EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1

Exhibit 99.1
 
 
 
 
ITURAN LOCATION AND CONTROL LTD. AND ITS SUBSIDIARIES

ITURAN LOCATION AND CONTROL LTD. PRESENTS
RESULTS FOR THE THIRD QUARTER 2016

Record Revenues of $52.8m in the quarter; Record net income of $8.2m

AZOUR, Israel – November 15, 2016 – Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the third quarter ended September 30, 2016.

Highlights of the Third Quarter
·
Net subscribers adds in the quarter amounting to 23,000, reaching 1,035,000 subscribers;
·
Revenue of $52.8 million, up 20% year-over-year;
·
Gross margin of 50.0% and operating margin of 21.9%; excluding a one-time expense, operating margin was 24.2%;
·
Net income of $8.2 million, up 32% year-over-year;
·
Generated $12.0  million in operating cash flow;
·
Dividend of $4.1 million declared for the quarter;

Third Quarter 2016 Results
Revenues for the third quarter of 2016 were $52.8 million, representing an increase of 20% from revenues of $43.8 million in the third quarter of 2015. 70% of revenues were from location based service subscription fees and 30% were from product revenues.

Revenues from subscription fees increased by 18% over the same period last year. The growth was driven primarily due to the increase in the subscriber base, which expanded from 915,000 as of September 30, 2015, to 1,035,000 as of September 30, 2016.

Product revenues increased by 27% compared with the same period last year. The main contribution to growth was due to sales in Israel.

Gross profit for the third quarter of 2016 was $26.4 million (50.0% of revenues), an increase of 20% compared with $22.0 million (50.2% of revenues) in the third quarter of 2015. The gross margin in the quarter on subscription fees was 65.7% compared with 62.6% in the same period last year. The gross margin in the quarter on products was 12.7% compared with 18.5% in the same period last year.

Other Expenses were $1.0 million which included a one-time $1.2 million expense related to the repurchase, by the Company, of a former employee’s options in Ituran Brazil.

Operating profit for the third quarter of 2016 was $11.6 million (21.9% of revenues), an increase of 18% compared with an operating profit of $9.8 million (22.4% of revenues) in the third quarter of 2015. Excluding the above-mentioned one-time expense, the operating profit would have been $12.8 million (24.2% of revenues), representing an increase of 30%.

During the quarter, share in affiliates, net was an income of $753 thousand versus a loss of $638 thousand in the same quarter of last year. The change was due to a capital gain of $1.2 million, resulting from a dilutive event at an affiliate.

EBITDA for the quarter was $14.6 million (27.7% of revenues), an increase of 17% compared to an EBITDA of $12.5 million (28.6% of revenues) in the third quarter of 2015. Excluding the above-mentioned one-time expense, EBITDA for the quarter would have been $15.8 million (29.9% of revenues), representing an increase of 26%.

 
ITURAN LOCATION AND CONTROL LTD. AND ITS SUBSIDIARIES
 
Net profit was $8.2 million in the third quarter of 2016 (15.4% of revenues) or fully diluted EPS of $0.39, an increase of 32% compared with a net profit of $6.2 million (14.1% of revenues) or fully diluted EPS of $0.29 in the third quarter of 2015.

Cash flow from operations for the quarter was $12.0 million.

As of September 30, 2016, the Company had net cash, including marketable securities, of $26.0 million or $1.24  per share. This is compared with $25.8 million or $1.23 per share as at June 30, 2016.

Dividend
For the third quarter of 2016, a dividend of $4.1 million was declared in line with the Company’s stated policy of issuing at least 50% of net profits in a dividend, on a quarterly basis.

Eyal Sheratzky, Co-CEO of Ituran said, “We are pleased with our results and our strong performance to date in 2016. As our subscriber base continues to grow, having surpassed 1 million subscribers last quarter, we increasingly enjoy the operating leverage inherent in our business, and our subscriber gross margin has now surpassed 65% throughout 2016. I look forward to continued growth as we move into 2017 and beyond.”
 
Conference Call Information

The Company will also be hosting a conference call later today, November 15, 2016 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 0687
CANADA Dial-in Number: 1 888 604 5839
INTERNATIONAL Dial-in Number:  +972 3 918 0687
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.

2
ITURAN LOCATION AND CONTROL LTD. AND ITS SUBSIDIARIES
 
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.

