CalAmp F2Q09 (Qtr End 8/31/08) Earnings Call Transcript

| About: CalAmp Corp. (CAMP)
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CalAmp Corp. (NASDAQ:CAMP) F2Q09 Earnings Call October 7, 2008 4:30 PM ET


Larson Valasi - Financial Relations Board

Richard B. Gold - President, Chief Executive Officer, Director

Richard Vitelle - Chief Financial Officer, Vice President - Finance, Corporate Secretary


Jim Harken - Premiere Capital Management

Kevin Dede - Morgan Joseph


Good afternoon, ladies and gentlemen. Thank you so much for standing by and welcome to the CalAmp fiscal 2009 second quarter conference call. (Operator Instructions) I will now turn the conference over to Mr. [Larson Valasi] of the Financial Relations Board. Please go ahead, sir.

Larson Valasi

Thank you. Good afternoon, everybody. Welcome to CalAmp's fiscal 2009 second quarter earnings call. With us today are CalAmp's President and CEO, Rick Gold; and the company’s 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, expects, believes, estimates, could, 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 made today due to risks and uncertainties, including but not limited to fluctuations in market demand for CalAmp's products and services, general and industry economic conditions, increased competition, continued pricing pressure in the DBS market, supplier constraints and manufacturing yields, the timing and market acceptance of new product introductions and approvals, new technologies, the risks that the ultimate cost of resolving a product performance issue with one of the company’s key DBS customers may exceed the amount of reserves established for that purpose, the length and extent of the U.S. market downturn stemming from the recent tightening of credit markets that may impact the company’s business and that of its customers, and which may constrain the company’s ability to refinance its bank term loan, and other risks and uncertainties that are described under the heading risk factors in the company’s fiscal 2008 annual report on Form 10-K, as filed with the SEC on May 15, 2008.

Any projections as to the company’s future financial performance represent management’s estimates as of today, October 7, 2008. Management assumes no obligation to update these projections in the future due to changing market conditions or otherwise.

With that, it is now my pleasure to turn the call over to CalAmp's President and Chief Executive Officer, Rick Gold. Rick.

Richard B. Gold

Thank you. Good afternoon and thank you for joining us today to discuss CalAmp's fiscal 2009 second quarter results. I will begin with comments on the financial and operational highlights from this past quarter and will then provide an update on several of our key business initiatives. Rick Vitelle will then discuss additional details about our financial results, balance sheet, working capital management, and cash flow. I’ll wrap up with our revenue and earnings guidance for the third quarter of fiscal 2009, along with some concluding remarks. This will be followed by a question-and-answer session.

In looking at our second quarter financial highlights and overview, total revenue for the second quarter was $23.3 million, slightly lower than the revenue guidance range of $24 million to $28 million that we provided last quarter. Total revenue in the second quarter fell short of our projections, primarily due to lower-than-expected shipments of satellite products which generated revenues of $3.2 million in the quarter. Wireless DataCom revenues of $20.1 million were in line with our expectations and accounted for 86% of our consolidated revenue in the latest quarter.

Results of operations included a GAAP loss from continuing operations of $1.5 million, or $0.06 per diluted share, which was in line with the $0.04 to $0.08 loss that we provided as guidance last quarter.

Excluding the amortization of intangible assets and stock-based compensation expense, our adjusted basis or non-GAAP loss from continuing operations was $452,000, or $0.02 per diluted share. This was also in line with our guidance range of break-even to a loss of $0.04 per share. I refer you to our second quarter earnings press release issued earlier today for a detailed reconciliation of the GAAP basis loss from continuing operations to adjusted basis loss from continuing operations.

We continue to make progress toward our goal of rebuilding our competitive position in the DBS market. As previously reported, satellite product shipments to our historically largest customer resumed in small quantities at the end of the first quarter. Sales to this quarter [sic] remained modest throughout much of the second quarter with volume shipments starting to ramp towards the end of the quarter. We expect revenue to this customer to be materially higher in the second half of fiscal 2009 as we continue to ramp up our production lines.

We also saw lower second quarter satellite product revenue as the result of orders from another key DBS customer being pushed into the third quarter.

Suffice it to say our business with our historically largest customer is back and ramping. We are off to a good start in the third quarter and we look for our satellite products to contribute meaningfully to our overall revenues going forward.

