Ituran Presents Its Second Quarter 2023 Results
Record revenue contributed from recent strong subscriber growth
Net subscriber growth in Q2 2023 of 47,000
AZOUR, Israel , Aug. 15, 2023 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the second quarter of 2023.
Highlights of the Second Quarter of 2023
- Net subscriber growth of 47,000: net increase in aftermarket of 45,000 and net increase in OEM of 2,000;
- Record revenue of $81.6 million, an increase of 11% year-over-year;
- Net income of $12.2 million, an increase of 40% year-over-year;
- EBITDA of $21.8 million, up 12% year-over-year;
- Generated $17.5 million in quarterly operating cash flow;
- Declared dividend of $3.0 million and continued share buy-back program totaling $3.5 million in the quarter;
Management Comment
Eyal Sheratzky, Co-CEO of Ituran said, "We are very pleased with the results of the second quarter of 2023, especially with our highest level of quarterly revenue in our history and highest net income and EBITDA levels in over four years. The solid results are due to the accelerated subscriber growth we have seen in recent quarters which has contributed to our strong results. Furthermore, even given this strong growth, we have been able to continue to demonstrate very strong cash generation, reporting our highest ever operating cash flow in a six month period of almost $35 million."
"As our recent partnership with Santander Bank demonstrates, we are experiencing growing interest for our value-added telematic services from the car financing sector in Latin America. Our strong momentum adds to our optimism for continued growth in the coming quarters and we expect that the positive trends will continue through 2023 and beyond."
Second Quarter 2023 Results
Revenues for the second quarter of 2023 were a record $81.6 million, an increase of 11% compared with revenues of $73.4 million in the second quarter of 2022. The appreciation of the US dollar over the past year, versus the local currencies in the various geographies in which Ituran operates impacted the revenues as reported in US dollars. In local currency terms, second quarter revenue grew by 15% compared with that of the second quarter of last year.
72% of revenues were from location-based service subscription fees and 28% were from product revenues.
Revenues from subscription fees were a record $59.2 million, an increase of 13% over the second quarter 2022 revenues. In local currency terms, second quarter subscription fee revenue grew by 17% compared with that of the second quarter of last year.
The subscriber base amounted to 2,162,000 as of June 30, 2023. This represents an increase of 47,000 net over that of the end of the prior quarter, and a net increase of 190,000 year-over-year. During the quarter, there was an increase of 45,000 net in the aftermarket subscriber base and an increase of 2,000 net in the OEM subscriber base.
Product revenues were $22.5 million, an increase of 7% compared with that of the second quarter of last year.
Gross profit for the quarter was $38.7 million (47.4% of revenues), a 14% increase compared with gross profit of $33.8 million (46.1% of revenues) in the second quarter of last year.
The gross margin in the quarter on subscription revenues was 57.3%, compared with 56.8% in the second quarter of last year. The gross margin on products was 21.0% in the quarter, compared with 19.6% in the second quarter of last year.
Operating income for the quarter was $16.6 million (20.4% of revenues), an increase of 15% compared with an operating income of $14.4 million (19.7% of revenues) in the second quarter of last year. In local currency terms, second quarter operating income grew by 18% compared with that of the second quarter of last year.
EBITDA for the quarter was $21.8 million (26.7% of revenues), an increase of 12% compared with EBITDA of $19.4 million (26.5% of revenues) in the second quarter of last year. In local currency terms, second quarter EBITDA grew by 15% compared with that of the second quarter of last year.
Financial income for the quarter was $0.3 million, compared with financial expenses of $1.4 million in the second quarter of last year. In the second quarter of last year, there was a financial loss due to the devaluation of SaverOne, an early-stage public company in which Ituran holds equity.
Net income for the second quarter of 2023 was $12.2 million (15.0% of revenues) or diluted earnings per share of $0.61, an increase of 40% compared to $8.7 million (11.9% of revenues) or diluted earnings per share of $0.43 in the second quarter of last year. In local currency terms, second quarter net income grew by 44% compared with that of the second quarter of last year.
Cash flow from operations for the second quarter of 2023 was $17.5 million.
On the balance sheet, as of June 30, 2023, the Company had cash, including marketable securities, of $34.5 million and debt of $4.5 million, amounting to a net cash position of $30.0 million. This is compared with cash, including marketable securities, of $28.2 million and debt of $12.2 million, amounting to a net cash position of $16.0 million, as of the end of 2022.
Dividend
For the second quarter of 2023, a dividend of $3.0 million was declared.
