Surf Air Mobility

Ituran Presents Third Quarter 2023 Results

27 November 2023
  • Growth in subscriber revenue from continued subscriber growth leading to record EBITDA
  • Net subscriber growth in Q3 2023 of 48,000

AZOUR, Israel, Nov. 27, 2023 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the third quarter of 2023.

Highlights of the Third Quarter of 2023

  • Strong net subscriber growth of 48,000: a net increase in aftermarket of 45,000 and a net increase in OEM of 3,000;
  • Revenue of $81.1 million, a 12% improvement year-over-year;
  • Net income grew to $12.5 million, an increase of 24% year-over-year;
  • EBITDA reached $22.5 million, a 15% increase year-over-year;
  • Operating cash flow was reported at $20.5 million;
  • The Company declared a dividend of $5 million and the share buyback in the quarter was $1.9 million, reflecting the company's robust financial position.

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "We are pleased with our third quarter results. The accelerated subscriber growth we have seen in recent quarters continued in the third quarter and contributed to our highest ever level of subscriber revenues. In the fourth quarter, we expect subscriber growth of between 30,000 and 35,000, which is somewhat impacted by a lack of new car sales in Israel specifically, because of the war that started near the start of the fourth quarter. However, our well-over 2 million global subscriber base, which are consistently using our services on an ongoing monthly basis, provides us with continued long-term stability and growth, as well as significant resilience. We look forward to continued solid performance for the foreseeable future."

Continued Mr. Sheratzky, "We are very pleased to share the fruits of our ongoing profitable growth and reward our loyal shareholders for their long-term support of our company. We therefore increased our regular dividend payout starting from this quarter to $5 million."

Third Quarter 2023 Results

Revenue for the third quarter of 2023 was $81.1 million, a 12% increase compared with revenues of $72.7 million in the third quarter of 2022. In local currency terms, third quarter revenues grew by 13% compared with that of the third quarter of last year.

74% of revenues were from location-based service subscription fees and 26% were from product revenues.

Revenues from subscription fees were a record $60.2 million, an increase of 13% over the third quarter 2022 revenues. In local currency terms, third quarter subscription fee revenue grew by 14% compared with that of the third quarter of last year.

The subscriber base amounted to 2,210,000 as of September 30, 2023. This represents an increase of 48,000 net over that of the end of the prior quarter, and a net increase of 190,000 year-over-year. During the quarter, there was an increase of 45,000 net in the aftermarket subscriber base and an increase of 3,000 net in the OEM subscriber base.

Product revenues were $20.9 million, an increase of 7% compared with that of the third quarter of last year.

Gross profit for the quarter was $39.4 million (48.6% of revenues), a 14% increase compared with gross profit of $34.6 million (47.6% of revenues) in the third quarter of last year.

The gross margin in the quarter on subscription revenues was 58.5%, compared with 57.2% in the third quarter of last year. The gross margin on products was 20.3% in the quarter, compared with 21.5% in the third quarter of last year.

Operating income for the quarter was $16.9 million, or 20.8% of revenues, reflecting a 15% increase year-over-year. In local currency terms, third quarter operating income grew at the same level at 15% year-over-year.

EBITDA for the quarter was $22.5 million (27.8% of revenues), an increase of 15% compared with EBITDA of $19.6 million (27.0% of revenues) in the third quarter of last year. In local currency terms, third quarter EBITDA grew by 14% compared with that of the third quarter of last year.

Financial expenses for the quarter were $0.1 million, compared with financial expenses of $0.7 million in the third quarter of last year.     

Net income for the third quarter of 2023 was $12.5 million (15.4% of revenues) or diluted earnings per share of $0.63, an increase of 24% compared to $10.1 million (13.9% of revenues) or diluted earnings per share of $0.49 in the third quarter of last year. In local currency terms, third quarter net income grew at the same level of 24% year-over-year.

Cash flow from operations for the third quarter of 2023 was $20.5 million.

On the balance sheet, as of September 30, 2023, the Company had cash, including marketable securities, of $40.0 million and debt of $2.0 million, amounting to a net cash position of $38.0million. This is compared with cash, including marketable securities, of $28.2 million and debt of $12.2 million, amounting to a net cash position of $16.0 million, as of the end of 2022.

