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CalAmp Reports Fiscal 2007 Third Quarter Results

01/11/07
OXNARD, Calif., Jan 11, 2007 (BUSINESS WIRE) -- CalAmp Corp. (Nasdaq:CAMP), a leading provider of wireless communications products, today reported results for its fiscal 2007 third quarter ended November 30, 2006. Key highlights of the latest quarter include:

-- Initial shipments of new generation Direct Broadcast Satellite (DBS) products to support service providers' rollout of high definition television (HDTV) programming.

-- Revenues of $61.1 million, GAAP earnings of $0.04 per diluted share and Adjusted Basis (non-GAAP) earnings of $0.08 per diluted share within expectations.

"During the fiscal third quarter, our core DBS business continued to generate solid cash flows, and we made progress executing on our business strategy to increase our market presence in wireless data communication markets," commented Fred Sturm, CalAmp's President and Chief Executive Officer. "On a sequential quarter basis, CalAmp's increase in revenues was driven by sales to our Direct Broadcast Satellite (DBS) customers along with growth in several of our wireless data communications offerings including products for Mobile Resource Management (MRM)."

Mr. Sturm continued, "CalAmp achieved a number of important operational milestones during the third quarter, which position the Company for a solid finish to fiscal 2007. Toward the end of the quarter, we received product approval from both of our DBS customers and began shipping next generation outdoor reception equipment. During our fourth quarter, we expect meaningful revenues from the new DBS products. As an indication of our leadership position in this market, CalAmp is currently the only company supplying these latest products to both DBS service providers. In our wireless data communications business, we continue to aggressively execute our growth strategy. Dataradio recently won a $1.3 million contract to provide a mobile data communications system for the police, fire and EMS personnel of Genesee County, Michigan. Additionally, CalAmp was selected to provide key MRM components for GE Security's new NavLogix(TM) fleet tracking service."

Fiscal 2007 Third Quarter Results

Revenue for the fiscal 2007 third quarter was $61.1 million compared to $64.5 million for the third quarter of fiscal 2006. Growth in the Company's wireless data communications business, driven by the May 2006 acquisitions of Dataradio and the MRM product line, partially offset lower DBS product sales and Solutions Division revenue in the latest quarter.

Net income for the fiscal 2007 third quarter was $0.9 million or $0.04 per diluted share compared to net income of $5.4 million or $0.23 per diluted share for the third quarter of last year. Adjusted Basis (non-GAAP) net income for the fiscal 2007 third quarter was $2.0 million or $0.08 per diluted share compared to Adjusted Basis net income of $5.7 million or $0.24 per diluted share for the same period last year. Adjusted Basis net income for the comparable periods exclude the impact of amortization of intangible assets, stock-based compensation expense, in-process research and development and impairment loss, each net of tax where applicable. A reconciliation of GAAP basis net income to Adjusted Basis net income is provided in the table at the end of this press release.

Gross profit for the third quarter of fiscal 2007 was $12.7 million, or 20.8% of revenues compared to $16.5 million or 25.5% of revenues for the same period last year. The reduction in gross profit and gross margin were primarily the result of higher freight costs and lower margins on final shipments of end-of-life DBS products. The Company made the decision to incur higher freight costs to expedite incoming materials in response to supply chain disruptions and demand volatility in order to meet customer requirements. The Company expects the higher level of freight costs to persist through much of the fourth quarter until the supply pipeline for new DBS products has been filled.

Liquidity

During the nine months ended November 30, 2006, the Company generated operating cash flow of $11.7 million. At November 30, 2006, the Company had total cash of $33.3 million, with $34.3 million in total outstanding debt. Inventories were $20.8 million at the end of the third quarter, representing annualized turns of 9 times based on cost of sales in the latest quarter. Accounts receivable outstanding at the end of the third quarter represents a 51 day average collection period.

Business Outlook

Commenting on the Company's fiscal 2007 fourth quarter outlook, Mr. Sturm said, "Based on our current estimates, we anticipate fiscal 2007 fourth quarter revenues will be in the range of $54 to $60 million, with net income in the range of $0.03 to $0.07 per diluted share. Adjusted Basis (Non-GAAP) net income for the fourth quarter, which excludes amortization of intangible assets and stock-based compensation expense--each net of tax--is expected to be $0.07 to $0.11 per diluted share."

