EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1

Exhibit 99.1

ITURAN LOCATION AND CONTROL LTD. PRESENTS

RESULTS FOR FULL YEAR & FOURTH QUARTER 2018

Reports Record Full Year Revenue of $253 million and Net Profit of $65 million;

 Report Fourth Quarter adjusted EBITDA of $25 million;

AZOUR, Israel – March 11, 2019 – 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

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

 ITURAN LOCATION AND CONTROL LTD.

Condensed Consolidated Financial Statements

as of December 31, 2018

ITURAN LOCATION AND CONTROL LTD.

Condensed Consolidated Financial Statements

as of December 31, 2018

Table of Contents

	Page
Condensed Consolidated Interim Financial Statements:
Balance Sheets	2-3
Statements of  Income	4
Reconciliation of NON-GAAP results	5-6
Statements of Cash Flows	7-8

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

2

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

3

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
Revenues:
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

4

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

5

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

6

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

7

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

8