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Ituran Location and Control Ltd. Presents Results for The Third Quarter of 2019
[November 25, 2019]

Ituran Location and Control Ltd. Presents Results for The Third Quarter of 2019


AZOUR, Israel, Nov. 25, 2019 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the third quarter ended September 30, 2019.

Highlights of the third quarter of 2019

  • Revenue of $69.0 million, up 29% year-over-year;
  • Adjusted EBITDA of $18.7 million (26.8% of revenues), up 10% year-over-year
  • Generated $11.5 million in quarterly operating cash flow;
  • Dividend of $5 million declared for the quarter;
  • Ituran added 20,000, net after-market subscribers and no change to OEM subscribers;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "While Ituran's aftermarket business in Brazil has been recovering and returning to its growth trend, the OEM segment remains weak as a result of the difficult environment that the car manufacturers in the region are facing. 2019 has been a transitional year for us and we are working on realizing the synergies from the recently acquired OEM business across all our geographies. We are focusing on cross selling our services into new geographies as well as combining the operating footprint which will result in cost saving that will offset any decline in OEM revenues."

Continued Mr. Sheratzky, "In the aftermarket business, the subscriber quarterly growth rate has returned to its long-term target level of around 20,000 subscriber-adds per quarter, which we are very pleased with. We expect that the resumption of aftermarket subscriber growth will translate into improved operating results in the coming year."

The results include the consolidated non-GAAP financial results of Ituran, which exclude revenues and costs related to the purchase price allocation. For further details with regard to the reconciliation between the non-GAAP and GAAP results please see the financial tables with the press release.

Third quarter 2019 Results

Revenues for the third quarter of 2019 were $69.0 million. Non-GAAP revenues for the quarter were $70.0 million representing an increase of 31% compared with revenues of $53.4 million in the third quarter of 2018.

The higher average level of the US dollar exchange rate versus the Brazilian real and the Argentinean peso, 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, third quarter non-GAAP revenue grew 33% year over year.

73% of revenues were from location-based service subscription fees and 27% were from product revenues.

Non-GAAP revenues from subscription fees were $51.2 million, representing an increase of 31% over the same period last year. In local currency terms, subscription fees grew 32% over the same period last year. The subscriber base amounted to 1,781,000 as of September 30, 2019. Ituran added 20,000, net after-market subscribers during the quarter and there was no change to the number of OEM subscribers.

Non-GAAP product revenues were $18.7 million, representing an increase of 31% compared with the same period last year.

Gross profit for the quarter was $31.9 million (46.2% of revenues). Non-GAAP gross profit for the quarter was $32.9 million (47.0% of revenues). This represents an increase of 14% compared with gross profit of $28.9 million (54.1% of revenues) in the third quarter of 2018.

The non-GAAP gross margin in the quarter on subscription fees was 56.3% compared with 61.8% in the same period last year. The lower margin was due to the lower average gross margin on the recently acquired OEM subscribers as well as a decrease in the gross margin from Brazil and Argentina.

The non-GAAP gross margin in the quarter on products was 21.5% compared with 33.0% in the same period last year. The variance in the gross margin between quarters was due to the product mix sold.

Operating profit for the quarter was $11.9 million (17.2% of revenues). Non-GAAP operating profit for the quarter was $13.7 million (19.6% of revenues). This is compared with an operating profit of $14.0 million (26.3% of revenues) in the third quarter of 2018. In local currency terms, the non-GAAP operating profit was unchanged compared with that of last year.

Adjusted EBITDA for the quarter was $18.7 million (26.8% of revenues), an increase of 10% compared to $17.0 million (31.8% of revenues) in the third quarter of 2018. In local currency terms, the increase in adjusted EBITDA was 17% year-over-year.

Net income in the third quarter of 2019 was $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.30. Net income on a non-GAAP basis in the third quarter of 2019 was $7.8 million (11.0% of revenues) or fully diluted earnings per share of $0.37.

Net income in the third quarter of 2018 was $26.0 million (48.8% of revenues) or fully diluted earnings per share of $1.24 in the third quarter of 2018. This included a one-time other income of $13.8 million, 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. The net income on a non-GAAP basis in the third quarter of 2018 was $12.5 million (23.4% of revenues) or fully diluted earnings per share of $0.60.

Cash flow from operations for the quarter was $11.5 million.

As of September 30, 2019, the Company had cash, including marketable securities, of $56.5 million and debt of $74.5 million, amounting to a net debt of $18.0 million or $0.86 per share. This is compared with cash, including marketable securities, of $53.3 million and debt of $73.2 million, amounting to a net debt of $19.9 million, or $0.93 per share, as of December 31, 2018.

Dividend

For the third quarter of 2019, 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.

Share Buy Back

On May 21, 2019, the board of directors approved a share buyback program, which Ituran has commenced. Under the program, the Company is able to repurchase Ituran shares in an amount up to $25 million by December 31, 2020. As of September 30, 2019, Ituran repurchased a total of 121,000 shares amounting to approximately $3.5 million.  

