LoJack Corporation Reports Fourth-Quarter and Year-End 2013 Financial Results

LoJack Corporation Reports Fourth-Quarter and Year-End 2013 Financial Results

PR Newswire

CANTON, Mass, Feb. 20, 2014

CANTON, Mass, Feb. 20, 2014 /PRNewswire/ --

Highlights

  oQ4 Revenue of $40.5 Million, Up 20% from Q4 2012; Full-Year Revenue Up 6%
    to $140.2 Million
  oQ4 Net Income of $4.5 Million, EPS of $0.25 Per Diluted Share; 2013 EPS of
    $0.18
  oQ4 Gross Margin Strong at 57.5%; Full-Year Gross Margin at 55%
  oQ4 U.S. Dealer Channel Volume up 26%; Has Outpaced Retail Auto Industry
    Growth for 15 Consecutive Months
  o2014 Guidance for 8% to 10% Revenue Growth and Strategic Investments in
    LoJack's Connected Car Strategy

LoJack Corporation (NASDAQ: LOJN), a provider of vehicle theft recovery
systems and fleet management solutions, today reported
consolidatedrevenuefor thefourth quarter ended December 31, 2013 of $40.5
million, compared with $33.8millionin the fourth quarter of 2012. Net income
attributable to LoJack Corporation for the fourth quarter was $4.5 million, or
$0.25 per diluted share, compared with a net loss attributable to the Company
of $1.5 million, or $0.08 per diluted share, in the comparable period of 2012.
Results for the 2012 period included a goodwill impairment charge of $0.5
million. 

(Logo: http://photos.prnewswire.com/prnh/20080512/NEM054LOGO)

"We finished a successful 2013 with a strong performance in the fourth
quarter, reporting a 20% year-over-year increase in revenue," said LoJack CEO
and President Randy Ortiz. "Domestically, our pre-install strategy continued
to drive growth in our U.S. Stolen Vehicle Recovery business as pre-install
units accounted for 51% of total volume in the quarter, compared with 43% for
the same period a year earlier. Our Stolen Vehicle Recovery unit volume was up
26% in the fourth quarter, compared with growth of 7% for the domestic retail
auto industry as a whole. Through December, our unit growth had outpaced that
of the broader U.S. retail auto industry for 15 consecutive months. The
Company's U.S. revenue also improved 10% to$22.9 million from thesame
quarter last year. To continue our growth in the U.S. market, we recently
announced the availability of LoJack in the State of New Mexico, further
expanding our tracking and recovery network. We were especially pleased that
the request for LoJack came from the New Mexico State Police and the New
Mexico Automobile Dealers Association.

"International licensee revenue increased 56% in Q4 to $13.6 million,
primarily due to greater shipments to Argentina during the quarter," Ortiz
continued. "We understand that our licensee continues to have significant
pent-up demand as a result of the import restrictions in that nation. We are
cautiously optimistic that our licensee will resume normal sales activity over
time to fulfill the needs of the marketplace. We also continued to be very
pleased with the unit growth generated by our South African licensee.

Consolidated gross profit in the fourth quarter of 2013 was $23.3 million, or
57.5% of revenue, compared with $17.9 million, or 52.8% of revenue, in the
same period a year earlier. The increase in gross profit was primarily
attributable to higher international revenues. 

Operating expensesin the fourth quarterof 2013 were $18.0million, compared
with $16.8 million for the same period of 2012.

Adjusted EBITDA for the fourth quarter of 2013, which excludes the items
reflected in Table 1, was $6.5 million, compared with $3.2 million in the
fourth quarter of 2012.

Cash and cash equivalents at December 31, 2013 were $32.0 million, compared
with $48.6 million at year-end 2012. As previously disclosed, in July 2013 the
Company paid approximately $7.5 million under a settlement agreement reached
in 2012 related to California wage-and-hour class action litigation. The
payment settled all remaining claims in this matter. In addition, during the
fourth quarter of 2013 the Company reduced its outstanding debt balance by
nearly $10 million.

"We also made good progress in the past year on our growth strategy as we
expand into telematics and add services for the connected car," Ortiz said.
"In 2014, we plan to make important investments as we transition from a
company solely focused on stolen vehicle recovery to a broader emphasis on
safety, security and protection through the connected car.
We expect these investments, coupled with our strong brand, dealer network,
law enforcement connections and international distribution capabilities, to
enable us to capitalize on what we believe is a significant opportunity to
generate new revenue and income streams for LoJack."

