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CalAmp Reports Fiscal 2006 First Quarter Results; Company Achieves 51% Increase in Net Income Driven by Improvements in Gross Margin

07/07/05

OXNARD, Calif.--(BUSINESS WIRE)--July 7, 2005--CalAmp Corp. (Nasdaq:CAMP), a leading provider of wireless products and engineering services, today reported results for its fiscal 2006 first quarter ended May 31, 2005.

Fiscal 2006 First Quarter Results

Revenue for the first quarter of fiscal 2006 was $47.6 million, compared to $45.0 million for the first quarter of fiscal 2005. The increase reflects the inclusion of recently acquired Skybility for six weeks of the fiscal 2006 first quarter, which contributed revenue of $1.2 million during this period.

Net income for the fiscal 2006 first quarter was $2.0 million or $0.09 per diluted share compared to net income of $1.3 million or $0.07 per diluted share for the first quarter of last year. This represents a 51% increase in net income. First quarter results include pretax charges of $293,000 and $471,000 in fiscal 2006 and 2005, respectively, for the write-off of in-process research and development associated with acquisitions.

Gross profit for the first quarter of fiscal 2006 was $10.7 million, or 22.5% of revenues compared to $8.3 million or 18.4% of revenues for the same period last year. The increases in gross profit and gross margin were primarily the result of changes in product mix for Products Division sales and actions taken to improve the financial performance of the Solutions Division.

"We are quite pleased with the bottom line improvement generated during the first quarter of fiscal 2006," commented Fred Sturm, CalAmp's President and Chief Executive Officer. "Earnings per share of $0.09 was at the high end of our guidance range for the quarter and was driven by improved gross margins in both the Products and Solutions Divisions. During the quarter, the Products Division benefited from a mix of products favoring higher-margin Direct Broadcast Satellite (DBS) equipment and positive contributions from Skybility, which was acquired mid-quarter. The integration of Skybility has now been completed and we look forward to leveraging CalAmp's high volume manufacturing capability and design and development expertise with Skybility's strong customer relationships and intellectual property. The Solutions Division is also showing improved results as we continue to execute on our strategy of selectively pursuing higher-margin business opportunities and refining the cost structure required to deliver our services."

Mr. Sturm continued, "As anticipated, during the first quarter, our primary DBS customers adjusted their inventory holding levels, resulting in a sequential decline in Product Division quarterly revenues. However, the order rate has increased in the beginning of our fiscal 2006 second quarter due to continued demand for feature rich equipment that supports our customers' multi-satellite and digital video recorder service offerings. Longer term, we expect to benefit from higher value added products and the higher gross profit associated with these advanced products."

Liquidity

At May 31, 2005, the Company had total cash of $29.2 million, with $9.8 million in total outstanding debt. During the past 12 months total cash increased by $5.5 million due primarily to $13 million of cash provided from operating activities, partially offset by cash used for the Skybility acquisition of $4.9 million and debt reductions of $3 million.

Business Outlook

Commenting on the Company's fiscal 2006 second quarter outlook, Mr. Sturm said, "Based on our current projections, we estimate that fiscal 2006 second quarter revenues will be in the range of $52 to $60 million, and that earnings will be in the range of $0.10 to $0.14 per diluted share. For the full year of fiscal 2006, we continue to target 10% to 15% revenue growth reflecting introduction of new products, growth in our DBS business, and the contributions of our recent strategic acquisitions made to diversify our markets and customer base."

Conference Call and Webcast

A conference call and simultaneous webcast to discuss fiscal 2006 first quarter financial results and business outlook will be held today at 4:30 p.m. Eastern / 1:30 p.m. Pacific. The live webcast of the call is available on CalAmp's web site at www.calamp.com. Participants are encouraged to visit the web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.

CalAmp's President and CEO Fred Sturm and CFO Rick Vitelle will host the conference call. After the live webcast, a replay will remain available until the next quarterly conference call in the Investor Relations section of CalAmp's web site.

About CalAmp Corp.

CalAmp is a leading provider of wireless equipment, engineering services and software that enable anytime/anywhere access to critical information, data and entertainment content. With comprehensive capabilities ranging from product design and development through volume production, CalAmp delivers cost-effective high quality solutions to a broad array of customers and end markets. CalAmp is the leading supplier of Direct Broadcast Satellite (DBS) outdoor customer premise equipment to the U.S. satellite television market. The Company also provides wireless connectivity solutions for the telemetry and asset tracking markets, healthcare industry, enterprise-class Wi-Fi networks and digital multimedia delivery applications. For additional information, please visit the Company's web site at www.calamp.com.

Forward-Looking Statement

Statements in this press release that are not historical in nature are forward-looking statements, which involve known and unknown risks and uncertainties. Words such as "may," "will," "expect," "intend," "plan," "believe," "seek," "could," "estimate," "judgment," "targeting," 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 general and industry economic conditions, competition, development factors, operating costs, the Company's ability to eliminate operating losses in its Solutions Division and make this business segment profitable, and other risks and uncertainties that are detailed from time to time in the Company's filings 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 or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                            CAL AMP CORP.
                    CONSOLIDATED INCOME STATEMENTS
          (Unaudited, in thousands except per share amounts)

                                                    Three Months Ended
                                                          May 31,
                                                   -------------------
                                                      2005      2004
                                                   --------- ---------

Revenues                                           $ 47,580  $ 44,997

Cost of revenues                                     36,882    36,696
                                                   --------- ---------

