Else Nutrition

Ituran Presents Results For The Second Quarter Of 2022

29 August 2022

Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the second quarter of 2022.

Highlights of the Second Quarter of 2022

  • Growth in total subscribers to approximately 1,972,000: net increase in aftermarket of 50,000 and net decrease in OEM of 2,000;
  • Revenues of $73.4 million, an increase of 9% year-over-year;
  • Net income of $8.7 million compared with $9.1 million in the second quarter of last year;
  • EBITDA of $19.4 million, compared with $18.2 million in the second quarter of last year, up 7% year-over-year;
  • Generated $10.9 million in quarterly operating cash flow;
  • Declared dividend of $3.0 million; purchased $3.4 million under share buy-back program;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran, said, "We are very pleased with the results of the second quarter, especially at a time when component supply chains remained tight and new car sales remain constrained. In particular, the above-average growth in our after-market subscriber base has continued for the second quarter this year and we have so far added 91,000 subscribers in 2022- well on target to reach or even surpass the top-end of our expected range of between 140,000-160,000 for the year."

Continued Mr. Sheratzky, "The strong growth in our subscriber base is beginning to be expressed in our subscriber revenue growth, which despite currency headwinds, showed a growth of 11% year-over-year. We also demonstrated a 130 basis-point improvement in the subscriber gross margin, demonstrating that the operating leverage in our business is beginning to become more apparent." 

Added Mr. Sheratzky, "Our continued profitability and ongoing cash generation enable us to share the fruits of our ongoing success with our shareholders. Beyond the regular dividend payment of $3 million per quarter, we purchased $3.4 million in shares under our share buy-back program. Both our dividend and share buy-back programs are expressions of our ongoing focus on generating shareholder value."

Second Quarter 2022 Results

Revenues for the second quarter of 2022 were $73.4 million, an increase of 9% compared with revenues of $67.5 million in the second quarter of 2021. 71% of revenues were from location-based service subscription fees and 29% were from product revenues.

Revenues from subscription fees were $52.3 million, an increase of 11% over second quarter 2021 revenues.

The subscriber base amounted to 1,972,000 as of June 30, 2022. This represents an increase of 48,000 net over that of the end of the prior quarter. During the quarter, there was an increase of 50,000 in the aftermarket subscriber base and a decrease of 2,000 in the OEM subscriber base.

Product revenues were $21.1 million, an increase of 3% compared with that of the second quarter of 2021.  

Gross profit for the quarter was $33.8 million (46.1% of revenues), an 9% increase compared with gross profit of $31.1 million (46.2% of revenues) in the second quarter of 2021.

The gross margin in the quarter on subscription revenues improved to 56.8%, compared with 55.5% in the second quarter of 2021.  

The gross margin on products was 19.6% in the quarter, compared with 24.8% in the second quarter of 2021. The product margin was impacted by the higher components' prices up until the beginning of the year, due to the ongoing global shortage of component as well as the product sales mix sold in the quarter. As the shortage of components has began to ease, we expect improvement in our product gross margins toward the end of the year

Operating income for the quarter was $14.4 million (19.7% of revenues), compared with $13.8 million (20.4% of revenue) in the second quarter of last year.  

EBITDA for the quarter was $19.4 million (26.5% of revenues), compared with $18.2 (26.9% of revenues) million in the second quarter of last year.  

Financial expense for the quarter was $1.4 million compared with a financial expense of $1.0 million in the second quarter of last year.  

Net income for the second quarter of 2022 was $8.7 million (11.9% of revenues) or earnings per share of $0.43, compared with a $9.1 million (13.5% of revenues)  or earnings per share of $0.44.    

Cash flow from operations for the second quarter of 2022 was $10.9 million.

As of June 30, 2022, the Company had cash, including marketable securities, of $33.2  million and debt of $20.1 million, amounting to a net cash of $13.1 million. This is compared with cash, including marketable securities, of $54.7 million and debt of $31.4 million, amounting to a net cash of $23.3 million, as of December 31, 2021.

Dividend

For the second quarter of 2022, a dividend of $3.0 million was declared. This is in line with the Board's current policy of issuing at least $3 million on a quarterly basis.

