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Ituran Location and Control Ltd. Presents Results for the Third Quarter of 2020

·14 min read

AZOUR, Israel, Nov. 18, 2020 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the third quarter of 2020.

Highlights of the third quarter of 2020

  • Improved results versus the prior quarter, as the Company continues to successfully overcome some of the impacts of the Covid-19 pandemic;

  • Revenues of $60.3 million, an increase of 13% sequentially and a decline of 13% year over year; in local currencies revenues from subscription fees were at a similar level to that of the last year's quarter;

  • EBITDA was $15.0 million; when excluding foreign exchange impacts, it would have been at a similar level to last year;

  • Net income was $9.3 million, an increase of 45% year over year;

  • Generated $13.6 million in quarterly operating cash flow; Ituran returns to a net cash position for the first time since its acquisition of RoadTrack in 2018;

  • Total subscribers reached 1,752,000 at the end of the quarter; net increase of 13,000 in after-market subscribers and net decrease of 12,000 in the OEM business.

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "We are happy with the improvement in our results in the third quarter, despite an environment which still remains difficult in many of our geographies due to the ongoing pandemic. While revenues were still below those of the third quarter last year, we are pleased with the resumption in our sequential growth. Furthermore, we are happy to report that our after-market subscriber base resumed its growth again, showing growth of 13,000 subscriber this quarter. Finally, the steps we took earlier this year as the effects of the pandemic became apparent, enabled us to reach similar operating profit compared with last year when excluding foreign exchange impact."

Mr. Sheratzky concluded, "Looking ahead, while the pandemic continues to have an impact, and the associated uncertainties are making it difficult to make predictions, we expect that the results of the fourth quarter will be similar to this quarter. Longer-term, I am confident that Ituran is very well positioned to emerge this period a stronger company with a platform for long-term sustainable and profitable growth."

Third quarter 2020 Results

Revenues for the third quarter of 2020 were $60.3 million, a decrease of 13% compared with revenues of $69.0 million in the third quarter of 2019.

The decrease in the revenue level was due to the impact of the Covid-19 pandemic on new car sales, particularly in Brazil and other geographies in which Ituran operates. Furthermore, the higher average level of the US dollar exchange rate versus the Brazilian real during the quarter compared with the same period last year, reduced the overall revenue level in US dollar terms and had a negative impact on the revenue growth rate. In local currency terms, third quarter revenue declined by 6% year-over-year.

74% of revenues were from location-based service subscription fees and 26% were from product revenues.

Revenues from subscription fees were $44.5 million, a decrease of 12% over third quarter 2019 revenues. In local currency terms, subscription fees declined by 2% year-over-year.

The subscriber base amounted to 1,752,000 as of September 30, 2020. This represents an increase of 1,000 net over that of the end of the prior quarter. During the quarter, there was an increase of 13,000 in the aftermarket subscriber base and a decline of 12,000 in the OEM subscriber base.

Product revenues were $15.9 million, a decrease of 15% compared with that of the third quarter of 2019. The decline was primarily due to limited installations of Ituran's products due to the Covid-19 pandemic shutdown implemented in many of the geographies in which Ituran operates, during most of the third quarter.

Gross profit for the quarter was $27.4 million (45.4% of revenues), a 14% decrease compared with gross profit of $31.9 million (46.2% of revenues) in the third quarter of 2019.

The gross margin in the quarter on subscription revenues was 54.9%, compared with 55.4% in the third quarter of 2019. The gross margin on products was 18.6%, compared with 21.5% in the third quarter of 2019.

Operating income for the quarter was $10.5 million (17.5% of revenues) compared with $11.9 million (17.2% of revenues) in the third quarter of last year. This is a decline of 11% year-over-year. In local currency terms, the operating income would have been similar to that of the third quarter 2019.

EBITDA for the quarter was $15.0 million (24.9% of revenues), a decrease of 14% compared with $17.5 million (25.4% of revenues) in the third quarter of last year. In local currency terms, the decline would have been 3% year over year.

