Ituran Location and Control Ltd. Presents Results for the Third Quarter of 2007
Record Quarterly Revenues Growing 21% Over Last Year
AZOUR, Israel, November 19 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the third quarter ended September 30, 2007.
Highlights
- Revenues of $31.6 million, a 21% increase over the third quarter of 2006
- Subscribers reached 430,000 as of September 30, 2007, an increase of 47,000 subscribers from 383,000 subscribers as of September 30, 2006
Third Quarter Results
Revenues for the third quarter of 2007 reached US$31.6 million. This represents a 21.2% increase compared with revenues of US$26.0 million in the third quarter of last year. The increase in revenues was primarily driven by the continued growth in the Company's subscriber base, growth in end-unit sales and revenues from the recently acquired ERM and MAPA businesses.
Operating profit for the third quarter of 2007 was US$5.3 million (16.9% of revenues) compared with US$6.3 million (24.1% of revenues) in the third quarter of 2006. The lower operating margin was in part due to the fact that in the third quarter of 2007 the company did not record any significant revenues from Korea and China, which typically represents higher margins. In addition, and as previously announced, the Company strongly increased its investment in sales and marketing for the new Ituran GPS in Israel, and the Company experienced increased labor costs compared with the third quarter last year. Finally, in Israel the devaluation of the US dollar against the Israeli shekel in the quarter increased expenses relative to revenues which are linked to the dollar.
EBITDA for the quarter was $7.3 million, which represents 23.1% of revenues compared to $7.4 million which represents 28.4% in the third quarter of last year.
Financial expenses in the quarter, was US$27 thousand as compared with a financial income of $563 thousand in the third quarter of last year. The decrease was mainly as a result of a decrease in gains from investments in marketable securities and the decrease in interest income due to a lower net cash level following the recent acquisitions of ERM and MAPA, and dividends issued through the year.
Net profit was US$3.6 million in the third quarter of 2007 (11.6% of revenues), compared with US$4.9 million (18.8% of revenues), as reported in the third quarter of 2006.
Fully diluted earnings per share in the third quarter of 2007 was US$0.16 compared with US$0.21 per fully diluted share in the third quarter of 2006.
Cash flow from operations during the quarter was US$3.0 million. As of September 30, 2007 the company had a net cash position (including marketable securities) of US$44.3 million compared with US$59.4 million on December 31, 2006.
Eyal Sheratzky, Co-CEO of Ituran said, "2007 was a year in which we made a number of investments for our continued future growth. While we have seen a strong increase in revenues, our expenses did rise throughout the year, pressuring our margins."
"In 2008, we expect to see the fruits of our efforts in 2007, with bottom line and top line growth," continued Mr. Sheratzky. "Following our sale of Telematics and our recent acquisitions of MAPA and ERM, we have a leaner business with a stronger focus on our core competencies, that of providing location based services and related applications. We are also in a stronger financial position to pursue acquisitions that will expand our global reach."
Conference Call Information
The Company will also be hosting a conference call today, Monday, November 19, 2007 at 10:00am EST. On the call, management will review and discuss the results and the sale of Telematics announced today, 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: 1-888-407-2553
UK Dial-in Number: 0-800-917-5108
ISRAEL Dial-in Number: 03-918-0687
INTERNATIONAL Dial-in Number: +972-3-918-0687
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: http://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. Ituran's subscriber base has been growing significantly since the Company's inception to over 430,000 subscribers distributed globally. Established in 1995, Ituran has approximately 900 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.
