CalAmp Corp. (NASDAQ:CAMP), a leading provider of wireless products, services and solutions, today reported results for its fourth quarter and full year ended February 29, 2016. Highlights include:
- Fourth quarter revenue of $70.8 million, in-line with the Company’s previously announced preliminary results
- Record fourth quarter Adjusted EBITDA of $13.7 million, up 11% year-over-year, and record Adjusted EBITDA margin of 19.3%
- Record fourth quarter Adjusted Basis net income of $11.7 million, or $0.32 per diluted share
- Full year consolidated revenue up 12% year-over-year to $281 million
- Full year Adjusted EBITDA up 28% to $49 million and Adjusted EBITDA margin of 17.5%
- Full year Adjusted Basis net income up 21% to $42.4 million, or $1.15 per diluted share
- Full year net cash provided by operations of $47.4 million, up 65% year-over-year
- Completion of the acquisition of LoJack Corporation (LoJack) subsequent to year-end
Commenting on the Company’s fiscal 2016 highlights, Michael Burdiek, CalAmp’s President and Chief Executive Officer, said, “Fiscal 2016 was another exceptional year with accelerated top line growth, margin expansion and record cash flow, coupled with the achievement of several strategic milestones positioningCalAmp for sustained, profitable growth. Consolidated revenues increased 12% year-over-year to $281 million, with yet another year of above market-rate growth for our Wireless Datacom segment, driven partly by shipments to our key heavy equipment OEM customer that nearly doubled compared to the prior year.”
Mr. Burdiek continued, “In addition to our strong operating results in fiscal 2016, we are extremely pleased with the progress we have achieved over the past year in advancing our strategic initiatives as a pioneer in the connected vehicle telematics space. Subsequent to the end of the fiscal year, we completed the acquisition of LoJack, a leader in aftermarket vehicle theft recovery systems offered through auto dealer channels. We believe that LoJack’s world-renowned brand and channel relationships will create significant new opportunities for growth. Earlier in fiscal 2016, we also acquired Crashboxx and made a seed investment in the SmartDriverClub, two early stage technology companies that augment CalAmp’s state-of-the-art capabilities for the commercialization of a broad range of novel connected vehicle services. We also recently changed our primary corporate headquarters location from Oxnard to Irvine, California in order to more appropriately reflect our prominent Southern California technology pedigree. Overall, CalAmp enjoyed a highly productive and transformative year in fiscal 2016.”
Fiscal 2016 Fourth Quarter Results
Total revenue for the fiscal 2016 fourth quarter was $70.8 million compared to $69.2 million for the fourth quarter of fiscal 2015. Wireless Datacom revenue was $58.9 million compared to $60.5 million in the same period last year, while Satellite revenue increased to $11.9 million from $8.7 million in the fourth quarter last year.
Consolidated gross profit for the fiscal 2016 fourth quarter was $27.6 million, an increase of $3.0 million over the same quarter last year, primarily attributable to favorable changes in both the Wireless Datacom and Satellite product mix. Consolidated gross margin was 38.9% in the fiscal 2016 fourth quarter, compared to 35.5% in the fourth quarter last year.
GAAP net income for the fiscal 2016 fourth quarter was $5.5 million, or $0.15 per diluted share, down from$6.5 million, or $0.18 per diluted share, in the comparable quarter last year. GAAP net income in the latest quarter includes charges of $2.9 million for the Omega patent infringement lawsuit and $2.0 million for transaction expenses associated with the LoJack acquisition.
The Company had an income tax benefit of $2.4 million in the fiscal 2016 fourth quarter attributable to the reversal of a portion of the deferred tax asset valuation allowance and the recognition of federal R&D tax credits due to congressional action in December 2015 to extend this tax program and make it permanent. As a result of these factors the Company’s GAAP-basis effective tax rate for the full year in fiscal 2016 was 20.5%. The Company’s pretax income is still largely sheltered from taxation by net operating loss and R&D tax credit carryforwards, and is expected to remain so for the next few years.
Adjusted Basis (non-GAAP) net income for the fiscal 2016 fourth quarter was $11.7 million, or $0.32 per diluted share, compared to Adjusted Basis net income of $11.6 million, or $0.32 per diluted share, for the fourth quarter last year. Adjusted Basis net income excludes the impact of intangibles amortization expense, stock-based compensation, acquisition and integration expenses, provisions for litigation-related awards, the gain on investment in LoJack securities, non-cash interest expense in the form of debt discount amortization and the non-operational equity in net loss of affiliate, and includes an income tax provision for cash taxes paid or payable for the period. A reconciliation of GAAP-basis pretax income to Adjusted Basis net income and earnings per diluted share is provided in the table at the end of this press release.
