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CalAmp Corporation (NASDAQ:CAMP)

F4Q12 Earnings Call

April 26, 2012 4:30 PM ET

Executives

Joanne Keates – Director, Corporate Communications

Michael Burdiek – President and CEO

Rick Vitelle – CFO

Analysts

Mike Crawford – B Riley & Company

Marc Robins – Catalyst Research

Orin Hirschman – AIGH Investment

Operator

Good afternoon. My name is Tunisia and I’ll be your conference operator today. At this time I’d like to welcome everyone to the Fourth Quarter and Year-End 2012 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions) Thank you. Ms. Keates, you may begin your conference.

Joanne Keates

Thank you good afternoon and welcome to CalAmp’s fiscal 2012 fourth quarter and full results conference call. With us today are CalAmp’s President and Chief Executive Officer, Michael Burdiek and Chief Financial Officer, Rick Vitelle.

Before I turn the call over to management, please remember that our prepared remarks and responses to questions may contain forward-looking statements. Words such as may, will, expect, intend, plan, believe, seek, could, estimate, judgment, targeting, should, anticipate, goal, and variations of these words, and similar expressions, are intended to identify forward-looking statements.

Actual results could differ materially from those implied by such forward-looking statements due to a variety of factors including product demand, competitive pressures and pricing declines in the company’s satellite and wireless markets, the timing of customer approvals of new product designs, the length and extent of the global economic downturn that has and may continue to adversely affect the company’s business, and other risks and uncertainties that are described in the company’s annual report on Form 10-K for fiscal 2011 as filed today with the SEC.

Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that its expectations will be attained. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. With that, it’s now my pleasure to turn the call over to CalAmp’s President and CEO Michael Burdiek. Go ahead Michael.

Michael Burdiek

Thank you Joe and good afternoon and thank you for joining us today to discuss CalAmp’s fiscal 2012 fourth quarter and full year results. I will begin today’s call with a review of our financial and operational highlights and Rick Vitelle will provide additional details about our financial results. I will wrap up with our business outlook and guidance for fiscal 2013 first quarter along with some concluding remarks. This will followed by question and answer session.

Fiscal 2012 was a year of solid revenue growth and long awaited return into profitability. In our wireless datacom segment our revenue increased 26% year-over-year as we experienced growth in nearly every vertical market application we serve. And although the year-over-year revenue growth in our satellite segment was a more modest 10% we completed the transformation of our satellite business to a variable cost operation and broaden its product base to improve gross margins and drive positive cash flow all of which contributed to our strong fourth quarter results.

Consolidated revenue for the fourth quarter was $37.6 million up 30% year-over-year with wireless datacom revenue increasing to $25.7 million and satellite revenue more than doubling to $12 million. At the bottom line fourth quarter per share earnings is $0.06 GAAP basis and $0.09 non-GAAP were at the high end of our original guidance.

Consolidated revenue for the fourth quarter was at the highest level since the first quarter of fiscal 2008. For fiscal 2012 as a whole, consolidated revenue grew 21% year-over-year to $138.7 million with wireless datacom revenues increasing to a record $99.1 million and satellite revenue growing to $39.6 million. We generated operating cash flow of almost $5 million in the fiscal 2012 fourth quarter and more than $12 million for the year as a whole.

Strong positive cash flow throughout the year enabled us to pay down our debt by $9 million. And at the end of the year in a net cash position of $2.6 million, which is the first time in five years that we have had a positive net cash balance. Focused on deinvestments across all of our operations resulted in 24 new product introductions during fiscal 2012 and we expect these products to drive continued growth in market expansion. Total R&D investment in fiscal 2012 was $11.3 million, which more than $9 million was in our wireless datacom segment.

Now but – I would like to review our operational highlights for the quarter. Our wireless datacom segment maintained a near-record revenue run rate in the fourth quarter with continued momentum across multiple markets compensating for the expected lowered revenue from our positive train control development project. We continue to experience strong demand for our MRM products and services, as well as increased demand for products targeting smart grid and oil and gas applications. Similar to recent past quarters, MRM applications accounted for approximately two thirds of total wireless datacom revenue with wireless networks applications accounting for one third.

