Ituran Location and Control Ltd. Presents Record Results for the Fourth Quarter and Full Year of 2005
Year Over Year, Pro-Forma Revenue Growth of 25.6% and Pro-Forma Net Profit Growth of 43%
AZOUR, Israel, February 21 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the quarter and year ended December 31, 2005.
Revenues for the fourth quarter of 2005 reached US$23.5 million. This represents a 6.8% increase compared with revenues of US$22.0 million in the fourth quarter of last year and a sequential increase of 2% compared with revenues of US$23.0 million in the previous quarter.
Pro-forma revenues in the fourth quarter, excluding the non-core and the now-discontinued project with Partner Communications increased 18.4% over the fourth quarter of last year, which had pro-forma revenues of US$19.8 million. The main increase in revenues over last year was driven by the continued broadening and growth in the Company's subscriber base as well as the proceeding project work in the Far-East.
Revenues from product sales in the fourth quarter showed a slight sequential decrease of US$0.3 million over the prior quarter due to the reduction of business days in Israel during the fourth quarter because of the holiday period in October, and in the United States due to the hurricanes.
The number of subscribers as of December 31st, 2005 reached 339,000, representing a 29% growth compared with 263,000 subscribers as of December 31st, 2004.
Gross margin in the fourth quarter and third quarter of 2005 was 48% of revenues, compared with 45% in the fourth quarter of 2004. The main reasons for the growth in margin was the operating leverage in the Company's business model and the discontinuation of the project with Partner Communications, which had a lower gross margin than the rest of the Company's products.
Net profit was US$4.2 million in the fourth quarter of 2005 representing a growth of 25% over the US$3.4 million reported for the fourth quarter of 2004, or an increase of 17% from US$3.6 million in the previous quarter. Fully diluted EPS in the fourth quarter of 2005 was US$0.18 compared with US$0.17 per fully diluted share in the fourth quarter of 2004, or US$0.19 per share as reported in the previous quarter. Due to the company's initial public offering on the NASDAQ, the number of shares grew from US$19.1 million in the third quarter to US$23.3 million in the fourth quarter.
Full year 2005 revenues were US$90.1 million compared with US$77.9 million in 2004, a growth of 15.6%. Pro-forma revenues growth, excluding the revenues from the activities with Partner Communications, was US$87.9 million compared with US$70 million in 2004, representing growth of 25.6%.
Net profit was US$14.9 million for 2005 representing a growth of 34% compared to a net profit of US$11.2 million in 2004. Fully diluted EPS was US$0.74 compared with US$0.58 per fully diluted share for 2004. Pro-forma net profit excluding the activities with Partner was US$14.8 million compared with US$10.3 million in 2004, representing growth of 43%.
There was a general increase during 2005 in marketing, sales, general and administrative expenses. The increase was due to the fact that the Company adjusted its expense level to the revenue growth it has exhibited in recent years. This is in order to maintain the quality of operation and service and to strengthen its brand. Management estimates that those expenses, as a percentage of revenues, are unlikely to increase in the coming quarters.
Cash flow from operations during 2005 was US$17.8 million. As of December 31st, 2005 the company had a net cash position of US$54.7 million compared with net liabilities of US$5.6 million as of December, 31st 2004.
On the 20th February 2006, the Board of Directors declared a dividend distribution of a total of US$3.8 million. The ex-div date will be on 21st March 2006 and payment day on the 4th April 2006.
Eyal Sheratzky, Co-CEO of Ituran said, "Our core business is growing strongly. We saw a 29% growth in our subscriber base in 2005, with the majority of this growth coming from operations in South America, but also a portion from Israel. The leverage inherent in our business model has enabled this increase to lead to an even stronger growth in our bottom line."
Mr. Sheratzky continued, "Our growth plans outside of Israel have been proceeding according to plan. Based on our existing infrastructure already in place in Brazil, we expect that our new system in Rio de Janeiro will be commercially available towards the end of the second quarter. This will bring us a second large regional market using our existing control center in Sao-Paulo."
Mr. Sheratzky concluded, "A particular milestone we reached in the quarter was that our revenues from our international operations surpassed those from our local operation in Israel. We are entering 2006 very well positioned internationally in countries with strong growth potential such as Brazil, Argentina, China and South Korea. We therefore expect to see year-over-year double-digit growth in revenues and profit throughout 2006."
