CANTON, Mass., Aug. 6, 2015 /PRNewswire/ --
Highlights:
- Net income of $1.2 million, or
$0.06 per diluted share, compared
with a net loss of ($3.4) million, or
($0.19) per share, in Q2
2014
- EBITDA of $2.7 million
represents $4.5 million improvement
year-over-year
- Gross margin of 54.9%
- Company reduces operating expenses by $2.8 million from Q2 2014
- Cash from operations of $2.7
million; debt repayment of $3
million
- Company has met or exceeded growth of U.S. retail auto
market in 10 of past 11 quarters
LoJack Corporation (NASDAQ GS: LOJN), a provider of vehicle
theft recovery systems and advanced fleet management solutions,
today reported financial results for the quarter ended June 30, 2015. In a separate release, the Company
also announced today that it has appointed Edward Davis, former commissioner of the
Boston Police Department, to its
Board of Directors.
"We posted a profitable second quarter that demonstrated our
success in reducing expenses and right-sizing our foundational
Stolen Vehicle Recovery (SVR) business while fully maintaining our
focus on building future growth in key telematics segments," said
LoJack President and CEO Randy
Ortiz. "Ongoing cost-reduction initiatives helped to drive a
$4.6 million improvement in the
bottom line in the second quarter, and we remain on track to reduce
fixed overhead expense by between $6 million
and $8 million on an annualized basis this year.
"Driven by the success of our Pre-Install strategy, unit volume
in our domestic dealer SVR business increased 5 percent in the
quarter," Ortiz continued. "June was the strongest month in terms
of SVR unit volume in seven years and the second-strongest month
ever in terms of Pre-Install volume. Our domestic business has now
equaled or exceeded the performance of the broader U.S. retail auto
market in 10 of the past 11 quarters.
"We believe that demand and sales momentum are building for our
LoJack® Connect for Equipment ruggedized telematics system," Ortiz
said. "Construction firms are seeking to track their equipment and
optimize their usage, while large multi-national rental companies
are focusing on optimizing their rental models to lower overall
maintenance costs and maximize profitability."
Second-Quarter 2015 Financial Summary
Revenue
was $33.6 million for the second
quarter of 2015, compared with $34.4
million for the same period in 2014. Net income was
$1.2 million, or $0.06 per diluted share, compared with a net loss
of $3.4 million, or $0.19 per share, for the second quarter of
2014.
Consolidated gross profit was $18.5
million, or 54.9% of revenue in the second quarter of 2015,
compared with $17.0 million, or 49.4%
of revenue, for the second quarter of 2014. The respective periods
included the items listed in Table 2 below. Consolidated non-GAAP
gross profit, excluding these items, was $18.5 million, or 55.1% of revenue, for the
second quarter of 2015, compared with $18.7
million, or 54.3%, for the same period of 2014.
Operating expenses decreased $2.8
million, or 14.1%, to $17.1
million in the second quarter of 2015 from $19.9 million in the same period of 2014,
reflecting the benefit of cost-savings measures implemented by the
Company during the second half of 2014 and the first half of
2015.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the three months ended June 30,
2015 were $2.7 million, an
improvement of $4.5 million from a
loss of $1.8 million for the
comparable period of 2014.
Adjusted EBITDA, excluding the items listed in Table 1 below,
was $1.6 million for the second
quarter of 2015 compared to $1.2
million for the 2014 period.
Reconciliations of non-GAAP financial measures to the most
directly comparable GAAP financial measures are set forth in Table
1 and 2 of this press release.
Cash and cash equivalents at June 30,
2015 were $13.2 million, which
represents positive operating cash flows of $2.7 million and debt repayment during the second
quarter of $3.0 million. Working
capital was $19.6 million as of
June 30, 2015. Primary sources
of cash in the quarter included receivables collections and a
reduction of overall working capital needs. The Company
currently anticipates being cash flow positive in 2015.
Quality Assurance Program (QAP)
The total
expense of $9.1 million since
inception for LoJack's QAP reserve remained unchanged during the
second quarter. Approximately $2.8
million of the reserve was used in the quarter, resulting in
a net QAP reserve of $3.1 million as
of June 30, 2015. The Company
currently anticipates that the U.S. QAP will be completed in the
second quarter of 2016. In addition, LoJack has reached agreement
to support the QAP for all major international licensees that have
identified performance issues in certain self-powered units
equipped with the EVE battery pack.
