Ituran Location and Control Ltd. Presents Results for the Second Quarter Of 2019
AZOUR, Israel, Aug. 28, 2019 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN, TASE: ITRN), today announced its consolidated financial results for the second quarter ended June 30, 2019.
Highlights of the second quarter of 2019
-- Non-GAAP revenue of $72.2 million, up 25% year-over-year;
-- Adjusted EBITDA of $20.6 million (28.5% of revenues), up 15%
year-over-year
-- Generated $16.3 million in quarterly operating cash flow;
-- Dividend of $5 million declared for the quarter;
-- Ituran added 21,000 net after-market subscribers;
-- Second insurance company signed for Ituran's UBI (usage based insurance)
in Israel;
Management Comment
Eyal Sheratzky, Co-CEO of Ituran said, "We are very pleased that our aftermarket subscriber quarterly growth rate has jumped back above the 20,000 range for the first time in five quarters. This is a sign that our aftermarket business is now back to its strong performance trend. As this is the more profitable part of our business, we believe our stronger aftermarket subscriber growth will translate into improved operating results in the coming quarters, and more prominently in 2020."
Continued Mr. Sheratzky, "We are pleased with the progress and momentum that our UBI offering is making. We recently signed our second customer in Israel, Shlomo Insurance, and we expect to bring additional customers in the coming months. This offering has significant potential for Ituran and represents an additional growth engine for us."
Concluded Mr. Sheratzky, "We are working hard at integrating and extracting synergies from the new geographies we have penetrated through Road Track. We see strong cross selling opportunities and we expect this to positively impact our results in the future."
The results below also include consolidated non-GAAP financial results of Ituran, which exclude revenues and costs related to the purchase price allocation. For further details with regard to the reconciliation between the non-GAAP and GAAP results please see the financial tables with the press release.
Second Quarter 2019 Results
Revenues for the second quarter of 2019 were $71.2 million. Non-GAAP revenues for the quarter were $72.2 million representing an increase of 25% compared with revenues of $57.7 million in the second quarter of 2018.
The significantly higher average level of the US dollar exchange rate versus the Brazilian real and the Argentinean peso, 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, second quarter non-GAAP revenue grew 33% year over year.
73% of revenues were from location based service subscription fees and 27% were from product revenues.
Non-GAAP revenues from subscription fees were $52.7 million, representing an increase of 27% over the same period last year. In local currency terms, subscription fees grew 37% over the same period last year. The subscriber base amounted to 1,758,000 as of June 30, 2019. Ituran added 21,000 net after-market subscribers during the quarter.
Product revenues were $19.6 million, representing an increase of 21% compared with the same period last year.
Gross profit for the quarter was $33.5 million (47.0% of revenues). Non-GAAP gross profit for the quarter was $34.5 million (47.8% of revenues). This represents an increase of 19% compared with gross profit of $28.9 million (50.1% of revenues) in the second quarter of 2018.
The non-GAAP gross margin in the quarter on subscription fees was 57.2% compared with 63.9% in the same period last year. The lower margin was due to the lower average gross margin on the recently acquired subscribers.
The non-GAAP gross margin in the quarter on products was 22.3% compared with 14.8% in the same period last year. The higher gross margin in the current quarter was due to the product mix sold during the quarter.
Operating profit for the quarter was $13.6 million (19.1% of revenues). Non-GAAP operating profit for the quarter was $15.5 million (21.5% of revenues) which represents an increase of 5%, compared with operating profit of $14.8 million (25.6% of revenues) in the second quarter of 2018. In local currency terms, the year-over-year increase in non-GAAP operating profit was 13%.
Adjusted EBITDA for the quarter was $20.6 million (28.5% of revenues), an increase of 16% compared to $17.8 million (30.9% of revenues) in the second quarter of 2018. In local currency terms, the increase in adjusted EBITDA was 24% year-over-year.
Net income in the second quarter of 2019 was $7.7 million (10.8% of revenues) or fully diluted earnings per share of $0.37. Net income on a non-GAAP basis in the second quarter of 2019 was $9.6 million (13.3% of revenues) or fully diluted earnings per share of $0.46. This represents a decline of 20% compared with a net income of $12.0 million (20.8% of revenues) or fully diluted earnings per share of $0.57 in the second quarter of 2018. In local currency terms the year-over-year decrease in non-GAAP net income was 13%.
The decrease in net income was primarily due to the increase in the finance expenses, primarily related to the acquisition of RoadTrack, and due to increased losses in affiliated company, Bringg, which is one of Ituran's early-stage company investments.
Cash flow from operations for the quarter was $16.3 million.
