CANTON, Mass., Nov. 6, 2015 /PRNewswire/ -- LoJack
Corporation (NASDAQ GS: LOJN), a provider of vehicle theft recovery
systems and advanced fleet management solutions, today reported
financial results for the three and nine months ended September 30, 2015.
Comments on the Third Quarter
"Our third-quarter performance reflects unit growth in our domestic
stolen vehicle recovery (SVR) business, higher gross profit and
significantly reduced operating expenses, which contributed to an
$11.2 million improvement in EBITDA
as well as positive operating cash flow of $6.9 million," said Randy
L. Ortiz, the Company's President and CEO. "Domestic dealer
SVR unit sales in Q3 resulted in the best volume quarter since Q2
2008, and the best quarter for our Pre-Install program in LoJack's
history.
"Our business in Italy
contributed to a strong international performance in the third
quarter," Ortiz said. "We have grown the number of subscribers to
our stolen vehicle recovery network in Italy to more than 66,000, an increase of 49%
from the third quarter of 2014.
Company Signs New Telematics Accounts
"LoJack's leadership in vehicle tracking and recovery is also
driving the growth of our emerging telematics business, as we
recently added automobile dealerships on the East and West Coast as
well as a large municipality to our client roster," Ortiz
continued. "On the dealership side, JM Lexus, located in
Margate, Florida, the largest
Lexus dealer in the world, is deploying our IM1 Inventory
Management system across its inventory, further enhancing the
dealer's ability to quickly track vehicle location and access
valuable data to continue delivering excellent customer service and
improved operational efficiency. We are also happy to announce
that California-based Galpin
Motors, one of our largest Pre-Install accounts, is also ready to
deploy our IM1 Inventory Management solution across its inventory
at one of its dealerships, enhancing their ability to run an
efficient operation and deliver great customer service.
"We were recently informed that the City of Phoenix selected LoJack Fleet
Management powered by TomTom to equip its on-road vehicle fleet.
This GPS-based advanced telematics system is designed to help
customers achieve a wide range of operational efficiencies," Ortiz
said. "These new customers will add thousands of units to our
portfolio, underscoring our strategy to leverage our strong brand
attributes of safety, security and protection to provide high-value
telematics products and services that customers can use to manage
critical business operations."
Third-Quarter 2015 Financial Summary
Revenue was
$32.6 million for the third quarter
of 2015, compared with $32.7 million
for the same period in 2014. This includes a decrease of
$1.3 million from Canada due to the Company's decision to exit
that market.
Net income was $1.5 million, or
$0.08 per diluted share, compared
with a net loss of $8.2 million, or
$0.45 per share, for the third
quarter of 2014.
Consolidated gross profit was $17.8
million, or 54.4% of revenue, in the third quarter of 2015,
compared with $10.1 million, or 30.9%
of revenue, for the third quarter of 2014. The 2014 period included
certain items, listed in Table 2 below, which did not recur in the
2015 period. Consolidated non-GAAP gross profit was 54.5% of
revenue for the third quarter of 2015, versus 51.0% for the same
period of 2014.
Operating expenses decreased $3.4
million, or 18.2%, to $15.1
million in the third quarter of 2015 from $18.4 million in the same period of 2014,
reflecting the benefit of cost-savings measures implemented by the
Company during the first half of 2015.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the three months ended September 30, 2015 were $3.5 million, an improvement of $11.2 million from a loss of $7.7 million for the comparable period of
2014.
Adjusted EBITDA, excluding the items listed in Table 1 below,
was approximately $4.0 million for
the third quarter of 2015 compared with Adjusted EBITDA of
$0.1 million for the same period last
year.
Reconciliations of non-GAAP financial measures to the most
directly comparable GAAP financial measures are set forth in Tables
1 and 2 of this press release.
Cash and cash equivalents at September
30, 2015 were $18.7 million,
which represents positive operating cash flows of $7.1 million and debt repayment of $3.0 million in the first nine months of 2015.
Working capital was $21.9 million as
of September 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 the fourth
quarter and into 2016.
Quality Assurance Program (QAP)
The Company has
recorded total expense of $9.1
million since inception for its QAP reserve. Approximately
$4.8 million of the reserve was used
during the first nine months of 2015, with no additional reserve
recorded during the third quarter. As of September 30, 2015, LoJack's remaining QAP
reserve was $2.7 million. The Company
still anticipates that the U.S. QAP will be completed in the second
quarter of 2016.