Conference Call Information
The Company will also be hosting a conference call today, February 21, 2006 at 10:00am 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: 1-866-229-7198
UK Dial-in Number: 0-800-917-5108
ISRAEL Dial-in Number: 03-918-0610
INTERNATIONAL Dial-in Number: +972-3-918-0610
At:
10:00am Eastern Time, 7:00am Pacific Time, 5:00pm 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 339,000 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 Contacts:
Ehud Helft (Ehud@gkir.com)
Kenny Green (Kenny@gkir.com)
GK International Investor Relations
(US) +1-866-704-6710
Investor Relations in Israel:
Amit Lev Ari (amit@km-ir.co.il)
KM Investor Relations
(Israel) +972-3-5167620
CONSOLIDATED BALANCE SHEETS
US dollars
December 31,
(in thousands) 2005 2004
Current assets
Cash and cash equivalents 58,429 4,604
Accounts receivable (net of allowance for doubtful
accounts) 22,494 19,993
Other current assets 2,747 1,614
Contracts in process, net - 30
Inventories 6,330 6,416
90,000 32,657
Long-term investments and debit balances
Investments in affiliated companies 918 870
Accounts receivable 280 -
Deposit 1,300 1,393
Deferred income taxes 5,168 5,507
Funds in respect of employee rights upon retirement 2,959 2,854
10,625 10,624
Property and equipment, net 9,904 9,204
Intangible assets, net 3,201 3,676
Goodwill 2,754 2,862
Total assets 116,484 59,023
CONSOLIDATED BALANCE SHEETS
US dollars
December 31,
(in thousands) 2005 2004
Current liabilities
Credit from banking institutions 3,315 6,586
Accounts payable 10,298 10,574
Deferred revenues 3,900 3,824
Other current liabilities 11,492 9,165
29,005 30,149
Long-term liabilities
Long-term loans from banking institutions 373 3,615
Liability for employee rights upon retirement 4,504 4,256
Deferred income taxes 212 -
5,089 7,871
Minority interest 204 108
Capital Notes 5,894 5,894
Total shareholders' equity 76,292 15,001
Total liabilities and shareholders' equity 116,484 59,023
CONSOLIDATED INTERIM STATEMENTS OF INCOME
US dollars US dollars
Year ended Three months
ended December 31, ended December 31,
(in thousands except per share
data) 2005 2004 2005 2004
(Audited) (Unaudited)
Revenues:
Location-based services 44,128 36,549 12,195 9,520
Wireless communications products 43,806 33,461 11,260 10,287
Other 2,192 7,916 29 2,176
90,126 77,926 23,484 21,983
Cost of revenues:
Location-based services 14,987 12,944 3,715 (*)2,921
Wireless communications products 30,956 23,224 8,378 (*)7,621
Other 1,643 5,720 41 1,584
47,586 41,888 12,134 12,126
Gross profit 42,540 36,038 11,350 9,857
Research and development expenses 2,799 2,020 557 589
Selling and marketing expenses 4,876 4,074 1,268 1,149
General and administrative
expenses 14,959 11,693 4,039 3,514
Other expenses (income), net (16) (12) (10) (103)
Operating income 19,922 18,263 5,496 4,708
Financing income (expenses), net 906 (2,059) 711 (488)
Income (loss) before taxes on
income 20,828 16,204 6,207 4,220
Taxes on income (5,295) (4,423) (1,584) (711)
15,533 11,781 4,623 3,509
Share in losses of affiliated
companies, net (355) (324) (258) (44)
Minority interests in loss of
subsidiaries (257) (238) (143) (97)
Net income for the period 14,921 11,219 4,222 3,368
Earnings per share:
Basic 0.76 0.60 0.18 0.18
Diluted 0.74 0.58 0.18 0.17
Weighted average number of shares
outstanding (in thousands):
Basic 19,736 18,585 22,930 18,503
Diluted 20,254 19,192 23,343 19,176
(*) - reclassified
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
US dollars US dollars
Year ended Three months
ended December ended December
31, 31,
(in thousands) 2005 2004 2005 2004
(Audited) (Unaudited)
Cash flows from operating activities
Net income for the period 14,921 11,219 4,222 3,368
Adjustments to reconcile net income
to net cash from operating
activities:
Depreciation and amortization 3,341 3,536 695 1,014
Exchange differences on principal of
deposit and loan, net 105 373 2 (147)
Increase (decrease) in liability for
employee rights upon retirement 521 424 284 (70)
Share in losses of affiliated
companies, net 355 324 258 44
Deferred income taxes (11) 1,183 (101) 603
Amortization of deferred compensation
related to employee stock option
plans, net 243 129 - 27
Capital losses (gains) on sale of
property and equipment, net (16) (40) (16) (24)
Minority interests in profits of
subsidiaries, net 257 238 371 379
Increase in accounts receivable (4,601) (3,002) (1,301) (80)
Increase (decrease ) in other current
assets (1,028) (1,003) 5 591
Decrease (increase) in inventories
and contracts in process, net (297) (1,259) 710 (112)
Increase (decrease) in accounts
payable 460 2,582 (874) (93)
Increase (decrease) in deferred
revenues 321 1,033 (459) 1,457
Increase (decrease) in other current
liabilities 3,187 1,937 (517) (1,348)
Net cash provided by operating
activities 17,758 17,674 3,279 5,609
Cash flows from investment activities
Increase in funds in respect of
employee rights upon retirement, net
of withdrawals (288) (366) (102) (268)
Capital expenditures (3,540) (2,374) (606) (830)
Proceeds from sale of property and
equipment 133 125 6 31
Purchase of intangible assets and
minority interest (746) (295) 78 (273)
Loan granted to affiliated company (452) - (113) -
Net cash used in investment
activities (4,893) (2,910) (737) (1,340)
Cash flows from financing activities
Short-term credit from banking
institutions, net 181 (8,560) 149 (2,830)
Receipt of long-term loans - 9,360 - -
Repayment of long-term loans (6,290) (15,035) (1,572) (1,710)
Dividend paid (2,697) (1,327) - -
Issuance expenses - - 596 -
Issuance of capital share 50,046 - 50,046 -
Proceeds from sale of Company shares
held by a subsidiary - 1,416 - -
Proceeds from exercise of options by
employees 15 4 - -
Net cash provided (used) in financing
activities 41,255 (14,142) 49,219 (4,540)
Effect of exchange rate changes on
cash and cash equivalents (295) 64 (5) 154
Net increase (decrease) in cash and
cash equivalents 53,825 686 51,756 (117)
Balance of cash and cash equivalents
at beginning of period 4,604 3,918 6,673 4,721
Balance of cash and cash equivalents
at end of period 58,429 4,604 58,429 4,604
Company Contact: Udi Mizrachi (udi_m@ituran.com), VP Finance, Ituran, (Israel) +972-3-557-1348; International Investor Relations Contacts: Ehud Helft (Ehud@gkir.com), Kenny Green (Kenny@gkir.com), GK International Investor Relations, (US) +1-866-704-6710; Investor Relations in Israel: Amit Lev Ari (amit@km-ir.co.il), KM Investor Relations, (Israel) +972-3-5167620