. X.X think that's for out, up as million count we've QX. sequentially quarter, million around about single us around I category revenue every in very so opportunity a encouraging, obviously, of

Synovia, to us before discriminate worth from revenue of that had I able recent to that the Mexico. relates streams the Tracker sources it But for difficult to revenue think to in As sequentially. pointing we going increasingly acquire out revenue, subscription be pre-existing LoJack it up it's acquired and certainly was acquisitions it's be we

Kurt Binder

the add we X quarter range the at for the million, was quarters mentioned XX had just as we that to I to million previous in I'd believe.

and adjustments that accounting fourth As I at the the as last high we're slightly starting quarter, purchase we continue would especially above range that in into to are mentioned to the end rate quarter, expect right dissipate. and of now, the

David Gearhart

XX fiscal And end to million and QX range. just at that that you're comment the high on of X the given subscription, million software with

level LoJack fiscal that? check fiscal for but to coming seasonality it play from roughly Italy. guiding flat not double specificity, consider I of to fair into just QX? have it Is wanted You you're QX, that I to know

Michael Burdiek

outlet reasonable have that's given think a could ground seasonality in. I the factors

David Gearhart

on quarters into program? expanding you take coming offset other should revenue that And next for and devices As telematics about should of just could wondering, product or the service the near some then the -- the term provide dynamic me we us program, color lastly for on we lines? in plans rates from if systems think how think and

Michael Burdiek

under out quarter rolling belt full full quarter that have we're and that now just Given belt, one program we our under domestically our internationally. really only one only

take really you early. really, to premature it's So on statistics too give rates much

our that skews relates opportunities to expanding all it of imminent other in at to right additional As that we're a and sort now, looking start options apply to products, plan to to our portfolio. of program there's obviously, there. no But

key behind As think biggest I had some Caterpillar some of positive soft around other hopefully QX think our in substantial, that going and obviously given of quarter but this year with of the on we some factors customers. Systems outlook impact former revenue would play. not Telematics level And the that, the and it and and devices the revenue, I is relates considering the seen say we've our elimination to growth, reasonably And of us. impact other terms program, consolidation is of service that's I factors, in of forward, all obviously

front the that telematics bulk XG a and the believe in talked number do also are devices XXX,XXX. into is recent a X was turns quarter, most And devices that that us. estimate the I are substantial It XG LTE is to think service, of CDMA out units. of into there because of that population little are all on in we calls, nature. the upgrade bit service nearly which low, of million that legacy We we've In still around that not factored talked prior cycle that as about about are in

there United X.X are service still opportunity the in States. CalAmp something in in of that million an addressable units neighborhood there's customers with the upgrade So of

that's is So become significant going at but tailwind some point really of us, hopefully the that to timing for a uncertain. in time, pretty

Operator

comes Notter from question next George of Jefferies. Your

open. Your line is

George Notter

tax deferred those understand, are renew, through accounting then you the back that revenue that? tax done, guys? out? of of would one those revenue customers in to And impact us what correct? I NOLs trying are and the once purchase post kind Can to your is guess you impact contracts I off start look of rate through NOLs for I the go the want his Thanks. some you consumed? year to on they come that flowing that plays ask then when rebuild and Is forward. how I'm guess the process run understand you walk guess, that just NOLs mechanics much the up and I going XXXX. to pick And as I about deal then post like normalized to back is separately, to wanted then incremental and I how credits,

Kurt Binder

So, first accounting. the we'll start purchase off with

revenue the the the point as to So, we offset the way already that. sheet had we recorded that essentially that was haircut that is the eliminate businesses, in recorded acquired accounting their purchase an at take works opening on time, to deferred to the That a balance When weighted gross was away at over remaining let's adjustments, prior of that the margin that average period which equates the acquisition or time, say came that our total margin gets use contracts amortized to acquisition. date date. to earned, of a basically over from then

So a most to might XX of months, acquisitions. about varies the have XX of it but from those period between three anywhere say

purchase adjustment different. larger this the is Synovia acquisition fiscal largest is revenue and exact the at accounting quarter essentially the be fiscal given That you dissipate So because and guidance one XXXX. businesses, Solution. each gone by any will first year, numbers we contribution of new specific in can What particular, the tell of I three looking that haven't on the upcoming on

The generally fiscal very burn second a going others time, at we two, longer over quarter year. of the a be should it but nominal the first bit might little into rate of off next period

from to the $XX we the were $XX mid-teens. we somewhere those mentioned rate. we on businesses thought to other digits. mid The when million for Synovia, And run other was of two range in million the be acquisitions as growth the bought anywhere $XX Those I million snow before, via it would that high for And single indicated two, $XX rate four million. annual

So of give some We exact that the should adjustment first be again two quarters expect gone we haven't to to dissipate you over the announced them visibility. but XXXX.

