Ituran Location and Control Ltd. Presents Results for the Fourth Quarter and Full Year 2010

Record Full Year Revenues of $148 Million (+22% YoY) and EPS of $1.00 (+16% YoY)

Mar 01, 2011, 05:59 ET from Ituran Location and Control Ltd

AZOUR, Israel, March 1, 2011 /PRNewswire-FirstCall/ -- 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, 2010.

    Highlights of the Fourth Quarter

    - A 42 thousand year-over-year increase in net subscribers to
      a record of 604 thousand as of December 31, 2010;

    - Gross margin at 48.7% and operating margin at 20.8%;

    - EBITDA of $12.9 million or 31.7% of revenues;

    - Generated $9.6 million in operating cash flow; ended the
      quarter with $60.9 million in net cash (including marketable
      securities and deposits for short and long term);

Fourth Quarter 2010 Results

Revenues for the fourth quarter of 2010 reached $40.7 million, representing 21% growth over revenues of $33.7 million in the fourth quarter of 2009. 71% of revenues were from location based service subscription fees and 29% from product revenues.

Revenues from subscription fees grew by 10% over the same period last year. The increase in subscription fees was mainly due to the increase in the subscriber base, which grew to 604,000 as of December 31, 2010, as compared with 562,000 at the end of December 31, 2009. Product revenues grew 57% compared with the same period last year. This increase was driven primarily by increased sales in Israel, as well as expanding the program of charging for installations and unrecovered customer equipment in Brazil.

Gross profit for the fourth quarter of 2010 was $19.8 million (48.7% of revenues) compared with $17.1 million (50.9% of revenues) in the fourth quarter of last year. The decrease is mainly due to the change in revenue mix between location-based services and equipment sales.

Operating profit for the fourth quarter of 2010 was $8.5 million (20.8% of revenues) compared with an operating profit of $6.9 million (20.6% of revenues) in the fourth quarter of 2009.

EBITDA for the quarter was $12.9 million (31.7% of revenues) compared to an EBITDA of $10.7 million (31.8% of revenues) in the fourth quarter of last year.

Financial expense for the fourth quarter of 2010 was $0.3 million compared with a financial income of $0.7 million in the fourth quarter of 2009.

Following arbitration between Ituran and ST as reported in 2009, the purchaser of Telematics in 2007, and in accordance with the milestones in the sale agreement of Telematics, Ituran has increased the provision in its balance sheet which related to Telematic's milestones from $3.5 million to $4.4 million.

Excluding the above effect, the net profit in the fourth quarter of 2010 would have been $6.5 million (15.9% of revenues). Reported net profit was $5.8 million in the fourth quarter of 2010 (14.2% of revenues), compared with a net profit of $5.5 million (16.4% of revenues), as reported in the fourth quarter of 2009.

Excluding the above-mentioned increase in provision, fully diluted earnings per share in the fourth quarter of 2010 would have been $0.31. Reported fully diluted earnings per share in the fourth quarter of 2010 was $0.28, compared with fully diluted earnings per share of $0.26 in the fourth quarter of 2009.

Cash flow from operations during the quarter was $9.6 million.

Full Year Results

Revenues for 2010 reached $147.8 million. This is an increase of 22% over revenues of $121.4 million in 2009.

Gross profit in 2010 reached $72.5 (49.0% of revenues), compared with $60.6 million (49.9% of revenues) in 2009.

Operating profit for 2010 was US$30.6 million (20.7% of revenues) compared with an operating profit of US$24.4 million (20.1% of revenues) in 2009.

EBITDA for the year was $46.6 million (31.5% of revenues) compared to an EBITDA of $36.9 million (30.4% of revenues) last year.

Excluding the effect of the arbitration with ST, the net profit in 2010 would have been $21.7 million (14.7% of revenues). Reported net profit was $21.0 million in 2010 (14.2% of revenues), compared with a net profit of $18.2 million (15.0% of revenues), as reported in 2009. Fully diluted earnings per share in 2010 was $1.00, compared with fully diluted earnings per share of $0.87 in 2009.

Cash flow from operations for the year was $33.4 million.

As of December 31, 2010, the Company had net cash, including marketable securities and deposits for short and long term, of $60.9 million or $2.90 per share. This is compared with US$54.0 million or $2.57 per share as at September 30, 2010, and $78.1 million as of December 31, 2009.

Dividend

The Board of Directors announced a dividend amounting $21 million, or 100% of the net profit for 2010. Starting in November 2009, the Board of Directors approved a new dividend policy, providing for an annual dividend distribution in an amount not less than 50% of the Company's net profit.

The dividend's record date is March 23, 2011, and the dividend will be paid on April 6, 2011, net of taxes and levies, at the rate of 20%.

