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Published: 2020-11-18 06:30:19 ET
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EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1
ITURAN LOCATION AND CONTROL LTD. PRESENTS
RESULTS FOR THE THIRD QUARTER OF 2020

AZOUR, Israel – November 18, 2020 – Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the third quarter of 2020.

Highlights of the third quarter of 2020
•
Improved results versus the prior quarter, as the Company continues to successfully overcome some of the impacts of the  Covid-19 pandemic;
•
Revenues of $60.3 million, an increase of 13% sequentially and a decline of 13% year over year; in local currencies revenues from subscription fees were at a similar level to that of  the last year’s quarter;
•
EBITDA was $15.0 million; when excluding foreign exchange impacts, it would have been at a similar level to last year;
•
Net income was $9.3 million, an increase of 45% year over year;
•
Generated $13.6 million in quarterly operating cash flow; Ituran returns to a net cash position for the first time since its acquisition of RoadTrack in 2018;
•
Total subscribers reached 1,752,000 at the end of the quarter; net increase of 13,000 in after-market subscribers and net decrease of 12,000 in the OEM business.

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, “We are happy with the improvement in our results in the third quarter, despite an environment which still remains difficult in many of our geographies due to the ongoing pandemic. While revenues were still below those of the third quarter last year, we are pleased with the resumption in our sequential growth. Furthermore, we are happy to report that our after-market subscriber base resumed its growth again, showing growth of 13,000 subscriber this quarter. Finally, the steps we took earlier this year as the effects of the pandemic became apparent, enabled us to reach similar operating profit compared with last year when excluding foreign exchange impact.”

Mr. Sheratzky concluded, “Looking ahead, while the pandemic continues to have an impact, and the associated uncertainties are making it difficult to make predictions, we expect that the results of the fourth quarter will be similar to this quarter. Longer-term, I am confident that Ituran is very well positioned to emerge this period a stronger company with a platform for long-term sustainable and profitable growth.”

Third quarter 2020 Results

Revenues for the third quarter of 2020 were $60.3 million, a decrease of 13% compared with revenues of $69.0 million in the third quarter of 2019.

The decrease in the revenue level was due to the impact of the Covid-19 pandemic on new car sales, particularly in Brazil and other geographies in which Ituran operates. Furthermore, the higher average level of the US dollar exchange rate versus the Brazilian real during the quarter compared with the same period last year, reduced the overall revenue level in US dollar terms and had a negative impact on the revenue growth rate. In local currency terms, third quarter revenue declined by 6% year-over-year.

74% of revenues were from location-based service subscription fees and 26% were from product revenues.

Revenues from subscription fees were $44.5 million, a decrease of 12% over third quarter 2019 revenues. In local currency terms, subscription fees declined by 2% year-over-year.

The subscriber base amounted to 1,752,000 as of September 30, 2020. This represents an increase of 1,000 net over that of the end of the prior quarter. During the quarter, there was an increase of 13,000 in the aftermarket subscriber base and a decline of 12,000 in the OEM subscriber base.

Product revenues were $15.9 million, a decrease of 15% compared with that of the third quarter of 2019. The decline was primarily due to limited installations of Ituran’s products due to the Covid-19 pandemic shutdown implemented in many of the geographies in which Ituran operates, during most of the third quarter.

Gross profit for the quarter was $27.4 million (45.4% of revenues), a 14% decrease compared with gross profit of $31.9 million (46.2% of revenues) in the third quarter of 2019.

The gross margin in the quarter on subscription revenues was 54.9%, compared with 55.4% in the third quarter of 2019. The gross margin on products was 18.6%, compared with 21.5% in the third quarter of 2019.

Operating income for the quarter was $10.5 million (17.5% of revenues) compared with $11.9 million (17.2% of revenues) in the third quarter of last year. This is a decline of 11% year-over-year. In local currency terms, the operating income would have been similar to that of the third quarter 2019.

EBITDA for the quarter was $15.0 million (24.9% of revenues), a decrease of 14% compared with $17.5 million (25.4% of revenues) in the third quarter of last year. In local currency terms, the decline would have been 3% year over year.