Buy Back
On August 23, 2022, Ituran announced that its Board of Directors made the decision to continue executing on the $19 million remainder of a $25 million share buy-back program that was announced in 2019. On February 23, 2023, the Board of Directors made the decision to increase the buy-back program by a further $10 million. As of June 30, 2023, there is remaining under the buy-back program $8.6 million.
In the second quarter, under the program, Ituran purchased 156,138 shares for a total of $3.5 million.
Share repurchases, were funded by available cash and repurchases of Ituran's ordinary shares under SEC Rule10b-18 terms.
Conference Call Information
The Company will also be hosting a conference call later today, August 15, 2023 at 10am 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:
10:00am Eastern Time, 7:00am Pacific Time, 5:00pm 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, financing industries 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 over 2 million subscribers using its location-based services with a market leading position in Israel and Latin America. Established in 1995, Ituran has approximately 2,700 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 Deputy CEO & VP Finance, Ituran (Israel) +972 3 557 1348 | International Investor Relations Ehud Helft EK Global Investor Relations (US) +1 212 378 8040 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
US dollars | ||
June 30, | December 31, | |
(in thousands) | 2023 | 2022 |
(unaudited) | ||
Current assets
| ||
Cash and cash equivalents | 34,205 | 27,850 |
Investments in marketable securities | 257 | 316 |
Accounts receivable (net of allowance for doubtful accounts) | 47,909 | 45,821 |
Other current assets | 56,056 | 48,156 |
Inventories | 28,048 | 28,509 |
166,475 | 150,652 | |
Non- Current investments and other assets | ||
Investments in affiliated companies | 763 | 1,188 |
Investments in other companies | 1,839 | 1,779 |
Other non-current assets | 3,762 | 3,129 |
Deferred income taxes | 12,849 | 11,400 |
Funds in respect of employee rights upon retirement | 15,537 | 15,146 |
34,750 | 32,642 | |
Property and equipment, net | 44,528 | 45,598 |
Operating lease right-of-use assets, net | 7,994 | 9,905 |
Intangible assets, net | 11,043 | 12,620 |
Goodwill | 39,328 | 39,510 |
Total assets | 304,118 | 290,927 |
CONDENSED CONSOLIDATED BALANCE SHEETS (cont.) | ||
US dollars | ||
June 30, | December 31, | |
(in thousands) | 2023 | 2022 |
(unaudited) | ||
Current liabilities | ||
Credit from banking institutions | 4,143 | 11,845 |
Accounts payable | 23,224 | 21,937 |
Deferred revenues | 25,466 | 21,783 |
Other current liabilities | 40,846 | 37,407 |
93,679 | 92,972 | |
Non- Current liabilities | ||
Long term loan | 309 | 345 |
Liability for employee rights upon retirement | 21,799 | 21,224 |
Deferred income taxes | 1,395 | 1,534 |
Deferred revenues | 14,335 | 13,036 |
Others non-current liabilities | 1,983 | 2,071 |
Operating lease liabilities, non-current | 4,975 | 6,886 |
44,796 | 45,096 | |
Stockholders' equity | 159,303 | 145,797 |
Non-controlling interests | 6,340 | 7,062 |
Total equity | 165,643 | 152,859 |
Total liabilities and equity | 304,118 | 290,927 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||||||
US dollars | US dollars | |||||||
Six month period | Three month period | |||||||
(in thousands except per share data) | 2023 | 2022 | 2023 | 2022 | ||||
(unaudited) | (unaudited) | |||||||
Revenues: | ||||||||
Telematics services | 114,963 | 102,540 | 59,186 | 52,314 | ||||
Telematics products | 46,154 | 42,920 | 22,459 | 21,074 | ||||
161,117 | 145,460 | 81,645 | 73,388 | |||||
Cost of revenues: | ||||||||
Telematics services | 48,642 | 44,739 | 25,250 | 22,607 | ||||
Telematics products | 37,124 | 33,627 | 17,733 | 16,950 | ||||
85,766 | 78,366 | 42,983 | 39,557 | |||||
Gross profit | 75,351 | 67,094 | 38,662 | 33,831 | ||||
Research and development expenses | 8,354 | 8,131 | 4,216 | 3,991 | ||||
Selling and marketing expenses | 6,606 | 6,580 | 3,283 | 3,456 | ||||
