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

AZOUR, Israel, May 13, 2020 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the first quarter of 2020.

Highlights of the first quarter of 2020

    --  Revenue of $68.4 million;
    --  EBITDA of $15.3 million;
    --  Generated $10.7 million in quarterly operating cash flow;
    --  Net increase in aftermarket subscribers of 17,000;
    --  Total subscribers reached 1,794,000 at the end of the quarter;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "We are pleased with Ituran's first quarter performance with revenues and operating income ahead of those of the prior quarter, driven by continued subscriber growth in the aftermarket business. This is despite the impact from the COVID-19 pandemic and some currency headwinds."

Continued Mr. Sheratzky, "Due to the pandemic, in the second quarter we have seen a halt in new car sales globally, and therefore in new subscribers. We have been focusing on reducing expenses across the board, which will allow us to mitigate some of the impact to profitability and cash generation. Consequently, for the second quarter, we expect between a 10-20% reduction in EBITDA.

"Conservatively, the board has decided to suspend our dividend payments for the time being in order to strengthen our cash levels, which will better enable us to weather this significant global crisis, while also providing us with increased capital to take advantage of any opportunities.

Concluded Mr. Sheratzky, "Our ability to remain profitable and cash flow positive during this unprecedented global crisis, demonstrates the overall resilience of our business model, built on the subscription fees of 1.8 million customers distributed globally. I remain optimistic over the long-term, while in the short-term preparing Ituran to overcome the current crisis. I am confident that Ituran will emerge this period as a stronger and more efficient company. "

First Quarter 2020 Results

Starting from the current quarter, the difference between the GAAP and non-GAAP results has become minimal. Therefore, Ituran will discontinue its reporting of the non-GAAP financial measures from the current first quarter of 2020.

Revenues for the first quarter of 2020 were $68.4 million, a decrease of 7% compared with revenues of $73.6 million in the first quarter of 2019.

The higher average level of the US dollar exchange rate versus the Brazilian real, 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 revenue growth rate. In local currency terms, first quarter revenue decline by 4% year-over-year.

72% of revenues were from location-based service subscription fees and 28% were from product revenues.

Revenues from subscription fees were $49.0 million, a decrease of 8% over first quarter 2019 revenues. In local currency terms, subscription fees declined by 3% year-over-year.

The subscriber base amounted to 1,794,000 as of March 31, 2020. This represents an increase of 13,000 over that of the end of the prior quarter. During the quarter, Ituran added 17,000 aftermarket subscribers, while the OEM subscriber base declined by 4,000.

Product revenues were $19.4 million, a decrease of 5% compared with that of the first quarter of 2019.

Gross profit for the quarter was $31.0 million (45.3% of revenues), an 11% decrease compared with gross profit of $34.6 million (47.1% of revenues) in the first quarter of 2019.

The gross margin in the quarter on subscription fees was 54.4%, compared with 57.5% in the first quarter of 2019. The gross margin on products was 22.3%, compared with 19.8% in the first quarter of 2019.

Operating income for the quarter was $10.1 million (14.7% of revenues), a decrease of 25% compared with $13.5 million (18.3% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 22% year over year. As mentioned in prior quarters, the main decline was due to the OEM business as a result of selling of less hardware and reducing the free trial period for new subscribers.

EBITDA for the quarter was $15.3 million (22.4% of revenues), a decrease of 21% compared with $19.3 million (26.2% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 16% year over year.

Net income for the first quarter of 2020 was $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.31, a decrease of 21% compared with $8.1 million (10.9% of revenues) or fully diluted earnings per share of $0.38 in the first quarter of last year. In local currency terms, the decline would have been 17% year over year.

Cash flow from operations for the first quarter of 2020 was $10.7 million.

