Ituran Location and Control Ltd. Presents Record Results for the Second Quarter of 2006
Year Over Year Growth of 15% in Revenues and 42% in Net Income
AZOUR, Israel, August 16 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the quarter ended June 30, 2006.
Highlights of the second quarter
- Record results with strong growth across all parameters, with gross, operating and net profit continuing to show sequential and year-over year improvement.
- Revenue and net income growth of 15.1% and 42.4% year over year, respectively.
- The number of subscribers as of June 30th, 2006 reached 375,000, representing a 26% growth compared with 298,000 subscribers as of June 30th, 2005.
Revenues for the second quarter of 2006 reached US$25.0 million. This represents a 15.1% increase compared with revenues of US$21.7 million in the second quarter of last year. The main increase in revenues was driven by the continued broadening and growth of the Company's subscriber base. Additionally, the Company's expansion into Latin American and its projects in the Far East, have also begun to contribute to sales as well as the growth in the sales of AMR products.
Gross margin in the second quarter of 2006 was 49.6% compared with 47.5% in the second quarter of 2005. The main reasons for the continued improvement in gross margin over the last few quarters was primarily due to the operating leverage in the Company's business model and the change in the product mix toward higher margins products.
Net profit was US$4.6 million in the second quarter of 2006, representing growth of 42.4% over the US$3.2 million as reported for the second quarter of 2005. Fully diluted EPS in the second quarter of 2006 was US$0.20 compared with US$0.17 per fully diluted share in the second 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 second quarter of 2005 to 23.5 million in the second quarter of 2006.
Cash flow from operations during the second quarter of 2006 was US$2.9 million. As of June 30th, 2006 the company had a net cash position (including marketable securities) of US$54.6 million compared with net liabilities of US$1.8 million on June 30th, 2005.
The Board of Directors of Ituran decided to allocate $250,000 to support Kiryat Shmona, a town in the north of Israel that was one of the worst hit areas in Israel during the recent hostilities that took place in the region. This is in addition to the support that Ituran provides to this town on a regular basis.
Eyal Sheratzky, Co-CEO of Ituran said, "We are happy with the results and they are inline with our expectations. 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 ever-stronger growth in our bottom line. Given the good results that we have shown over the last year, as well as the inherent unrealized value in our stock, we felt we should reward our shareholders through a share buy-back. "
Mr. Sheratzky concluded, "The first half of 2006 has been good for us from both a financial point of view and from a long-term, strategic stand. We are well positioned internationally in countries with strong growth potential such as Brazil, Argentina, China and South Korea, while our core business in Israel remains strong. We expect our growth to continue over the rest of the year."
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 375,000 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.
Ituran Location and Control Ltd. AND ITS SUBSIDIARIES
CONSOLIDATED INTERIM BALANCE SHEETS
US dollars
December 31, June 30,
(in thousands) 2005 2006
(audited) (unaudited)
Current assets
Cash and cash equivalents 58,429 37,839
Investment in marketable securities - 17,482
Accounts receivable (net of allowance for
doubtful accounts) 22,494 24,726
Other current assets 2,747 3,101
Inventories 6,330 9,627
_______ _______
90,000 92,775
---------- ----------
Long-term investments and debit balances
Investments in affiliated companies 872 893
Accounts receivable 280 280
Deposit 1,300 1,367
Deferred income taxes 5,168 5,195
Funds in respect of employee rights upon
retirement 2,959 3,302
_______ _______
10,579 11,037
---------- ----------
Property and equipment, net 9,904 16,159
---------- ----------
Intangible assets, net 3,201 2,989
---------- ----------
Goodwill 2,800 2,869
---------- ----------
_______ _______
Total assets 116,484 125,829
_______ _______
_______ _______
Ituran Location and Control Ltd. AND ITS SUBSIDIARIES
CONSOLIDATED INTERIM BALANCE SHEETS
US dollars
December 31, June 30,
(in thousands) 2005 2006
(audited) (unaudited)
Current liabilities
Credit from banking institutions 3,315 731
Accounts payable 10,298 14,624
Deferred revenues 3,900 4,313
Advances, net of work in progress
inventory - 434
Other current liabilities 11,492 10,154
_______ _______
29,005 30,256
---------- ----------
Long-term liabilities
Long-term loans from banking
institutions 373 -
Liability for employee rights upon
retirement 4,504 4,491
Deferred income taxes 212 571
_______ _______
5,089 5,062
---------- ----------
Minority interest 734 767
---------- ----------
Capital Notes 5,894 5,894
---------- ----------
Total shareholders' equity 75,762 83,850
----------- -----------
_______ _______
Total liabilities and shareholders'
equity 116,484 125,829
_______ _______
_______ _______
Ituran Location and Control Ltd. AND ITS SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF INCOME
US dollars US dollars