General and administrative expenses | 27,716 | 23,698 | 14,443 | 11,986 | ||||
Other income (expense), net | 118 | (118) | 75 | (39) | ||||
Operating income | 32,557 | 28,803 | 16,645 | 14,437 | ||||
Other expense, net | (3) | - | (24) | - | ||||
Financing income (expense), net | 154 | (3,938) | 349 | (1,373) | ||||
Income before income tax | 32,708 | 24,865 | 16,970 | 13,064 | ||||
Income tax expenses | (7,220) | (5,918) | (3,801) | (3,454) | ||||
Share in losses of affiliated companies, net | (627) | (121) | (261) | (78) | ||||
Net income for the period | 24,861 | 18,826 | 12,908 | 9,532 | ||||
Less: Net income attributable to non-controlling interest | (1,257) | (1,359) | (659) | (794) | ||||
Net income attributable to the Company | 23,604 | 17,467 | 12,249 | 8,738 | ||||
Basic and diluted earnings per share attributable to | 1.17 | 0.85 | 0.61 | 0.43 | ||||
Basic and diluted weighted average number of shares | 20,158 | 20,497 | 20,118 | 20,460 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
US dollars | US dollars | |||||
Six month period | Three month period | |||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||
(unaudited) | (unaudited) | |||||
Cash flows from operating activities | ||||||
Net income for the period | 24,861 | 18,826 | 12,908 | 9,532 | ||
Adjustments to reconcile net income to net cash from | ||||||
Depreciation and amortization | 10,051 | 9,893 | 5,146 | 4,986 | ||
Loss (gain) in respect of trading marketable securities | (53) | 3,772 | (54) | 1,422 | ||
Increase in liability for employee rights upon retirement | 1,590 | 1,072 | 729 | 154 | ||
Share in losses of affiliated companies, net | 627 | 121 | 261 | 78 | ||
Deferred income taxes | (1,394) | 142 | (791) | (15) | ||
Capital loss (gain) on sale of property and equipment, net | 46 | (295) | 53 | (233) | ||
Increase in accounts receivable | (2,952) | (5,051) | (172) | (1,366) | ||
Increase in other current assets | (6,975) | (6,251) | (2,399) | (3,225) | ||
Decrease (increase) in inventories | (609) | (3,995) | (450) | 755 | ||
Increase (decrease) in accounts payable | 939 | 255 | (2,726) | (956) | ||
Increase (decrease) in deferred revenues | 5,227 | 541 | 2,498 | (1,305) | ||
Increase (decrease) in other current and non-current liabilities | 3,544 | (1,228) | 2,504 | 1,025 | ||
Net cash provided by operating activities | 34,902 | 17,802 | 17,507 | 10,852 | ||
Cash flows from investment activities | ||||||
Decrease (increase) in funds in respect of employee rights upon | (1,160) | (373) | (777) | 19 | ||
Capital expenditures | (6,282) | (14,718) | (3,379) | (8,596) | ||
Investments in affiliated and other companies | (607) | (600) | (312) | (223) | ||
Repayment of (Investments in) long term deposit | (45) | 130 | (45) | 152 | ||
Sale of (investment in) marketable securities | 99 | (103) | (103) | |||
Proceeds from sale of property and equipment | 58 | 783 | 40 | 573 | ||
Net cash used in investment activities | (7,937) | (14,881) | (4,473) | (8,178) | ||
Cash flows from financing activities | ||||||
Short term credit from banking institutions, net | 185 | (99) | (954) | (50) | ||
Repayment of long term loan | (7,907) | (8,223) | (3,765) | (4,046) | ||
Dividend paid | (5,617) | (5,766) | (2,820) | (2,875) | ||
Purchase of treasury shares | (4,717) | (3,446) | (3,517) | (3,446) | ||
Dividend paid to non-controlling interest | (1,687) | - | (892) | - | ||
Net cash used in financing activities | (19,743) | (17,534) | (11,948) | (10,417) | ||
Effect of exchange rate changes on cash and cash equivalents | (867) | (3,022) | (157) | (2,840) | ||
Net increase (decrease) in cash and cash equivalents | 6,355 | (17,635) | 929 | (10,583) | ||
Balance of cash and cash equivalents at beginning of the period | 27,850 | 50,306 | 33,276 | 43,254 | ||
Balance of cash and cash equivalents at end of the period | 34,205 | 32,671 | 34,205 | 32,671 | ||
In May 2023, the Company declared a dividend in an amount of US$ 3 million. The dividend was paid in July 2023. | ||||||
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SOURCE Ituran Location and Control Ltd.
