CAMP - Earnings call 3 2024

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Operator

Good day and thank you for standing by. Welcome to the CalAmp Corp. FY '24 Q3 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jikun Kim, Chief Financial Officer.

Jikun Kim

to FY welcome Earnings Financial and Call. afternoon CalAmp's 'XX QX Results Good Jikun name Kim. My is the Financial am I Chief Officer at CalAmp. today Cohenour. Also Executive us is President Interim with and Officer, Jason CalAmp's Chief

forward-looking During we Section of Act XXE Securities today's the of Section the of and the will certain XXA XXXX call, Act of meaning statements make XXXX. of within Exchange

uncertainties. assumptions, statements Forward-looking Many materially to based on are future events statements that subject actual cause are predictions, could communication. from are expectations factors projections and and future and risks differ such, other and in statements about to as current events this forward-looking

that Investors may are make. with be should the about intentions call from results different statements actual plans, the our in we listen materially disclosed today's and to understanding to expectations that forward-looking the

factors issued about the as refer as please that cause information forward-looking materially we actual to the differ Exchange filings more the these that results today from release may Securities to For and within Commission. statements, company's well earnings press risk

Investors on company these statements this put may to obligation be forward-looking undue the that update call. reliance are disclaims any The discussed specifically statements. during to cautioned not forward-looking

company's begin the by will with call will review operational session. review a question-and-answer I a Jason and highlights, financial then provide of detailed today's more followed a recent of results,

please. President CalAmp's that, Executive it With is Officer, go my turn the and Chief Interim ahead, Cohenour. great over to to call pleasure Jason Jason,

Jason Cohenour

in also continued today. areas softness see all certain thanks the Jikun, strength you, others. demand for while us CalAmp experiencing the the to and you to business of In Thank joining on third quarter, of call in

well, to segments demand revenue. car lower-than-expected whereas soft led TSP our Specifically, from and industrial connected continued consolidated customers to international perform

telematics that segment to strategic inventory early we as overall are mainly and continued with environment Our ecosystem. subsequent and seeing as supply post-COVID to related resources recovery. In this chain focus view signs we in have well an the rebalancing reallocated correction solution competitive response, of and is intensified the TSPs believe is softness

growth and stabilize We are revenue to optimistic current that levels. will return from TSP

with Another to difficult some its months device is our a complete. that migration been I very effort of of million pleased management after than technical necessary X.X complicating from has legacy monumental DMCTC factor XX pain essentially that migration TSP PULS system am to report successor, devices to our customers DMCTC. now but the more and

functionality All TSP of can devices. and of our fully now as to forward DMCTC improved leveraging look customers to opposed migrating the benefits

the team the of Furthermore, and as completed, CalAmp the more to the can optimizing its growth. are time re-vector and driving final migration attention experience strokes of revenue customer

result the of sequentially a gross a and as of Adjusted of Overall, X. in revenue EBITDA the previous was $X October impact and revenue result million which margin. provided OpEx company quarter, the below of this lower directional our we $XX.X revenue commentary as initiatives, million both to expected cushion on expectations the at margin. adjusted Non-GAAP and of time the helped generated gross than was and in lower lower lower cost-reduction fell EBITDA

core and the to to effectiveness continued investments product on front, sales our segments its the resources. focus On of company and the market hone maximize

that several result, represent quarter catalysts were As in we the for the believe there growth a future. developments

fleet gateway stand-alone release or but includes X.X. and This the upgraded was device. telematics our X.X model also a Vision capabilities K-XX separate Vision developments now has X.X AI new of GPS as without applications. our these the of video dash solution, need functionality, been One LMU other Vision such the cam released of an commercial for of tracking, version for offers

the with industrial strong another had our As large previously quarter we customer. extraordinarily in OEM particularly segment, mentioned,

power significant some seeing OEMs, interest CalAmp's of industrial software showing other edge market and are who computing with also traction EdgeCore. platform, flexibility very encouraging are in We the

edge costs, edge operating lower proprietary to flexibility apps, This our can latency lower and which together enables with lead for device-to-cloud cloud, improved solutions. capabilities DMCTC edge-computing compared customized platform, to traditional

We excited expand with set opportunity this are today to customers edge OEMs. industrial and capability our integrating have unique

international to quarter. execute in connected well, continues the our business achieving Also, milestones car several

First, we were expansion. for Toyota's streamlining granted providing enabling at delivery sales ports, be to Toyota installed solutions thereby an "Genuine" opportunity certification, the and customer and geographical our process

the premiums our Additionally, system Jaguar to Recovery on recommended impact led theft Land Rover mitigate has issue Vehicle theft Stolen a JLR's help targeted models. the the U.K. Range of these to solution increases Rovers in its in has insurance as U.K. growing Increasing of in endorsed significant

JLR's are installed. premiums that have offering select our With lower insurance solution vehicles on endorsement, companies SVR

by for growth encouraged it catalyst of and market unique technology a SVR are JLR's that in our represents endorsement believe We U.K. beyond. the and

During the focus also opportunities narrow well for to we launched profitable are market initiative where quarter, growth. our an segments strategic positioned to particularly see and we

significant narrower take In to addition actions. also market for focus to our concentrating with us our in opportunity enabled the growth, resources segments cost-reduction has best those

