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Thursday, Sep 29, 2022

It Survived – Now It Wants to Thrive

The beeps intensify, and the directional signal from the LoJack stolen-vehicle recovery system is pointing north.

“As we get closer, it will fixate on a direction,” Anaheim patrolman Kevin Flanagan says as he monitors the system embedded in his Ford Police Interceptor. “It’s probably going to be on this street or the next side street.”

The 20-year veteran is searching for a light-colored Dodge Caravan during this training exercise and demonstration. Within minutes, the tracking bars on the display are nearly at full strength, and he spots the vehicle on the side of the road.

LoJack police tracking computers, installed in vehicles at every law enforcement agency in Orange County, are activated when an antennae on a police vehicle picks up a LoJack signal from a stolen vehicle. Officers run a specific LoJack reply code from the tracking computer’s display on their police radio or computer through the FBI’s National Crime Information Center’s National Stolen Vehicle Database.

A message is received confirming that the vehicle was stolen, along with a full description and history of the theft. The system allows officers to request assistance from other nearby law enforcement agencies, helicopters and fixed-wing aircraft to track the vehicle.

“It’s like a bloodhound,” Flanagan says. “It gets us on the scent.”

Bold Moves

The device, supplied to law enforcement agencies for free, has helped Irvine-based CalAmp Corp. (Nasdaq: CAMP) diversify offerings while expanding international business.

The company, which specializes in telematics products and services, reported record quarterly revenue in February of $94.4 million, up 9.6% from a year earlier.

The company set aside $30 million in May to repurchase its stock. “This underscores our confidence in the long-term outlook for our business,” Chief Executive Michael Burdiek said in a statement announcing the program. “We believe the current stock price is undervalued and a strong investment opportunity for the Company.”

The quarterly sales record was driven by its Mobile Resource Management telematics product and LoJack Italia business.

Telematics is an all-encompassing term for remote monitoring of assets, typically autos.

The company acquired LoJack Corp. in Canton, Mass., in 2016 for $131.7 million, adding a strong distribution network and brand in the used-car dealership market, as well as vehicle theft-recovery systems production and fleet telematics. The purchase fueled business expansion in the U.S. and overseas.

Peak sales are sustainable, according to B. Riley FBR Inc. analyst Mike Crawford, as CalAmp boosts recurring revenue and maintains its key hardware supplier role for the likes of Caterpillar Inc. (NYSE: CAT), Trimble (Nasdaq: TRMB), Omnitracs and Verizon Communications Inc. (NYSE: VZA).

For the full fiscal year, CalAmp posted sales of $365.9 million, up 4.2% year-over-year. Excluding revenue of its satellites business, which ceased operations in August, revenue for the year was up 9%. Adjusted EBITDA was $52.4 million, up 6.1%, and free cash flow increased 228% to $58.6 million.

Illinois-based Caterpillar was its biggest customer in the 12 months through February, accounting for 12.4% of sales, or roughly $45.3 million.

Burdiek, CalAmp chief operating officer at the time, helped orchestrate a bold move into telematics in the late 2000s as the company teetered on insolvency, burning through cash along the way in the heart of the recession.

CalAmp’s share price sank to 37 cents in March 2009, trading under $1 for nearly a year and jeopardizing its listing on the tech-heavy Nasdaq.

The company’s core business at the time, manufacturing satellite equipment for Echostar and DirecTV, was in bad shape, still reeling from a 2007 product recall months before Burdiek joined the company as executive vice president.

Annual sales from the business line plummeted from more than $150 million to $26 million.

“It was a mess, it was a disaster,” Burdiek says over lunch at Brio Tuscan Grill at the Spectrum. “We had a two- or three-year period where we were fighting fires, just trying to survive.”

CalAmp executives and its board rerouted legacy resources and investment into emerging growth markets.

“One of those things was telematics,” says Burdiek, who was promoted to chief executive in 2011 and given a board seat.

The company targeted early telematics product and software makers, such as Aliso Viejo-based Telogis Inc. and Fleetmatics Group PLC in Illinois, with its data communication technology.

“They were some of the first important customers,” Burdiek says. “For the next five years, it was kind of a rocket ship.”

Verizon bought Telogis in 2016 for about $900 million, and Fleetmatics six weeks later for about $2.4 billion. The pair, along with an in-house network, were rebranded in March as a stand-alone unit Verizon Connect.

CalAmp overcame another hurdle that year when it shuttered the satellite business after Echostar, an affiliate of Dish Network Corp. (Nasdaq: DISH), terminated its contract and consolidated its supply chain.

The closure fueled a sell-off that year as CalAmp’s share price dipped more than 27% to a low of $12.13 in November.

The company weathered the setback and has positioned itself well in the booming Internet of Things segment, according to B. Riley (Nasdaq: RILY), which has a buy rating on the company.

“We believe CEO Michael Burdiek and team have expertly positioned the company to thrive, leading transformation in a global connected economy and positioning CAMP for long-term growth and profitability,” B. Riley’s Crawford wrote in a recent investor note.

CalAmp shares were trading around $21.70 late last week, up 1% this year to a $776 million market cap.


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