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

ITURAN LOCATION AND CONTROL LTD. PRESENTS
RESULTS FOR THE FIRST QUARTER OF 2020

AZOUR, Israel – May 13, 2020 – Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the first quarter of 2020.

Highlights of the first quarter of 2020
•
Revenue of $68.4 million;
•
EBITDA of $15.3 million;
•
Generated $10.7 million in quarterly operating cash flow;
•
Net increase in aftermarket subscribers of 17,000;
•
Total subscribers reached 1,794,000 at the end of the quarter;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, “We are pleased with Ituran’s first quarter performance with revenues and operating income ahead of those of the prior quarter, driven by continued subscriber growth in the aftermarket business. This is despite the impact from the COVID-19 pandemic and some currency headwinds.”

Continued Mr. Sheratzky, “Due to the pandemic, in the second quarter we have seen a halt in new car sales globally, and therefore in new subscribers. We have been focusing on reducing expenses across the board, which will allow us to mitigate some of the impact to profitability and cash generation. Consequently, for the second quarter, we expect between a 10-20% reduction in EBITDA.

“Conservatively, the board has decided to suspend our dividend payments for the time being in order to strengthen our cash levels, which will better enable us to weather this significant global crisis, while also providing us with increased capital to take advantage of any opportunities.

Concluded Mr. Sheratzky, “Our ability to remain profitable and cash flow positive during this unprecedented global crisis, demonstrates the overall resilience of our business model, built on the subscription fees of 1.8 million customers distributed globally. I remain optimistic over the long-term, while in the short-term preparing Ituran to overcome the current crisis. I am confident that Ituran will emerge this period as a stronger and more efficient company. ”

First Quarter 2020 Results

Starting from the current quarter, the difference between the GAAP and non-GAAP results has become minimal. Therefore, Ituran will discontinue its reporting of the non-GAAP financial measures from the current first quarter of 2020.

Revenues for the first quarter of 2020 were $68.4 million, a decrease of 7% compared with revenues of $73.6 million in the first quarter of 2019.

The higher average level of the US dollar exchange rate versus the Brazilian real, 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 revenue growth rate. In local currency terms, first quarter revenue decline by 4% year-over-year.

72% of revenues were from location-based service subscription fees and 28% were from product revenues.

Revenues from subscription fees were $49.0 million, a decrease of 8% over first quarter 2019 revenues. In local currency terms, subscription fees declined by 3% year-over-year.

The subscriber base amounted to 1,794,000 as of March 31, 2020. This represents an increase of 13,000 over that of the end of the prior quarter. During the quarter, Ituran added 17,000 aftermarket subscribers, while the OEM subscriber base declined by 4,000.

Product revenues were $19.4 million, a decrease of 5% compared with that of the first quarter of 2019.

Gross profit for the quarter was $31.0 million (45.3% of revenues), an 11% decrease compared with gross profit of $34.6 million (47.1% of revenues) in the first quarter of 2019.

The gross margin in the quarter on subscription fees was 54.4%, compared with 57.5% in the first quarter of 2019. The gross margin on products was 22.3%, compared with 19.8% in the first quarter of 2019.

Operating income for the quarter was $10.1 million (14.7% of revenues), a decrease of 25% compared with $13.5 million (18.3% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 22% year over year. As mentioned in prior quarters, the main decline was due to the OEM business as a result of selling of less hardware and reducing the free trial period for new subscribers.

EBITDA for the quarter was $15.3 million (22.4% of revenues), a decrease of 21% compared with $19.3 million (26.2% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 16% year over year.

Net income for the first quarter of 2020 was $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.31, a decrease of 21% compared with $8.1 million (10.9% of revenues) or fully diluted earnings per share of $0.38 in the first quarter of last year. In local currency terms, the decline would have been 17% year over year.

Cash flow from operations for the first quarter of 2020 was $10.7 million.

As of March 31, 2020, the Company had cash, including marketable securities, of $50.l million and debt of $63.5 million, amounting to a net debt of $13.4 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, May 13, 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: 1 888 407 2553
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 March 31, 2020


ITURAN LOCATION AND CONTROL LTD.
 
Condensed Consolidated Financial Statements
as of March 31, 2020

Table of Contents
 
 
Page
   
Condensed Consolidated Interim Financial Statements:
  
2-3
4
5
 

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

   
US dollars
  
   
March 31,
    
Decmber 31,
  
(in thousands)
  
2020
    
2019
  
   
(unaudited)
        
             
Current assets
            
Cash and cash equivalents
    
49,858
      
53,964
  
Investments in marketable securities
    
268
      
358
  
Accounts receivable (net of allowance for doubtful accounts)
    
46,327
      
45,090
  
Other current assets
    
41,020
      
49,201
  
Inventories
    
25,526
      
25,537
  
     
162,999
      
174,150
  
                 
Non- Current investments and other assets
                
Investments in affiliated companies
    
835
      
1,666
  
Investments in other companies
    
3,612
      
3,260
  
Other non-current assets
    
3,203
      
3,365
  
Deferred income taxes
    
8,602
      
10,385
  
Funds in respect of employee rights upon retirement
    
11,231
      
11,476
  
     
27,483
      
30,152
  
                 
Property and equipment, net
    
43,381
      
48,866
  
                 
Operating lease right-of-use assets, net
    
12,139
      
12,626
  
                 
Intangible assets, net
    
21,650
      
23,355
  
                 
Goodwill
    
49,970
      
50,086
  
                 
Total assets
    
317,622
      
339,235
  

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ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

