PR Newswire | Nov 18, 2020 06:31AM EST

11/18 05:30 CST

Ituran Location and Control Ltd. Presents Results for the Third Quarter of 2020 AZOUR, Israel, Nov. 18, 2020

AZOUR, Israel, Nov. 18, 2020 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the third quarter of 2020.

Highlights of the third quarter of 2020

* Improved results versus the prior quarter, as the Company continues to successfully overcome some of the impacts of the Covid-19 pandemic; * Revenues of $60.3 million, an increase of 13% sequentially and a decline of 13% year over year; in local currencies revenues from subscription fees were at a similar level to that of the last year's quarter; * EBITDA was $15.0 million; when excluding foreign exchange impacts, it would have been at a similar level to last year; * Net income was $9.3 million, an increase of 45% year over year; * Generated $13.6 million in quarterly operating cash flow; Ituran returns to a net cash position for the first time since its acquisition of RoadTrack in 2018; * Total subscribers reached 1,752,000 at the end of the quarter; net increase of 13,000 in after-market subscribers and net decrease of 12,000 in the OEM business.

Management Comment

Eyal Sheratzky, Co-CEO of Ituran said, "We are happy with the improvement in our results in the third quarter, despite an environment which still remains difficult in many of our geographies due to the ongoing pandemic. While revenues were still below those of the third quarter last year, we are pleased with the resumption in our sequential growth. Furthermore, we are happy to report that our after-market subscriber base resumed its growth again, showing growth of 13,000 subscriber this quarter. Finally, the steps we took earlier this year as the effects of the pandemic became apparent, enabled us to reach similar operating profit compared with last year when excluding foreign exchange impact."

Mr. Sheratzky concluded, "Looking ahead, while the pandemic continues to have an impact, and the associated uncertainties are making it difficult to make predictions, we expect that the results of the fourth quarter will be similar to this quarter. Longer-term, I am confident that Ituran is very well positioned to emerge this period a stronger company with a platform for long-term sustainable and profitable growth."

Third quarter 2020 Results

Revenues for the third quarter of 2020 were $60.3 million, a decrease of 13% compared with revenues of $69.0 million in the third quarter of 2019.

The decrease in the revenue level was due to the impact of the Covid-19 pandemic on new car sales, particularly in Brazil and other geographies in which Ituran operates. Furthermore, the higher average level of the US dollar exchange rate versus the Brazilian real during the quarter compared with 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, third quarter revenue declined by 6% year-over-year.

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

Revenues from subscription fees were $44.5 million, a decrease of 12% over third quarter 2019 revenues. In local currency terms, subscription fees declined by 2% year-over-year.

The subscriber base amounted to 1,752,000 as of September 30, 2020. This represents an increase of 1,000 net over that of the end of the prior quarter. During the quarter, there was an increase of 13,000 in the aftermarket subscriber base and a decline of 12,000 in the OEM subscriber base.

Product revenues were $15.9 million, a decrease of 15% compared with that of the third quarter of 2019. The decline was primarily due to limited installations of Ituran's products due to the Covid-19 pandemic shutdown implemented in many of the geographies in which Ituran operates, during most of the third quarter.

Gross profit for the quarter was $27.4 million (45.4% of revenues), a 14% decrease compared with gross profit of $31.9 million (46.2% of revenues) in the third quarter of 2019.

The gross margin in the quarter on subscription revenues was 54.9%, compared with 55.4% in the third quarter of 2019. The gross margin on products was 18.6%, compared with 21.5% in the third quarter of 2019.

Operating income for the quarter was $10.5 million (17.5% of revenues) compared with $11.9 million (17.2% of revenues) in the third quarter of last year. This is a decline of 11% year-over-year. In local currency terms, the operating income would have been similar to that of the third quarter 2019.

EBITDA for the quarter was $15.0 million (24.9% of revenues), a decrease of 14% compared with $17.5 million (25.4% of revenues) in the third quarter of last year. In local currency terms, the decline would have been 3% year over year.