As of June 30, 2019, the Company had cash, including marketable securities, of $62.8 million and debt of $76.2 million, amounting to a net debt of $13.4 million or $0.64 per share. This is compared with cash, including marketable securities, of $53.3 million and debt of $73.2 million, amounting to a net debt of $19.9 million, or $0.93 per share, as of December 31, 2018.
Dividend
For the second quarter of 2019, 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.
Share Buy Back
On May 21, 2019, the board of directors approved a share buyback program, which Ituran has commenced. Under the program, the Company is able to repurchase Ituran shares in an amount up to $25 million by December 31, 2020.
Conference Call Information
The Company will also be hosting a conference call later today, August 28, 2019 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: 1 888 668 9141
ISRAEL Dial-in Number: 03 918 0609
CANADA Dial-in Number: 1 888 604 5839
INTERNATIONAL Dial-in Number: +972 3 918 0609
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 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 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
CONDENSED CONSOLIDATED BALANCE SHEETS
US dollars
June 30, December
31,
(in thousands) 2019 2018
---
(unaudited)
Current assets
Cash and cash
equivalents 62,391 51,398
Investments in
marketable securities 441 1,897
Accounts receivable
(net of allowance 51,205 54,261
for doubtful accounts)
Other current assets 49,150 52,983
Inventories 26,980 28,367
190,167 188,906
Non- Current
investments and other
assets
Investments in
affiliated companies 2,998 4,872
Investments in other
companies 3,014 2,772
Other non-current
assets 3,858 3,222
Deferred income taxes 11,323 12,127
Funds in respect of
employee rights 10,888 9,497
upon retirement
32,081 32,490
Property and
equipment, net 50,804 50,460
Operating lease right-
of-use assets, net 6,962
Intangible assets, net 38,582 39,040
Goodwill 63,074 62,896
Total assets 381,670 373,792
CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)
US dollars
June 30, December 31
(in thousands) 2019 2018
---
(unaudited)
Current liabilities
Credit from banking
institutions 19,200 10,559
Accounts payable 23,879 23,987
Deferred revenues 30,995 37,671
Operating lease
liabilities, current 2,724 -
Other current liabilities 30,926 32,475
107,724 104,692
Non- Current liabilities
Long term loan 57,042 62,622
Liability for employee
rights upon retirement 16,603 14,801
Provision for
contingencies 174 201
Deferred income taxes 5,273 6,458
Deferred revenues 9,353 8,221
Others non-current
liabilities 348 325
Operating lease
liabilities, non-
current 4,238 -
Obligation to purchase
non-controlling
interests 16,653 16,272
109,684 108,900
Stockholders' equity 157,972 153,693
Non-controlling
interests 6,290 6,507
Total equity 164,262 160,200
Total liabilities and
equity 381,670 373,792
CONDENSED
CONSOLIDATED
STATEMENTS OF INCOME
US dollars US dollars
Six month period Three month
period
ended June 30 ended June 30
, ,
(in thousands
except per share
data) 2019 2018 2019 2018
---
Revenues:
Telematics services 104,825 87,189 51,666 41,490
Telematics products 40,021 33,605 19,576 16,226
144,846 120,794 71,242 57,716
Cost of revenues:
Telematics services 45,094 31,056 22,517 14,975
Telematics products 31,604 29,354 15,214 13,814
76,698 60,410 37,731 28,789
Gross profit 68,148 60,384 33,511 28,927
Research and
development
expenses 7,128 2,099 3,377 939
Selling and
marketing expenses 6,303 5,482 3,373 2,630
General and
administrative
expenses 27,597 22,590 13,151 10,712
Other expense
(income), net 5 (118) 1 (144)
Operating income 27,115 30,331 13,609 14,790
Other income
(expense), net (48) 25
Financing income
(expense), net (1,854) 568 (839) 292
Income before
income tax 25,213 30,899 12,795 15,082
Income tax expenses (7,189) (8,510) (3,692) (3,853)
Share in gains
(losses) of
affiliated
companies, net (1,971) 2,224 (1,103) 1,537
Net income for the
period 16,053 24,613 8,000 12,766
Less: Net income
attributable to
non-controlling
interest (302) (1,319) (306) (753)
Net income
attributable to
the Company 15,751 23,294 7,694 12,013
Basic and diluted
earnings per share
attributable to 0.74 1.11 0.37 0.57
Company's
stockholders
Basic and diluted
weighted average
number of shares 21,146 20,968 21,041 20,968
outstanding (in
thousands)
