PR Newswire | Aug 23, 2021 06:30AM EDT

08/23 05:30 CDT

Ituran Location and Control Ltd. Presents Results For The Second Quarter Of 2021 AZOUR, Israel, Aug. 23, 2021

AZOUR, Israel, Aug. 23, 2021 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the second quarter of 2021.

Highlights of the Second Quarter of 2021

* Growth in both aftermarket and OEM subscribers: net increase in aftermarket of 23,000 and net increase in OEM of 1,000; * Revenues of $67.5 million, an increase of 27% year-over-year; * Net income of $9.1 million, versus last year's $6.3 million net loss; * EBITDA of $18.2 million, up 30% year-over-year (excluding last year's impairment); * Generated $19.0 million in quarterly operating cash flow; * Declared dividend of $3 million; Renewed share buy-back program;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran, said, "We are very pleased with our results, especially with the above-average growth in our after-market subscriber base. While the pandemic continues to impact many of the countries we operate in, we are pleased with our solid performance, demonstrating that even in the hardest of times, Ituran has a strong enough business base to successfully overcome all the challenges it has been faced with. As the global recovery moves to a more solid footing with the associated recovery in global car sales, Ituran is exceptionally well-positioned across all its geographies to capitalize on the ongoing recovery and renewed growth."

Continued Sheratzky, "In June, one of our early-stage mobility technology holdings, Bringg, a company we seeded in 2014, raised capital from leading venture capital investors. We are very proud that in only seven years, this company, of which Ituran remains the largest shareholder with 17%, has grown to its current valuation of $1 billion and it is still valued at close to zero on our balance sheet. Ituran prides itself on its ability to correctly read market trends and invest into disruptive mobility technologies. Our investment in Bringg is a successful element of this strategy and has become a strong value-add to Ituran and its shareholders."

Added Sheratzky, "Our continued profitability and ongoing cash generation, enables us to share the fruits of our ongoing success with our shareholders. Beyond the regular dividend payment of at least $3 million per quarter, the Board of Directors also renewed our share buy- back program of which $19 million remains and which will commence in the coming days. We believe that the ability to buy back Ituran shares, depending on market conditions, is another tool in our arsenal that will contribute to shareholder value."

Second Quarter 2021 Results

Revenues for the second quarter of 2021 were $67.5 million, an increase of 27% compared with revenues of $53.3 million in the second quarter of 2020.

70% of revenues were from location-based service subscription fees and 30% were from product revenues.

Revenues from subscription fees were $46.9 million, an increase of 7% over second quarter 2020 revenues.

The subscriber base amounted to 1,812,000 as of June 30, 2021.

This represents an increase of 24,000 net over that of the end of the prior quarter. During the quarter, there was an increase of 23,000 in the aftermarket subscriber base and an increase of 1,000 in the OEM subscriber base.

Product revenues were $20.5 million, an increase of 114% compared with that of the second quarter of 2020. Product revenues in the second quarter of 2020 were impacted due to the Covid-related economic shutdowns throughout the world.

Gross profit for the quarter was $30.8 million (45.7% of revenues), an 11% increase compared with gross profit of $27.7 million (51.9% of revenues) in the second quarter of 2020.

The gross margin in the quarter on subscription revenues was 54.8%, compared with 58.5% in the second quarter of 2020. The gross margin on subscription revenue in the second quarter of last year was unusually high due to short-term cost reduction made by the Company to mute the impact of the Covid shutdowns, and current levels represent the more typical level of subscription gross margin.

The gross margin on products was 24.8% in the quarter, compared with 21.8% in the second quarter of 2020.

Operating income for the quarter was $13.8 million (20.4% of revenues), compared with an operating loss of $4.9 million in the second quarter of last year. In the second quarter of last year, it is noted that there was an impairment charge of $14.2 million. Excluding that charge, operating income in the current quarter grew by 48% compared with operating income in the second quarter of 2020 amounting to $9.3 million (17.5% of revenues).

EBITDA for the quarter was $18.2 million (26.9% of revenues), compared with an EBITDA loss of $0.3 million in the second quarter of last year. Excluding the above-mentioned impairment charge last year, current EBITDA represents an increase of 30% versus EBITDA of $13.9 million (26.1% of revenues) in the second quarter of last year.

Financial expensefor the quarter was $1.0 million compared with a financial income of $1.5 million in the second quarter of last year, which last year mainly related to the Saver-One increase in value in its market capitalisation.

Net income for the second quarter of 2021 was $9.1 million (13.5% of revenues) or earnings per share of $0.44, compared with a loss of $6.3 million or loss per share of $0.30. Excluding the above-mentioned impairment charge last year, current net income represents an increase of 28% compared to a net income of $7.1 million and earnings per share of $0.34 in the second quarter of 2020.

Cash flow from operations for the second quarter of 2021 was $19.0 million.

As of June 30, 2021, the Company had cash, including marketable securities, of $71.8 million and debt of $38.5 million, amounting to a net cash of $33.3 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 second 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 a decision to continue executing the $19 million remainder of a $25 million share buy-back program that was first announced in 2019. The buy back program will commence on August 25, 2021.

The share repurchases, if any, will be funded by available cash and repurchases of Ituran's ordinary shares will be made based on SEC Rule10b-18 terms.