Business Outlook
Commenting on the Company's business outlook, Ortiz continued, "We expect that
the success of our pre-install program will continue to enable us to meet or
exceed U.S. automotive retail growth in our units sold throughout the year.
While we expect that international revenues will remain volatile, we are
encouraged by the resumption of shipments to Argentina in 2013. We also expect
that we will continue to see strong demand from our South African licensee in
2014. Looking further ahead, we plan to capitalize on many exciting
opportunities as a result of our connected car strategy, and we're looking
forward to further expanding the brand beyond fleet management into the
dealer, OEM and insurance telematics space."

LoJack expects that revenues for full year 2014 will be in the range of 8% to
10% higher than revenues for full year 2013. Given the Company's planned
investments in its growth strategy, adjusted EBITDA is expected to be in the
range of 5% to 7% of revenue for 2014. Due to seasonality and significant
shipments to some of the Company's international licensees in the fourth
quarter of 2013, first quarter 2014 revenue and net income will most likely be
lower than the fourth quarter of 2013.

Fourth Quarter Financial Results Conference Call
In conjunction with its fourth quarter 2013 financial results, LoJack will
host a conference call for investors and analysts at 8:30 a.m. ET today. To
access the webcast of the call, log onto http://www.lojack.com (click "About
Us," "Investor Relations," and then click "Events and Presentations"). The
live call can also be accessed by dialing 877-868-1835 (domestic) or
914-495-8581 (international) and using conference ID 31364963. The
presentation slides that will be discussed in 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 on the Company's website 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 into new areas across the continuum
from theft deterrence to recovery. The Company is focusing on creating a new
level of value for its Dealer, customer and investor communities by delivering
innovative offerings and multiple technologies in expanding geographies. 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. 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 international markets, (b) the Company's
strategic initiatives, investments and plans for growth and future operations,
including with respect to the Company's expansion into telematics and the
connected car, (c) the Company's pre-install program and expected unit growth,
(d) the development of new products and services, including telematics
solutions, (e) the Company's future financial performance, including expected
revenue and net income for the first quarter of 2014 and expected revenue and
adjusted EBITDA for the full year, and (f) customer demand and future sales by
the Company to its licensees in Argentina and South Africa. 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 fleet
management and other telematics products; (2) the Company's ability to obtain
financing from lenders; (3) the outcome of ongoing litigation involving the
Company; (4) the rate of growth in the industries of the Company's customers;
(5) the presence of competitors with greater technical, marketing, and
financial resources; (6) the Company's customers' ability to access the credit
markets, including changes in interest rates; (7) the Company's ability to
promptly and effectively respond to technological change to meet evolving
customer needs; (8) the Company's ability to successfully expand its
operations, including through the introduction of new products and services;
(9) changes in general economic or geopolitical conditions, including the
European debt crisis; (10) conditions in the automotive retail market and the
Company's relationships with dealers, licensees, partners, agents and local
law enforcement; (11) the expected timing of purchases by the Company's
customers; (12) the Company's ability to achieve the expected benefits of its
strategic alliance with TomTom; (13) the Company's ability to maintain the
strength of its brand; and (14) trade tensions and governmental regulations
and restrictions in Argentina and the Company's other 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, 2012 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.

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.



Table 1 – Adjusted EBITDA Computation



GAAP to Pro Forma Non-GAAP Reconciliation

(in thousands)


                                        Three Months Ended  Three Months Ended
                                        December 31, 2013   December 31, 2012
                                        $                   $
Net income, as reported                 4,633               1,496
 Adjusted for:
  (Benefit) Provision for income taxes  724                 (383)
  Other income (expense)                54                  10
Operating income                        5,303               1,103
 Adjusted for:
  Depreciation and amortization         1,033               1,204
  Stock compensation expense            204                 462
  Impairment of goodwill                —                   472
Adjusted EBITDA                         6,540               3,241
                                        Year Ended          Year Ended
                                        December 31, 2013   December 31, 2012
                                        $                   $
Net income (loss), as reported          3,313               (8,288)
 Adjusted for:
  (Benefit) Provision for income taxes  (2,518)             472
  Other income (expense)                162                 (197)
Operating income (loss)                 633                 (7,619)
 Adjusted for:
  Depreciation and amortization         4,131               4,711
  Stock compensation expense            1,681               2,441
  Legal settlement                      (623)               6,930
  Impairment of goodwill                —                   472
Adjusted EBITDA                         5,822               6,935







LoJack Corporation and Subsidiaries

Condensed Consolidated Statement of Operations



(in thousands, except share and per share amounts)


