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Ituran Location and Control Ltd. Presents Results for Full Year and Fourth Quarter 2018
[March 11, 2019]

Ituran Location and Control Ltd. Presents Results for Full Year and Fourth Quarter 2018


AZOUR, Israel, March 11, 2019 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN) (TASE: ITRN), today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2018.

Highlights of 2018

  • Closed acquisition of Road Track Holdings in mid-September;
  • Number of subscribers increased to 1,770,000 at year-end;
  • Revenue of $253.3 million, up 8% year-over-year;
  • Net income of $64.5 million, up 47% year-over-year;
  • Adjusted EBITDA of $79.2 million (31.2% of revenues), up 13% year-over-year;
  • Generated $53.2 million in full year operating cash flow;
  • Total dividends of $20 million declared to shareholders for 2018;

Highlights of the Fourth Quarter of 2018

  • Revenue of $79.2 million, up 31% year-over-year;
  • Net income of $15.2 million, up 55% year-over-year;
  • Adjusted EBITDA of $25.2 million (31.7% of revenues), up 38% year-over-year
  • Generated $18.5 million in quarterly operating cash flow;
  • Dividend of $5 million declared for the quarter;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "Our growth in 2018 was driven by both organic growth at Ituran as well as the consolidation of Road Track, which has significantly expanded our business. This is the first full quarter that we are reporting our results as a consolidated company. As can be seen in the results, we are now a company on a completely new scale. We have an adjusted EBITDA annual run-rate of $100 million. We also see increased potential due to the multiple top-line synergies that we are looking to harvest, throughout the regions in which we operate. We look forward to further building on our already highly successful business over the coming quarters and years."

Fourth Quarter 2018 Results

Revenues for the fourth quarter of 2018 were $79.2 million, representing an increase of 31% compared with revenues of $60.6 million in the fourth quarter of 2017.

The significantly higher average level of the US dollar exchange rate versus the Brazilian real, the Argentinean peso and the Israeli shekel, during the quarter versus the same period last year reduced the overall revenue level in US dollar terms and had a negative impact on the reported year-over-year revenue growth rate. In local currency terms, fourth quarter revenue grew 39% year over year.

70% of revenues were from location based service subscription fees and 30% were from product revenues.

Revenues from subscription fees increased by 24% over the same period last year. In local currency terms, subscription fees grew 33% over the same period last year. The growth was driven primarily by the increase in the subscriber base which amounted to 1,770,000 as of December 31, 2018, representing a year over year increase of 610,000.

Product revenues increased by 50% compared with the same period last year, with the majority of the increase being due to the full consolidation of Road Track Holdings.

Gross profit for the quarter was $38.1 million (48.1% of revenues). This represents an increase of 25% compared with gross profit of $30.6 million (50.4% of revenues) in the fourth quarter of 2017.

The gross margin in the quarter on subscription fees was 57.9% compared with 67.0% in the same period last year. The lower margin was due to the lower average gross margin on the newly acquired subscribers. The gross margin in the quarter on products was 25.5% compared with 4.8% in the same period last year. The higher gross margin in the current quarter was due to the product mix sold during the quarter as well as the higher product gross margin from in the acquired business.

Operating profit for the quarter was $18.3 million (23.2% of revenues). Non-GAAP operating profit for the quarter was $18.9 million (23.9% of revenues). This represent an increase of 25% and 29% respectively, compared with an operating profit of $14.7 million (24.2% of revenues) in the fourth quarter of 2017. In local currency terms, the year-over-year increase was 37% and 41%, respectively.

Share in affiliates, net, during the quarter was an income of $4.2 million versus an income of $3.0 million in the same quarter of last year. In each respective quarter, the majority of this income was due to a capital gain from an investment round at Bringg, one of Ituran's early stage mobility technology companies.

Adjusted EBITDA for the quarter was $25.2 million (31.7% of revenues), an increase of 38% compared to $18.2 million (30.1% of revenues) in the fourth quarter of 2017. In local currency terms, the increase was 50% year-over-year.

Net income in the fourth quarter of 2018 was $15.2 million (19.2% of revenues) or fully diluted earnings per share of $0.71. Net income on a non-GAAP basis in the fourth quarter of 2018 was $15.8 million (19.9% of revenues) or fully diluted earnings per share of $0.74. This represents a growth rate of 55% and 61%, respectively, compared with a net income (GAAP and non-GAAP) of $9.8 million (16.2% of revenues) or fully diluted earnings per share of $0.47 in the fourth quarter of 2017. In local currency terms the year-over-year increase was 67% and 73%, respectively.

Cash flow from operations for the quarter was $18.5 million.