Financial incomefor the quarter was $2.8 million compared with a financial expense of $0.8 million in the third quarter of last year. Held company, SaverOne, in Ituran has an 11% stake, became a public company listed on the Tel Aviv Stock Exchange in June 2020. As a result, the SaverOne holdings are measured by its quarter-end traded value and therefore any change in valuation between quarters are recorded as a financial gain or loss under the financial income line item in the profit and loss statement. In the quarter, SaverOne appreciated in value and Ituran recorded a financial income of $3.3 million from this holding.

Net income for the third quarter of 2020 was $9.3 million (15.4% of revenues) or earnings per share of $0.45, a 45% increase compared with $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.30 in the third quarter of last year. In local currency terms, the gain would have been 58% year over year.

Cash flow from operations for the third quarter of 2020 was $13.6 million.

As of September 30, 2020, the Company had cash, including marketable securities, of $61.9 million and debt of $56.8 million, amounting to a net cash of $5.1 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, November 18, 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: 1 866 860 9642ISRAEL Dial-inNumber: 03 918 0610CANADA Dial-in Number: 1 866 485 2399INTERNATIONAL Dial-inNumber: +972 3 918 0610at: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

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

US dollars

September December 30, 31,

(in thousands) 2020 2019

(unaudited)

Current assets



Cash and cash equivalents 61,836 53,964

Investments in marketable securities 100 358

Accounts receivable (net of allowance for 40,051 45,090doubtful accounts)

Other current assets 35,027 49,201

Inventories 23,391 25,537

160,405 174,150

Non- Current investments and other assets

Investments in affiliated companies 890 1,666

Investments in other companies 8,136 3,260

Other non-current assets 2,789 3,365

Deferred income taxes 10,653 10,385

Funds in respect of employee rights upon 12,320 11,476retirement

34,788 30,152

Property and equipment, net 36,641 48,866

Operating lease right-of-use assets, net 10,301 12,626

Intangible assets, net 19,593 23,355

Goodwill 39,594 50,086

Total assets 301,322 339,235

ITURAN LOCATION AND CONTROL LTD.



CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)

US dollars

September 30, December 31,

(in thousands) 2020 2019

(unaudited)

Current liabilities

Credit from banking institutions 20,380 18,110

Accounts payable 19,337 22,656

Deferred revenues 23,829 29,146

Obligation to purchase non-controlling interests 11,063 -

Other current liabilities 32,774 31,153

107,383 101,065

Non- Current liabilities

Long term loan 36,378 49,803

Liability for employee rights upon retirement 18,431 17,000

Deferred income taxes 2,584 2,867

Deferred revenues 8,276 9,763

Others non-current liabilities 2,577 241

Obligation to purchase non-controlling interests - 11,743

Operating lease liabilities, non-current 7,347 10,839

75,593 102,256

Stockholders' equity 116,292 129,330

Non-controlling interests 2,054 6,584

Total equity 118,346 135,914

Total liabilities and equity 301,322 339,235

ITURAN LOCATION AND CONTROL LTD.



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

US dollars US dollars

Nine month period Three month period ended September 30, ended September 30,

(in thousands except per share data) 2020 2019 2020 2019



Revenues:

Telematics services 137,185 155,086 44,478 50,261

Telematics products 44,829 58,755 15,851 18,734

182,014 213,841 60,329 68,995

Cost of revenues:

Telematics services 60,553 67,497 20,052 22,403

Telematics products 35,458 46,318 12,900 14,714

96,011 113,815 32,952 37,117

Gross profit 86,003 100,026 27,377 31,878

Research and development expenses 9,959 10,335 2,654 3,207

Selling and marketing expenses 8,428 9,593 2,529 3,290

General and administrative expenses 37,635 41,155 11,636 13,558

Impairment of goodwill 10,508 - - -

Impairment of intangible assets and 3,712 (72) 12 (77)other expenses (income), net

