PR Newswire | Nov 16, 2021 06:30AM EST

11/16 05:30 CST

Ituran Location and Control Ltd. Presents Results for the Third Quarter of 2021 AZOUR, Israel, Nov. 16, 2021

AZOUR, Israel, Nov. 16, 2021 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the third quarter of 2021.

Highlights of the third quarter of 2021

* 25,000 net subscriber growth: net increase in aftermarket of 21,000 and net increase in OEM of 4,000; * Revenues of $65.7 million, an increase of 9% year-over-year; * Net income was $7.3 million, compared with $9.3 million last year; * Adjusted net income (excluding the non-cash financial impact related to SaverOne's change in public market value) was $9.6 million versus $6.0 million last year; * EBITDA of $18.5 million, up 23% year-over-year; * Generated $11.5 million in quarterly operating cash flow; * Declared dividend of $3 million; Continued share buy-back program totaling $1.9 million;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "We are very pleased with our results, especially with the continued strong growth in our after-market subscriber base and the return to growth in the OEM base. Furthermore, the strong operating leverage in our business model enabled us to bring a 9% increase in revenue to a 23% increase in EBITDA."

Continued Mr. Sheratzky, "As the global recovery continues, we see a solid recovery in car sales in our markets which is leading to increased demand for our services. In particular, the Corona slowdown created many new opportunities for us, one of which we identified was the second-hand car market. We are providing our services to some key financing providers in Latin America, allowing them to reduce the loan risk by tracking the car and the driver behaviour. We see this as a growth engine that could significantly accelerate our subscriber growth in the second half of 2022 and beyond. More generally, we continue to focus on enhancing our growth by adding additional offerings and services, in particular, by taking advantage of the synergies across all our geographies. Looking ahead, our recent above-average subscriber-base growth throughout 2021 positions us exceptionally well to maintain our profitable growth in 2022 and beyond."

Third quarter 2021 Results

Revenues for the third quarter of 2021 were $65.7 million, an increase of 9% compared with revenues of $60.3 million in the third quarter of 2020.

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

Revenues from subscription fees were $48.3 million, an increase of 9% over third quarter 2020 revenues.

The subscriber base amounted to 1,837,000 as of September 30, 2021. This represents an increase of 25,000 net over that of the end of the prior quarter, and an increase of 85,000 since the end of the third quarter of last year. During the quarter, there was both an increase of 21,000 in the aftermarket subscriber base and an increase of 4,000 in the OEM subscriber base.

Product revenues were $17.4 million, an increase of 10% compared with that of the third quarter of 2020.

Gross profit for the quarter was $31.9 million (48.5% of revenues), a 16% increase compared with gross profit of $27.4 million (45.4% of revenues) in the third quarter of 2020.

The gross margin in the quarter on subscription revenues was 55.8%, compared with 54.9% in the third quarter of 2020. The gross margin on products was 28.3% in the quarter, compared with 18.6% in the third quarter of 2020.

Operating income for the quarter was $13.9 million (21.1% of revenues), an increase of 32% compared with an operating income of $10.5 million (17.5% of revenues) in the third quarter of last year.

EBITDA for the quarter was $18.5 million (28.1% of revenues), an increase of 23% compared with an EBITDA of $15.0 million (24.9% of revenues) in the third quarter of last year.

Financial expensefor the quarter was $2.7 million compared with a financial income of $2.8 million income in the third quarter of last year. The financial expenses were impacted significantly by the change in market capitalisation on the Tel Aviv Stock Exchange of Saver-One, one of Ituran's early-stage mobility investments.

Net income for the third quarter of 2021 was $7.3 million (11.1% of revenues) or diluted earnings per share of $0.35, compared with $9.3 million (15.4% of revenues) or diluted earnings per share of $0.45.

Adjusted net income for the third quarter of 2021, which excludes the non-cash financial impact related to Saver One was $9.6 million (or 14.6% of revenues) or diluted earnings per share of $0.46 compared with $6.0 million (or 10.0% of revenues) or diluted earnings per share of $0.29.