Dividend

The Board of Directors declared that starting from the third quarter of 2023, the Company would return to its former dividend policy which had been in place and continued until the fourth quarter of 2019, prior to the Corona shutdown. The former dividend policy, and dividend policy going forward from the current quarter, calls for the issuance of a $5.0 million dividend per quarter. This represents a 67% increase from the more recent policy of a $3.0 million dividend per quarter.

Buy Back

On August 23, 2022, Ituran announced that its Board of Directors made the decision to continue executing on the $25 million share buy-back program that was originally announced in 2019 and on February 23, 2023, the Board of Directors made the decision to increase the buy-back program by a further $10 million. As of September 30, 2023, there is remaining under the buy-back program $6.7 million. Share repurchases are funded by available cash and repurchases of Ituran's ordinary shares under SEC Rule10b-18 terms.

In the third quarter, under the program, Ituran purchased 73,000 shares for a total of $1.9 million.

Conference Call Information

The Company will also be hosting a conference call later today, November 27, 2023 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, financing industries 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 over 2 million subscribers using its location-based services with a market leading position in Israel and Latin America. Established in 1995, Ituran has approximately 2,700 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

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

EK Global  Investor Relations

(US) +1 212 378 8040

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

US dollars

 

 September 30,

 

December 31,

(in thousands)

2023

 

2022

 

(unaudited)

  
    
    

Current assets

 

   

Cash and cash equivalents

39,879

 

27,850

Investments in marketable securities

144

 

316

Accounts receivable (net of allowance for doubtful accounts)

45,481

 

45,821

Other current assets

51,888

 

48,156

Inventories

26,125

 

28,509

 

163,517

 

150,652

    

Non- Current investments and other assets

   

Investments in affiliated companies

602

 

1,188

Investments in other companies

1,780

 

1,779

Other non-current assets

3,967

 

3,129

Deferred income taxes

12,828

 

11,400

Funds in respect of employee rights upon retirement

15,790

 

15,146

 

34,967

 

32,642

    

Property and equipment, net

41,589

 

45,598

    

Operating lease right-of-use assets, net

6,991

 

9,905

    

Intangible assets, net

10,852

 

12,620

    

Goodwill

39,213

 

39,510

    
    
    
    

Total assets

297,129

 

290,927

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

 

US dollars

 

 September 30,

 

December 31,

(in thousands)

2023

 

2022

 

(unaudited)

  

Current liabilities

   

Credit from banking institutions

1,729

 

11,845

Accounts payable

18,802

 

21,937

Deferred revenues

25,139

 

21,783

Other current liabilities

39,015

 

37,407

 

84,685

 

92,972

    

Non- Current liabilities

   

Long term loan

263

 

345

Liability for employee rights upon retirement

21,819

 

21,224

Deferred income taxes

1,255

 

1,534

Deferred revenues

13,899

 

13,036

Others non-current liabilities

1,896

 

2,071

Operating lease liabilities, non-current

4,538

 

6,886

 

43,670

 

45,096

    
    
    

Stockholders' equity

163,701

 

145,797

Non-controlling interests

5,073

 

7,062

Total equity

168,774

 

152,859

    
    
    

Total liabilities and equity

297,129

 

290,927

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

US dollars

 

US dollars

 

Nine months period
ended September 30
,

 

Three months period
ended September 30
,

(in thousands except per share data)

2023

 

2022

 

2023

 

2022

 

             (unaudited)

 

              (unaudited)

Revenues:

       

Telematics services

175,115

 

155,671

 

60,152

 

53,131

Telematics products

67,055

 

62,453

 

20,901

 

19,533

 

242,170

 

218,124

 

81,053

 

72,664

        

Cost of revenues:

       

Telematics services

73,627

 

67,455

 

24,985

 

22,716

Telematics products

53,782

 

48,960

 

16,658

 

15,333

 

127,409

 

116,415

 

41,643

 

38,049

        

Gross profit

114,761

 

101,709

 

39,410

 

34,615

Research and development expenses

12,746

 

12,232

 

4,392

 

4,101

Selling and marketing expenses

10,108

 

10,025

 

3,502

 

3,445

General and administrative expenses

42,330

 

36,131

 

14,614

 

12,433

Other expense (income), net

127

 

(149)

 

9

 