Financial income for the quarter was $2.8 million compared with a financial expense of $0.8 million in the third quarter of last year. Held company, SaverOne, in Ituran has an 11% stake, became a public company listed on the Tel Aviv Stock Exchange in June 2020. As a result, the SaverOne holdings are measured by its quarter-end traded value and therefore any change in valuation between quarters are recorded as a financial gain or loss under the financial income line item in the profit and loss statement. In the quarter, SaverOne appreciated in value and Ituran recorded a financial income of $3.3 million from this holding.

Net income for the third quarter of 2020 was $9.3 million (15.4% of revenues) or earnings per share of $0.45, a 45% increase compared with $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.30 in the third quarter of last year. In local currency terms, the gain would have been 58% year over year.

Cash flow from operations for the third quarter of 2020 was $13.6 million.

As of September 30, 2020, the Company had cash, including marketable securities, of $61.9 million and debt of $56.8 million, amounting to a net cash of $5.1 million. This is compared with cash, including marketable securities, of $54.3 million and debt of $67.9 million, amounting to a net debt of $13.6 million, as of December 31, 2019.

Conference Call Information

The Company will also be hosting a conference call later today, November 18, 2020 at 9am Eastern Time.

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 a few 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: 1 866 860 9642
ISRAEL Dial-in Number: 03 918 0610
CANADA Dial-in Number: 1 866 485 2399
INTERNATIONAL Dial-in Number:  +972 3 918 0610
at:
9:00am Eastern Time, 6:00am Pacific Time, 4:00pm Israel Time

For those unable to listen to the live call, a replay of the call will be available from the day after the call in the investor relations section of Ituran’s website.

Certain statements in this press release are "forward-looking statements" within the meaning of the Securities Act of 1933, as amended.  These forward-looking statements include, but are not limited to, our plans, objectives, expectations and intentions and other statements contained in this report that are not historical facts as well as statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to significant uncertainties and changes in circumstances, many of which are beyond our control. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors, as well as factors related to the global COVID-19 pandemic.

About Ituran
Ituran is a leader in the emerging mobility technology field, providing value-added location-based services, including a full suite of services for the connected-car. Ituran offers Stolen Vehicle Recovery, fleet management as well as mobile asset location, management & control services for vehicles, cargo and personal security for the retail, insurance industry and car manufacturers. Ituran is the largest OEM telematics provider in Latin America. Its products and applications are used by customers in over 20 countries. Ituran is also the founder of the Tel-Aviv based DRIVE startup incubator to promote the development of smart mobility technology.

Ituran's subscriber base has been growing significantly since the Company's inception to approaching 2 million subscribers using its location based services with a market leading position in Israel and Latin America. Established in 1995, Ituran has approximately 3,000 employees worldwide, with offices in Israel, Brazil, Argentina, Mexico, Ecuador, Columbia, India, Canada and the United States.

For more information, please visit Ituran’s website, at: www.ituran.com

Company Contact
  
International Investor Relations
Udi Mizrahi
udi_m@ituran.com
Deputy CEO & VP Finance, Ituran
(Israel) +972 3 557 1348
  
Ehud Helft
ituran@gkir.com
GK  Investor & Public Relations
(US) +1 646 201 9246
 
 
 ITURAN LOCATION AND CONTROL LTD.
 
Condensed Consolidated Financial Statements
as of September 30, 2020
ITURAN LOCATION AND CONTROL LTD.
 
Condensed Consolidated Financial Statements
as of September 30, 2020

Table of Contents
 
 
Page
   
Condensed Consolidated Interim Financial Statements:
  
2-3
4
5
 
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ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

   
US dollars
  
   
September 30,
    
December 31,
  
(in thousands)
  
2020
    
2019
  
   
(unaudited)
        
             
Current assets
            
Cash and cash equivalents
    
61,836
      
53,964
  
Investments in marketable securities
    
100
      
358
  
Accounts receivable (net of allowance for doubtful accounts)
    