In MRM applications, we continue to see strong demand in market share gains for our products and solutions in a market that is estimated to be growing at about 20% per year. Sales to our core customers for fleet management, trailer tracking, stolen vehicle recovery and vehicle finance applications, we are very strong resulting in full year, year-over-year, excuse me, in full year-over-year revenue growth in these segments of 25%. We are seeing steady international market penetration particularly in Latin America and we were poised for further wins in Asia-Pacific and EMEA region.

In the emerging usage based insurance market as we have previously stated, we are involved in a number of product trials with tier one and tier two automotive insurance companies that we believe could contribute to significant unit volume growth for CalAmp in the coming years.

In MRM applications where we provide bundled solutions including tracking hardware, hosted software applications, cellular data subscriptions.

Fourth quarter results were in line with expectation with healthy revenue from our remote car start application and the start of the seasonal ramp in our Vehicle Finance segment. We believe the high value CalAmp brand positions us well to address the larger enterprise customers looking to roll out new secured Telematic solutions that enhance their business processes and streamline their operations.

We are now seeing larger opportunities in or into our pipeline and partnership with tier one cellular carriers and others to develop differentiated solutions tailored to global enterprise operations.

At the end of the fourth quarter there were more than 1.3 million MRM devices in service with our customers that are supported by CalAmp’s proprietary over the year device provisioning, monitoring and maintenance system notice poles. Our bundled offerings in the vehicle finance and remote stock market had approximately 265,000 subscribers on our own network at the end of the fourth quarter compared to 235,000 subscribers at the end of the third quarter. This growing subscriber base provides an ongoing recurring revenue stream within our wireless datacom business.

In our wireless networks energy vertical, we saw continued steady revenue growth in the fourth quarter with a broadening base of key customers. We partnered with SIMCom a system integrator to supply communication networks for Mexico state-owned electric utility, CFE providing our Viper brand radios for smart grid applications. We were also selected by Alster to supply the wireless routing hardware and network services for a wide area advanced metering infrastructure project for Tennessee Bolivar Energy Authority again using our Viper system as the vital telemetry (inaudible) for the smart grid.

In addition, during the fourth quarter, we signed a $1.5 million contract with the leading oil and gas provider to supply private data telemetry radios for oil field operations in the Anadarko Basin in North Texas in order to automate and remotely monitor oil well operations throughout the Anadarko field.

On the product side, in January, we’re introduced our fusion 4G LTE router platform. This high performance multi-band product enables broadband communications for industrial applications. Fusion LTE routers now being implemented by Central Vermont Public Service in Green Mountain Power to provide communications between these electric utilities, advanced metering infrastructure.

Within the rail industry vertical, we experienced an expected low on revenue in the fourth quarter from our positive train controlled radio development project. Subsequent to the end of the fourth quarter we began shipping the final phase of pre-production radios under the $19 million PTC development contract. Shipments for this final phase which has a revenue value of approximately $7.5 million are expected to be completed in the first half of fiscal 2013. With this development contract nearing completion, we have now started pursuing production phase PTC radio business initially targeting North American rail roads.

Over the coming quarters we will focus our on increasing our customer base within the rail industry in identifying opportunities to add further value and sell additional CalAmp products and solutions into this important growth vertical.

Turning to our public safety business, overall sales in this market remain soft. Despite this we are making progress on certain opportunities in our sales pipeline and we remain bullish about our prospects in this vertical over the longer term. As one sign of progress we were recently selected by the Erie County Pennsylvania Department of Public Safety to install a new mobile data network for law enforcement and fire services.

This project will deploy our latest generation IT mobile data communication system to replace an order technology private radio network that was installed nearly 12 years ago. A recent national legislative action that bodes well for our public safety business is a law passed by Congress as part of the Middle Class Tax Relieved and Job Creation Act of 2012 that makes available for use by public safety agencies the 700 MHz spectrum also known as Band 14 this legislation also provides $7 billion in funding to build out a nationwide interoperable broadband public safety communication network. The pending and fusion of capital should propel technology upgrades among municipalities and help resuscitate market opportunities.