As of March 31, 2020, the Company had cash, including marketable securities, of $50.l million and debt of $63.5 million, amounting to a net debt of $13.4 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, May 13, 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: 1 888 407 2553

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


                              
            
              CONDENSED CONSOLIDATED BALANCE SHEETS






                                                                  US dollars



                                              
            
               March 31,            Decmber 
         31,


                   (in thousands)                                        2020                         2019

    ---

                                             
            
              (unaudited)







       
              Current assets


        Cash and cash
         equivalents                                                   49,858                       53,964


        Investments in
         marketable securities                                            268                          358


        Accounts receivable
         (net of allowance for
         doubtful accounts)                                            46,327                       45,090


        Other current assets                                           41,020                       49,201



       Inventories                                                    25,526                       25,537


                                                             
            _______                 
       _______


                                                                      162,999                      174,150







                   Non- Current investments and other assets


        Investments in
         affiliated companies                                             835                        1,666


        Investments in other
         companies                                                      3,612                        3,260


        Other non-current
         assets                                                         3,203                        3,365


        Deferred income taxes                                           8,602                       10,385


        Funds in respect of
         employee rights upon
         retirement                                                    11,231                       11,476


                                                             
            _______                 
       _______


                                                                       27,483                       30,152





                   Property and
                    equipment, net                                     43,381                       48,866





                   Operating lease right-
                    of-use assets, net                                 12,139                       12,626





                   Intangible assets, net                              21,650                       23,355





                   Goodwill                                            49,970                       50,086













                                                             
            _______                 
       _______


                   Total assets                                       317,622                      339,235




                                                             
            _______                 
       _______




                                                             
            _______                 
       _______


                      
              
                CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)






                                                                      US dollars



                                                                       March 31,               December 31,


                     (in thousands)                                          2020                       2019

    ---

                                                                      (unaudited)



       
                Current liabilities


        Credit from banking
         institutions                                                      19,618                     18,110


        Accounts payable                                                   20,069                     22,656


        Deferred revenues                                                  27,488                     29,146


        Other current
         liabilities                                                       34,569                     31,153


                                                               
              _______            
          _______


                                                                          101,744                    101,065






       
                Non- Current liabilities


        Long term loan                                                     43,891                     49,803


        Liability for employee
         rights upon retirement                                            17,344                     17,000


        Deferred income taxes                                               2,788                      2,867


        Deferred revenues                                                   8,963                      9,763


        Others non-current
         liabilities                                                          239                        241


        Operating lease
         liabilities, non-
         current                                                            8,724                     10,839


        Obligation to purchase
         non-controlling
         interests                                                         11,748                     11,743


                                                              
              ________           
          ________


                                                                           93,697                    102,256









                     Stockholders' equity                                 116,009                    129,330


                     Non-controlling
                      interests                                             6,172                      6,584





                                                              
              ________           
          ________


                     Total equity                                         122,181                    135,914











                                                               
              _______            
          _______


                     Total liabilities and
                      equity                                              317,622                    339,235





                                                               
              _______            
          _______




                                                                
              ______            
          _______


       
        
                CONDENSED 
             CONSOLIDATED STATEMENTS OF INCOME






                                                                                 US dollars



                      (in thousands                                              Three months period
                                                                ended March 31,


                      except per share data)                                       2020                  2019

    ---

                                                                                              (unaudited)



        Revenues:


         Telematics services                                                     48,976                53,159


         Telematics products                                                     19,398                20,445


                                                                     
              _______   
              _______


                                                                                 68,374                73,604





                      Cost of revenues:


         Telematics services                                                     22,342                22,577


         Telematics products                                                     15,063                16,390


                                                                     
              _______   
              _______


                                                                                 37,405                38,967





                                                                     
              _______   
              _______




         Gross profit                                                            30,969                34,637


         Research and
          development expenses                                                    3,886                 3,751


         Selling and marketing
          expenses                                                                3,059                 2,930


         General and
          administrative
          expenses                                                               13,923                14,446


         Other expenses, net                                                         27                     4


                                                                     
              _______   
              _______


         Operating income                                                        10,074                13,506