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 985,000 subscribers distributed globally. Established in 1995, Ituran has over 1,500 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.

Company Contact   International Investor Relations
Udi Mizrahi
udi_m@ituran.com
VP Finance, Ituran
(Israel) +972 3 557 1348
  
Ehud Helft
ituran@gkir.com
GK  Investor Relations
(US) +1 646 201 9246
 

3
 
ITURAN LOCATION AND CONTROL LTD.
 
Condensed Consolidated Interim Financial Statements
as of September 30, 2016
 
ITURAN LOCATION AND CONTROL LTD.
 
Condensed Consolidated Interim Financial Statements
as of September 30, 2016
 
Table of Contents
 
 
Page
   
Condensed Consolidated Interim Financial Statements:
  
F - 2 - F - 3
F - 4
F - 5
 

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS


   
US dollars
  
   
September 30,
    
December 31,
  
(in thousands)
  
2016
    
2015
  
Current assets            
Cash and cash equivalents
    
25,632
      
27,016
  
Investments in marketable securities
    
390
      
2,035
  
Accounts receivable (net of allowance for doubtful accounts)
    
35,862
      
27,436
  
Other current assets
    
34,367
      
22,437
  
Inventories
    
13,953
      
12,781
  
     
110,204
      
91,705
  
                 
Long-term investments and other assets
                
Investments in affiliated companies
    
11,661
      
4,705
  
Investments in other company
    
87
      
78
  
Other non-current assets
    
1,350
      
1,166
  
Deferred income taxes
    
2,332
      
2,279
  
Funds in respect of employee rights upon retirement
    
8,006
      
7,174
  
     
23,436
      
15,402
  
                 
Property and equipment, net
    
34,505
      
31,514
  
                 
Intangible assets, net
    
25
      
26
  
                 
Goodwill
    
3,484
      
3,356
  
                 
Total assets
    
171,654
      
142,003
  

F - 2
ITURAN LOCATION AND CONTROL LTD.
 
CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)
 
   
US dollars
  
   
September 30,
    
December 31,
  
(in thousands)
  
2016
    
2015
  
             
Current liabilities
            
Credit from banking institutions
    
3
      
155
  
Accounts payable
    
15,589
      
10,466
  
Deferred revenues
    
11,218
      
9,210
  
Other current liabilities
    
27,247
      
21,750
  
     
54,057
      
41,581
  
                 
Long-term liabilities
                
Liability for employee rights upon retirement
    
11,968
      
10,637
  
Provision for contingencies
    
443
      
622
  
Deferred revenues
    
977
      
973
  
Others non-current
    
555
      
369
  
     
13,943
      
12,601
  
                 
Stockholders’ equity
    
98,305
      
83,698
  
Non-controlling interests
    
5,349
      
4,123
  
Total equity
    
103,654
      
87,821
  
                 
Total liabilities and equity
    
171,654
      
142,003
  


F - 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)
  
2016
    
2015
    
2016
    
2015
  
                         
Revenues:
                        
Location-based services
    
104,673
      
95,595
      
37,166
      
31,502
  
Wireless communications products
    
44,540
      
36,242
      
15,594
      
12,321
  
     
149,213
      
131,837
      
52,760
      
43,823
  
                                 
Cost of revenues:
                                
Location-based services
    
36,066
      
34,926
      
12,739
      
11,780
  
Wireless communications products
    
37,488
      
29,308
      
13,617
      
10,039
  
     
73,554
      
64,234
      
26,356
      
21,819
  
                                 
Gross profit
    
75,659
      
67,603
      
26,404
      
22,004
  
Research and development expenses
    
2,082
      
1,699
      
681
      
614
  
Selling and marketing expenses
    
7,471
      
6,912
      
2,537
      
2,287
  
General and administrative expenses
    
30,113
      
28,675
      
10,588
      
9,310
  
Other income, net
    
973
      
(17
)
    
1,039
      
(3
)
Operating income
    
35,020
      
30,334
      
11,559
      
9,796
  
Financing income (expenses), net
    
1,246
      
774
      
408
      
566
  
Income before income tax
    
36,266
      
31,108
      
11,967
      
10,362
  
Income tax expenses
    
(10,945
)
    
(9,657
)
    
(3,893
)
    
(3,218
)
Share in gains (losses) of affiliated companies ,net
    
(554
)
    
