Ituran Location and Control Ltd. Presents Record Results for the Fourth Quarter and Full Year of 2006
Record All-Time-High Quarterly and Annual Net Profit and Revenues
AZOUR, Israel, February 20 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the quarter and full year ended December 31, 2006.
Highlights of the Fourth Quarter and Full Year
- Record results showing growth across all parameters, with gross, operating and net profit presenting continued year-over-year improvement.
- Record annual revenues of $104.1 million, 18.3% increase over 2005 (excluding revenues from the discontinued business with Partner in 2005); Fourth quarter revenues $29.0 million, an increase of 23.4% year-over-year
- Strong increase in revenues from wireless products, up 31.4% in fourth quarter 2006 over 2005
- High annual net income of $19.3 million, an increase of 35.5% (excluding the discontinued business with Partner in 2005); Fourth quarter net income $5.2 million, an increase of 41.3% year over year
- Record subscribers of 396,000 as of December 31st, 2006, 16.8% growth from 339,000 subscribers as of December 31st, 2005
Ituran completed the acquisition and began to consolidate the results of ERM from December 1st, 2006.
Fourth Quarter Results
Revenues for the fourth quarter of 2006 reached US$29.0 million. This represents a 23.4% increase compared with revenues of US$23.5 million in the fourth quarter of last year. The increase in revenues was driven by the continued growth in the Company's subscriber base and particularly strong quarterly growth in sales of the Company's wireless products. In addition, product revenues included the contribution of ERM amounting to $0.4 million for the quarter.
Operating profit for the fourth quarter of 2006 was US$6.5 million compared with US$5.5 million in the fourth quarter of 2005, representing growth of 18.4%.
Net profit was US$5.2 million in the fourth quarter of 2006 (17.9% of revenues), representing growth of 41.3% over US$3.7 million (15.6% of revenues), as reported for the fourth quarter of 2005.
Fully diluted EPS in the fourth quarter of 2006 was US$0.22 compared with US$0.16 per fully diluted share in the fourth quarter of 2005.
Full Year Results
Revenues for the full year 2006 reached US$104.1 million. This represents an 18.3% increase compared with revenues of US$87.9 million last year, excluding the discontinued business with Partner Communications which was closed at the end of the first quarter of 2005. 2005 revenues including the closed business totaled $90.1 million. The increase in revenues was driven by the continued growth of the Company's subscriber base and strong growth in the Company's wireless products.
Operating profit for the year was US$24.7 million compared with US$19.9 million in 2005, representing growth of 24.1%.
Annual net profit was US$19.3 million in 2006, or 18.5% of revenues, representing growth of 34.0% over US$14.4 million, or 15.9% of revenues, as reported in 2005. Annual net profit growth, excluding the discontinued business with Partner, totaled 35.5%. The main reason for the continued improvement in margins over the last few quarters was primarily due to the operating leverage inherent in the Company's business.
Fully diluted EPS in full year 2006 was US$0.82 compared with US$0.71 per fully diluted share in 2005.
Cash flow from operations during the fourth quarter and the full year of 2006 were US$5.2 million and US$18.3 million, respectively. As of December 31st, 2006 the company had a net cash position (including marketable securities) of US$59.4 million compared with US$54.7 million on December 31st, 2005.
On the 19th February 2007, the Board of Directors declared a dividend distribution of a total of US$4.8 million.
Eyal Sheratzky, Co-CEO of Ituran said, "Again we have shown record top and bottom line results with strong year over year and sequential growth. Our global expansion is progressing to plan and we expect to maintain our double-digit growth rate for the coming year."
"Our core business continues to grow. At the same time, we are always looking for ways to expand the range of services we can provide to our customers," continued Mr. Sheratzky. "In this regard and as a part of our growth strategy, we are constantly examining M&A opportunities. We look to either strengthen our presence in markets where we already operate or to bring us into new territories and synergistic services. We are committed to doing such deals only if they make strong business and financial sense and I hope that we will be able to announce such deals during 2007."
Conference Call Information
The Company will also be hosting a conference call today, Tuesday, February 20th, 2007 at 9:00am EST. 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 at least 5 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: 1-888-281-1167
UK Dial-in Number: 0-800-917-9141
ISRAEL Dial-in Number: 03-918-0610
INTERNATIONAL Dial-in Number: +972-3-918-0610
at:
09:00am 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 for three months from the day after the call in the investor relations section of Ituran's website, at: www.ituran.com
About Ituran
Ituran provides location-based services, consisting predominantly of stolen vehicle recovery and tracking services, as well as wireless communications products used in connection with its location-based services and various other applications. Ituran offers mobile asset location, Stolen Vehicle Recovery, management & control services for vehicles, cargo and personal security, and radio frequency identification products for various purposes including automatic meter reading, electronic toll collection and homeland security applications. Ituran's subscriber base has been growing significantly since the Company's inception to over 396,000 subscribers distributed globally. Established in 1995, Ituran has approximately 800 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States. The company also sells its products in China and South Korea.
