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Ituran Location and Control Ltd. Presents Results for the Second Quarter 2016

Record Revenues of $49 million in the quarter; Subscribers reach over 1 million


News provided by

Ituran Location and Control Ltd

Aug 11, 2016, 06:00 ET

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AZOUR, Israel, Aug. 11, 2016 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN, TASE: ITRN), today announced its consolidated financial results for the second quarter ended June 30, 2016.

Highlights of the Second Quarter

  • Strong net subscribers adds in the quarter amounting to 27 thousand, reaching 1,012,000 subscribers;
  • Revenue of $49.3 million, up 12% year-over-year;
  • Gross margins of 51.7%;
  • Operating profit of $12.0 million (margin of 24.3%), up 19% year-over-year;
  • Generated $9.6 million in operating cash flow;
  • Dividend of $3.8 million declared for the quarter;

Second Quarter 2016 Results

Revenues for the second quarter of 2016 were $49.3 million, representing an increase of 12% from revenues of $43.8 million in the second quarter of 2015. The significant strengthening of the US Dollar versus the Brazilian Real and the Argentinean Peso, compared with the level during the second quarter of 2015 reduced the overall revenue level in US Dollars. Excluding the exchange rate impact, the increase in revenues would have been 23% over the second quarter of last year. 72% of revenues were from location based service subscription fees and 28% from product revenues.

Revenues from subscription fees increased 10% over the same period last year. In local currency terms, subscription fees increased 24%, primarily due to the growth in the subscriber base which expanded from 879,000 as of June 30, 2015, to 1,012,000 as of June 30, 2016.

Product revenues increased by 19% compared with the same period last year. There is almost no impact from the year-over-year changes in exchange rates to the product revenues.

Gross profit for the second quarter of 2016 was $25.5 million (51.7% of revenues), an increase of 15% compared with $22.2 million (50.8% of revenues) in the second quarter of 2015. The gross margin on subscription fees was 65.8% and the gross margin on products was 16.0%. The weakening of the Brazilian Real and the Argentinean Peso versus the US Dollar had a negative impact on the margin.

Operating profit for the second quarter of 2016 was $12.0 million (24.3% of revenues), an increase of 19% compared with an operating profit of $10.0 million (22.9% of revenues) in the second quarter of 2015. Excluding the impact of the change in exchange rates over the period, the operating profit would have increased 36% over the second quarter of 2015.

EBITDA for the quarter was $14.8 million (30.1% of revenues), an increase of 17% compared to an EBITDA of $12.7 million (29.0% of revenues) in the second quarter of 2015. Excluding the impact of the change in exchange rates over the period, the EBITDA would have increased by 24% over the second quarter of last year.

Net profit was US$7.6 million in the second quarter of 2016 (15.5% of revenues) or fully diluted EPS of US$0.36, an increase of 31% compared with a net profit of US$5.8 million (13.3% of revenues) or fully diluted EPS of US$0.28 in the second quarter of 2015. Excluding the impact of the change in exchange rates over the period, the net profit would have increased 52% over the second quarter of last year.

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

As of June 30, 2016, the Company had net cash, including marketable securities, of $25.8 million or $1.23  per share. This is compared with $27.2 million or $1.30 per share as at March 31, 2016.

Dividend

For the second quarter of 2016, a dividend of $3.8 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 very pleased with our record results and we are especially pleased to surpass the 1 million subscriber milestone. With regard to IRT, our jointly owned JV providing the telematic services for a leading car manufacturer in both Brazil and Argentina, we are pleased with its progress so far and it is moving ahead in accordance with our plan. Furthermore, we are constantly adding value-added services for our subscribers, making our product offering ever more attractive. These include advanced fleet management services, driver behavior intelligence, as well as other connected car services. I remain optimistic with regard to our future in 2016 and beyond."

Conference Call Information

The Company will also be hosting a conference call later today, August 11, 2016 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 0610
CANADA Dial-in Number: 1 888 604 5839
INTERNATIONAL Dial-in Number:  +972 3 918 0610
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 1 million 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.

ITURAN LOCATION AND CONTROL LTD.

 CONSOLIDATED BALANCE SHEETS



US dollars


June 30,

December 31,

(in thousands)

2016

2015




Current assets



Cash and cash equivalents

25,448

27,016

Investment in marketable securities

371

2,035

Accounts receivable (net of allowance for doubtful accounts)

34,821

27,436

Other current assets

31,573

22,437

Inventories

13,072

12,781


105,285

91,705




Long-term investments and other assets



Investments in affiliated companies

7,694

4,705

Investments in other company

85

78

Other non-current assets

1,319

1,166

Deferred income taxes

2,376

2,279

Funds in respect of employee rights upon retirement

7,501

7,174


18,975

15,402




Property and equipment, net

33,511

31,514




Intangible assets, net

25

26




Goodwill

3,405

3,356



















Total assets

161,201

142,003

ITURAN LOCATION AND CONTROL LTD.