Financial Tables to Follow
Consolidated Interim Balance Sheets
US dollars
December 31, September 30,
(in thousands) 2006 2007
(audited) (unaudited)
Current assets
Cash and cash equivalents 43,812 35,829
Investment in marketable securities 16,034 9,137
Accounts receivable (net of allowance for
doubtful accounts) 29,709 36,976
Other current assets 4,915 5,885
Contracts in process 1,465 1,633
Inventories 10,901 16,727
_______ _______
106,836 106,187
---------- ----------
Long-term investments and debit balances
Investments in affiliated companies 881 2,296
Accounts receivable 123 -
Deposit 1,457 1,592
Deferred income taxes 5,112 5,559
Funds in respect of employee rights upon
retirement 4,001 5,219
_______ _______
11,574 14,666
---------- ----------
Property and equipment, net 19,109 24,749
---------- ----------
Intangible assets, net 2,784 10,260
---------- ----------
Goodwill 4,536 9,364
---------- ----------
_______ _______
Total assets 144,839 165,226
_______ _______
_______ _______
Consolidated Interim Balance Sheets
US dollars
December 31, September 30,
(in thousands) 2006 2007
(audited) (unaudited)
Current liabilities
Credit from banking institutions 474 711
Accounts payable 14,956 15,930
Deferred revenues 4,399 6,518
Other current liabilities 13,573 13,105
_______ _______
33,402 36,264
---------- ----------
Long-term liabilities
Liability for employee rights upon retirement 5,278 6,881
Deferred income taxes 816 2,569
_______ _______
6,094 9,450
---------- ----------
Minority interest 2,578 3,270
---------- ----------
Capital Notes 5,894 5,894
---------- -----------
Total shareholders' equity 96,871 110,348
----------- -----------
_______ _______
Total liabilities and shareholders' equity 144,839 165,226
_______ _______
_______ _______
Consolidated Interim Statements of Income
US dollars US dollars
Nine month period Three month period
(in thousands except ended September 30, ended September 30,
per share data)
2006 2007 2006 2007
Revenues:
Location-based services 39,867 46,523 13,845 16,504
Wireless communications
products 35,201 42,212 12,201 15,070
_______ _______ _______ _______
75,068 88,735 26,046 31,574
---------- ---------- ---------- ----------
Cost of revenues:
Location-based services 13,314 16,729 4,780 6,016
Wireless communications
products 24,917 31,804 8,571 11,504
_______ _______ _______ _______
38,231 48,533 13,351 17,520
---------- ---------- ---------- ----------
_______ _______ _______ _______
Gross profit 36,837 40,202 12,695 14,054
Research and development
expenses 2,082 2,210 590 734
Selling and marketing expenses 3,829 5,531 1,250 2,284
General and administrative
expenses 12,701 15,871 4,571 5,690
Other expenses (income), net 2 2 (4) 1
_______ _______ _______ _______
Operating income 18,223 16,588 6,288 5,345
Financing income, net 1,152 1,176 560 (27)
_______ _______ _______ _______
Income before taxes on income 19,375 17,764 6,848 5,318
Taxes on income (4,703) (4,910) (1,774) (1,442)
_______ _______ _______ _______
14,672 12,854 5,074 3,876
Share in losses of affiliated
companies, net (201) (161) (52) (68)
Minority interests in income
of subsidiaries (403) (550) (127) (162)
_______ _______ _______ _______
Net income for the period 14,068 12,143 4,895 3,646
_______ _______ _______
_______ _______ _______ _______
Earnings per share
Basic 0.61 0.52 0.21 0.16
_______ _______ _______ _______
_______ _______ _______ _______
Diluted 0.60 0.52 0.21 0.16
_______ _______ _______ _______
_______ _______ _______ _______
Weighted average number of
shares outstanding
(in thousands):
Basic 23,172 23,287 23,281 23,338
_______ _______ _______ _______
_______ _______ _______ _______
Diluted 23,469 23,422 23,442 23,422
_______ _______ _______ _______
_______ _______ _______ _______
Consolidated Interim Statements OF Cash Flows
US dollars US dollars
Nine month period Three month period
ended September 30, ended September 30,
(in thousands) 2006 2007 2006 2007
Cash flows from operating
activities
Net income for the period 14,068 12,143 4,895 3,646