While we’ve made steady progress in getting this business back on track over the last several quarters, we’re not done. Our longer term goal is to return the satellite business to profitability, which will require a revenue run-rate of approximately $15 million per quarter, which is our target by the second half of fiscal year 2010, as we discussed in last quarter’s call.

Now let’s move on to an update of our Wireless DataCom business, which provides communication systems, products, and services for application in public safety, mobile resource management, or MRM, and industrial monitoring and controls.

During the second quarter, the Wireless DataCom business generated revenues of $20.1 million, which is a 12% decrease on a year-over-year basis and essentially flat on a sequential quarter basis. This year-over-year decrease was driven primarily by reduced sales to a key wireless OEM customer and lower Aercept revenues in the current quarter, partially offset by strong growth in our MRM product lines.

While Wireless DataCom revenues were flat on a sequential quarter basis, it should be noted that fiscal 2009 first quarter revenues included $1.5 million from the sale of non-strategic patents to a large multi-national electronics company, as previously discussed. Excluding this patent sale, the Wireless DataCom business experienced top line growth in the second quarter of more than 7% compared to the first quarter.

Within our Wireless DataCom business, our MRM products are continuing to perform very well in the marketplace. During the second quarter, we had record MRM shipments and have seen nearly 50% growth in this business unit for the first half of fiscal 2009 compared to the first half of fiscal 2008. This growth has been driven by customer acceptance of several products that were launched over the last year that are targeted for applications in the vehicle tracking, fleet management, high value asset tracking, and public transit markets. And as fuel costs increase, enterprises that run fleets and have other mobile assets are finding our MRM products and services extremely valuable because our applications enable them to operate more efficiently and cost effectively.

Moving on to our Aercept business unit, revenues in the second quarter were down on both a year-over-year and sequential quarter basis. The decline is attributable to the adverse effects of the general economic conditions on used car sales, the contraction of capital for sub-prime auto financing resulting from the ongoing turmoil in the credit markets, and the loss of air time revenue from customers that use tracking units on analog networks that were shut off after the exploration of the analog sunset date earlier this calendar year.

Despite all of this, the long-term prospects for Aercept are encouraging. Key growth initiatives to launch services into attractive new consumer verticals are underway, with partners that have strong positions in the markets we are pursuing.

Earlier this week, we announced organizational changes that we believe will help us execute these growth initiatives. Mike Zachan has joined our senior leadership team as Aercept's new Vice President and General Manager. Mike’s background and experience are well aligned with the new Aercept applications and partners. We have every expectation that we will be successful in profitably growing this business.

In addition, I am also pleased with our IP enforcement and licensing campaign. Last week we announced a patent license agreement with Track End Inc. that resulted from our patent infringement suit. We now have four licensing partners using two of our patents related to a vehicle location system that enables auto dealers and finance companies to locate and repossess vehicles upon a change in loan status. Going forward, we will continue to aggressively enforce and capture value from our Aercept patent portfolio.

We are making progress on the key strategic initiatives for our Wireless DataCom business that I shared with you on prior calls. In particular, I am pleased with ongoing efforts to strengthen our sales and distribution channels. We are excited that Arcadia Networks will use our data radio wireless equipment as part of its private license wireless communications network. This agreement provides us with a strong distribution partner for our network equipment.

Over its private license wireless frequency, Arcadian supplies its customers in the utility and energy sectors with turn-key mobile data and voice communication solutions. We believe that partnering with Arcadian will provide us with a valuable new growth opportunity.

In addition to more effectively pursue smaller opportunities in our industrial monitoring and controls business unit, we’ve established an indirect sales channel that comprises a network of 16 regional distributors and we are working to bring additional partners on board.

With the challenging outlook in government budgets to fund future projects, we are seeing a marked decrease in request for proposal activities from city and county governments for our public safety mobile voice and data applications. That said, we’ve been able to inject our sales pipeline with several large opportunities with utilities, oil and gas, and international customers. As an example, we are currently in negotiations with the leading international mining company to build a mobile data communications network for a private railway system that hauls ore from remote mining locations.

And finally, in our efforts to penetrate other new and adjacent vertical markets, we are executing several initiatives that we believe will provide the foundation for significant growth with a particular focus on end users in the utility sector.

Last month we announced the introduction of our WiMetry next generation cellular networking platform for the automatic meter reading and advanced meter infrastructures. With a suite of smart grid applications, we think this platform has tremendous growth potential as utility companies look to upgrade their infrastructure and improve operating efficiency with state-of-the-art technology.