The nationwide public safety interoperable broadband network represents a longer-term revenue opportunity for CalAmp going well beyond our traditional hardware offerings with the deployment of 4G broadband infrastructure we believe there is an opportunity for CalAmp to provide products and services addressing a range of application including converged VOIP, telematics and video applications serve directly and through developing channel partnerships moving on for satellite segment we had a strong finish to the fiscal year in which we experienced 10% year-over-year growth supported by a new product launch in the fourth quarter.

As a result of transitioning this business to a variable cost operating model and broadening our satellite product offerings we expect this business to continue to generate double digit gross margins and provide positive cash flow in fiscal 2013 with that I will now turn the call over to Rick Vitelle, our chief financial officer, for a closer look at our fourth quarter financial detail.

Rick Vitelle

Thank you Michael. I will provide a summary of our gross profit performance, income tax position, working capital management, and cash flow results for the fiscal 2012 fourth quarter. Consolidated gross profit for the fiscal 2012 fourth quarter was $10.6 million an increase of $2.2 million over the same period last year predominantly as a result of higher revenue this represent a gross margin percentage of 28.2% which was essentially flat compared to last year’s fourth quarter.

Looking more closely at gross profit performance by reporting segment wireless DataCom gross profit was $9.1 million in the fourth quarter or 35.6% gross margin. This compares with gross profit of $8.9 million or 37.9% gross margin in the same period last year. Wireless DataCom gross profit increased on higher revenue while the gross margin percent declined due to a change in product mix.

Our satellite business had a gross profit of $1.4 million in the fourth quarter or 12.1% gross margin this compares to a negative gross profit of $493,000 in the comparable quarter last year. The significant improvement in satellite gross profit and gross margin for synergy is primarily due to the operational transition to a variable cost model and the broadening on the product base in this business segment.

Our satellite business now has a break-even point of about $8 million per quarter. Now turning to our tax position the effective income tax rate of 1% for the fourth quarter and fiscal 2012 as a whole it substantially less than statutory tax rates due to the existence of net operating loss carry forwards for U.S. Federal and State tax purposes and income tax provision of $18000 was recorded in the fourth quarter representing federal alternative minimum taxes which arises because under the federal AMT rules we can only show for 90% of our taxable income with net operating loss carry forwards.

Our deferred tax assets comprised of the tax effective or net operating loss carry forwards tax credit carry forwards and book tax temporary differences amounted to $51 million at the end of fiscal 2012. Of this amount $39 million is offset by a differed tax asset valuation allowance this valuation allowance was established in prior years during periods when we were not able to demonstrate that the company could generate sufficient future taxable income to utilize all the tax benefits.

Under the income tax accounting rules a key prerequisite to produce or eliminate and establish deferred tax asset valuation allowance is to have cumulative positive pre-tax look income over the most recent three year period. As a result the company returned to profitable operations and based on our latest financial projection we expect to satisfy this requirement in fiscal 2013. Consequently we expect to reverse a substantial portion of the deferred tax asset valuation allowance in the fourth quarter of the current fiscal year which would result in recognizing an income tax benefit in the corresponding month as we get now.

As we get closure to the end of this fiscal year we will provide an estimate of how much we believe this fourth quarter income tax benefit will be, the impact of the result for fiscal 2012 our GAAP basis net income in the fiscal fourth quarter was $1.6 million or $0.06 per diluted share.

Our non-GAAP net income in the fourth quarter was $2.6 million or $0.09 per diluted share. Non-GAAP earnings excluded the impact of intangible asset amortizations and stock based compensation expense and includes an income tax provision that reflects tax paid or payable for period. For a more detailed reconciliation of the GAAP and non-GAAP results are referred to our fourth quarter earnings press release that was issued today, which is available on our website. Now moving, on to the balance sheet, our total inventory at the end of the most recent quarter was $10.1 million representing annualized inventory returns up ten times. At the end of the immediately preceding quarter inventory was $12.4 million which represented annualized inventory returns of seven times.