Conference Call, Webcast and 10-Q filing

A conference call and simultaneous webcast to discuss fiscal 2007 third 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.

The reader is also referred to the Company's quarterly report on Form 10-Q, filed today with the Securities and Exchange Commission.

About CalAmp Corp.

CalAmp is a leading provider of wireless communications products 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 data communication solutions for the telemetry and asset tracking markets, private wireless networks, public safety communications and critical infrastructure and process control applications. For additional information, please visit the Company's website 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", "should", 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, the timing of customer approvals of new product designs, operating costs, the Company's ability to efficiently and cost-effectively integrate its acquired businesses, 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 STATEMENTS OF OPERATIONS
          (Unaudited, in thousands except per share amounts)


                              Three Months Ended   Nine Months Ended
                                 November 30,         November 30,
                             ------------------- ---------------------
                               2006       2005     2006        2005
                             --------   -------- ---------   ---------

Revenues                     $61,092    $64,463  $165,339    $169,704

Cost of revenues              48,390     47,999   127,699     129,127
                             --------   -------- ---------   ---------

Gross profit                  12,702     16,464    37,640      40,577
                             --------   -------- ---------   ---------

Operating expenses:
  Research and development     4,099      2,585    10,456       7,142
  Selling                      2,614      1,914     7,390       5,582
  General and administrative   3,308      2,679     9,638       7,900
  Intangible asset
   amortization                1,229        403     2,905       1,375
  In-process research and
   development                     -          -     6,850         320
  Impairment loss                  -          -    29,848           -
                             --------   -------- ---------   ---------
                              11,250      7,581    67,087      22,319
                             --------   -------- ---------   ---------

Operating income (loss)        1,452 (a)  8,883   (29,447)(a)  18,258

Non-operating income
 (expense), net                 (141)       162       574         231
                             --------   -------- ---------   ---------

Income (loss) before income
 taxes                         1,311      9,045   (28,873)     18,489

Income tax provision            (415)    (3,606)   (3,047)     (7,392)
                             --------   -------- ---------   ---------

Net income (loss)            $   896    $ 5,439  $(31,920)   $ 11,097
                             ========   ======== =========   =========

Net income (loss) per share:
  Basic                      $  0.04    $  0.24  $  (1.37)   $   0.49
  Diluted                    $  0.04    $  0.23  $  (1.37)   $   0.48
Shares used in per share
 calculations:
  Basic                       23,414     22,580    23,290      22,520
  Diluted                     23,679     23,592    23,290      23,272


(a) Operating income (loss) for the three and nine months ended
 November 30, 2006 includes share-based compensation expense pursuant
 to FAS123R of $541 and $1,614, respectively. Such expense is included
 in the following captions of the Statement of Operations:

                                Three     Nine
                                Months    Months
                                Ended     Ended
      Statement of            Nov. 30,   Nov. 30,
       Operations Caption        2006      2006
----------------------------  ---------- --------

      Cost of revenues           $39       $112
      Research and
       development expense        55        166
      Selling expense             65        191
      General and
       administrative
       expense                   382      1,145
                              -------    -------
                                $541     $1,614
                              =======    =======



                            CAL AMP CORP.
                     BUSINESS SEGMENT INFORMATION
          (Unaudited, in thousands except per share amounts)


                              Three Months Ended   Nine Months Ended
                                 November 30,         November 30,
                             ------------------- ---------------------
                               2006       2005     2006        2005
                             --------   -------- ---------   ---------
Revenue
  Products Division          $59,484    $59,565  $157,784    $153,331
  Solutions Division           1,608      4,898     7,555      16,373
                             --------   -------- ---------   ---------

    Total revenue            $61,092    $64,463  $165,339    $169,704
                             ========   ======== =========   =========

Gross profit
  Products Division          $11,983    $14,441  $ 34,714    $ 34,975
  Solutions Division             719      2,023     2,926       5,602
                             --------   -------- ---------   ---------

    Total gross profit       $12,702    $16,464  $ 37,640    $ 40,577
                             ========   ======== =========   =========

Operating income (loss)
  Products Division          $ 3,819    $10,406  $  7,336    $ 23,453
  Solutions Division            (779)      (373)  (32,384)     (2,029)
  Corporate expenses          (1,588)    (1,150)   (4,399)     (3,166)
                             --------   -------- ---------   ---------

