|
Ituran Location and Control Ltd. Presents Results for the Third Quarter 2018
AZOUR, Israel, Nov. 26, 2018 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN, TASE: ITRN), today announced its consolidated financial results for the third quarter ended September 30, 2018.
Highlights of the third quarter of 2018
- Closed acquisition of the majority stake in Road Track Holdings in mid-September with minimal impact on the financial results of the quarter;
- Revenue of $53.4 million and operating profit of $13.7 million (margin of 25.7%)
- Net profit of $26.1 million (including one-time income of $13.8 million);
- EBITDA of $17.0 million (31.8% of revenue); in local currency terms, EBITDA grew by 13%;
- Dividend of $5 million declared for the quarter;
Third Quarter 2018 Results
The closing of the acquisition of Road Track Holdings on September 13, 2018, brought slightly over half a million subscribers and the subscriber base reached 1,752,000 subscribers as of September 30, 2018 compared with 1,137,000 subscribers as of September 30, 2017. Because the acquisition happened toward the end of the third quarter, there was minimal impact on the consolidated profit and loss statement for the quarter.
Revenues for the third quarter of 2018 were $53.4 million, compared with revenues of $60.6 million in the third quarter of 2017. 73% of revenues were from location based service subscription fees and 27% were from product revenues.
The significant strengthening of the US dollar versus the Brazilian real and the Argentinean peso during the third quarter versus the prior quarter as well as the third quarter of 2017 reduced the overall revenue level in US dollars and impacted the growth rate of the revenues in US dollar terms.
Revenues from subscription fees were $39.1 million, compared with $43.8 million in the third quarter last year. Excluding the exchange rate impact, the revenues from subscription fees would have grown by 3.4% year-over-year.
Revenue from products were $14.3 million compared with $16.8 million in the third quarter of last year. The New Year holiday season in Israel fell fully in the third quarter of 2018, while it was divided between the third and fourth quarter of last year, leading to less days of sales in Israel and lower product revenue during the current quarter. In addition, the above mentioned exchange rate volatility also impacted the product revenues. In local currency terms, product revenues would have declined by 13% year-over-year.
Gross profit for the third quarter of 2018 was $28.9 million (54.1% of revenues), compared with $30.5 million (50.4% of revenues) in the third quarter of 2017.
The gross margin on subscription fees were 65.3% compared with 66.7% in the same period last year. The gross margin on product sales were 23.4% compared with 7.6% in the same period last year. The change in gross margin was mainly due to the product sales mix sold during the quarter.
Operating profit for the third quarter of 2018 was $13.7 million (25.7% of revenues), compared with an operating profit of $13.9 million (22.9% of revenues) in the third quarter of 2017. Excluding the impact of the change in exchange rates over the period, the operating profit would have increased 15% over the third quarter of 2017.
During the quarter, Ituran had a one-time other income of $13.8 million. This was related to an accounting gain from an acquisition following the gain of control of Ituran's joint venture with Road Track Holdings in Brazil and Argentina, which under GAAP rules, is accounted for at market value and was therefore revalued. The total gain is net of transaction related expenses.
During the quarter, share in affiliates, net was an income of $1.6 million versus an income of $1.0 million in the same quarter of last year.
EBITDA for the quarter was $17.0 million (31.8% of revenues), compared to an EBITDA of $17.4 million (28.7% of revenues) in the third quarter of 2017. Excluding the impact of the change in exchange rates over the period, the EBITDA would have increased by 13%.
Net profit was $26.1 million in the third quarter of 2018 (48.8% of revenues) or fully diluted EPS of $1.24. This is compared with a net profit of $10.5 million (17.4% of revenues) or fully diluted EPS of $0.50 in the third quarter of 2017.
Cash flow from operations for the quarter was $14.8 million.
As of September 30, 2018, the Company had cash, including marketable securities, of $57.4 million. The company also had short and long-term debt of $84.9 million. On a net basis, the net debt of the company was $27.5 million, compared with net cash of $40.4 million as of December 31, 2017.
Ituran consolidated non-GAAP Pro-Forma Financials
On September 13, 2018, Ituran closed its acquisition of 81.3% of Road Track Holdings. In order to aid investor's understanding of how to model Ituran following the acquisition, the consolidated non-GAAP pro-forma financials of Ituran and Road Track Holdings for the first nine months of 2018 are included in the table below.
