Ituran Location and Control Ltd. Presents Record Results for the First Quarter of 2006
Year Over Year Growth of 21.2% in Revenues and 25.7% in Net Income on a Pro-Forma Basis (Excluding the Discontinued Operations With Partner Communications)
AZOUR, Israel, May 15 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the quarter ended March 31, 2006.
Highlights of the first quarter
- Record results with strong growth across all parameters, with gross, operating and net margins all showing yet another quarter of improvement.
- Pro-forma revenue and net income grew 21.2% and 25.7% year over year, respectively.
- Subscriber growth of 27.4% since March 31 2005.
- Initial product sales in China one quarter earlier than expected.
- Ituran system in Rio de Janeiro is fully operational.
Revenues for the first quarter of 2006 reached US$24.1 million. This represents a 9.4% increase compared with revenues of US$22.0 million in the first quarter of last year. On a pro-forma basis excluding last year's revenues from the discontinued operations with Partner, first quarter revenues grew 21.2% compared with $19.8 million dollars as achieved in the first quarter of 2005. The main increase in revenues over last year was driven by the continued broadening and growth in the Company's subscriber base, growth in the sales of AMR products, the proceeding project work in the Far-East.
The number of subscribers as of March 31st, 2006 reached 358,000, representing a 27.4% growth compared with 281,000 subscribers as of March 31st, 2005.
Gross margin in the first quarter of 2006 was 48.9% compared with 44.2% in the first quarter of 2005. 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$4.5 million in the first quarter of 2006, representing growth of 18.5% over the US$3.8 million reported for the first quarter of 2005. Fully diluted EPS in the first quarter of 2006 was US$0.19 compared with US$0.20 per fully diluted share in the first quarter of 2005. Due to the Company's initial public offering on the NASDAQ, the number of shares grew from 19.1 million in the first quarter of 2005 to 23.5 million in the first quarter of 2006.
Cash flow from operations during the first quarter of 2006 was US$4.6 million. As of March 31st, 2006 the company had a net cash position (include invest in marketable securities) of US$56.2 million compared with net liabilities of US$2.9 million on March 31st, 2005.
Eyal Sheratzky, Co-CEO of Ituran said, "Even though our first quarter is seasonally the weakest of the year, the first quarter of 2006 was unusually strong with a 5.6% growth in subscribers since the end of last quarter. Our core business continues to grow strongly and the leverage inherent in our business model is enabling our margins to increase on a quarter by quarter basis, providing even stronger growth in our bottom line."
Mr. Sheratzky continued, "Our growth plans outside of Israel have been proceeding according to plan. Our new system in Rio de Janeiro is on track and is already operational. We expect to start seeing some initial revenues already in the second half of the year but more significantly during 2007 and beyond. This will bring us a second large regional market using our existing control center in Sao-Paulo. Additionally, China is operating ahead of schedule. In the first quarter we received, earlier than expected, the first order for end-user location devices for operation in Beijing."
Mr. Sheratzky concluded, "2006 has started very strongly and we are now very well positioned internationally in countries with strong growth potential such as Brazil, Argentina, China and South Korea. With such a good start to the year, we are well placed to continue showing 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, May 15 at 9:30am 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: 0-800-917-9141
Israel Dial-in Number: 03-918-0610
International Dial-in Number: +972-3-918-0610
At:
9:30am Eastern Time, 6:30am Pacific Time, 4:30pm 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 358,000 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
Oded Ben Chorin (oded@km-ir.co.il)
KM Investor Relations
(Israel) +972-3-5167620
CONSOLIDATED BALANCE SHEETS
US dollars
December 31, March 31,
(in thousands) 2005 2006
(Unaudited)
Current assets
Cash and cash equivalents 58,429 17,641
Investment in marketable securities - 40,801
Accounts receivable (net of allowance for doubtful
accounts) 22,494 23,225
Other current assets 2,747 3,190
Inventories 6,330 8,214
_______ _______
90,000 93,071
---------- ---------
Long-term investments and debit balances
Investments in affiliated companies (*) 872 891
Accounts receivable 280 280
Deposit 1,300 1,310
Deferred income taxes 5,168 5,386
Funds in respect of employee rights upon
retirement 2,959 3,069
_______ _______
10,579 10,936
---------- ---------
Property and equipment, net 9,904 11,237
--------- --------
Intangible assets, net 3,201 3,094
--------- --------
Goodwill (*) 2,800 2,770
--------- --------
Total assets 116,484 121,108
_______ _______
(*) Reclassification
US dollars
December 31, March 31,
(in thousands) 2005 2006
(Unaudited)
Current liabilities
Credit from banking institutions 3,315 1,916