Telematics Business
During the quarter LoJack
announced that it has surpassed 10,000 subscriptions under
agreement for a range of products and services in the telematics
space, including offerings that meet the unique requirements of
"Main Street" fleets, the construction industry and auto
dealerships. The Company's telematics products include:
- LoJack® Connect for Equipment - ruggedized solution
for fleets of construction equipment: Allows business owners to
precisely track equipment utilization, use real-time and historical
data to improve operational efficiencies and asset management,
remotely optimize fleet operations and streamline processes.
- LoJack® Fleet Management Powered by TomTom - for "Main
Street" fleets: Advanced solutions that help businesses grow
and streamline their operations. The recently announced
integration with Intuit's QuickBase® with the power of the LoJack
Fleet Management platform gives LoJack Fleet Management customers
the data, tools and insights to improve efficiencies from lead
generation to project completion throughout their on-road fleet of
vehicles.
- LoJack® IM1 Inventory Management System - for dealers:
Enables dealership personnel through tablets, smartphones and other
mobile devices, to verify vehicle location, quickly access relevant
vehicle information, track test drives and receive early-warning
alerts if a vehicle is moved from a geo-fenced location.
LoJack has just begun a staged rollout of LoJack IM1, and expects
to broaden its sales activity through the end of 2015.
Business Outlook
"As we head into the second
half of 2015, we expect to continue to build on our core SVR
business both domestically and internationally in addition to
capitalizing on opportunities to expand the LoJack brand into the
emerging telematics business," Ortiz said. "Our Pre-Install
strategy has allowed us to grow our unit sales, which has
effectively stabilized our U.S. SVR business, while at the same
time we have reduced operating expenses and invested in the future
by positioning the Company for success in telematics."
While LoJack continues to experience order volatility in its
international licensee business, based on its results through the
first half of the year, the Company affirms its outlook for
improving revenue in full-year 2015 with positive Adjusted EBITDA
and cash flows. The Company expects continued improvement in
Adjusted EBITDA for the remainder of the year.
Second-Quarter 2015 Conference Call
Chief
Executive Officer Randy Ortiz and
Chief Financial Officer Ken Dumas
will host a conference call and webcast at 8:30 a.m. ET today to discuss details of the
Company's performance and provide a business outlook.
The webcast can be accessed by logging on to
http://investors.lojack.com/events.cfm. You also can hear the live
call by dialing 877-868-1835 (domestic) or 914-495-8581
(international) and using conference ID 31076596. The presentation
slides that will be discussed on the conference call are expected
to be available this morning, prior to the start of the call. The
slides may be downloaded from the Investor Relations section of the
LoJack website. An archive of the webcast will be available after
the call concludes.
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 our business to include our traditional vehicle and
equipment theft recovery, people at risk and new telematics-based
products and services. LoJack is delivering new telematics-based
solutions for on-road and off-road fleet management, as well as
dealer inventory management. By expanding our brand beyond stolen
vehicle recovery, LoJack Corporation is committed to creating a new
level of value for its dealer, licensee, customer and investor
communities by delivering innovative offerings and multiple
technologies in expanding geographies. For more information, visit
www.lojack.com/fleet, www.autotheftblog.com,
www.youtube.com/lojack, www.twitter.com/LoJackCorp or
www.Facebook.com/LoJackCorp.
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 certain non-GAAP financial measures including EBITDA,
Adjusted EBITDA and non-GAAP gross profit (and the corresponding
gross margin percentages). LoJack management believes that
the inclusion of these non-GAAP financial measures 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. Management uses
these non-GAAP measures, in addition to GAAP financial measures, as
the basis for measuring its core operating performance and
comparing such performance to that of prior periods and to the
performance of its 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 the
comparable measurement that is 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 accompanying tables to this press release.
