Satellite Revenue Drives Positive Q3 Earnings for CalAmp

CalAmp Satellite Brazil

CalAmp Rings Opening Bell at NASDAQ on August 26, 2013. Photo: CalAmp

[Via Satellite 12-24-13] Wireless and satellite communications company CalAmp had a salient increase in satellite revenue during the company’s third quarter. Consolidated revenue rose by 43 percent to $63 million, satellite revenue increased by 72 percent to $13.8 million compared to $8 million in the third quarter last year, and wireless datacom revenue also rose by 37 percent, closing the quarter at $49.7 million compared to $36.3 million in the same period last year.

“In our satellite segment, the increase in revenue and improved margins helped further expand CalAmp’s consolidated cash flow and bottom-line profitability,” said Michael Burdiek, president and chief executive officer, CalAmp. “Also during the quarter, our strong cash flow and growing cash balance allowed us to pay off our bank term loan.”

CalAmp’s total cash balance at Nov. 30, 2013 was $31.1 million, and net cash provided by operations for the third quarter were $5.6 million. The company’s consolidated gross profit for Q3 2014 rose to $21.0 million, an increase of $7.0 million over the same quarter last year. The consolidated gross margin rose by 1.5 percent to 33.1 percent compared to Q3 2013, which CalAmp attributes  to higher margin Software-as-a-Service (SaaS) revenue from the Wireless Matrix acquisition and margin improvement in its satellite segment.

Acquisitions of Radio Satellite Integrators (RSI) and Wireless Matrix also spurred on growth for CalAmp. RSI has been tasked with focusing on the municipal government marketplace, where it will sell products from across the company as CalAmp directs. “We expect the government sales team, which will be mostly comprised of RSI personnel, will be mostly driving sales for their legacy platform, the fleet output platform which we acquired from Wireless Matrix, as well as our hardware products including our fusion LTE broadband router product,” said Burdiek.

Another major satellite OEM opportunity for the company is solar power. “We’re engaged with a company that focuses on the solar power industry by building solar power plants,” said Burdiek. “They have a solar controller assembly that was their own design which they brought to us to cost optimize and also to enable certain types of wireless communication functionality … that activity will ramp into our Q4 before probably moderating somewhat going into Q1, but we hope to be well positioned to support them going into future projects that they are involved with well off into the future.”

South American markets also played a major role and are expected to become a driver of growth for the company going forward. Revenue from Brazil was the primary reason for growth in Q2, and though this tapered going into Q3, new legislation may stimulate growth. A bill known as Contran 245 would require new or imported vehicles to be equipped with GPRS tracking units prior to sale in the country. As part of Brazil’s push to curtail car thefts, this stolen vehicle recovery technology would make stealing a vehicle more difficult, as well as make it easier for police to track and retrieve stolen assets.

“We’re involved with a couple of major suppliers to automotive OEM companies who are looking for telematics solutions partners to help their customers in complying with the 245 legislation,” said Burdiek. “Whereas before we didn’t see much of a direct OEM opportunity, we are now starting to see that as a potential pipeline opportunity as the automotive OEMs start to position their product platforms for full compliance with the 245 legislation.”

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