Ituran Location and Control Ltd. Presents Record Revenues for the Fourth Quarter and Full Year of 2007
Fourth Quarter 2007 Revenues Grow by 25% Over Last Year Reaching $36m
AZOUR, Israel, February 21 -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2007.
Highlights of the Fourth Quarter and Full Year
- Strong top-line and subscriber growth.
- Record annual revenues of $125 million, 20% increase over 2006; fourth quarter revenues $36.1 million, an increase of 25% year-over-year
- The purchases of ERM and MAPA broadened the suite of location based products and services Ituran provides
- Sold Telematics, increasing the cash position and refocusing the business on its core competencies
- Record subscribers of 444,000 as of December 31st, 2007, an increase of 48,000 from the 396,000 subscribers as of December 31st, 2006
Fourth quarter Results
Revenues for the fourth quarter of 2007 reached US$36.1 million. This represents a 24.6% increase compared with revenues of US$29.0 million in the fourth quarter of last year. The increase in revenues was primarily driven by the continued growth in the Company's subscriber base and revenues from the recently acquired ERM and MAPA businesses. This increase was partly offset by a decrease in revenues from the Far East which relates to the Telematics business.
Operating profit for the fourth quarter of 2007 excluding the other income was US$6.8 million (18.7% of revenues) compared with US$6.5 million (22.5% of revenues) in the fourth quarter of 2006. The lower operating margin was in part due to the fact that, as previously announced, the Company increased its investment in sales and marketing in 2007, as well as the devaluation of the US dollar against the Israeli shekel.
EBITDA for the quarter was $8.9 million, which represents 24.5% of revenues compared to $7.8 million which represents 26.9% in the fourth quarter of last year.
Financial income in the quarter was US$51 thousand as compared with a financial income of $734 thousand in the fourth quarter of last year. The decrease was primarily as a result of the devaluation of the US dollar against the Company's functional currency in Israel, the Israeli shekel.
The Company recorded a one-time income of $49.5 million from the sale of Telematics on December 31st, 2007, and an associated tax expense of $13.7 million.
Net profit on a GAAP basis was US$39.3 million in the fourth quarter of 2007, compared with US$5.2, as reported in the fourth quarter of 2006. Fully diluted earnings per share on a GAAP basis in the fourth quarter of 2007 was US$1.68 compared with US$0.22 per fully diluted share in the fourth quarter of 2006.
Excluding the other income and the related tax expense, and a one-time write-off related to an affiliated company of $0.3 million, net profit was US$4.2 million in the fourth quarter of 2007, or fully diluted earnings per share of $0.18.
Full Year Results
Revenues for the full year 2007 reached US$124.8 million. This represents a 20% increase compared with revenues of US$104.1 million last year. The increase in revenues was driven by the continued growth in the Company's subscriber base as well as the contribution by the recently acquired ERM and Mapa businesses. This increase was partly offset by a decrease in revenues from the Far East which relates to the Telematics business throughout 2007.
Operating profit for the year excluding the other income was US$23.3 million compared with US$24.7 million in 2006. The lower operating profit was in part due to the increase in investment in sales and marketing in 2007, the lower revenue level in the Far East, and the relative increase in expenses due to the devaluation of the US dollar against the Israeli shekel.
Annual net profit on a GAAP basis was US$51.5 million in 2007 or earnings per diluted share of $2.20, compared with US$19.3 million or earnings per diluted share of $0.82, as reported in 2006. Excluding the other income and the related tax expense, and a one-time write-off from an affiliated company of $0.3 million, net profit for the year was US$16.4, or fully diluted earnings per share of $0.70.
Cash flow from operations during the fourth quarter and the full year of 2007 were US$4.8 million and US$12.8 million, respectively. As of December 31st, 2007 the Company had a net cash position (including marketable securities) of US$37.9 million (this does not include the proceeds from the sale of Telematics which were received in the beginning of 2008) compared with US$59.4 million on December 31st, 2006.
Pro-forma full year results excluding Telematics
As announced, the sale of Telematics was completed on December 31st, 2007. Excluding Telematics, the Company would have reported full year 2007 revenues of $104.7 million, operating income of $17.8 million and net income of $13.4 million or fully diluted earnings per share of $0.57, excluding the impact of the above mentioned one-time items.
On February 20th, 2008, the Board of Directors declared a dividend distribution of a total of US$30 million or $1.34 per share.
Eyal Sheratzky, Co-CEO of Ituran said, "2007 was a year of strong growth in our subscriber base and revenues. It was also a year in which we stepped up our operating expenses, in order to invest in expanding our business into new segments and improve our customer care and retention. In addition, our sale of Telematics at the end of the year, was a significant step in our strategy of focusing on our core competencies, that of providing a full suite of location based product and services."
"Our sale of Telematics increased our cash position by $48.3 million to $98 million at the beginning of 2008," continued Mr. Sheratzki. "We have used a portion of our cash for purchasing 1.5 million shares of Ituran for a total of $17.6 million. In addition, we today announced a special dividend of $30 million. Following these actions, our cash position is expected to stand at approximately $50 million. We believe that this is the right way to share some of our success with our shareholders, while maintaining enough cash on our balance sheet for our future growth."
