Third Quarter Highlights
7% Increase in Revenue Over the Prior Year
Net Income of $2.7 Million; Earnings Per Share of $0.15
Adjusted EBITDA of $4.9 Million
Operating Cash Flow of $5.4 Million
For the full press release and accompanying Condensed Consolidated Statement of Operations, Balance Sheets, and GAAP to Pro Forma Non-GAAP Reconciliation, please click here.
Westwood, MA. October 27, 2010 – LoJack Corporation (NASDAQ GS: “LOJN”) today
reported that consolidated revenue for the third quarter ended September 30, 2010 increased 7%
to $38.5 million, from $36.1 million in the same quarter of the prior year. Revenue in the
company’s North America segment declined 7% to $24.4 million for the quarter compared to
$26.2 million for the same period in 2009, when the U.S. government’s Cash for Clunkers
program resulted in a temporary surge in auto sales. Third quarter revenue in the company’s
North America segment reflected a 6% decline in unit volume in the U.S. market. Revenue in
the company’s international segment increased 47% to $13.4 million for the third quarter, from
$9.1 million in 2009, driven by unit volume growth of 61% from the licensee business and
continued expansion of the subscriber base in Italy.
Richard T. Riley, Chairman and Chief Executive Officer said, “The increase in consolidated
revenue for the third quarter was consistent with our expectations. Our international licensees
have returned to normal buying patterns, which more than offset the overall U.S. retail auto
market decline in the third quarter.
“LoJack unit volume trends in the U.S. have consistently tracked the retail trends in the broader
domestic auto market for the year. We continue to maintain our leadership position in the
domestic consumer market and demonstrate that the LoJack technology is the standard for the tolen vehicle recovery. Our business performance in the U.S. for the quarter reflects the uneven turn around in the broader domestic auto industry. Despite the growth in total auto sales recorded in the third quarter, actual retail auto sales declined. The industry-wide increase in total auto
sales during the third quarter was fueled entirely by fleet sales, which rose 24%. Consumer
purchases continue to be impacted by the restrictive credit environment, continued high
unemployment and fewer incentives offered by auto manufacturers.
“Our international business delivered strong revenue growth for the third quarter as orders from
our licenses in Latin America and South Africa returned to historical levels. Additionally, we
continued to add subscribers at our operation in Italy, increasing the subscriber base to
approximately 11,000 at the end of the third quarter.”
Consolidated gross margin for the third quarter declined 6% to $19.4 million from $20.6 million
in 2009. Gross margin as a percentage of revenue for the third quarter was 50%, compared to
57% in the same quarter in the prior year. The gross margin for the third quarter of 2010 reflects
a significant increase in bulk installations in the U.S., warranty expenses related to the
Boomerang technology in Canada, the discontinuation of a non-core GPS product and an
unmatched Canadian sales tax benefit in 2009.
Operating expense, adjusted for the items reflected in Table 4, declined $4.6 million or 22% for
the third quarter, as a result of the company’s continued cost management initiatives. Operating
expense for the third quarter of 2009 included $19.9 million of expense related to the settlement
with the company’s former licensee in China.
Mr. Riley said, “During the third quarter, we continued to effectively manage our cost structure
while investing in our core stolen vehicle recovery business, the SafetyNet business and our
growing operation in Italy. Our aggressive steps to control expenses had a dramatic impact on
our underlying cost structure and we are confident that our operating expenses are now at an
appropriate level to allow us to invest in our business and drive profitable revenue growth in the
Adjusted EBITDA, which includes the items reflected in Table 1, for the third quarter of 2010
was $4.9 million, compared to adjusted EBITDA of $1.9 million in the same period of the prior
year, reflecting the company’s overall revenue growth and tight cost control. Operating income,
which includes the items reflected in Table 2, for the third quarter of 2010 was $3.0 million,
compared to an operating loss of $20.3 million in the third quarter of 2009. The operating loss in
the prior year reflects a charge of approximately $19.9 million related to the settlement with the
company’s former licensee in China.
Net income attributable to LoJack Corporation, which includes the items reflected in Table 3, for
the third quarter was $2.7 million or $0.15 per diluted share, compared to a net loss of $13.4
million, or $0.78 per diluted share, for the same quarter of the prior year. The net loss in the prior
year reflects an after tax charge of approximately $14.6 million related to the settlement with the
company’s former licensee in China. he company generated positive operating cash flow of $5.4 million in the third quarter of 2010,
compared to negative operating cash flow of $13.6 million in the third quarter of 2009, and
ended the quarter with a cash balance of $37.5 million.
Mr. Riley said, “Based on the improvement in our international business and the continued
stabilization of the U.S. auto business, we remain encouraged by our prospects for the remainder
of the year. While we remain focused on delivering positive adjusted EBITDA and maintaining
our liquidity, we will continue to make investments in our core business, as well as strategic
programs to build our business in Italy and to further develop our SafetyNet business. Based on a
moderate year over year increase in revenue, we continue to expect to deliver positive adjusted
EBITDA, positive operating cash flow and healthy margins for 2010. For 2011, we expect our
domestic business to follow the expected gradual recovery of the overall auto market in the U.S.”
During the third quarter of 2010, the company did not repurchase any shares under its stock
repurchase plan. As of September 30, 2010, the company had an outstanding authority to
repurchase 1,681,778 shares.
About LoJack Corporation
LoJack Corporation, the company that invented the stolen vehicle recovery market more than 25 years ago, is the global leader in finding and recovering a wide range of mobile assets including cars, construction equipment and motorcycles-having recovered nearly $4 billion USD in stolen assets worldwide. In today's rapidly changing world, LoJack's core competencies are more valuable and more relevant than ever as they are now being applied into new areas, such as the prevention, detection and recovery of stolen cargo and finding and rescuing people with cognitive conditions such as autism and Alzheimer's.
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 About Forward-Looking Statements
From time to time, information provided by the company or statements made by its employees
may contain “forward-looking” information, which involve risks and uncertainties. Any
statements in this news release that are not statements of historical fact are forward-looking
statements (including, but not limited to, statements concerning the characteristics and growth of
the company’s market and customers, the company’s objectives and plans for future operations
and products and the company’s expected liquidity, revenue, profit and capital resources). Such
forward-looking statements are based on a number of assumptions and involve a number of risksnd uncertainties, and accordingly, actual results could differ materially. Factors that may cause such differences include, but are not limited to: (i) the continued and future acceptance of the company’s products and services; (ii) our ability to obtain financing from lenders; (iii) the
outcome of ongoing litigation involving the company; (iv) the rate of growth in the industries of
the company’s customers; (v) the presence of competitors with greater technical, marketing, and
financial resources; (vi) the company’s customers’ ability to access the credit markets; (vii) the
company’s ability to promptly and effectively respond to technological change to meet evolving
customer needs; (viii) the company’s ability to successfully expand its operations; and (ix)
changes in general economic or geopolitical conditions. 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, 2009.
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
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