Adjustments to reconcile net
income to net cash from operating
activities:
Depreciation and amortization 2,922 4,895 1,101 1,948
Exchange differences on principal
of deposit and loan, net (37) (57) (18) 5
Exchange differences on principal
of marketable securities, net 100 (350) (72) 96
Increase (decrease) in liability
for employee rights upon
retirement (296) 596 (118) 297
Share in losses of affiliated
companies, net 201 161 52 68
Deferred income taxes 886 1,618 591 2,023
Capital gains on sale of property
and equipment, net (35) (48) (8) (47)
Minority interests in profits
(losses) of subsidiaries, net 403 550 127 162
Decrease (increase) in accounts
receivable (3,269) (3,655) (1,005) (1,336)
Increase in other current assets (237) (658) (203) (332)
Increase in inventories and
contracts in process, net (3,626) (4,904) (995) (1,300)
Increase (decrease) in accounts
payable 3,134 (168) 835 (1,279)
Increase in deferred revenues 471 1,352 201 1,258
Increase (decrease) in other
current liabilities (1,596) (3,488) 205 (2,237)
______ ______ ______ ______
Net cash provided by operating
activities 13,089 7,987 5,588 2,972
--------- --------- --------- ---------
Cash flows from investing
activities
Increase in funds in respect of
employee rights upon retirement,
net of withdrawals (341) (599) (107) (311)
Capital expenditures (10,080) (7,663) (4,193) (2,720)
Proceeds from sale of property and
equipment 53 181 8 42
Purchase of intangible assets and
minority interest (51) (31) (28) (17)
Investment in affiliated company - (1,447) - -
Investment in marketable
securities (52,357) (3,269) (5,540) (1,695)
Sale of marketable securities 35,155 11,364 5,424 2,054
Loan granted to affiliated company (138) - - -
Acquisition of subsidiary
(Appendix A ) - (8,549) - -
______ ______ ______ ______
Net cash used in investment
activities (27,759) (10,013) (4,436) (2,647)
--------- --------- --------- ---------
Cash flows from financing
activities
Short-term credit from banking
institutions, net (244) 560 (60) (25)
Repayment of long-term loans (2,835) (3,500) - -
Dividend paid (3,705) (4,838) - -
Proceeds from exercise of options
by employees 18 12 10 12
Acquisition of minority interests
in subsidiaries (21) - - -
Dividend distribution to minority
interest of a subsidiary (172) - - -
Purchase of shares from treasury (877) - (877) -
______ ______ ______ ______
Net cash used in financing
activities (7,836) (7,766) (927) (13)
--------- --------- --------- ---------
Effect of exchange rate changes on
cash and cash equivalents 4,090 1,809 1,949 2,056
--------- --------- --------- ---------
______ ______ ______ ______
Net increase (decrease) in cash
and cash equivalents (18,416) (7,983) 2,174 2,368
Balance of cash and cash
equivalents at
beginning of period 58,429 43,812 37,839 33,461
______ ______ ______ ______
Balance of cash and cash
equivalents at end of period 40,013 35,829 40,013 35,829
====== ====== ===== =====
Appendix A - Acquisition of Subsidiary
US dollars
________________________________________________ ________________________
Nine months period
Ended September 30,
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
Intangible assets , net 6,719
Goodwill 5,220
Liability for employee rights upon retirement (729)
Long-term deferred income taxes (1,583)
Long term loan (3,163)
---------
8,549
Company Contact:
Udi Mizrachi,
VP Finance, Ituran
(udi_m@ituran.com),
(Israel) +972-3-557-1348;
International Investor Relations:
Ehud Helft,
Kenny Green,
GK Investor Relations,
info@gkir.com,
(US) +1-646-201-9246;
Investor Relations in Israel:
Oded Ben Chorin,
KM Investor Relations,
(oded@km-ir.co.il),
(Israel) +972-3-5167620.
Company Contact: Udi Mizrachi, VP Finance, Ituran (udi_m@ituran.com), (Israel) +972-3-557-1348; International Investor Relations: Ehud Helft, Kenny Green, GK Investor Relations, info@gkir.com, (US) +1-646-201-9246; Investor Relations in Israel: Oded Ben Chorin, KM Investor Relations, (oded@km-ir.co.il), (Israel) +972-3-5167620.