Eyal Sheratzky, Co-CEO of Ituran said, "The fourth quarter caps a very strong year for Ituran. We continued to generate growing revenues, profit and cash, and we are very happy to again distribute a large dividend and share our success with all our shareholders. In fact, since our Nasdaq IPO in 2005, we have declared almost $100 million in dividends to shareholders which we believe, for a company of our size, is very significant. Brazil continued to grow throughout the year and our business in Israel saw a solid resumption to growth as strength in the local economy has led to increased car sales. We remain very pleased with the performance of our business, and we are targeting continued double-digit growth in 2011 over 2010."

Conference Call Information

The Company will also be hosting a conference call later today, March 1, 2011 at 10am ET. 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: 03-918-0609
                      CANADA Dial-in Number: 1-866-485-2399
                  INTERNATIONAL Dial-in Number: +972-3-918-0609

                    At: 10:00am Eastern Time, 7:00am Pacific
                          Time, 5:00pm 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 604,000 subscribers distributed globally. Established in 1995, Ituran has over 1,300 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.

    CONSOLIDATED BALANCE SHEETS

                                                           US dollars
                                                          December 31 ,
    (in thousands)                                       2010       2009
                                                      ------------------

    Current assets
    Cash and cash equivalents                          46,674     60,813
    Deposit in escrow                                   5,238      5,227
    Investments in trading marketable securities        1,509      4,213
    Accounts receivable (net of allowance for doubtful
    accounts)                                          31,161     24,906
    Other current assets                                9,604      6,136
    Inventories                                         8,501      7,924 (*)
                                                      -------    -------
                                                      102,687    109,219
                                                      -------    -------

    Long-term investments and debit balances

    Deposit in escrow                                   7,858      7,840
    Investments in affiliated company                     220        205
    Investments in other company                           86         80
    Other assets                                        2,426      1,742
    Loan to former employee                               558        558
    Deferred income taxes                               4,934      5,653
    Funds in respect of employee rights upon retirement 4,498      3,606
                                                      -------    -------
                                                       20,580     19,684
                                                      -------    -------
    Property and equipment, net                        46,148     42,262 (*)
                                                      -------    -------
    Intangible assets, net                              4,402      5,064
                                                      -------    -------
    Goodwill                                           10,079      9,639
                                                      -------    -------
                                                      -------    -------


                                                      -------    -------
    Total assets                                      183,896    185,868
                                                      -------    -------
                                                      -------    -------

    (*) Reclassified



    CONSOLIDATED BALANCE SHEETS


                                                      US dollars
                                                     December 31,
    (in thousands)                                  2010      2009
                                                ------------------
    Current liabilities
    Credit from banking institutions                  98         6
    Accounts payable                              13,087    13,459
    Deferred revenues                              4,614     5,486
    Other current liabilities                     18,227    17,443
                                                 -------   -------
                                                  36,026    36,394
                                                 -------   -------

    Long-term liabilities
    Long term loans                                  233         -
    Liability for employee rights upon retirement  6,472     5,457
    Provision for contingencies                    5,324     3,071
    Deferred income taxes                          1,046     1,209
                                                 -------   -------
                                                  13,075     9,737
                                                 -------   -------

    Capital Notes                                  5,894     5,894
                                                 -------   -------

    shareholders' equity                         124,509   130,126
    Non -controlling interest                      4,392     3,717
                                                 -------   -------
    Total shareholders' equity                   128,901   133,843
                                                 -------   -------

                                                 -------   -------
    Total liabilities and shareholders' equity   183,896   185,868
                                                 -------   -------
                                                 -------   -------



    CONSOLIDATED STATEMENTS OF INCOME



                                     US dollars         US dollars
                                     Year ended     Three month period
    (in thousands                   December 31,     ended December 31,
    except per share data)          2010     2009      2010      2009
                                -------------------------------------
    Revenues:
    Location-based services      108,101   91,574    28,780    26,061
    Wireless communications
    products                      39,724   29,807    11,965     7,613
                                 -------  -------   -------   -------
                                 147,825  121,381    40,745    33,674
                                 -------  -------   -------   -------
    Cost of revenues:
    Location-based services       40,977   33,377    11,029     9,611
    Wireless communications
    products                      34,354   27,445     9,881     6,928
                                 -------  -------   -------   -------
                                  75,331   60,822    20,910    16,539
                                 -------  -------   -------   -------
       Gross profit               72,494   60,559    19,835    17,135
    Research and development
    expenses                         481      372       148        97
    Selling and marketing
    expenses                       8,675    7,684     2,174     2,205
    General and administrative
    expenses                      32,703   27,213     9,075     7,673
    Other expenses (income), net      55      908       (29)      235
                                 -------  -------   -------   -------
    Operating income              30,580   24,382     8,467     6,925
    Other expenses                  (944)       -      (944)        -
    Financing income (expenses)
    , net                            139    1,604      (320)      660
                                 -------  -------   -------   -------
       Income before taxes on
       income                     29,775   25,986     7,203     7,585
                                 -------  -------   -------   -------
    Taxes on income               (7,686)  (7,139)   (1,142)   (1,804)
    Share in gains (losses) of
    affiliated
    companies, net                    (3)      13        (1)       (3)
                                 -------  -------   -------   -------
       Net income for the year    22,086   18,860     6,060     5,778
    Less :Net income
    attributable
    To non controlling interest   (1,071)    (668)     (287)     (247)
                                 -------  -------   -------   -------
    Net income attributable to
    company
    Shareholders                  21,015   18,192     5,773     5,531
                                 -------  -------   -------   -------
    Earnings per share:

    Basic                           1.00     0.87      0.28      0.26
                                 -------  -------   -------   -------
    Diluted                         1.00     0.87      0.28      0.26
                                 -------  -------   -------   -------
    Weighted average number of
    shares outstanding (in
    thousands):

    Basic                         20,968   20,968    20,968    20,968
                                 -------  -------   -------   -------
    Diluted                       20,977   20,977    20,977    20,977
                                 -------  -------   -------   -------



                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                               US dollars        US dollars
                                               Year ended       Three months
                                                                period ended
                                               December31,     December 31 ,
    (in thousands)                            2010     2009     2010    2009
                                            --------------------------------
    Cash flows from operating activities
    Net income for the period               22,086   18,860    6,060   5,778
    Adjustments to reconcile net income to
    net cash from operating activities:
    Depreciation amortization and
    impairment of goodwill                  15,876   12,530    4,363   3,771
    Exchange differences on principal of
    deposit and loan, net                      834       28      453     (40)
    Gains in respect of trading marketable
    securities                                   -   (1,421)       -     (25)
    Increase in liability for employee
    rights upon retirement                     667      676        9     192
    Share in losses (gains) of affiliated
    companies, net                               3      (13)       1       3
    Deferred income taxes                      824      988      225     307
    Capital loses (gains) on sale of
    property and equipment, net               (299)      (2)    (320)      8
    Decrease (increase) in accounts
    receivable                              (4,669)     722      270    (660)
    Decrease in other current assets        (1,287)  (1,716)      96     132
    Decrease in inventories                    129      646     (366)    291
    Increase (decrease) in accounts payable (1,229)   1,734   (2,130)  1,304
    Increase (decrease) in deferred
    revenues                                (1,221)     631     (453)   (420)
    Increase in other current liabilities
    and provision for contingencies          1,733    4,063    1,401   1,821
                                            ------   ------   ------  ------
      Net cash provided by operating
      activities                            33,477   37,726    9,609  12,462
                                            ------   ------   ------  ------
    Cash flows from investing activities
    Increase in funds in respect of
    employee rights upon
    retirement, net of withdrawals            (662)    (794)    (123)   (205)
    Capital expenditures                   (18,641) (15,698)  (4,032) (4,765)
    Intangible assets expenditures             (85)       -      (85)      -
    Deposit                                    (52)    (389)      (7)    (26)
    Proceeds from sale of property and
    equipment                                1,286      106      582      48
    Investment in available for sale
    marketable securities                        -     (182)       -       -
    Investment in trading marketable
    securities                              (2,664) (34,467)  (1,338)      -
    Sale of trading marketable securities    5,552   60,600    1,338       -
    Sale of available for sale marketable
    securities                                   -    3,886        -     244
                                            ------   ------   ------  ------
    Net cash provide by (used in)
    investment activities                  (15,266)  13,062   (3,665) (4,704)
                                            ------   ------   ------  ------
    Cash flows from financing activities
    Short-term credit from banking
    institutions ,net                           46     (316)    (670)   (188)
    Receipt of long term loans from banking
    institutions                               297        -      132       -
    Repayment of long term loans               (18)              (12)      -
    Acquisition of non controlling interest (2,223)       -                -
    Dividend paid to non-controlling
    interest                                     -     (169)       -       -
    Dividend paid                          (31,621)   (3566)       -       -
                                            ------   ------   ------  ------
    Net cash used in financing activities  (33,519)  (4,051)    (550)   (188)
                                            ------   ------   ------  ------
    Effect of exchange rate changes on cash
    and cash equivalents                     1,199    1,565    1,066     (14)
                                            ------   ------   ------  ------

                                            ------   ------   ------  ------
    Net Increase (decrease) in cash and
    cash equivalents                       (14,139)  48,302    6,460   7,556
    Balance of cash and cash equivalents at
    beginning of period                     60,813   12,511   40,214  53,257
                                            ------   ------   ------  ------
    Balance of cash and cash equivalents at
    end of period                           46,674   60,813   46,674  60,813
                                            ------   ------   ------  ------
                                            ------   ------   ------  ------



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

SOURCE Ituran Location and Control Ltd