On September 13, 2018, Ituran closed its acquisition of 81.3% of Road Track Holdings. In order to aid investor's understanding of modeling Ituran following the acquisition, the consolidated fourth quarter non-GAAP financials of Ituran, which exclude revenues and costs related the purchase price allocation, are included in the table below.  For further details with regard to the reconciliation between the non-GAAP and the GAAP results please see the tables published with the press release.

 

 





US$ millions

Actual Results

Fourth Quarter 2018

Non-GAAP Results

Fourth Quarter 2018

Revenue

79.2

79.4

Gross Profit

38.1

39.8

EBIT

18.3

18.9

Net Profit

15.2

15.8

EBITDA

23.4

25.2


 

Full Year Results

Revenues for 2018 were $253.3 million, representing an increase of 8% compared with revenues of $234.6 million in 2017.

The significantly higher average level of the US dollar exchange rate versus the Brazilian real and the Argentinean peso during 2018 versus 2017 reduced the overall reported revenue level and had an impact on the year-over-year revenue growth rate in US dollar terms. In local currency terms, revenues increased by 20% year-over-year.

72% of revenues were from location based service subscription fees and 28% from product revenues.

Revenues from subscription fees increased by 7% over those of last year and in local currency terms, they increased by 23% over those of last year. Product revenues increased by 11% over those of last year.

Gross profit for the year was $127.3 million (50.3% of revenues). This represents an increase of 7% compared with gross profit of $119.4 million (50.9% of revenues) in 2017.

The gross margin in the year on subscription fees was 64.4% compared with 66.7% in the same period last year. The gross margin in the year on products was 14.6% compared with 9.5% in 2017.

Operating profit for the year was $62.4 million (24.6% of revenues). Non-GAAP operating profit for the year was $63.3 million (25.0% of revenues). This represents an increase of 10% and 12% respectively, compared with an operating profit of $56.5 million (24.1% of revenues) in 2017. In local currency terms, the year-over-year increase was 19% and 21% respectively.

Share in affiliates, net for the year was an income of $8.1 million, compared with an income of $8.5 million last year.

Adjusted EBITDA for the year was $79.2 million (31.2% of revenues), an increase of 13% compared to $70.1 million (29.9% of revenues) in 2017. In local currency terms, the increase was 23% year-over-year.

Net income on a GAAP basis in 2018 was $64.5 million (25.5% of revenues) or fully diluted earnings per share of $3.06. Net income on a non-GAAP basis was $51.6 million (20.4% of revenues) or fully diluted earnings per share of $2.45. This represents a growth rate of 47% and 18%, respectively, compared with a net profit (GAAP and non-GAAP) of $43.8 million (18.7% of revenues) or fully diluted earnings per share of $2.09 in 2017. In local currency terms, the year-over-year increase was 55% and 26%, respectively.

Cash flow from operations for 2018 was $53.2 million.

Please find below the consolidated non-GAAP and Pro-forma noon GAAP full year financials of Ituran which exclude revenues and costs related to the purchase price allocation. The Pro-forma financials assumes full consolidation of Road Track on January 1 2018. For further details with regard to the reconciliation between the non-GAAP and GAAP results please see the tables with the press release.

 

US$ millions

Actual Results

Full Year 2018

Non-GAAP Results

Full Year 2018

Non-GAAP Pro-Forma

Full Year 2018

Revenue

253.3

253.6

346.3

Gross Profit

127.3

129.1

167.3

EBIT

62.4

63.3

78.0

Net Profit

64.5

51.6

57.7

EBITDA

77.5

79.2

101.4

 

 

As of December 31, 2018, the Company had cash, including marketable securities, of $53.3 million or $2.50 per share. Following the acquisition of Road Track, as of December 31, 2018, the Company had debt of $73.2 million or $3.43 per share, This is compared with cash, including marketable securities, of $40.4 million or $1.93 per share, and zero debt, as of December 31, 2017.

Dividend

For the fourth 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.

For the full year of 2018, the total dividend declared including that of the fourth quarter of 2018, was $20 million, representing 31% of the full year net income.

Conference Call Information

The Company will also be hosting a conference call later today, March 11, 2019 at 10am 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, 4:00pm 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 3,000 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


December 31,

(in thousands)

2018

2017










Current assets

 



Cash and cash equivalents

51,398

36,906

Investments in marketable securities

1,897

3,559

Accounts receivable (net of allowance
for doubtful accounts)

54,261

41,009

Other current assets

52,983

41,394

Inventories

28,367

14,244


188,906

137,112




Long-term investments and other assets



Investments in affiliated companies

8,574

14,839

Investments in other companies

2,772

1,382

Other non-current assets

3,222

939

Deferred income taxes

12,127

8,398

Funds in respect of employee rights
upon retirement

9,497

9,627


36,192

35,185




Property and equipment, net

50,460

39,047




Intangible assets, net (*)

