ITURAN LOCATION AND CONTROL LTD. PRESENTS RESULTS FOR THE SECOND QUARTER OF 2022

Rhea-AI Summary

Ituran Location and Control Ltd. (NASDAQ: ITRN) reported its Q2 2022 results, showcasing a 9% year-over-year revenue increase to $73.4 million and a net income of $8.7 million. Subscriber growth reached approximately 1,972,000, with an aftermarket increase of 50,000 subscribers. EBITDA rose 7% to $19.4 million. The company declared a $3 million dividend and spent $3.4 million on share buybacks. Despite currency challenges, subscriber revenue increased by 11%, and gross margin improved in subscription services.

Positive

• Revenue increased by 9% year-over-year to $73.4 million.
• Net income remained stable at $8.7 million; earnings per share maintained at $0.43.
• Subscriber base grew to approximately 1,972,000, adding 50,000 aftermarket subscribers.
• EBITDA rose 7% to $19.4 million, showcasing operational efficiency.
• Declared a dividend of $3.0 million and repurchased $3.4 million in shares, enhancing shareholder value.

Negative

• Net income decreased slightly from $9.1 million in Q2 2021 to $8.7 million.
• Operating income margin declined from 20.4% to 19.7% year-over-year.
• Gross margin on product revenues dropped from 24.8% to 19.6%, affected by higher component prices.

AZOUR, Israel, Aug. 29, 2022 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the second quarter of 2022.

Highlights of the Second Quarter of 2022

• Growth in total subscribers to approximately 1,972,000: net increase in aftermarket of 50,000 and net decrease in OEM of 2,000;
• Revenues of $73.4 million, an increase of 9% year-over-year;
• Net income of $8.7 million compared with $9.1 million in the second quarter of last year;
• EBITDA of $19.4 million, compared with $18.2 million in the second quarter of last year, up 7% year-over-year;
• Generated $10.9 million in quarterly operating cash flow;
• Declared dividend of $3.0 million; purchased $3.4 million under share buy-back program;

Management Comment

Eyal Sheratzky, Co-CEO of Ituran, said, "We are very pleased with the results of the second quarter, especially at a time when component supply chains remained tight and new car sales remain constrained. In particular, the above-average growth in our after-market subscriber base has continued for the second quarter this year and we have so far added 91,000 subscribers in 2022- well on target to reach or even surpass the top-end of our expected range of between 140,000-160,000 for the year."

Continued Mr. Sheratzky, "The strong growth in our subscriber base is beginning to be expressed in our subscriber revenue growth, which despite currency headwinds, showed a growth of 11% year-over-year. We also demonstrated a 130 basis-point improvement in the subscriber gross margin, demonstrating that the operating leverage in our business is beginning to become more apparent." 

Added Mr. Sheratzky, "Our continued profitability and ongoing cash generation enable us to share the fruits of our ongoing success with our shareholders. Beyond the regular dividend payment of $3 million per quarter, we purchased $3.4 million in shares under our share buy-back program. Both our dividend and share buy-back programs are expressions of our ongoing focus on generating shareholder value."

Second Quarter 2022 Results

Revenues for the second quarter of 2022 were $73.4 million, an increase of 9% compared with revenues of $67.5 million in the second quarter of 2021. 71% of revenues were from location-based service subscription fees and 29% were from product revenues.

Revenues from subscription fees were $52.3 million, an increase of 11% over second quarter 2021 revenues.

The subscriber base amounted to 1,972,000 as of June 30, 2022. This represents an increase of 48,000 net over that of the end of the prior quarter. During the quarter, there was an increase of 50,000 in the aftermarket subscriber base and a decrease of 2,000 in the OEM subscriber base.

Product revenues were $21.1 million, an increase of 3% compared with that of the second quarter of 2021.  

Gross profit for the quarter was $33.8 million (46.1% of revenues), an 9% increase compared with gross profit of $31.1 million (46.2% of revenues) in the second quarter of 2021.

The gross margin in the quarter on subscription revenues improved to 56.8%, compared with 55.5% in the second quarter of 2021.  

The gross margin on products was 19.6% in the quarter, compared with 24.8% in the second quarter of 2021. The product margin was impacted by the higher components' prices up until the beginning of the year, due to the ongoing global shortage of component as well as the product sales mix sold in the quarter. As the shortage of components has began to ease, we expect improvement in our product gross margins toward the end of the year

Operating income for the quarter was $14.4 million (19.7% of revenues), compared with $13.8 million (20.4% of revenue) in the second quarter of last year.  

