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Ituran Location and Control Ltd. Presents Results for the Third Quarter 2016

AZOUR, Israel, Nov. 15, 2016 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the third quarter ended September 30, 2016.

Highlights of the Third Quarter

  • Net subscribers adds in the quarter amounting to 23,000, reaching 1,035,000 subscribers;
  • Revenue of $52.8 million, up 20% year-over-year;
  • Gross margin of 50.0% and operating margin of 21.9%; excluding a one-time expense, operating margin was 24.2%;
  • Net income of $8.2 million, up 32% year-over-year;
  • Generated $12.0  million in operating cash flow;
  • Dividend of $4.1 million declared for the quarter;

Third Quarter 2016 Results

Revenues for the third quarter of 2016 were $52.8 million, representing an increase of 20% from revenues of $43.8 million in the third quarter of 2015. 70% of revenues were from location based service subscription fees and 30% were from product revenues.

Revenues from subscription fees increased by 18% over the same period last year. The growth was driven primarily due to the increase in the subscriber base, which expanded from 915,000 as of September 30, 2015, to 1,035,000 as of September 30, 2016.

Product revenues increased by 27% compared with the same period last year. The main contribution to growth was due to sales in Israel.

Gross profit for the third quarter of 2016 was $26.4 million (50.0% of revenues), an increase of 20% compared with $22.0 million (50.2% of revenues) in the third quarter of 2015. The gross margin in the quarter on subscription fees was 65.7% compared with 62.6% in the same period last year. The gross margin in the quarter on products was 12.7% compared with 18.5% in the same period last year.

Other Expenses were $1.0 million which included a one-time $1.2 million expense related to the repurchase, by the Company, of a former employee's options in Ituran Brazil.  

Operating profit for the third quarter of 2016 was $11.6 million (21.9% of revenues), an increase of 18% compared with an operating profit of $9.8 million (22.4% of revenues) in the third quarter of 2015. Excluding the above-mentioned one-time expense, the operating profit would have been $12.8 million (24.2% of revenues), representing an increase of 30%.

During the quarter, share in affiliates, net was an income of $753 thousand versus a loss of $638 thousand in the same quarter of last year. The change was due to a capital gain of $1.2 million, resulting from a dilutive event at an affiliate.

EBITDA for the quarter was $14.6 million (27.7% of revenues), an increase of 17% compared to an EBITDA of $12.5 million (28.6% of revenues) in the third quarter of 2015. Excluding the above-mentioned one-time expense, EBITDA for the quarter would have been $15.8 million (29.9% of revenues), representing an increase of 26%.

Net profit was $8.2 million in the third quarter of 2016 (15.4% of revenues) or fully diluted EPS of $0.39, an increase of 32% compared with a net profit of $6.2 million (14.1% of revenues) or fully diluted EPS of $0.29 in the third quarter of 2015.

Cash flow from operations for the quarter was $12.0 million.

As of September 30, 2016, the Company had net cash, including marketable securities, of $26.0 million or $1.24  per share. This is compared with $25.8 million or $1.23 per share as at June 30, 2016.

Dividend

For the third quarter of 2016, a dividend of $4.1 million was declared in line with the Company's stated policy of issuing at least 50% of net profits in a dividend, on a quarterly basis.

Eyal Sheratzky, Co-CEO of Ituran said, "We are pleased with our results and our strong performance to date in 2016. As our subscriber base continues to grow, having surpassed 1 million subscribers last quarter, we increasingly enjoy the operating leverage inherent in our business, and our subscriber gross margin has now surpassed 65% throughout 2016. I look forward to continued growth as we move into 2017 and beyond."

Conference Call Information

The Company will also be hosting a conference call later today, November 15, 2016 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 0687

CANADA Dial-in Number: 1 888 604 5839

INTERNATIONAL Dial-in Number:  +972 3 918 0687

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.

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. Ituran's subscriber base has been growing significantly since the Company's inception to over 985,000 subscribers distributed globally. Established in 1995, Ituran has over 1,500 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS


US dollars


September 30,

December 31,

(in thousands)

2016

2015




Current Assets

 



Cash and cash equivalents

25,632

27,016

Investments in marketable securities

390

2,035

Accounts receivable (net of allowance for doubtful accounts)

35,862

27,436

Other current assets

34,367

22,437

Inventories

13,953

12,781


110,204

91,705




Long-term investments and other assets



Investments in affiliated companies

11,661

4,705

Investments in other company

87

78

Other non-current assets

1,350

1,166

Deferred income taxes

2,332

2,279

Funds in respect of employee rights upon retirement

8,006

7,174


23,436

15,402




Property and equipment, net

34,505

31,514




Intangible assets, net

25

26




 Goodwill

3,484

3,356



















Total assets

171,654

142,003

 

 

 


CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)


US dollars


September 30,

December 31,

(in thousands)

2016

2015

 

