LoJack Corp. Reports Second Quarter 2006 Results

- Revenue Increases 15% for the Quarter

- Gross Margin Increases 15% for the Quarter

- Gross Margin as a Percentage of Revenue Consistent with Second Quarter of 2005 at 55%

- Net Income Increases 11% and Earnings Per Fully Diluted Share Increase 12% for the Quarter

WESTWOOD, Mass., Aug. 7 -- LoJack Corporation reported today that revenue for the second quarter ended June 30, 2006 increased 15% to $56,660,000, from $49,163,000 in the same period a year ago. For the six months ended June 30, 2006, revenue increased 17% to $107,362,000, from $92,115,000 in the same period of the prior year.

Net income, computed in accordance with generally accepted accounting principles ("GAAP") increased 11% to $5,514,000 for the second quarter, and GAAP earnings per fully diluted share increased 12% to $0.29 per fully diluted share, from $4,986,000, or $0.26 per fully diluted share, in the same quarter a year ago. For the six months ended June 30, 2006, GAAP net income increased 11% to $8,450,000, from $7,621,000, and GAAP earnings per fully diluted share increased 8% to $0.43 per fully diluted share from $.40 per diluted share in the same period of the prior year.

Excluding the effects of stock based compensation expense, pro forma net income for the second quarter increased 22% to $6,146,000; pro forma earnings per fully diluted share increased 23% to $0.32 per fully diluted share; pro forma net income for the six months ended June 30, 2006, increased 28% to $9,868,000, and pro forma earnings per fully diluted share increased 22% to $0.50 per diluted share.

In announcing the results, Joseph F. Abely, Chairman and Chief Executive Officer said, "We are pleased with our continued strong financial performance this quarter. The second quarter delivered our 15th straight quarter of net income growth and set records for unit volume, revenue and gross margin. Our operating income performance for the quarter is particularly noteworthy given the investments we are making on longer term strategic opportunities to grow the company. These results reflect continued strong performance in our core domestic and international businesses."

GAAP operating income for the second quarter increased 10% to $8,123,000, from $7,364,000 for the same quarter a year ago. For the six months ended June 30, 2006, GAAP operating income increased 4% to $12,214,000, compared to the same period a year ago. Excluding the affects of stock based compensation expense, pro forma operating income for the second quarter was $9,022,000, representing an increase of 21% compared to the same period last year. Pro forma operating income for the six months ended June 30, 2006 was $14,234,000, representing an increase of 20% compared to the same period last year

Gross margin for the second quarter increased 15% to $30,925,000, compared to $26,875,000 for the same quarter last year, while gross margin as a percentage of revenue was 55%, the same as in the second quarter of 2005. Gross margin as a percentage of revenue in the second quarter increased four percentage points on a sequential basis from the first quarter of 2006. For the six months ended June 30, 2006, gross margin increased 16% to $56,861,000 from $48,969,000 in the same period of the prior year, and gross margin as a percentage of revenue was 53%, unchanged from the same period in 2005.

Second quarter domestic unit volumes grew 22% compared to the same period a year ago. Domestic revenue in the second quarter increased 15% to $39,054,000 from $33,934,000 in the prior year. Domestic gross margin grew 14% over the prior year and gross margin as a percentage of revenue was 57% compared to 58% for the second quarter of 2005.

International revenue in the second quarter grew 22% to $12,374,000, from $10,118,000 in the prior year, attributable to a 51% increase in volume. International gross margin dollars increased 31% compared to the same period a year ago, while gross margin as a percentage of revenue was 46% compared to 43% for the same period a year ago.

Boomerang Tracking had revenue of $5,232,000 compared to $5,111,000 for the same period of the prior year. Boomerang gross margin dollars grew 1% over the prior year, and gross margin as a percentage of revenue was 57%, the same as in the second quarter of 2005. Both the increases in revenue and gross margin are primarily due to the effects of foreign currency exchange.

Mr. Abely said, "The 22% increase in domestic unit sales produced a 15% increase in domestic revenue compared to a year ago, reflecting the continued positive effect of our bulk installation program. At the same time, we recorded a strong 14% growth in domestic margin. Gross margin as a percentage of revenue, 57% compared to 58% a year ago, remains strong with significant growth of the bulk installation program. We are especially pleased with the growth in our domestic business given the challenging automotive market. Our changes to the domestic business model have enabled us to effectively react to these market conditions to increase LoJack market share and revenue, and will be a catalyst for growth in unit sales, revenue, gross margin and net income. Our international business remains strong with growth coming from all regions around the world.

"As a result of continued anticipated strong growth in the domestic automotive channel, which has led to increased market penetration, and the aggressive growth programs of our international licensees, it is our expectation that our revenue will grow by 12% to 15% in 2006. We expect net income to grow by 12% to 14% and earnings per fully diluted share to grow by 8% to 10%, consistent with our previous guidance. Additionally, we expect gross margin as a percentage of revenue to be 54% to 55%," Mr. Abely said.

The company repurchased approximately 761,000 shares of LoJack common stock during the second quarter of 2006 at an average price of $17.85. For the six months ending June 30, 2006, the company has repurchased approximately 1,293,000 shares at an average price of $19.67. In February of this year LoJack announced a stock repurchase program, which authorized the repurchase of up to 2,000,000 shares of the company's common stock over the next two years. At June 30, 2006, approximately 757,000 shares of LoJack common stock remain authorized for repurchase under this program.

About LoJack

LoJack Corporation, the premier worldwide marketer of wireless tracking and recovery systems for valuable mobile assets, is the undisputed leader in global stolen vehicle recovery. Its Stolen Vehicle Recovery System delivers a better than 90% success rate and has helped recover more than $3 billion in global stolen assets. The system is uniquely integrated into law enforcement agencies in the United States that use LoJack's in-vehicle tracking equipment to recover stolen assets, including cars, trucks, commercial vehicles, construction equipment and motorcycles. LoJack operates in 26 states and the District of Columbia, representing areas of the country with the greatest population density, and highest number of new vehicle sales and incidence of vehicle theft. In addition, LoJack technology is utilized by law enforcement and security organizations in more than 27 countries throughout Europe, Africa and Latin America. Boomerang Tracking, Inc., the dominant marketer of stolen vehicle recovery technology in Canada operates as a wholly owned subsidiary of LoJack Corporation.