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CalAmp Turns the Corner

Steve Symington, The Motley Fool

CalAmp (NASDAQ: CAMP) announced fiscal first-quarter 2020 results on Thursday after the market closed. Though revenue did decline year over year as the company continued to face headwinds for its core telematics systems segment, a combination of software and subscription services growth and supply chain improvements helped its top line arrive near the high end of investors' expectations.

With shares of the machine-to-machine communications leader up more than 13% Friday morning as of this writing, let's take a closer look at what CalAmp had to say.

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CalAmp results: The raw numbers

Metric

Fiscal Q1 2020*

Fiscal Q1 2019

Year-Over-Year Growth

Revenue

$89.1 million

$94.9 million

(6.1%)

GAAP net income (loss)

($8.7 million)

$8.5 million

N/A

GAAP earnings (loss) per diluted share

($0.26)

$0.23

N/A

Data source: CalAmp. *For the quarter ended May 31, 2019. GAAP = generally accepted accounting principles. 

What happened with CalAmp this quarter?

  • On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation and acquisition expenses, CalAmp generated net income of $4.2 million, or $0.12 per share, down from $0.29 per share in the same year-ago period.
  • Adjusted EBITDA declined 38% to $7.6 million.
  • These results compare favorably to the guidance CalAmp provided in early May, which called for revenue ranging from $84.5 million to $89.5 million, adjusted EBITDA of $6.5 million to $9.5 million, and adjusted earnings per share of $0.06 to $0.12.
  • Telematics Systems revenue declined 17% year over year -- in line with expectations -- to $63.6 million, driven by lower MRM telematics and legacy LoJack Stolen Vehicle Recovery product sales.
  • Software and subscription services revenue grew 38% to $25.5 million (or 29% of total sales), driven by both acquisitions and sales of CalAmp iOn fleet management and LoJack subscription services.
  • Worldwide subscribers exceeded 1.2 million, helped by this year's acquisitions of Tracker, Car Track (LoJack Mexico), and Synovia Solutions.

What management had to say

CalAmp CEO Michael Burdiek stated:

We made significant progress on our strategic initiatives in the quarter with the achievement of record software and subscription services revenue and markedly improved supply chain performance, thereby contributing to consolidated revenue at the high end of our guidance. The integration of our recent acquisitions is progressing well with identified incremental revenue synergies that we believe will further bolster our software-as-a-service (SaaS) business expansion toward our targeted quarterly run rate of more than $30 million exiting the year. Looking forward, we believe the first fiscal quarter represents an inflection point in our business, with a positive outlook of revenue and EBITDA growth as we move into the second half of the fiscal year.

Burdiek added that CalAmp's fiscal second-quarter 2020 guidance assumes "revenue momentum across SaaS businesses combined with an increase in MRM Telematics sales due to customer LTE transactions."

Looking forward

More specifically, CalAmp sees fiscal Q2 revenue in the range of $89.5 million to $94.5 million, down from $96 million a year earlier. Trending toward the bottom line, that should translate to adjusted EBITDA of $7.5 million to $11.5 million, and adjusted earnings per share of $0.08 to $0.14. Though we don't typically pay close attention to Wall Street's demands, most analysts were modeling adjusted earnings of $0.15 per share on revenue closer to $91.4 million.

Still, it seems the market is more than willing to accept this technically mixed near-term outlook in favor of focusing on both CalAmp's "inflection point" to start the year and its impending return to revenue and EBITDA growth in the second half.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends CalAmp. The Motley Fool has a disclosure policy.