At February 29, 2016, the Company had total cash and marketable securities of $228 million and total debt outstanding of $172.5 million, which is the face amount of the Company’s 1.625% convertible notes. Net cash provided by operating activities was $9.5 million during the fourth quarter and $47.4 million for fiscal 2016 as a whole. The unused borrowing capacity on CalAmp’s bank revolver at quarter-end was $15 million. Subsequent to fiscal year-end, the Company used approximately $109 million of its cash to complete the LoJack acquisition, net of cash acquired.
Subsequent to the end of fiscal 2016, EchoStar, the Company’s Direct Broadcast Satellite customer, notifiedCalAmp that it will discontinue purchasing products from CalAmp at the end of the current product demand forecast that extends through August 2016. EchoStar stated that its decision is due to a consolidation of its supplier base to better align with its future requirements and its reduced demand for the products thatCalAmp currently supplies. As a result of EchoStar’s decision, CalAmp expects sales to this customer will cease at or around the end of the second quarter of fiscal 2017. In light of the fact that EchoStar accounts for essentially all of the revenue of the Satellite reporting segment, the Company expects that this portion of its operations will be discontinued during fiscal 2017. The Company does not believe that the loss of EchoStar as a customer will have a material adverse effect on its overall business.
In light of the expected treatment of the Company’s Satellite segment as a discontinued operation in fiscal 2017, this segment’s expected operating results are not included in the following financial outlook for revenue and Adjusted Basis net income. Also, because the valuation of intangible assets arising from the LoJack acquisition is not complete, the Company is not providing an estimate of GAAP-basis net income at this time.
Commenting on the Company’s business outlook, Mr. Burdiek said, “Looking at our fiscal 2017 first quarter, we expect to achieve consolidated revenue from continuing operations in the range of $77 to $85 million. We expect revenue from our key heavy equipment OEM customer to decline to a more normalized quarterly level of between $7 and $8 million. We also expect a $2 million sequential decline in first quarter revenue from our Solar OEM customer before an expected rebound through the balance of the year. Overall, we expect Wireless Datacom revenue to be substantially higher on a year-over-year basis due to organic growth and contributions from LoJack. At the bottom line, we expect first quarter Adjusted Basis net income from continuing operations in the range of $0.18 to $0.24 per diluted share with Adjusted EBITDA in the range of$10 to $13 million.”
Burdiek continued, “For fiscal 2017 as a whole, anticipating the discontinued operations treatment for the Satellite segment, we expect revenue from continuing operations to be in the range of $375 to $400 millionwith Adjusted Basis net income in the range of $1.15 to $1.35 per diluted share. For purposes of comparison, fiscal 2016 revenues excluding the Satellite segment were $241 million, and fiscal 2016 Adjusted Basis net income excluding the Satellite segment was $0.96 per diluted share. We also anticipate Adjusted EBITDA growth in fiscal 2017 of approximately 20% over the fiscal 2016 amount of $49 million.”
Burdiek concluded, “We are pleased with our fiscal 2016 accelerated revenue growth, margin expansion and record cash flow. We made significant progress over the past year, and going forward, CalAmp will be a pure-play pioneer in the connected vehicle and broader Industrial Internet of Things marketplace with a highly diversified — and global — customer base. Our global competitive position and the pipeline of growth initiatives have never been stronger, and we are positioned well for growth into the future.” (Original Source)
Shares of Calamp are down nearly 10% to $15.75 in after-hours trading. CAMP has a 1-year high of $21.82 and a 1-year low of $14.01. The stock’s 50-day moving average is $17.97 and its 200-day moving average is $18.42.
On the ratings front, Calamp has been the subject of a number of recent research reports. In a report issued on March 22, Northland Securities analyst Michael Latimore maintained a Buy rating on CAMP, with a price target of $27, which represents a potential upside of 56.0% from where the stock is currently trading. Separately, on March 21, Canaccord Genuity’s Michael Walkley maintained a Buy rating on the stock and has a price target of $29.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael Latimore and Michael Walkley have a total average return of -7% and 15% respectively. Latimore has a success rate of 44.1% and is ranked #3628 out of 3807 analysts, while Walkley has a success rate of 58.5% and is ranked #22.
CalAmp Corp. develops and markets wireless communications solutions that deliver data, voice and video for critical networked communications and other applications. The company operates in two business segments: Wireless DataCom and Satellite. The Wireless DataCom segment offers solutions to address the markets for Machine-to-Machine or M2M, communications, Mobile Resource Management, or MRM, applications and other emerging applications that require anytime and everywhere connectivity.