LoJack Corporation Reports Second Quarter 2013 Financial Results

CANTON, Mass., Aug. 6, 2013 /PRNewswire/ --

Highlights

- Revenue of $33.7 Million, Up 6% from Q2 2012

- Gross Margin Improves 240 Basis Points to 54.5%

- Net Income of $2.6 Million, EPS of $0.15, including tax benefit of $2.4 million

- Successful Pre-Install Program Drives 25% Increase in U.S. Dealer Volume

- Company Reiterates 2013 Guidance

- Expects Continued Volatility in International Business

LoJack Corporation (NASDAQ GS: LOJN), the company that created the stolen vehicle recovery market, today reported consolidated revenue for the second quarter ended June 30, 2013 of $33.7 million, compared with $31.7 million in the same quarter of the prior year. Net income attributable to LoJack Corporation for the quarter was $2.6 million, or $0.15 per share, which compares favorably to a loss of $2.2 million in the prior-year period.  Of the current period's net income of $2.6 million, $2.4 million relates to a tax benefit recorded during the period.

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Comments on the Second Quarter

"LoJack sustained its positive momentum in the second quarter with revenue growth, margin improvement and enhanced profitability," said Randy L. Ortiz, the Company's Chief Executive Officer and President. "Our results underscore the growing success of our Domestic Pre-Install Program, which is enabling our dealer customers to enhance their profitability while providing an increasing number of consumers across the country with the safety, security and protection of our Stolen Vehicle Recovery System."

"Volume in our U.S. dealer channel grew 25% in the quarter over the same period last year, more than doubling the 11% growth of the retail domestic auto industry," said Ortiz.  "This was the ninth consecutive month in which our unit growth outperformed that of the U.S. retail market. Pre-installed units represented 45% of LoJack's total volume, compared with 32% in Q2 of 2012 while the Company increased gross margins year over year."  

The Company's U.S. revenue grew 8% in the second quarter of 2013 to $23.7 million, up from $22.0 million a year earlier, while international licensee revenue increased 11% to $6.1 million from $5.5 million for the same period of 2012.

"The percentage of our total volume represented by national accounts, agents and the 125 largest dealers in our coverage areas continued to increase in the second quarter.  We believe this validates and reinforces our marketing strategy aimed at these key segments of our U.S. dealer channel.

"Complementing this domestic performance, both commercial and international volumes rose during the second quarter," Ortiz said. "On the international front, during the quarter we had significant shipments to our licensee in South Africa and reinitiated shipments to our licensee in Argentina in accordance with that country's trade balancing policies.  We are encouraged about the resumption of activities in Argentina and cautiously optimistic that our volume there will reach previous levels over time. However, the trade process with Argentina remains challenging.  Furthermore, our business with our Brazilian licensee continues to be sporadic.  Therefore we expect our international business to remain volatile."   

Consolidated gross profit for the second quarter of 2013 was $18.4 million, or 54.5% of revenue, compared with $16.5 million, or 52.1% of revenue, in the same quarter of 2012, driven by higher revenue in the 2013 period.

Operating expenses in the second quarter of 2013 were $18.2 million, compared with $18.0 million for the same period of 2012.  The Company recorded a $623,000 credit during the current quarter related to the final settlement of the California Wage-and-Hour Litigation. 

Adjusted EBITDA for the second quarter of 2013, which excludes the items reflected in Table 1, increased to $1.8 million compared with adjusted EBITDA of $0.4 million in the second quarter of 2012. 

As previously reported, in May 2011 the Internal Revenue Service opened an audit of the Company's 2009 tax return.  In 2012 the IRS's audit report was furnished to the congressional Joint Committee on Taxation for their consideration. In April 2013, the Company was notified that the audit process is now complete and that there would be no further changes to our 2009 tax return.  During the second quarter of 2013 the Company recorded a discrete tax benefit of $2.4  million which was primarily related to the release of tax reserves associated with the settlement of tax examinations. The release of reserves resulted in a tax benefit to the Company of $0.13 per share in the second quarter of 2013.  

LoJack's cash and equivalents remained at $46.0 million at June 30, 2013. The Company paid approximately $7.5 million in July 2013 under a settlement agreement reached in 2012 related to the California wage-and-hour class action litigation. The payment, which is $623,000 less than the Company's expected obligation, settles all remaining claims in this matter. 

Business Outlook
Ortiz commented, "In the second half of 2013, we expect to further strengthen our operating efficiencies, broaden relationships with our dealer partners and expand the launch of new LoJack-branded fleet management products being developed through our alliance with TomTom Business Solutions. Based on the current business environment, we continue to expect that consolidated revenue will increase approximately 10% over 2012, and that adjusted EBITDA will be in the range of 3 to 7% of consolidated revenue for the full year."  