Gross profit                                         10,698     8,301

Operating expenses:
  Research and development                            2,197     1,807
  Selling                                             1,872     1,072
  General and administrative                          2,614     2,445
  Intangible asset amortization                         443       260
  In-process research and development                   293       471
                                                   --------- ---------
                                                      7,419     6,055
                                                   --------- ---------

Operating income                                      3,279     2,246

Non-operating income (expense), net                      43       (64)
                                                   --------- ---------

Income before income taxes                            3,322     2,182

Income tax provision                                 (1,345)     (873)
                                                   --------- ---------

Net income                                         $  1,977  $  1,309
                                                   ========= =========

Net income per share:
  Basic                                            $   0.09  $   0.07
  Diluted                                          $   0.09  $   0.07

Shares used in per share calculations:
  Basic                                              22,492    18,755
  Diluted                                            22,910    19,750


Business Segment Information
                                                    Three Months Ended
                                                          May 31,
                                                   -------------------
                                                      2005      2004
                                                   --------- ---------
Revenue
  Products Division                                $ 41,168  $ 40,499
  Solutions Division                                  6,412     4,498
                                                   --------- ---------

    Total revenue                                  $ 47,580  $ 44,997
                                                   ========= =========

Gross profit
  Products Division                                $  8,810  $  7,266
  Solutions Division                                  1,888     1,035
                                                   --------- ---------

    Total gross profit                             $ 10,698  $  8,301
                                                   ========= =========

Operating income (loss)
  Products Division                                $  5,356  $  4,634
  Solutions Division                                 (1,143)   (1,509)
  Corporate expenses                                   (934)     (879)
                                                   --------- ---------

    Total operating income                         $  3,279  $  2,246
                                                   ========= =========


                            CAL AMP CORP.
                     CONSOLIDATED BALANCE SHEETS
                      (Unaudited - In thousands)

                                               May 31,    February 28,
                                                2005         2005
                                             ----------- -------------
                            Assets

Current assets:
  Cash and cash equivalents                  $   29,186  $     31,048
  Accounts receivable, net                       24,101        27,027
  Inventories                                    26,533        21,465
  Deferred income tax assets                      5,716         6,118
  Prepaid expenses and other current assets       3,780         2,876
                                             ----------- -------------

       Total current assets                      89,316        88,534

Equipment and improvements, net                   5,513         5,383

Deferred income tax assets                        4,869         5,285

Goodwill                                         94,977        92,834

Other intangible assets, net                      4,554         4,028

Other assets                                        682           691
                                             ----------- -------------

                                             $  199,911  $    196,755
                                             =========== =============

      Liabilities and Stockholders' Equity

Current liabilities:
  Current portion of long-term debt          $    2,880  $      2,897
  Accounts payable                               21,835        18,389
  Accrued payroll and employee benefits           2,099         3,652
  Other accrued liabilities                       3,285         3,127
  Deferred revenue                                1,474         1,597
                                             ----------- -------------

      Total current liabilities                  31,573        29,662
                                             ----------- -------------

Long-term debt, less current portion              6,965         7,679
                                             ----------- -------------

Other non-current liabilities                     1,093         1,126
                                             ----------- -------------

Stockholders' equity:
  Common stock                                      227           227
  Additional paid-in capital                    131,799       131,784
  Common stock held in escrow                    (2,548)       (2,548)
  Retained earnings                              31,603        29,626
  Accumulated other comprehensive loss             (801)         (801)
                                             ----------- -------------

      Total stockholders' equity                160,280       158,288
                                             ----------- -------------

                                             $  199,911  $    196,755
                                             =========== =============


                            CAL AMP CORP.
                  CONSOLIDATED CASH FLOW STATEMENTS
                      (Unaudited - In thousands)

                                                    Three Months Ended
                                                          May 31,
                                                   -------------------
                                                      2005      2004
                                                   ---------  --------
Cash flows from operating activities:
   Net income                                      $  1,977   $ 1,309
   Depreciation and amortization                      1,080       959
   Write-off of in-process R&D                          293       471
   Increase in equity associated with tax
    benefit of stock option exercises                     2        41
   Deferred tax assets, net                             818       809
   Changes in operating working capital                 (62)       85
   Other                                                  7        (2)
                                                   ---------  --------

      Net cash provided by operating activities       4,115     3,672
                                                   ---------  --------

Cash flows from investing activities:
   Capital expenditures                                (373)     (686)
   Proceeds from sale of property and equipment           -       177
   Acquisition of Skybility assets                   (4,886)        -
   Acquisition of Vytek Corp., net of cash
    acquired                                              -    (1,727)
                                                   ---------  --------

      Net cash used in investing activities          (5,259)   (2,236)
                                                   ---------  --------

Cash flows from financing activities:
   Debt repayments, net of borrowings                  (731)     (768)
   Proceeds from stock option exercises                  13        87
                                                   ---------  --------

      Net cash used in financing activities            (718)     (681)
                                                   ---------  --------

Net change in cash                                   (1,862)      755

Cash at beginning of period                          31,048    22,885
                                                   ---------  --------

Cash at end of period                              $ 29,186   $23,640
                                                   =========  ========

CONTACT: CalAmp Corp.
Rick Vitelle, 805-987-9000
or
Financial Relations Board
General Information:
Lasse Glassen, 310-854-8313
lglassen@financialrelationsboard.com
or
Investor/Analyst Information:
Amy Cozamanis, 310-854-8314
acozamanis@financialrelationsboard.com

SOURCE: CalAmp Corp.

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