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 telematics markets, (b) the
Company's strategic initiatives, investments and plans for growth
and future operations, including with respect to the Company's
telematics, fleet management, inventory management and other
product development initiatives, (c) the Company's Pre-Install
Program, (d) expectations for orders from the Company's
international licensees, (f) the expected costs and expenses
associated with the battery performance matter, (g) the anticipated
timing for completion of the Quality Assurance Program, (h) the
expected benefits of the Company's cost-reduction initiatives, and
(i) the Company's future financial performance, financial condition
and cash flows. 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 inventory management, fleet
management and telematics solutions; (2) the Company's ability to
obtain financing from lenders and to satisfy or obtain waivers for
covenant requirements under its credit facility; (3) the outcome of
ongoing litigation involving the Company; (4) the Company's ability
to enforce the terms of the settlement agreement with Tracker do
Brasil LTDA and its impact on the Company's future relationships
with Tracker and its affiliates; (5) the rate of growth in the
industries of the Company's customers; (6) the presence of
competitors with greater technical, marketing, and financial
resources; (7) the Company's customers' ability to access the
credit markets, including changes in interest rates; (8) the
Company's ability to promptly and effectively respond to
technological change to meet evolving customer needs; (9) the
Company's ability to successfully expand its operations, including
through the introduction of new products and services; (10) changes
in general economic or geopolitical conditions; (11) conditions in
the automotive retail market and the Company's relationships with
dealers, licensees, partners, agents and local law enforcement;
(12) delays or other changes in the timing of purchases by the
Company's customers; (13) the Company's ability to achieve the
expected benefits of its strategic alliances with TomTom and
Trackunit; (14) financial and reputational risks related to product
quality and liability issues; (15) the Company's ability to
re-enter the Brazilian market in a timely manner and/or on
favorable terms; and (16) trade tensions and governmental
regulations and restrictions in the Company's international
markets. 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, 2014 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.
LoJack Corporation
and Subsidiaries
Condensed
Consolidated Statements of Operations
(In thousands, except
per share amounts)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(unaudited)
|
|
(unaudited)
|
Revenue
|
$
|
33,642
|
|
|
$
|
34,411
|
|
|
$
|
62,405
|
|
|
$
|
64,543
|
|
Cost of goods
sold
|
15,158
|
|
|
17,419
|
|
|
29,965
|
|
|
32,458
|
|
Gross
profit
|
18,484
|
|
|
16,992
|
|
|
32,440
|
|
|
32,085
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Product
development
|
1,482
|
|
|
1,122
|
|
|
2,656
|
|
|
2,675
|
|
Sales and
marketing
|
7,420
|
|
|
8,743
|
|
|
15,087
|
|
|
17,339
|
|
General and
administrative
|
6,965
|
|
|
9,007
|
|
|
14,307
|
|
|
18,408
|
|
Depreciation and
amortization
|
1,206
|
|
|
994
|
|
|
2,195
|
|
|
1,919
|
|
Total
|
17,073
|
|
|
19,866
|
|
|
34,245
|
|
|
40,341
|
|
Operating income
(loss)
|
1,411
|
|
|
(2,874)
|
|
|
(1,805)
|
|
|
(8,256)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
income
|
4
|
|
|
3
|
|
|
6
|
|
|
4
|
|
Interest
expense
|
(248)
|
|
|
(480)
|
|
|
(380)
|
|
|
(587)
|
|
Other, net
|
67
|
|
|
57
|
|
|
1,852
|
|
|
43
|
|
Total
|
(177)
|
|
|
(420)
|
|
|
1,478
|
|
|
(540)
|
|
Income (loss) before
provision for income taxes
|
1,234
|
|
|
(3,294)