Company Contact
Udi Mizrachi (udi_m@ituran.com)
VP Finance, Ituran
(Israel) +972-3-557-1348
International Investor Relations
Ehud Helft (Ehud.Helft@gkir.com)
Kenny Green (Kenny.Green@gkir.com)
GK Investor Relations
(US) +1-866-704-6710
Investor Relations in Israel
Oded Ben Chorin (oded@km-ir.co.il)
KM Investor Relations
(Israel) +972-3-5167620
CONSOLIDATED BALANCE SHEETS
US dollars
December 31,
(in thousands) 2005 2006
(Audited)
Current assets
Cash and cash equivalents 58,429 43,812
Investments in marketable securities - 16,034
Accounts receivable (net of allowance for doubtful
accounts) 22,494 29,709
Other current assets 2,747 4,169
Contracts in process , net - 1,456
Inventories 6,330 10,910
_______ _______
90,000 106,090
---------- -----------
Long-term investments and debit balances
Investments in affiliated companies 918 881
Accounts receivable 280 123
Deposit 1,300 1,457
Deferred income taxes 5,168 5,112
Funds in respect of employee rights upon retirement 2,959 4,001
_______ ______
10,625 11,574
---------- ----------
Property and equipment, net 9,904 19,109
---------- ---------
Intangible assets, net 3,201 2,784
---------- ---------
Goodwill 2,754 4,536
---------- ---------
_______ ______
Total assets 116,484 144,093
_______ _______
_______ _______
CONSOLIDATED BALANCE SHEETS
US dollars
December 31,
(in thousands) 2005 2006
(Audited)
Current liabilities
Credit from banking institutions 3,315 474
Accounts payable 10,298 14,956
Deferred revenues 3,900 4,399
Other current liabilities 11,492 12,827
_______ ______
29,005 32,656
---------- ---------
Long-term liabilities
Long-term loans from banking institutions 373 -
Liability for employee rights upon retirement 4,504 5,278
Deferred income taxes 212 816
_______ ______
5,089 6,094
---------- ----------
Minority interest 734 2,578
---------- ---------
Capital Notes 5,894 5,894
---------- ---------
Total shareholders' equity 75,762 96,871
----------- ----------
_______ ______
Total liabilities and shareholders' equity 116,484 144,093
_______ _______
_______ _______
CONSOLIDATED INTERIM STATEMENTS OF INCOME
US dollars US dollars
Year ended December Three months ended
31 , December 31 ,
(in thousands except per
share data) 2005 2006 2005 2006
(Audited) (Unaudited)
Revenues:
Location-based services 44,128 54,048 12,195 14,181
Wireless communications
products 43,806 50,004 11,262 14,803
Other 2,192 - 28 -
_______ ______ ______ ______
90,126 104,052 23,485 28,984
---------- ---------- ---------- ----------
Cost of revenues:
Location-based services 14,987 18,419 3,715 5,105
Wireless communications
products 30,956 35,434 8,378 10,517
Other 1,643 - 41 -
_______ _______ ______ ______
47,586 53,853 12,134 15,622
---------- ---------- ---------- ----------
_______ _______ ______ ______
Gross profit 42,540 50,199 11,351 13,362
Research and development
expenses 2,799 2,682 557 600
Selling and marketing
expenses 4,876 5,123 1,268 1,294
General and administrative
expenses 14,959 17,659 4,039 4,959
Other expenses (income),
net (16) 3 (10) -
_______ ______ ______ ______
Operating income 19,922 24,732 5,497 6,509
Financing income, net 906 1,886 709 733
_______ ______ ______ ______
Income before taxes on
income 20,828 26,618 6,206 7,242
Taxes on income (5,295) (6,581) (1,584) (1,878)
_______ ______ ______ ______
15,533 20,037 4,622 5,364
Share in losses of
affiliated companies, net (355) (213) (258) (11)
Minority interests in
income of subsidiaries (803) (565) (689) (162)
_______ ______ ______ ______
Net income for the period 14,375 19,259 3,675 5,191
_______ ______ ______ ______
_______ ______ ______ ______
Earnings per share:
Basic 0.73 0.83 0.16 0.22
_______ ______ ______ ______
_______ ______ ______ ______
Diluted 0.71 0.82 0.16 0.22
_______ ______ ______ ______
_______ ______ ______ ______
Weighted average number of
shares outstanding (in
thousands):
Basic 19,736 23,194 22,930 23,322
_______ _______ ______ ______
_______ _______ ______ ______
Diluted 20,254 23,457 23,343 23,482
_______ _______ ______ ______
_______ _______ ______ ______
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
US dollars