Financial income for the quarter was $2.8 million compared with a financial expense of $0.8 million in the third quarter of last year. Held company, SaverOne, in Ituran has an 11% stake, became a public company listed on the Tel Aviv Stock Exchange in June 2020. As a result, the SaverOne holdings are measured by its quarter-end traded value and therefore any change in valuation between quarters are recorded as a financial gain or loss under the financial income line item in the profit and loss statement. In the quarter, SaverOne appreciated in value and Ituran recorded a financial income of $3.3 million from this holding.

Net income for the third quarter of 2020 was $9.3 million (15.4% of revenues) or earnings per share of $0.45, a 45% increase compared with $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.30 in the third quarter of last year. In local currency terms, the gain would have been 58% year over year.

Cash flow from operations for the third quarter of 2020 was $13.6 million.

As of September 30, 2020, the Company had cash, including marketable securities, of $61.9 million and debt of $56.8 million, amounting to a net cash of $5.1 million. This is compared with cash, including marketable securities, of $54.3 million and debt of $67.9 million, amounting to a net debt of $13.6 million, as of December 31, 2019.

Conference Call Information

The Company will also be hosting a conference call later today, November 18, 2020 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
ISRAEL Dial-in Number: 03 918 0610
CANADA Dial-in Number: 1 866 485 2399
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, as well as factors related to the global COVID-19 pandemic.

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 approaching 2 million subscribers using its location based services with a market leading position in Israel and Latin America. Established in 1995, Ituran has approximately 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

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS



US dollars


September 30,

December 31,

(in thousands)

2020

2019


(unaudited)








Current assets



Cash and cash equivalents

61,836

53,964

Investments in marketable securities

100

358

Accounts receivable (net of allowance for doubtful accounts)

40,051

45,090

Other current assets

35,027

49,201

Inventories

23,391

25,537


160,405

174,150




Non- Current investments and other assets



Investments in affiliated companies

890

1,666

Investments in other companies

8,136

3,260

Other non-current assets

2,789

3,365

Deferred income taxes

10,653

10,385

Funds in respect of employee rights upon retirement

12,320

11,476


34,788

30,152




Property and equipment, net

36,641

48,866




Operating lease right-of-use assets, net

10,301

12,626




Intangible assets, net

19,593

23,355




Goodwill

39,594

50,086



















Total assets

301,322

339,235

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)



US dollars


September 30,

December 31,

(in thousands)

2020

2019


(unaudited)


Current liabilities



Credit from banking institutions

20,380

18,110

Accounts payable

19,337

22,656

Deferred revenues

23,829

29,146

Obligation to purchase non-controlling interests

11,063

-

Other current liabilities

32,774

31,153


107,383

101,065




Non- Current liabilities



Long term loan

36,378

49,803

Liability for employee rights upon retirement

18,431

17,000

Deferred income taxes

2,584

2,867

Deferred revenues

8,276

9,763

Others non-current liabilities

2,577

241

Obligation to purchase non-controlling interests

-

11,743

Operating lease liabilities, non-current

7,347

10,839


75,593

102,256










Stockholders' equity

116,292

129,330

Non-controlling interests

2,054

6,584

Total equity

118,346

135,914
















Total liabilities and equity

301,322

339,235

ITURAN LOCATION AND CONTROL LTD.

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)

2020

2019

2020

2019






Revenues:





Telematics services

137,185

155,086

44,478

50,261

Telematics products

44,829

58,755

15,851

18,734


182,014

213,841

60,329

68,995






Cost of revenues:





Telematics services

60,553

67,497

20,052

22,403

Telematics products

35,458

46,318

12,900

14,714


96,011

113,815

32,952

37,117






Gross profit

86,003

100,026

27,377

31,878

Research and development expenses

9,959

10,335

2,654

3,207

Selling and marketing expenses

8,428

9,593

2,529

3,290

General and administrative expenses

37,635

41,155

11,636

13,558

Impairment of goodwill

10,508

-

-

-

Impairment of intangible assets and other expenses (income), net

3,712

(72)