|
|
|
(327)
|
|
|
(8,796)
|
|
Provision for income
taxes
|
25
|
|
|
141
|
|
|
90
|
|
|
178
|
|
Net income
(loss)
|
1,209
|
|
|
(3,435)
|
|
|
(417)
|
|
|
(8,974)
|
|
Less: Net income
(loss) attributable to the noncontrolling interest
|
21
|
|
|
(47)
|
|
|
45
|
|
|
(98)
|
|
Net income
(loss) attributable to LoJack Corporation
|
$
|
1,188
|
|
|
$
|
(3,388)
|
|
|
$
|
(462)
|
|
|
$
|
(8,876)
|
|
Net income (loss) per
share attributable to LoJack Corporation:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.06
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.50)
|
|
Diluted
|
$
|
0.06
|
|
|
$
|
(0.19)
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.50)
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
Basic
|
18,323
|
|
|
17,974
|
|
|
18,255
|
|
|
17,908
|
|
Diluted
|
18,604
|
|
|
17,974
|
|
|
18,255
|
|
|
17,908
|
|
LoJack Corporation
and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
thousands)
|
|
June
30, 2015
|
|
December
31, 2014
|
|
(unaudited)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
13,224
|
|
|
$
|
17,588
|
|
Accounts
receivable, net
|
22,573
|
|
|
23,963
|
|
Inventories
|
7,775
|
|
|
8,323
|
|
Other current
assets
|
4,969
|
|
|
4,276
|
|
Total current
assets
|
48,541
|
|
|
54,150
|
|
Property, plant &
equipment, net
|
16,472
|
|
|
16,791
|
|
Other non-current
assets
|
5,959
|
|
|
5,319
|
|
Total
assets
|
$
|
70,972
|
|
|
$
|
76,260
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current liabilities,
excluding deferred revenue
|
$
|
21,625
|
|
|
$
|
24,729
|
|
Debt
|
586
|
|
|
3,500
|
|
Current portion of
deferred revenue
|
6,714
|
|
|
7,535
|
|
Total current
liabilities
|
28,925
|
|
|
35,764
|
|
Long-term
debt
|
6,978
|
|
|
6,978
|
|
Deferred
revenue
|
10,163
|
|
|
9,609
|
|
Other long-term
liabilities
|
2,852
|
|
|
3,464
|
|
Total
liabilities
|
48,918
|
|
|
55,815
|
|
Stockholders'
equity
|
22,054
|
|
|
20,445
|
|
Total liabilities
and stockholders' equity
|
$
|
70,972
|
|
|
$
|
76,260
|
|
Table 1 – Adjusted
EBITDA Computation
GAAP to Pro Forma
Non-GAAP Reconciliation
(Unaudited, in
thousands)
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported
|
|
$
|
1,209
|
|
|
$
|
(3,435)
|
|
|
$
|
(417)
|
|
|
$
|
(8,974)
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
248
|
|
|
480
|
|
|
380
|
|
|
587
|
|
|
|
Provision for income
taxes
|
|
25
|
|
|
141
|
|
|
90
|
|
|
178
|
|
|
|
Depreciation and
amortization
|
|
1,260
|
|
|
1,054
|
|
|
2,305
|
|
|
2,042
|
|
EBITDA
|
|
2,742
|
|
|
(1,760)
|
|
|
2,358
|
|
|
(6,167)
|
|
|
|
Stock compensation
expense
|
|
403
|
|
|
359
|
|
|
721
|
|
|
883
|
|
|
|
Licensee agreement
modification
|
|
(2,000)
|
|
|
—
|
|
|
(2,000)
|
|
|
—
|
|
|
|
Brazil legal
settlement
|
|
—
|
|
|
—
|
|
|
(2,000)
|
|
|
—
|
|
|
|
Quality assurance
program
|
|
—
|
|
|
1,700
|
|
|
1,076
|
|
|
1,700
|
|
|
|
Restructuring
costs
|
|
462
|
|
|
900
|
|
|
462
|
|
|
900
|
|
Adjusted
EBITDA
|
|
$
|
1,607
|
|
|
$
|
1,199
|
|
|
$
|
617
|
|
|
$
|
(2,684)
|
|
Table 2 – Non-GAAP
Gross Margin Percentage Calculation
GAAP to Non-GAAP
Gross Margin Percentage Reconciliation
(Unaudited, in
thousands)
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
Gross profit, as
reported
|
|
18,484
|
|
54.9%
|
|
16,992
|
|
49.4%
|
|
32,440
|
|
52.0%
|
|
32,085
|
|
49.7%
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
costs
|
|
56
|
|
0.2%
|
|
—
|
|
—%
|
|
56
|
|
0.1%
|
|
—
|
|
—%
|
|
|
Quality assurance
program
|
|
—
|
|
—%
|
|
1,700
|
|
4.9%
|
|
1,076
|
|
1.7%
|
|
1,700
|
|
2.6%
|
Non-GAAP gross
profit
|
|
18,540
|
|
55.1%
|
|
18,692
|
|
54.3%
|
|
33,572
|
|
53.8%
|
|
33,785
|
|
52.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:
|
|
Ken Dumas
|
Scott
Solomon
|
LoJack
Corporation
|
Sharon Merrill
Associates
|
(781)
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SOURCE LoJack Corporation