Ituran Location and Control Ltd. Presents Results for the Third Quarter of 2020
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 B
ALANCE 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 Three month period
ended September 30 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 Three month period
ended September 30
, 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 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.
