CAMP4 Therapeutics Corporation

Welcome to CalAMS Second Quarter 2022 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 Akramowitz, Managing Director of Shelton Group, CalAMS Investor Relations Firm. Joel, you may begin.

Good afternoon and welcome to CalAMS Fiscal Second Quarter 2022 Financial Results Conference Call. I'm Joel Akramowitz, Managing Director of Shelton Group. Calum's Investor Relations Firm. With us today are Calum's President and Chief Executive Officer, Jeff Gardner, and Chief Financial Officer, Kurt Binder. Before we begin, I'd like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Calum's best current judgment, they're subject to risk 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, and then Kurt will provide additional details about the financial results, followed by a question-and-answer session. With that, it's my great pleasure to turn the call over to CalAMP's President and CEO, Jeff Gardner. Jeff, please go ahead.

Thank you, Joel. We finished the second quarter with strong growth in our software and subscription services revenue, increasing 24% over the prior year period and representing 52% of our total consolidated revenue. Contributing to this performance in the quarter was the completion of a major trailer retrofit program that we began last quarter combined with the initial conversion of a few strategic customers to our CalAMP Telematics Cloud platform under recurring subscription contracts. As a result of the higher revenue contribution from the software and subscription services in the quarter, our gross margin improved to 42% of revenue. In our Telematics products, business revenue continued to be impacted by the global component supply shortages, but we continue to work closely with our suppliers to source as much inventory as we can. As many companies are echoing across multiple industries, these supply chain headwinds are not subsiding and are likely to extend throughout this calendar year. Despite some recent improvements in allocation, we are still far from optimal levels. It's worth noting that with our backlog at record levels, we could have recognized much higher revenue in the quarter if we had been able to source more components. It is our view that we are not losing orders as a result of this backlog. They are just a bit deferred relative to our original plan. We have every confidence that our supply chain is operating as well or better than any firm in the industry. The positive element to this situation is that demand remains very strong, supported by the worldwide 3G to 4G upgrade cycle. This strength is especially evident at our largest customer, which continues to perform very well. With our global operations team actively engaged We expect to ship approximately 20% more devices in the back half of our fiscal year than in the first half. Now let me turn to the progress we made across our business during the quarter. In addition to the ongoing market development efforts underway in support of our Ion SaaS application in the US, we recently launched this flagship fleet management solution in Italy and the UK as part of our EMEA expansion strategy. And we'll be launching it in other international markets in the coming months. ION's rich feature set provides real-time data insights on vehicles, drivers, and assets for business critical decisions. With CalAMP's global sales training and organizational readiness underway, and progressing very well, we expect to continue to expand the reach of this highly effective connected intelligence platform to commercial and fleet operators across the globe. We also enhanced our ion tag product family with the addition of our newest ionic stream temperature tag. This new smart sensor tag utilizes a thermal coupled probe to monitor environmental temperatures of assets in conditions as low as negative 270 degrees Celsius and as high as 400 degrees Celsius, making the device ideal for tracking and monitoring shipments of pharmaceuticals, vaccines, biological materials, and liquid nitrogen. Our Ion Extreme tag has been highly effective in the midst of the pandemic as our customers employ it for tracking and monitoring shipments of vaccines safely and at the right temperatures to preserve efficacy. In addition to the smart trailer retrofit program I discussed earlier, that also included the launch of a new solar-powered gateway, we recently teamed up with Hyundai TransLead to support the launch of a smart trailer technology platform, HT Link Sense. This powerful tracking solution employs our edge-to-cloud gateway and provides one of the most open and smartest trailer enablement platforms in the industry. With HT-Link Sense, we integrate Hyundai's trailer sensors on our CTC cloud platform and deliver actionable insights via the ION application to fleet operators so that they can maximize trailer usage and safely, while enabling the efficient delivery of goods. Hyundai TransLead is the leading manufacturer of dry and refrigerated trailers in North America and produced more than 66,000 trailers in 2019. No other trailer manufacturer in the U.S. has shipped more trailers, and now each one they sell could be equipped with CalAMP Smart Trailer technology as a recurring subscription contract. Also during the quarter, we continue to make progress, transitioning several customers to our new device management solution built on our CTC platform that I discussed on last quarter's call. The sunset of our older Pulse device management system in the coming months will serve as a strong incentive for customers to make the move to this new SaaS platform. The enhanced functionality includes faster and more secure bulk updating of devices over the year compared to Pulse, and more enhanced account and device hierarchy management is really resonating with customers. We're excited about migrating our customers' infield devices as well as all new orders to make their businesses run more efficiently as we accelerate our transition to a SAS company with our industry-leading edge devices. In summary, CalAMP continues to make significant progress towards achieving the objective of becoming a leading provider of recurring software and services in the telematics industry. Our powerful new ION telematics application and device management SaaS solution are making a noticeable impact on the industry. I'm proud of the team and what we've accomplished so far this year in this supply-constrained environment, and I'm excited about the opportunities that lie ahead for CalAMP. With that, I will now turn the call over to Kurt for a closer look at our second quarter financial results, and then we will open the call to your questions.