(31)

Operating income

49,450

 

43,470

 

16,893

 

14,667

Other expense, net

(3)

 

-

 

-

 

-

Financing income (expense), net

101

 

(4,652)

 

(53)

 

(714)

Income before income tax

49,548

 

38,818

 

16,840

 

13,953

Income tax expenses

(10,821)

 

(8,998)

 

(3,601)

 

(3,080)

Share in losses of affiliated companies, net

(822)

 

(412)

 

(195)

 

(291)

Net income for the period

37,905

 

29,408

 

13,044

 

10,582

Less: Net income attributable to non-controlling interest

(1,787)

 

(1,877)

 

(530)

 

(518)

Net income attributable to the Company

36,118

 

27,531

 

12,514

 

10,064

        

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

1.80

 

1.35

 

0.63

 

0.49

        

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

20,096

 

20,435

 

19,912

 

20,347

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

US dollars

 

US dollars

 

Nine months period
ended September 30
,

 

Three months period
ended September 30
,

(in thousands)

2023

2022

 

2023

 

2022

 

       (unaudited)

 

  (unaudited)

Cash flows from operating activities

      

Net income for the period

37,905

 

29,408

 

13,044

 

10,582

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

       

Depreciation and amortization

15,661

 

14,871

 

5,610

 

4,978

Losses in respect of trading marketable securities

57

 

3,840

 

110

 

68

Increase in liability for employee rights upon retirement

2,281

 

1,301

 

691

 

229

Share in losses of affiliated companies, net

822

 

412

 

195

 

291

Deferred income taxes

(1,695)

 

(115)

 

(301)

 

(257)

Capital loss (gain) on sale of property and equipment, net

35

 

(304)

 

(11)

 

(9)

Decrease (increase) in accounts receivable

(1,795)

 

(4,292)

 

1,157

 

759

Decrease (increase) in other current assets

(4,109)

 

(10,223)

 

2,866

 

(3,972)

Decrease (increase) in inventories

901

 

(8,810)

 

1,510

 

(4,814)

Increase (decrease) in accounts payable

(2,953)

 

2,576

 

(3,892)

 

2,319

Increase (decrease) in deferred revenues

4,768

 

1,007

 

(459)

 

465

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

3,561

 

(467)

 

17

 

761

Net cash provided by operating activities

55,439

 

29,204

 

20,537

 

11,400

Cash flows from investment activities

       

Increase in funds in respect of employee rights upon retirement, net of withdrawals

(1,933)

 

(548)

 

(773)

 

(175)

Capital expenditures

(10,193)

 

(18,758)

 

(3,911)

 

(4,040)

Investments in affiliated and other companies

(556)

 

(690)

 

51

 

(90)

Investment in (sale of) marketable securities

99

 

(103)

 

-

 

-

Proceeds from (Investments in) deposits

(140)

 

87

 

(95)

 

(43)

Proceeds from sale of property and equipment

144

 

848

 

86

 

65

Net cash used in investment activities

(12,579)

 

(19,164)

 

(4,642)

 

(4,283)

Cash flows from financing activities

       

Short term credit from banking institutions, net

1,486

 

(148)

 

1,301

 

(49)

Repayment of long-term loan

(11,488)

 

(12,293)

 

(3,581)

 

(4,070)

Dividend paid

(8,618)

 

(8,621)

 

(3,001)

 

(2,855)

Dividend paid to non-controlling interest

(3,327)

 

-

 

(1,640)

 

-

Acquisition of company shares purchased by a wholly owned subsidiary

(6,613)

 

(5,446)

 

(1,896)

 

(2,000)

Net cash used in financing activities

(28,560)

 

(26,508)

 

(8,817)

 

(8,974)

Effect of exchange rate changes on cash and cash equivalents

(2,271)

 

(3,770)

 

(1,404)

 

(746)

Net decrease in cash and cash equivalents

12,029

 

(20,238)

 

5,674

 

(2,603)

Balance of cash and cash equivalents at beginning of the period

27,850

 

50,306

 

34,205

 

32,671

Balance of cash and cash equivalents at end of the period

39,879

 

30,068

 

39,879

 

30,068

          

In August 2023, the Company declared a dividend in an amount of US$ 3 million. The dividend was paid in October 2023.

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