Second Quarter Highlights
6% Increase in Revenue
Adjusted EBITDA of $1.8 Million
Operating Cash Flow of $5.5 Million
Non-Cash Tax Charge of $15.1 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. August 4, 2010 – LoJack Corporation (NASDAQ GS: “LOJN”) today reported consolidated revenue for the second quarter ended June 30, 2010 increased 6% to $37.4 million, from $35.4 million in the same quarter of the prior year. Revenue in the company’s North America segment increased 4% to $25.8 million for the quarter compared to $24.7 million for the same period in 2009, primarily as a result of unit growth of 13% in the U.S. as the company continued to expand its bulk install program. Revenue in the company’s international segment increased 3% to $10.3 million for the second quarter from $10.0 million in 2009 driven by unit volume growth of 15% with the licensee business and continued expansion of the subscriber base in Italy. The company’s other businesses, particularly SafetyNet and Supply Chain Integrity, also contributed to the overall 6% increase in consolidated revenue for the second quarter.
Richard T. Riley, Chairman and Chief Executive Officer said, “Our consolidated increase in revenue reflects the stabilization of our core auto business in both the U.S and international markets. Our unit volume increase of 15% in the U.S. auto channel outpaced the 9% increase in retail auto sales for the quarter and our overall penetration rate remained stable despite a continued tight credit environment. As confidence returns to certain dealerships, we continue to expand our bulk install program, providing additional profit opportunity to those dealers and LoJack. For the remainder of 2010, year over year comparisons will be challenging due to the government sponsored cash for clunkers program in the third quarter of 2009. Despite this, we are cautiously optimistic about the broader U.S. auto market outlook based on recent projections by industry analysts that project annual new vehicle sales of 11.0 to 11.5 million units for the full year.
“Our international licensee business has also stabilized with all major regions returning to more normal buying patterns. The increase in product sales was offset by lower infrastructure component sales. Our licensees are enthusiastic about our self-powered product and have begun to take delivery of the new units. Additionally, we continue to generate increased revenue and grow the subscriber base in Italy, adding approximately one thousand subscribers in each of the last 6 months.”
Consolidated gross margin for the second quarter increased 5% to $19.5 million from $18.6 million in 2009. Gross margin as a percentage of revenue for the second quarter was 52%, unchanged from the same quarter in the prior year.
Operating expense for the second quarter declined 39% to $21.0 million from $34.6 million in the same period of 2009. Operating expense for the quarter included approximately $2.4 million of severance related expense associated with the company’s previously announced restructuring and workforce reduction. These actions are expected to result in $3.9 million of net savings over the remainder of 2010 and $7.4 million of annualized savings on an ongoing basis.
Mr. Riley said, “Our actions to further manage our cost structure will enable us to provide financial support to both our core business, as well as some of the newer initiatives, such as SafetyNet and our operation in Italy.”
Adjusted EBITDA, which includes the items reflected in Table 1, for the second quarter was $1.8 million, compared to $0.6 million in the same period of the prior year, reflecting modest revenue growth and tight cost control. The operating loss for the second quarter was $1.5 million, compared to an operating loss of $16.0 million in the second quarter of 2009. The operating loss in the prior year reflects a non-cash charge of approximately $14.0 million associated with the impairment of goodwill and intangible assets of the company’s Boomerang Tracking business.
The net loss attributable to LoJack Corporation for the second quarter was $18.2 million or $1.05 per diluted share, compared to a net loss of $12.5 million, or $0.73 per diluted share, for the same quarter of the prior year. The net loss for the second quarter of 2010 includes a one-time 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. The valuation allowance does not impact the company’s ability to reflect any and all allowed deductions when filing its tax returns.
The company generated positive operating cash flow of $5.5 million in the second quarter, consistent with the same period in 2009, and ended the quarter with a cash balance of $33.0 million.
Mr. Riley said, “We are encouraged by the general trends in both our North America and international segments. While we are focused on delivering positive Adjusted EBITDA and aintaining our liquidity, we will continue to make investments in our core business, as well as strategic programs to build our business in Italy and further develop our new 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.”
During the second quarter of 2010, the company did not repurchase any shares under its stock repurchase plan. As of June 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.
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