    Total operating income
     (loss)                  $ 1,452 (a)$ 8,883  $(29,447)(a)$ 18,258
                             ========   ======== =========   =========



(a) Operating income (loss) for the three and nine months ended
 November 30, 2006 includes share-based compensation expense pursuant
 to FAS123R of $541 and $1,614, respectively. Such expense is included
 in the operating income (loss) of the reporting segments as follows:

                                Three     Nine
                                Months    Months
                                Ended     Ended
       Reporting Segment      Nov. 30,   Nov. 30,
                                 2006     2006
----------------------------  ---------- --------

       Products Division        $141       $531
       Solutions Division        105        296
       Corporate expenses        295        787
                              -------    -------
                                $541     $1,614
                              =======    =======



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


                                                    November  February
                                                       30,       28,
                                                     2006      2006
                                                   --------- ---------
                    Assets
Current assets:
  Cash and cash equivalents                        $ 33,284  $ 45,783
  Accounts receivable, net                           30,274    28,630
  Inventories                                        20,821    18,279
  Deferred income tax assets                          4,139     4,042
  Prepaid expenses and other current assets           8,443     2,502
                                                   --------- ---------

       Total current assets                          96,961    99,236

Equipment and improvements, net                       6,571     5,438

Deferred income tax assets, less current portion          -     2,344

Goodwill                                             89,835    91,386

Other intangible assets, net                         19,872     5,304

Other assets                                          1,399       638
                                                   --------- ---------

                                                   $214,638  $204,346
                                                   ========= =========
                    Liabilities and
                     Stockholders' Equity
Current liabilities:
  Current portion of long-term debt                $  2,215  $  2,168
  Accounts payable                                   12,820    12,011
  Accrued payroll and employee benefits               3,431     3,608
  Other accrued liabilities                           4,954     2,763
  Deferred revenue                                    1,313     1,323
                                                   --------- ---------

      Total current liabilities                      24,733    21,873
                                                   --------- ---------

Long-term debt, less current portion                 32,048     5,511
                                                   --------- ---------

Deferred income tax liabilities                       7,109         -
                                                   --------- ---------

Other non-current liabilities                         1,034       853
                                                   --------- ---------

Stockholders' equity:
  Common stock                                          235       232
  Additional paid-in capital                        138,199   135,022
  Common stock held in escrow                             -    (2,532)
  Retained earnings                                  12,268    44,188
  Accumulated other comprehensive loss                 (988)     (801)
                                                   --------- ---------

      Total stockholders' equity                    149,714   176,109
                                                   --------- ---------

                                                   $214,638  $204,346
                                                   ========= =========




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


                                                     Nine Months Ended
                                                       November 30,
                                                    ------------------
                                                      2006      2005
                                                    --------- --------
Cash flows from operating activities:
  Net income (loss)                                 $(31,920) $11,097
  Depreciation and amortization                        5,027    3,305
  Stock-based compensation expense                     1,614        -
  Write-off of in-process R&D                          6,850      320
  Impairment loss                                     29,848        -
  Stock option income tax benefits                         -      678
  Excess tax benefit from stock-based compensation      (392)       -
  Deferred tax assets, net                             3,555    5,431
  Changes in operating working capital                (2,973)  (6,485)
  Other                                                   84       16
                                                    --------- --------

     Net cash provided by operating activities (A)    11,693   14,362
                                                    --------- --------

Cash flows from investing activities:
  Capital expenditures                                (2,112)  (1,555)
  Proceeds from sale of property and equipment            16      143
  Acquisition of Dataradio net of cash acquired      (48,047)       -
  Acquisition of TechnoCom product line               (2,478)       -
  Proceeds from Vytek escrow distribution                480        -
  Acquisition of Skybility assets                          -   (4,897)
                                                    --------- --------

     Net cash used in investing activities           (52,141)  (6,309)
                                                    --------- --------

Cash flows from financing activities:
  Proceeds from long-term debt                        38,000        -
  Debt repayments                                    (11,416)  (2,178)
  Proceeds from stock option exercises                 1,130    1,282
  Excess tax benefit from stock-based compensation       392        -
                                                    --------- --------

     Net cash provided (used) by financing
      activities                                      28,106     (896)
                                                    --------- --------

Effect of exchange rate changes on cash                 (157)       -
                                                    --------- --------

Net change in cash and cash equivalents              (12,499)   7,157

Cash and cash equivalents at beginning of period      45,783   31,048
                                                    --------- --------

Cash and cash equivalents at end of period          $ 33,284  $38,205
                                                    ========= ========


(A) Net cash provided by operating activities for the nine months
 ended November 30, 2006 is net of the payment of $5,355,000 of
 accrued incentives paid by Dataradio to its workforce shortly after
 the acquisition by CalAmp. These incentives were recorded as an
 expense in Dataradio's pre-acquisition income statement.




