Le Lézard
Classified in: Transportation, Science and technology, Business
Subjects: ERN, CCA, DIV, FVT

Ituran Location and Control Ltd. Presents Results for the Second Quarter 2018


AZOUR, Israel , Aug. 30, 2018 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN) (TASE: ITRN), today announced its consolidated financial results for the second quarter ended June 30, 2018.

Highlights of the second quarter of 2018

Second quarter 2018 results

Revenues for the second quarter of 2018 were $57.7 million, representing an increase of 1% from revenues of $57.4 million in the second quarter of 2017. The significant strengthening of the US Dollar versus the Brazilian Real and the Argentinean Peso during the second quarter versus the prior quarter as well as the second quarter of 2017 reduced the overall revenue level in US Dollars and impacted the growth rate of the revenues in US Dollar terms. Excluding the exchange rate impact, in local currency terms, compared with those of the second quarter of 2017, the increase in revenues would have been 7%.

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

Revenues from subscription fees were at a similar level as those of the same period last year. Excluding the exchange rate impact the revenues from subscription fees would have grown 9%. The subscriber base increased by 86,000 year over year, from 1,112,000 as of June 30, 2017, to 1,198,000 as of June 30, 2018.

Product revenues increased by 3% compared with the same period last year.

Gross profit for the second quarter of 2018 was $28.9 million (50.1% of revenues), a decrease of 4% compared with $30.2 million (52.6% of revenues) in the second quarter of 2017. The weakening of the Brazilian Real and the Argentinean Peso versus the US Dollar in the second quarter had a negative impact on the gross profit. Excluding the exchange rate impact, the gross profit would have increased by 3%.

The gross margin in the quarter on subscription fees improved to 67.7% compared with 66.9% in the same period last year.

The gross margin in the quarter on products was 4.9% compared with 14.6% in the same period last year.  

Operating profit for the second quarter of 2018 was $14.8 million (25.6% of revenues), an increase of 4% compared with an operating profit of $14.2 million (24.7% of revenues) in the second quarter of 2017. Excluding the impact of the change in exchange rates over the period, the operating profit would have increased 15% over the second quarter of 2017.

Taxes in the quarter amounted to $3.9 million, at approximately the same level as in the second quarter of last year.

During the quarter, share in affiliates, net was an income of $1.5 million versus an income of $0.5 million in the same quarter of last year. The main contribution was from Ituran's joint venture with Road Track, Ituran Road Track (IRT) in Brazil and Argentina.

EBITDA for the quarter was $17.8 million (30.9% of revenues), an increase of 2% compared to an EBITDA of $17.4 million (29.7% of revenues) in the second quarter of 2017. Excluding the impact of the change in exchange rates over the period, the EBITDA would have increased by 12%.

Net profit was $12.0 million in the second quarter of 2018 (20.8% of revenues) or fully diluted EPS of $0.57, an increase of 15% compared with a net profit of $10.4 million (18.2% of revenues) or fully diluted EPS of $0.50 in the second quarter of 2017. Excluding the impact of the change in exchange rates as described above, the net profit would have increased 25% over the second quarter of last year.

Cash flow from operations for the quarter was $12.4 million.

As of June 30, 2018, the Company had net cash, including marketable securities, of $37.4 million or $1.78 per share, compared with $40.4 million or $1.93 per share as of December 31, 2017.

Acquisition of Road Track

On July 24, 2018, Ituran announced its acquisition of 81.3% of Road Track Holdings for $91.7 million, valuing the company at approximately $113 million. Subject to various approvals and customary closing conditions, the closing is expected during the third quarter of 2018.

Road Track's major customers include two global automotive manufacturers as well as car dealers, insurance companies, car financing companies and fleet operators.

On a consolidated 2017 pro-forma non-GAAP basis, Ituran including Road Track would have had $366 million in revenue, $98 million in EBITDA and $51 million in net profit and total subscribers at year-end 2017 would have totaled 1.7 million. Following the closing in the third quarter, Ituran expects that the combined business will have approximately 1.8 million subscribers with an annual revenue run-rate of approximately $400 million.

Dividend

For the second 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, "Our business continues to perform well and in line with our targets. This strong performance was masked this quarter by the impact that currency volatility had on our financial results. Most significant, from a strategic perspective, was our agreement to acquire Road Track, a company we have been working with closely for five years in Brazil and Argentina. Road Track and Ituran, together bring significant synergies for us to leverage, providing significant scale in the telematics market, allowing us to provide a broader service offering into new regions. We have already been working closely together to ensure the acquisition will be a success, and we see many opportunities for cross selling. We see this acquisition as a game changer for Ituran and the telematics industry in Latin America as a whole. We look forward to unlocking and realizing the substantial inherent value over the coming quarters."

Conference Call Information

The Company will also be hosting a conference call later today, August 30, 2018 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 0644
CANADA Dial-in Number: 1 888 604 5839
INTERNATIONAL Dial-in Number:  +972 3 918 0644
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. 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 million subscribers using its location based services with a market leading position in Israel and Brazil. Established in 1995, Ituran has over 1,700 employees worldwide, with offices in Israel, Brazil, Argentina, India, Canada and the United States.

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

 

ITURAN LOCATION AND CONTROL LTD.

 CONSOLIDATED BALANCE SHEETS 














US dollars


June 30,

December 31,

(in thousands)

2018

2017




Current assets



Cash and cash equivalents

36,106

36,906

Investment in marketable securities

1,319

3,559

Accounts receivable (net of allowance for doubtful accounts)

43,097

41,009

Other current assets

39,746

41,394

Inventories

13,526

14,244


133,794

137,112




Long-term investments and other assets



Investments in affiliated companies

13,774

14,839

Investments in other companies

2,186

1,382

Other non-current assets

1,062

939

Deferred income taxes

6,450

8,398

Funds in respect of employee rights upon retirement

9,006

9,627


32,478

35,185




Property and equipment, net

37,232

39,047




Intangible assets, net

77

38




Goodwill

3,758

3,777







Total assets

207,168

215,159

 

 

ITURAN LOCATION AND CONTROL LTD.