"In 2008, we expect to see the fruits of our investments in 2007 and expect pro-forma double-digit top-line growth over the year with renewed growth in our profitability. Looking ahead, we have a lean business with a strong focus on what we do best, that of providing location based services and related applications. We believe that our business is now very well positioned, with great growth potential for years to come," concluded Mr. Sheratzky.
Conference Call Information
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 444,000 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.
CONSOLIDATED BALANCE SHEETS
US dollars
December 31,
(in thousands) 2007 2006
Current assets
Cash and cash equivalents 28,669 43,812
Investments in marketable securities 9,558 16,034
Accounts receivable (net of allowance
for doubtful accounts) 27,578 29,709
Other current assets 83,783 4,915
Contracts in process , net - 1,465
Inventories 13,258 10,901
______ ______
162,846 106,836
------- -------
Long-term investments and debit balances
Investments in affiliated companies 1,869 881
Accounts receivable 49 123
Loan 560 -
Deposit - 1,457
Deferred income taxes 5,850 5,112
Funds in respect of employee rights
upon retirement 2,513 4,001
______ _____
10,841 11,574
------- -------
Property and equipment, net 24,440 19,109
-------- -------
Intangible assets, net 8,801 2,784
-------- -------
Goodwill 9,631 4,536
-------- -------
_________ ________
Total assets 216,559 144,839
_______ _______
_______ _______
US dollars
December 31,
(in thousands) 2007 2006
Current liabilities
Credit from banking institutions 318 474
Accounts payable 12,703 14,956
Deferred revenues 5,335 4,399
Other current liabilities 34,058 13,573
_______ ______
52,414 33,402
--------- ---------
Long-term liabilities
Liability for employee rights upon retirement 4,085 5,278
Deferred income taxes 1,715 816
_______ ______
5,800 6,094
--------- ---------
Minority interest 2,860 2,578
--------- ---------
Capital Notes 5,894 5,894
--------- ---------
Total shareholders' equity 149,591 96,871
----------- ----------
_______ ______
Total liabilities and shareholders' equity 216,559 144,839
_______ _______
_______ _______
CONSOLIDATED STATEMENTS OF INCOME
US dollars US dollars
Year ended Three months ended
December 31 , December 31 ,
(in thousands except per share
data) 2007 2006 2007 2006
Revenues:
Location-based services 64,634 54,048 18,111 14,181
Wireless communications
products 60,204 50,004 17,992 14,803
_______ ______ ______ ______
124,838 104,052 36,103 28,984
--------- --------- --------- ---------
Cost of revenues:
Location-based services 23,630 18,419 6,901 5,105
Wireless communications
products 44,009 35,434 12,205 10,517
_______ _______ ______ ______
67,639 53,853 19,106 15,622
--------- --------- --------- ---------
_______ _______ ______ ______
Gross profit 57,199 50,199 16,997 13,362
Research and development
expenses 2,991 2,682 781 600
Selling and marketing expenses 8,218 5,123 2,687 1,294
General and administrative
expenses 22,629 17,659 6,758 4,958
Other expenses (income), net (49,138) 3 (49,140) 1
_______ ______ ______ ______
Operating income 72,499 24,732 55,911 6,509
Financing income, net 1,227 1,886 51 734
_______ ______ ______ ______
Income before taxes on income 73,726 26,618 55,962 7,243
Taxes on income (20,953) (6,581) (16,043) (1,878)
_______ ______ ______ ______
52,773 20,037 39,919 5,365
Share in losses of
affiliated companies , net (516) (213) (355) (12)
Minority interests in income
of subsidiaries (783) (565) (233) (162)
_______ ______ ______ ______
Net income 51,474 19,259 39,331 5,191
_______ ______ ______ ______
_______ ______ ______ ______
Earnings per share:
Basic 2.21 0.83 1.68 0.22
_______ ______ ______ ______
_______ ______ ______ ______
Diluted 2.20 0.82 1.68 0.22
_______ ______ ______ ______
_______ ______ ______ ______
Weighted average number of
shares outstanding (in
thousands):
Basic 23,315 23,194 23,408 23,322
_______ _______ ______ ______
_______ _______ ______ ______
Diluted 23,422 23,457 23,417 23,482
_______ _______ ______ ______
_______ _______ ______ ______
CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars
Year ended December Three months ended
31, December 31 ,
(in thousands) 2007 2006 2007 2006
Cash flows from operating
activities
Net income for the period 51,474 19,259 39,331 5,191
Adjustments to reconcile net
income to net cash from
operating activities:
Depreciation and amortization 8,080 4,205 3,185 1,283
Exchange differences on
principal of deposit and
loan, net (78) (50) (21) (13)
Gains in respect of
marketable securities (437) (200) (87) (300)