                                                      Three Months Ended
                                                      December 31,
                                                      2013         2012
                                                      (unaudited)
Revenue                                               $  40,511    $  33,824
Cost of goods sold                                    17,204       15,969
Gross profit                                          23,307       17,855
Costs and expenses:
Product development                                   1,409        1,162
Sales and marketing                                   7,758        7,093
General and administrative                            7,869        6,891
Depreciation and amortization                         968          1,134
Impairment of goodwill                                —            472
Total                                                 18,004       16,752
Operating income                                      5,303        1,103
Other income (expense):
Interest income                                       24           25
Interest expense                                      (242)        (190)
Other, net                                            272          175
Total                                                 54           10
Income before provision for income taxes              5,357        1,113
Provision (benefit) for income taxes                  724          (383)
Net income                                            4,633        1,496
Net income attributable to noncontrolling interest in 85           34
consolidated subsidiary
Net income attributable to LoJack Corporation         $  4,548     $  1,462
Net income per diluted share attributable to LoJack   $  0.25      $  0.08
Corporation
Weighted average diluted common shares outstanding    18,322,491   17,824,910



LoJack Corporation and Subsidiaries

Condensed Consolidated Statement of Operations



(in thousands, except share and per share amounts)


                                                      Full Year Ended
                                                      December 31,
                                                      2013         2012
                                                      (unaudited)
Revenue                                               $  140,207   $  132,528
Cost of goods sold                                    63,037       61,358
Gross profit                                          77,170       71,170
Costs and expenses:
Product development                                   5,434        5,410
Sales and marketing                                   32,005       29,018
General and administrative                            35,840       32,546
Legal settlement                                      (623)        6,930
Depreciation and amortization                         3,881        4,413
Impairment of goodwill                                —            472
Total                                                 76,537       78,789
Operating income (loss)                               633          (7,619)
Other income (expense):
Interest income                                       97           141
Interest expense                                      (943)        (730)
Other, net                                            1,008        392
Total                                                 162          (197)
Income (loss) before provision for income taxes       795          (7,816)
(Benefit) Provision for income taxes                  (2,518)      472
Net income (loss)                                     3,313        (8,288)
Net income attributable to noncontrolling interest in 146          95
consolidated subsidiary
Net income (loss) attributable to LoJack Corporation  $  3,167     $  (8,383)
Net income (loss) per diluted share attributable to   $  0.18      $  (0.48)
LoJack Corporation
Weighted average diluted common shares outstanding    18,051,090   17,515,903







LoJack Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)


                                                    December 31,  December 31,

                                                    2013          2012
                                                    (unaudited)
ASSETS




CURRENT ASSETS:
Cash and cash equivalents                           $  31,983     $  48,592
Restricted cash                                     47            225
Marketable securities at fair value                 —             1,877
Accounts receivable, net of allowances of $2,023
and $2,599,                                         26,525        20,037

respectively
Inventories                                         7,226         7,123
Prepaid and other expenses                          2,253         2,917
Prepaid and receivable income taxes                 186           1,319
Deferred income taxes                               10            586
Total current assets                                68,230        82,676
PROPERTY AND EQUIPMENT, net of accumulated
depreciation                                        12,600        11,686

of $49,235 and $49,250 respectively
DEFERRED INCOME TAXES                               —             145
INTANGIBLE ASSETS—NET                               90            100
GOODWILL                                            1,245         1,245
OTHER ASSETS—NET                                    4,611         6,076
TOTAL ASSETS                                        $  86,776     $  101,928
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short term debt                                     $  274        $  274
Accounts payable                                    6,875         5,979
Accrued and other liabilities                       9,048         15,827
Current portion of deferred revenue                 10,270        13,274
Accrued compensation                                6,227         3,290
Total current liabilities                           32,694        38,644
LONG TERM DEBT                                      6,000         13,820
DEFERRED REVENUE                                    10,648        13,395
DEFERRED INCOME TAXES                               10            586
OTHER ACCRUED LIABILITIES                           84            3,994
ACCRUED COMPENSATION                                1,331         1,243
Total liabilities                                   50,767        71,682
COMMITMENTS AND CONTINGENT LIABILITIES
EQUITY:
Preferred stock—$.01 par value; authorized,         —             —
10,000,000 shares
Common stock—$.01 par value; authorized, 35,000,000
shares;

issued and outstanding 18,741,253 at December 31,   187           182
2013 and

18,187,703 at December 31, 2012
Additional paid-in capital                          25,022        23,261
Accumulated other comprehensive income              6,875         6,191
Retained earnings                                   3,904         737
Total LoJack Corporation equity                     35,988        30,371
Noncontrolling interest in subsidiary               21            (125)
Total equity                                        36,009        30,246
TOTAL LIABILITIES AND EQUITY                        $  86,776     $  101,928



Contacts:
Donald R. Peck
LoJack Corporation
(781) 302-4200

Scott Solomon
Sharon Merrill Associates
(617) 542-5300







SOURCE LoJack Corporation

Website: http://www.lojack.com
 
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