The improvement in inventory returns in the latest quarter was driven primarily by our satellite business which is now demonstrating a beneficial of eFax of the conversion to a variable cost operating model and which more the inventory for this business is held by our offshore manufacturing partners. The consolidated accounts receivable balance was $14.4 million at the end of the fourth quarter this represents in average collection period of 37 days which is consistent with our current year receivable turnover rates.

Net cash provided by operating activities was $4.9 million for the fourth quarter and $12.4 million for fiscal 2012 as a whole as of February 28, 2012 cash and cash equivalents totaled $5.6 million, an increase of $1.2 million from the end of the third quarter. At year end our total debt was $3 million which represents the amount outstanding under the bank term loan.

This term loan is repayable at the rate of $100,000 monthly beginning this month the unused borrowing capacity on our bank revolver was at full availability of $9 million at the end of the fiscal year. We ended fiscal 2012 in a net cash position of $2.6 million with that I’ll now turn the call back over to Michael Burdiek for our guidance and some final comments.

Michael Burdiek

Thank you, Rick. Now let’s turn to our financial guidance. Based on our most recent projections, we expect fiscal 2013 first quarter consolidated revenues in the range of $38 million to $41 million, with Wireless DataCom revenue up sequentially and satellite revenue relatively flat.

We project first quarter GAAP basis net income in the range of $0.07 to $0.11 per diluted share. While non-GAAP net income for the first quarter is expected to be in the range of $0.10 to $0.14 per diluted share.

And in closing I like to recap some key points John from our recent results at latest developments. First in Wireless DataCom our technology and product leadership position in mobile resource management applications and in industrial machine-to-machine verticals it’s fueling growth and increased demand for our products we continue to focus our resources on those markets and applications that we believe have excellent long-term growth prospects addressing them with products and services that we believe has sustainable competitive advantages we will continue to look for opportunities to move up to the value chain and offer a range of turnkey end-to-end solutions for new and emerging applications.

Second we successfully transformed our satellite business operationally thereby improving gross margin and lowering our quarterly break-even point to approximately $8 million our broadening product base drove significant revenue growth and profitability in the fourth quarter we will continue to manage this business for positive cash flow. And third more than $12 million cash generated from operations in fiscal 2012 allowed us to pay down debt by $9 million and finish the year in a year net cash position for the first time in five years. Our strengthening balance sheet affords us greater flexibility to execute our strategic growth initiatives in core markets as well as in new and exciting emerging application.

Overall, we were quite pleased with our fiscal 2012 performance, as we achieved many financial and operational milestones. We are entering fiscal 2013 with a very healthy backlog and strong sales pipeline and we believe we can build upon our recent momentum. We remain focused on the execution of our strategy to pursue opportunities and attractive in growing markets with competitive products and solutions that positions us well for growth in fiscal 2013 and beyond.

That concludes our prepared remarks. Thank you for your attention. And at this time I would like to open the call up to questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Mike Crawford

Mike Crawford – B Riley & Company

Thanks a lot. Your (inaudible) units track continues to grow actually in accelerated pace, do you expect how do you look at that going forward continued 10,000, 15,000, 20,000 units per quarter set on your network?

Michael Burdiek

We don’t see any reason that that trend can continue and I’d like to point out that we have seen accelerated growth in subscribes that does not necessarily translate in an linear relationship with revenues, since there is an ongoing marginal ASP decline in the markets that we serve, but we’re quite pleased with the increase in unit subscriptions we’ve been seeing quarter-to-quarter. And as you pointed if you compare the Q3 to Q4 increase which this year was about 30,000 subscribers that’s an improvement over last year when we increased from Q3 to Q4 by 25,000 subscribers. So we are quite pleased with that performance.

Mike Crawford – B Riley & Company

Right and then on the radio side. So on the PTC, when do you expect that production run rate to start up whether you want them or someone else want them?

