CAMP

CalAmp Corp. (CAMP)

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Exchange: NASDAQ
Industry: Technology
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CalAmp Corp. (CAMP)

F4Q10 (Qtr End 05/31/10) Earnings Call

May 06, 2010 04:30 am ET

Executives

Lasse Glassen - Financial Relations Board

Rick Gold - CEO

Rick Vitelle - CFO

Analysts

Mike Crawford - B. Riley & Company

Presentation

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the CalAmp fiscal 2010 fourth quarter conference call. During today’s presentation all parties will be in a listen only mode. Following the presentation the conference will be open for questions. (Operator Instructions) This conference is being recorded today Thursday May 06, 2010.

I would now like to turn the conference over to Lasse Glassen with the Financial Relations Board. Please go ahead.

Lasse Glassen

Thank you and good afternoon, everybody. Welcome to CalAmp's fiscal 2010 fourth quarter earnings call. With us today are CalAmp’s Chief Executive Officer, 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 variation 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 on 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 or may continue to adversely affect the company’s business. And other risks and uncertainties that are described in the company’s Annual Report on Form 10-K for fiscal 2010 as filed today with the Securities and Exchange Commission.

Although the company believes the expectations reflected in such forward-looking statements are based upon the reasonable assumptions. We can give no assurance that its expectations will be attained. 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 Chief Executive Officer, Rick Gold. Rick?

Rick Gold

Thank you, Lasse. Good afternoon and thank you for joining us today to discuss CalAmp’s fiscal 2010 and fourth quarter and full year results. I will begin with comments on our financial and operational highlights and I will then provide an update on several of our key business activities.

Rick Vitelle will next discuss additional details about our financial results, balance sheet, working capital management and cash flow. And I will wrap up with our business outlook and guidance along with some concluding remarks. This will be followed by question-and-answer session.

We had a strong finish to fiscal 2010 with consolidated fourth quarter revenue of $34.5 million an increase of 62% from the prior year and 12% sequentially. During the fourth quarter production volumes of our satellite products continued to ramp resulting in the consecutive quarter of operating profitability in this business segment. In addition our wireless datacom business which has been impacted by the global economic down turn stabilized over the course of the fiscal year and generated double digit percentage growth in revenue in the fourth quarter.

Looking at the bottom line results of operations included a GAAP net loss of $1.3 or $0.5 per diluted share. Excluding the impact of amortization of intangible assets and stock based compensation expense our adjusted basis for non-GAAP net loss with $0.5 million or $0.2 per diluted share. I will refer to our fourth quarter earnings press release issued earlier today for detail reconciliation of the GAAP basis pre-tax laws to the adjusted basis or non-GAAP net income or loss.

Looking at our cash flow and balance sheet in fiscal 2010 we generated cash flow from operations of $2.5 million and reduced our debt $21.1 million at the beginning of the year to $10.1 million at year end. During the fourth quarter we announced the re-financing of our maturing bank debt which was funded by new credit facility with Square 1 bank and by gross cash proceeds of $9.25 million from the private placement of common stock and subordinated debt.

Completing this re-financing was an important milestone as it enhanced our financial flexibility improved our liquidity possession and eliminated uncertainty associated with the maturity of our previous bank loan. I will next provide updates for satellite and wireless datacom businesses. During the fourth quarter satellite product revenues increased to $18.7 million up 11% sequentially and 130% on a year-over-year basis.

The satellite business also achieved operating profitability for the second quarter in a row. That said, gross margin percentages remained below historical levels due to lower revenue run rates, resulting in lower overhead absorptions, as well as supply chain inefficiencies associated with the rapid ramp in production volume in the second half of fiscal 2010.

We’ve now substantially completed the shipment of refurbished satellite products under our product warranty program for our key customer. We continue to work closely with our direct broadcast satellite or DBS customers on next generation products that we expect will increase our market share and improved our gross margins over the course of fiscal 2011.

In total, we are currently developing four next generation products, two for each of our DBS customers. For the product with the largest revenue potential we’re well into the product qualification process with that customer and expect shipments to begin in our second fiscal quarter.

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