Company Update (NASDAQ:CAMP): Here’s Why CalAmp Corp. Shares Are Down 12%

camp1CalAmp Corp. (NASDAQ:CAMP) shares are down nearly 12% after the wireless software company reported fiscal second-quarer earnings that fell short of Wall Street expectations.

Michael Burdiek, CalAmp’s President and Chief Executive Officer, said, “The company continues its rapid pace of innovation, expanding its product portfolio and leadership position in the connected vehicle marketplace.  Our pipeline of opportunities is very healthy, and we recently won two significant MRM telematics device customers who are expected to contribute to our long-term growth.  Although we have been impacted by tough macro conditions in North America , we continue to invest in market-leading telematics solutions, and we remain optimistic that we will see a pick-up in growth from CalAmp’s core businesses and new opportunities emerging through LoJack channels.”

Revenue for the second quarter of fiscal 2017 was $90.5 million , an increase of 30% from the second quarter of fiscal 2016. Revenue in the second quarter of fiscal 2017 included $31.9 million from LoJack products and services and $6.7 million from the Satellite segment.

Gross profit for the second quarter of fiscal 2017 was $37.6 million , an increase of $12.3 million over the same quarter last year. Gross margin was 42% in the second quarter of fiscal 2017, up from 36% in the second quarter of fiscal 2016.

GAAP net income for the second quarter of fiscal 2017 was $0.5 million , or $0.01 per diluted share, compared to net income of $3.5 million , or $0.10 per diluted share, in the second quarter of fiscal 2016.  Non-GAAP adjusted basis net income for the second quarter of fiscal 2017 was $10.1 million , or $0.27 per diluted share, compared to non-GAAP adjusted net income of $9.8 million , or $0.27 per diluted share, in the second quarter of fiscal 2016.   Adjusted EBITDA for the second quarter of fiscal 2017 was $12.9 million and Adjusted EBITDA margin was 14.2%.

As of August 31, 2016 , the Company had total cash and marketable securities of $117 million and total debt outstanding of $143 million , which is the carrying amount of the Company’s 1.625% convertible notes in the face amount of $172.5 million . Net cash provided by operating activities was $11.0 million during the second quarter of fiscal 2017.

During the second quarter, the company purchased and retired approximately 580,000 shares of its common stock at an aggregate cost of $8.5 million pursuant to a stock repurchase plan adopted in June 2016.  As of August 31, 2016 , the remaining authorization for additional share purchases under this plan is $16.5 million .

Recent Business Highlights

  • One of the largest telematics service providers in North America has chosen various CalAmp LMU and TTU telematics device lines for its range of fleet and asset management solutions. This recent development follows another significant customer win in the first quarter with Omnitracs.
  • The company launched the LoJack-branded LotSmart™ and SureDrive™ telematics applications.
  • CalAmp received certification of its Instant Crash Notification (ICN) service by independent insurance industry research company CESVIMAP, which provides objective evaluations of crash test results for vehicle repair and other collision damage services to insurance companies in Europe , Latin America and China .
  • The company announced that two customers, MapAnything and Chevin, have chosen the CalAmp Telematics Cloud suite of services to enable their respective telematics applications offerings. With these additional customers, CalAmp now has six companies that rely on this innovative service platform to power their telematics solutions.
  • LoJack Italy, the wholly-owned LoJack licensee, maintained its rapid growth at over 60% year-over-year.

Business Outlook
The Company remains cautious in the very near-term as macro conditions in North America have continued to result in softer-than-expected demand from key customers for MRM telematics products.   Though CalAmp has experienced weakness through the first half of this year, the company is seeing some firming of demand and is optimistic that the company will see MRM product revenues begin to improve later this fiscal year and into fiscal 2018.

Excluding CalAmp’s Satellite business, which contributed $6.7 million of revenue in the second fiscal quarter and ceased operations at quarter-end, the outlook for the third quarter ending November 30, 2016 is:

  • Consolidated revenue in the range of $81 to $87 million , along with GAAP basis results of operations in the range of ($0.02) net loss to$0.02 net income per diluted share and non-GAAP net income in the range of $0.24 to $0.30 per diluted share.
  • Adjusted EBITDA in the range of $11 to $14 million .

In addition, the Company expects its core business to steadily strengthen through the balance of this year, with momentum building into fiscal 2018. (Original Source)

On the ratings front, CAMP stock has been the subject of a number of recent research reports. In a report issued on September 11, Canaccord analyst Michael Walkley reiterated a Buy rating on CAMP, with a price target of $25, which implies an upside of 51% from current levels. Separately, on June 29, Craig-Hallum’s Anthony Stoss reiterated a Buy rating on the stock and has a price target of $20.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael Walkley and Anthony Stoss have a total average return of 15.0% and 11.7% respectively. Walkley has a success rate of 62% and is ranked #25 out of 4181 analysts, while Stoss has a success rate of 59% and is ranked #521.

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. Its broad portfolio of wireless communications products includes asset tracking devices, targeted telematics platforms, fixed and mobile wireless gateways and full-featured, multi-mode wireless routers. The Satellite segment develops, manufactures and sells direct-broadcast satellite outdoor customer premise equipment and whole home video networking devices for digital and high definition satellite television services. Its satellite products are sold primarily to EchoStar, an affiliate of Dish Network, for incorporation into complete subscription satellite television systems.

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