Fourth Quarter Highlights
12% Increase in Revenue Year Over Year
Net Income of $2.8 Million; Earnings Per Share of $0.15
Adjusted EBITDA of $6.4 Million
Operating Cash Flow of $14.5 Million
Westwood, MA. February 16, 2011 – LoJack Corporation (NASDAQ GS: “LOJN”) today
reported that consolidated revenue for the fourth quarter ended December 31, 2010 increased
12% to $40.0 million, from $35.6 million in the same quarter of the prior year. Revenue in the
company’s North America segment increased 5% to $23.0 million for the fourth quarter, from
$21.9 million in the fourth quarter of 2009, driven by a 15% increase in unit volume in the
recovering U.S. auto market, partially offset by a decline in the company’s Boomerang business
in Canada. Revenue in the company’s international segment increased 27% to $16.4 million for
the fourth quarter of 2010, from $12.9 million in the fourth quarter of 2009, driven by strong unit
growth of 23% in the licensee business and continued expansion of the subscriber base in Italy.
Richard T. Riley, Chairman and Chief Executive Officer said, “We are pleased with our growth
in revenue for the fourth quarter as the strong increase in our international business combined
with a solid performance in our U.S. auto business drove double digit growth for the quarter.
“The strong unit volume in the U.S. tracked slightly behind overall retail growth in the broader
domestic auto market for the quarter, as we were impacted by a shift in historical brand mix in
U.S. auto sales, with our most successful brands experiencing slower growth rates.
“Our international business delivered strong revenue growth in the fourth quarter as our
international licensees returned to historical purchasing levels for the quarter and the full year. In
addition, our business in Italy continued to gain traction as we added approximately 2,200
subscribers in the current quarter and more than 10,000 for the full year. We had approximately
13,000 subscribers in Italy as of year end.”
Consolidated gross profit for the fourth quarter of 2010 increased 12% to $20.4 million from
$18.2 million in the fourth quarter of 2009. Gross profit as a percentage of revenue for the fourth
quarter of 2010 was 51%, essentially unchanged from prior year quarter levels. The increase in
gross profit for the fourth quarter was consistent with our revenue growth, as the benefit of the
higher mix of international revenue was somewhat offset by the higher mix of bulk install units
in the U.S.
Operating expenses declined $3.4 million, or 17%, from prior year levels for the fourth quarter,
to $16.4 million, as a result of staffing reductions made earlier in 2010 and lower marketing
spending. Adjusted EBITDA, which includes the items reflected in Table 1, for the fourth
quarter of 2010 was $6.4 million, compared to adjusted EBITDA of $2.5 million in the fourth
quarter of the prior year, reflecting our overall revenue growth and the effect of tight cost
control. Operating income for the fourth quarter of 2010 was $4.0 million, compared to an
operating loss of $1.6 million in the fourth quarter of 2009.
Mr. Riley said, “We continued to effectively manage our cost structure during the fourth quarter,
while investing in our core stolen vehicle recovery business, the start up of our SafetyNet
business and our growing operation in Italy. Our aggressive steps to control expenses, coupled
with solid revenue growth, significantly improved profitability in the quarter. Now that the
broader domestic auto industry is on more solid footing and poised once again for growth, we
will again invest in our sales efforts, brand advertising and certain employee benefit expenses
while continuing to tightly manage our underlying cost structure at an appropriate level allowing
us to drive profitable revenue growth in the future.”
Net income attributable to LoJack Corporation for the fourth quarter of 2010 was $2.8 million, or
$0.15 per diluted share, compared to a net loss of $2.3 million, or $0.13 per share, in the fourth
quarter of the prior year. The company generated positive operating cash flow of $14.5 million in
the fourth quarter of 2010, compared to $6.0 million in the fourth quarter of 2009, and ended the
year with a cash balance of $51.8 million.
For the year ended December 31, 2010, consolidated revenue increased 9% to $146.6 million,
from $135.0 million in 2009. Revenue in the company’s North America segment reached $96.2
million for the full year, essentially unchanged from 2009. Solid unit growth in the U.S. market
in 2010 was driven by increased bulk installations, which sell at a lower average price than
standard installations. The increase in bulk installations is a sign that dealers are gaining
confidence as the broader domestic auto market experienced several encouraging months.
Revenue in the company’s international segment increased 30% to $46.9 million for the full year
of 2010, from $36.1 million in 2009, driven by strong unit growth of 40% in the licensee
business and significant expansion of the subscriber base in Italy.
Adjusted EBITDA, which includes the items reflected in Table 1, for the full year of 2010 was
$10.2 million, compared to $3.0 million in 2009. The operating loss for the full year in 2010 was
$0.4 million, compared to an operating loss of $44.2 million in 2009. The net loss attributable to
LoJack Corporation for the full year in 2010 was $18.3 million, or $1.06 per share, compared to
a net loss of $34.7 million, or $2.02 per share in 2009, as 2010 includes a non-cash charge of 15.1 million, or $0.87 per diluted share, to establish a valuation allowance against our U.S.
deferred tax assets.
Mr. Riley said, “We built our budget for 2011 assuming a continued recovery in the broader
domestic auto market and a stable, but slower growth rate in our international business. We
remain focused on delivering solid EBITDA growth and maintaining strong liquidity while
continuing to make investments in our core business, our operations in Italy and in developing
our SafetyNet business. For 2011, our budget reflects revenue between $154 million and $157
million and adjusted EBITDA to be between $16 million and $18 million.”
During the fourth quarter of 2010, the company did not repurchase any shares under its stock
repurchase plan. As of December 31, 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 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.
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, adjusted EBITDA and
capital resources). 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: (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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