Six month period Three month period
ended June 30, ended June 30,
(in thousands except per
share data) 2005 2006 2005 2006
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Location-based services 20,565 26,022 10,783 13,199
Wireless communications
products 20,958 23,000 10,890 11,773
Other 2,162 - 23 -
_______ _______ _______ _______
43,685 49,022 21,696 24,972
---------- ---------- ---------- ----------
Cost of revenues:
Location-based services 7,393 8,534 3,728 4,452
Wireless communications
products 14,686 16,346 7,722 8,129
Other 1,573 - (66) -
_______ _______ _______ _______
23,652 24,880 11,384 12,581
---------- ---------- ---------- ----------
_______ _______ _______ _______
Gross profit 20,033 24,142 10,312 12,391
Research and development
expenses 1,600 1,492 803 809
Selling and marketing
expenses 2,206 2,579 1,407 1,402
General and
administrative expenses 6,823 8,130 3,695 4,090
Other expenses (income),
net (5) 6 (7) 10
_______ _______ _______ _______
Operating income 9,409 11,935 4,414 6,080
Financing income
(expenses), net (41) 592 189 175
_______ _______ _______ _______
Income before taxes on
income 9,368 12,527 4,603 6,255
Taxes on income (2,133) (2,929) (1,302) (1,445)
_______ _______ _______ _______
7,235 9,598 3,301 4,810
Share in losses of
affiliated companies,
net (88) (149) (57) (36)
Minority interests in
income of subsidiaries (62) (276) 21 (127)
_______ _______ _______ _______
Net income for the
period 7,085 9,173 3,265 4,647
_______ _______ _______ _______
_______ _______ _______ _______
Earnings per share
Basic 0.38 0.40 0.17 0.20
_______ _______ _______ _______
_______ _______ _______ _______
Diluted 0.36 0.39 0.17 0.20
_______ _______ _______ _______
_______ _______ _______ _______
Weighted average number
of shares outstanding
(in thousands):
Basic 18,614 23,117 18,610 23,142
_______ _______ _______ _______
_______ _______ _______ _______
Diluted 19,140 23,482 19,130 23,482
_______ _______ _______ _______
_______ _______ _______ _______
Ituran Location and Control Ltd. AND ITS SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
US dollars US dollars
Six month period Three month period
ended June 30, ended June 30,
(in thousands) 2005 2006 2005 2006
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flows from
operating
activities
Net income for the
period 7,085 9,173 3,265 4,647
Adjustments to
reconcile net
income to net cash
from operating
activities:
Depreciation and
amortization 1,812 1,821 954 982
Exchange
differences on
principal of
deposit and loan,
net (224) (19) 158 (27)
Exchange
differences on
principal of
marketable
securities, net - 172 - (108)
Increase (decrease)
in liability for
employee rights
upon retirement 208 (178) 119 27
Share in losses of
affiliated
companies, net 88 149 57 36
Deferred income
taxes 196 295 1,045 607
Capital gains on
sale of property
and equipment, net - (27) - (35)
Minority interests
in profits (losses)
of subsidiaries,
net 62 272 (21) 123
Increase in
accounts receivable (3,530) (2,264) (653) (1,209)
Decrease (increase)
in other current
assets (801) (34) (673) 257
Decrease (increase)
in inventories and
contracts in
process, net (431) (2,631) 287 (663)
Increase in
accounts payable 2,667 2,299 1,820 4
Increase (decrease)
in deferred
revenues (260) 270 (943) (195)
Increase (decrease)
in other current
liabilities 2,593 (1,801) 524 (1,542)
______ ______ ______ ______
Net cash provided
by operating
activities 9,465 7,497 5,939 2,904
--------- --------- --------- ---------
Cash flows from
investing
activities
increase in funds
in respect of
employee rights
upon retirement,
net of withdrawals (142) (234) (62) (85)
Capital
expenditures (1,654) (5,887) (1,164) (4,094)
Proceeds from sale
of property and
equipment - 45 - 45
Purchase of
intangible assets
and minority
interest (941) (23) (635) -
Investment in
marketable
securities - (46,817) - (2,698)
Sale of marketable
securities - 29,731 - 26,662
Loan granted to
affiliated company (231) (138) (231) 11
______ ______ ______ ______
Net cash used in
investment
activities (2,968) (23,323) (2,092) 19,841
--------- --------- --------- ---------
Cash flows from
financing
activities
Short-term credit
from banking
institutions, net (22) (184) (294) 43
Repayment of
long-term loans (3,326) (2,835) (1,912) (1,643)
Dividend paid (2,684) (3,705) (2,684) (3,705)
Proceeds from
exercise of options
by employees 14 8 12 8
Acquisition of
minority interests
in subsidiaries - (21) - -
Dividend
distribution to
minority interest
of a subsidiary - (172) - (172)
______ ______ ______ ______
Net cash used in
financing
activities (6,018) (6,909) (4,878) (5,469)
--------- --------- --------- ---------
Effect of exchange
rate changes on
cash and cash
equivalents (268) 2,145 (212) 2,922
--------- --------- --------- ---------
______ ______ ______ ______
Net increase
(decrease) in cash
and cash
equivalents 211 (20,590) (1,243) 20,198
Balance of cash and
cash equivalents at
beginning of period 4,604 58,429 6,058 17,641
______ ______ ______ ______
Balance of cash and
cash equivalents at
end of period 4,815 37,839 4,815 37,839
______ ______ ______ ______
______ ______ ______ ______
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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 Investor Relations, (US) +1-866-704-6710. Investor Relations in Israel: Oded ben horin (oded@km-ir.co.il), KM Investor Relations, (Israel) +972-3-5167620