Ituran Location and Control Ltd. Presents Results for the Third Quarter 2015

Record subscriber growth at 36 thousand in the quarter

Nov 18, 2015, 06:00 ET from Ituran Location and Control Ltd

AZOUR, Israel, Nov. 18, 2015 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN, TASE: ITRN), today announced its consolidated financial results for the third quarter ended September 30, 2015.

Highlights of the Third Quarter

  • Record net subscribers adds in the quarter amounting to 36 thousand; total subscribers reached 915,000 as of September 30, 2015;
  • In local currency terms, Ituran continued to demonstrate year-over-year growth in revenue driven by strong subscriber growth;
  • Gross margins at 50.2% and operating margins at 22.4%;
  • Generated $8.8 million in operating cash flow; ended the quarter with $31.5 million in net cash (including marketable securities);
  • Dividend of $3.1 million declared for the quarter.

Third Quarter 2015 Results

Revenues for the third quarter of 2015 were $43.8 million, representing an 5.8% decrease from revenues of $46.5 million in the third quarter of 2014. The significant weakening of the Brazilian Real versus the US Dollar, in addition to weakening of the Israeli Shekel to the US Dollar compared with the third quarter of 2014 reduced the overall revenue level in US Dollars. Excluding the exchange rate impact, the increase in revenues would have been 17% over the third quarter of last year. 72% of revenues were from location based service subscription fees and 28% from product revenues.

Revenues from subscription fees decreased 8.5% over the same period last year. In local currency terms, subscription fees increased 18%, primarily due to the growth in the subscriber base which expanded from 795,000 as of September 30, 2014, to 915,000 as of September 30, 2015.

Product revenues increased by 2% compared with the same period last year. In local currency terms, product revenues grew by 14% compared with product revenues reported in the third quarter in 2014.

Gross profit for the third quarter of 2015 was $22.0 million (50.2% of revenues), a decrease of 11.5% compared with $24.9 million (53.5% of revenues) in the third quarter of 2014. The decrease in the gross margin was mainly due to the weakening of the Brazilian Real and the Israeli Shekel versus the US Dollar. In addition, costs of service revenue increased due to the fast growth in subscribers in the past few quarters.

Operating profit for the third quarter of 2015 was $9.8 million (22.4% of revenues), a decrease of 19% compared with an operating profit of $12.1 million (26.1% of revenues) in the third quarter of 2014. Excluding the impact of the change in exchange rates over the period, the operating profit would have increased by 7% over the third quarter of last year.

EBITDA for the quarter was $12.5 million (28.6% of revenues), a decrease of 16% compared to an EBITDA of $15.0 million (32.2% of revenues) in the third quarter of 2014. Excluding the impact of the change in exchange rates over the period and one-time costs, the EBITDA would have increased by 11% over the third quarter of last year.

Net profit was US$6.2 million in the third quarter of 2015 (14.1% of revenues) or fully diluted EPS of US$0.29. This is compared with a net profit of US$8.7 million (18.7% of revenues) or fully diluted EPS of US$0.41 in the third quarter of 2014. The decrease in the net profit was mainly due to the weakening of the Brazilian Real and the Israeli Shekel versus the US Dollar.

Cash flow from operations during the quarter was $8.8 million.

As of September 30, 2015, the Company had net cash, including marketable securities, of $31.5 million or $1.50 per share. This is compared with $33.4 million or $1.59 per share as at June 30, 2015.

Dividend

For the third quarter of 2015, a dividend of $3.1 million was declared in line with the Company's stated policy of issuing at least 50% of net profits in a dividend, on a quarterly basis.

Eyal Sheratzky, Co-CEO of Ituran said, "We are pleased with another quarter of exceptionally strong and record growth in our subscriber base. In only three quarters this year, we have added 98,000 subscribers, compared with 76,000 for the whole of last year. As has been the case throughout the past year, in particular as the Brazilian Real has consistently weakened against the US dollar, our reported US Dollar result does not demonstrate the growth we are seeing in our underlying business, which remains as strong as ever. This strength is ongoing in our operations both in Brazil and Israel, and all signs are that it should continue as indicated by the record growth in subscribers. "

Continued Mr. Sheratzky, "At the end of the quarter, a jointly-owned JV we set up in Brazil signed an important agreement with a global and leading automaker in Brazil to offer telematics services in that country. This is a milestone and significant step for our business. This will strengthen our market position, as we evolve into a player in the automotive industry after two decades of operating in the aftermarket segment only. As we grow, it will bring us hundreds of thousands of additional subscribers, positioning us as the clear market leader in Brazil. In addition, we see this agreement opening up further future opportunities for us in the Latin American continent."

