EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1

ITURAN LOCATION AND CONTROL LTD. PRESENTS
RESULTS FOR THE SECOND QUARTER OF 2019

Revenue of $71.2 million, Net Profit of $7.7 million & EBITDA of $19.4 million;

AZOUR, Israel – August 28, 2019 – Ituran Location and Control Ltd. (NASDAQ: ITRN, TASE: ITRN), today announced its consolidated financial results for the second quarter ended June 30, 2019.

Highlights of the second quarter of 2019
•
Non-GAAP revenue of $72.2 million, up 25% year-over-year;
•
Adjusted EBITDA of $20.6 million (28.5% of revenues), up 15% year-over-year
•
Generated $16.3 million in quarterly operating cash flow;
•
Dividend of $5 million declared for the quarter;
•
Ituran added 21,000 net after-market subscribers;
•
Second insurance company signed for Ituran’s UBI (usage based insurance) in Israel;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, “We are very pleased that our aftermarket subscriber quarterly growth rate has jumped back above the 20,000 range for the first time in five quarters. This is a sign that our aftermarket business is now back to its strong performance trend. As this is the more profitable part of our business, we believe our stronger aftermarket subscriber growth will translate into improved operating results in the coming quarters, and more prominently in 2020.”

Continued Mr. Sheratzky, “We are pleased with the progress and momentum that our UBI offering is making. We recently signed our second customer in Israel, Shlomo Insurance, and we expect to bring additional customers in the coming months. This offering has significant potential for Ituran and represents an additional growth engine for us.”

Concluded Mr. Sheratzky, “We are working hard at integrating and extracting synergies from the new geographies we have penetrated through Road Track. We see strong cross selling opportunities and we expect this to positively impact our results in the future.”

The results below also include consolidated non-GAAP financial results of Ituran, which exclude revenues and costs related to the purchase price allocation. For further details with regard to the reconciliation between the non-GAAP and GAAP results please see the financial tables with the press release.


Second Quarter 2019 Results

Revenues for the second quarter of 2019 were $71.2 million. Non-GAAP revenues for the quarter were $72.2 million representing an increase of 25% compared with revenues of $57.7 million in the second quarter of 2018.

The significantly higher average level of the US dollar exchange rate versus the Brazilian real and the Argentinean peso, during the quarter versus the same period last year reduced the overall revenue level in US dollar terms and had a negative impact on the reported year-over-year revenue growth rate. In local currency terms, second quarter non-GAAP revenue grew 33% year over year.

73% of revenues were from location based service subscription fees and 27% were from product revenues.

Non-GAAP revenues from subscription fees were $52.7 million, representing an increase of 27% over the same period last year. In local currency terms, subscription fees grew 37% over the same period last year. The subscriber base amounted to 1,758,000 as of June 30, 2019. Ituran added 21,000 net after-market subscribers during the quarter.

Product revenues were $19.6 million, representing an increase of 21% compared with the same period last year.

Gross profit for the quarter was $33.5 million (47.0% of revenues). Non-GAAP gross profit for the quarter was $34.5 million (47.8% of revenues). This represents an increase of 19% compared with gross profit of $28.9 million (50.1% of revenues) in the second quarter of 2018.

The non-GAAP gross margin in the quarter on subscription fees was 57.2% compared with 63.9% in the same period last year. The lower margin was due to the lower average gross margin on the recently acquired subscribers.

The non-GAAP gross margin in the quarter on products was 22.3% compared with 14.8% in the same period last year. The higher gross margin in the current quarter was due to the product mix sold during the quarter.

Operating profit for the quarter was $13.6 million (19.1% of revenues). Non-GAAP operating profit for the quarter was $15.5 million (21.5% of revenues) which represents an increase of 5%, compared with operating profit of $14.8 million (25.6% of revenues) in the second quarter of 2018. In local currency terms, the year-over-year increase in non-GAAP operating profit was 13%.

Adjusted EBITDA for the quarter was $20.6 million (28.5% of revenues), an increase of 16% compared to $17.8 million (30.9% of revenues) in the second quarter of 2018. In local currency terms, the increase in adjusted EBITDA was 24% year-over-year.

Net income in the second quarter of 2019 was $7.7 million (10.8% of revenues) or fully diluted earnings per share of $0.37. Net income on a non-GAAP basis in the second quarter of 2019 was $9.6 million (13.3% of revenues) or fully diluted earnings per share of $0.46. This represents a decline of 20% compared with a net income of $12.0 million (20.8% of revenues) or fully diluted earnings per share of $0.57 in the second quarter of 2018. In local currency terms the year-over-year decrease in non-GAAP net income was 13%.