Conference Call Information

The Company will also be hosting a conference call later today, November 25, 2019 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.

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.

 

 







CONDENSED CONSOLIDATED BALANCE SHEETS



US dollars


September 30,


December 31,

(in thousands)

2019


2018





Current assets




Cash and cash equivalents

56,254


51,398

Investments in marketable securities 

233


1,897

Accounts receivable (net of allowance for doubtful accounts)

48,667


54,261

Other current assets

48,200


52,983

Inventories

25,642


28,367


_______


_______


178,996


188,906


----------


----------





Long-term investments and other assets




Investments in affiliated companies

2,086


4,872

Investments in other company

3,126


2,772

Other non-current assets

3,325


3,222

Deferred income taxes

10,410


12,127

Funds in respect of employee rights upon retirement

11,316


9,497


_______


_______


30,263


32,490


----------


----------





Property and equipment, net

48,438


50,460


----------


----------





Operating lease right-of-use assets, net



6,331


-


----------


----------

Intangible assets, net

37,822


39,040


----------


----------





Goodwill

62,343


62,896





Total assets

364,193


373,792








 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)



US dollars


September 30,


December 31,

(in thousands)

2019


2018









Current liabilities


Credit from banking institutions 

20,599


10,559

Accounts payable

19,733


23,987

Deferred revenues

30,183


37,671

Operating lease liabilities, current

2,313


-

Other current liabilities

29,883


32,475


             _______


           _______


102,711


104,692


----------


----------





Long-term liabilities




Long term loan

53,924


62,622

Liability for employee rights upon retirement

17,084


14,801

Provision for contingencies

158


201

Deferred income taxes

4,875


6,458

Deferred revenues

8,816


8,221

Operating lease liabilities, non-current

4,018


-

Obligation to purchase non-controlling interests

15,916


16,272

Others non-current

129


325


               ________ 


         ________ 


104,920


108,900


-----------


-----------









Stockholders' equity

150,032


153,693

Non-controlling interests

6,530


6,507


-----------


-----------

Total equity

156,562


160,200


-----------


-----------






                  _______


            _______

Total liabilities and equity

364,193


373,792





 

 


CONDENSED CONSOLIDATED STATEMENTS OF INCOME










US dollars

US dollars










Nine month period
ended September 30,




Three month period
ended September 30,


(in thousands except per share data)

2019


2018


2019


2018











Revenues:





Location-based services

155,086


126,315


50,261


39,126


Wireless communications products

58,755


47,855


18,734


14,250



_______


_______


_______


_______



213,841


174,170


68,995


53,376



----------


----------


----------


----------











Cost of revenues:









Location-based services

67,497


45,994


22,403


14,938


Wireless communications products

46,318


38,899


14,714


9,545



_______


_______


_______


_______



113,815


84,893


37,117


24,483











Gross profit

100,026


89,277


31,878


28,893


Research and development expenses

10,335


3,727


3,207


1,628


Selling and marketing expenses

9,593


8,423


3,290


2,941


General and administrative expenses

41,155


33,385


13,558


10,795


Other income, net

(72)


(308)


(77)


(190)



_______


_______


_______


_______


Operating income

39,015


44,050


11,900


13,719


Other income (expense), net

(37)


13,833


11


13,833


Financing income (expense), net

(2701)


2,134


(847)


1,566



_______


_______


_______


_______


Income before income tax

36,277


60,017


11,064


29,118


Income tax expenses

(10,869)


(12,416)


(3,680)


(3,906)


Share in gains (losses) of affiliated companies ,net 

(2,781)


3,868


(810)


1,644



_______


_______


_______


_______


Net income for the period

22,627


51,469


6,574


26,856


Less: Net income attributable to non-controlling interest 

(477)


(2,124)


(175)


(805)



_______


_______


_______


_______


Net income attributable to the Company

22,150


49,345


6,399


26,051











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

1.05


2.35


0.3


1.24











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

21,112


20,982


21,041


21,010








 

 

RECONCILIATION OF NON-GAAP RESULTS












US dollars

US dollars


(in thousands



Nine months ended

Three months ended


September 30,




September 30,

except per share data)

2019


2018


2019


2018









GAAP Revenues:

213,841


174,170


68,995


53,376

Valuation adjustment on acquired deferred



-




-

revenue

2,989




985




________


________


________


________

Non –GAAP revenue 

216,830


174,170


69,980


53,376


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


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


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


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










100,026


89,277


31,878


28,893

GAAP gross profit 




Valuation adjustment on acquired deferred 



-




-

revenue

3,209




985




________


________


________


________

Non –GAAP gross profit

103,235


89,277


32,863


28,893










39,015


44,050


11,900


13,719





GAAP operating income 




Operation profit adjustments 








Amortization of other intangible assets 

6,354


310


1,803


310


________


________


________


________

Non-GAAP operating income 

45,369


44,360


13,703


14,029









Depreciation and amortization

17,210


9,656


5,030


2,970


________


________


________


________

Adjusted EBITDA

60,179


54,016


18,733


16,999









GAAP net income attributable to




         the company's shareholders

22,150


49,345


6,399


26,051

Operation income adjustment  

6,354


310


1,803


310

Other adjustments, net

(1,776)