Operating income 15,761 39,015 10,546 11,900

Other income (expense), net 5 (37) 2 11

Financing income (expense), net 3,651 (2,701) 2,788 (847)

Income before income tax 19,417 36,277 13,336 11,064

Income tax expenses (8,595) (10,869) (3,778) (3,680)

Share in gains (losses) of affiliated (858) (2,781) 29 (810)companies, net

Net income for the period 9,964 22,627 9,587 6,574

Less: Net income attributable to (663) (477) (320) (175)non-controlling interest

Net income attributable to the Company 9,301 22,150 9,267 6,399

Basic and diluted earnings per share 0.45 1.05 0.45 0.30attributable to Company's stockholders

Basic and diluted weighted averagenumber of shares outstanding (in 20,813 21,112 20,813 21,041thousands)

ITURAN LOCATION AND CONTROL LTD.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

US dollars US dollars

Nine month period Three month period ended September 30, ended September 30,

(in thousands) 2020 2019 2020 2019

Cash flows from operating activities

Net income for the period 9,964 22,627 9,587 6,574

Adjustments to reconcile net income tonet cash from operating activities:

Depreciation and amortization 14,310 17,210 4,484 5,631

Interest and exchange rate differences (423) 23 119 (8)on loans

Losses (gain) in respect of trading (11) 210 5 208marketable securities

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

Increase in liability for employee 1,350 1,294 455 115rights upon retirement

Share in losses (gains) of affiliated 858 2,781 (29) 810companies, net

Deferred income taxes (1,244) 252 (875) 269

Capital loss on sale of property and 118 47 31 33equipment, net

Decrease (increase) in accounts 1,505 6,526 (1,982) 1,968receivable

Decrease in other current assets 4,647 1,115 1,698 (1,199)

Decrease in inventories 1,825 3,618 1,596 1,613

Increase (decrease) in accounts payable 198 (3,559) 2,443 (3,212)

Decrease in deferred revenues (5,521) (7,090) (1,811) (947)

Increase (decrease) in other current and 7,453 (3,341) 1,275 (663)non-current liabilities

Impairment of goodwill 10,508 - - -

Impairment of other intangible assets 3,661 - - -

Increase (decrease) in obligation for (680) 967 18 265purchase non-controlling interests

Net cash provided by operating 43,570 42,680 13,590 11,457activities

Cash flows from investment activities

Increase in funds in respect of employeerights upon retirement, net of (790) (1,117) (427) (161)withdrawals

Capital expenditures (7,506) (13,658) (1,927) (3,283)

Investments in affiliated and other (545) (184) (53) -companies

Sale of marketable securities, net 269 1,454 269 -

Proceeds from (Investments in) deposits (43) (83) (8) 69

Proceeds from sale of property and 223 203 27 168equipment

Net cash used in investment activities (8,392) (13,385) (2,119) (3,207)

Cash flows from financing activities

Short term credit from banking 2,614 387 (46) 998institutions, net

Repayment of long term loan (13,353) (4,436) (4,551) (4,436)

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

Dividend paid (9,967) (14,798) - (5,050)

Dividend paid to non-controlling (1,461) (1,557) (1,461) (748)interest

Acquisition of company shares purchased - (3,501) - (3,501)by a wholly owned subsidiary

Net cash used in financing activities (22,917) (23,905) (6,058) (12,737)

Effect of exchange rate changes on cash (4,389) (534) (359) (1,650)and cash equivalents

Net increase (decrease) in cash and cash 7,872 4,856 5,054 (6,137)equivalents

Balance of cash and cash equivalents at 53,964 51,398 56,782 62,391beginning of the period

Balance of cash and cash equivalents at 61,836 56,254 61,836 56,254end of the period

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

View original content: http://www.prnewswire.com/news-releases/ituran-location-and-control-ltd-presents-results-for-the-third-quarter-of-2020-301175730.html

SOURCE Ituran Location and Control Ltd.