40,051
      
45,090
  
Other current assets
    
35,027
      
49,201
  
Inventories
    
23,391
      
25,537
  
     
160,405
      
174,150
  
                 
Non- Current investments and other assets
                
Investments in affiliated companies
    
890
      
1,666
  
Investments in other companies
    
8,136
      
3,260
  
Other non-current assets
    
2,789
      
3,365
  
Deferred income taxes
    
10,653
      
10,385
  
Funds in respect of employee rights upon retirement
    
12,320
      
11,476
  
     
34,788
      
30,152
  
                 
Property and equipment, net
    
36,641
      
48,866
  
                 
Operating lease right-of-use assets, net
    
10,301
      
12,626
  
                 
Intangible assets, net
    
19,593
      
23,355
  
                 
Goodwill
    
39,594
      
50,086
  
                 
Total assets
    
301,322
      
339,235
  

2
ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

   
US dollars
  
   
September 30,
    
December 31,
  
(in thousands)
  
2020
    
2019
  
   
(unaudited)
        
             
Current liabilities
            
Credit from banking institutions
    
20,380
      
18,110
  
Accounts payable
    
19,337
      
22,656
  
Deferred revenues
    
23,829
      
29,146
  
Obligation to purchase non-controlling interests
    
11,063
      
-
  
Other current liabilities
    
32,774
      
31,153
  
     
107,383
      
101,065
  
                 
Non- Current liabilities
                
Long term loan
    
36,378
      
49,803
  
Liability for employee rights upon retirement
    
18,431
      
17,000
  
Deferred income taxes
    
2,584
      
2,867
  
Deferred revenues
    
8,276
      
9,763
  
Others non-current liabilities
    
2,577
      
241
  
Obligation to purchase non-controlling interests
    
-
      
11,743
  
Operating lease liabilities, non-current
    
7,347
      
10,839
  
     
75,593
      
102,256
  
                 
Stockholders’ equity
    
116,292
      
129,330
  
Non-controlling interests
    
2,054
      
6,584
  
Total equity
    
118,346
      
135,914
  
                 
Total liabilities and equity
    
301,322
      
339,235
  

3

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

   
US dollars
    
US dollars
  
   
Nine month period
ended September 30,
    
Three month period
ended September 30,
  
(in thousands except per share data)
  
2020
    
2019
    
2020
    
2019
  
                         
Revenues:
                        
Telematics services
    
137,185
      
155,086
      
44,478
      
50,261
  
Telematics products
    
44,829
      
58,755
      
15,851
      
18,734
  
     
182,014
      
213,841
      
60,329
      
68,995
  
                                 
Cost of revenues:
                                
Telematics services
    
60,553
      
67,497
      
20,052
      
22,403
  
Telematics products
    
35,458
      
46,318
      
12,900
      
14,714
  
     
96,011
      
113,815
      
32,952
      
37,117
  
                                 
Gross profit
    
86,003
      
100,026
      
27,377
      
31,878
  
Research and development expenses
    
9,959
      
10,335
      
2,654
      
3,207
  
Selling and marketing expenses
    
8,428
      
9,593
      
2,529
      
3,290
  
General and administrative expenses
    
37,635
      
41,155
      
11,636
      
13,558
  
Impairment of goodwill
    
10,508
      
-
      
-
      
-
  
Impairment of intangible assets and other expenses (income), net
    
3,712
      
(72
)
    
12
      
(77
)
Operating income
    
15,761
      
39,015
      
10,546
      
11,900
  
Other income (expense), net
    
5
      
(37
)
    
2
      
11
  
Financing income (expense), net
    
3,651
      
(2,701
)
    
2,788
      
(847
)
Income before income tax
    
19,417
      
36,277
      
13,336
      
11,064
  
Income tax expenses
    
(8,595
)
    
(10,869
)
    
(3,778
)
    
(3,680
)
Share in gains (losses) of affiliated companies ,net
    
(858
)
    
(2,781
)
    
29
      
(810
)
Net income for the period
    
9,964
      
22,627
      
9,587
      
6,574
  
Less: Net income attributable to non-controlling interest
    
(663
)
    
(477
)
    
(320
)
    
(175
)
Net income attributable to the Company
    
9,301
      
22,150
      
9,267
      
6,399
  
                                 
Basic and diluted earnings per share attributable to Company’s stockholders
    
0.45
      
1.05
      
0.45
      
0.30
  
                                 
Basic and diluted weighted average number of shares outstanding (in thousands)
    
20,813
      
21,112
      
20,813
      
21,041
  


4

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

   
US dollars
    
US dollars
  
   
Nine month period
ended September 30,
    
Three month period
ended September 30,
  
(in thousands)
  