CONSOLIDATED BALANCE SHEETS





US dollars


June 30,

December 31,

(in thousands)

2016

2015




Current liabilities



Credit from banking institutions

9

155

Accounts payable

13,555

10,466

Deferred revenues

11,665

9,210

Other current liabilities

23,276

21,750


48,505

41,581




Long-term liabilities



Liability for employee rights upon retirement

11,469

10,637

Provision for contingencies

449

622

Deferred revenues

1,014

973

Other non-current liabilities

451

369


13,383

12,601










Stockholders' equity

94,420

83,698

Non-controlling interests

4,893

4,123

Total equity

99,313

87,821
















Total liabilities and equity

161,201

142,003































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)

2016

2015

2016

2015




Revenues:





Location-based services

67,507

64,093

35,352

32,145

Wireless communications products

28,946

23,921

13,902

11,669


96,453

88,014

49,254

43,814






Cost of revenues:





Location-based services

23,327

23,146

12,106

11,845

Wireless communications products

23,871

19,269

11,683

9,732


47,198

42,415

23,789

21,577






Gross profit

49,255

45,599

25,465

22,237

Research and development expenses

1,401

1,085

726

595

Selling and marketing expenses

4,934

4,625

2,556

2,229

General and administrative expenses

19,525

19,365

10,254

9,402

Other income, net

(66)

(14)

(23)

(2)

Operating income

23,461

20,538

11,952

10,013

Financing income (exspenses), net

838

208

770

(263)

Income before income tax

24,299

20,746

12,722

9,750

Income tax expense

(7,052)

(6,439)

(3,837)

(3,100)

Share in losses of affiliated companies, net

(1,307)

(844)

(615)

(537)

Net income for the period

15,940

13,463

8,270

6,113

Less: Net income attributable to non-controlling interests

(1,208)

(834)

(637)

(295)

Net income attributable to the Company

14,732

12,629

7,633

5,818






 

 

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

0.70

0.60

0.36

0.28






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
ended June 30
,

Three month period
ended June 30
,

(in thousands)

2016

2015

2016

2015




Cash flows from operating activities





Net income for the period

15,940

13,463

8,270

6,113

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





Depreciation and amortization

5,507

5,383

2,896

2,710

Losses (gains) in respect of trading marketable securities

(68)

(204)

(34)

(115)

Increase )decrease) in liability for employee rights upon retirement

713

290

342

(91)

Share in losses of affiliated companies, net

1,307

844

615

537

Deferred income taxes

(1,744)

(346)

(1,052)

(341)

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

(17)

(7)

(7)

(2)

Decrease (increase) in accounts receivable

(7,078)

(867)

(509)

567

Decrease (increase) in other current assets

(5,309)

(671)

(2,079)

1,007

Decrease (increase) in inventories

(148)

388

(180)

(272)

Decrease(increase)  in accounts payable

2,906

854

426

(12)

Increase (decrease) in deferred revenues

2,382

128

1,027

524

Increase (decrease) in other current liabilities

675

150

(73)

53

Net cash provided by operating activities

15,066

19,405

9,642

10,678

Cash flows from investment activities





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

(247)

(487)

(24)

(224)

Capital expenditures

(4,900)

(12,969)

(2,689)

(6,132)

Investment in marketable securities

(344)

-

-

-

Investment in affiliated companies

(3,924)

(1,783)

(2,516)

(513)

Sale of marketable securities

1,858

-

-

-

Deposit

52

(239)

115

(79)

Proceeds from sale of property and equipment

99

687

9

188

Net cash used in investment activities

(7,406)

(14,791)

(5,105)

(6,760)

Cash flows from financing activities





Short term credit from banking institutions, net

(146)

6

6

6

Dividend paid

(9,749)

(11,343)

(6,629)

(6,920)

Dividend paid to non-controlling interests

(617)

(536)

-

-

Net cash provided by (used in) financing activities

(10,512)

(11,873)

(6,623)

(6,914)

Effect of exchange rate changes on cash and cash equivalents

1,284

(171)

722

1,076

Net increase(decrease)  in cash and cash equivalents

(1,568)

(7,430)

(1,364)

(1,920)

Balance of cash and cash equivalents at beginning of  period

27,016

38,418

26,812

32,908

Balance of cash and cash equivalents at end of the period

25,448

30,988

25,448

30,988

Supplementary information on investing activities not involving cash flows:

In May 2016, the Company declared a dividend in an amount of US$ 3.6 million.  The dividend was paid in July 2016.

During the six month period ended June 30, 2016, the Company purchased property and equipment in an amount of US$ 66 thousand using a directly related liability.

Company Contact

Udi Mizrahi

[email protected]

VP Finance, Ituran

(Israel) +972 3 557 1348

International Investor Relations

Ehud Helft / Gavriel Frohwein

[email protected]

GK  Investor Relations

(US) +1 646 688 3559 

SOURCE Ituran Location and Control Ltd

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