39,040

38




Goodwill (*)

69,874

3,777










Total assets

384,472

215,159

(*) based on provisional measurement






 

 

 

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)



US dollars


December 31,

(in thousands)

2018

2017




 

Current liabilities



Credit from banking institutions

10,559

48

Accounts payable

23,987

23,264

Deferred revenues

37,671

12,796

Other current liabilities

32,475

29,644


104,692

65,752




Long-term liabilities



Long term loan

62,622

-

Liability for employee rights
upon retirement

14,801

14,062

Provision for contingencies

201

400

Deferred income taxes

2,636

-

Deferred revenues

8,221

1,241

Others non-current liabilities

325

475

Obligation to purchase
non-controlling interests(*)

16,272

-


105,078

16,178










Stockholders' equity

168,195

125,790

Non-controlling interests

6,507

7,439

Total equity

174,702

133,229
















Total liabilities and equity

384,472

215,159

(*) based on provisional measurement






 

 

 

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME



US dollars

US dollars


(in thousands

Year ended

December 31,

Three months period

ended December 31,


except per share data)

2018

2017

2018

2017








Telematics services

181,357

169,752

55,042

44,468


Telematics products

71,978

64,884

24,123

16,110



253,335

234,636

79,165

60,578








Cost of revenues:






Telematics services

64,555

56,572

23,147

14,683


Telematics products

61,452

58,680

17,967

15,318



126,007

115,252

41,114

30,001








Gross profit

127,328

119,384

38,051

30,577


Research and development expenses

6,223

3,160

2,496

716


Selling and marketing expenses

11,340

12,246

2,917

2,695


General and administrative expenses

47,693

47,590

14,308

12,494


Other expenses (income), net

(306)

(147)

2

(1)


Operating income

62,378

56,535

18,328

14,673


Other income (expenses), net

13,138

-

(695)

-


Financing income (expenses), net

1,236

(989)

(898)

(2,080)


Income before income tax

76,752

55,546

16,735

12,593


Income tax expenses

(17,273)

(17,705)

(4,857)

(5,317)


Share in gains of affiliated companies ,net

8,079

8,520

4,211

3,033


Net income for the period

67,558

46,361

16,089

10,309


Less: Net income attributable to
non-controlling interest

(3,023)

(2,567)

(899)

(485)


Net income attributable to the Company

64,535

43,794

15,190

9,824








Basic and diluted earnings per share
attributable to
Company's stockholders

3.06

2.09

0.71

0.47








Basic and diluted weighted average
number of shares
outstanding (in thousands)

21,077

20,968

21,342

20,968












 

 

 

ITURAN LOCATION AND CONTROL LTD.

RECONCILIATION OF NON-GAAP RESULTS







US dollars

US dollars


Year ended

December 31,

Three months period

ended December 31,

(in thousands)

2018

2017

2018

2017






GAAP Revenues

253,335

234,636

79,165

60,578

Valuation adjustment on acquired
deferred revenue

263

-

263

-

Non –GAAP revenue

253,598

234,636

79,428

60,578











GAAP gross profit

127,328

119,384

38,051

30,577

Gross profit adjustment

1,773

-

1,773

-

Non –GAAP gross profit

129,101

119,384

39,824

30,577











 

 

GAAP operating income

62,378

56,535

18,328

14,673

Other  profit adjustments

1,773

-

1,463

-

Amortization

(837)

-

(837)

-

    Non-GAAP operating income

63,314

56,535

18,954

14,673






Depreciation and amortization

15,917

13,519

6,261

3,537

Adjusted EBITDA

79,231

70,054

25,215

18,210











Net income attribute to the company's
shareholders

64,535

43,794

15,190

9,824

Operation income adjustment  

936

-

626

-

Capital gain on acquisition of non-controlling
interest 

(14,677)

-

-

-

Other transaction expenses

844

-

-

-

Non-GAAP net income attributable to

 Iturans' shareholders        

51,638

43,794

15,816

9,824











 

 

 

ITURAN LOCATION AND CONTROL LTD.