Year ended Three months ended
December 31 ,
December 31,
(in thousands) 2005 2006 2005 2006
(Audited) (Unaudited)
Cash flows from operating
activities
Net income for the period 14,375 19,259 3,675 5,191
Adjustments to reconcile net
income to net cash from
operating activities:
Depreciation and amortization 3,341 4,205 694 1,283
Exchange differences on
principal of deposit and loan,
net 104 (50) 1 (13)
Exchange differences on
principal of marketable
securities - (200) - (300)
Increase (decrease) in
liability for employee rights
upon retirement 521 (187) 284 109
Share in losses of affiliated
companies, net 355 213 258 12
Deferred income taxes 301 909 211 23
Amortization of deferred
compensation related to
employee stock option plans,
net 243 - 2 -
Capital gains on sale of
property and equipment, net (16) (35) (16) -
Minority interests in profits
of subsidiaries, net 803 565 917 162
Increase in accounts receivable (4,912) (3,931) (1,612) (662)
Decrease (increase) in other
current assets (1,028) (884) 5 (647)
Decrease (increase) in
inventories and contracts in
process, net (269) (4,435) 738 (809)
Increase (decrease) in accounts
payable 460 2,686 (874) (448)
Increase (decrease) in deferred
revenues 321 (1) (459) (472)
Increase (decrease) in other
current liabilities 3,159 142 (545) 1,738
______ ______ ______ ______
Net cash provided by operating
activities 17,758 18,256 3,279 5,167
--------- --------- ---------- ----------
Cash flows from investing
activities
Increase in funds in respect of
employee rights upon
retirement, net of withdrawals (288) (412) (102) (71)
Capital expenditures (3,540) (12,106) (606) (2,026)
Proceeds from sale of property
and equipment 133 53 6 -
Acquisitions of subsidiaries
(appendix A ) - (2,243) - (2,243)
Purchase of intangible assets
and minority interest (746) (58) 78 (7)
Investment in marketable
securities - (55,863) - (3,506)
Sale of marketable securities - 40,848 - 5,693
Loan granted to affiliated
company (452) (138) (113) -
______ ______ ______ ______
Net cash used in investment
activities (4,893) (29,919) (737) (2,160)
--------- ---------- ---------- ----------
Cash flows from financing
activities
Short-term credit from banking
institutions, net 181 (237) 149 7
Repayment of long-term loans (6,290) (3,191) (1,573) (356)
Dividend paid (2,697) (3,705) - -
Proceeds from exercise of
options by employees 15 18 611 -
Proceeds from exercise of
warrants 373 - 373 -
Issuance of share capital , net 49,673 - 49,673 -
Acquisition of minority
interests in subsidiaries - (21) - -
Dividend distribution to
minority interest of a
subsidiary - (172) (15) -
Purchase of shares from
treasury - (877) - -
______ ______ ______ ______
Net cash used in financing
activities 41,255 (8,185) 49,218 (349)
--------- --------- ---------- --------
Effect of exchange rate changes
on cash and cash equivalents (295) 5,231 (4) 1,141
--------- -------- ---------- ----------
______ ______ ______ ______
Net increase (decrease) in cash
and cash equivalents 53,825 (14,617) 51,756 3,799
Balance of cash and cash
equivalents at beginning of
period 4,604 58,429 6,673 40,013
______ ______ _______ ______
Balance of cash and cash
equivalents at end of period 58,429 43,812 58,429 43,812
______ ______ ______ ______
______ ______ ______ ______
CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.)
Appendix A - Acquisitions of subsidiaries
US dollars
year ended
December 31,
( in thousands ) 2006
(Audited)
Working capital( excluding cash and
cash equivalents ), net 2,015
Long-term deferred income taxes 54
Funds in respect of employee rights upon retirement 366
Property and equipment , net 231
Goodwill 1,631
Liability for employee rights upon retirement (559)
Minority interest (1,495)
---------
2,243
---------
Company Contact, Udi Mizrachi (udi_m@ituran.com), VP Finance, Ituran, (Israel) +972-3-557-1348; International Investor Relations, Ehud Helft (Ehud.Helft@gkir.com), Kenny Green (Kenny.Green@gkir.com); GK Investor Relations, (US) +1-866-704-6710, Investor Relations in Israel, Oded Ben Chorin (oded@km-ir.co.il), KM Investor Relations, (Israel) +972-3-5167620