Overall, we continue to be pleased with the progress and performance of our Wireless DataCom business. The critical mass we have developed, along with our broad technology platforms and focus on middle market customers, gives us a competitive advantage that most other players in our markets cannot offer. Despite the difficult macroeconomic environment, overall our margins are strong and we believe we are gaining market share in several of our key verticals.

With that, I will now turn the call over to Rick Vitelle, our Chief Financial Officer, for a closer look at the second quarter financial details.

Richard Vitelle

Thank you, Rick. I will provide a summary of our gross product -- gross profit performance, working capital management, and cash flow results for the fiscal 2009 second quarter.

Consolidated gross profit for the fiscal 2009 second quarter was $7.5 million, or 32% of revenues, compared to gross profit of $6.3 million, or 19.3% of revenues for the same period last year. The increase in consolidated gross profit was primarily attributable to a $1.5 million provision recorded in the second quarter of last year for product warranty and other costs associated with a product performance issue involving satellite products supplied to one of our key DBS customers.

The second quarter consolidated gross profit margin of 32% was higher than our historical quarterly gross profit margin, due primarily to the continuing shift in product mix. In the second quarter of last year, Wireless DataCom products, which generate higher gross margins than the satellite business, represented approximately 70% of total revenues, while in the latest quarter, Wireless DataCom accounted for more than 86% of total revenue.

Now, taking a look at gross profit performance by recording segment, gross profit for satellite products was negative $81,000 in the latest quarter, compared to negative gross profit of $1.8 million in the second quarter of last year. The improvement in the satellite products gross profit in the latest quarter was due mainly to the aforementioned $1.5 million provision recorded in the second quarter of last year. Despite this improvement, the gross margin for satellite products remains slightly negative. This is due primarily to the low level of sales that has resulted in lower manufacturing overhead absorption rates, which adversely affects the gross margin.

Wireless DataCom gross profit was $7.5 million in the latest quarter, or 37.5% of Wireless DataCom revenue. This compares to gross profit of $8.2 million, or 35.7% of revenue in the same period last year. The lower gross margin dollars in the most recent quarter was due primarily to lower Wireless DataCom revenue in the latest period.

The year-over-year improvement in gross margin percentage was primarily attributable to a significant increase in the gross margin of mobile resource management, or MRM products.

I would also like to point out that our income statement for the latest quarter includes a pretax gain of $716,000 related to the reversal of a collectability reserve for a specific contract receivable, as a result of a settlement agreement and payment plan entered into with this customer. This was recorded as a reduction of selling expense.

Moving on to the balance sheet, our total inventory at the end of the second quarter was $24 million, representing annualized inventory turns of approximately 2.6 times. This compares to inventory turns of approximately 3 times in the prior quarter. We expect the annualized inventory turns to increase over the next several quarters as we ship satellite material that has been held for quite some time in our inventory.

The second quarter accounts receivable balance of $16.6 million was up slightly from $16 million at the end of the first quarter and represents a 65-day average collection period. Our primary sources of liquidity are our cash and cash equivalents that amounted to $4.7 million at the end of the second quarter, down from $7.2 million at the end of the prior quarter. Net cash used by operating activities during the second quarter was $1.1 million. For the first half of fiscal 2009, net cash generated by operating activities was $700,000.

Total debt at the end of the second quarter amounted to $31 million, comprised of $26 million of bank debt and a $5 million non-interest bearing subordinated note payable to a key DBS customer.

During the second quarter, the bank debt was reduced by a little more than $1 million. In the first half of fiscal 2009, bank debt has been reduced by $1.5 million. Terms of the $5 million subordinated note call for the note to be paid down at a rate of $5 per DBS unit purchased by this customer after the date of the settlement agreement.

Product shipments resumed to this customer at the very end of the first quarter and began ramping up in the second quarter. However, because of the time lag between the shipments of units and payments on the note, we did not make any payment on the note during the quarter and the principal balance remained at $5 million as of the end of the second quarter.

We expect to start paying down the note beginning in the fiscal third quarter and to pay it in full by August 31, 2009.

Our bank credit agreement has a maturity date of June 30, 2009. We recently requested an extension of the maturity date and are currently in discussions with our banks on this matter. Because we did not obtain an extension of the maturity data prior to finalizing the financial statements for the latest quarter, the entire bank term loan balance of $26 million is classified as a current liability in the August 31 ’08 balance sheet.

