By Stephen Nellis, Staff Writer
CalAmp is back.
The Oxnard-based firm, which trades on the Nasdaq and has a 98,000-square-foot facility in the Tri-Counties, had a brush with death when it temporarily lost a huge customer and revenues halved. But analysts say the company’s turnaround team has righted the ship and handed off power to a new CEO.
After narrowing its losses for several years, CalAmp told Wall Street to expect a profit for its first quarter as the Business Times was going to press. In the coming years, analysts expect “record profitability.”
CalAmp was once laser-focused on gear for direct broadcast satellites, the small dishes used by firms such as DirecTV and EchoStar. Up to 90 percent of its revenue came from those products.
Between 2005 and 2007, CalAmp began to aggressively diversify its business, buying other companies in the wireless space. It found niches in highspeed mobile data gear for police and firefighters — think of it as an ultra-tough WiMax — and on applications such as tracking fleet vehicles for big companies.
But just as CalAmp was making those investments, crisis hit. A supplier made changes to the circuit boards that went into its satellite gear that caused the units to fail. One of the company’s biggest customers basically halted shipments. CalAmp entered a settlement to make its business partner whole. “That was a big blow to the company,” said current CEO Michael Burdiek.
New CEO Rick Gold stepped off CalAmp’s board to navigate the crisis.
CalAmp sued the supplier who caused the problem and won, resulting in an $8.2 million cash infusion. But the legal victory was cold comfort. Between 2007 and 2009, revenues dropped from $211.7 million to $140.9 million to $98 million, with an $82 million loss in 2008 alone. “Just as we were getting our feet back under us,” Burdiek said, “the economic downturn hit.”
But CalAmp has regained some of its satellite business. Revenues stabilized in the low $110 million range for 2009 and 2010, though only about 30 percent of that now comes from satellite dish gear. The rest comes from CalAmp’s other wireless businesses. Gold handed off power to Burdiek, who analysts say is shifting from turnaround mode to growth mode.
“I think it is clear that CalAmp has made the turn and is now focusing more on how to grow its wireless businesses than what to do about its satellite transceiver business,” Mike Crawford, analyst with investment bank B. Riley & Co., told the Business Times via email. B. Riley does business with CalAmp and makes a market in its shares.
A substantial portion of CalAmp’s sales used to come from DirecTV. Crawford said that revenue may come back, but that the potential for solid organic growth lies with its newer lines of business, which are also more profitable.
“We believe DirecTV already is coming back as a satellite customer but that this business is becoming less strategic to CalAmp,” Crawford said. “It might not be a $200 million revenue business again anytime soon without satellite — barring further acquisitions — but CalAmp’s wireless datacom business has superior gross and operating margins, which we expect to drive record profitability.”
CalAmp was scheduled to release its first quarter earnings just as the Business Times was going to press. The company had told investors to expect higher revenue — $34 million to $34.5 million, as opposed to an earlier predicted $31 million to $34 million — and brightened its forecast from a potential small loss to a definite profit.
“The future of our company is fundamentally our wireless business,” Burdiek said. “Our wireless business is getting back to where it was and is even threatening to be better than it was historically.”
CalAmp’s shifts have mixed implications for Oxnard. Its satellite gear once used parts made in China with a lot of assembly and testing done in Oxnard. CalAmp is changing to producing those satellite transceivers start-to-finish in China. But Burdiek said that the company’s newer product lines also use foreign parts that will need significant tinkering in the United States before shipping out. “It doesn’t mean we’re idling the Oxnard facility. We have plenty of things that we’re doing to support the wireless business,” Burdiek said.
Burdiek sees opportunities in anything that can be tracked. Examples include fleet vehicles — CalAmp recently inked a deal with a major soft drink distributor — and even tracking drivers on behalf of insurance companies or tracking cargo. “Most cargo containers that move around across the country or across the ocean are tracked in a really crude fashion. Those goods are sometimes extremely valuable, and we think that’s a great growth opportunity for us,” Burdiek said.
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