After climbing more than 4% in Tuesday's regular session, shares of CalAmp Corp. (CAMP +0.00%) are up modestly in after-hours trading as of this writing after the machine-to-machine communications specialist reported strong fiscal first-quarter 2016 results.
No surprises here
Consolidated quarterly revenue climbed 11% year over year to $65.4 million, including a 21% jump in Wireless Datacom revenue to $57.8 million, and an expected 31.5% decline in satellite revenue to $7.6 million. The latter might sound bad, but keep in mind it follows what CalAmp CEO Michael Burdiek has previously described as an "exceptional" performance for satellite last year. This time, Burdiek noted satellite performed in line with expectations "and added meaningfully to our bottom line profitability and operating cash flow."
Speaking of which, CalAmp generated cash from operations of $16.3 million -- its highest ever amount for a single quarter -- and achieved adjusted earnings before interest, taxes, depreciation and amortization of $10.69 million. That was good for adjusted EBITDA margin of 16.3%, compared to 12.9% in the same year-ago period, and translated to 37% year-over-year growth in adjusted net income to $9.5 million, or $0.26 per diluted share.
"Contributing to our strong results were record quarterly revenues posted by our Mobile Resource Management products business," added Burdiek, "as well as broad based growth in our Wireless Networks business. [...] Overall, I'm quite pleased with our first quarter results and expect revenue growth and earnings to accelerate through the balance of the fiscal year."
Analysts, for their part, were anticipating roughly the same on both the top and bottom lines, with consensus estimates calling for adjusted earnings of $0.26 per share on revenue of $65.39 million.
On continued progress, future acquisitions
Investors should also keep in mind that CalAmp completed a private offering during the quarter of $172.5 million of 1.625% convertible notes due 2020. Net proceeds to the company were $152 million, leaving CalAmp with cash and marketable securities of $209 million on its balance sheet at the quarter's end. When CalAmp initially announced the offering in April, it stated these proceeds will be used for "general corporate purposes, which may include acquisitions, strategic transactions and working capital." Considering CalAmp has a habit of strategically acquiring businesses to bolster its position as the Internet of Things gains steam -- including its purchase of usage-based insurance specialist Crashboxx prior to last quarter's report -- I doubt investors will need to wait long before we know what the company has in mind for its freshly rejuvenated cash hoard.
Without providing specifics during the subsequent conference call, CalAmp management stated revenue from the sale of telematics devices to its "key OEM customer in the heavy equipment industry" -- i.e. Caterpillar (CAT 1.39%) -- were in line with expectations.
"We are quite pleased with how our relationship with this customer is progressing," said Burdiek on Caterpillar, "and expect revenue to increase in the second quarter and further expand in the second half of the year." For reference, last quarter sales to Caterpillar generated revenue of roughly $7 million, but was expected to decline slightly on a sequential basis before resuming growth later in the year.
Next, CalAmp saw solid year-over-year growth in enterprise fleet management software services solutions. In total, subscription based revenue from fleet management and automotive after-market and vehicle finance applications comprised 15.6% of consolidated revenue in Q1, up from 15% last quarter and driven by continued growth from previously announced fleet management customers.
Finally, CalAmp continues to make progress in the usage-based insurance market. Demand for hardware telematics devices for UBI increased sequentially in fiscal Q1, and is expected to continue to increase for the remainder of the year. CalAmp also completed the aforementioned acquisition of Crashboxx this quarter, and has had encouraging initial discussions with insurance carriers regarding the promise of integrating Crashboxx's intellectual property into CalAmp's UBI software solutions. Over the next several quarters, CalAmp will focus on commercializing this IP while at the same time continuing strategic global promotion to foster UBI adoption over the long term.
On guidance
For the current quarter, CalAmp anticipates consolidated revenue of $66 million to $70 million, helped by another sequential increase in Wireless Datacom, and held back by relatively flat sales from the Satellite segment. That should result in adjusted net income per share of $0.24 to $0.28. Once again, both ranges are in line with analysts' models, which call for revenue of $68.1 million and earnings of $0.26 per share.
On a more exciting note, Calamp expects full fiscal 2016 revenue to be in the range of $280 million to $290 million, the mid-point of which sits above Wall Street's estimates for full-year sales of $282.8 million. For that, Burdiek says, investors can thank both "continued growth in our Wireless Datacom segment and a much stronger second half for our Satellite segment."
In the end, it's hard to find anything to complain about in this quarter's report. With shares of CalAmp still sitting roughly where they started in 2015, I think long-term investors should give this promising Internet of Things stock a serious look.
