LoJack Reports Fourth Quarter Earnings of $.11 Per Share on $17,889,000 In Revenues
24 April 1998
LoJack Reports Fourth Quarter Earnings of $.11 Per Share on $17,889,000 In Revenues
DEDHAM, Mass., April 24 -- LoJack Corporation
announced today that for the fourth quarter ending February 28, 1998 (Fiscal
1998) revenues were $17,889,000, an increase of 15% over revenues of
$15,618,000 for the same period a year ago. Net income was $2,198,000, or
$.11 per share compared to $1,956,000 or $.09 per share for the same period a
year ago. This reflects increases of 12% in net income and 22% in earnings
per share in the fourth quarter of fiscal 1998 compared to the fourth quarter
of fiscal 1997. These results fell short of the company's expectations as the
result of lower than expected sales to the company's Argentinean licensee.
The increase in revenues in the fourth quarter of fiscal 1998 reflected a
$2,513,000 or 21% increase in domestic revenues and a $242,000, or
7% decrease in revenues from product sales and licensing fees pursuant to
license agreements for the company's technology in international markets.
Operating income for the fourth quarter of fiscal 1998 was $3,482,000, an
increase of 19% over $2,918,000 for the same period in fiscal 1997.
Revenues for the year ended February 28, 1998 were $74,502,000, an
increase of $12,837,000, or 21% over revenues of $61,665,000 a year ago. Net
income for the year ended February 28, 1998 was $9,887,000, or $.48 per share,
increases of 21% and 33% respectively, over net income of $8,180,000, or
$.36 per share for the same period a year ago.
The increase in revenues reflects an $8,706,000, or 17%, increase in
domestic revenues and a $4,131,000, or 43%, increase in revenues from product
sales and licensing fees pursuant to international licensing agreements.
Operating income for fiscal 1998 was $15,520,000 an increase of 30% over
$11,920,000 for the same period a year earlier.
Gross margin for the fourth quarter of fiscal 1998 increased to 56% of
revenues from 55% for the same period in fiscal 1997. Domestic gross margin
increased to 57% from 54% for the same period a year earlier. This increase
in gross margin percentage reflects the combination of lower manufacturing and
installation costs for the LoJack Unit as well as decreased growth rates in
optional lower margin automobile security products. International margins for
the fourth quarter of fiscal 1998 decreased to 52% of related revenues from
58% for the same period a year earlier due to changes in product mix. For the
year ended February 28, 1998 gross margin increased to 56% of revenues from
55% a year earlier. Domestic gross margin for fiscal 1998 increased to 56% of
related revenues from 55% in fiscal 1997. International gross margins for
fiscal 1998 decreased to 56% of related revenues from 57% a year earlier.
In making the announcement, C. Michael Daley, chairman, said, "Our fourth
quarter showed a continuation of the strong revenue growth in our domestic
operations that we experienced throughout the year. Our domestic revenue
growth of 21% in the fourth quarter over a year ago was the result of
contributions from both our new and existing domestic markets, and consisted
of a 28% increase in LoJack Units sales as our strong focus on our selling and
marketing efforts continue to show results. Most of this growth in LoJack
Unit sales was through LoJack's dealer distribution network, causing the
percentage of higher priced direct-to-consumer sales to decrease. This growth
was also offset partially by the aforementioned decreased penetrations of
optional, lower margin automobile security products.
"Our international revenues fell short of expectations during the fourth
quarter as the result of potential financial difficulties experienced by our
Argentinean licensee which came to light over the last several days. As a
result, a shipment of LoJack Units to this licensee in the fourth quarter was
not recognized as revenue which would have accounted for an additional $.02 of
net earnings per share. Our contracts with international licensees provide
remedies to LoJack should any licensee be unable to meet the financial
requirements necessary to operate. We believe that, based upon our license
agreement, the significant financial investment of the licensee and the
consumer acceptance of the LoJack product in Argentina, the continued
operation of LoJack's technology in Argentina is likely. At this point in
time we have taken no action to alter the relationship with our Argentinean
licensee. However, we are evaluating the situation and its potential impact
on our prospective revenues and earnings and determining the appropriate
course of action.
"Our strongest international growth continues to come from our licensees
in South Africa and South America. We have shipped the initial order of
system components and LoJack Units to our new licensee in Mexico, who plans to
begin operations in that country shortly. Implementation schedules of our
licensees in Germany and Brazil are progressing, with start-up expected
sometime during the latter half of fiscal 1999. In addition, we expect that
licensing arrangements in a number of other international locations will
progress and have a positive impact on our earnings in fiscal 1999.
"The results of the fourth quarter and of the fiscal year reflect our
increasing level of profitability as we continue to benefit from efficiencies
brought about from the economics of scale both domestically and
internationally. This increased profitability, in combination with the impact
of our stock buyback program, has produced increases in earnings per share of
22% and 33% for the fourth quarter and for fiscal 1998, respectively, as
compared with the same periods a year earlier.
"As we enter fiscal 1999 we remain enthusiastic about the company's
continued growth prospects. Domestically, we expect growth from both our
existing operations as well as from planned expansions within Texas and
California, and into Arizona, which we estimate will begin operations sometime
during the early part of the summer. Additionally, we expect increased
efforts in the fleet and commercial market to contribute to our growth for the
first time. On the international front, we expect continued growth in the
sales of international versions of the LoJack Unit, as our existing licensees
continue to become more firmly established in their markets, as well as from
license fees and system component sales related to new licensees in fiscal
1999. We will continue to evaluate the status of our Argentinean licensee and
we remain optimistic about the continued demand for our products in that
market.
"With respect to our stock buyback program, we purchased 743,000 shares
from December 1, 1998 to April 23, 1998, bringing our total number of shares
repurchased to 4,086,500. There are 913,500 shares remaining to be purchased
under the current authorization."
The foregoing statements concerning expectations for fiscal 1999 are
forward-looking statements which involve a number of risks and uncertainties
which could cause actual results to differ from those projected. Such risks
and uncertainties include, without limitation, matters affecting the sales of
automobiles, and the state of the economy in general, as well as matters
affecting the company, such as timing of commencement of operations of new
markets and success and financial condition of the company's new and existing
foreign licensees, the results of the company's domestic markets, and other
factors which are listed in Exhibit 99 to the company's Annual Report on Form
10-K for the fiscal year ended February 29, 1996.
LOJACK CORPORATION
Consolidated Financial Information
(Unaudited)
3 Months Ended 12 Months Ended
Last Day of February Last Day of February
1998 1997 1998 1997
Revenues $17,889,000 $15,618,000 $74,502,000 $61,665,000
Operating Income 3,482,000 2,918,000 15,520,000 11,920,000
Pre-tax Income 3,606,000 3,203,000 16,205,000 13,404,000
Net Income 2,198,000 1,956,000 9,887,000 8,180,000
Diluted earnings
per share $.11 $.09 $.48 $.36
Diluted Weighted Average
Shares Outstanding 20,291,000 21,398,000 20,580,000 21,569,000
SOURCE LoJack Corporation