CAMP4 Therapeutics Corporation

Welcome to CalAMP's third quarter 2021 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 Seavers, president of Shelton Group, CalAMP's investor relations firm. Leanne, you may begin.

Good morning and welcome to CalAMP's fiscal third quarter 2021 financial results conference call. I'm Leanne Seavers, president of Shelton Group, CalAMP's investor relations firm. With us today are CalAMP's President and Chief Executive Officer, Jeff Gardner, and Chief Financial Officer, Kurt Bender. Before we begin, I'd like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect CalAMP's best current judgment, they're subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in our periodic SEC filings and in the earnings release issued today, which are available on our website. We undertake no obligation to revise or update any forward-looking statements to reflect future events or circumstances. Jeff will begin today's call with a review of the company's financial and operational highlights. Then he will provide additional details about the financial results, followed by a question and answer session. With that, it's my pleasure to turn the call over to Callum's President and CEO, Jeff Gardner. Jeff, please go ahead.

Thank you, Leigh Ann. Welcome, everyone, and thank you for joining us on this early morning call. Our third quarter results represented another quarter of solid revenue growth combined with strong margin expansion. And as indicated in this morning's release, we recently made the strategic decision to begin winding down our LoJack U.S. operations. And I will speak more about this in a few minutes. First, let me start with the results. Consolidated revenue in the third quarter was $88 million, with adjusted EBITDA margin of 10%. Our SAS revenue grew both sequentially and year-over-year to $34.4 million, or 39% of total revenue. We ended the quarter with a strong balance sheet, including over $91 million in cash, and we generated our fourth consecutive quarter of positive free cash flow. During the quarter, we continued to benefit from the ongoing 3G to 4G upgrade cycle. which fueled our largest customer's record performance in the quarter. Additionally, demand for our fleet management solution remained robust, particularly for our Here Come the Bus and Bus Guardian subscription offerings. And you may have seen our recent press release highlighting a school district in North Carolina that implemented all of our solutions. As the pandemic continues, we've seen more and more K-12 school districts utilize these applications to track their students, buses, and drivers in order to create a safer environment for children and easing parents' concerns. Demand for advanced tracking technologies for critical supply chain asset management has also been increasing recently, especially in light of the global pandemic and the major increase in shipping volumes. I'll comment more about some of our recent successes in this regard in a moment. I couldn't be prouder of our employees' contributions and CalAMP's important technology offerings that together are helping communities all over the world stay increasingly connected and safe. To that end, I'd like to highlight some of the key customer wins during the third quarter and more recently. To begin, we further expanded our relationship with a large global freight transport and package delivery customer by winning an additional 35,000 cargo trailers for telematics tracking. That's in addition to the 100,000 trailers that were already retrofitted. We had been working on this opportunity for almost 18 months, and we're pleased to have won this business over a number of large competing firms. We're also working on a new proof of concept for an exciting smart trailer project that we believe could offer this customer more efficient, cost-effective fleet management and asset tracking features. We are very pleased with the continued progress of this relationship and the potential opportunities for further expansion. Additionally, and as I mentioned earlier, our largest customer, Caterpillar, reached a new quarterly revenue record as we continue to support its ongoing 3G to 4G transition. We also benefited from a similar trend at other large MRM customers, along with some of our smaller TSPs, even though many of our smaller accounts continue to struggle with lower installations due to the pandemic. In our EMEA region, I'm excited to report that our LoJack Italia subsidiary began installing IonTag and vision tracking solutions for shipments across Europe. We also launched a predictive maintenance services program in Italy with PlusService to make public and private transportation vehicle maintenance smarter and easier in order to prevent mechanical breakdown. In the UK, we partnered with Coaster, an exciting emerging digital solutions company to revolutionize the rental car industry with our telematics solutions. And we also partnered with Grove and Dean to protect vehicles across Europe and help reduce insurance premiums. Regarding recent developments on our ION Suite application platform, we recently migrated over 350 customers from our legacy application to our new ION platform, running on CalAMP's telematics cloud. We're also integrating a new AI-based camera solution into the ION platform that TSPs can use in solution development with convenient APIs provided by CalAMP. And we've added some powerful fuel and asset management applications to the suite that raise the bar for our customers managing governmental and private sector vehicles fleet. So there continues to be a lot of great progress being made across our business as CalAMP remains well-positioned to benefit from the increasing need for tracking, monitoring, and recovering high-value assets around the globe. Now turning to the additional news we released this morning. After extensive consideration of various alternatives over the past several months, we decided to wind down our LoJack US operations. As many of you know, this business historically provided stolen vehicle recovery products operating on radio frequencies allocated by the FCC for domestic automotive dealerships. These products and the related services were provided predominantly as a hardware-based offering that no longer aligns to the company's core focus on a software-based business model. Recognizing the importance of the LoJack brand and in an effort to further promote public safety, we intend to continue supporting law enforcement as we orchestrate the wind-down in a responsible manner and allow sufficient time for our dealer customers to make the transition. The most important reason for this decision is that it allows us to refine our focus on key areas of our telemedic staff business that will drive higher growth rates and more predictable revenue streams. I want to emphasize that we will continue to operate and invest in our international LoJack business, which operates as a subscription-based business model and is also well aligned to our core SaaS strategy. Ultimately, this decision will enable higher growth rates for the consolidated business, as well as generate higher margins and profitability for the company. And although there will be a transition period financially, as we wind down the business, I believe in six to 12 months, the company will be in a better position to grow and further expand our SaaS business. Lastly, I want to take the time to thank the members of our dedicated US Lojac team who have worked very hard over the last four years. And I'd like to personally extend my appreciation for all of their support. To conclude my prepared remarks, the CalAMP team remains focused on offering our telematics software solutions platform to help customers improve their fleet operations supply chain management, and overall operating decisions. We believe our SaaS sales will continue to expand as our customers increasingly value the knowledge and real-time status of their critical mobile assets and personnel. And this is the hallmark of our telematics technology. With continued execution on our strategic initiatives and further refinement of our business, we expect to drive higher quality revenue, to further expand our margins, as well as higher profitability and cash flow for the company. With that, I'll now turn the call over to Kurt for a closer look at our fiscal third quarter financial results, and then we will open the call to questions. Kurt?