Cash flow from operations for the third quarter of 2021 was $11.5 million.

As of September 30, 2021, the Company had cash, including marketable securities, of $67.0 million and debt of $34.6 million, amounting to a net cash of $32.4 million. This is compared with cash, including marketable securities, of $78.8 million and debt of $54.5 million, amounting to a net cash of $24.3 million, as of December 31, 2020.

Dividend

For the third quarter of 2021, a dividend of $3.0 million was declared. This is in line with the Board's current policy of issuing at least $3 million on a quarterly basis.

Buy Back

On August 4, 2021, Ituran announced that it Board of Directors made the decision to continue executing on the $19 million remainder of a $25 million share buy-back program that was first announced in 2019. The buy back program commenced on August 25, 2021. The share repurchases, if any, are funded by available cash and repurchases of Ituran's ordinary shares under SEC Rule10b-18 terms.

Under the renewed program, Ituran purchased 71,000 shares for a total of $1.9 million until the end of September 30, 2021.

Conference Call Information

The Company will also be hosting a conference call later today, November 16, 2021 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 9642ISRAEL Dial-inNumber: 03 918 0609INTERNATIONAL Dial-inNumber: +972 3 918 0609at: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 Ehud Helft

udi_m@ituran.com ituran@gkir.com

Deputy CEO & VP Finance, Ituran GK Investor & Public Relations

(Israel) +972 3 557 1348 (US) +1 212 378 8040

CONDENSED CONSOLIDATED BALANCE SHEETS

US dollars

September December 30, 31,

(in thousands) 2021 2020

(unaudited)

Current assets

Cash and cash equivalents 62,947 72,183

Investments in marketable securities 4,015 6,663

Accounts receivable (net of allowance for doubtful 45,972 39,343accounts)

Other current assets 35,668 38,624

Inventories 26,334 22,622

174,936 179,435

Non- Current investments and other assets

Investments in affiliated companies 1,043 908

Investments in other companies 1,543 1,263

Other non-current assets 3,353 2,953

Deferred income taxes 12,135 11,910

Funds in respect of employee rights upon retirement 15,374 13,558

33,448 30,592

Property and equipment, net 34,739 37,653

Operating lease right-of-use assets, net 3,476 5,548

Intangible assets, net 16,811 19,382

Goodwill 39,844 39,862



Total assets 303,254 312,472

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

US dollars

September 30, December 31,

(in thousands) 2021 2020

(unaudited)

Current liabilities

Credit from banking institutions 17,659 20,388

Accounts payable 21,441 19,716

Deferred revenues 24,640 24,351

Obligation to purchase non-controlling interests 11,000 10,595

Other current liabilities 40,740 37,677

115,480 112,727

Non- Current liabilities

Long term loan 16,911 34,068

Liability for employee rights upon retirement 21,221 19,715

Deferred income taxes 2,091 2,494

Deferred revenues 8,603 8,536

Others non-current liabilities 2,355 2,341

Operating lease liabilities, non-current 1,169 2,692

52,350 69,846

Stockholders' equity 130,837 127,192

Non-controlling interests 4,587 2,707

Total equity 135,424 129,899

Total liabilities and equity 303,254 312,472

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

US dollars US dollars

Nine month Three month period period

ended September ended September 30, 30,

(in thousands except per share data) 2021 2020 2021 2020

(unaudited) (unaudited)

Revenues:

Telematics services 140,873 137,185 48,311 44,478

Telematics products 59,655 44,829 17,390 15,851

200,528 182,014 65,701 60,329

Cost of revenues:

Telematics services 63,354 60,553 21,364 20,052

Telematics products 44,118 35,458 12,466 12,900

107,472 96,011 33,830 32,952

Gross profit 93,056 86,003 31,871 27,377

Research and development expenses 10,168 9,959 3,327 2,654

Selling and marketing expenses 8,877 8,428 2,997 2,529

General and administrative expenses 33,725 37,635 11,720 11,636

Impairment of goodwill - 10,508 - -

Impairment of intangible assets and other (152) 3,712 (66) 12expenses (income), net