We result from that We estimate run with the expenditures, reductions capital will in million and of operating in annualized anticipate goods. savings $XX expenses the fiscal compared cost-reduction in of savings our XX% from QX our approximately that actions approximately rate. to balance cost will coming come

from throughout benefit While realized we see will year expect cost-reduction to impact fiscal some initiatives, our be full 'XX. immediate the

suppliers. positioning financial flexibility strategy and model announced revenue, at enhances of we significantly Lynrock a existing breakeven Fund XX, capital Lake asset-backed term reductions, $XX EBITDA loan we the replaces customers, our partners our in our credit strengthen also provides of product transformation. million million LP. margins. On achieve December $XX on Master The leverage in gross support new with term and engage new depending and and operating loan approximately to mix adjusted in to expect new This and of line with business closing and With the strategic these as quarterly we previous our

term and Adams with in technology agreement, security accomplished excited notes wealth CalAmp next a we of bring CalAmp senior notes leader, as of CalAmp's to and Lynrock is is the large that the January of CalAmp's technology existing an add a and amending In is the of will maturing Chris a August connection a long-time supporter I'm X% an of of execution of interest. And finally, CalAmp. majority loan XXXX. XXXX. convertible holder recently very experience CEO is President XX, knowledge announced very effective Chris leader, to appointment veteran the

management recently a division Automotive combination operational onsemi. technology most the of unique General possesses at He of of technical general skills and Sensing depth, broad companies, from Manager range a as experience

in for We through company ability the to its and to and investors. have high customers value confidence lead greater Chris' transformation

until serve continue As will for Interim I me, arrives. to CEO as CalAmp's Chris

with and the to responsibilities. ensure work will I handover of a team smooth arrival, him his Following leadership

handover, as to for CalAmp. Independent the resume plan Following I my role Director

and has before serve team I report It that the us. been the CalAmp's CalAmp Interim they can as to talented true CEO, without hesitation in and opportunity passionate, is a pleasure believe and

a in to over In excellent quarter turn I leadership. With more other chapter market blue-chip the Jikun also to company CalAmp's supporting and of assets, addition our to has a and great having profitable products look large-and-growing detail. a solutions, to Jikun? I'll third the results tremendous discuss call that, team, growth financial market opportunity. next forward including customer base and

Jikun Kim

the to full you in has measures connected earnings is TSP work pleasure thank will driven million. industrial to the for declined corresponding of been you, Revenues segments. reference and with My from GAAP commentary the to included our and by you. Jason, decline $XX.X measures. and third reconciliation sales of with and a stepping by these non-GAAP include last market in during transition. XX% sequentially million car customers, revenues release. Total non-GAAP Thank performance year-over-year quarter were measure A this lower the was XX% up our year-over-year It Much $XX.X revenue quarter. offset strong partially quarter-over-quarter in financial

the in TSP in customers remarks, his driven to revenue Jason competitive continuing was their end our navigating inventories mentioned their pressures while decline As rebalance also by markets.

customers seeing are is we the sequential a subscription indications business QX, have early were orders that quarter TSP into $XXX,XXX the move decline. million, we revenue application from and improved. Recurring in stabilizing $XX.X our As

quarter-over-quarter, total revenue in quarter car lower quarter. The expenses XX% product prior declines which as the U.K. exited insurance and were our revenue higher-than-normal our market margin warranty car since by one driven market mix, large result a in compared operations segment. Consolidated and by K-XX from by been the issues were with volumes segment recurring has was the partially gross a higher by excess SKUs, expenses. obsolescence in our was warranty connected sequential the XX% accruals third resolved. revenues gross and product set to decline SKUs These quarter. unfavorable line, of our margin largely and decline was driven of cargo-tracking product in the connected quality of was While offset driven E&O recurring in the growth steady were U.K. the carrier

Third quarter were operating expenses million. GAAP $XXX

other flow positive sequentially to of and Jeff cash million expenses of cash restructuring from $XX.X a related for $XX million and impairment, approximately quarter nonrecurring further $XXX,XXX. expenses Cash charges, flow was $X.X we cash our $XX.X $X EBITDA would X% revenues. million operating goodwill nonrecurring quarter details expenses, press to Excluding was passing see FY $X.X have Please third QX or release declined Gardner's the 'XX Resulting adjusted million. approximately million end equivalents adjustments. At Free a operations the was quarter. the total of 'XX, negative quarter. in FY QX of the million last as had to in compared

in implemented 'XX. we annualized cost-reduction fully of initiative, savings of by relative FY end run end to the $XX QX the a realized 'XX cash savings Towards rate. targeting million 'XX, QX significant should be These FY FY

over balance from will of and as operating expenses Approximately come the products from XX% reductions the lower-cost aging of new, expenditures. The capital and cost goods time. will reductions higher-performance replace come products of