The decrease in net income was primarily due to the increase in the finance expenses, primarily related to the acquisition of RoadTrack, and due to increased losses in affiliated company, Bringg, which is one of Ituran’s early-stage company investments.

Cash flow from operations for the quarter was $16.3 million.

As of June 30, 2019, the Company had cash, including marketable securities, of $62.8 million and debt of $76.2 million, amounting to a net debt of $13.4 million or $0.64 per share. This is compared with cash, including marketable securities, of $53.3 million and debt of $73.2 million, amounting to a net debt of $19.9 million, or $0.93 per share, as of December 31, 2018.

Dividend
For the second quarter of 2019, a dividend of $5.0 million was declared in line with the Company’s stated current policy of issuing at least $5 million on a quarterly basis.

Share Buy Back
On May 21, 2019, the board of directors approved a share buyback program, which Ituran has commenced. Under the program, the Company is able to repurchase Ituran shares in an amount up to $25 million by December 31, 2020.

Conference Call Information

The Company will also be hosting a conference call later today, August 28, 2019 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: 1 888 668 9141
ISRAEL Dial-in Number: 03 918 0609
CANADA Dial-in Number: 1 888 604 5839
INTERNATIONAL Dial-in Number:  +972 3 918 0609
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 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.

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 over 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 June 30, 2019

ITURAN LOCATION AND CONTROL LTD.
 
Condensed Consolidated Financial Statements
as of June 30, 2019
Table of Contents
 
 
Page
   
Condensed Consolidated Interim Financial Statements:
  
   
2 - 3
   
4
   
5 - 6
   
7
 
ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

   
US dollars
  
   
June 30,
    
Decmber 31,
  
(in thousands)
  
2019
    
2018
  
   
(unaudited)
        
             
Current assets
            
Cash and cash equivalents
    
62,391
      
51,398
  
Investments in marketable securities
    
441
      
1,897
  
Accounts receivable (net of allowance for doubtful accounts)
    
51,205
      
54,261
  
Other current assets
    
49,150
      
52,983
  
Inventories
    
26,980
      
28,367
  
     
190,167
      
188,906
  
                 
Non- Current investments and other assets
                
Investments in affiliated companies
    
2,998
      
4,872
  
Investments in other companies
    
3,014
      
2,772
  
Other non-current assets
    
3,858
      
3,222
  
Deferred income taxes
    
11,323
      
12,127
  
Funds in respect of employee rights upon retirement
    
10,888
      
9,497
  
     
32,081
      
32,490
  
                 
Property and equipment, net
    
50,804
      
50,460
  
                 
Operating lease right-of-use assets, net
    
6,962
      
-
  
                 
Intangible assets, net
    
38,582
      
39,040
  
                 
Goodwill
    
63,074
      
62,896
  
                 
Total assets
    
381,670
      
373,792
  
- 2 -
ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

   
US dollars
  
   
June 30,
    
December 31
  
(in thousands)
  
2019
    
2018
  
   
(unaudited)
        
Current liabilities
            
Credit from banking institutions
    
19,200
      
10,559
  
Accounts payable
    
23,879
      
23,987
  
Deferred revenues
    
30,995
      
37,671
  
Operating lease liabilities, current
    
2,724
      
-
  
Other current liabilities
    
30,926
      
32,475
  
     
107,724
      
104,692
  
                 
Non- Current liabilities
                
Long term loan
    
57,042
      
62,622
  
Liability for employee rights upon retirement
    
16,603
      
14,801
  
Provision for contingencies
    
174
      
201
  
Deferred income taxes
    
5,273
      
6,458
  
Deferred revenues
    
9,353
      
8,221
  
Others non-current liabilities
    
348
      
325
  
Operating lease liabilities, non-current
    
4,238
      
-
  
Obligation to purchase non-controlling interests
    
16,653
      
16,272
  
     
109,684
      
108,900
  
                 
Stockholders’ equity
    
157,972
      
153,693
  
Non-controlling interests
    
6,290
      
6,507
  
Total equity
    
164,262
      
160,200
  
                 
Total liabilities and equity
    
381,670
      
373,792
  
- 3 -
ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

   
US dollars
    
US dollars
  
   
Six month period
ended June 30,
    
Three month period
ended June 30,
  
(in thousands except per share data)
  
2019
    
2018
    
2019
    
2018
  
                         
Revenues:
                        
