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Ituran Location and Control Ltd. Presents Results for the First Quarter of 2020
[May 13, 2020]

Ituran Location and Control Ltd. Presents Results for the First Quarter of 2020


AZOUR, Israel, May 13, 2020 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the first quarter of 2020.

Highlights of the first quarter of 2020

  • Revenue of $68.4 million;
  • EBITDA of $15.3 million;
  • Generated $10.7 million in quarterly operating cash flow;
  • Net increase in aftermarket subscribers of 17,000;
  • Total subscribers reached 1,794,000 at the end of the quarter;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "We are pleased with Ituran's first quarter performance with revenues and operating income ahead of those of the prior quarter, driven by continued subscriber growth in the aftermarket business. This is despite the impact from the COVID-19 pandemic and some currency headwinds."

Continued Mr. Sheratzky, "Due to the pandemic, in the second quarter we have seen a halt in new car sales globally, and therefore in new subscribers. We have been focusing on reducing expenses across the board, which will allow us to mitigate some of the impact to profitability and cash generation. Consequently, for the second quarter, we expect between a 10-20% reduction in EBITDA.

"Conservatively, the board has decided to suspend our dividend payments for the time being in order to strengthen our cash levels, which will better enable us to weather this significant global crisis, while also providing us with increased capital to take advantage of any opportunities.

Concluded Mr. Sheratzky, "Our ability to remain profitable and cash flow positive during this unprecedented global crisis, demonstrates the overall resilience of our business model, built on the subscription fees of 1.8 million customers distributed globally. I remain optimistic over the long-term, while in the short-term preparing Ituran to overcome the current crisis. I am confident that Ituran will emerge this period as a stronger and more efficient company. "

First Quarter 2020 Results

Starting from the current quarter, the difference between the GAAP and non-GAAP results has become minimal. Therefore, Ituran will discontinue its reporting of the non-GAAP financial measures from the current first quarter of 2020.

Revenues for the first quarter of 2020 were $68.4 million, a decrease of 7% compared with revenues of $73.6 million in the first quarter of 2019.

The higher average level of the US dollar exchange rate versus the Brazilian real, 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 revenue growth rate. In local currency terms, first quarter revenue decline by 4% year-over-year.

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

Revenues from subscription fees were $49.0 million, a decrease of 8% over first quarter 2019 revenues. In local currency terms, subscription fees declined by 3% year-over-year.

The subscriber base amounted to 1,794,000 as of March 31, 2020. This represents an increase of 13,000 over that of the end of the prior quarter. During the quarter, Ituran added 17,000 aftermarket subscribers, while the OEM subscriber base declined by 4,000.

Product revenues were $19.4 million, a decrease of 5% compared with that of the first quarter of 2019.

Gross profit for the quarter was $31.0 million (45.3% of revenues), an 11% decrease compared with gross profit of $34.6 million (47.1% of revenues) in the first quarter of 2019.

The gross margin in the quarter on subscription fees was 54.4%, compared with 57.5% in the first quarter of 2019. The gross margin on products was 22.3%, compared with 19.8% in the first quarter of 2019.

Operating income for the quarter was $10.1 million (14.7% of revenues), a decrease of 25% compared with $13.5 million (18.3% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 22% year over year. As mentioned in prior quarters, the main decline was due to the OEM business as a result of selling of less hardware and reducing the free trial period for new subscribers.

EBITDA for the quarter was $15.3 million (22.4% of revenues), a decrease of 21% compared with $19.3 million (26.2% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 16% year over year.

Net income for the first quarter of 2020 was $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.31, a decrease of 21% compared with $8.1 million (10.9% of revenues) or fully diluted earnings per share of $0.38 in the first quarter of last year. In local currency terms, the decline would have been 17% year over year.

Cash flow from operations for the first quarter of 2020 was $10.7 million.

As of March 31, 2020, the Company had cash, including marketable securities, of $50.l million and debt of $63.5 million, amounting to a net debt of $13.4 million. This is compared with cash, including marketable securities, of $54.3 million and debt of $67.9 million, amounting to a net debt of $13.6 million, as of December 31, 2019.

Conference Call Information

The Company will also be hosting a conference call later today, May 13, 2020 at 9am 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: 1 888 407 2553           

ISRAEL Dial-in Number: 03 918 0610

CANADA Dial-in Number: 1 866 485 2399

INTERNATIONAL Dial-in Number:  +972 3 918 0610

at:

9:00am Eastern Time, 6:00am 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, as well as factors related to the global COVID-19 pandemic.

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 approaching 2 million subscribers using its location based services with a market leading position in Israel and Latin America. Established in 1995, Ituran has approximately 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

 

 

 





CONDENSED CONSOLIDATED BALANCE SHEETS




US dollars


 March 31,    

Decmber 31,

(in thousands)

2020

2019


(unaudited)








Current assets



Cash and cash equivalents

49,858

53,964

Investments in marketable securities

268

358

Accounts receivable (net of allowance for doubtful accounts)