(13,833)


(452)


(13,833)


________


________


________


________

Non-GAAP net income attributable to 

26,728


35,822


7,750


12,528

         Iturans' shareholders




 

 

 

Summary of NON –GAAP Financial Information



US dollars

US dollars

(in thousands

Nine months ended

Three months ended

September 30,

September 30,

except per share data)

2019

2018

2019

2018











revenue

216,830

174,170

69,980

53,376

Gross profit

103,235

89,277

32,863

28,893

Operation income

45,369

44,360

13,703

14,029

Net income to shareholders 

26,728

35,822

7,750

12,528

Adjusted EBITDA

60,179

54,016

18,733

16,999

Basic and diluted earnings per share

1.27

1.71

0.37

0.6





















 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS







US dollars


US dollars




Nine Month period
ended September 30,


Three month period
ended September 30,

(in thousands)

2019


2018


2019


2018

Cash flows from operating activities








Net income for the period

22,627


51,469


6,574


26,856

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








Depreciation and amortization 

17,210


9,966


5,631


3,277

Interest and exchange rate differences on long term credit

23


-


(8)


-

Operating lease right-of-use assets

2,255


-


219


-

Operating lease liabilities

(2,255)


-


(219)


-

Losses (gain) in respect of trading marketable securities

210


(321)


208


20

Increase in liability for employee rights upon retirement

1,294


290


115


363

Share in losses (gains) of affiliated companies, net

2,781


(3,868)


810


(1,644)

Deferred income taxes

252


1,411


269


(408)

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

47


107


33


38

Capital gains on Acquisition of non-controlling interests

-


(14,677)


-


(14,677)

Decrease (increase) in accounts receivable

6,526


(2,131)


1,968


3,623

Decrease in other current assets

1,115


(5,265)


(1,199)


(1,286)

Decrease (increase) in inventories

3,618


(2,852)


1,613


(2,867)

Increase (decrease) in accounts payable

(3,559)


191


(3,212)


2,054

Increase (decrease) in deferred revenues

(7,090)


(2,065)


(947)


(138)

Increase (decrease) in other current liabilities

(3,341)


2,465


(663)


(389)

Increase in obligation for purchase non-controlling interests

967


-


265


-


________


________


________


________

Net cash provided by operating activities

42,680


34,720


11,457


14,822


-----------


-----------


-----------


-----------

Cash flows from investment activities








Increase in funds in respect of employee rights upon retirement, net of withdrawals

(1,117)


(372)


(161)


(525)

Capital expenditures

(13,658)


(15,311)


(3,283)


(5,329)

Acquisitions of a subsidiary – Appendix A

-


(68,969)


-


(68,969)

Investments in affiliated companies

(55)


(1,250)


-


-

Investments in other companies

(129)


(1,097)


-


(200)

Sale of (Invest in) marketable securities, net

1,454


1,428


-


(243)

Deposit 

(83)


(175)


69


30

Proceeds from loans to affiliated companies

-


7,317


-


4,055

Proceeds from sale of property and equipment

203


341


168


125


________


________


________


________

Net cash used in investment activities

(13,385)


(78,088)


(3,207)


(71,056)


-----------


-----------


-----------


-----------

Cash flows from financing activities








Short term credit from banking institutions, net

387


(34)


998


(1)

Receipt (repayment) of long-term credit from banking institutions

(4,436)


81,695


(4,436)


81,695

Dividend paid 

(14,798)


(15,097)


(5,050)


(5,030)

Dividend paid to non-controlling interest

(1,557)


(1,517)


(748)


(545)

Acquisition of company shares purchased by a wholly owned subsidiary

(3,501)


-


(3,501)


-


________


________


________


________

Net cash provided by (used in) financing activities

(23,905)


65,047


(12,737)


76,119


-----------


-----------


-----------


-----------

Effect of exchange rate changes on cash and cash equivalents

(534)


(2,842)


(1,650)


(248)

Net increase (decrease) in cash and cash equivalents

4,856


18,837


(6,137)


19,637

Balance of cash and cash equivalents at beginning of the period

51,398


36,906


62,391


36,106


________


________


_______


_______

Balance of cash and cash equivalents at end of the period

56,254


55,743


56,254


55,743

 

 

For more information, please visit Ituran's website, at: www.ituran.com

 

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-the-third-quarter-of-2019-300964428.html

SOURCE Ituran Location and Control Ltd.


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