Telematics services
    
104,825
      
87,189
      
51,666
      
41,490
  
Telematics products
    
40,021
      
33,605
      
19,576
      
16,226
  
     
144,846
      
120,794
      
71,242
      
57,716
  
                                 
Cost of revenues:
                                
Telematics services
    
45,094
      
31,056
      
22,517
      
14,975
  
Telematics products
    
31,604
      
29,354
      
15,214
      
13,814
  
     
76,698
      
60,410
      
37,731
      
28,789
  
                                 
Gross profit
    
68,148
      
60,384
      
33,511
      
28,927
  
Research and development expenses
    
7,128
      
2,099
      
3,377
      
939
  
Selling and marketing expenses
    
6,303
      
5,482
      
3,373
      
2,630
  
General and administrative expenses
    
27,597
      
22,590
      
13,151
      
10,712
  
Other expense (income), net
    
5
      
(118
)
    
1
      
(144
)
Operating income
    
27,115
      
30,331
      
13,609
      
14,790
  
Other income (expense), net
    
(48
)
    
-
      
25
      
-
  
Financing income (expense), net
    
(1,854
)
    
568
      
(839
)
    
292
  
Income before income tax
    
25,213
      
30,899
      
12,795
      
15,082
  
Income tax expenses
    
(7,189
)
    
(8,510
)
    
(3,692
)
    
(3,853
)
Share in gains (losses) of affiliated companies ,net
    
(1,971
)
    
2,224
      
(1,103
)
    
1,537
  
Net income for the period
    
16,053
      
24,613
      
8,000
      
12,766
  
Less: Net income attributable to non-controlling interest
    
(302
)
    
(1,319
)
    
(306
)
    
(753
)
Net income attributable to the Company
    
15,751
      
23,294
      
7,694
      
12,013
  
                                 
Basic and diluted earnings per share attributable to Company’s stockholders
    
0.74
      
1.11
      
0.37
      
0.57
  
                                 
Basic and diluted weighted average number of shares outstanding (in thousands)
    
21,146
      
20,968
      
21,041
      
20,968
  
- 4 -
ITURAN LOCATION AND CONTROL LTD.

RECONCILIATION OF NON-GAAP RESULTS

   
US dollars
    
US dollars
  
(in thousands
  
Six months ended
June 30,
    
Three months ended
June 30,
  
except per share data)
  
2019
    
2018
    
2019
    
2018
  
                         
GAAP Revenues:
    
144,846
      
120,794
      
71,242
      
57,716
  
Valuation adjustment on acquired deferred revenue
    
2,004
      
-
      
985
      
-
  
Non –GAAP revenue
    
146,850
      
120,794
      
72,227
      
57,716
  
                                 
GAAP gross profit
    
68,148
      
60,384
      
33,511
      
28,927
  
Valuation adjustment on acquired deferred revenue
    
2,224
      
-
      
985
      
-
  
Non –GAAP gross profit
    
70,372
      
60,384
      
34,496
      
28,927
  
                                 
GAAP operating income
    
27,115
      
30,331
      
13,609
      
14,790
  
Operation profit adjustments
    
2,752
              
1,206
          
Amortization of other intangible assets
    
1,799
      
-
      
699
      
-
  
Non-GAAP operating income
    
31,666
      
30,331
      
15,514
      
14,790
  
                                 
Depreciation and amortization
    
9,780
      
6,689
      
5,081
      
3,066
  
Adjusted EBITDA
    
41,446
      
37,020
      
20,595
      
17,856
  
                                 
Net income attribute to the company's shareholders
    
15,751
      
23,294
      
7,694
      
12,013
  
Operation income adjustment
    
4,551
      
-
      
1,905
      
-
  
Other income, net
    
-
      
-
      
-
      
-
  
Non-GAAP net income attributable to
         Iturans' shareholders
    
20,302
      
23,294
      
9,599
      
12,013
  
- 5 -
ITURAN LOCATION AND CONTROL LTD.

