Ituran Location and Control Ltd. Presents Results for the Second Quarter of 2007
Record Quarterly Revenues Growing 17% Over Last Year
AZOUR, Israel, August 20 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the second quarter ended June 30, 2007.
Highlights
- Revenues of $29.2 million, a 17% increase over the second quarter of 2006
- Subscribers reached 418 thousand as of June 30, 2007, an increase of 43 thousand subscribers from 375 thousand subscribers as of June 30, 2006
- At the end of the second quarter, Ituran closed its acquisition of MAPA group, the main provider of geographical information in Israel
Second Quarter Results
Revenues for the second quarter of 2007 reached US$29.2 million. This represents a 17.0% increase compared with revenues of US$25.0 million in the second quarter of last year. While revenues from the business in Korea decreased in the quarter compared to last year, the net increase in revenues was driven by the continued growth in the Company's subscriber base, growth in end-unit sales and revenues from the ERM business which was acquired at the end of 2006. In addition, the Company saw a growth in average revenue per subscriber.
Operating profit for the second quarter of 2007 was US$5.2 million (17.7% of revenues) compared with US$6.1 million (24.3% of revenues) in the second quarter of 2006. The lower operating margin in the quarter was due to the previously announced delay in recognizing revenues from the second and third phase of the project in Korea. In addition, the Company experienced increased labor costs and other operating expenses.
For the rest of the year, Ituran management expects expenses to continue to increase, although at a slower pace than revenues, and therefore expect operating margins to improve in the second half of the year.
Net profit was US$4.1 million in the second quarter of 2007 (14.1% of revenues), compared with US$4.6 million (18.6% of revenues), as reported in the second quarter of 2006.
Fully diluted EPS in the second quarter of 2007 was US$0.18 compared with US$0.20 per fully diluted share in the second quarter of 2006.
Since the closing of the acquisition of Mapa was at the end of the second quarter, its balance sheet was consolidated with Ituran's in the second quarter, while Mapa's income statement will be consolidated from the beginning of the third quarter.
Cash flow from operations during the quarter was US$3.7 million. As of June 30, 2007 the company had a net cash position (including marketable securities) of US$41.4 million compared with US$59.4 million on December 31, 2006. The decrease was mainly due to $13.0 million paid for Mapa and a dividend of $4.8 million that was paid in the second quarter.
Eyal Sheratzky, Co-CEO of Ituran said, "Our business continues to grow, and in the quarter we grew our top line strongly by 17% over last year. We are facing higher expenses, due to our investment in customer support and marketing, which includes the Ituran GPS launched in the third quarter, and this is impacting our profitability. We believe that during the second half of the year, our expenses will continue to increase on an absolute basis. However, our revenues will grow faster than our expenses and we expect our profitability to increase from these levels."
"We will consolidate Mapa's results as of the start of the third quarter," continued Mr. Sheratzky. "We believe our recently launched GPS system in Israel complements our existing services, and fits our strategy of continuously expanding the scope of the location based services that we can offer to our customers."
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 418,000 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.
CONSOLIDATED INTERIM BALANCE SHEETS
US dollars
December 31, June 30,
(in thousands) 2006 2007
Current assets
Cash and cash equivalents 43,812 33,461
Investments in marketable
securities 16,034 8,653
Accounts receivable (net of
allowance for doubtful
accounts) 29,709 34,524
Other current assets 4,915 5,165
Contracts in process , net 1,465 1,485
Inventories 10,901 14,852
_______ ______
106,836 98,140
------- ------
Long-term investments and
debit balances
Investments in affiliated
companies 881 2,233
Accounts receivable 123 -
Deposit 1,457 1,512
Deferred income taxes 5,112 5,674
Funds in respect of employee
rights upon retirement 4,001 4,674
______ ______
11,574 14,093
------ ------
Property and equipment, net 19,109 22,718
------ ------
Intangible assets, net 2,784 9,304
------ ------
Goodwill 4,536 9,731
------ ------
______ ______
Total assets 144,839 153,986
_______ _______
_______ _______
CONSOLIDATED INTERIM BALANCE SHEETS
US dollars
December
31, June 30,
(in thousands) 2006 2007
Current liabilities
Credit from banking
institutions 474 728
Accounts payable 14,956 16,367
Deferred revenues 4,399 5,003
Other current liabilities 13,573 12,873
______ ______
33,402 34,971
------ ------
Long-term liabilities
Liability for employee rights
upon retirement 5,278 6,275
Deferred income taxes 816 2,487
______ ______
6,094 8,762
------ ------
Minority interest 2,578 2,962
------ ------
Capital Notes 5,894 5,894
------ ------
Total shareholders' equity 96,871 101,397
------ -------
______ ______
Total liabilities and
shareholders' equity 144,839 153,986
_______ _______
_______ _______
CONSOLIDATED INTERIM STATEMENTS OF INCOME
US dollars US dollars
