CAMP

CalAmp Corp. (CAMP)

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CalAmp Corp. (CAMP)

F1Q14 Earnings Conference Call

June 27, 2013 4:30 pm ET

Executives

Lasse Glassen – Senior Vice President, Financial Relations Board

Michael Burdiek – President and Chief Executive Officer

Rick Vitelle – Executive Vice President, Chief Financial Officer and Secretary

Analysts

Michael Walkley – Canaccord Genuity

Mike Crawford – B.Riley & Co.

Mike Latimore – Northland Capital Markets

Jason Smith – Craig-Hallum Capital

Raymond Joseph Rund – Shaker Investments

Shai Dardashti – DCM

Presentation

Operator

Greetings and welcome to the CalAmp First Quarter Fiscal 2014 Results Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded.

It is now my pleasure to introduce your host Lasse Glassen. Thank you sir, you may begin.

Lasse Glassen

Thank you, operator. Good afternoon and welcome to CalAmp’s fiscal 2014 first quarter results conference call. With us today are CalAmp’s President and Chief Executive Officer, Michael Burdiek and Chief Financial Officer, Rick Vitelle.

Before I turn the call over to management, please remember that our prepared remarks and responses to questions may contain forward-looking statements. Words such as may, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal and variations of these words and similar expressions are intended to identify forward-looking statements.

Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors including product demand, competitive pressures and pricing declines on the Company's wireless and satellite markets, the timing of customer approvals of new product designs, intellectual property, infringement claims interruption or failure of our internet based systems used to wirelessly configure and communicate with tracking and monitoring devices that we sell. Integration issues that may arise in connection with the Wireless Matrix acquisition customer response to this acquisition and other risks and uncertainties that are described in the Company's Annual Report on Form 10-K for fiscal 2013 as filed on April 25, 2013 with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

With that it’s now my pleasure to turn the call over to CalAmp’s President and CEO, Michael Burdiek.

Michael Burdiek

Thank you, Lasse. Good afternoon and thank you for joining us today to discuss CalAmp’s fiscal 2014 first quarter results. I will begin today’s call with a review of our financial and operational highlights. Rick Vitelle will provide additional details about our financial results, I will wrap up with our business outlook and guidance for the fiscal 2014 second quarter. This will be followed by a question-and-answer session.

Overall, we’re off to a strong start in fiscal 2014. In the first quarter, our Wireless Datacom segment revenue increased 29% year-over-year driven by continued momentum from our Mobile Resource Management or MRM products business and contribution from our Wireless Matrix acquisition that was completed in the first week of the quarter.

In fact, MRM product revenues were at an all time high for a single quarter and MRM product bookings during the quarter were that strongest in history. As a result revenue growth in these areas more than offset the low that we experienced in rail shipments along with slow government sales.

Our Wireless Datacom segment gross margin improved to 39.1% due mainly to higher margin application subscription revenue from the Wireless Matrix acquisition. And rapid progress on the integration front during the first quarter resulted in lower than expected operating expenses from the acquired operations of Wireless Matrix.

In our Satellite segment, we saw improving margins along with some growth resulting in a meaningful impact to the bottom line results.

On a consolidated basis, revenue for the first quarter was $53.7 million, up 22.5% compared to the first quarter of last year with Wireless Datacom revenue increasing 29% to $40.9 million, and Satellite revenue up 6% to $12.9 million.

At the bottom line, we are in $0.05 per diluted share on a GAAP basis at $0.16 per diluted share on a non-GAAP basis just above or non-GAAP guidance range for the quarter. Cash flow provided by operating activities was $5.8 million and we ended the quarter with the cash balance of $24.5 million.

Now I’d like to review our operational highlights for the quarter. The Wireless Datacom segment posted record revenue results in the first quarter with MRM products accounting for approximately 55% of total Wireless Datacom revenue and Wireless Networks products and services which included contribution from the Wireless Matrix acquisition accounting for the remaining 45%.

Consistent with what we’ve seen in recent quarters, we are continuing to experience very strong customer demand for our MRM products in the fleet management, asset tracking, stolen vehicle recovery, and vehicle finance verticals. Notably, the investments we have made to grow our international presence continue to bear fruit. We are now seeing meaningful growth with key customers in Latin America, Europe and South Africa, as well as significant recent orders for stolen vehicle recovery products in Brazil that should drive growth in our second quarter.

On the usage-based insurance front, we continue to actively support a handful of customers who are in the early stages of launching their insurance telematics offerings. We believe our products are competitively positioned both in terms of functionality and price, and we now expect meaningful revenue from insurance carriers in the second half of the year. As we mature our technology and as our customers validate to business models, revenue from insurance-based applications could become a significant growth driver for CalAmp well into the future.

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