Ituran Location and Control Ltd. Presents Results for Full Year and Fourth Quarter 2018
AZOUR, Israel, March 11, 2019 /PRNewswire/ -- 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 Non-GAAP Results
Fourth Quarter 2018 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 Non-GAAP Results Non-GAAP Pro-Forma
Full Year 2018 Full Year 2018 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
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 54,261 41,009
for doubtful accounts)
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 9,497 9,627
upon retirement
---
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
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 14,801 14,062
upon retirement
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 16,272
non-controlling interests(*)
---
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
ITURAN LOCATION AND CONTROL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
US dollars US dollars
(in thousands Year ended Three months
period
December 31, ended December
31,
except per share data) 2018 2017 2018 2017
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 (3,023) (2,567) (899) (485)
non-controlling interest
Net income
attributable to the
Company 64,535 43,794 15,190 9,824
Basic and diluted
earnings per share 3.06 2.09 0.71 0.47
attributable to
Company's stockholders
Basic and diluted
weighted average 21,077 20,968 21,342 20,968
number of shares
outstanding (in thousands)
ITURAN LOCATION AND CONTROL LTD.
RECONCILIATION OF NON-GAAP RESULTS
US dollars US dollars
---
Year ended Three months
period
December 31, ended December
31,
(in thousands) 2018 2017 2018 2017
--- ---
GAAP Revenues 253,335 234,636 79,165 60,578
Valuation adjustment on
acquired 263 263 -
deferred revenue
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
---
62,378 56,535 18,328 14,673
GAAP operating income
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 64,535 43,794 15,190 9,824
shareholders
Operation income adjustment 936 626 -
Capital gain on acquisition
of non-controlling (14,677) -
interest
Other transaction expenses 844 -
Non-GAAP net income
attributable to 51,638 43,794 15,816 9,824
Iturans' shareholders
===
ITURAN LOCATION AND CONTROL LTD.
Summary of NON -GAAP Financial Information
US dollars US dollars
---
(in thousands Year ended Three months
period ended
December 31, 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
ITURAN LOCATION AND CONTROL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars US dollars
---
Year ended Three months
period
December 31, 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
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
Company Contact International Investor Relations
Udi Mizrahi
Ehud Helft
udi_m@ituran.com ituran@gkir.com
Deputy CEO &VP
Finance, Ituran GK Investor & Public Relations
(Israel) +972 3
557 1348
(US) +1 646 201 9246
---
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SOURCE Ituran Location and Control Ltd.