Accounts payable 10,298 12,456
Deferred revenues 3,900 4,313
Other current liabilities 11,492 15,056
_______ _______
29,005 33,741
--------- --------
Long-term liabilities
Long-term loans from banking institutions 373 334
Liability for employee rights upon retirement 4,504 4,356
Deferred income taxes 212 373
_______ _______
5,089 5,063
--------- --------
Minority interest (**) 734 619
---------- --------
Capital Notes 5,894 5,894
-------- --------
_______ _______
Total shareholders' equity (**) 75,762 75,791
--------- ---------
_______ _______
Total liabilities and shareholders' equity 116,484 121,108
_______ _______
_______ _______
(**) See note 1
CONSOLIDATED INTERIM STATEMENT OF INCOME
US dollars
Three month period
ended March 31,
(in thousands except per share data) 2005 2006
(unaudited)
Revenues:
Location-based services 9,782 12,823
Wireless communications products 10,068 11,227
Other 2,139 -
_______ _______
21,989 24,050
---------- ----------
Cost of revenues:
Location-based services 3,665 4,082
Wireless communications products 6,964 8,217
Other 1,639 -
_______ _______
12,268 12,299
---------- ----------
_______ _______
Gross profit 9,721 11,751
Research and development expenses 797 683
Selling and marketing expenses 799 1,177
General and administrative expenses 3,128 4,040
Other expenses (income), net 2 (4)
_______ _______
Operating income 4,995 5,855
Financing income (expenses), net (230) 417
_______ _______
Income before taxes on income 4,765 6,272
Taxes on income (831) (1,484)
_______ _______
3,934 4,788
Share in losses of affiliated companies, net (31) (113)
Minority interests in income of subsidiaries (**) (83) (149)
_______ _______
Net income for the period (**) 3,820 4,526
_______ _______
Earnings per share
Basic 0.21 0.20
_______ _______
Diluted 0.20 0.19
Weighted average number of shares outstanding (in
thousands):
Basic 18,608 23,091
_______ _______
Diluted 18,983 23,482
_______ _______
** See note 1
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
US dollars
Three month period
ended March 31,
(in thousands) 2005 2006
(unaudited)
Cash flows from operating activities
Net income for the period (**) 3,820 4,526
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization 858 839
Exchange differences on principal of deposit and
loan, net (382) 8
Exchange differences on principal of marketable
securities, net - 280
Increase (decrease) in liability for employee rights
upon retirement 89 (205)
Share in losses of affiliated companies, net 31 113
Deferred income taxes (849) (312)
Amortization of deferred compensation related to
employee stock option plans, net - -
Capital losses (gains) on sale of property and
equipment, net - 8
Minority interests in profits (losses) of
subsidiaries, net (**) 83 149
Increase in accounts receivable (2,877) (1,055)
Decrease (increase) in other current assets (128) (291)
Decrease (increase) in inventories and contracts in
process, net (718) (1,968)
Increase (decrease) in accounts payable 847 2,295
Increase (decrease) in deferred revenues 683 465
Increase (decrease) in other current liabilities 2,069 (259)
______ ______
Net cash provided by operating activities 3,526 4,593
--------- ---------
Cash flows from investing activities
Decrease (increase) in funds in respect of employee
rights upon retirement, net of withdrawals (80) (149)
Capital expenditures (490) (1,793)
Proceeds from sale of property and equipment - -
Purchase of intangible assets and minority interest (306) (23)
Investment in marketable securities - (44,119)
Sale of marketable securities - 3,069
Loan granted to affiliated company - (149)
______ ______
Net cash used in investment activities (876) (43,164)
--------- ---------
Cash flows from financing activities
Short-term credit from banking institutions, net 272 (227)
Repayment of long-term loans (1,414) (1,192)
Dividend paid - -
Proceeds from exercise of options by employees - -
Acquisition of minority interests in subsidiaries - (21)
Issuance of share capital 2 -
______ ______
Net cash used in financing activities (1,140) (1,440)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents (56) (777)
--------- ---------
______ ______
Net increase (decrease) in cash and cash equivalents 1,454 (40,788)
Balance of cash and cash equivalents at beginning of
period 4,604 58,429
______ ______
Balance of cash and cash equivalents at end of period 6,058 17,641
______ ______
______ ______
(**) See note 1
Note 1 - The Company has recalculated the minority interest in income from subsidiaries for the year ended December 31, 2005. The effect of this recalculation on the Company's reported results were as follows:
In 2005, the minority interest in income of subsidiaries should have been U.S.$235,000 higher (decreasing 2005 EPS by $0.01).
In prior years, the minority interest in income of subsidiaries should have been in total U.S.$287,000 higher (decreasing 2005 EPS by a further $0.02, even though this amount relates to prior years).
In Q1 2005, the minority interest in income of subsidiaries should have been U.S.$46,000 higher (resulting in no impact on EPS).
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, Oded Ben Chorin (oded@km-ir.co.il), KM Investor Relations, (Israel) +972-3-5167620