Industries served by CalAmp's new Supply Chain Integrity product

CalAmp's new Supply Chain Integrity solution propels the company into a promising new market. Image: CalAmp Corp.

When CalAmp (NASDAQ:CAMP) first made public its efforts to acquire vehicle recovery specialist LoJack a little over a year ago, it was clear the machine-to-machine communications company was excited for the road ahead.

After all, according to CEO Michael Burdiek at the time, CalAmp had already made three all-cash offers to LoJack in the 14 months prior to that latest offer. CalAmp also argued that combining forces would not only reduce the risks associated with LoJack continuing to operate as a stand-alone business, but also serve to significantly accelerate consumer adoption of a number of largely untapped opportunities for vehicle telematics applications. 

Sure enough, CalAmp and LoJack came to terms shortly thereafter, and the acquisition was completed last March. CalAmp has since worked feverishly to not only build LoJack's existing revenue base, but also expand its reach and capitalize on a number of other revenue synergies and related telematics initiatives.

And if the past month is any indication, those initiatives are finally beginning to gain momentum.

Supplying a big new market

More specifically, CalAmp recently announced its entrance into the cold chain and supply chain visibility markets with CalAmp Supply Chain Integrity (SCI). Using a combination of GPS and RF beacon cargo sensors, tracking devices, and access to CalAmp's SC iOn Command Portal, CalAmp SCI offers a compelling enterprise visibility solution to help its customers with orchestrating, improving their supply chain performance, and meeting regulatory compliance requirements. CalAmp's solution can also be applied to an array of industries from healthcare to biotech, pharmaceuticals, food, and consumer goods.

"End-to-end visibility of temperature-sensitive drugs, food and high-value consumer goods is now an imperative in the highly regulated consumer goods marketplace," added Paul Washicko, VP and GM of CalAmp's software-as-a-service business. "CalAmp SCI services combine LoJack's long-standing experience in supply chain integrity with CalAmp's expertise in telematics and data analytics to enable multinational companies to comply with strict regulatory requirements, maintain a high quality brand reputation and instill consumer confidence."

Perspective is in order

So what does this mean from an investor's perspective? According to Research and Markets, the supply chain analytics industry is expected to enjoy a compound annual growth rate of 15.2% over the next five years, driven by a combination of high demand for inventory management and the increasing awareness and relatively affordable cost of smart supply chain solutions, sourcing, and logistics. As a result, by 2021, global supply chain analytics should represent a roughly $5.4 billion market opportunity.

To be fair, CalAmp is hardly the only key player trying to capitalize on this attractive growth opportunity, so CalAmp SCI certainly won't be able to corner the entire market. But it doesn't need to secure a mammoth slice of this fast-growing industry for CalAmp SCI to meaningfully contribute to its overall results. Analysts on Wall Street only expect CalAmp to report revenue of $364 million next fiscal year, representing modest 3.8% year-over-year growth (based on current fiscal-year estimates) as CalAmp begins to recover from macroeconomic headwinds that pressured demand for its core fleet telematics products in 2016.

Considering CalAmp management only just told investors in December that visibility has markedly improved in recent months, leaving the company optimistic for its growth prospects going forward, any incremental revenue it can win from new markets through products like CalAmp SCI should only serve to reinforce that optimism.