US$ millions
| Actual
results
(9 months ended
September 30, 2018)
| Non-GAAP
Pro-forma results
(9 months ended
September 30, 2018)
| Non-GAAP pro-forma at
constant currency ex-rates
(based on average
2017 exchange rates)
| Revenue
| 174.2
| 270.4
| 286.8
| EBIT
| 44.1
| 59.2
| 65.9
| Net profit
| 49.3*
| 41.9
| 46.6
|
*Please note that the actual net profit in the table above includes a $13.8 million one-time income while the non-GAAP pro-forma does not include this.
Dividend
For the third quarter of 2018, a dividend of $5.0 million was declared in line with the Company's stated current policy of issuing at least $5 million on a quarterly basis.
Management Comment
Eyal Sheratzky, Co-CEO of Ituran said, "Ituran continues to grow and is performing well. Again, significant local currency weakness versus the dollar had an impact on our financials. As the solid improvement in our margins indicates, the health of the underlying business is strong and allows us to continually grow profitably for the long-term, independent of the short-term volatility."
Continued Mr. Sheratzky, "We closed the third quarter consolidating Road Track, a company we had been working with closely for five years in Brazil and Argentina. Ituran is now a Company on a completely new scale adding significant operations throughout Latin America. While the impact on our P&L was not significant in the current quarter, we ended the quarter with over 1.7 million subscribers. In only a few weeks since the close, we are already working on leveraging the synergies, given our new scale in the telematics market in Latin America. We look forward to our continued growth and expansion for the foreseeable future."
Conference Call Information
The Company will also be hosting a conference call later today, November 26, 2018 at 10 am Eastern Time. On the call, management will review and discuss the results, and will be available to answer investor questions.
To participate, please call one of the following teleconferencing numbers. Please begin placing your calls a few minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1 888 668 9141
ISRAEL Dial-in Number: 03 918 0610
CANADA Dial-in Number: 1 888 604 5839
INTERNATIONAL Dial-in Number: +972 3 918 0610
At:
10:00am Eastern Time, 7:00am Pacific Time, 5:00pm Israel Time
For those unable to listen to the live call, a replay of the call will be available from the day after the call in the investor relations section of Ituran's website.
Certain statements in this press release are "forward-looking statements" within the meaning of the Securities Act of 1933, as amended. These forward-looking statements include, but are not limited to, our plans, objectives, expectations and intentions and other statements contained in this report that are not historical facts as well as statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to significant uncertainties and changes in circumstances, many of which are beyond our control. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors.
About Ituran
Ituran is a leader in the emerging mobility technology field, providing value-added location-based services, including a full suite of services for the connected-car. Ituran offers Stolen Vehicle Recovery, fleet management as well as mobile asset location, management & control services for vehicles, cargo and personal security for the retail, insurance industry and car manufacturers. Ituran is the largest OEM telematics provider in Latin America. Its products and applications are used by customers in over 20 countries. Ituran is also the founder of the Tel-Aviv based DRIVE startup incubator to promote the development of smart mobility technology.
Ituran's subscriber base has been growing significantly since the Company's inception to well over 1.7 million subscribers using its location based services with a market leading position in Israel and Latin America. Established in 1995, Ituran has over 3,400 employees worldwide, with offices in Israel, Brazil, Argentina, Mexico, Ecuador, Columbia, India, Canada and the United States.
For more information, please visit Ituran's website, at: www.ituran.com
ITURAN LOCATION AND CONTROL LTD.
| CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
| US dollars
|
| September 30,
| December 31,
| (in thousands)
| 2018
| 2017
|
|
|
|
|
|
| Current assets
|
|
| Cash and cash equivalents
| 55,743
| 36,906
| Investments in marketable securities
| 1,674
| 3,559
| Accounts receivable (net of allowance for doubtful accounts)
| 62,782
| 41,009
| Other current assets
| 45,591
| 41,394
| Inventories
| 35,066
| 14,244
|
| 200,856
| 137,112
| Long-term investments and other assets
|
|
| Investments in affiliated companies
| 4,088
| 14,839
| Investments in other company
| 2,400
| 1,382
| Other non-current assets
| 2,998
| 939
| Deferred income taxes
| 14,550
| 8,398
| Funds in respect of employee rights upon retirement
| 9,588
| 9,627
|
| 33,624
| 35,185
|
|
|
| Property and equipment, net
| 52,607
| 39,047
| Intangible assets, net
| 29,389
| 38
| Goodwill
| 70,875
| 3,777
|
|
|
| Total assets
| 387,351
| 215,159
|
ITURAN LOCATION AND CONTROL LTD.
| CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)
|
|
| US dollars
|
| September 30,
| December 31,
| (in thousands)
| 2018
| 2017
|
|
|
| Current liabilities
|
|
| Credit from banking institutions
| 8,022
| 48
| Accounts payable
| 27,990
| 23,264
| Deferred revenues
| 42,135
| 12,796
| Other current liabilities
| 38,236
| 29,644
|
| 116,383
| 65,752
|
|
|
| Long-term liabilities
|
|
| Long term loan
| 76,895
| -
| Liability for employee rights upon retirement
| 15,020
| 14,062
| Provision for contingencies
| 326
| 400
| Deferred income taxes
| 3,079
| -
| Deferred revenues
| 7,030
| 1,241
| Others non-current
| 390
| 475
|
| 102,740
| 16,178
|
|
|
|
|
|
| Stockholders' equity
| 155,130
| 125,790
| Non-controlling interests
| 13,098
| 7,439
| Total equity
| 168,228
| 133,229
|
|
|
|
|
|
|
|
|
| Total liabilities and equity
| 387,351
| 215,159
|
ITURAN LOCATION AND CONTROL LTD.
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
| US dollars
| US dollars
|
| Nine month period
| Three month period
|
| ended September 30,
| ended September 30,
| (in thousands except per share data)
| 2018
| 2017
| 2018
| 2017
|
|
|
|
|
| Revenues:
|
|
|
|
| Location-based services
| 126,315
| 125,284
| 39,126
| 43,847
| Wireless communications products
| 47,855
| 48,774
| 14,250
| 16,764
|
| 174,170
| 174,058
| 53,376
| 60,611
|
|
|
|
|
| Cost of revenues:
|
|
|
|
| Location-based services
| 41,408
| 41,889
| 13,569
| 14,584
| Wireless communications products
| 43,485
| 43,362
| 10,914
| 15,483
|
| 84,893
| 85,251
| 24,483
| 30,067
|
|
|
|
|
| Gross profit
| 89,277
| 88,807
| 28,893
| 30,544
| Research and development expenses
| 3,727
| 2,444
| 1,628
| 676
| Selling and marketing expenses
| 8,423
| 9,551
| 2,941
| 3,273
| General and administrative expenses
| 33,385
| 35,096
| 10,795
| 12,705
| Other income, net
| (308)
| (146)
| (190)
| (3)
| Operating income
| 44,050
| 41,862
| 13,719
| 13,893
| Other income, net
| 13,833
| -
| 13,833
| -
| Financing income, net
| 2,134
| 1,091
| 1,566
| 250
| Income before income tax
| 60,017
| 42,953
| 29,118
| 14,143
| Income tax expenses
| (12,416)
| (12,388)
| (3,906)
| (3,944)
| Share in gains of affiliated companies ,net
| 3,868
| 5,487
| 1,644
| 998
| Net income for the period
| 51,469
| 36,052
| 26,856
| 11,197
| Less: Net income attributable to non-controlling interest
| (2,124)
| (2,082)
| (805)
| (667)
| Net income attributable to the Company
| 49,345
| 33,970
| 26,051
| 10,530
|
|
|
|
|
| Basic and diluted earnings per share attributable to
Company's stockholders
| 2.35
| 1.62
| 1.24
| 0.50
|
|
|
|
|
| Basic and diluted weighted average number of shares
outstanding (in thousands)
| 20,982
| 20,968
| 21,010
| 20,968
|
ITURAN LOCATION AND CONTROL LTD.