In addition to seeking an extension of the credit agreement maturity date, we plan to refinance the bank loan with proceeds from new funding sources as soon as we are able to do so on reasonable terms. We anticipate that this refinancing would primarily involve an asset-based loan collateralized by receivables and inventory.

Current turbulent conditions in the credit markets and our current level of receivables and inventory that could serve as collateral for an asset-based loan are both factors that constrain our ability to refinance the bank term loan at the present time. Nonetheless, we are optimistic that as our shipments continue to ramp up to the DBS service provider that has historically been our largest customer, conditions will be more conducive to achieving this refinancing in the mid-term future.

With that, I will now turn the call back over to Rick Gold for our second quarter guidance and some final comments.

Richard B. Gold

Thank you, Rick. Now let’s turn to our financial guidance. Our third quarter guidance remains cautious due in part to continued uncertainty surrounding the U.S. economy, which may impact purchase decisions by key customers. That said, we expect an increase in sales of satellite products compared to the second quarter, as shipments to our historically largest customer continue to ramp. In addition, we anticipate that Wireless DataCom revenue will be slightly higher compared to the second quarter.

Based on our current estimates, we believe that fiscal 2009 third quarter revenue will be in the range of $26 million to $30 million, with a GAAP net loss in the range of $0.03 to $0.07 per diluted share. The adjusted basis or non-GAAP results of operations for the third quarter, which exclude amortization of intangible assets and stock-based compensation expense, both net of tax, are expected to be in the range of a loss of $0.03 to income of $0.01 per diluted share.

In concluding our prepared remarks, I would like to recap some key points from our recent results. First, the Wireless DataCom business posted another strong quarter, with greater than 10% adjusted basis operating margin. Our strategic growth initiatives are on track and this business is poised for long-term profitable growth.

Second, our satellite business with our historically largest customer is getting back on track with the commencement of volume shipments and ramping production lines. We have now made significant steps toward rebuilding our competitive position and achieving profitability in our DBS business.

And third, we are continuing to make progress toward improving our balance sheet and liquidity position as we start converting longstanding DBS inventory into cash.

I believe we are on track with our recovery plan to return CalAmp to sustainable profitability, albeit in a challenging environment.

That concludes our prepared remarks. Thanks for your attention and at this time, I would like to open the call up to questions. Operator.

Question-and-Answer Session


(Operator Instructions) Our first question is from the line of Jim [Harken] with Premiere Capital Management.

Jim Harken - Premiere Capital Management

I’d like to get a little more color on the agreement with Arcadian. When would you envision this contributing materially to revenues?

Richard B. Gold

It depends -- let me just start by saying we are working with them on several potential projects right now. There are proposals outstanding from Arcadian to customers that involve our product, so I think that depending on those, on the timing of those, we could certainly see some this fiscal year but this is really something we would expect to contribute in a meaningful way in fiscal 2010.

Jim Harken - Premiere Capital Management

Can you give me a sense of the size of the orders that you are looking at with them?

Richard B. Gold

I think it’s premature to talk about that but the kinds of projects that we are talking about here are pretty substantial and could be, you know, certainly in the six or seven figure range, depending on the scope of the individual project. And some of those will play out over time.

Jim Harken - Premiere Capital Management

And how about the gross margins you would have on sales to them? Would they differ materially from what you get through your direct sales?

Richard B. Gold

I think from a standpoint of is there margin stacking because of the extra tier there, there’s a little bit of that but what this really allows us to do is to get the extra scale, so fundamentally the economics that we would be seeing for orders of comparable size if you aggregate them together, we would expect to be comparable to other customers that were buying in those kinds of aggregated volume.

Jim Harken - Premiere Capital Management


Richard B. Gold

Now, one thing I should mention is that these parts, they are based on a common platform that we already have but because of the specifics of their network, they are -- they do become customer products.

Jim Harken - Premiere Capital Management

Okay. Can you talk a little bit about these new opportunities for the Aercept business, and in particular what type of end markets or applications you are thinking about for them?

Richard B. Gold

We have not announced -- there’s -- there are a few key initiatives that we are working on with some partners that we have -- that the partners have not announced them yet and we have not announced them. The one common theme that I can tell you is that these are really targeted at end consumers.

Jim Harken - Premiere Capital Management

Do you have a timeframe for what you are thinking about on when we might see a turnaround from this business?