46,327

45,090

Other current assets

41,020

49,201

Inventories

25,526

25,537


_______

_______


162,999

174,150


----------

----------




Non- Current investments and other assets



Investments in affiliated companies

835

1,666

Investments in other companies

3,612

3,260

Other non-current assets

3,203

3,365

Deferred income taxes

8,602

10,385

Funds in respect of employee rights upon retirement

11,231

11,476


_______

_______


27,483

30,152


----------

----------

Property and equipment, net

43,381

48,866


----------

----------

Operating lease right-of-use assets, net

12,139

12,626


----------

----------

Intangible assets, net

21,650

23,355


----------

----------

Goodwill

49,970

50,086


----------

----------














_______

_______

Total assets

317,622

339,235


 

_______

 

_______


 

_______

 

_______


 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)




US dollars


March 31,           

December 31,

(in thousands)

2020

2019


(unaudited)


Current liabilities



Credit from banking institutions

19,618

18,110

Accounts payable

20,069

22,656

Deferred revenues

27,488

29,146

Other current liabilities

34,569

31,153


_______

_______


101,744

101,065


----------

----------

Non- Current liabilities



Long term loan

43,891

49,803

Liability for employee rights upon retirement

17,344

17,000

Deferred income taxes

2,788

2,867

Deferred revenues

8,963

9,763

Others non-current liabilities

239

241

Operating lease liabilities, non-current

8,724

10,839

Obligation to purchase non-controlling interests

11,748

11,743


________

________


93,697

102,256


-----------

-----------







Stockholders' equity

116,009

129,330

Non-controlling interests

6,172

6,584


-----------

-----------


________

________

Total equity

122,181

135,914


-----------

-----------











_______

_______

Total liabilities and equity

317,622

339,235


 

_______

 

_______


 

______

 

_______

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME









US dollars

(in thousands


Three months period
ended March 31,

except per share data)



2020

2019




(unaudited)

Revenues:





Telematics services



48,976

53,159

Telematics products



19,398

20,445




_______

_______




68,374

73,604




----------

----------

Cost of revenues:





Telematics services



22,342

22,577

Telematics products



15,063

16,390




_______

_______




37,405

38,967




----------

----------




_______

_______






Gross profit



30,969

34,637

Research and development expenses



3,886

3,751

Selling and marketing expenses



3,059

2,930

General and administrative expenses



13,923

14,446

Other expenses, net



27

4




_______

_______

Operating income



10,074

13,506

Other expenses, net



(10)

(73)

Financing expenses, net



(654)

(1,015)




_______

_______

Income before income tax



9,410

12,418

Income tax expenses



(1,926)

(3,497)

Share in losses of affiliated companies ,net



(903)

(868)




_______

_______

Net income for the period



6,581

8,053

Less: Net loss (income) attributable to non-controlling interest



(214)

4




_______

_______

Net income attributable to the Company



6,367

8,057






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



0.31

0.38






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



20,813

21,256











 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS








US dollars




Three months period
ended March 31 ,


(in thousands)



2020

2019





(unaudited)


Cash flows from operating activities






Net income for the period



6,581

8,053


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





Depreciation and  amortization



5,223

6,115


Interest and exchange rate on short and long term credit



(598)

(13)


Loss in respect of trading marketable securities



90

28


Increase in liability for employee rights upon retirement, net



834

274


Share in losses of affiliated company, net



903

868


Deferred income taxes



798

84


Capital losses  from sale of property and equipment, net



60

6


Decrease (increase) in accounts receivable



(4,491)

4,929


Increase in other current and non-current assets



(528)

(301)


Decrease (increase) in inventories



(378)

1,292


Increase (decrease) in accounts payable



190

(1,596)


Decrease in deferred revenues



(1,403)

(2,548)


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



3,380

(2,778)


Increase in obligasion for purechase non-controling interests



51

494





________

________


Net cash provided by operating activities



10,712

14,907





------------

------------








Cash flows from investment activities






Increase in funds in respect of employee rights upon






retirement, net of withdrawals



(108)

(75)


Capital expenditures



(3,451)

(6,930)


Investments in affiliated and other companies



(496)

(13)


Proceed from long term deposit



(22)

(78)


Sale of marketable securities,net



-

384


Proceeds from sale of property and equipment



166

27





________

________


Net cash used in investment activities



(3,911)

(6,685)





------------

------------








Cash flows from financing activities






Short term credit from banking institutions, net



2,660

(1,818)


Repayment of long term loan



(4,285)

-


Dividend paid



(5,050)

(4,909)


Dividend paid to non-controlling interest



-

(538)





________

________


Net cash used in  in financing activities



(6,675)

(7,265)





------------

------------


Effect of exchange rate changes on cash and cash equivalents



(4,232)

694





------------

------------


Net Increase (decrease) in cash and cash equivalents



(4,106)

1,651


Balnce of cash and cash equivalents at beginning of period



53,964

51,398





________

________


Balance of cash and cash equivalents at end of period



49,858

53,049














Supplementary information on financing and investing activities not involving cash flows:
In March 2020, the Company declared a dividend in the amount of US$ 5 million.  The dividend was paid in April 2020.

 

Company Contact

International Investor Relations

Udi Mizrahi

Ehud Helft

udi_m@ituran.com

ituran@gkir.com

Deputy CEO & VP Finance, Ituran

GK Investor & Public Relations

(Israel) +972 3 557 1348

(US) +1 646 201 9246

 

Cision View original content:http://www.prnewswire.com/news-releases/ituran-location-and-control-ltd-presents-results-for-the-first-quarter-of-2020-301058431.html

SOURCE Ituran Location and Control Ltd


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