LoJack Corporation (LOJN)
Q1 2012 Earnings Call
May 01, 2012 08:30 a.m. ET
Jeremy Warnick – Corporate Communications Manager
Randy Ortiz – President & CEO
Donald Peck – EVP & CFO
Bill Dezellem – Tieton Capital
Chris Owen – Plaisance Fund
Previous Statements by LOJN
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» LoJack CEO Discusses Q1 2011 Results - Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to LoJack’s First Quarter 2012 Financial Results Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. [Operator instructions] As a reminder, this conference is being recorded.
I would now like to turn the conference over to Mr. Jeremy Warnick, sir, you may begin.
Good afternoon, and thank you, everyone for joining the call today. Our moderator is Randy Ortiz, Chief Executive Officer and President of LoJack. He’ll be joined on the call by Donald Peck, Chief Financial Officer. An archive of the webcast will be available through lojack.com in the Investor Relations section.
Any statements during this call that are not statements of historical facts are forward-looking statements. These forward-looking statements are based on a number of assumptions that involve a number of risks and uncertainties, accordingly actual results could differ materially. For further information regarding the forward-looking statements and factors that may cause such differences, please see the warning regarding forward-looking statements on our Form 10(k) for the year ended December 31, 2011.
I’ll now turn the call over to Randy Ortiz.
Okay, thank you, Jeremy, and good afternoon everybody. It’s a pleasure joining you on the call today, and we certainly appreciate your time and interest in the LoJack business.
I’m going to begin the call today with an overview of our business results in the first quarter, along with a few observations on our domestic and international businesses, and then I’ll turn the call over to our CFO, Don Peck, who will provide a detailed review of our first quarter 2012 financial results and of course an update on our guidance for the financial outlook of 2012.
I’ll then provide my observations on the auto industry and specifically the growth we are seeing in the US market. Having just completed by first full quarter leading the LoJack business, I’d also like to update you on opportunities that I see within the organization and the plans we have to best position LoJack to achieve our budget in 2012. Then we’ll close by opening up the call for any questions you may have.
First of all LoJack team is pleased with our first quarter performance delivering overall revenue growth of 13% and growth in our North American Segment of 21.3% over the same period a year ago. The domestic retail auto industry grew 11% in the first quarter and even after netting out the acceleration of our extended warranty contracts in Q1, which Don will review in detail later, we still grew the total US business at a 10.1% clip.
Our growth this quarter demonstrates our progress in closing the gap between year-over-year industry growth and the growth of the LoJack business. Additionally, on the industry front, although this is a bit counter intuitive, oil prices have not dampened new car demand in the US market, due in part to today’s vehicles that are more powerful and certainly more fuel efficient than ever before and that’s according to recent report by the Environmental Protection Agency.
The outlook for the domestic retail automobile industry for the remaining portion of the year is strong, with analysts projecting approximately 10% year-over-year sales growth which should equate to at least 1 million additional retail units versus a year ago.
While our inventories have been tight in the first quarter, manufacturer plant production line should exceed the annual growth rate for quarter two which would increase our online inventories thereby reducing dealer trades and lowering the hurdle for our preinstalled programs. Industry analysts LMC Automotive and IHS are projecting second quarter production of 3.6 million units or about a 16% growth over the same quarter year ago.
Finally, dealer performance is very strong especially within some of our key national accounts and with our agent segment, which grew 46% significantly outpacing retail industry growth. We also continue to see improvement in the fundamentals of LoJack US automotive business, including the LoJack retention rate of our dealer base as well as increases in unit sales per selling dealer and the number of new selling dealers. These improvements, in my opinion, are a reflection of strong automotive market as well as our solid value proposition for both dealerships and consumers.
Brand rotation, a favorite topic of LoJack in the past, continue to impact us going into the first quarter, but at lower rates than we’ve experienced in previous quarters. This improvement is a result of the continued increase in inventories and of course sales performance among the Japanese brands, specifically Toyota as well as continued increases in penetration rates against domestic brands. Toyota and Honda retail sales grew 9% and 4% respectively, according to Automotive News and Toyota is expected to have another very strong month in April, the early estimates calling for at least a 10% improvement over a year ago.
Revenue in the company’s international segment for the first quarter of 2012, was $6.3 million, down 13% from the $7.2 million in the same quarter last year, and Don is going to provide additional financial detail for both the domestic and international segments during his comments.