Richard B. Gold

I think we can expect to see some of the fruits of the new initiatives this fiscal year. However, one thing about that business, just given the way the revenue and profit is recognized on a GAAP basis, it’s spread out over time so by the time it’s fully reflected in an up-turn there, it could be into next fiscal year. But I think what we can say there is -- and we’ve talked about this the last couple of quarters, is that the challenge is in the sub-prime vehicle finance market. I think from a standpoint of that business, just looking over the last few months at new billings, new installations there from our direct sales channels, those have stabilized, albeit at a much lower level than we had thought they were going to be a year or two ago. But in terms of turning it back up, it’s really -- it’s not going to come from that market. It’s going to come from some of these newer initiatives that I alluded to earlier.

Jim Harken - Premiere Capital Management


Richard B. Gold

But we believe that those newer initiatives leveraged both from a hardware standpoint and from the services infrastructure standpoint what we are already doing at Aercept, and we believe that those initiatives, even individually and certainly in the aggregate, have the potential to be as big if not bigger than the business we are doing. Now that obviously depends on execution but again, and we’ve talked about this before, these markets for tracking, there’s many verticals and sub-verticals within there and I continue to believe that we are just at the knee of the curve on adoption there, so we are bullish about that business but also cognizant that the vertical that Aercept is currently focused in is really challenged.

Jim Harken - Premiere Capital Management

Okay. Thank you.


(Operator Instructions) Our next question is from the line of Kevin Dede with Morgan Joseph.

Kevin Dede - Morgan Joseph

Just a couple of strategic issues -- I guess what you are expecting on the DBS side is pretty much what you pointed to last quarter in that you think you will get to that double-digit revenue number and profitable in four or five quarters from now. And I guess what I’m wondering is are you sticking with that business, just to make sure that you will be able to refinance the term note? Is that what your thinking is?

Richard B. Gold

Well, let me -- there’s a couple of questions embedded in there so let me just back up a second. I think we are definitely looking for that business to be significantly larger this quarter than it was last quarter, and we had guided to a $15 million run-rate, which would put us at break-even by the middle of next fiscal year, so well above -- you know, beyond double-digit but into at that point where it can be profitable.

And we believe that is achievable. It’s a very realistic goal and that when we get to that point and can get past that point, that business becomes quite profitable. Even though the margins are relatively low, the ability to generate cash and flow that to the bottom line with a very manageable OpEx as we grow is something we’ve seen before in that business and we are looking to see again, albeit probably not at the $40 million, $50 million kind of quarterly run-rates that we were at a couple of years ago, at least for a while. But to get it to $15 million and beyond where we can really see the financial and the strategic leverage there is definitely part of our strategy.

The other point that I would add there, and I think I mentioned this on the last call, that as we look at that business in the context of the CalAmp of today with a vibrant wireless data business, we are looking for opportunities that go beyond just the things we’ve done historically. And so I believe that a year or two from now, that business is going to start to actually have a lot more in common with our wireless data business than it does today. In other words, higher levels of functionality, even more significant contributions from our engineering team, and from a product differentiation standpoint.

But in the near-term, our focus is just -- is growing the current business and getting back really in the game there from a competitive position, and so far so good on that.

Kevin Dede - Morgan Joseph

Okay. Then just to take it one step further, your -- I guess what you are telling me is that you see that as a profitable cash generation type of business and not something that you are sticking with just to facilitate financial transaction that you will need to do to clean up the balance sheet between now and the end of the year?

Richard B. Gold

That’s exactly correct but again, I’m drawing a distinction between that as the foundation of the business and that as a product line that contributes as a product line. And in particular, I don’t see our balance sheet getting back to looking like what it did a couple of years ago, where we had a disproportionate amount of the assets on our balance sheet tied up around the satellite business. I don’t see that happening and that’s really kind of what I’m pointing to when I say treating it as a product line rather than the foundation of the business.

Kevin Dede - Morgan Joseph

Okay, well that sort of is the springboard for my next question. I was hoping you would give us a little more detail on inventory and what leaves you confident that you will be able to work that down?

Richard B. Gold

Okay, that’s a good question. The inventory came down slightly this quarter from a dollar standpoint, although the turns came down just because of the revenue. We came down from 25 and change --

Kevin Dede - Morgan Joseph

To 24.