Business Outlook
Based on its results through the
first nine months of 2015, the Company anticipates that full-year
2015 revenue will be slightly down from the prior year, with
Adjusted EBITDA for full-year 2015 in the range of $8.0 million to $9.0 million.
"Our SVR business provides margin and cash flow opportunity for
the Company as we grow our telematics business. We believe that the
combination of our improved liquidity, positive cash flow and
recent telematics wins position us well as we conclude the year and
start to look forward to 2016," Ortiz concluded.
Third-Quarter 2015 Conference Call
LoJack management 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 41111897. 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,
(e) the expected costs and expenses associated with the battery
performance matter, (f) the anticipated timing for completion of
the U.S. Quality Assurance Program, (g) the expected benefits of
the Company's cost-reduction initiatives, (h) margin, cash flow and
growth opportunities for the Company,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, including the battery performance
matter; (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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(unaudited)
|
|
(unaudited)
|
Revenue
|
$
|
32,644
|
|
|
$
|
32,673
|
|
|
$
|
95,049
|
|
|
$
|
97,216
|
|
Cost of goods
sold
|
14,877
|
|
|
22,587
|
|
|
44,842
|
|
|
55,045
|
|
Gross
profit
|
17,767
|
|
|
10,086
|
|
|
50,207
|
|
|
42,171
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Product
development
|
1,160
|
|
|
1,834
|
|
|
3,815
|
|
|
4,509
|
|
Sales and
marketing
|
6,641
|
|
|
7,833
|
|
|
21,728
|
|
|
25,172
|
|
General and
administrative
|
6,245
|
|
|
8,054
|
|
|
20,553
|
|
|
26,463
|
|
Depreciation and
amortization
|
1,007
|
|
|
688
|
|
|
3,202
|
|
|
2,607
|
|
Total
|
15,053
|
|
|
18,409
|
|
|
49,298
|
|
|
58,751
|
|
Operating income
(loss)
|
2,714
|
|
|
(8,323)
|
|
|
909
|
|
|
(16,580)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
income
|
6
|
|
|
1
|
|
|
12
|
|
|
6
|
|
Interest
expense
|
(138)
|
|
|
(110)
|
|
|
(518)
|
|
|
(697)
|
|
Other, net
|
(320)
|
|
|
(100)
|
|
|
1,531
|
|
|
(56)
|
|
Total
|
(452)
|
|
|
(209)
|
|
|
1,025
|
|
|
(747)
|
|
Income (loss) before
provision for income taxes
|
2,262
|
|
|
(8,532)
|
|
|
1,934
|
|
|
(17,327)
|
|
Provision (benefit)
for income taxes
|
767
|
|
|
(358)
|
|
|
857
|
|
|
(179)
|
|
Net income
(loss)
|
1,495
|
|
|
(8,174)
|
|
|
1,077
|
|
|
(17,148)
|
|
Less: Net income
(loss) attributable to the noncontrolling
interest
|
14
|
|
|
20
|
|
|
59
|
|
|
(78)
|
|
Net income
(loss) attributable to LoJack Corporation
|
$
|
1,481
|
|
|
$
|
(8,194)
|
|
|
$
|
1,018
|
|
|
$
|
(17,070)
|
|
Net income (loss) per
share attributable to LoJack Corporation:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.08
|
|
|
$
|
(0.45)
|
|
|
$
|
0.06
|
|
|
$
|
(0.95)
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
(0.45)
|
|
|
$
|
0.05
|
|
|
$
|
(0.95)
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
Basic
|
18,541
|
|
|
18,092
|
|
|
18,352
|
|
|
17,971
|
|
Diluted
|
18,805
|
|
|
18,092
|
|
|
18,551
|
|
|
17,971
|
|
LoJack Corporation
