CAMP

CalAmp Corp. (CAMP)

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CalAmp Corp. (CAMP)

F1Q11 (Qtr End 05/31/10) Earnings Call Transcript

July 8, 2010 4:30 pm ET

Executives

Lasse Glassen – IR, Financial Relations Board

Rick Gold – President & CEO

Rick Vitelle – CFO

Analysts

Mike Crawford – B. Riley & Company

Ilya Grozovsky – Morgan Joseph

Marc Robins – Catalyst Research

Richard Todaro – Kennedy Capital

James Basch – Dialectic Capital Partners

Presentation

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the CalAmp fiscal 2011 first quarter conference call. During today’s presentation all participants will be in a listen-only mode. Following the presentation the conference will be opened for questions. (Operator instructions) This conference is being recorded today, Thursday, July 8th, 2010.

And at this time I would now like to turn the conference over to Lasse Glassen with the Financial Relations Board. Please go ahead, sir.

Lasse Glassen

Thank you. Good afternoon, everybody. Welcome to CalAmp's fiscal 2011 first 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 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 approval 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, and other risks and uncertainties that are described in the Company’s Annual Report on Form 10-K for fiscal 2010 as filed on May 6th, 2010 with the Securities and Exchange Commission.

Although the Company believes the expectations reflected in such forward-looking statements are based upon 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 statement 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 2011 first quarter 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 then 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 a question-and-answer session.

First quarter operating results were in line with expectations. Revenues of $26.3 million increased 15% on a year-over-year basis and were driven by improving fundamentals in both our satellite and wireless datacom businesses. During the quarter, we experienced continued strong demand for our mobile resource management, or MRM, products as well as contribution from key wireless network projects introduced earlier this year – or announced earlier this year.

In our satellite business, as anticipated, first quarter revenues declined compared to the fourth quarter of fiscal 2010, but were up on a year-over-year basis. We expect next generation satellite products that are currently in the customer qualification process along with normal seasonal demand patterns in this markets will help drive growth and improve profitability during the remainder of fiscal 2011.

At the bottom line, results of operations included a GAAP basis net loss of $2.5 million, or $0.09 per diluted share. Excluding the impact of amortization of intangible assets and stock-based compensation expense, our adjusted basis or non-GAAP net loss was $1.1 million, or $0.04 per diluted share. I refer you to our first quarter earnings press release issued earlier today for a detailed reconciliation of the GAAP basis pre-tax loss to the adjusted basis, or non-GAAP net loss.

Moving on to our cash flow and balance sheet, during the first quarter of fiscal 2011, cash used by operating activities was $0.5 million and our net debt position stood at $8.1 million.

I will next provide updates for our satellite and wireless datacom businesses. Looking at our satellite business, revenues of $10.5 million were up 14% compared to the same period last year. The gross margin percentage for satellite products remained below historical levels due in large part to the lower revenue run rate resulting in lower absorption of manufacturing overhead cost.

We are continuing to work closely with our Direct Broadcast Satellite, or DBS, customers to develop next generation products that we expect will increase our addressable portion of the market and improve gross margins over the remainder of fiscal 2011. We are currently developing four next generation satellite products, two for each of our DBS customers. We are well into the production qualification process for the first of these products with revenue shipments expected to begin late in the second fiscal quarter or early in the third fiscal quarter of this year. We expect two other products to enter the customer qualification process this quarter with one more in Q3.

Now, let’s move on to an update of our wireless datacom business, which provides communication systems, products, and services for applications in the utility, public safety, industrial, and mobile resource management markets. During the first quarter, the wireless datacom business generated revenues of $15.8 million, which was up slightly on a sequential quarter basis, and up 15% year-over-year. The year-over-year improvement was driven by our MRM business.

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