EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1

Exhibit 99.1
 
ITURAN LOCATION AND CONTROL LTD. PRESENTS
RESULTS FOR THE SECOND QUARTER 2018

Revenue of $57.7m, net profit of $12.0m & EBITDA of $17.8m

AZOUR, Israel – August 30, 2018 – 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
·
Agreement to acquire Road Track Holdings with closing expected in the third quarter;
·
Net subscribers adds in the quarter amounted to 17,000, reaching 1.2 million subscribers;
·
Revenue of $57.7 million, up 1% year-over-year;
·
In local currency terms, revenues grew 7% and revenues from subscriptions grew 9%;
·
Net profit of $12.0 million, up 15% year-over-year and in local currency terms grew 25%;
·
Dividend of $5 million declared for the quarter;

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
 
Company Contact
  
International Investor Relations
Udi Mizrahi
udi_m@ituran.com
VP Finance, Ituran
(Israel) +972 3 557 1348
  
Ehud Helft
ituran@gkir.com
GK  Investor & Public Relations
(US) +1 646 201 9246
 

 
ITURAN LOCATION AND CONTROL LTD.
 
Consolidated Interim Financial Statements
as of June 30, 2018
 

 
ITURAN LOCATION AND CONTROL LTD.
 
Consolidated Financial Statements
as of June 30, 2018
 
Table of Contents
 
 
Page
Consolidated Interim Financial Statements:
  
2-3
4
5
 
 
 
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
    
3,587
      
3,777
  
           
 
  
Total assets
    
207,168
      
215,159
  
 
- 2 -
 
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
  


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ITURAN LOCATION AND CONTROL LTD.

CONSOLIDATED STATEMENTS OF INCOME

   
US dollars
    
US dollars
  
   
Six month period
 ended June 30,
    
Three month period
 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
  
                                 
Basic and diluted earnings per share attributable to Company’s stockholders
    
1.11
      
1.12
      
0.57
      
0.50
  
                                 
Basic and diluted weighted average number of shares outstanding
    
20,968
      
20,968
      
20,968
      
20,968
  


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ITURAN LOCATION AND CONTROL LTD.
 
STATEMENTS OF CASH FLOWS
 
   
US dollars
    
US dollars
  
   
Six month period
 ended June 30,
    
Three month period
 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.

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