12

(77)

Operating income

15,761

39,015

10,546

11,900

Other income (expense), net

5

(37)

2

11

Financing income (expense), net

3,651

(2,701)

2,788

(847)

Income before income tax

19,417

36,277

13,336

11,064

Income tax expenses

(8,595)

(10,869)

(3,778)

(3,680)

Share in gains (losses) of affiliated companies, net

(858)

(2,781)

29

(810)

Net income for the period

9,964

22,627

9,587

6,574

Less: Net income attributable to non-controlling interest

(663)

(477)

(320)

(175)

Net income attributable to the Company

9,301

22,150

9,267

6,399






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

0.45

1.05

0.45

0.30






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

20,813

21,112

20,813

21,041

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



US dollars

US dollars


Nine month period
ended September 30
,

Three month period
ended September 30
,

(in thousands)

2020

2019

2020

2019




Cash flows from operating activities





Net income for the period

9,964

22,627

9,587

6,574

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





Depreciation and amortization

14,310

17,210

4,484

5,631

Interest and exchange rate differences on loans

(423)

23

119

(8)

Losses (gain) in respect of trading marketable securities

(11)

210

5

208

Gain in respect of investments in other companies

(4,948)

-

(3,424)

-

Increase in liability for employee rights upon retirement

1,350

1,294

455

115

Share in losses (gains) of affiliated companies, net

858

2,781

(29)

810

Deferred income taxes

(1,244)

252

(875)

269

Capital loss on sale of property and equipment, net

118

47

31

33

Decrease (increase) in accounts receivable

1,505

6,526

(1,982)

1,968

Decrease in other current assets

4,647

1,115

1,698

(1,199)

Decrease in inventories

1,825

3,618

1,596

1,613

Increase (decrease) in accounts payable

198

(3,559)

2,443

(3,212)

Decrease in deferred revenues

(5,521)

(7,090)

(1,811)

(947)

Increase (decrease) in other current and non-current liabilities

7,453

(3,341)

1,275

(663)

Impairment of goodwill

10,508

-

-

-

Impairment of other intangible assets

3,661

-

-

-

Increase (decrease) in obligation for purchase non-controlling interests

(680)

967

18

265

Net cash provided by operating activities

43,570

42,680

13,590

11,457






Cash flows from investment activities





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

(790)

(1,117)

(427)

(161)

Capital expenditures

(7,506)

(13,658)

(1,927)

(3,283)

Investments in affiliated and other companies

(545)

(184)

(53)

-

Sale of marketable securities, net

269

1,454

269

-

Proceeds from (Investments in) deposits

(43)

(83)

(8)

69

Proceeds from sale of property and equipment

223

203

27

168

Net cash used in investment activities

(8,392)

(13,385)

(2,119)

(3,207)






Cash flows from financing activities





Short term credit from banking institutions, net

2,614

387

(46)

998

Repayment of long term loan

(13,353)

(4,436)

(4,551)

(4,436)

Purchase of shares from minority shareholders

(750)

-

-

-

Dividend paid

(9,967)

(14,798)

-

(5,050)

Dividend paid to non-controlling interest

(1,461)

(1,557)

(1,461)

(748)

Acquisition of company shares purchased by a wholly owned subsidiary

-

(3,501)

-

(3,501)

Net cash used in financing activities

(22,917)

(23,905)

(6,058)

(12,737)






Effect of exchange rate changes on cash and cash equivalents

(4,389)

(534)

(359)

(1,650)

Net increase (decrease) in cash and cash equivalents

7,872

4,856

5,054

(6,137)

Balance of cash and cash equivalents at beginning of the period

53,964

51,398

56,782

62,391

Balance of cash and cash equivalents at end of the period

61,836

56,254

61,836

56,254







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

Cision
Cision

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SOURCE Ituran Location and Control Ltd.