                            CAL AMP CORP.
                   NON-GAAP EARNINGS RECONCILIATION
          (Unaudited, in thousands except per share amounts)


 Non-GAAP Earnings
  Reconciliation
 -------------------------------
 "GAAP" refers to financial information presented in accordance with
  Generally Accepted Accounting Principles in the United States. This
  press release includes historical non-GAAP financial measures, as
  defined in Regulation G promulgated by the Securities and Exchange
  Commission. CalAmp believes that its presentation of historical non-
  GAAP financial measures provides useful supplementary information to
  investors. The presentation of historical non-GAAP financial
  measures is not meant to be considered in isolation from or as a
  substitute for results prepared in accordance with accounting
  principles generally accepted in the United States.

 In this press release, CalAmp reported the non-GAAP financial
  measures of Adjusted Basis net income and diluted earnings per
  share. CalAmp uses these non-GAAP financial measures to enhance the
  investor's overall understanding of the financial performance and
  prospects for the future of CalAmp's core business activities.
  Specifically, CalAmp believes that a report of Adjusted Basis net
  income and diluted earnings per share provides consistency in its
  financial reporting and facilitates the comparison of results of
  core business operations between its current and past periods.

 The reconciliation of GAAP basis net income (loss) to Adjusted Basis
  net income is as follows:

                                 Three Months Ended  Nine Months Ended
                                    November 30,       November 30,
                                ------------------- ------------------
                                   2006      2005     2006      2005
                                ---------- -------- --------- --------

 GAAP basis net income (loss)   $     896  $ 5,439  $(31,920) $11,097

 Adjustments to reconcile to
  non-GAAP net income:
    Amortization of intangible
     assets, net of tax               693      242     1,638      825
    Stock-based compensation
     expense, net of tax              305        -       910        -
    In-process R&D, net of tax
     in fiscal 2006                     -        -     6,850      192
    Impairment loss - goodwill          -        -    29,012        -
    Impairment loss - intangible
     assets, net of tax                 -        -       472        -
                                ---------- -------- --------- --------

 Adjusted Basis net income      $   1,894  $ 5,681  $  6,962  $12,114
                                ========== ======== ========= ========

 Adjusted Basis net income per
  diluted share                 $    0.08  $  0.24  $   0.29  $  0.52

 Weighted average common shares
  outstanding on diluted basis     23,679   23,592    23,701   23,272

 Reconciling items that are not treated as tax deductible in computing
  the GAAP basis income tax provision (in-process research and
  development in fiscal 2007 and goodwill impairment loss) are not
  tax-effected in the Non-GAAP Earnings Reconciliation. The remaining
  reconciling items are tax-effected using an adjusted year-to-date
  effective income tax rate that is computed by excluding from pretax
  income (loss) those reconciling items that are not treated as tax
  deductible in computing the GAAP basis income tax provision. The
  computation of the adjusted year-to-date effective income tax rate
  is as follows:
                                                     Nine Months Ended
                                                       November 30,
                                                    ------------------
                                                      2006      2005
                                                    --------- --------
   Pretax income (loss) as
    reported                                        $(28,873) $18,489
   Add back nondeductible items:
     In-process research and
      development in fiscal 2007                       6,850        -
     Impairment loss - goodwill                       29,012        -
                                                     --------  -------
   Pretax income before
    nondeductible items                                6,989   18,489
   Income tax provision as
    reported                                           3,047    7,392
                                                     --------  -------

   Year-to-date effective income
    tax rate as adjusted                                43.6%    40.0%
                                                     ========  =======


SOURCE: CalAmp Corp.

CalAmp Corp.
Rick Vitelle, Chief Financial Officer, 805-987-9000
or
Financial Relations Board
Lasse Glassen, 310-854-8313 (General Information)
lglassen@financialrelationsboard.com

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