Summary of NON –GAAP Financial Information

   
US dollars
    
US dollars
  
   
Six month period
ended June 30,
    
Three month period
ended June 30,
  
(in thousands)
  
2019
    
2018
    
2019
    
2018
  
             
Revenue
    
146,850
      
120,794
      
72,227
      
57,716
  
Gross profit
    
70,372
      
60,384
      
34,496
      
28,927
  
Operation income
    
31,666
      
30,331
      
15,514
      
14,790
  
Net income attribute to shareholders
    
20,302
      
23,294
      
9,599
      
12,013
  
Adjusted EBITDA
    
41,446
      
37,020
      
20,595
      
17,856
  
                                 
     Basic and diluted earnings per share
    
0.96
      
1.11
      
0.46
      
0.57
  
- 6 -
ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

   
US dollars
    
US dollars
  
   
Six month period
ended June 30,
    
Three month period
ended June 30,
  
(in thousands)
  
2019
    
2018
    
2019
    
2018
  
             
Cash flows from operating activities
                        
Net income for the period
    
16,053
      
24,613
      
8,000
      
12,766
  
                                 
Adjustments to reconcile net income to net cash from operating activities:
                                
Depreciation and amortization
    
11,579
      
6,689
      
5,464
      
3,066
  
Interest and exchange rate differences on loans
    
31
      
-
      
44
      
-
  
Losses (gain) in respect of trading marketable securities
    
2
      
(341
)
    
(26
)
    
(145
)
Increase (decrease) in liability for employee rights upon retirement
    
1,179
      
(73
)
    
905
      
55
  
Share in losses (gains) of affiliated companies, net
    
1,971
      
(2,224
)
    
1,103
      
(1,537
)
Deferred income taxes
    
(17
)
    
1,819
      
(101
)
    
307
  
Capital gains on sale of property and equipment, net
    
14
      
69
      
8
      
17
  
Decrease (increase) in accounts receivable
    
4,558
      
(5,754
)
    
(371
)
    
(1,637
)
Decrease (increase) in other current assets
    
2,314
      
(3,979
)
    
2,615
      
220
  
Decrease in inventories
    
2,005
      
15
      
713
      
585
  
Operating lease right-of-use assets
    
2,036
      
-
      
843
      
-
  
Increase (decrease) in accounts payable
    
(347
)
    
(1,863
)
    
1,249
      
(2,245
)
Decrease in deferred revenues
    
(6,143
)
    
(1,927
)
    
(3,595
)
    
(1,591
)
Increase (decrease) in other current liabilities
    
(2,678
)
    
2,854
      
100
      
2,501
  
Operating lease liabilities
    
(2,036
)
    
-
      
(843
)
    
-
  
Increase in obligation for purchase non-controlling interests
    
702
      
-
      
208
      
-
  
Net cash provided by operating activities
    
31,223
      
19,898
      
16,316
      
12,362
  
                                 
Cash flows from investment activities
                                
Decrease (increase) in funds in respect of employee rights upon retirement, net of withdrawals
    
(956
)
    
153
      
(881
)
    
(205
)
Capital expenditures
    
(10,375
)
    
(9,982
)
    
(3,445
)
    
(3,364
)
Investments in affiliated companies
    
(55
)
    
(1,250
)
    
(55
)
    
(1,250
)
Investments in other companies
    
(129
)
    
(897
)
    
(116
)
    
(330
)
Sale of marketable securities, net
    
1,454
      
1,671
      
1,070
      
1,621
  
Proceed from long term deposit
    
(152
)
    
(205
)
    
(74
)
    
(114
)
Proceeds from loans to affiliated companies
    
-
      
3,262
      
-
      
550
  
Proceeds from sale of property and equipment
    
35
      
216
      
8
      
13
  
Net cash used in investment activities
    
(10,178
)
    
(7,032
)
    
(3,493
)
    
(3,079
)
                                 
Cash flows from financing activities
                                
Short term credit from banking institutions, net
    
(611
)
    
(33
)
    
1,207
      
6
  
Dividend paid
    
(9,748
)
    
(10,067
)
    
(4,839
)
    
(5,033
)
Dividend paid to non-controlling interest
    
(809
)
    
(972
)
    
(271
)
    
(547
)
Net cash used in financing activities
    
(11,168
)
    
(11,072
)
    
(3,903
)
    
(5,574
)
                                 
Effect of exchange rate changes on cash and cash equivalents
    
1,116
      
(2,594
)
    
422
      
(2,337
)
                                 
Net increase in cash and cash equivalents
    
10,993
      
(800
)
    
9,342
      
1,372
  
Balance of cash and cash equivalents at beginning of the period
    
51,398
      
36,906
      
53,049
      
34,734
  
Balance of cash and cash equivalents at end of the period
    
62,391
      
36,106
      
62,391
      
36,106
  

Supplementary information on financing and investing activities not involving cash flows:
In May 2019, the Company declared a dividend in an amount of US$ 5 million. The dividend was paid in July 2019.

- 7 -