Conference Call Information

The Company will also be hosting a conference call later today, November 18, 2015 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: 1 866 860 9642 or 1 800 896 9108 ISRAEL Dial-in Number: 03 918 0687 CANADA Dial-in Number: 1 866 485 2399 INTERNATIONAL Dial-in Number:  +972 3 918 0687 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 provides location-based services, consisting predominantly of stolen vehicle recovery and tracking services, as well as wireless communications products used in connection with its location-based services and various other applications. Ituran offers mobile asset location, Stolen Vehicle Recovery, management & control services for vehicles, cargo and personal security. Ituran's subscriber base has been growing significantly since the Company's inception to over 915,000 subscribers distributed globally. Established in 1995, Ituran has over 1,500 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.

CONDENSED CONSOLIDATED BALANCE SHEETS

US dollars

September 30,

December 31,

(in thousands)

2015

2014

Cash and cash equivalents

29,434

38,418

Investments in marketable securities

2,553

2,362

Accounts receivable (net of allowance for doubtful accounts)

27,802

27,960

Other current assets

20,240

22,318

Inventories

11,808

12,164

_______

_______

91,837

103,222

----------

----------

Long-term investments and other assets

Investments in affiliated companies

4,405

1,016

Investments in other company

81

79

Other non-current assets

1,134

2,091

Deferred income taxes

3,319

2,886

Funds in respect of employee rights upon retirement

7,159

6,642

_______

_______

16,098

12,714

----------

----------

Property and equipment, net

31,612

31,908

----------

----------

Intangible assets, net

322

452

----------

----------

 Goodwill

4,006

4,041

----------

----------

_______

_______

Total assets

143,875

152,337

_______

_______

_______

_______

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

US dollars

September 30,

December 31,

(in thousands)

2015

2014

Current liabilities

Credit from banking institutions

447

-

Accounts payable

10,480

11,658

Deferred revenues

8,737

9,401

Other current liabilities

22,126

23,880

_______

_______

41,790

44,939

----------

----------

Long-term liabilities

Liability for employee rights upon retirement

10,642

10,229

Provision for contingencies

573

1,373

Deferred revenues

772

1,063

Deferred income taxes

116

150

Others

638

-

_______ 

_______ 

12,741

12,815

-----------

-----------

Stockholders' equity

85,662

90,696

-----------

-----------

Non-controlling interests

3,682

3,887

-----------

-----------

_______

_______

Total equity

89,344

94,583

-----------

-----------

_______

_______

Total liabilities and equity

143,875

152,337

_______

_______

_______

_______

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)

2015

2014

2015

2014

 

Revenues:

Location-based services

95,595

100,737

31,502

34,442

Wireless communications products

36,242

37,843

12,321

12,048

_______

_______

_______

_______

131,837

138,580

43,823

46,490

---------

----------

---------

----------

Cost of revenues:

Location-based services

34,926

35,527

11,780

12,300

Wireless communications products

29,308

29,611

10,039

9,330

_______

_______

_______

_______

64,234

65,138

21,819

21,630

---------

----------

---------

----------

_______

_______

_______

_______

Gross profit

67,603

73,442

22,004

24,860

Research and development expenses

1,699

1,895

614

650

Selling and marketing expenses

6,912

6,783

2,287

2,346

General and administrative expenses

28,675

28,950

9,310

9,752

Other income, net

(17)

(63)

(3)

(9)

_______

_______

_______

_______

Operating income

30,334

35,877

9,796

12,121

Financing income (expenses), net

774

1,215

566

1,259

_______

_______

_______

_______

Income before income tax

31,108

37,092

10,362

13,380

Income tax expenses

(9,657)