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
(unaudited)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
18,678
|
|
|
$
|
17,588
|
|
Restricted
cash
|
490
|
|
|
—
|
|
Accounts
receivable, net
|
22,116
|
|
|
23,963
|
|
Inventories
|
6,976
|
|
|
8,323
|
|
Other current
assets
|
3,776
|
|
|
4,276
|
|
Total current
assets
|
52,036
|
|
|
54,150
|
|
Property, plant &
equipment, net
|
15,745
|
|
|
16,791
|
|
Other non-current
assets
|
5,957
|
|
|
5,319
|
|
Total
assets
|
$
|
73,738
|
|
|
$
|
76,260
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current liabilities,
excluding deferred revenue
|
$
|
23,008
|
|
|
$
|
24,729
|
|
Debt
|
586
|
|
|
3,500
|
|
Current portion of
deferred revenue
|
6,521
|
|
|
7,535
|
|
Total current
liabilities
|
30,115
|
|
|
35,764
|
|
Long-term
debt
|
6,978
|
|
|
6,978
|
|
Deferred
revenue
|
10,157
|
|
|
9,609
|
|
Other long-term
liabilities
|
2,716
|
|
|
3,464
|
|
Total
liabilities
|
49,966
|
|
|
55,815
|
|
Stockholders'
equity
|
23,772
|
|
|
20,445
|
|
Total liabilities
and stockholders' equity
|
$
|
73,738
|
|
|
$
|
76,260
|
|
Table 1 – Adjusted
EBITDA Computation
|
|
GAAP to Pro Forma
Non-GAAP Reconciliation
|
(unaudited, in
thousands)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported
|
|
$
|
1,495
|
|
|
$
|
(8,174)
|
|
|
$
|
1,077
|
|
|
$
|
(17,148)
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
138
|
|
|
110
|
|
|
518
|
|
|
697
|
|
|
|
Provision (benefit)
for income taxes
|
|
767
|
|
|
(358)
|
|
|
857
|
|
|
(179)
|
|
|
|
Depreciation and
amortization
|
|
1,139
|
|
|
765
|
|
|
3,444
|
|
|
2,807
|
|
EBITDA
|
|
3,539
|
|
|
(7,657)
|
|
|
5,896
|
|
|
(13,823)
|
|
|
|
Stock compensation
expense
|
|
417
|
|
|
410
|
|
|
1,138
|
|
|
1,293
|
|
|
|
Licensee agreement
modification
|
|
—
|
|
|
—
|
|
|
(2,000)
|
|
|
—
|
|
|
|
Brazil legal
settlement
|
|
—
|
|
|
—
|
|
|
(2,000)
|
|
|
—
|
|
|
|
Quality assurance
program
|
|
—
|
|
|
6,506
|
|
|
1,076
|
|
|
8,040
|
|
|
|
Restructuring
costs
|
|
24
|
|
|
829
|
|
|
486
|
|
|
1,729
|
|
Adjusted
EBITDA
|
|
$
|
3,980
|
|
|
$
|
88
|
|
|
$
|
4,596
|
|
|
$
|
(2,761)
|
|
Table 2 – Non-GAAP
Gross Margin Percentage Calculation
|
|
GAAP to Non-GAAP
Gross Margin Percentage Reconciliation
|
(unaudited, in
thousands)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
Gross profit, as
reported
|
|
17,767
|
|
|
54.4
|
%
|
|
10,086
|
|
|
30.9
|
%
|
|
50,207
|
|
|
52.8
|
%
|
|
42,171
|
|
|
43.4
|
%
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
costs
|
|
14
|
|
|
—
|
%
|
|
66
|
|
|
0.2
|
%
|
|
70
|
|
|
0.1
|
%
|
|
164
|
|
|
0.2
|
%
|
|
|
Quality assurance
program
|
|
—
|
|
|
—
|
%
|
|
6,506
|
|
|
19.9
|
%
|
|
1,076
|
|
|
1.1
|
%
|
|
8,040
|
|
|
8.3
|
%
|
Non-GAAP gross
profit
|
|
17,781
|
|
|
54.5
|
%
|
|
16,658
|
|
|
51.0
|
%
|
|
51,353
|
|
|
54.0
|
%
|
|
50,375
|
|
|
51.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:
Ken Dumas
|
|
Scott
Solomon
|
Senior Vice President
and CFO
|
|
Senior Vice
President
|
LoJack
Corporation
|
|
Sharon Merrill
Associates, Inc.
|
(781)
302-4200
|
|
(617)
542-5300
|
|
|
LOJN@investorrelations.com
|
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SOURCE LoJack Corporation