Buy Back

On August 4, 2021, Ituran announced that its Board of Directors decided to continue executing the $19 million remainder of a $25 million share buy-back program that was first announced in 2019. Under the current buy-back program, 146,589 shares amounting to $3.4 million was purchased in the second quarter and approximately $8 remains under the current program.

The share repurchases, if any, will be funded by available cash and repurchases of Ituran's ordinary shares will be made based on SEC Rule10b-18 terms.

Conference Call Information

The Company will also be hosting a conference call later today, August 29, 2022 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 0609
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, 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

Company Contact

Udi Mizrahi

This email address is being protected from spambots. You need JavaScript enabled to view it.

Deputy CEO & VP Finance, Ituran

(Israel) +972 3 557 1348

International Investor Relations

Ehud Helft

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EK Global  Investor Relations

(US) +1 212 378 8040 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

US dollars

 

 June 30, 

 

December 31,

(in thousands)

2022

 

2021

 

(unaudited)

  
    

Current assets

   

Cash and cash equivalents

32,671

 

50,306

Investments in marketable securities

496

 

4,405

Accounts receivable (net of allowance for doubtful accounts)

45,837

 

43,916

Other current assets

42,655

 

36,979

Inventories

29,154

 

27,128

 

150,813

 

162,734

    

Non- Current investments and other assets

   

Investments in affiliated companies

1,330

 

885

Investments in other companies

1,658

 

1,866

Other non-current assets

3,465

 

3,146

Deferred income taxes

10,868

 

11,091

Funds in respect of employee rights upon retirement

14,739

 

16,205

 

32,060

 

33,193

    

Property and equipment, net

40,263

 

35,652

    

Operating lease right-of-use assets, net

10,815

 

4,690

    

Intangible assets, net

14,535

 

16,753

 

Goodwill

39,530

 

39,999

    
    

Total assets

288,016

 

293,021

 
 
 

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

 
 

US dollars

 

June 30,

 

December 31,

(in thousands)

2022

 

2021

 

(unaudited)

  

Current liabilities

   

Credit from banking institutions

16,219

 

18,257

Accounts payable

20,890

 

21,275

Deferred revenues

21,480

 

24,333

Other current liabilities

37,241

 

40,767

 

95,830

 

104,632

    

Non- Current liabilities

   

Long term loan

3,901

 

13,169

Liability for employee rights upon retirement

21,171

 

22,476

Deferred income taxes

1,863

 

1,952

Deferred revenues

11,741

 

8,902

Others non-current liabilities

2,182

 

2,337

Operating lease liabilities, non-current

7,681

 

1,750

 

48,539

 

50,586

    

Stockholders' equity

137,590

 

132,460

Non-controlling interests

6,057

 

5,343

    

Total equity

143,647

 

137,803

    
    

Total liabilities and equity

288,016

 

293,021

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

 
 

US dollars

 

US dollars

 
 

Six month period
ended June 30
,

 

Three month period
ended June 30
,

 

(in thousands except per share data)

2022

 

2021

 

2022

 

2021

 
 

(unaudited)

 

(unaudited)

 

 

Revenues:

        

Telematics services

102,540

 

92,562

 

52,314

 

46,943

 

Telematics products

42,920

 

42,265

 

21,074

 

20,519

 
 

145,460

 

134,827

 

73,388

 

67,462

 
         

Cost of revenues:

        

Telematics services

44,739

 

41,370

 

22,607

 

20,899

 

Telematics products

33,627

 

31,652

 

16,950

 

15,421

 
 

78,366

 

73,022

 

39,557

 

36,320

 
         

Gross profit

67,094

 

61,805

 

33,831

 

31,142

 

Research and development expenses

8,131

 

6,841

 

3,991

 

3,295

 

Selling and marketing expenses

6,580

 

6,500

 

3,456

 

3,244

 

General and administrative expenses

23,698

 

22,005

 

11,986

 

10,907

 

Other income, net

(118)

 

(86)

 

(39)

 

(74)

 

Operating income

28,803

 

26,545

 

14,437

 

13,770

 

Other expense, net

-

 

(3)

 

-

 

-

 

Financing expense, net

(3,938)

 

(1,982)

 

(1,373)

 

(989)

 

Income before income tax

24,865

 