(11,373)

(3,218)

(3,895)

Share in losses of affiliated companies ,net

(1,482)

(308)

(638)

(107)

_______

_______

_______

_______

Net income for the period

19,969

25,411

6,506

9,378

Less: Net income attributable to non-controlling interest

(1,180)

(1,996)

(346)

(701)

_______

_______

_______

_______

Net income attributable to the Company

18,789

23,415

6,160

8,677

_______

_______

_______

_______

_______

_______

_______

 _______

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

0.90

1.12

0.29

0.41

_______

_______

_______

_______

_______

_______

_______

_______

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

20,968

20,968

20,968

20,968

_______

_______

_______

_______

_______

_______

_______

_______

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

US dollars

US dollars

Nine month period ended September 30,

Three month period ended September 30,

(in thousands)

2015

2014

2015

2014

Cash flows from operating activities

Net income for the period

19,969

25,411

6,506

9,378

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

Depreciation amortization and impairment of goodwill

8,122

8,131

2,739

2,863

Exchange differences on principal of deposit and loans, net

-

(23)

-

-

Losses (gain) in respect of trading marketable securities

(428)

(271)

(224)

(359)

Increase (decrease) in liability for employee rights upon retirement

502

1,294

212

359

Share in losses of affiliated companies, net

1,482

308

638

107

Deferred income taxes

940

(1,209)

1,286

(311)

Capital gains on sale of property and equipment, net

(10)

(19)

(3)

(39)

Decrease (increase) in accounts receivable

(84)

(2,868)

783

2,330

Decrease (increase) in other current assets

(85)

(770)

586

(63)

Decrease (increase) in inventories

251

2,237

(137)

(296)

Increase (decrease) in accounts payable

(1,092)

(912)

(1,946)

209

Decrease in deferred revenues

(864)

(212)

(992)

(236)

Decrease in other current liabilities

(462)

(553)

(612)

(1,071)

_______

_______

_______

_______

Net cash provided by operating activities

28,241

30,544

8,836

12,871

----------

----------

----------

----------

Cash flows from investment activities

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

(575)

(540)

(88)

(243)

Capital expenditures

(15,132)

(10,609)

(2,163)

(4,082)

Investments in affiliated companies

(4,639)

-

(2,856)

-

Investment in marketable securities

-

(2,771)

-

-

Deposit in escrow

-

5,005

-

-

Deposit

(321)

(123)

(82)

33

Proceeds from sale of property and equipment

683

1,370

(4)

742

_______

_______

_______

_______

Net cash used in investment activities

(19,984)

(7,668)

(5,193)

(3,550)

-----------

-----------

-----------

-----------

Cash flows from financing activities

Short term credit from banking institutions, net

447

(36)

441

3

Acquisition of non-controlling interests

-

(500)

-

(500)

Dividend paid

(14,729)

(15,481)

(3,386)

(4,022)

Dividend paid to non-controlling interest

(1,224)

(2,062)

(688)

(557)

_______

_______

_______

_______

Net cash provided by (used in) financing activities

(15,506)

(18,079)

(3,633)

(5,076)

----------

----------

----------

----------

Effect of exchange rate changes on cash and cash equivalents

(1,735)

(3,490)

(1,564)

(3,008)

----------

----------

----------

----------

_______

_______

_______

_______

Net increase (decrease) in cash and cash equivalents

(8,984)

1,307

(1,554)

1,237

Balance of cash and cash equivalents at beginning of the period

38,418

41,697

30,988

41,767

_______

_______

_______

_______

Balance of cash and cash equivalents at end of the period

29,434

43,004

29,434

43,004

_______

_______

_______

_______

_______

_______

_______

_______

Supplementary information on financing and investing activities not involving cash flows:

In August 2015, the Company declared a dividend in an amount of US$ 3 million. The dividend was paid in October 2015.

During the nine month period ended September 30, 2015, the Company purchased property and equipment in an amount of US$ 15 thousand using a directly related liability.

Company Contact

Udi Mizrahi

udi_m@ituran.com

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

 

SOURCE Ituran Location and Control Ltd