   
US dollars
  
   
March 31,
    
December 31,
  
(in thousands)
  
2020
    
2019
  
   
(unaudited)
        
Current liabilities
            
Credit from banking institutions
    
19,618
      
18,110
  
Accounts payable
    
20,069
      
22,656
  
Deferred revenues
    
27,488
      
29,146
  
Other current liabilities
    
34,569
      
31,153
  
     
101,744
      
101,065
  
                 
Non- Current liabilities
                
Long term loan
    
43,891
      
49,803
  
Liability for employee rights upon retirement
    
17,344
      
17,000
  
Deferred income taxes
    
2,788
      
2,867
  
Deferred revenues
    
8,963
      
9,763
  
Others non-current liabilities
    
239
      
241
  
Operating lease liabilities, non-current
    
8,724
      
10,839
  
Obligation to purchase non-controlling interests
    
11,748
      
11,743
  
     
93,697
      
102,256
  
                 
Stockholders’ equity
    
116,009
      
129,330
  
Non-controlling interests
    
6,172
      
6,584
  
Total equity
    
122,181
      
135,914
  
                 
Total liabilities and equity
    
317,622
      
339,235
  

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ITURAN LOCATION AND CONTROL LTD.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

   
US dollars
  
(in thousands
  
Three months period
ended March 31,
  
except per share data)
  
2020
    
2019
  
   
(unaudited)
  
Revenues:
            
Telematics services
    
48,976
      
53,159
  
Telematics products
    
19,398
      
20,445
  
     
68,374
      
73,604
  
                 
Cost of revenues:
                
Telematics services
    
22,342
      
22,577
  
Telematics products
    
15,063
      
16,390
  
     
37,405
      
38,967
  
                 
Gross profit
    
30,969
      
34,637
  
Research and development expenses
    
3,886
      
3,751
  
Selling and marketing expenses
    
3,059
      
2,930
  
General and administrative expenses
    
13,923
      
14,446
  
Other expenses, net
    
27
      
4
  
Operating income
    
10,074
      
13,506
  
Other expenses, net
    
(10
)
    
(73
)
Financing expenses, net
    
(654
)
    
(1,015
)
Income before income tax
    
9,410
      
12,418
  
Income tax expenses
    
(1,926
)
    
(3,497
)
Share in losses of affiliated companies ,net
    
(903
)
    
(868
)
Net income for the period
    
6,581
      
8,053
  
Less: Net loss (income) attributable to non-controlling interest
    
(214
)
    
4
  
Net income attributable to the Company
    
6,367
      
8,057
  
                 
Basic and diluted earnings per share attributable to Company’s stockholders
    
0.31
      
0.38
  
                 
Basic and diluted weighted average number of shares outstanding (in thousands)
    
20,813
      
21,256
  

- 4 -

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

   
US dollars
  
   
Three months period
ended March 31,
  
(in thousands)
  
2020
    
2019
  
   
(unaudited)
  
Cash flows from operating activities
            
Net income for the period
    
6,581
      
8,053
  
Adjustments to reconcile net income to net cash from operating activities:
                
Depreciation and  amortization
    
5,223
      
6,115
  
Interest and exchange rate on short and long term credit
    
(598
)
    
(13
)
Loss in respect of trading marketable securities
    
90
      
28
  
Increase in liability for employee rights upon retirement, net
    
834
      
274
  
Share in losses of affiliated company, net
    
903
      
868
  
Deferred income taxes
    
798
      
84
  
Capital losses  from sale of property and equipment, net
    
60
      
6
  
Decrease (increase) in accounts receivable
    
(4,491
)
    
4,929
  
Increase in other current and non-current assets
    
(528
)
    
(301
)
Decrease (increase) in inventories
    
(378
)
    
1,292
  
Increase (decrease) in accounts payable
    
190
      
(1,596
)
Decrease in deferred revenues
    
(1,403
)
    
(2,548
)
Increase (decrease) in other current and non-current liabilities
    
3,380
      
(2,778
)
Increase in obligasion for purechase non-controling interests
    
51
      
494
  
Net cash provided by operating activities
    
10,712
      
14,907
  
                 
Cash flows from investment activities
                
Increase in funds in respect of employee rights upon
                
retirement, net of withdrawals
    
(108
)
    
(75
)
Capital expenditures
    
(3,451
)
    
(6,930
)
Investments in affiliated and other companies
    
(496
)
    
(13
)
Proceed from long term deposit
    
(22
)
    
(78
)
Sale of marketable securities,net
    
-
      
384
  
Proceeds from sale of property and equipment
    
166
      
27
  
Net cash used in investment activities
    
(3,911
)
    
(6,685
)
                 
Cash flows from financing activities
                
Short term credit from banking institutions, net
    
2,660
      
(1,818
)
Repayment of long term loan
    
(4,285
)
    
-
  
Dividend paid
    
(5,050
)
    
(4,909
)
Dividend paid to non-controlling interest
    
-
      
(538
)
Net cash used in  in financing activities
    
(6,675
)
    
(7,265
)
Effect of exchange rate changes on cash and cash equivalents
    
(4,232
)
    
694
  
Net Increase (decrease) in cash and cash equivalents
    
(4,106
)
    
1,651
  
Balance of cash and cash equivalents at beginning of period
    
53,964
      
51,398
  
Balance of cash and cash equivalents at end of period
    
49,858
      
53,049
  

Supplementary information on financing and investing activities not involving cash flows:
In March 2020, the Company declared a dividend in the amount of US$ 5 million.  The dividend was paid in April 2020
 
- 5 -