24,560

 

13,064

 

12,781

 

Income tax expenses

(5,918)

 

(5,718)

 

(3,454)

 

(2,905)

 

Share in losses of affiliated companies ,net

(121)

 

(21)

 

(78)

 

(10)

 

Net income for the period

18,826

 

18,821

 

9,532

 

9,866

 

Less: Net income attributable to non-controlling interest

(1,359)

 

(1,452)

 

(794)

 

(758)

 

Net income attributable to the Company

17,467

 

17,369

 

8,738

 

9,108

 
         
         

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

0.85

 

0.83

 

0.43

 

0.44

 
         
         

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

20,497

 

20,813

 

20,460

 

20,813

 
            

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

US dollars

 

US dollars

  
 

Six month period
ended June 30
,

 

Three month period
ended June 30
,

(in thousands)

2022

2021

 

2022

 

2021

 

(unaudited)

 

(unaudited)

Cash flows from operating activities

      

Net income (loss) for the period

18,826

 

18,821

 

9,532

 

9,866

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

       

Depreciation and amortization

9,893

 

8,735

 

4,986

 

4,383

Interest and exchange rate differences on loans, net

-

 

4

 

-

 

33

Loss (gain) in respect of trading marketable securities

3,772

 

365

 

1,422

 

(116)

Increase in liability for employee rights upon retirement

1,072

 

1,178

 

154

 

716

Share in losses of affiliated companies, net

121

 

21

 

78

 

10

Deferred income taxes

142

 

(882)

 

(15)

 

39

Capital gain on sale of property and equipment, net

(295)

 

(53)

 

(233)

 

(49)

Increase in accounts receivable

(5,051)

 

(6,533)

 

(1,366)

 

(945)

Decrease (increase) in other current assets

(6,251)

 

1,032

 

(3,225)

 

1,552

Decrease (increase) in inventories

(3,995)

 

1,229

 

755

 

(431)

Increase (decrease) in accounts payable

255

 

1,008

 

(956)

 

1,964

Increase (decrease) in deferred revenues

541

 

1,863

 

(1,305)

 

42

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

(1,228)

 

743

 

1,025

 

1,264

Increase in obligation for purchase non-controlling interests

-

 

686

 

-

 

686

Net cash provided by operating activities

17,802

 

28,217

 

10,852

 

19,014

        

Cash flows from investment activities

       

Decrease (increase) in funds in respect of employee rights
upon retirement, net of withdrawals

(373)

 

(1,504)

 

19

 

(765)

Capital expenditures

(14,718)

 

(6,819)

 

(8,596)

 

(4,102)

Investments in affiliated and other companies

(600)

 

(420)

 

(223)

 

(138)

Repayment of (Investments in) long term deposit

130

 

(79)

 

152

 

-

Investment in marketable securities

(103)

 

-

 

(103)

 

-

Proceeds from sale of property and equipment

783

 

628

 

573

 

407

Net cash used in investment activities

(14,881)

 

(8,194)

 

(8,178)

 

(4,598)

        

Cash flows from financing activities

       

Short term credit from banking institutions, net

(99)

 

(83)

 

(50)

 

(34)

Repayment of long term loan

(8,223)

 

(14,982)

 

(4,046)

 

(4,211)

Dividend paid

(5,766)

 

(10,100)

 

(2,875)

 

(10,100)

Purchase of treasury shares

(3,446)

 

-

 

(3,446)

 

-

Dividend paid to non-controlling interest

-

 

(385)

 

-

 

(356)

Net cash used in financing activities

(17,534)

 

(25,550)

 

(10,417)

 

(14,701)

        

Effect of exchange rate changes on cash and cash equivalents

(3,022)

 

(1,080)

 

(2,840)

 

1,728

        

Net increase (decrease) in cash and cash equivalents

(17,635)

 

(6,607)

 

(10,583)

 

1,443

Balance of cash and cash equivalents at beginning of the period

50,306

 

72,183

 

43,254

 

64,133

Balance of cash and cash equivalents at end of the period

32,671

 

65,576

 

32,671

 

65,576

 
          

In May 2022, the Company declared a dividend in an amount of US$ 3 million. The dividend was paid in July 2022.

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