Second-Quarter Financial Results Conference Call
In conjunction with its second-quarter 2013 financial results, LoJack will host a conference call for investors and analysts at 8:30 a.m. ET today. To access the webcast of the call, log onto http://www.lojack.com (click "About Us," "Investor Relations," and then click "Events and Presentations"). The live call can also be accessed by 877-868-1835 (toll-free) or 914-495-8581 (international) and using 13543807 as the conference ID. An archive of the webcast will be available on the Company's website. 

About LoJack Corporation
LoJack Corporation, the company that has helped more than nine million people protect their vehicles in the event of theft over the past 25+ years, today provides safety, security and protection for an ever-growing range of valuable assets and people. Leveraging its core strengths, including its well-known brand, direct integration with law enforcement and dealer distribution network, LoJack Corporation is expanding into new areas across the continuum from theft deterrence to recovery. The Company is focusing on creating a new level of value for its dealer, customer and investor communities by delivering innovative offerings and multiple technologies in expanding geographies. For more information, visit www.lojack.com, www.autotheftblog.com, www.youtube.com/lojack, www.twitter.com/LoJackCorp or www.Facebook.com/LoJackCorp.

Safe Harbor Regarding Forward Looking Statements
From time to time, information provided by the Company or statements made by its employees may contain "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws, which involve risks and uncertainties.  You can identify these statements by use of the words "assumes," "believes," "estimates," "expects," "will," "intends," "plans," "projects" and similar expressions that do not relate to historical matters.   Any statements in this news release that are not statements of historical fact are forward-looking statements, including, but not limited to, statements concerning (a) the Company's markets, including the domestic auto market and international markets, (b) conditions in the automotive industry and market trends, (c) the Company's strategic initiatives and plans for growth and future operations, including with respect to the Company's pre-install programs, (d) the Company's relationships with consumers, agents, dealer groups and other dealer-partners, (e) the Company's strategic alliance with TomTom, (f) the development of new products and services, including fleet management products, (g) the Company's future financial performance, including expected revenue and adjusted EBITDA, and (h) sales by the Company to its licensee in Argentina and Brazil.  Such forward-looking statements are based on a number of assumptions and involve a number of risks and uncertainties, and accordingly, actual results could differ materially.  Factors that may cause such differences include, but are not limited to:  (1) the continued and future acceptance of the Company's products and services, including the Company's pre-install program and fleet management products; (2) the Company's ability to obtain financing from lenders; (3) the outcome of ongoing litigation involving the Company; (4) the rate of growth in the industries of the Company's customers; (5) the presence of competitors with greater technical, marketing, and financial resources; (6) the Company's customers' ability to access the credit markets, including changes in interest rates; (7) the Company's ability to promptly and effectively respond to technological change to meet evolving customer needs; (8) the Company's ability to successfully expand its operations, including through the introduction of new products and services; (9) changes in general economic or geopolitical conditions, including the European debt crisis; (10) conditions in the automotive retail market and the Company's relationships with dealers, licensees, partners and agents; (11) the expected timing of purchases by the Company's customers; (12) the Company's ability to achieve the expected benefits of its strategic alliance with TomTom; and (13) trade tensions and governmental regulations and restrictions.  For a further discussion of these and other significant factors to consider in connection with forward-looking statements concerning the Company, reference is made to the Company's Annual Report on Form 10-K for the year ended December 31, 2012 and the Company's other filings with the Securities and Exchange Commission.

Readers should not place undue reliance on any forward-looking statements, which only speak as of the date made.  Except as required by law, the Company undertakes no obligation to release publicly the result of any revision to the forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release also contains the non-GAAP financial measure, adjusted EBITDA.  The Company believes that the inclusion of this non-GAAP financial measure in this press release helps investors to gain a meaningful understanding of changes in the Company's core operating results, and can also help investors who wish to make comparisons between LoJack and other companies on both a GAAP and a non-GAAP basis. LoJack management uses this non-GAAP measure, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. These measures are also used by management to assist with their financial and operating decision making.

The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similar measures used by other companies.  Reconciliations of the non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying tables to, this press release.

 

Table 1 – Adjusted EBITDA Computation

GAAP to Pro Forma Non-GAAP Reconciliation

 

(in thousands)






Three Months Ended


Three Months Ended





June 30, 2013


June 30, 2012





$


$








Net income (loss), as reported


2,645



(2,229)



Adjusted for:







(Benefit) provision for income taxes


(2,281)



239




Other income (expense)


150



(460)


Operating income (loss)


214



(1,530)



Adjusted for:







Depreciation and amortization


1,088



1,317




Stock compensation expense


521



650


Adjusted EBITDA


1,823



437




















Six Months Ended


Six Months Ended





June 30, 2013


June 30, 2012





$


$








Net income (loss), as reported


(2,991)



(2,524)



Adjusted for:







(Benefit) provision for income taxes


(2,355)



497




Other income (expense)


74



148


Operating income (loss)


(5,420)



(2,175)



Adjusted for:







Depreciation and amortization


2,217



2,514




Stock compensation expense


943



1,522


Adjusted EBITDA


(2,260)