Rick Vitelle

Well, as we’ve talked about in the recent past, we don’t expect to begin production of production ratios until after the development contract is compete. And as we pointed out earlier, we expect to be burning our backlog in support of the development project through roughly our Q2 fiscal 2013 and as soon as that development contract is complete, we’re hopeful that we’ll receive some business and continue production for the main state radios supply directly to the industry providers.

Mike Crawford – B Riley & Company

And that would be seamless or maybe with some delay?

Michael Burdiek

There is possible, there could be some delays depending on the timing of borders. I mean these are quite unique products, and in some cases there are fairly long lead time materials associated with the key component. So this possibility there could be a gap, but I wouldn’t expect a long one, so long as we receive orders this quarter early next quarter.

Mike Crawford – B Riley & Company

Okay. And then Michael you also talked about your belief that it sounds like the insurance pilots they are going low on that do you expect (inaudible) provide some meaningful unit volumes for your MRM business, is that something you expect with most of the companies you’ve been doing pilots with or just the info, what’s the dynamics are?

Michael Burdiek

Well, really the dynamics are the same as they’ve been in the recent past. We’re involved in a number of pilot projects with large insurance carriers. Interesting if I still maintain the position that we wouldn’t see significant unit volumes related to commercial insurance deployment I mean, sorry, consumer insurance deployments until probably sometime next fiscal year.

But we’re seeing dynamics to suggest that there could be some insurance opportunities with some of our main stay fleet customers, whereby the insurance carriers who offer insurance policies to commercial fleet not considering deploy in case we drive insurance program so those fleets and that could potentially contribute to revenue this fiscal year.

Mike Crawford – B Riley & Company

Okay. Thank you and then finally maybe you could talk about how you see seasonality in the business in fiscal 13 again there some things like remote car started so well and say October, November and stay there with the other changes and your business how you would expect the business to role kind of a from a seasonality perspective throughout the year?

Michael Burdiek

Yeah, we are in the past we seen some very profound seasonality effects in our satellite business or in our MRM products business we are seeing less of that these days but we do expect to continue to see a degree of seasonality in terms of the bundled solutions that we sell into the vehicle finance and remote car start applications. And you saw that expressed in the uptick in subscriber counts from Q3 to Q4 as compared to any of the other quarters in fiscal 2012.

Mike Crawford – B Riley & Company

Okay, thank you. And that final question relates to D Block, so that is a huge capital pool to go out with all these state and local public safety providers that have had demand, but no ability to buy anything for quite a long time. So, when do you say that (inaudible) breaking?

Michael Burdiek

We’re starting to see some activity now not necessarily directly related to the $7 billion of federal funding, but we think some projects to get spread along later this fiscal year in direct response to the resolution of the D Block matter and the prospects for some federal brand funding to support it.

Mike Crawford – B Riley & Company

Okay, great. Thank you that much.

Operator

Your next question comes from line of Marc Robins.

Marc Robins – Catalyst Research

Hi, thank you. Very nice year guys, that’s a very nice looking.

Michael Burdiek

Thank you.

Marc Robins – Catalyst Research

Let’s chat a little bit about the political backdrop to positive train controls. Have you seen any changes from a political standpoint, either as a government or amongst your potential customers as to what’s happening or what seems to be happening between now and supposed completion date, I think that’s still too early – has been 2015?

Michael Burdiek

Yeah that deadline hasn’t been changed.

Marc Robins – Catalyst Research

Okay.

Michael Burdiek

However, there have been some discussions and potential inclusion of a per share criteria, long stalled transportation bill within Congress. And there is the possibility that bill if it’s passed would enable the Department Secretary to based on his judgment or her judgment depending on who is in that position after the election to give them the ability first the deadline out as necessary depending on the technology for the application.

We’ve talked on previous calls about our expectation that that deadline will get pushed out that I think our outlook on that matter hasn’t changed. But we do believe even if the deadline is pushed out even at some point in the near future, there will be business between hopefully this year and in subsequent years by those early adaptors who based on capital deployment efficiency criteria want to deploy this one that is ready to deploy it.

