CalAmp Corp. (NASDAQ: CAMP) announced fiscal fourth-quarter 2018 results on Thursday after the market closed, highlighting the continued strength of its telematics business and the potential of several promising new partnerships to drive sustained long-term growth. But the machine-to-machine communications specialist followed with weaker-than-expected guidance, leading shares to fall hard on Friday in response.
Let’s dig in to better understand what CalAmp had to say, and what investors should expect from the company in the coming quarters.
CalAmp results: The raw numbers
Metric Fiscal Q4 2018 Fiscal Q4 2017 Year-Over-Year Growth
Revenue$ 94.4 million$ 86.1 million 9.6%
GAAP net income (loss)($4.8 million) ($4.2 million) N/A
GAAP earnings per share (diluted)($0.13) ($0.12) N/A
Data source: CalAmp Corp.
What happened with CalAmp this quarter?
- On an adjusted (non-GAAP) basis — which excludes items like equity compensation and one-time tax provisions — net income grew 11.1% to $10.9 million, and net income per share rose 7.1% to $0.30.
- These results were roughly in line with CalAmp’s latest guidance (provided last quarter), which called for revenue of $91 million to $96 million and adjusted earnings per share of $0.27 to $0.33.
- Adjusted EBITDA grew 1.8% to $13.1 million, within CalAmp’s outlook for $12 million to $15 million.
- Telematics systems revenue grew 10.4% to $78.3 million, driven by 29% growth in MRM telematics product revenue.
- Software and subscription services revenue increased 5.9% to $16.1 million, led by 31% growth from CalAmp’s LoJack Italia subsidiary (to $4.2 million).
- LoJack Italia struck an agreement to provide real-time vehicle data and crash-management capabilities to European fleet-management company ALD Automotive Italia.
- Caterpillar remained CalAmp’s single largest customer, generating sales of $11.6 million this quarter.
- CalAmp also successfully ramped up shipments to its second (unnamed) global heavy equipment OEM, generating revenue of $3.4 million.
- The company announced a new partnership with TransUnion to monetize its installed base of dormant LoJack devices, enabling stolen vehicle recovery for both insurance companies and their customers.
- CalAmp now has roughly 730,000 unique subscribers across its software-as-a-service (SaaS) and recurring-service platforms, up from 689,000 last quarter.
What management had to say
CalAmp CEO Michael Burdiek stated:
We achieved several transformative business and operational milestones during fiscal 2018, realizing record revenues and delivering strong adjusted EBITDA and free cash flows. We realigned our global sales organization, armed our team with a comprehensive suite of SaaS solutions, and succeeded on closing several global enterprise opportunities in multiple market verticals. We are realizing the benefits of our investments and have a strong foundation to drive long-term profitable growth and increased recurring revenue.
For the first quarter of fiscal 2019, CalAmp expects revenue in the range of $91 million to $95 million, adjusted EBITDA of $12 million to $14 million, and adjusted earnings per share of $0.26 to $0.32. By comparison, however, most investors were modeling earnings and revenue near the high ends of those ranges.
To be fair, management noted during the subsequent conference call that the outlook reflects a negative, albeit minor, impact to revenue of between $250,000 and $500,000 related to the adoption of new accounting standards.
Burdiek also suggested that CalAmp’s Telematics device business should be set to enjoy “technology transition tailwinds” later in fiscal 2019. At the same time, he says, the software and subscription services segment should enjoy “solid growth” as CalAmp continues to deploy its newer large program wins in the coming quarters. And that’s not to mention the potential for LoJack to drive incremental sales through new partnerships like its recent deal with TransUnion, which promises to monetize its base of millions of dormant units.
So in the end, while CalAmp’s near-term growth left the market wanting more, I think long-term shareholders have no reason to worry.