CONSOLIDATED BALANCE SHEETS 






US dollars


June 30,

December 31,

(in thousands)

2018

2017




Current liabilities



Credit from banking institutions

3

48

      Accounts payable

19,059

23,264

      Deferred revenues

14,045

12,796

      Other current liabilities

27,525

29,644


60,632

65,752







Long-term liabilities



Liability for employee rights upon retirement

13,245

14,062

Provision for contingencies

513

400

Deferred revenues

612

1,241

Other non-current liabilities

402

475


14,772

16,178













Stockholders' equity

124,526

125,790

Non-controlling interests

7,238

7,439

Total equity

131,764

133,229













Total liabilities and equity

207,168

215,159







 

ITURAN LOCATION AND CONTROL LTD.

CONSOLIDATED STATEMENTS OF INCOME 



US dollars

US dollars


Six month period

Three month period

ended June 30,

ended June 30,

(in thousands except per share data)

2018

2017

2018

2017




Revenues:





Location-based services

87,189

81,437

41,490

41,698

Wireless communications products

33,605

32,010

16,226

15,695


120,794

113,447

57,716

57,393






Cost of revenues:





Location-based services

27,839

27,305

13,386

13,814

Wireless communications products

32,571

27,879

15,403

13,397


60,410

55,184

28,789

27,211






Gross profit

60,384

58,263

28,927

30,182

Research and development expenses

2,099

1,768

939

986

Selling and marketing expenses

5,482

6,278

2,630

3,450

General and administrative expenses

22,590

22,391

10,712

11,629

Other income, net

(118)

(143)

(144)

(55)

Operating income

30,331

27,969

14,790

14,172

Financing income, net

568

841

292

352

Income before income tax

30,899

28,810

15,082

14,524

Income tax expense

(8,510)

(8,444)

(3,853)

(3,868)

Share in gains of affiliated companies, net

2,224

4,489

1,537

489

Net income for the period

24,613

24,855

12,766

11,145

Less: Net income attributable to non-controlling interests

(1,319)

(1,415)

(753)

(692)

Net income attributable to the Company

23,294

23,440

12,013

10,453







1.11

1.12

0.57

0.5


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






Basic and diluted weighted average number of
 shares outstanding

20,968

20,968

20,968

20,968






 

 

ITURAN LOCATION AND CONTROL LTD.

STATEMENTS OF CASH FLOWS



US dollars

US dollars


Six month period

Three month period

ended June 30,

ended June 30,

(in thousands)

2018

2017

2018

2017




Cash flows from operating activities





Net income for the period

24,613

24,855

12,766

11,145

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





Depreciation and amortization

6,689

6,467

3,066

3,239

Gains in respect of trading marketable securities

(341)

(67)

(145)

(37)

Increase (decrease) in liability for employee rights upon retirement

(73)

488

55

192

Share in gains of affiliated companies, net

(2,224)

(4,489)

(1,537)

(489)

Deferred income taxes

1,819

220

307

109

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

69

(61)

17

(31)

Increase in accounts receivable

(5,754)

(5,517)

(1,637)

(2,302)

Increase in other current assets

(3,979)

(5,811)

220

(1,675)

Decrease (increase) in inventories

15

(1,464)

585

(599)

Increase (decrease) in accounts payable

(1,863)

1,487

(2,245)

2,630

Increase (decrease) in deferred revenues

(1,927)

2,236

(1,591)

1,151

Increase (decrease) in other current liabilities

2,854

(1,068)

2,501

804

Net cash provided by operating activities

19,898

17,276

12,362

14,137

Cash flows from investment activities





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

153

(363)

(205)

(244)

Capital expenditures

(9,982)

(6,749)

(3,364)

(3,993)

Investment in marketable securities

(22,375

(3,189)

(20,081)

(1,761)

Sale of marketable securities

24,046

2,119

21,702

940

Investments in affiliated companies

(1,250)

(97)

(1,250)

-

Proceeds from loans to affiliated companies

3,262

562

550

562

Investment in other companies

(897)

(1,061)

(330)

-

Proceed from (invest in) long term deposit

(205)

38

(114)

36

Proceeds from sale of property and equipment

216

181

13

115

Net cash used in investment activities

(7,032)

(8,559)

(3,079)

(4,345)

Cash flows from financing activities





Short term credit from banking institutions, net

(33)

(7)

6

(406)

Dividend paid 

(10,067)

(12,581)

(5,033)

(8,388)

Dividend paid to non-controlling interests

(972)

(752)

(547)

(39)

Net cash used in financing activities

(11,072)

(13,340)

(5,574)

(8,833)

Effect of exchange rate changes on cash and cash equivalents

(2,594)

652

(2,337)

(453)

Net increase (decrease) in cash and cash equivalents

(800)

(3,971)

1,372

506

Balance of cash and cash equivalents at beginning of  period

36,906

31,087

34,734

26,610

Balance of cash and cash equivalents at end of the period

36,106

27,116

36,106

27,116

 

Supplementary information on investing activities not involving cash flows:

In April 2018, the Company declared a dividend in an amount of US$ 5 million. The dividend was paid in July 2018.

Company Contact

Udi Mizrahi

[email protected]

VP Finance, Ituran

(Israel) +972 3 557 1348

International Investor Relations

Ehud Helft

[email protected]

GK  Investor & Public Relations

(US) +1 646 201 9246 

SOURCE Ituran Location and Control Ltd


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