We're about one week away from CalAmp's (CAMP +0.00%) fiscal first-quarter 2018 earnings report, which is a good time to revisit what management is forecasting for the quarter and what it said on its last earnings call. Investors have pushed up shares of CalAmp's stock nearly 20% over the past three months, indicating that shareholders are optimistic about the company's future and its upcoming quarter.
So here's what investors can expect when CalAmp reports after the closing bell on June 27:
Image source: Getty Images.
The raw forecasts
Here's a look at the raw numbers CalAmp's management has forecasted for the first quarter:
- Consolidated revenue in the range of $84 million to $90 million.
- GAAP net income between $0.01 to $0.09 per diluted share.
- Non-GAAP net income in the range of $0.24 to $0.32 per diluted share.
- Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) in the range of $11 million to $14 million.
If those forecasts pan out, CalAmp will see revenue drop by 4.5% on a year over year basis, non-GAAP earnings per share slip by 6.6%, and EBITDA drop by 8.7%, all based on the company's midpoint projections. Of course, if CalAmp reaches the higher end of its forecasts, or beats its own guidance, then these numbers could look quite different.
What management is expecting
CalAmp CEO Michael Burdiek said on the fourth quarter earnings call that he expects some headwinds going into the first quarter, primarily from the company's international licensee revenue and its Positive Train Control (PTC) communication product sales.
"So between the international licensee revenue outlook being lower in Q1 versus Q4 and the expectation of lower PTC product sales in Q1 versus Q4, it's roughly a $4 million headwind," Burdiek said, but he expects that to be partially offset by an improved outlook for the company's LoJack U.S. business and other product lines.
The company's CFO, Richard Vitelle, also noted that CalAmp's business should strengthen throughout fiscal 2018 because of its mobile resource management (MRM) products, as well as an uptick in recurring revenue. "Looking further ahead to fiscal 2018, we expect our business to strengthen as the year progresses, driven by growth in MRM Telematics, product revenues and our recurring revenue, both domestically and with LoJack Italy."
What investors should keep an eye on
CalAmp's management is expecting upper single-digit to double-digit growth for its MRM, network, and OEM products further into the fiscal 2018 year, with Burdiek saying he expects to see "broad-based growth" in all of these areas.
The company is also expecting the gains that it made in Q4 from its latest products -- an in-cab Android display terminal for fleet use -- to continue throughout 2018. "MDT revenues in the fourth quarter represented a new high watermark, with solid backlog scheduled for delivery over the course of fiscal 2018," Burdiek said.
Of course, investors should also keep an eye on how well CalAmp is able to grow revenue from one of its key customers, Caterpillar, in the coming quarters. The construction equipment company accounted for $30 million in CalAmp's fiscal 2017 revenues, and the company expects incremental growth from Caterpillar through the next fiscal year as well.
"In terms of sizing expectations there, I would be disappointed if [Caterpillar] revenue wasn't up at least 10% versus where we were in FY '17, but I wouldn't be surprised if it was up 20% or more versus FY '17," Burdiek said on the call.
Additionally, CalAmp investors can expect R&D expenses to be about 6% of of the company's revenue, and G&A expenses to account for about 12% of the company's revenue, Vitelle said.
So while CalAmp's upcoming fiscal first-quarte 2018 may not prove to be all that impressive, it appears the company is still on track for more product and sales growth later this year.