| RECONCILIATION OF NON-GAAP RESULTS
|
|
| US dollars
| US dollars
|
| Nine months ended
| Three months ended
| (in thousands
| September 30,
| September 30,
| except per share data)
| 2018
| 2017
| 2018
| 2017
|
|
|
|
|
| GAAP Revenues:
| 174,170
| 174,058
| 53,376
| 60,611
| Valuation adjustment on acquired deferred
| -
| -
| -
| -
| revenue
|
|
|
|
| Non –GAAP revenue
| 174,170
| 174,058
| 53,376
| 60,611
|
|
|
|
|
| GAAP gross profit
| 89,277
| 88,807
| 28,893
| 30,544
| Valuation adjustment on acquired deferred
| -
| -
| -
| -
| revenue
|
|
|
|
| Non –GAAP gross profit
| 89,277
| 88,807
| 28,893
| 30,544
|
|
|
|
|
| GAAP operating income
| 44,050
| 41,862
| 13,719
| 13,893
| Operation profit adjustments
|
|
|
|
| Amortization of other intangible assets
| 310
| -
| 310
| -
| Non-GAAP operating income
| 44,360
| 41,862
| 14,029
| 13,893
|
|
|
|
|
| GAAP net income attributable to
|
|
|
|
| the company's shareholders
| 49,345
| 33,970
| 26,051
| 10,530
| Operation income adjustment
| 310
| -
| 310
| -
| Other income, net
| (13,833)
| -
| (13,833)
| -
| Non-GAAP net income attributable to
sapiens' shareholders
| 35,822
| 33,970
| 12,528
| 10,530
|
|
|
|
|
|
ITURAN LOCATION AND CONTROL LTD.
|
| Summary of NON –GAAP Financial Information
|
|
|
|
| US dollars
| US dollars
|
| Nine months ended
| Three months ended
| (in thousands
| September 30,
| September 30,
| except per share data)
| 2018
| 2017
| 2018
| 2017
|
|
|
|
|
|
|
|
|
|
| revenue
| 174,170
| 174,058
| 53,376
| 60,611
| Gross profit
| 89,277
| 88,807
| 28,893
| 30,544
| Operation income
| 44,360
| 41,862
| 14,029
| 13,893
| Net income to shareholders
| 35,822
| 33,970
| 12,528
| 10,530
| Adjusted EBITDA
| 54,016
| 51,844
| 16,996
| 17,408
|
|
|
|
|
| Basic and diluted earnings per share
| 1.71
| 1.62
| 0.60
| 0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA Calculation
|
|
|
|
|
|
|
|
|
|
| US dollars
| US dollars
|
| Nine months ended
| Three months ended
| (in thousands
| September 30,
| September 30,
| except per share data)
| 2018
| 2017
| 2018
| 2017
|
|
|
|
|
| GAAP operation profit:
| 44,050
| 41,862
| 13,719
| 13,893
| Non –GAAP adjustments
|
|
|
|
|
|
|
|
|
| Amortization of other intangible assets
| 310
| -
| 310
| -
|
|
|
|
|
| Non –GAAP operating profit
| 44,360
| 41,862
| 14,029
| 13,893
|
|
|
|
|
| Depreciation
| 9,656
| 9,982
| 2,967
| 3,515
| Adjusted EBITDA
| 54,016
| 51,844
| 16,996
| 17,408
|
ITURAN LOCATION AND CONTROL LTD.