Richard B. Gold

Yeah, to just a tad under 24. We expect that to come down materially in the next two quarters and the reason for that is, as you can see from the detail in the Q, we have a disproportionate amount of our inventory tied up in the satellite products and a lot of that inventory is inventory that has been sitting there for a year. So really just to kind of time-phase it out for you, what has happened in the last quarter was the process of starting to convert some of that inventory into product and from a cash standpoint at the beginning of that, of course we were doing the work on the product because there is a re-work involved to conform to the new design. Those cost inputs from a cash standpoint, we felt that in the most recent quarter but because the revenues were back-loaded in the quarter, those were -- for the most part, those were receivables at the end of the quarter but in this quarter, we were continuing to convert current, existing inventory into reworked product and it will be, as you can see from the detail in the Q, we have several million dollars of inventory associated to these specific products and over the next couple of quarters, we are going to be flushing that through, reworking it, turning it into receivables and ultimately cash, as well as paying down the note that we have there.

So over the next -- and the other thing I should point to was that in some of our other businesses where the inventory has been relatively flat, we are paying particular attention to that and across the entire spectrum of the businesses that we have, we will be focusing on more efficient management of our inventory.

But there’s some real low-hanging fruit there in satellite and there’s several million dollars of inventory there that will be -- where we will see net reductions over the next few quarters as that business ramps and we flush that through.

Kevin Dede - Morgan Joseph

So okay, then just taking your comments and boiling them down, I guess what you are saying is most of that inventory as it relates to satellite is components and work-in-progress versus product that was designed to previous specs.

Richard B. Gold

Well, at this point I would classify it all as work-in-process because some of it was finished a year-and-a-half ago and was about to be shipped but has now been opened up and we’ve begun the process of reworking it. Some of it was in earlier stages, at the PC board level or in some cases still at the component level. So we had reserves established to cover the cost of reworking that inventory and we are -- that process is well under way but just the value of the inventory to start with includes everything from components through work-in-process, and some of that work-in-process as I say was essentially complete and we are making very minor modifications to it to convert it into finished product. But all of that cost of reworking the existing inventory of the finished products has already been reserved.

Kevin Dede - Morgan Joseph

Okay, then what would you imagine that inventory level to be say at the end of the November quarter and then the end of the November quarter and then the end of the February quarter? Just a rough target.

Richard B. Gold

I would expect -- we don’t give specific guidance on inventory but I would expect it to be -- we came down a little over $1 million this quarter. I would expect that to accelerate. You know, the current quarter that we just reported in Q2, it came down $1.3 million. I would expect a larger decrease in each of the next two quarters.

Kevin Dede - Morgan Joseph

Okay. Switching gears and going back to Arcadian just for a quick sec, now my understanding was there was a particular equipment vendor serving that network and my take is that they are no longer doing that. And I am just wondering -- I mean, as far as I remember, Arcadian had coverage in part of one state. I’m just wondering if you can give us a little more background on where you think their network covers and some of the financing behind that network development.

Richard B. Gold

They have coverage over most of the nation. They did have a relationship, and to be honest, Kevin, I don’t know the exact details of the current state of the relationship with the other equipment provider that you are referring to. But they are involved and we have been in discussions with several of the end customers that they are proposing to, where we are involved in joint proposals. So it spans -- you know, there’s multiple geographies and multiple end markets that are involved there. I still say this is early. We have not announced any --

Kevin Dede - Morgan Joseph

Okay, I gotcha. Are the products that you will be working with for that network cellular based or is it going to have to be a proprietary based RF component?

Richard B. Gold

It’s a proprietary architecture and it’s a derivative of what we have used for our public safety private networks in the past, so that’s the fundamental architecture of these products but they were at different frequencies, obviously, so we have -- and there are some other relatively minor changes there but that’s the platform that we are using as the foundation for this.

Kevin Dede - Morgan Joseph

Right. Okay, well, congrats on winning that and we’ll look forward to watching the progress.


Thank you. There are no further questions at this time. Management, please continue with any closing comments.

Richard B. Gold

Okay, well, I’d like to thank you all for joining us today and we look forward to speaking with you again next quarter.


Thank you, ladies and gentlemen. This concludes the CalAmp fiscal 2009 second quarter conference call. If you would like to listen to a replay of today’s conference in its entirety, you can do so by dialing 1-800-405-2236 or 303-590-3000, input the access code 11120595. Those numbers again for dialing 1-800-405-2236 or 303-290-3000, input the access code 11120595. ACT would like to thank you very much for your participation today. You may now disconnect. Have a very pleasant rest of your day.

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