Operating income 40,438 15,761 13,893 10,546

Other income (expense), net (3) 5 - 2

Financing income (expense), net (4,716) 3,651 (2,734) 2,788

Income before income tax 35,719 19,417 11,159 13,336

Income tax expenses (9,055) (8,595) (3,337) (3,778)

Share in gains (losses) of affiliated companies (39) (858) (18) 29,net

Net income for the period 26,625 9,964 7,804 9,587

Less: Net income attributable to (1,944) (663) (492) (320)non-controlling interest

Net income attributable to the Company 24,681 9,301 7,312 9,267

Basic and diluted earnings per share 1.19 0.45 0.35 0.45attributable to Company's stockholders

Basic and diluted weighted average number of 20,809 20,813 20,799 20,813shares outstanding (in thousands)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

US dollars US dollars

Nine month period Three month period

ended September 30 ended September 30, ,

(in thousands) 2021 2020 2021 2020

(unaudited) (unaudited)

Cash flows from operating activities

Net income for the period 26,625 9,964 7,804 9,587

Adjustments to reconcile net income tonet cash from operating activities:

Depreciation and amortization 13,329 14,310 4,594 4,484

Interest and exchange rate differences on - (423) (4) 119loans

Losses (gain) in respect of trading 2,609 (11) 2,244 5marketable securities

Gain in respect of investments in other - (4,948) - (3,424)companies

Increase in liability for employee rights 1,568 1,350 390 455upon retirement

Share in losses (gains) of affiliated 39 858 18 (29)companies, net

Deferred income taxes (794) (1,244) 88 (875)

Capital loss (gain) on sale of property (91) 118 (38) 31and equipment, net

Decrease (increase) in accounts (6,991) 1,505 (458) (1,982)receivable

Decrease in other current assets 3,008 4,647 1,976 1,698

Decrease (increase) in inventories (4,088) 1,825 (5,317) 1,596

Increase in accounts payable 1,825 198 817 2,443

Decrease (increase) in deferred revenues 499 (5,521) (1,364) (1,811)

Increase in other current and non-current 1,524 7,453 781 1,275liabilities

Impairment of goodwill - 10,508 - -

Impairment of other intangible assets - 3,661 - -

Increase (decrease) in obligation for 686 (680) - 18purchase non-controlling interests

Net cash provided by operating activities 39,748 43,570 11,531 13,590

Cash flows from investment activities

Increase in funds in respect of employeerights upon retirement, net of (1,857) (790) (353) (427)withdrawals

Capital expenditures (11,246) (7,506) (4,427) (1,927)

Investments in affiliated and other (420) (545) - (53)companies

Sale of marketable securities, net - 269 - 269

Proceeds from (Investments in) deposits (116) (43) (37) (8)

Proceeds from sale of property and 697 223 69 27equipment

Net cash used in investment activities (12,942) (8,392) (4,748) (2,119)

Cash flows from financing activities

Short term credit from banking (149) 2,614 (66) (46)institutions, net

Repayment of long term loan (19,173) (13,353) (4,191) (4,551)

Purchase of shares from minority - (750) - -shareholders

Dividend paid (12,904) (9,967) (2,804) -

Dividend paid to non-controlling interest (424) (1,461) (39) (1,461)

Acquisition of company shares purchased (1,870) - (1,870) -by a wholly owned subsidiary

Net cash used in financing activities (34,520) (22,917) (8,970) (6,058)

Effect of exchange rate changes on cash (1,522) (4,389) (442) (359)and cash equivalents

Net increase (decrease) in cash and cash (9,236) 7,872 (2,629) 5,054equivalents

Balance of cash and cash equivalents at 72,183 53,964 65,576 56,782beginning of the period

Balance of cash and cash equivalents at 62,947 61,836 62,947 61,836end of the period

In August 2021, the Company declared a dividend in an amount of US$ 3 million.The dividend was paid in October 2021

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SOURCE Ituran Location and Control Ltd.