Marc Robins – Catalyst Research

I guess you are shipping some units and so they are getting to some extent deployed into the rail system. Is that sparking any science of innovation and the rail road industry it all to kind of follow and food steps in the trucking industry a little more closely are is it still really pretty much contains in the PTC arena.

Michael Burdiek

I think for now it’s mostly contain with the PTC arena, but there are some interesting discussion and concepts being sort of about on ways that network for that deployment could be leverage for other application.

Marc Robins – Catalyst Research

Okay so it be getting the (inaudible) just a little bit.

Michael Burdiek

For a little bit yeah

Marc Robins – Catalyst Research

Is there is an opportunity for (inaudible) representative engineers to do a little more work in you know helping the industry solve their problem for them but I really mean is read lead by the nose to the holy land or we – still struggling along with a couple of hundred year old industry that is not willing to change all that quickly.

Michael Burdiek

I’m not going to add much color to the color you just gave.

Marc Robins – Catalyst Research

Okay. We have got a (inaudible) portrait as it says, that’s okay. So I think we have said enough there.

Michael Burdiek

No I think it was a tremendous opportunity for CalAmp to be a leader and an innovator. In terms of deploying technology that makes their operations more efficient and we have had an interesting opportunity (inaudible) the industry in a big way through our PTC development contract that has opened a lot of doors for us. It is giving us some audiences with the appropriate people to discuss some of these concepts.

Marc Robins – Catalyst Research

Okay let’s switch on over to the satellite business and I apologize I was in between a couple of calls. Now we’ve got this new unit out and that was, just give me, if you would be so kind as to give us kind of an update on the technological developments that are going on there CalAmp, in that realm?

Michael Burdiek

Sure, so we actually issued two press releases over the last 90 days or so related to two different product introductions, both of which are shipping now. One shipped in volume in our physical Q4 and these devices are basically whole home video distribution or interconnect devices for our customer’s whole home video solution.

And those two products have added another layer of revenue to our mainstream legacy product revenue stream which we think will add a degree of stability, reduce quarter-to-quarter volatility to an extent. So we expect those to be nice contributors to revenue from this point forward.

Marc Robins – Catalyst Research

Does the more aggressive stands by John Malone and Sirius XM, does that give you any better kind of inclines to what’s going on with your particular customers?

Michael Burdiek

Not necessarily.

Marc Robins – Catalyst Research

Not necessarily, okay. I will get back in the queue. Thanks and again a tremendous quarter. It’s wonderful to see the stock acting so well.

Michael Burdiek

Thank you.

Operator

(Operator Instructions) Your next question comes from Orin Hirschman.

Orin Hirschman – AIGH Investment

Hi congratulations on the progress.

Michael Burdiek

Thank you.

Orin Hirschman – AIGH Investment

Just a little additional color in terms of you going out in the insurance side you’ve mentioned that you might see more commercial customers early on. Will those customers just be buying hardware from you or are those customers also going to ask you to manage it from their current operations in terms of the ongoing revenue?

Michael Burdiek

Well we believe that the insurance applications primarily are hardware opportunity for CalAmp.

Orin Hirschman – AIGH Investment

It in both commercial as well as...

Michael Burdiek

Both the commercial and consumer.

Orin Hirschman – AIGH Investment

Okay. And in terms of actually the consumer side just to go back, when do you see even small but commercial shipments so to speak both on the past shipments on the consumer side?

Michael Burdiek

Right now, there are broadcast commitments, we’ve sort of seen two sort of peers of piloting activities thus far, very, very small quantities of devices, in a very controlled setting. We’ve seen some of the pilots expand to a larger number of vehicles. And also what’s interesting, for a specific insurance career opportunities, often times we are working with multiple service providers as partners, pursuing the same opportunity. So we sort of get them surrounded. And that’s tended to drive up the equality associated with specific insurance career pilot projects.

Orin Hirschman – AIGH Investment

If you guys turn around for a couple of minutes, just what you are seeing in terms of these insurance pilots and what’s your feeling, happy, not happy, (inaudible) needed, what would you say, just give us something on that?