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
| US dollars
| US dollars
|
| Nine month period
| Three month period
|
| ended September 30,
| ended September 30,
| (in thousands)
| 2018
| 2017
| 2018
| 2017
|
|
|
| Cash flows from operating activities
|
|
|
|
| Net income for the period
| 51,469
| 36,052
| 26,856
| 11,197
|
|
|
|
|
| Adjustments to reconcile net income to net cash from
operating activities:
|
|
|
|
|
|
|
|
|
| Depreciation and amortization
| 9,966
| 9,982
| 3,277
| 3,515
| Losses (gain) in respect of trading marketable securities
| (321)
| (201)
| 20
| (134)
| Increase in liability for employee rights upon retirement
| 290
| 827
| 363
| 339
| Share in gains of affiliated companies, net
| (3,868)
| (5,487)
| (1,644)
| (998)
| Deferred income taxes
| 1,411
| (268)
| (408)
| (488)
| Capital gains (losses) on sale of property and equipment, net
| 107
| (57)
| 38
| 4
| Capital gains on Acquisition of non-controlling interests
| (14,677)
| -
| (14,677)
| -
| Decrease (increase) in accounts receivable
| (2,131)
| (8,908)
| 3,623
| (3,391)
| Decrease in other current assets
| (5,265)
| (8,194)
| (1,286)
| (2,383)
| Decrease (increase) in inventories
| (2,852)
| 545
| (2,867)
| 2,009
| Increase in accounts payable
| 191
| 1,667
| 2,054
| 180
| Increase (decrease) in deferred revenues
| (2,065)
| 2,686
| (138)
| 450
| Increase (decrease) in other current liabilities
| 2,465
| 535
| (389)
| 1,603
| Net cash provided by operating activities
| 34,720
| 29,179
| 14,822
| 11,903
|
|
|
|
|
| Cash flows from investment activities
|
|
|
|
| Increase in funds in respect of employee rights upon
retirement, net of withdrawals
| (372)
| (619)
| (525)
| (256)
| Capital expenditures
| (15,311)
| (10,796)
| (5,329)
| (4,047)
| Acquisitions of a subsidiary – Appendix A
| (68,969)
| -
| (68,969)
| -
| Investments in affiliated companies
| (1,250)
| (97)
| -
| -
| Investments in other companies
| (1,097)
| (1,061)
| (200)
| -
| Investment in marketable securities
| (22,618)
| (6,607)
| (243)
| (3,418)
| Sale of marketable securities
| 24,046
| 3,424
| -
| 1,305
| Deposit
| (175)
| 132
| 30
| 94
| Proceeds from loans to affiliated companies
| 7,317
| 4,305
| 4,055
| 3,743
| Proceeds from sale of property and equipment
| 341
| 305
| 125
| 124
| Net cash used in investment activities
| (78,088)
| (11,014)
| (71,056)
| (2,455)
|
|
|
|
|
| Cash flows from financing activities
|
|
|
|
| Short term credit from banking institutions, net
| (34)
| 125
| (1)
| 132
| Receipt of long-term credit from banking institutions
| 81,695
| -
| 81,695
| -
| Dividend paid
| (15,097)
| (17,613)
| (5,030)
| (5,032)
| Dividend paid to non-controlling interest
| (1,517)
| (1,172)
| (545)
| (420)
| Net cash provided by (used in) financing activities
| 65,047
| (18,660)
| 76,119
| (5,320)
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents
| (2,842)
| 1,229
| (248)
| 577
|
|
|
|
|
| Net increase in cash and cash equivalents
| 18,837
| 734
| 19,637
| 4,705
| Balance of cash and cash equivalents at beginning of the period
| 36,906
| 31,087
| 36,106
| 27,116
| Balance of cash and cash equivalents at end of the period
| 55,743
| 31,821
| 55,743
| 31,821
|
| Supplementary information on financing and investing activities not involving cash flows:
| In August 2018, the Company declared a dividend in an amount of US$ 5 million. The dividend was paid in October 2018.
|
Appendix A - Acquisitions of a subsidiary
|
|
|
| US dollars
|
| Nine and three
|
| months ended
|
| September 30,
| (in thousands)
| 2018
|
|
| Working capital (excluding cash and cash equivalents), net
| (858)
| Related parties
| 2,855
| Intangible assets, net
| 29,610
| Property and equipment , net
| 13,766
| Liability for employee rights upon retirement
| (1,337)
| Goodwill
| 67,067
| Consideration paid by issues of treasury stock
| (12,038)
| Deferred income taxes
| 4,700
| Other non-current assets
| 2,132
| Previous investments in acquired companies
| (24,734)
| Deferred revenues
| (6,514)
| Non-controlling interests
| (5,680)
|
|
| Net cash used to pay for the Acquisition
| 68,969
|
Company Contact
| International Investor Relations
| Udi Mizrahi
[email protected]
VP Finance, Ituran
(Israel) +972 3 557 1348
| Ehud Helft
[email protected]
GK Investor & Public Relations
(US) +1 646 201 9246
|
 View original content:http://www.prnewswire.com/news-releases/ituran-location-and-control-ltd-presents-results-for-the-third-quarter-2018-300755021.html
SOURCE Ituran Location and Control Ltd.
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