Current liabilities



Credit from banking institutions

3

155

Accounts payable

15,589

10,466

Deferred revenues

11,218

9,210

Other current liabilities

27,247

21,750


54,057

41,581




Long-term liabilities



Liability for employee rights upon retirement

11,968

10,637

Provision for contingencies

443

622

Deferred revenues

977

973

Others non-current

555

369


13,943

12,601




Stockholders' equity

98,305

83,698

Non-controlling interests

5,349

4,123

Total equity

103,654

87,821
















Total liabilities and equity

171,654

142,003

 

 


CONDENSED CONSOLIDATED STATEMENTS OF INCOME


US dollars

US dollars


Nine month period
ended September 30
,

Three month period
ended September 30
,

(in thousands except per share data)

2016

2015

2016

2015

 

Revenues:





Location-based services

104,673

95,595

37,166

31,502

Wireless communications products

44,540

36,242

15,594

12,321


149,213

131,837

52,760

43,823






Cost of revenues:





Location-based services

36,066

34,926

12,739

11,780

Wireless communications products

37,488

29,308

13,617

10,039


73,554

64,234

26,356

21,819






Gross profit

75,659

67,603

26,404

22,004

Research and development expenses

2,082

1,699

681

614

Selling and marketing expenses

7,471

6,912

2,537

2,287

General and administrative expenses

30,113

28,675

10,588

9,310

Other income, net

973

(17)

1,039

(3)

Operating income

35,020

30,334

11,559

9,796

Financing income (expenses), net

1,246

774

408

566

Income before income tax

36,266

31,108

11,967

10,362

Income tax expenses

(10,945)

(9,657)

(3,893)

(3,218)

Share in gains (losses) of affiliated companies ,net

(554)

(1,482)

753

(638)

Net income for the period

24,767

19,969

8,827

6,506

Less: Net income attributable to non-controlling interest

(1,885)

(1,180)

(677)

(346)

Net income attributable to the Company

22,882

18,789

8,150

6,160






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

1.09

0.90

0.39

0.29






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

20,968

20,968

20,968

20,968

 

 


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



US dollars

US dollars


Nine month period
ended September 30
,

Three month period
ended September 30
,

(in thousands)

2016

2015

2016

2015




Cash flows from operating activities





Net income for the period

24,767

19,969

8,827

6,506

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





Depreciation amortization and impairment of goodwill

8,570

8,122

3,063

2,739

Losses (gain) in respect of trading marketable securities

(95)

(428)

(27)

(224)

Increase (decrease) in liability for employee rights upon retirement

960

502

247

212

Share in losses (gains) of affiliated companies, net

554

1,482

(753)

638

Deferred income taxes

(836)

940

908

1,286

Capital gains on sale of property and equipment, net

(18)

(10)

(1)

(3)

Decrease (increase) in accounts receivable

(7,470)

(84)

(392)

783

Decrease (increase) in other current assets

(9,080)

(85)

(3,771)

586

Decrease (increase) in inventories

(726)

251

(578)

(137)

Increase (decrease) in accounts payable

4,836

(1,092)

1,930

(1,946)

Increase (decrease)   in deferred revenues

1,657

(864)

(725)

(992)

Increase (decrease)    in other current liabilities

3,988

(462)

3,313

(612)

Net cash provided by operating activities

27,107

28,241

12,041

8,836

Cash flows from investment activities





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

(582)

(575)

(335)

(88)

Capital expenditures

(9,049)

(15,132)

(4,149)

(2,163)

Investments in affiliated companies

(7,181)

(4,639)

(3,257)

(2,856)

Investment in marketable securities

(2,076)

-

(1,732)

-

Sale of marketable securities

3,615

-

1,757

-

Deposit

16

(321)

(36)

(82)

Proceeds from sale of property and equipment

133

683

34

(4)

Net cash used in investment activities

(15,124)

(19,984)

(7,718)

(5,193)

Cash flows from financing activities





Short term credit from banking institutions, net

(152)

447

(6)

441

Dividend paid

(13,314)

(14,729)

(3,565)

(3,386)

Dividend paid to non-controlling interest

(940)

(1,224)

(323)

(688)

Net cash provided by (used in) financing activities

(14,406)

(15,506)

(3,894)

(3,633)

Effect of exchange rate changes on cash and cash equivalents

1,039

(1,735)

(245)

(1,564)

Net increase (decrease)  in cash and cash equivalents

(1,384)

(8,984)

184

(1,554)

Balance of cash and cash equivalents at beginning of the period

27,016

38,418

25,448

30,988

Balance of cash and cash equivalents at end of the period

25,632

29,434

25,632

29,434

 

 

Supplementary information on financing and investing activities not involving cash flows:

In August 2016, the Company declared a dividend in an amount of US$ 3.8 million. The dividend was paid in October 2016.

Company Contact

Udi Mizrahi

udi_m@ituran.com

VP Finance, Ituran

(Israel) +972 3 557 1348

International Investor Relations

Ehud Helft

ituran@gkir.com

GK  Investor Relations

(US) +1 646 201 9246 

SOURCE Ituran Location and Control Ltd