2020
    
2019
    
2020
    
2019
  
             
Cash flows from operating activities
                        
Net income for the period
    
9,964
      
22,627
      
9,587
      
6,574
  
Adjustments to reconcile net income to net cash from operating activities:
                                
Depreciation and amortization
    
14,310
      
17,210
      
4,484
      
5,631
  
Interest and exchange rate differences on loans
    
(423
)
    
23
      
119
      
(8
)
Losses (gain) in respect of trading marketable securities
    
(11
)
    
210
      
5
      
208
  
Gain in respect of investments in other companies
    
(4,948
)
    
-
      
(3,424
)
    
-
  
Increase in liability for employee rights upon retirement
    
1,350
      
1,294
      
455
      
115
  
Share in losses (gains) of affiliated companies, net
    
858
      
2,781
      
(29
)
    
810
  
Deferred income taxes
    
(1,244
)
    
252
      
(875
)
    
269
  
Capital loss on sale of property and equipment, net
    
118
      
47
      
31
      
33
  
Decrease (increase) in accounts receivable
    
1,505
      
6,526
      
(1,982
)
    
1,968
  
Decrease in other current assets
    
4,647
      
1,115
      
1,698
      
(1,199
)
Decrease in inventories
    
1,825
      
3,618
      
1,596
      
1,613
  
Increase (decrease) in accounts payable
    
198
      
(3,559
)
    
2,443
      
(3,212
)
Decrease in deferred revenues
    
(5,521
)
    
(7,090
)
    
(1,811
)
    
(947
)
Increase (decrease) in other current and non-current liabilities
    
7,453
      
(3,341
)
    
1,275
      
(663
)
Impairment of goodwill
    
10,508
      
-
      
-
      
-
  
Impairment of other intangible assets
    
3,661
      
-
      
-
      
-
  
Increase (decrease) in obligation for purchase non-controlling interests
    
(680
)
    
967
      
18
      
265
  
Net cash provided by operating activities
    
43,570
      
42,680
      
13,590
      
11,457
  
                                 
Cash flows from investment activities
                                
Increase in funds in respect of employee rights upon retirement, net of withdrawals
    
(790
)
    
(1,117
)
    
(427
)
    
(161
)
Capital expenditures
    
(7,506
)
    
(13,658
)
    
(1,927
)
    
(3,283
)
Investments in affiliated and other companies
    
(545
)
    
(184
)
    
(53
)
    
-
  
Sale of marketable securities, net
    
269
      
1,454
      
269
      
-
  
Proceeds from (Investments in) deposits
    
(43
)
    
(83
)
    
(8
)
    
69
  
Proceeds from sale of property and equipment
    
223
      
203
      
27
      
168
  
Net cash used in investment activities
    
(8,392
)
    
(13,385
)
    
(2,119
)
    
(3,207
)
                                 
Cash flows from financing activities
                                
Short term credit from banking institutions, net
    
2,614
      
387
      
(46
)
    
998
  
Repayment of long term loan
    
(13,353
)
    
(4,436
)
    
(4,551
)
    
(4,436
)
Purchase of shares from minority shareholders
    
(750
)
    
-
      
-
      
-
  
Dividend paid
    
(9,967
)
    
(14,798
)
    
-
      
(5,050
)
Dividend paid to non-controlling interest
    
(1,461
)
    
(1,557
)
    
(1,461
)
    
(748
)
Acquisition of company shares purchased by a wholly owned subsidiary
    
-
      
(3,501
)
    
-
      
(3,501
)
Net cash used in financing activities
    
(22,917
)
    
(23,905
)
    
(6,058
)
    
(12,737
)
Effect of exchange rate changes on cash and cash equivalents
    
(4,389
)
    
(534
)
    
(359
)
    
(1,650
)
                                 
Net increase (decrease) in cash and cash equivalents
    
7,872
      
4,856
      
5,054
      
(6,137
)
Balance of cash and cash equivalents at beginning of the period
    
53,964
      
51,398
      
56,782
      
62,391
  
Balance of cash and cash equivalents at end of the period
    
61,836
      
56,254
      
61,836
      
56,254
  

5