Six month period Three months period
ended June 30, ended June 30,
(in thousands except per
share data) 2006 2007 2006 2007
Revenues:
Location-based services 26,022 30,019 13,199 15,416
Wireless communications
products 23,000 27,142 11,773 13,807
______ ______ ______ ______
49,022 57,161 24,972 29,223
------ ------ ------ ------
Cost of revenues:
Location-based services 8,534 10,713 4,452 5,655
Wireless communications
products 16,346 20,300 8,129 10,631
______ ______ ______ ______
24,880 31,013 12,581 16,286
------ ------ ------ ------
______ ______ ______ ______
Gross profit 24,142 26,148 12,391 12,937
Research and development
expenses 1,492 1,476 809 763
Selling and marketing
expenses 2,579 3,247 1,402 1,665
General and administrative
expenses 8,130 10,181 4,090 5,336
Other expenses, net 6 1 10 12
______ ______ ______ ______
Operating income 11,935 11,243 6,080 5,161
Financing income , net 592 1,203 175 892
_____ ______ ______ ______
Income before taxes on
income 12,527 12,446 6,255 6,053
Taxes on income (2,929) (3,468) (1,445) (1,743)
_____ ______ ______ ______
9,598 8,978 4,810 4,310
Share in losses of
affiliated companies, net (149) (93) (36) (36)
Minority interests in income
of subsidiaries (276) (388) (127) (164)
______ ______ ______ ______
Net income for the period 9,173 8,497 4,647 4,110
_______ ______ ______ ______
______ ______ ______ ______
Earnings per share:
Basic 0.40 0.36 0.20 0.18
______ ______ ______ ______
______ ______ ______ ______
Diluted 0.39 0.36 0.20 0.18
______ ______ ______ ______
______ ______ ______ ______
Weighted average number of
shares outstanding
(in thousands):
Basic 23,117 23,321 23,142 23,321
______ ______ ______ ______
______ ______ ______ ______
Diluted 23,482 23,482 23,482 23,482
_______ ______ ______ ______
_______ ______ ______ ______
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
US dollars US dollars
Six months period Three months period
ended June 30 , ended June 30 ,
(in thousands) 2006 2007 2006 2007
Cash flows from operating
activities
Net income for the period 9,173 8,497 4,647 4,110
Adjustments to reconcile
net income to net cash from
operating activities:
Depreciation and
amortization 1,821 2,947 982 1,569
Exchange differences on
principal of deposit and
loan, net (19) (62) (27) (38)
Exchange differences on
principal of marketable
securities 172 (446) (108) (206)
Increase (decrease) in
liability for employee
rights upon retirement (178) 299 27 141
Share in losses of
affiliated companies, net 149 93 36 36
Deferred income taxes 295 (405) 607 (422)
Capital loses (gains) on
sale of property and
equipment, net (27) (1) (35) 12
Minority interests in
profits of subsidiaries,
net 272 388 123 164
Decrease (Increase) in
accounts receivable (2,264) (2,319) (1,209) 1,485
Decrease (increase) in
other current assets (34) (326) 257 (476)
Increase in inventories and
contracts in process, net (2,631) (3,604) (663) (614)
Increase (decrease) in
accounts payable 2,299 1,111 4 (1,361)
Increase (decrease) in
deferred revenues 270 94 (195) 270
Decrease in other current
liabilities (1,801) (1,251) (1,542) (936)
______ ______ ______ ______
Net cash provided by
operating activities 7,497 5,015 2,904 3,734
------ ------ ------ ------
Cash flows from investing
activities
Increase in funds in
respect of employee rights
upon retirement, net of
withdrawals (234) (288) (85) (154)
Capital expenditures (5,887) (4,943) (4,094) (2,577)
Proceeds from sale of
property and equipment 45 139 45 63
Purchase of intangible
assets and minority
interest (23) (14) - (14)
Investment in affiliated
company - (1,447) - (947)
Investment in marketable
securities (46,817) (1,574) (2,698) (519)
Sale of marketable
securities 29,731 9,310 26,662 302
Loan granted to affiliated
company (138) - 11 -
Acquisition of subsidiary
(Appendix A) - (8,549) - (8,549)
______ ______ ______ ______
Net cash used in investment
activities (23,323) (7,366) 19,841 (12,395)
------ ------ ------ ------
Cash flows from financing
activities
Short-term credit from
banking institutions, net (184) 585 43 493
Repayment of long-term
loans (2,835) (3,500) (1,643) (3,163)
Dividend paid (3,705) (4,838) (3,705) (4,838)
Proceeds from exercise of
options by employees 8 - 8 -
Acquisition of minority
interests in subsidiaries (21) - - -
Dividend distribution to
minority interest of a
subsidiary (172) - (172) -
______ ______ ______ ______
Net cash used in financing
activities (6,909) (7,753) (5,469) (7,508)
------ ------ ------ ------
Effect of exchange rate
changes on cash and cash
equivalents 2,145 (247) 2,922 (984)
------ ------ ------ ------
______ ______ _______ ______
Net increase (decrease) in
cash and cash equivalents (20,590) (10,351) 20,198 (17,153)
Balance of cash and cash
equivalents at beginning of
period 58,429 43,812 17,641 50,614
______ ______ _______ ______
Balance of cash and cash
equivalents at end of
period 37,839 33,461 37,839 33,461
______ _______ ______ ______
______ _______ ______ ______
Appendix A - Acquisition of subsidiary
US dollars
Six and Three
months period
ended June 30,
(in thousands) 2007
Working capital (excluding cash and
cash equivalents ), net 1,280
Funds in respect of employee rights
upon retirement 408
Property and equipment , net 397
Goodwill 11,939
Liability for employee rights upon
retirement (729)
Long-term deferred income taxes (1,583)
Long term loan (3,163)
______
8,549
______
______