CalAmp Corp. (CAMP)
F2Q10 Earnings Call
October 8, 2009 4:30 pm ET
Lasse Glassen – Financial Relations Board
Richard B. Gold – President, Chief Executive Officer & Director
Richard Vitelle – Chief Financial Officer, Vice President Finance & Corporate Secretary
Marc Robins – The Robins Group
Justin Cable – Global Hunter Securities
Kevin Dede – Jessup & Lamont
Richard Todaro – Kennedy Capital Management
Previous Statements by CAMP
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Welcome to CalAmp’s fiscal 2010 second quarter earnings call. With us today are CalAmp’s President and CEO Rick Gold and the company’s 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 in the company’s satellite and wireless markets, the timing of customer approvals of new product designs, the length and extent of the global economic downturn that has and may continue to adversely affect the company’s business, the company’s ability to refinance or extend its bank term loan prior to the December 31, 2009 maturity date and other risks or uncertainties that are described in the company’s annual report on Form 10K for fiscal 2009 as filed on May 12, 2009 with the Securities & 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 obtained. The company undertakes no obligation to update or revise 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 Rick Gold.
Richard B. Gold
Thank you for joining us today to discuss CalAmp’s fiscal 2010 second quarter results. I will begin with comments on the financial and operational highlights from this past quarter and then I’ll provide an update on several of our key business initiatives. Rick Vitelle will then discuss additional details about our financial results, balance sheet, working capital management and cash flow. Then, I will wrap up with revenue and earnings guidance for the second half of fiscal 2010 along with some concluding remarks. This will be followed by a question and answer session.
Overall, I continue to be pleased with our ability to grow revenues and generate operating cash flow in spite of the challenging economic environment. During the quarter consolidated revenues increased 4% sequentially to $23.9 million which is within our expected guidance range of $23 to $25 million. The top line was driven by both ramping unit volumes in our satellite products business and a continued rebound of our wireless datacom business.
With two sequential quarters of revenue growth and a solid outlook for the remainder of fiscal 2010, we believe that the recovery of our business is well underway. Looking at the bottom line, results of operations included a GAAP net loss of $4.2 million or $0.17 per diluted share. Excluding the impact of changes in the differed income tax asset valuation allowance, amortization of intangible assets and stock-based compensation expense our adjusted basis or non-GAAP net loss was $2.3 million or $0.09 loss per diluted share.
Included in the second quarter GAAP and adjusted basis net loss is a pre-tax loss of approximately $1 million related to the sale of preferred stock in a privately held company. This non-operating loss on the sale of an investment represents $0.04 per diluted share on a GAAP basis and $0.02 per diluted share on an adjusted basis. Second quarter per share results were also negatively impacted by the sales mix change in which revenue from our lower margin satellite projects came in over our forecast and revenue from our higher margin wireless products came in lower than forecast. I refer you to our second quarter earnings press release issued earlier today for a detailed reconciliation of the GAAP basis net loss to the adjusted basis or non-GAAP net loss.
Moving on to our cash flow statement and balance sheet, we continued to generate positive operating cash flow and reduce our debt. During the second quarter we generated net cash from operating activities of $2.9 million and paid down total debt by $3.6 million. As of the end of the second quarter, the principle balance of our bank debt was down to $14 million and the subordinated note payable to a direct broadcast satellite or DBS customer stood at only $410,000.
I will next provide updates for our satellite and wireless datacom businesses. Our satellite business has entered a period of accelerated growth driven by customer demand. During the second quarter, satellite product revenues increased to $10 million, up 8% on a sequential basis. Looking ahead, we expect satellite revenue to increase sharply in the second half of fiscal 2010. In September, we added a second shift at our main assembly plant in Oxnard, California to increase our production capacity and we are working closely with key suppliers in an effort to achieve a smooth ramp in volume to meet the increased demand.