Michael Burdiek

Not sure I can describe just happy or unhappy, somewhat tentative because again insurance carriers are use to are familiar with deploying technologies part of the service offerings. And so to rollout a nationwide mainstream program requires a lot of logistics and a lot of planning that is background work that has to be done even if the pilots are going perfectly. And in most cases I would say the pilots are going well.

Orin Hirschman – AIGH Investment

Have you seen the work being done just before those are all let’s ready based on the pilot?

Michael Burdiek

Sure, at limited extend, yes

Orin Hirschman – AIGH Investment

Okay. And this determine permanent to the utility size I mean it looks like a little bit break and the launch and finally between going out the such long time, would you characterize it is really break in the large (inaudible) it’s going to continually very slow. I think it will be slow and steady. I mean we expect ongoing growth in that segment but it’s not going to be blockbuster incremental quarter-to-quarter 20% sort of growth. We – our expectation that will be ongoing and steady for a long period of time.

Michael Burdiek

Okay. Anything that would – will change that study but sure trajectory winning one or two large contracts – pound, so to speak where it is a high growth rate or it’s not the way we should be to?

Michael Burdiek

We do see a couple of large opportunities in our pipeline but to realize full deployment against those opportunities it’s a multiyear project. So even for the larger ones, it would be very, very difficult to discern that project being a major needle mover in terms of consolidated revenues for CalAmp.

Orin Hirschman – AIGH Investment

That will give you a long visibility correct?

Michael Burdiek

Excuse me.

Orin Hirschman – AIGH Investment

It will give you a lot of visibility.

Michael Burdiek

Sure.

Orin Hirschman – AIGH Investment

Okay, great. Okay thanks so much.

Operator

You have a follow-up question from Marc Robins.

Marc Robins

Actually, Mark Crawford asked the questions I had anticipated on asking. Thank you though.

Michael Burdiek

Sure.

Operator

You have a follow-up question from Mike Crawford.

Mike Crawford – B Riley & Company

Thanks. I was hoping you could go a little bit deeper into your international opportunities or you partnered with Syncom to get into the that large utility in Mexico. And I think in part, they chose because of your 400 UHF band radios but what’s your growth strategy for your international markets?

Michael Burdiek

Sort of really three prompts to the strategy number one it’s direct business development initiatives, you know we’ve build a team of international business development sales people and channel management folks over the last couple of years.

And that team brought symptom to that was one of their major wins and they are filling the pipeline with additional opportunities across market whether it’s application more traditional wireless networks energy application let’s with the strategy it’s direct efforts second is really related to partnership and so we are building very strong relationship with the Tier one carriers and the global aspiration to pursue large global enterprise customers who have fundamental global operations, which need a partner to support their M2M initiatives to whatever form they are.

And so that’s a fast developing part of our strategy. And we think that’s one that’s going to bring us some significant opportunities over the coming quarters. And then in terms of other channels partners, I mean Syncom is a great example of a regional partner but we work with others. Elser is the good example of this who have global footprint. And really can be leveraged platforms for us to expand let’s say from the Energy markets and opportunities in United States and to other opportunities that those partners address around the world.

Mike Crawford – B Riley & Company

Okay, thanks. So maybe what percent of revenues are international today and where would you like to see that and whether it’s one or two using them.

Rick Vitelle

For fiscal 2012 it was roughly 12% of consolidated revenue and that was up from the previous year as a percentage of revenue. In terms of our long-term objective I think I have mentioned this before we believe given the nature of our business in the markets reserve the 25% of revenue is a reasonable target for us, a few years down the road.

Mike Crawford – B Riley & Company

Okay great thank you very much.

Rick Vitelle

You are welcome

Operator

There are no further question, Burdiek do you have any final comments.

Michael Burdiek

I do thank you. Thanks again for joining us today. We look forward to speaking with you at the end of our first quarter.

Operator

This concludes today’s conference call. You may now disconnect.

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