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CalAmp Corp. Keeps Moving Forward

Image source: CALAMP CORP.

In a departure from its usual post-earnings volatility, CalAmp Corp. (NASDAQ: CAMP) didn't see its stock move much after the machine-to-machine communications specialist released fiscal first-quarter 2017 results late last month. But that doesn't mean investors shouldn't be happy with where CalAmp stands right now. Let's take a closer look at what CalAmp achieved in its latest quarter:

CalAmp results: The raw numbers

Metric

Fiscal Q1 2017 Actuals

Fiscal Q1 2016 Actuals

Growth (YOY)

Revenue

$91.1 million

$65.4 million

39.3%

GAAP net income (loss)

($2.7 million)

$4.1 million

N/A

GAAP earnings per share

($0.07)

$0.11

N/A

YOY: YEAR OVER YEAR. DATA SOURCE: CALAMP CORP. 

What happened with CalAmp this quarter?

  • Revenue was above guidance, which called for $77 million to $85 million, and included:
    • 43.1% year-over-year growth in wireless datacom segment sales, to $82.8 million, including $27.9 million from last quarter's $109 million acquisition (net of cash) of vehicle recovery specialist LoJack. 
    • 10.4% growth in satellite segment revenue, to $8.4 million.
  • Excluding satellite sales, which were expected to be treated as "discontinued operations," revenue would have been slightly above the midpoint of CalAmp's guidance range.
  • Recall that three months ago, CalAmp shares plunged when the company said it would discontinue its satellite operations after EchoStar (NASDAQ: SATS) -- which accounted for essentially all revenue under the satellite segment -- would discontinue purchases from CalAmp at the end of its current product-demand forecast in August. The satellite business is still in the process of winding down, but current accounting rules require its financial results to be included in CalAmp's continuing operations until the shutdown is complete.
  • On an adjusted basis -- which excludes items such as stock-based compensation and acquisition expenses -- net income grew 16.8% year over year, to $11.1 million, and increased 15.4% on a per-share basis, to $0.30.
  • Quarterly adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 28.4% year over year, to $13.7 million, while adjusted EBITDA margin was 15.1%.
  • Quarterly cash from operations totaled $8.3 million.
  • As of May 31, cash and equivalents were $118 million, and total debt was $141 million, the carrying amount of CalAmp's 1.625% convertible notes in the face amount of $172.5 million.
  • CalAmp's board of directors approved a 12-month, $25 million stock-repurchase plan.

What management had to say 

CalAmp CEO Michael Burdiek stated:

We executed on a number of key business initiatives that set the foundation for long-term revenue growth, margin expansion, and earnings leverage. We are very pleased that we are seeing early success with LoJack, which was acquired in mid-March and was a strong contributor in the quarter on multiple fronts, from revenue growth to operating leverage. The integration of LoJack is going smoothly, and we are realizing revenue synergies earlier than expected.

Looking forward 

For the current quarter, CalAmp expects revenue of $90 million to $95 million, up from $69.8 million in the same year-ago period. This includes around $6 million in satellite segment sales and incorporates some caution in the "very near term" as the uncertain macro environment in North America has caused soft demand from key customers for MRM telematics products. On the bottom line, this should translate to quarterly adjusted net income of $0.25 to $0.31 per diluted share and adjusted EBITDA of $12 million to $16 million. 

Regarding demand for MRM telematics, CalAmp elaborated in a statement, "We believe that as certain customers work off their inventory overhang, this part of our business should see a solid recovery. We expect the second half of the year to be stronger than the first half, with consolidated revenue reaching a $100 million quarterly run rate later in the year."

As a result, putting aside the accounting treatment of the winding down satellite business and the smoother-than-expected integration of LoJack, there were no big surprises in CalAmp's latest quarter. I think that's a great thing, as it allows CalAmp to continue to focus on seizing the enormous Internet-of-Things growth opportunity its core Wireless Datacom segment affords.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends CalAmp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.