Ituran Location and Control Ltd.
Presents Record Results for the Third Quarter of 2006
Ituran Presents Record Net Profit and Revenues
AZOUR, Israel, November 21 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the quarter ended September 30, 2006. Highlights of the third quarter
- Record results with strong growth across all parameters, with gross, operating and net profit continuing year-over-year improvement.
- Record revenues of $26 million, representing year-over-year growth of 13.5%.
- Record net income of $4.9 million, representing year-over-year growth of 35%.
- Record net margin of 18.8%.
- The number of subscribers as of September 30th, 2006 reached 383,000 representing a 20% growth compared with 320,000 subscribers as of September 30th, 2005.
Revenues for the third quarter of 2006 reached US$26.0 million. This represents a 13.5% increase compared with revenues of US$23.0 million in the third quarter of last year. The increase in revenues was driven by the continued growth of the Company's subscriber base, sales of infrastructures in the Far East, and sales of the AMR products.
Gross margin in the third quarter of 2006 was 48.7% compared with 48.6% in the third quarter of 2005.
Net profit was US$4.9 million in the third quarter of 2006, or 18.8% of revenues, representing growth of 34.6% over US$3.6 million, or 15.7% of revenues, as reported for the third quarter of 2005. 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 the third quarter of 2006 was US$0.21 compared with US$0.19 per fully diluted share in the third quarter of 2005. Due to the Company's initial public offering on the NASDAQ in the fourth quarter of 2005, the number of shares grew from 19.1 million in the third quarter of 2005 to 23.4 million in the third quarter of 2006.
Cash flow from operations during the third quarter of 2006 was US$5.6 million. As of September 30th, 2006 the company had a net cash position (including marketable securities) of US$57.3 million compared with US$2 million on September 30th, 2005.
Eyal Sheratzky, Co-CEO of Ituran said, "Again we have shown record top and bottom line results. Our global expansion is progressing to plan. In South Korea, our subsidiary Telematics Wireless, was awarded a $14.6 million order for the second and third phase of the deployment of our infrastructure equipment, to our local customer in Korea."
"Our core business continues to grow and we are also looking to expand the range of services we can provide," continued Mr. Sheratzky. "During the quarter we announced our intention to purchase a majority stake in ERM, a manufacturer of leading-edge vehicle alarm and GPRS tracking systems. The main reason for this purchase is the significant synergies we see with our business. We intend to leverage our brand through the value added services that can be provided by ERM, using our existing marketing and sales infrastructure, as well as our 24-hour service control center. We see the ERM business as an additional growth engine for Ituran."
Mr. Sheratzky concluded, "We remain 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 and into 2007."
Conference Call Information
The Company will also be hosting a conference call today, Tuesday, November 21st 2006 at 10am 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: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 383,000 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
Ituran Location and Control Ltd. and its Subsidiaries
Consolidated Interim Balance Sheets
US dollars
December 31, September 30,
(in thousands) 2005 2006
(audited) (unaudited)
Current assets
Cash and cash equivalents 58,429 40,013
Investment in marketable securities - 17,964
Accounts receivable (net of allowance for
doubtful accounts) 22,494 26,040
Other current assets 2,747 3,220
Inventories 6,330 10,880
_______ _______
90,000 98,117
---------- ----------
Long-term investments and debit balances
Investments in affiliated companies 872 872
Accounts receivable 280 135
Deposit 1,300 1,420
Deferred income taxes 5,168 5,119
Funds in respect of employee rights upon
retirement 2,959 3,507
_______ _______
10,579 11,053
---------- ----------
Property and equipment, net 9,904 17,826
---------- ----------
Intangible assets, net 3,201 2,883
---------- ----------
Goodwill 2,800 2,867
---------- ----------
_______ _______
Total assets 116,484 132,746
_______ _______
_______ _______
Ituran Location and Control Ltd. and its Subsidiaries
Consolidated Interim Balance Sheets
US dollars
December 31, September 30,
(in thousands) 2005 2006
(audited) (unaudited)
Current liabilities
Credit from banking institutions 3,315 691
Accounts payable 10,298 14,190
Deferred revenues 3,900 4,644
Advances, net of work in progress
inventory - 481
Other current liabilities 11,492 10,651
_______ _______
29,005 30,657
---------- ----------
Long-term liabilities
Long-term loans from banking
institutions 373 -
Liability for employee rights upon
retirement 4,504 4,523
Deferred income taxes 212 746
_______ _______
5,089 5,269
---------- ----------
Minority interest 734 905
---------- ----------
Capital Notes 5,894 5,894
---------- ----------
Total shareholders' equity 75,762 90,021
----------- -----------
_______ _______
Total liabilities and shareholders'
equity 116,484 132,746
_______ _______
_______ _______
Ituran Location and Control Ltd. and its Subsidiaries
