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CalAmp Delivers a Quarterly Beat on Telematics Strength

By Steve Symington - Dec 21, 2017 at 6:55PM

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But the M2M communications specialist left the market underwhelmed with light earnings guidance. Here's what investors need to know.

CalAmp Corp. (CAMP 1.92%) announced strong fiscal third-quarter 2018 results on Dec. 21 after the market closed, setting fresh records for both revenue and profitability, while extending the recent momentum of its telematics and software initiatives. But CalAmp also followed up with seemingly conservative forward earnings guidance.

Let's take a closer look at what drove CalAmp's business over the past few months, and what investors can expect following the stock's 56% climb so far this year.

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CalAmp results: The raw numbers

Metric

Fiscal Q3 2018

Fiscal Q3 2017

Year-Over-Year Growth

Revenue

$93.7 million

$83.4 million

12.4%

GAAP net income (loss)

$11.8 million

($1.5 million)

N/A

GAAP earnings per share (diluted)

$0.33

($0.04)

N/A

Data source: CalAmp Corp.  

What happened with CalAmp this quarter?

  • Adjusting for one-time items, CalAmp's (non-GAAP) net income climbed 48.7% year over year to $11.2 million, or $0.31 per share.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 39% year over year to $13.8 million.
  • These results compare favorably with CalAmp's guidance provided last quarter: revenue of $89 million to $94 million, GAAP net income per share of $0.28 to $0.34, adjusted net income per share of $0.27 to $0.33, and adjusted EBITDA of $12 million to $14.5 million.
  • As revealed last quarter, CalAmp received $13.3 million of net proceeds from a favorable legal settlement with a former LoJack battery supplier. CalAmp expects to receive roughly $18 million of additional proceeds over the next three quarters.
  • Software and subscription services revenue was roughly flat with the same year-ago period at $15.9 million.
  • Telematics Systems revenue grew 15.3% to $77.8 million, led by a 24% increase in Mobile Resource Management Telematics revenue.
  • Revenue from Caterpillar (CAT -0.26%) grew 24% sequentially to $13.2 million, marking another quarterly record.
  • CalAmp commenced services to a large state government agency on an end-to-end software-as-a-service (SaaS) fleet management solution that should contribute more than 5,000 new subscribers over the next several quarters.
  • The company launched the CalAmp V-Series electronic logging device bundle through Synnex, expanding channel partners and global sales distribution.
  • CalAmp also announced the LoJack Connect SaaS fleet management solution, targeting car rental agencies and insurance providers in Europe.

What management had to say

CalAmp CEO Michael Burdiek stated:

We achieved record consolidated revenue and adjusted EBITDA in the quarter, while continuing to make steady progress on our strategic initiatives. We expanded our product portfolio and are uniquely positioned in the Connected Vehicle and Industrial Internet of Things market. Our Telematics Systems business sustained its recent strength, building upon our base of blue-chip customers, including Caterpillar. Our software and subscription opportunity pipeline strengthened as we broadened our technology portfolio to expand into highly attractive verticals.

Looking forward

For the current fiscal fourth quarter, CalAmp anticipates revenue in the range of $91 million to $96 million, GAAP net income per share of $0.26 to $0.32, adjusted EBITDA of $12 million to $15 million, and adjusted earnings per share of $0.27 to $0.33. By comparison, and though we don't usually pay close attention to Wall Street's demands, consensus estimates predicted that roughly the same revenue would translate to fiscal Q4 adjusted earnings near the high end of CalAmp's guidance range.

Apart from that mild bottom-line shortfall, however -- and knowing CalAmp has a propensity for under-promising and over-delivering -- there was little not to like about this solid performance, as the company continues to land large customers and steadily expand the reach of its telematics and subscription software services. 

I think investors should be pleased with CalAmp's latest progress.

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Stocks Mentioned

CalAmp Corp. Stock Quote
CalAmp Corp.
CAMP
$4.25 (1.92%) $0.08
Caterpillar Inc. Stock Quote
Caterpillar Inc.
CAT
$178.29 (-0.26%) $0.47

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