1,861


 

LoJack Corporation and Subsidiaries

Condensed Consolidated Statement of Operations

 

(in thousands, except share and per share amounts)



Three Months Ended


June 30,


2013


2012


(unaudited)





Revenue

$

33,680



$

31,663






Cost of goods sold

15,316



15,160






Gross profit

18,364



16,503






Costs and expenses:




Product development

1,224



1,308


Sales and marketing

8,054



7,698


General and administrative

7,844



7,810


Depreciation and amortization

1,028



1,217


Total

18,150



18,033






Operating income (loss)

214



(1,530)






Other income (expense):




Interest income

28



43


Interest expense

(256)



(187)


Other, net

378



(316)


Total

150



(460)






Income (Loss) before (benefit) provision for income taxes

364



(1,990)


(Benefit) provision for income taxes

(2,281)



239


Net income (loss)

2,645



(2,229)


Net income (loss) attributable to noncontrolling interest in consolidated subsidiary

10



(4)


Net income (loss) attributable to LoJack Corporation

$

2,635



$

(2,225)






Net income (loss) per diluted share attributable to

LoJack Corporation

$

0.15



$

(0.13)






Weighted average diluted common

shares outstanding

17,982,688



17,500,282


 

LoJack Corporation and Subsidiaries

Condensed Consolidated Statement of Operations

 

(in thousands, except share and per share amounts)



Six Months Ended


June 30,


2013


2012


(unaudited)





Revenue

$

64,899



$

65,965






Cost of goods sold

30,064



30,799






Gross profit

34,835



35,166






Costs and expenses:




Product development

2,666



2,823


Sales and marketing

16,332



14,668


General and administrative

19,163



17,493


Depreciation and amortization

2,094



2,357


Total

40,255



37,341






Operating loss

(5,420)



(2,175)






Other income (expense):




Interest income

49



83


Interest expense

(454)



(357)


Other, net

479



422


Total

74



148






Loss before (benefit) provision for income taxes

(5,346)



(2,027)


(Benefit) provision for income taxes

(2,355)



497


Net loss

(2,991)



(2,524)


Net income attributable to noncontrolling interest in consolidated subsidiary

49



9


Net loss attributable to LoJack Corporation

$

(3,040)



$

(2,533)






Net loss per diluted share attributable to

LoJack Corporation

$

(0.17)



$

(0.15)






Weighted average diluted common

shares outstanding

17,631,802



17,444,405


 

LoJack Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)



June 30,
2013


December 31,
2012


(unaudited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$

45,998



$

48,592


Restricted cash

47



225


Marketable securities at fair value

965



1,877


Accounts Receivable, net of allowances of $2,234 and $2,599, respectively

21,377



20,037


Inventories

7,163



7,123


Prepaid and other expenses

2,571



2,917


Prepaid and receivable income taxes

1,057



1,319


Deferred income taxes

399



586


    Total current assets

79,577



82,676


PROPERTY AND EQUIPMENT, net of accumulated depreciation of $49,033 and $49,250, respectively

11,849



11,686


DEFERRED INCOME TAXES

156



145


INTANGIBLE ASSETS—NET

95



100


GOODWILL

1,245



1,245


OTHER ASSETS—NET

5,342



6,076


TOTAL ASSETS

$

98,264



$

101,928


LIABILITIES AND EQUITY




CURRENT LIABILITIES:




Short term debt

$

274



$

274


Accounts payable

6,239



5,979


Accrued and other liabilities

15,623



15,827


Current portion of deferred revenue

11,859



13,274


Accrued compensation

4,760



3,290


    Total current liabilities

38,755



38,644


LONG TERM DEBT

14,832



13,820


DEFERRED REVENUE

12,133



13,395


DEFERRED INCOME TAXES

399



586


OTHER ACCRUED LIABILITIES

1,237



3,994


ACCRUED COMPENSATION

1,715



1,243


        Total liabilities

69,071



71,682


COMMITMENTS AND CONTINGENT LIABILITIES




EQUITY:




Preferred stock—$.01 par value; authorized, 10,000,000 shares




Common stock—$.01 par value; authorized, 35,000,000 shares; issued and outstanding 18,743,348 at June 30, 2013 and 18,187,703 at December 31, 2012

187



182


Additional paid-in capital

24,159



23,261


Accumulated other comprehensive income

7,226



6,191


Retained earnings (accumulated deficit)

(2,303)



737


    Total LoJack Corporation equity

29,269



30,371


Noncontrolling interest in subsidiary

(76)



(125)


    Total equity

29,193



30,246


TOTAL LIABILITIES AND EQUITY

$

98,264



$

101,928


 

CONTACTS:

Donald R. Peck
LoJack Corporation
(781) 302-4200

David Calusdian
Sharon Merrill Associates
(617) 542-5300

 

SOURCE LoJack Corporation



RELATED LINKS
http://www.lojack.com

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