CalAmp has high liquidity despite debt, bemoans supply-chain issues

By Devika Patel

Knoxville, Tenn., Dec. 22 – CalAmp Corp. has about $141 million of liquidity and expects to maintain a strong financial position and balance sheet despite having $237 million of outstanding debt and concerning semiconductor supply-chain issues that are ongoing.

“In terms of our overall liquidity position, at the end of the third quarter, we had total cash and cash equivalents of approximately $91 million,” executive vice president and chief financial officer Kurt Binder said on the company’s third quarter ended Nov. 30 earnings conference call on Tuesday.

“Additionally, we have an unused $50 million revolving credit facility.

“Meanwhile, our aggregate outstanding debt is approximately $237 million, including $230 million of the 2% convertible senior notes due in August 2025.

“We expect to maintain a strong financial position and balance sheet with significant cash for working capital going forward,” Binder said.

Adjusted EBITDA fell about 66.67% to $3 million, compared to adjusted EBITDA of $9 million in the prior-year quarter.

Cash and cash equivalents were $91,114,000 as of Nov. 30, compared to $94,624,000 as of Feb. 28.

Long-term debt, net of current portion, was $187,679,000 as of Nov. 30, compared to $182,154,000 as of Feb. 28.

The company’s management is concerned about semiconductor supply-chain issues in the electronics industry.

“I’ve never seen such a global disruption in the electronics supply chain like the one we have today,” chief supply chain officer Nathan Lowstuter said on the call.

“Like many companies across multiple industries, the global semiconductor shortages continue to impact our ability to gain access to key components and have not shown a marked improvement over the past several quarters.

“Although we had previously anticipated some early signs of improvement in the second half of our fiscal year, we were faced with several component delivery decrements from our suppliers late in the quarter that impacted our ability to ship against order demand.

“This was driven by upstream challenges, the wafer allocation and delays in deliveries.

“As a result, overall material fill rates remained well below our order levels,” Lowstuter said.

Lowstuter says it’s hard to predict inventory levels.

“It’s been difficult to project inventory levels as many suppliers have limited near term delivery commitment windows of only one to three months out,” he said.

“Additionally, over the last couple of quarters, we have seen an increased rate of end-of-life notices for certain components, which has added to the overall supply challenges,” Lowstuter said.

The near-term future remains bleak, with hope for incremental improvements but possibilities for more downsides.

“Our expectation is that we will be working in a constrained material environment well into calendar year 2022, and we hope that the situation will incrementally improve every quarter,” Lowstuter said.

“We do not anticipate a quick snapback in the fourth quarter and there may be additional downside risk should the current conditions and allocations not improve, but we are monitoring this very closely and working diligently with our suppliers.

“We will continue to address and carefully navigate the situation in the best way we can.”

Irvine, Calif.-based CalAmp develops and markets wireless communications products.

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