Gain from sale of
subsidiary, net (36,373) - (36,373) -
Increase (decrease) in
liability for employee
rights upon retirement 1,293 (187) 697 109
Share in losses of
affiliated companies, net 516 213 355 12
Deferred income taxes 964 644 (654) (242)
Capital gains on sale of
property and equipment, net (5) (35) 43 -
Minority interests in profits
of subsidiaries, net 785 565 235 162
Increase in accounts
receivable (8,529) (3,668) (4,874) (399)
increase in other current
assets 724 (1,630) 1,382 (1,393)
Decrease (increase) in
inventories and contracts
in process, net (3,645) (4,435) 1,259 (809)
Increase (decrease) in
accounts payable 1,797 2,686 1,965 (448)
Increase (decrease) in
deferred revenues (32) (1) (1,384) (472)
Increase in other current
liabilities (3,773) 888 (285) 2,484
______ ______ ______ ______
Net cash provided by
operating activities 12,761 18,254 4,774 5,165
--------- --------- ---------- ----------
Cash flows from investing
activities
Increase in funds in respect
of employee rights upon
retirement, net of
withdrawals (678) (412) (79) (71)
Capital expenditures (9,641) (12,106) (1,978) (2,026)
Proceeds from sale of
property and equipment 195 53 14 -
Acquisitions of subsidiary
(appendix A) (8,549) (2,243) - (2,243)
Purchase of intangible
assets and minority
interest (64) (58) (33) (7)
Investment in
affiliated company (1,447) - - -
Investment in marketable
securities (5,488) (55,863) (2,219) (3,506)
Sale of marketable
securities 13,982 40,848 2,618 5,693
Loan granted to affiliated
company - (138) - -
Acquisition of additional
interest in a subsidiary - (21) - -
Loan (560) - (560) -
Company no longer
consolidated
(Appendix B) (6,938) - (6,938) -
______ ______ ______ ______
Net cash used in
investment activities (19,188) (29,940) (9,175) (2,160)
--------- ---------- ---------- ----------
Cash flows from financing
activities
Short-term credit from
banking institutions, net 160 (237) (400) 7
Repayment of long-term
loans (3,500) (3,191) - (356)
Dividend paid (4,838) (3,705) - -
Proceeds from sale of
Company shares held by
a subsidiary - - - -
Proceeds from exercise of
options by employees 12 18 - -
Purchase of shares from
treasury (4,874) - (4,874) -
Dividend distribution to
minority interest of a
subsidiary - (172) - -
Purchase of Company's shares - (877) - -
______ ______ ______ ______
Net cash used in
financing activities (13,040) (8,160) (5,274) (349)
--------- --------- ---------- ----------
Effect of exchange rate
changes on cash and cash
equivalents 4,324 5,229 2,515 1,143
--------- -------- ---------- ----------
_____ _____ ______ ______
Net increase (decrease) in
cash and cash equivalents (15,143) (14,617) (7,160) 3,799
Balance of cash and cash
equivalents at beginning of
period 43,812 58,429 35,829 40,013
______ ______ _______ ______
Balance of cash and cash
equivalents at end of
period 28,669 43,812 28,669 43,812
______ ______ ______ ______
______ ______ ______ ______
CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.)
Appendix A - Acquisitions of subsidiaries
Year ended December 31,
(in thousands) 2007 2006
Working capital (excluding
cash equivalents ), net 1,280 2,015
Long-term deferred income taxes (1,583) 54
Funds in respect of employee
rights upon retirement 408 366
Property and equipment , net 397 231
Intangible assets, net 6,719 -
Goodwill 5,220 1,631
Liability for employee rights upon
retirement (729) (559)
Long term loan (3,163) -
Minority interest - (1,495)
--------- ---------
8,549 2,243
--------- ---------
Appendix B - company no longer consolidated
Working capital ( excluding cash and cash
equivalents ) , net 50,031
Inventory ( including contracts in process ) (4,408)
Funds in respect of employee rights upon
retirement (2,968)
Deposit (1,680)
Investment in affiliated company (144)
Deferred taxes (347)
Property and equipment , net (1,254)
Goodwill (479)
Liability for employee rights upon retirement 3,803
Minority interest 757
Gain from sale of subsidiary (36,373)
________
6,938
--------
Company Contact
Udi Mizrachi (udi_m@ituran.com)
VP Finance, Ituran
(Israel) +972-3-557-1348
International Investor Relations
Ehud Helft
Kenny Green
info@gkir.com
GK Investor Relations
(US) +1-646-201-9246
Investor Relations in Israel
Oded Ben Chorin (oded@km-ir.co.il)
KM Investor Relations
(Israel) +972-3-5167620
Company Contact: Udi Mizrachi (udi_m@ituran.com), VP Finance, Ituran, (Israel) +972-3-557-1348; International Investor Relations: Ehud Helft, Kenny Green, info@gkir.com, GK Investor Relations, (US) +1-646-201-9246; Investor Relations in Israel: Oded Ben Chorin (oded@km-ir.co.il), KM Investor Relations, (Israel) +972-3-5167620