(1,482
)
    
753
      
(638
)
Net income for the period
    
24,767
      
19,969
      
8,827
      
6,506
  
Less: Net income attributable to non-controlling interest
    
(1,885
)
    
(1,180
)
    
(677
)
    
(346
)
Net income attributable to the Company
    
22,882
      
18,789
      
8,150
      
6,160
  
                                 
Basic and diluted earnings per share attributable to Company’s stockholders
    
1.09
      
0.90
      
0.39
      
0.29
  
                                 
Basic and diluted weighted average number of shares outstanding (in thousands)
    
20,968
      
20,968
      
20,968
      
20,968
  


F - 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)
  
2016
    
2015
    
2016
    
2015
  
             
Cash flows from operating activities
                        
Net income for the period
    
24,767
      
19,969
      
8,827
      
6,506
  
                                 
Adjustments to reconcile net income to net cash from operating activities:
                                
Depreciation amortization and impairment of goodwill
    
8,570
      
8,122
      
3,063
      
2,739
  
Losses (gain) in respect of trading marketable securities
    
(95
)
    
(428
)
    
(27
)
    
(224
)
Increase (decrease) in liability for employee rights upon retirement
    
960
      
502
      
247
      
212
  
Share in losses (gains) of affiliated companies, net
    
554
      
1,482
      
(753
)
    
638
  
Deferred income taxes
    
(836
)
    
940
      
908
      
1,286
  
Capital gains on sale of property and equipment, net
    
(18
)
    
(10
)
    
(1
)
    
(3
)
Decrease (increase) in accounts receivable
    
(7,470
)
    
(84
)
    
(392
)
    
783
  
Decrease (increase) in other current assets
    
(9,080
)
    
(85
)
    
(3,771
)
    
586
  
Decrease (increase) in inventories
    
(726
)
    
251
      
(578
)
    
(137
)
Increase (decrease) in accounts payable
    
4,836
      
(1,092
)
    
1,930
      
(1,946
)
Increase (decrease) in deferred revenues
    
1,657
      
(864
)
    
(725
)
    
(992
)
Increase (decrease) in other current liabilities
    
3,988
      
(462
)
    
3,313
      
(612
)
Net cash provided by operating activities
    
27,107
      
28,241
      
12,041
      
8,836
  
                                 
Cash flows from investment activities
                                
Increase in funds in respect of employee rights upon retirement, net of withdrawals
    
(582
)
    
(575
)
    
(335
)
    
(88
)
Capital expenditures
    
(9,049
)
    
(15,132
)
    
(4,149
)
    
(2,163
)
Investments in affiliated companies
    
(7,181
)
    
(4,639
)
    
(3,257
)
    
(2,856
)
Investment in marketable securities
    
(2,076
)
    
-
      
(1,732
)
    
-
  
Sale of marketable securities
    
3,615
      
-
      
1,757
      
-
  
Deposit
    
16
      
(321
)
    
(36
)
    
(82
)
Proceeds from sale of property and equipment
    
133
      
683
      
34
      
(4
)
Net cash used in investment activities
    
(15,124
)
    
(19,984
)
    
(7,718
)
    
(5,193
)
                                 
Cash flows from financing activities
                                
Short term credit from banking institutions, net
    
(152
)
    
447
      
(6
)
    
441
  
Dividend paid
    
(13,314
)
    
(14,729
)
    
(3,565
)
    
(3,386
)
Dividend paid to non-controlling interest
    
(940
)
    
(1,224
)
    
(323
)
    
(688
)
Net cash provided by (used in) financing activities
    
(14,406
)
    
(15,506
)
    
(3,894
)
    
(3,633
)
                                 
Effect of exchange rate changes on cash and cash equivalents
    
1,039
      
(1,735
)
    
(245
)
    
(1,564
)
Net increase (decrease)  in cash and cash equivalents
    
(1,384
)
    
(8,984
)
    
184
      
(1,554
)
Balance of cash and cash equivalents at beginning of the period
    
27,016
      
38,418
      
25,448
      
30,988
  
Balance of cash and cash equivalents at end of the period
    
25,632
      
29,434
      
25,632
      
29,434
  
 
Supplementary information on financing and investing activities not involving cash flows:
In August 2016, the Company declared a dividend in an amount of US$ 3.8 million. The dividend was paid in October 2016.
 
 
F - 5