RECONCILIATION OF NON-GAAP RESULTS
US dollars US dollars
(in thousands Six months ended Three months
ended
June 30, June 30,
except per share
data) 2019 2018 2019 2018
---
GAAP Revenues: 144,846 120,794 71,242 57,716
Valuation
adjustment on
acquired deferred 2,004 985
revenue
Non -GAAP revenue 146,850 120,794 72,227 57,716
68,148 60,384 33,511 28,927
GAAP gross profit
Valuation
adjustment on
acquired deferred 2,224 985
revenue
Non -GAAP gross
profit 70,372 60,384 34,496 28,927
27,115 30,331 13,609 14,790
GAAP operating
income
Operation profit
adjustments 2,752 1,206
Amortization of
other intangible
assets 1,799 699
Non-GAAP
operating income 31,666 30,331 15,514 14,790
Depreciation and
amortization 9,780 6,689 5,081 3,066
Adjusted EBITDA 41,446 37,020 20,595 17,856
Net income
attribute to the
company's 15,751 23,294 7,694 12,013
shareholders
Operation income
adjustment 4,551 1,905
Other income, net
Non-GAAP net
income
attributable to 20,302 23,294 9,599 12,013
Iturans'
shareholders
Summary of NON -GAAP Financial Information
US dollars US dollars
Six month period Three month
period
ended June 30 ended June 30
, ,
(in thousands) 2019 2018 2019 2018
---
Revenue 146,850 120,794 72,227 57,716
Gross profit 70,372 60,384 34,496 28,927
Operation income 31,666 30,331 15,514 14,790
Net income attribute to
shareholders 20,302 23,294 9,599 12,013
Adjusted EBITDA 41,446 37,020 20,595 17,856
Basic and diluted
earnings per share 0.96 1.11 0.46 0.57
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars US dollars
Six month period Three month
period
ended June 30 ended June 30
, ,
(in thousands) 2019 2018 2019 2018
---
Cash flows from operating
activities
Net income for the period 16,053 24,613 8,000 12,766
Adjustments to reconcile
net income to net cash
from
operating activities:
Depreciation and
amortization 11,579 6,689 5,464 3,066
Interest and exchange rate
differences on loans 31 44
Losses (gain) in respect of
trading marketable
securities 2 (341) (26) (145)
Increase (decrease) in
liability for employee
rights upon retirement 1,179 (73) 905 55
Share in losses (gains) of
affiliated companies, net 1,971 (2,224) 1,103 (1,537)
Deferred income taxes (17) 1,819 (101) 307
Capital gains on sale of
property and equipment,
net 14 69 8 17
Decrease (increase) in
accounts receivable 4,558 (5,754) (371) (1,637)
Decrease (increase) in
other current assets 2,314 (3,979) 2,615 220
Decrease in inventories 2,005 15 713 585
Operating lease right-of-
use assets 2,036 843
Increase (decrease) in
accounts payable (347) (1,863) 1,249 (2,245)
Decrease in deferred
revenues (6,143) (1,927) (3,595) (1,591)
Increase (decrease) in
other current liabilities (2,678) 2,854 100 2,501
Operating lease liabilities (2,036) (843)
Increase in obligation for
purchase non-controlling
interests 702 208
Net cash provided by
operating activities 31,223 19,898 16,316 12,362
Cash flows from investment
activities
Decrease (increase) in
funds in respect of
employee rights (956) 153 (881) (205)
upon retirement, net of
withdrawals
Capital expenditures (10,375) (9,982) (3,445) (3,364)
Investments in affiliated
companies (55) (1,250) (55) (1,250)
Investments in other
companies (129) (897) (116) (330)
Sale of marketable
securities, net 1,454 1,671 1,070 1,621
Proceed from long term
deposit (152) (205) (74) (114)
Proceeds from loans to
affiliated companies 3,262 550
Proceeds from sale of
property and equipment 35 216 8 13
Net cash used in investment
activities (10,178) (7,032) (3,493) (3,079)
Cash flows from financing
activities
Short term credit from
banking institutions, net (611) (33) 1,207 6
Dividend paid (9,748) (10,067) (4,839) (5,033)
Dividend paid to non-
controlling interest (809) (972) (271) (547)
Net cash used in financing
activities (11,168) (11,072) (3,903) (5,574)
Effect of exchange rate
changes on cash and cash
equivalents 1,116 (2,594) 422 (2,337)
Net increase in cash and
cash equivalents 10,993 (800) 9,342 1,372
Balance of cash and cash
equivalents at beginning
of the period 51,398 36,906 53,049 34,734
Balance of cash and cash
equivalents at end of the
period 62,391 36,106 62,391 36,106
Supplementary information on financing
and investing activities not involving
cash flows:
In May 2019, the Company declared a
dividend in an amount of US$ 5 million.
The dividend was paid in July 2019.
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