Conference Call Information

The Company will also be hosting a conference call later today, August 23, 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) +1 646 201 9246

CONDENSED CONSOLIDATED BALANCE SHEETS

US dollars

June December 30, 31,

(in thousands) 2021 2020

(unaudited)

Current assets



Cash and cash equivalents 65,576 72,183

Investments in marketable securities 6,217 6,663

Accounts receivable (net of allowance for doubtful 45,864 39,343accounts)

Other current assets 38,578 38,624

Inventories 21,170 22,622

177,405 179,435

Non- Current investments and other assets

Investments in affiliated companies 1,042 908

Investments in other companies 1,529 1,263

Other non-current assets 3,340 2,953

Deferred income taxes 12,659 11,910

Funds in respect of employee rights upon retirement 14,877 13,558

33,447 30,592

Property and equipment, net 37,164 37,653

Operating lease right-of-use assets, net 4,258 5,548

Intangible assets, net 18,013 19,382

Goodwill 39,806 39,862

Total assets 310,093 312,472

CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

US dollars

June December 30, 31,

(in thousands) 2021 2020

(unaudited)

Current liabilities

Credit from banking institutions 17,590 20,388

Accounts payable 21,387 19,716

Deferred revenues 26,053 24,351

Obligation to purchase non-controlling 11,002 10,595interests

Other current liabilities 41,200 37,677

117,232 112,727

Non- Current liabilities

Long term loan 20,938 34,068

Liability for employee rights upon retirement 20,646 19,715

Deferred income taxes 2,230 2,494

Deferred revenues 8,751 8,536

Others non-current liabilities 2,324 2,341

Operating lease liabilities, non-current 1,639 2,692

56,528 69,846

Stockholders' equity 132,280 127,192

Non-controlling interests 4,053 2,707

Total equity 136,333 129,899

Total liabilities and equity 310,093 312,472

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

US dollars US dollars

Six month Three month period period ended June 30, ended June 30,

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

(unaudited) (unaudited)



Revenues:

Telematics services 92,562 92,707 46,943 43,731

Telematics products 42,265 28,978 20,519 9,580

134,827 121,685 67,462 53,311

Cost of revenues:

Telematics services 41,990 40,501 21,220 18,159

Telematics products 31,652 22,558 15,421 7,495

73,642 63,059 36,641 25,654

Gross profit 61,185 58,626 30,821 27,657

Research and development expenses 6,841 7,305 3,295 3,419

Selling and marketing expenses 5,880 5,899 2,923 2,840

General and administrative expenses 22,005 25,999 10,907 12,076

Impairment of goodwill - 10,508 - 10,508

Impairment of intangible assets and other (86) 3,700 (74) 3,673expenses (income), net

Operating income (loss) 26,545 5,215 13,770 (4,859)

Other income (expense), net (3) 3 - 13

Financing income (expense), net (1,982) 863 (989) 1,517

Income (loss) before income tax 24,560 6,081 12,781 (3,329)

Income tax expenses (5,718) (4,817) (2,905) (2,891)

Share in gains (losses) of affiliated (21) (887) (10) 16companies ,net

Net income (loss) for the period 18,821 377 9,866 (6,204)

Less: Net income attributable to (1,452) (343) (758) (129)non-controlling interest

Net income (loss) attributable to the Company 17,369 34 9,108 (6,333)

Basic and diluted earnings (losses) per share 0.83 0.01 0.44 (0.30)attributable to Company's stockholders

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

US dollars US dollars

Six month period Three month ended June 30, period ended June 30,

(in thousands) 2021 2020 2021 2020

(unaudited) (unaudited)

Cash flows from operating activities

Net income (loss) for the period 18,821 377 9,866 (6,204)

Adjustments to reconcile net income to netcash from operating activities:

Depreciation and amortization 8,735 9,826 4,383 4,603

Interest and exchange rate differences on 4 (542) 33 56loans, net

Loss (gain) in respect of trading 365 (16) (116) (106)marketable securities

Gain in respect of investments in other - (1,524) - (1,524)companies

Increase in liability for employee rights 1,178 895 716 61upon retirement

Share in losses (gains) of affiliated 21 887 10 (16)companies, net

Deferred income taxes (882) (369) 39 (1,167)

Capital loss (gain) on sale of property and (53) 87 (49) 27equipment, net

Decrease (increase) in accounts receivable (6,533) 3,487 (945) 7,978

Decrease in other current assets 1,032 2,949 1,552 3,477

Decrease (increase) in inventories 1,229 229 (431) 607

Increase (decrease) in accounts payable 1,008 (2,245) 1,964 (2,435)

Increase (decrease) in deferred revenues 1,863 (3,710) 42 (2,307)

Increase in other current and non-current 743 6,178 1,264 2,798liabilities

Impairment of goodwill - 10,508 - 10,508

Impairment of other intangible assets - 3,661 - 3,661

Increase (decrease) in obligation forpurchase non-controlling 686 (698) 686 (749)interests

Net cash provided by operating activities 28,217 29,980 19,014 19,268

Cash flows from investment activities

Increase in funds in respect of employee (1,504) (363) (765) (255)rights upon retirement, net of withdrawals

Capital expenditures (6,819) (5,579) (4,102) (2,128)

Return from (investments in) affiliated and (420) (492) (138) 4other companies

Investments in long term deposit (79) (35) - (13)

Proceeds from sale of property and 628 196 407 30equipment

Net cash used in investment activities (8,194) (6,273) (4,598) (2,362)

Cash flows from financing activities

Short term credit from banking (83) 2,660 (34) -institutions, net

Repayment of long term loan (14,982) (8,802) (4,211) (4,517)

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

Dividend paid (10,100) (9,967) (10,100) (4,917)

Dividend paid to non-controlling interest (385) - (356) -

Net cash used in financing activities (25,550) (16,859) (14,701) (10,184)

Effect of exchange rate changes on cash and (1,080) (4,030) 1,728 202cash equivalents

Net increase (decrease) in cash and cash (6,607) 2,818 1,443 6,924equivalents

Balance of cash and cash equivalents at 72,183 53,964 64,133 49,858beginning of the period

Balance of cash and cash equivalents at end 65,576 56,782 65,576 56,782of the period

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

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SOURCE Ituran Location and Control Ltd.