EBITDA for the quarter was $19.4 million (26.5% of revenues), compared with $18.2 (26.9% of revenues) million in the second quarter of last year.  

Financial expense for the quarter was $1.4 million compared with a financial expense of $1.0 million in the second quarter of last year.  

Net income for the second quarter of 2022 was $8.7 million (11.9% of revenues) or earnings per share of $0.43, compared with a $9.1 million (13.5% of revenues)  or earnings per share of $0.44.    

Cash flow from operations for the second quarter of 2022 was $10.9 million.

As of June 30, 2022, the Company had cash, including marketable securities, of $33.2  million and debt of $20.1 million, amounting to a net cash of $13.1 million. This is compared with cash, including marketable securities, of $54.7 million and debt of $31.4 million, amounting to a net cash of $23.3 million, as of December 31, 2021.

Dividend

For the second quarter of 2022, 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 its Board of Directors decided to continue executing the $19 million remainder of a $25 million share buy-back program that was first announced in 2019. Under the current buy-back program, 146,589 shares amounting to $3.4 million was purchased in the second quarter and approximately $8 remains under the current program.

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 29, 2022 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 0609
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 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 Udi Mizrahi udi_m@ituran.com Deputy CEO & VP Finance, Ituran (Israel) +972 3 557 1348

International Investor Relations Ehud Helft ituran@ekgir.com EK Global  Investor Relations (US) +1 212 378 8040

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS
	US dollars
	June 30,		December 31,
(in thousands)	2022		2021
	(unaudited)
Current assets
Cash and cash equivalents	32,671		50,306
Investments in marketable securities	496		4,405
Accounts receivable (net of allowance for doubtful accounts)	45,837		43,916
Other current assets	42,655		36,979
Inventories	29,154		27,128
	150,813		162,734
Non- Current investments and other assets
Investments in affiliated companies	1,330		885
Investments in other companies	1,658		1,866
Other non-current assets	3,465		3,146
Deferred income taxes	10,868		11,091
Funds in respect of employee rights upon retirement	14,739		16,205
	32,060		33,193
Property and equipment, net	40,263		35,652
Operating lease right-of-use assets, net	10,815		4,690
Intangible assets, net	14,535		16,753
Goodwill	39,530		39,999
Total assets	288,016		293,021
CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)
	US dollars
	June 30,		December 31,
(in thousands)	2022		2021
	(unaudited)
Current liabilities
Credit from banking institutions	16,219		18,257
Accounts payable	20,890		21,275
Deferred revenues	21,480		24,333
Other current liabilities	37,241		40,767
	95,830		104,632
Non- Current liabilities
Long term loan	3,901		13,169
Liability for employee rights upon retirement	21,171		22,476
Deferred income taxes	1,863		1,952
Deferred revenues	11,741		8,902
Others non-current liabilities	2,182		2,337
Operating lease liabilities, non-current	7,681		1,750
	48,539		50,586
Stockholders' equity	137,590		132,460
Non-controlling interests	6,057		5,343
Total equity	143,647		137,803
Total liabilities and equity	288,016		293,021

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
	US dollars					US dollars
	Six month period ended June 30,					Three month period ended June 30,
(in thousands except per share data)	2022		2021			2022			2021
	(unaudited)					(unaudited)
Revenues:
Telematics services	102,540		92,562			52,314			46,943
Telematics products	42,920		42,265			21,074			20,519
	145,460		134,827			73,388			67,462
Cost of revenues:
Telematics services	44,739		41,370			22,607			20,899
Telematics products	33,627		31,652			16,950			15,421
	78,366		73,022			39,557			36,320
Gross profit	67,094		61,805			33,831			31,142
Research and development expenses	8,131		6,841			3,991			3,295
Selling and marketing expenses	6,580		6,500			3,456			3,244
General and administrative expenses	23,698		22,005			11,986			10,907
Other income, net	(118)		(86)			(39)			(74)
Operating income	28,803		26,545			14,437			13,770
Other expense, net	-		(3)			-			-
Financing expense, net	(3,938)		(1,982)			(1,373)			(989)
Income before income tax	24,865		24,560			13,064			12,781
Income tax expenses	(5,918)		(5,718)			(3,454)			(2,905)
Share in losses of affiliated companies ,net	(121)		(21)			(78)			(10)
Net income for the period	18,826		18,821			9,532			9,866
Less: Net income attributable to non-controlling interest	(1,359)		(1,452)			(794)			(758)
Net income attributable to the Company	17,467		17,369			8,738			9,108
Basic and diluted earnings per share attributable to Company's stockholders	0.85		0.83			0.43			0.44
Basic and diluted weighted average number of shares outstanding (in thousands)	20,497		20,813			20,460			20,813