Consolidated Interim Statements of Income
US dollars US dollars
Nine month period Three month period
ended September 30, ended September 30,
(in thousands except per
share data) 2005 2006 2005 2006
Revenues:
Location-based services 31,933 39,867 11,368 13,845
Wireless communications
products 32,544 35,201 11,586 12,201
Other 2,164 - 2 -
_______ _______ _______ _______
66,641 75,068 22,956 26,046
---------- ---------- ---------- ----------
Cost of revenues:
Location-based services 11,272 13,314 3,878 4,780
Wireless communications
products 22,578 24,917 7,893 8,571
Other 1,602 - 29 -
_______ _______ _______ _______
35,452 38,231 11,800 13,351
---------- ---------- ---------- ----------
_______ _______ _______ _______
Gross profit 31,189 36,837 11,156 12,695
Research and development
expenses 2,242 2,082 642 590
Selling and marketing
expenses 3,608 3,829 1,402 1,250
General and administrative
expenses 10,920 12,701 4,097 4,571
Other expenses (income),
net (6) 2 (1) (4)
_______ _______ _______ _______
Operating income 14,425 18,223 5,016 6,288
Financing income, net 197 1,152 238 560
_______ _______ _______ _______
Income before taxes on
income 14,622 19,375 5,254 6,848
Taxes on income (3,711) (4,703) (1,578) (1,774)
_______ _______ _______ _______
10,911 14,672 3,676 5,074
Share in losses of
affiliated companies, net (97) (201) (9) (52)
Minority interests in
income of subsidiaries (114) (403) (52) (127)
_______ _______ _______ _______
Net income for the period 10,700 14,068 3,615 4,895
_______ _______ _______ _______
_______ _______ _______ _______
Earnings per share
Basic 0.57 0.61 0.19 0.21
_______ _______ _______ _______
_______ _______ _______ _______
Diluted 0.55 0.60 0.19 0.21
_______ _______ _______ _______
_______ _______ _______ _______
Weighted average number of
shares outstanding
(in thousands):
Basic 18,671 23,172 18,785 23,281
_______ _______ _______ _______
_______ _______ _______ _______
Diluted 19,141 23,469 19,141 23,442
_______ _______ _______ _______
_______ _______ _______ _______
Ituran Location and Control Ltd. and its subsidiaries
Consolidated Interim Statements of Cash Flows
US dollars US dollars
Nine month period Three month period
ended September ended September
30, 30,
(in thousands) 2005 2006 2005 2006
Cash flows from operating
activities
Net income for the period 10,700 14,068 3,615 4,895
Adjustments to reconcile net
income to net cash from operating
activities:
Depreciation and amortization 2,647 2,922 835 1,101
Exchange differences on principal
of deposit and loan, net 103 (37) 327 (18)
Exchange differences on principal
of marketable securities, net - 100 - (72)
Increase (decrease) in liability
for employee rights upon
retirement 237 (296) 29 (118)
Share in losses of affiliated
companies, net 97 201 9 52
Deferred income taxes 90 886 (106) 591
Capital gains on sale of property
and equipment, net - (35) - (8)
Employees stock option plans, net 241 - 241 -
Minority interests in profits
(losses) of subsidiaries, net (114) 403 (176) 127
Decrease (increase) in accounts
receivable (3,300) (3,269) 230 (1,005)
Increase in other current assets (1,033) (237) (232) (203)
Increase in inventories and
contracts in process, net (1,007) (3,626) (576) (995)
Increase (decrease) in accounts
payable 1,334 3,134 (1,333) 835
Increase in deferred revenues 780 471 1,040 201
Increase (decrease) in other
current liabilities 3,704 (1,596) 1,111 205
______ ______ ______ ______
Net cash provided by operating
activities 14,479 13,089 5,014 5,588
--------- --------- --------- --------
Cash flows from investing
activities
Increase in funds in respect of
employee rights upon retirement,
net of withdrawals (186) (341) (44) (107)
Capital expenditures (2,934) (10,080) (1,280) (4,193)
Proceeds from sale of property and
equipment 127 53 127 8
Purchase of intangible assets and
minority interest (824) (51) (233) (28)
Investment in marketable
securities - (52,357) - (5,540)
Sale of marketable securities - 35,155 - 5,424
Loan granted to affiliated company (339) (138) (108) -
______ ______ ______ ______
Net cash used in investment
activities (4,156) (27,759) (1,538) (4,436)
--------- --------- --------- --------
Cash flows from financing
activities
Short-term credit from banking
institutions, net 32 (244) 54 (60)
Repayment of long-term loans (4,717) (2,835) (1,391) -
Dividend paid (2,698) (3,705) (14) -
Proceeds from exercise of options
by employees (596) 18 (246) 10
Acquisition of minority interests
in subsidiaries - (21) - -
Dividend distribution to minority
interest of a subsidiary 15 (172) 1 -
Purchase of shares from treasury - (877) - (877)
______ ______ ______ ______
Net cash used in financing
activities (7,964) (7,836) (1,596) (927)
--------- --------- --------- ---------
Effect of exchange rate changes on
cash and cash equivalents (290) 4,090 (22) 1,949
--------- --------- --------- ---------
______ ______ ______ ______
Net increase (decrease) in cash
and cash equivalents 2,069 (18,416) 1,858 2,174
Balance of cash and cash
equivalents at beginning of period 4,604 58,429 4,815 37,839
______ ______ ______ ______
Balance of cash and cash
equivalents at end of period 6,673 40,013 6,673 40,013
______ ______ ______ ______
______ ______ ______ ______
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