Michael Burdiek

relates massed EBITDA, revenue true adjustments, to and adjustments all somewhere flows one the revenue and related of then of adjusted as to the was a between less off, dilution reduction in a guidance, the million reported accounting obviously all through true million dollars EBITDA, there there's I George that margin and the add adjusted would not to based we an which our assessment and thing quarter And or gross have as the way other all on it only is EBITDA. of that impact we fourth relates which, adjusted more perform accounting, can't our $X purchase in required obviously GAAP report. $X obviously to

accounting the So adjustments been balance through, line bottom had opening we that to that place were various on financials would gives in have the you the sheet. what some the been with all idea of bring impact able

Kurt Binder

relatively upon whether the off. ensure entity your a basis speed also X.X% tax basis range are NOLs. is second of and will the essentially into to tax we beyond or tax We've a planning somewhere strategies, George, we rate which cash planning question, 'XX. 'XX tax contingent But then our remain instituted at our of those between and dictate do heavily And the which yes, that'll number burn rate low in forecasted to Obviously, X.X%. out fiscal currently, of new part have that cash

And it the we we performance Mexico look obligations through QX this a remainder purchased like like QX, at does slight better cash standpoint. acquisition year. of fiscal a had uptick a least Mexico, we have tax did and have when because and the around anticipated, be consistent in has mainly the than and We tax bit been Mexico looks that'll from

don't around our cash as our that's strategies, no thing. in glide our fiscal so tax tax anticipate and 'XX major and path a 'XX. that, favorable given the overall any planning as in changes wells we And well other basis rates But

Operator

comes Capital. question Searle [Operator Your from from next Scott ROTH Instructions]

open. line Your is

Scott Searle

in for given Couple to was low-teens on from within if of a as taking services number then that quick on kind mid Synovia. some my color going from Synovia you counting what And the run that? the quarter. that normalized the of we of now and Thanks heard a now not forward? and impacts here, majority questions. the The purchase expect for getting I'm growth business if standpoint should Tracker, the could we're on wondering, a cleanup rate Mexico I I provide basis through a sure we're blended

Kurt Binder

your question Synovia. first first Scott Well, on first,

as the actually the indicated acquisitions. XX the XX is acquisition. we I the the can what the We're mentioned is above XX%, before, by kind XX%, XX relative contributions X annual past the two, Based combined for of million haven't million, upon, allocation were for what We million run X and slightly extremely Again, trimming of at million revenue by rate each of that. quoted We range with pleased you quarters. guesstimate other Synovia, or acquisition. $XX say

let I'll figure you So that out.

Your terms think of other mean rate. I ongoing in question service, SaaS run

Scott Searle

yes. growth revenue SaaS general, in

Kurt Binder

acquisitions expectation seems our that Yes, be. contribution these right overall on now. based to And reasonable rate think that teens additional growth on providing visibility us should is giving we're I the-mid what experiencing the be is what are that

Michael Burdiek

Synovia can come recent with SaaS we route, It I I the the growth would of add, long-term sustain Scott. we fact revenue fashion. of enterprise some example. growth platforms, The these given expectation that say to other But that is linear optimistic that and rate SaaS a good SaaS stream. won't a a necessarily being of in medium nature would we're experienced pretty these some Synovia

Scott Searle

we the in next the gross of product experiencing of sounds to kind then some we're those is from manufacturing the part to gross normalize of to front. back LTE we like And And that assumptions you the from what is By factored introductions And that margin as have in normalized and questions of should our back talking issues on those he kicked gross you're when standpoint? earlier. It also tariff once revisit you're in year, said, what about thinking like but the part on new be margins through assumptions, XX% range that Xst, September get about? getting percentage just XX margins? other of middle

Michael Burdiek

We last just over didn't were quarter, I say XX. mean, XX. we

think expectation XX% burn continue And growth a from service and revenue some broadly, normal. I deferred we margins. in So obviously business than would dynamics for hopefully see gross so that's haircut expansion Gross which of subscription margins there, has software medium-term called our then better off. to the

who bought was customers for the reference us who you've that XX% rate from imported tariff imported customers the direct not The Those part pass-through made, from most a products the were through for had we that's on have upon might the we rate a the based the But pay because to import that purchase to pay pass tariff of our XX% customers. effective the, cost, price. China.

that. cost is XX% XX% a it the obviously, was applied than not to so quite less pass-through And customers, bit

significant expect. headwind as So you as XX% might that be to wouldn't headline therefore, the lead

transition the away suppliers stay we China. start will in we earlier, more rates to that mentioned legacy as the expected tariff I from activity effect to even if As dissipate continue current into manufacturing impact our

Operator

question the back further would I no time. at turn now There's to like Instructions] Michael. to [Operator call over this

Michael Burdiek

after Holidays Well, thank to fourth look call forward today. everyone year-end. you for joining we you and quarter speaking Happy our with our

Operator

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

You may now disconnect.

CalAmp (CAMP) 19 Dec 192020 Q3 Earnings call transcript