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	US dollars						US dollars
	Six month period ended June 30,						Three month period ended June 30,
(in thousands)	2022		2021				2022		2021
	(unaudited)						(unaudited)
Cash flows from operating activities
Net income (loss) for the period		18,826			18,821		9,532		9,866
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		9,893			8,735		4,986		4,383
Interest and exchange rate differences on loans, net		-			4		-		33
Loss (gain) in respect of trading marketable securities		3,772			365		1,422		(116)
Increase in liability for employee rights upon retirement		1,072			1,178		154		716
Share in losses of affiliated companies, net		121			21		78		10
Deferred income taxes		142			(882)		(15)		39
Capital gain on sale of property and equipment, net		(295)			(53)		(233)		(49)
Increase in accounts receivable		(5,051)			(6,533)		(1,366)		(945)
Decrease (increase) in other current assets		(6,251)			1,032		(3,225)		1,552
Decrease (increase) in inventories		(3,995)			1,229		755		(431)
Increase (decrease) in accounts payable		255			1,008		(956)		1,964
Increase (decrease) in deferred revenues		541			1,863		(1,305)		42
Increase (decrease) in other current and non-current liabilities		(1,228)			743		1,025		1,264
Increase in obligation for purchase non-controlling interests		-			686		-		686
Net cash provided by operating activities		17,802			28,217		10,852		19,014
Cash flows from investment activities
Decrease (increase) in funds in respect of employee rights upon retirement, net of withdrawals		(373)			(1,504)		19		(765)
Capital expenditures		(14,718)			(6,819)		(8,596)		(4,102)
Investments in affiliated and other companies		(600)			(420)		(223)		(138)
Repayment of (Investments in) long term deposit		130			(79)		152		-
Investment in marketable securities		(103)			-		(103)		-
Proceeds from sale of property and equipment		783			628		573		407
Net cash used in investment activities		(14,881)			(8,194)		(8,178)		(4,598)
Cash flows from financing activities
Short term credit from banking institutions, net		(99)			(83)		(50)		(34)
Repayment of long term loan		(8,223)			(14,982)		(4,046)		(4,211)
Dividend paid		(5,766)			(10,100)		(2,875)		(10,100)
Purchase of treasury shares		(3,446)			-		(3,446)		-
Dividend paid to non-controlling interest		-			(385)		-		(356)
Net cash used in financing activities		(17,534)			(25,550)		(10,417)		(14,701)
Effect of exchange rate changes on cash and cash equivalents		(3,022)			(1,080)		(2,840)		1,728
Net increase (decrease) in cash and cash equivalents		(17,635)			(6,607)		(10,583)		1,443
Balance of cash and cash equivalents at beginning of the period		50,306			72,183		43,254		64,133
Balance of cash and cash equivalents at end of the period		32,671			65,576		32,671		65,576

In May 2022, the Company declared a dividend in an amount of US$ 3 million. The dividend was paid in July 2022.

 

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SOURCE Ituran Location and Control Ltd.

FAQ

What were Ituran's Q2 2022 revenues?

Ituran reported revenues of $73.4 million for Q2 2022, a 9% increase compared to the previous year.

How did Ituran's net income change in Q2 2022?

Net income for Q2 2022 was $8.7 million, down from $9.1 million in Q2 2021.

What is the current subscriber base of Ituran?

As of June 30, 2022, Ituran's subscriber base reached approximately 1,972,000.

What dividend did Ituran declare for Q2 2022?

Ituran declared a dividend of $3.0 million for the second quarter of 2022.

What was the EBITDA for Ituran in Q2 2022?

EBITDA for Q2 2022 was $19.4 million, reflecting a 7% year-over-year increase.