CalAmp Satellite Revenues Decline, Wireless Datacom Buoys Earnings
Following fiscal year 2014’s standout performance for its satellite business, communications company CalAmp now anticipates revenues from this sector will even out at a rate lower than previous predictions. In the third quarter of fiscal year 2014, CalAmp’s satellite business brought in $13.8 million in revenues. It was a standout year for satellite, representing a $5 million increase compared to the same period in 2013. During the recently concluded third quarter of the company’s fiscal year 2015 CalAmp’s satellite business revenue was $8.6 million — a decrease of 4 percent sequentially and 37 percent Year over Year.
“Last year was an exceptional year and we think the run rates we’ve experienced for the last two quarters / three quarters are probably more indicative of the business on a go-forward basis,” Michael Burdiek, president and CEO of CalAmp, said during a conference call.
Over the past few years CalAmp has aimed for roughly $40 million a year in revenue from its satellite business, broken down into approximately $10 million per quarter, plus or minus $2 million. In the future, the company now expects satellite segment revenue to be similar to this fiscal year so far on a sequential quarter basis. But while revenues may trend lower than previous expectations for satellite, Burdiek expressed confidence in the segment’s performance.
“We continue to be pleased with satellite segments operational performance, which achieved gross margin of 23.4 percent in the third quarter, reflecting an improvement of nearly 3 percentage points year over year, and providing solid contribution to our cash flow and profitability,” he said.
Last year’s gross margin for the third quarter was 20.6 percent. Rick Vitelle, CalAmp CFO attributed the improvement primarily to a shift in product mix in the latest quarter, which reflected a greater proportion of higher margin home networking products. Revenue from Wireless Datacom boosted CalAmp for the third quarter of fiscal year 2015, growing 9 percent sequentially and 10 percent year-over-year to a record $54.6 million. The company attributed its $1.1 million increase in gross profit compared to the third quarter of fiscal year 2014, totaling $22.1 million, to Wireless Datacom revenue.
Burdiek said fleet management and asset tracking products are driving near term growth. In the transportation vertical, CalAmp began volume production of telematics product shipments to Caterpillar, a customer whose demand for these products exceeded expectations. Burdiek said CalAmp would be looking for more heavy equipment opportunities in the future. The company is also providing products for automotive telematics, and has made progress in selling products for vehicle recovery in Brazil.
Another area CalAmp is looking more closely at is public safety.
“There are some interesting opportunities in our pipeline as it relates to public safety product demand driven by FirstNet infrastructure rollouts. This year has obviously been a dormant year in that regard but I think we are increasingly optimistic that FirstNet will be a demand driver for high-end mobile router products and potentially some services as we enter the new fiscal year,” said Burdiek.
As the necessary infrastructure for FirstNet is built up, satellite companies are also gravitating toward the network to cover places that are difficult or prohibitively expensive to reach by terrestrial means.
CalAmp’s total revenue for the third quarter of fiscal year 2015 was $63.2 million compared to $63.5 million for the same period in fiscal year 2014. Burdiek said the company anticipates more growth in Wireless Datacom while satellite holds at about $8 million next quarter. CalAmp anticipates consolidated revenue will range from $66 to $70 million next quarter.
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