CalAmp posts upbeat Q4 earnings but stock falls on weak Q1 forecast

CalAmp (NASDAQ: CAMP) swung to a profit in the fourth quarter of 2019 helped by the reversal of a contingent reserve on the Omega patent infringement claim. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates. However, the company guided first-quarter earnings and revenue below the Street’s view. Following this, the stock inched down over 8% in the after-market session.

Net income for the quarter was $11.26 million or $0.33 per share compared to a loss of $4.77 million or $0.13 per share in the previous year quarter. Adjusted earnings decreased by 7% to $0.28 per share.

Revenue dropped by 11% to $84.4 million due to lingering supply chain challenges coupled with a decline in Telematics Systems product sales.

Software and Subscriptions Services revenue grew by 18% driven by Fleet management and LoJack subscription services. However, Telematics Systems revenue decreased by 17% principally due to a decline in MRM Telematics and legacy LoJack SVR (Stolen Vehicle Recovery) product sales.

Worldwide subscribers increased to over one million with the recent acquisitions of Tracker Network (UK), Car Track (LoJack Mexico) and Synovia Solutions.

Looking ahead into the first quarter of fiscal 2020, the company expects revenues in the range of $84.5 million to $89.5 million and net loss in the range of $0.37 to $0.31 per share. Adjusted earnings are anticipated to be in the range of $0.06 to $0.12 per share. Adjusted EBITDA is predicted to be in the range of $6.5 million to $9.5 million for the first quarter.

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For the full year 2020, the company expects adjusted EBITDA to be greater than the adjusted EBITDA recorded in fiscal 2019. Software and Subscription Services revenue is predicted to increase to about $120 million and represent more than 30% of consolidated revenue.

CalAmp expects Telematics Systems revenue to decline between $25 million and $30 million for fiscal 2020, due primarily to product revenue lost in consolidation with the acquisition of three former customers as well as the transition of certain MRM product lines to a subscription-based revenue recognition model.

Shares of CalAmp ended Tuesday’s regular session up 2.53% at $14.61 on the Nasdaq. The stock has fallen over 26% in the past year while it has risen over 11% in the year so far.

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