should and to significant to determined segment and a less quarterly CalAmp financing end, approximately of our will declines goodwill we Lynrock and segment, market of value growth, cash the revenues, efforts on our The in also of announced goodwill reductions, the recognized the flow carrying fair agreement and operating our was on value breakeven quarter revenue of these in we and depending than million profitability $XX million our closing balance carrying implement generation. business additional impairment. Subsequent flexibility restructuring the liquidity to financing Lake. margins. In with by some as we be sheet. gross return Driven assessed to value, provide TSP a With be we strategic mix the $XX reduced goodwill quarter, EBITDA the realized the adjusted

execute XXXX market multi-quarter expect X, decrease from to revenues recent normalized $XX more million from outlook business to segment its December the coming QX, term financing industrial a and in enhanced August level. will to standpoint, note, a a the coming company profitability to financial flows, million covenants. With incremental loan structure, convertible address no cash and positioning loan plan and As $XXX cost strategic significantly this lower its revenues the term on create XXXX. From on due due has XX, we loan our highs

this We for relative and adjusted offset comments. to turn to TSP EBITDA expect partially revenue down to be the a stable expect that, Overall, back Jason in recovery Jason? to consolidated revenues by our to the some from customers. I'll the call be slightly reduction industrial levels. With final 'XX we FY QX be for

Jason Cohenour

In like Jikun. conclusion, their everyone support continued you, would Thank I CalAmp. of thank to for

an bring unwavering and to have dedicated that And the our market. navigating in and to employees services belief We the opportunities our remains prepared value value ahead. This technology, concludes remarks. capitalizing team the on our

now the Operator? questions. open We call your will to

Operator

Adam [Operator question with Bubes from Instructions] Sachs. Our comes first Goldman

Adam Bubes

today. Bubes for Jerry is Adam on This

we here just could back a recovery market on around overall point seeing As broadly, are can about TSP the starting in a that's business? that the you timing to then revenue thinking what finer stepping more for how you're you And your driving return see soon? a put confidence growth point,

Jason Cohenour

Jason. is This Adam. Thanks,

But be basically, abstract come volume TSPs. order seeing bit. somewhat signals we're we the on So seeing up I'll a are from

our We're Our is getting internal from commentary favorable forecast TSPs. anecdotal up. more

current we're that believe optimistic. to is back to going that we're So a big commentary the quarters signs underway. slow. that on it's this going -- cautious like piece consolidated beyond negative think But to guidance us say, moving and here be revenue, get be recovery And said, to historical all think on we're realistic, balance, recovery forward overall we're I'd on I to is the take going to TSPs, view We for QX, few past our in time, in provided has see us respect us QX. With of a The up leads of that recovery. to I to optimistic. been seeing relative But while I Being Adam. a is we'll point recovery levels. at

our indicated to of prepared we're going normal remarks, to As Jikun industrial. see a in kind return for

business some, overall, that's work So in we've consolidated going that time. growth optimistic. got the And catalysts the results. will play to we over through But believe, we're out

Adam Bubes

address on the other you just convertible $XX us strategic then term how thinking see And Can XXXX the loan. options update to to nice closing you're of about million note? the

Jikun Kim

Yes.

this So discussed I past, think the we've Adam. in

going portion to us business, So cash. to believe to operationally, more options for better, do these we're have We generate and profitability will some obviously, things as some be to, as due well maturity. flexibility of the a right? one, a generate refinance able out lower Grow coming opportunities of debts at all increase and off potentially cost, push pay well of as as at it it, the

changed. So the hasn't fundamentally, strategy really

Adam Bubes

me, Okay. focused it. on applications folks you Got been for some and then solutions. And just have lastly new

grow subscriber newer have over how of those the higher-ARPU Just wondering, trends as think work those been? quarters to of trajectory how solutions the and several some applications about growth next solutions? And revenue you you

Jason Cohenour

talk of app optimistic driver. in I'll Vision important and there of so in an market been and in now. of has into K-XX. we're recent around product commercial That apps to fleet. really, kind most with particular, launch Jason. our We're both integrated and it our is been This Adam. stepping it. our has wins a CalAmp of We've with -- now fully ARPU kind installations, K-XX X.X terms customer for handful We're got Sure,

And course, K-XX dynamic in now they're through and, as normal after other quiet business the of their they're -- is back the back to seasonal school period around opens holidays.

with organically good grow. in there. And Spain achieved optimistic Connected on business breakeven to happening. I We've outside XX to the success few now catalysts a other are has, we're app to based connected That and months opened things about ago. car. growth think, we So us continuing in connected is that, has car, area car the point we're And there, customer with we've evaluating business Toyota Land can in addition mainly milestones more both help of opportunities business. believe Europe. And the of that part other geographical some that growth the and Jaguar expansion in got -- nice that to drive milestones in Rover

Operator

[Operator to Cohenour showing to over And remarks. call I like for not I'm back Instructions] further any would questions. the turn any closing Jason

Jason Cohenour

Thank you, look our call. on disconnect CalAmp. interest for continued during speaking Josh, Josh, us joining year the you today fiscal to you, thank everybody, quarter in fourth XXXX and forward your and We the call you with earnings for call. and now again can

Operator

Thank you your for you. Thank participation.

disconnect. now You may

CalAmp (CAMP) 9 Jan 242024 Q3 Earnings call transcript