Seeking Alpha • Jul 21
CalAmp: Down, But Not Out
Today, we revisit a small cap tech concern called CalAmp.
The stock has been hit hard over the past couple of quarters thanks to supply chain challenges, but has picked up some large recent insider buying.
Sign that a turnaround might be on the horizon? An investment analysis follows in the paragraphs below.
Don't handicap your children by making their lives easy.”― Robert A. Heinlein
Today, we put CalAmp Corp. (CAMP) in the spotlight for the first time in more than a year. The company and its shareholders have been under pressure here in 2022. Like so many manufacturers, CalAmp has been hit hard by supply chain issues over the past couple of quarters. However, the company also operates as a subscription service. Recently, the shares have picked up some considerable insider purchases. Better times ahead? We try to answer that question via the analysis below.
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Company Overview
CalAmp is based just outside of Los Angeles. The company has two distinct businesses. CalAmp provides CalAmp Telematics Cloud platform which offers cloud-based application enablement and telematics service platforms that facilitate integration of its own applications. The company also designs and builds telematics products, including asset tracking units, mobile telematics devices, fixed and mobile wireless gateways. It is probably best known for its LoJack line which it acquired some years back. The stock sells for around $4.50 a share and sports an approximate market capitalization of just over $150 million.
First Quarter Results
On June 23rd, the company posted first quarter numbers. Overall revenues fell nearly 19% on a year-over-year basis to $64.7 million. The company also had a GAAP quarterly loss of 34 cents a share. Both top and bottom line numbers missed the consensus.
The bottleneck in the global supply chain played havoc with CalAmp's results for the second straight quarter. The Telematics Products division was the cause of the shortfall. Thanks to component shortages and customer conversions to recurring software subscription arrangements, revenues of $25.2 million were lower sequentially from the $27.2 million and down significantly from the same period a year ago.
Three Months Ended
May 31,
Description 2022 2021
Revenues:
Software & Subscription Services (S&SS) $ 39,557 $ 35,043
Telematics Products 25,169 44,631
$ 64,726 $ 79,674
Gross margin 40 % 41 %
Net loss $ (12,173 ) $ (6,000 )
Net loss per diluted share $ (0.34 ) $ (0.17 )
Non-GAAP measures:
Adjusted basis net income (loss) $ (3,405 ) $ 2,946
Adjusted basis net income (loss) per diluted share $ (0.10 ) $ 0.08
Adjusted EBITDA $ 1,856 $ 8,385
Adjusted EBITDA margin 3 % 11 %
However, it should be noted that subscription revenue rose to $39.6 million from $35 million in 1Q2021. For the second straight quarter, subscription revenues were over 60% of overall sales. Total subscribers hit 1.2 million which is up 25% from the same period a year ago and 13% sequentially from the fourth quarter of 2021.
Analyst Commentary & Balance Sheet
Since first quarter earnings posted, both Roth Capital ($13 price target, down from $13.50 previously) and Northland Securities ($11 price target, down from $12 previously) have reissued their Buy ratings on the stock. The company ended the first quarter with nearly $60 million of cash and marketable securities on its balance sheet after posting a GAAP net loss of $12.2 million during the quarter. The company has just over $225 million of long-term debt.