CalAmp Corp. (CAMP 0.49%) announced fiscal first-quarter 2018 results on Tuesday after the market closed, highlighted again by strong sales growth for the machine-to-machine communications specialist's MRM telematics products. In addition, both revenue and adjusted earnings arrived near the high end of CalAmp's financial guidance provided last quarter.
Shares are down modestly in after-hours trading as of this writing, probably because CalAmp followed its strong report with a seemingly conservative earnings outlook -- though there's more than meets the eye in CalAmp's guidance. In the meantime, let's take a closer look at how CalAmp started the new fiscal year.
Image source: CalAmp.
CalAmp results: The raw numbers
| Metric |
Fiscal Q1 2018 |
Fiscal Q1 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$88.1 million |
$91.1 million |
(3.4%) |
|
GAAP net income (loss) |
($2.7 million) |
($2.7 million) |
0% |
|
GAAP earnings per share (diluted) |
($0.08) |
($0.07) |
N/A |
Data source: CalAmp Corp.
What happened with CalAmp this quarter?
- GAAP net income this quarter includes a $6.1 million charge ($0.11 per diluted share) related to additional damages under a patent infringement judgment in a 2013 lawsuit filed by non-practicing entity Omega Patents. CalAmp insists it will pursue "all legal remedies in this patent infringement matter, and management believes that CalAmp will ultimately prevail."
- On an adjusted (non-GAAP) basis -- which excludes both the aforementioned charge and items such as stock-based compensation -- net income was $10.4 million, or $0.29 per share, down from $11.1 million, or $0.30 per share, in the same year-ago period.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 3.6% year over year to $13.2 million.
- For perspective, each of these figures were near the high ends of CalAmp's most recent guidance ranges, which called for revenue of $84 million to $90 million, adjusted EBITDA of $11 million to $14 million, and adjusted net income per share of $0.24 to $0.32.
- Shipments of MRM Telematics products commenced to several international LoJack licensees.
- The company commercially launched CrashBoxx Instant Crash Notification and CrashBoxx automated accident reconstruction and predictive vehicle damage assessment services.
- MRM telematics product sales increased 17% year over year, to their highest level in six quarters.
- Software and subscription service revenue climbed 6% sequentially to $16.1 million.
What management had to say
CalAmp CEO Michael Burdiek stated:
We are pleased with our first-quarter performance as we report a strong start to the fiscal year. We built on the momentum from last quarter and grew our core telematics and subscription revenues as we continued to expand our technology leadership. We see additional opportunities from large customers as we invest in our core technologies and expand our strategic partnerships with [Internet of Things] industry leaders.
Looking forward
For the fiscal second quarter of 2017, CalAmp expects revenue of $86 million to $91 million, GAAP net income per diluted share of $0.32 to $0.38, adjusted net income per share of $0.23 to $0.29, and adjusted EBITDA of $10.5 million to $13.5 million. By comparison -- and though we don't usually pay close attention to Wall Street's demands -- consensus estimates predicted that roughly the same fiscal Q2 revenue would translate to adjusted earnings near the high end of CalAmp's guidance range.
But there's a caveat here: CalAmp explained that its fiscal Q2 adjusted earnings guidance includes a roughly 10% sequential increase in research and development expenses to support "strategic program rollouts with key customers that are expected to contribute revenue in the coming quarters." That's fair enough; CalAmp's long-term growth story remains in its early stages, so it makes sense to foster opportunities for incremental sales and market share even if it comes at the expense of the bottom line in the near term.
All things considered, this was another solid quarter for CalAmp as it works to keep expanding its reach. The business continues to strengthen as the year progresses, just as management promised last quarter, and I continue to believe that long-term investors have nothing to worry about.
