CalAmp (CAMP 3.86%) stock fell 9% the day after it released fiscal third-quarter 2016 results a few weeks ago. But that doesn't mean the market is correct in its pessimism for the machine-to-machine communications specialist. As I pointed out at the time, CalAmp's results were stronger than they first appeared. And shares have already begun to recover as investors mull what to expect going forward.

To that end, CalAmp management offered important insight into the business during their subsequent conference call with analysts. Here are five of the most important points they discussed during that call.


1. Visibility has improved

We've become more optimistic about our near-term growth as visibility has improved markedly from early in the year when macro factors had negatively impacted demand for fleet telematics products in the U.S.
-- CalAmp CEO Michael Burdiek (all quotes from Seeking Alpha)

Recall CalAmp stock also plunged two quarters ago, after the company blamed its cautious forward guidance on weak macroeconomic conditions in North America. Even then, however, Burdiek insisted the company would continue to invest in its industry-leading telematics solutions while remaining optimistic for growth in its core business to rebound. As it stands, this quarter's increased visibility appears to mark the beginning of that rebound. And I won't be surprised to see more tangible progress in the coming quarters.

2. The MRM telematics pipeline has "vastly improved"

Sales of MRM telematics products were up 7% sequentially and we now have a vastly improved opportunity pipeline as compared to just a few quarters ago. The business with OmniTrax, one of our newest key customers is on course and we are now launching new programs with another key customer related to the win we announced during our last earnings call.
-- Burdiek

The aforementioned macro headwinds earlier this year most notably resulted in soft demand from key customers for CalAmp's MRM telematics products. This quarter, however, MRM telematics product sales reached their highest level of the past year, including an all-time high for telematics device sales for fleet and connected car applications.

Burdiek also noted during the call that CalAmp is sensing "increased optimism among [its] U.S. customer base." And taken together with the fact more than one million commercial transport vehicles will soon need to comply with a new electronic logging device mandate, as well as international MRM telematics sales reaching a company-record 28.5% of total sales, CalAmp has every right to say its MRM telematics products pipeline has "vastly improved."

3. LoJack is just getting started

Sales of LoJack stolen vehicle recovery, or SVR products, were slightly below expectations in Q3, as anticipated orders from two large international licensees were received late in the quarter and cannot be fulfilled until early in the fourth quarter. We continue to make solid progress in the third quarter in identifying revenue synergies with LoJack customers and we advanced our road map to launch various telematics programs through our LoJack channels. We are in active dialogue with several LoJack licensees on their various telematics initiatives, and we believe that CalAmp is well positioned to become the supplier choice for both telematics devices and services.
-- Burdiek

First, note these late orders from LoJack hold some of the blame for CalAmp's weaker-than-expected quarter. But CalAmp is only just beginning to realize the benefits of its acquisition. For example, LoJack recently launched its new LotSmart and SureDrive telematics solutions, and already began to onboard its first LotSmart auto dealership customer in November. 

Earlier this week, CalAmp also announced it will leverage LoJack to enter the cold chain and supply chain visibility markets with its new CalAmp Supply Chain Integrity (SCI) solution. CalAmp SCI will be aimed at multinational customers to "secure goods in transit, improve supply chain performance and help meet regulatory compliance" -- especially important tasks for those customers shipping things like temperature-sensitive drugs, food and high-value goods."

4. Industrial machinery has a long runway for growth

Caterpillar revenue was in line with expectations with shipments of just over $6 million this quarter. We feel optimistic about future growth prospects in the industrial machine market which is largely unpenetrated and it has been under served by tailored telematics solutions.
-- Burdiek

It's no mystery Caterpillar (CAT 1.58%) is CalAmp's primary customer in the industrial machine market. And according to CalAmp management later in the call, quarterly revenue from Caterpillar should improve to a run rate in the range of $7 million to $8 million starting in the current fiscal fourth quarter (ending Feb. 28, 2017) and going into next fiscal year. But it's also important to note that CalAmp is working to replicate its success and secure other large customers in the early stages of this promising growth opportunity.

5. Margins are on the upswing

GAAP basis consolidated gross margin was 42.1% in the third quarter which is a new record compared to 35.6% in the third quarter of last year. This improvement is due not only to the inclusion of LoJack products and services in the last quarter, but also to a substantial increase in the year-over-year gross margin of our MRM products.
-- CalAmp CFO Rick Vitelle

CalAmp's gross margin just reached its highest levels in company history, and this despite the fact CalAmp also incurred higher-than-expected legal expenses of $1.6 million last quarter in a case to protect its intellectual property. Legal expenses should moderate to more normal levels later this year. So taken together with CalAmp's already improved margin profile and leverage from its growing revenue base, CalAmp should be poised for further improved profitability in the coming quarters.

"The improving performance metrics and key areas during the latest quarter have boosted our confidence that the macro conditions that affected many parts of the business early in the year are for the most part behind us," added Burdiek later in the call. "We believe we've built the sound foundation for a very bright future."

In the end, for those investors willing to buy now and watch that bright future unfold, I think CalAmp stock is poised to deliver market-beating returns from here.