         Other expenses, net                                                       (10)                 (73)


         Financing expenses,
          net                                                                     (654)              (1,015)


                                                                     
              _______   
              _______


         Income before income
          tax                                                                     9,410                12,418


         Income tax expenses                                                    (1,926)              (3,497)


         Share in losses of
          affiliated companies
          ,net                                                                    (903)                (868)


                                                                     
              _______   
              _______


         Net income for the
          period                                                                  6,581                 8,053


         Less: Net loss
          (income) attributable
          to non-controlling
          interest                                                                (214)                    4


                                                                     
              _______   
              _______


         Net income
          attributable to the
          Company                                                                 6,367                 8,057





         Basic and diluted
          earnings per share
          attributable to
          Company's
          stockholders                                                             0.31                  0.38





         Basic and diluted
          weighted average
          number of shares
          outstanding (in
          thousands)                                                             20,813                21,256


                      
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS






                                                                                                US dollars



                                                                                                Three months period
                                                                               ended March 31 ,


                     (in thousands)                                                                2020                   2019

    ---

                                                                                                            (unaudited)


                     Cash flows from operating activities



       Net income for the period                                                                 6,581                  8,053


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


        Depreciation and  amortization                                                            5,223                  6,115


        Interest and exchange rate on short
         and long term credit                                                                     (598)                  (13)


        Loss in respect of trading marketable
         securities                                                                                  90                     28


        Increase in liability for employee
         rights upon retirement, net                                                                834                    274


        Share in losses of affiliated
         company, net                                                                               903                    868



       Deferred income taxes                                                                       798                     84


        Capital losses  from sale of property
         and equipment, net                                                                          60                      6


        Decrease (increase) in accounts
         receivable                                                                             (4,491)                 4,929


        Increase in other current and non-
         current assets                                                                           (528)                 (301)


        Decrease (increase) in inventories                                                        (378)                 1,292


        Increase (decrease) in accounts
         payable                                                                                    190                (1,596)


        Decrease in deferred revenues                                                           (1,403)               (2,548)


        Increase (decrease) in other current
         and non-current liabilities                                                              3,380                (2,778)


        Increase in obligasion for purechase
         non-controling interests                                                                    51                    494


                                                                                    
              ________   
              ________


        Net cash provided by operating
         activities                                                                              10,712                 14,907







                     Cash flows from investment activities


        Increase in funds in respect of
         employee rights upon


        retirement, net of withdrawals                                                            (108)                  (75)



       Capital expenditures                                                                    (3,451)               (6,930)


        Investments in affiliated and other
         companies                                                                                (496)                  (13)


        Proceed from long term deposit                                                             (22)                  (78)


        Sale of marketable securities,net                                                                                 384


        Proceeds from sale of property and
         equipment                                                                                  166                     27


                                                                                    
              ________   
              ________


        Net cash used in investment
         activities                                                                             (3,911)               (6,685)







                     Cash flows from financing activities


        Short term credit from banking
         institutions, net                                                                        2,660                (1,818)


        Repayment of long term loan                                                             (4,285)



       Dividend paid                                                                           (5,050)               (4,909)


        Dividend paid to non-controlling
         interest                                                                                                       (538)


                                                                                    
              ________   
              ________


        Net cash used in  in financing
         activities                                                                             (6,675)               (7,265)





        Effect of exchange rate changes on
         cash and cash equivalents                                                              (4,232)                   694





        Net Increase (decrease) in cash and
         cash equivalents                                                                       (4,106)                 1,651


        Balnce of cash and cash equivalents
         at beginning of period                                                                  53,964                 51,398


                                                                                    
              ________   
              ________


        Balance of cash and cash equivalents
         at end of period                                                                        49,858                 53,049

Supplementary information on financing and investing activities not involving cash flows:
In March 2020, the Company declared a dividend in the amount of US$ 5 million. The dividend was paid in April 2020.



     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