Summary of NON –GAAP Financial Information



US dollars

US dollars

(in thousands

Year ended
December 31,

Three months period ended
December 31,

except per share data)

2018

2017

2018

2017











revenue

253,598

234,636

79,428

60,578

Gross profit

129,101

119,384

39,824

30,577

Operation income

63,314

56,535

18,954

14,673

Net income attribute to shareholders

51,638

43,794

15,816

9,824

Adjusted EBITDA

79,231

70,054

25,215

18,210






Basic and diluted earnings per share

2.45

2.09

0.74

0.47






 

 

 

ITURAN LOCATION AND CONTROL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS



US dollars

US dollars


Year ended
December 31,

Three months period
ended December 31 ,

(in thousands)

2018

2017

2018

2017

Cash flows from operating activities





Net income for the period

67,558

46,361

16,089

10,309

Adjustments to reconcile net income to net cash from operating activities:





Depreciation, amortization and impairment of goodwill

14,608

13,519

4,642

3,537

Interest on long term credit

88

-

88

-

Loss (gains) in respect of trading marketable securities

(166)

(397)

155

(196)

Increase in liability for employee rights upon retirement

491

1,025

201

198

Share in gains of affiliated company, net

(8,079)

(8,520)

(4,211)

(3,033)

Deferred income taxes

3,285

(516)

1,874

(248)

Capital (gain) losses  on sale of property and equipment, net

85

(1)

(22)

56

Capital gain on acquisition of non-controlling interests

(14,677)

-

-

-

Decrease (increase) in accounts receivable

6,182

(4,769)

8,313

4,139

increase in other current and non-current assets

(10,656)

(11,517)

(5,391)

(3,323)

Decrease in inventories

3,580

1,632

6,432

1,087

Increase (decrease) in accounts payable

(3,837)

3,751

(4,028)

2,084

Increase (decrease) in deferred revenues

(4,418)

2,238

(2,353)

(448)

Increase (decrease) in other current and non-current liabilities

(780)

1,101

(3,245)

566

Net cash provided by operating activities

53,264

43,907

18,544

14,728






Cash flows from investment activities





Increase in funds in respect of employee rights upon





retirement, net of withdrawals

(576)

(844)

(204)

(225)

Capital expenditures

(21,744)

(16,159)

(6,433)

(5,363)

Acquisition of subsidiary (Appendix A)

(68,969)

-

-

-

Investments in affiliated companies

(1,250)

(900)

-

(803)

Investments in other companies

(1,517)

(1,274)

(420)

(213)

Repayment of  loans from affiliated companies

7,317

6,982

-

2,677

Proceed from long term deposit

10

450

185

318

Sale of (investment in) marketable securities

1,494

(3,255)

66

(72)

Proceeds from sale of property and equipment

381

315

40

10

Net cash used in investment activities

(84,854)

(14,685)

(6,766)

(3,671)






Cash flows from financing activities





Repayment of long term credit

(7,994)

-

(7,994)

-

Receipt of long term credit from bank institution

81,695

-

-

-

Short term credit from banking institutions, net

(1,004)

23

(970)

(102)

Dividend paid

(20,219)

(22,645)

(5,122)

(5,032)

Dividend paid to non-controlling interest

(2,709)

(1,644)

(1,192)

(472)

Net cash provided by (used in)  in financing activities

49,769

(24,266)

(15,278)

(5,606)

Effect of exchange rate changes on cash and cash equivalents

(3,687)

863

(845)

(366)

Net Increase (decrease) in cash and cash equivalents

14,492

5,819

(4,345)

5,085

Balance of cash and cash equivalents at beginning of period

36,906

31,087

55,743

31,821

Balance of cash and cash equivalents at end of period

51,398

36,906

51,398

36,906






Supplementary information on financing and investing activities not involving cash flows:

During the years, 2018 and 2017, the Company purchased property and equipment in an amount US$ 11 thousand and US$ 373 thousand, respectively, using a directly related liability.

In November 2018, the Company declared a dividend in the amount of US$ 5 million.  The dividend was paid in January 2019

 

 

 

ITURAN LOCATION AND CONTROL LTD.

Appendix A -   Acquisitions of a subsidiary


US dollars


Year ended

December 31,

(in thousands)

2018



Working capital (excluding cash and cash equivalents), net

2,084

Related parties

2,855

Intangible assets, net (*)

38,583

Property and equipment , net

11,014

Liability for employee rights upon retirement

(1,337)

Goodwill (*)

66,380

Consideration paid by issues of treasury stock   

(12,038)

Deferred income taxes

4,585

Other non-current assets

2,132

Previous investments in acquired companies

(24,734)

Deferred revenues

(4,411)

Obligation to purchase non-controlling interests(*)

(16,144)



Net cash used to pay for the Acquisition 

68,969



(*) based on provisional measurement


 

 

 



Company Contact

Udi Mizrahi

udi_m@ituran.com

Deputy CEO &VP Finance, Ituran

(Israel) +972 3 557 1348

International Investor Relations

Ehud Helft

ituran@gkir.com

GK  Investor & Public Relations

(US) +1 646 201 9246 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ituran-location-and-control-ltd-presents-results-for-full-year-and-fourth-quarter-2018-300809840.html

SOURCE Ituran Location and Control Ltd.


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