Ituran Location and Control Ltd. Presents Results for the First Quarter of 2008Pro-Forma First Quarter 2008 Revenues Grow by 41% Over Last Year Reaching $32.8m
AZOUR, Israel, May 14 /PRNewswire-FirstCall/ -- Ituran Location and Control Ltd. , today announced its consolidated financial results for the first quarter ended March 31, 2008. Highlights of the Quarter
- Strong year over year top-line and subscriber growth
- Growth in average revenue per user
- Improved year over year pro-forma gross margins
- A 20,000 net subscriber increase from the 444,000
subscribers as of December 31st, 2007 to a record of 464,000 as of
March 31st, 2008
As previously announced, the sale of Telematics was completed on December 31st, 2007. The results of the first quarter of 2008 therefore exclude the contribution of Telematics. The pro-forma results of the comparable quarter in 2007 also exclude the contribution of Telematics, to enable investors to compare Ituran's historical results with current results on a similar basis. First quarter Results Revenues for the first quarter of 2008 reached US$32.8 million. This represents a 41% increase compared with pro-forma revenues of US$23.3 million in the first quarter of last year. The increase in revenues was primarily driven by the strong growth in the Company's subscriber base particularly in Brazil and Israel during the quarter, revenues from the recently acquired MAPA businesses, the increased average revenue per user and the weak US dollar. Operating profit for the first quarter of 2008 was US$6.3 million (19.1% of revenues) compared with a pro-forma operating profit of US$4.6 million (19.7% of revenues) in the first quarter of 2007. The operating margin was slightly lower than that of last year due to the previously announced increased investment in sales and marketing, and building Ituran's platform for growth, which started in the second half of last year, as well as the significant devaluation of the US dollar against the Israeli shekel. Excluding the effect of the weakening of the US dollar, the margin would have been higher than that of the first quarter last year. EBITDA for the quarter was $8.5 million (25.9% of revenues) compared to a pro-forma EBITDA of $5.9 million (25.2% of revenues) in the first quarter of last year. Financial expense in the quarter was US$4.4 million as compared with a pro-forma financial income of $331 thousand in the first quarter of last year. The unusually high financial expense is as a result of the strong devaluation of the US dollar against the Israeli shekel during the quarter. The Company's functional currency in Israel is the Israeli shekel and therefore for reporting purposes the Company's accounts are prepared in shekels and translated to US dollars. Therefore, due to the fact that most of the Company's cash is held in dollars, in shekel terms this amount was reduced by approximately NIS 16 million (US$ 4.3 million) in the quarter. Thus, Ituran recorded a financial charge of $4.3 million in the quarter, despite the fact that this cash did not change in value in dollar terms. Given that the primary purpose of Ituran's cash holdings is for the acquisition of synergistic business which are priced in US dollars, management believes that it is strategically prudent to maintain its cash holdings in US dollars, in order to hedge against currency fluctuations which may affect its ability to make potential acquisitions, despite the short term fluctuations in the Company's profit and loss statement that this may cause. GAAP net profit was US$862 thousand in the first quarter of 2008 (2.6% of revenues), compared with a pro-forma net profit of US$3.5 million (14.9% of revenues), as reported in the first quarter of 2007. Fully diluted GAAP EPS in the first quarter of 2008 were US$0.04, compared with US$0.15 per fully diluted share in the first quarter of 2007. Excluding the abovementioned financial charge, net profit in the quarter was US$4.0 million (12.2% of revenues) and fully diluted EPS was US$0.18. Cash flow from operations during the quarter was US$1.8 million. Excluding the above-mentioned financial charge, cash flow from operations was US$6.1 million. During the quarter, the company repurchased 1.1 million of its shares for a total of US$13.2 million. As of March 31st, 2008 the company had a net cash position (including marketable securities) of US$85.7 million compared with US$37.9 million on December 31st, 2007. Eyal Sheratzky, Co-CEO of Ituran said, "Our first quarter was a record quarter in terms of subscriber and revenue increase, driven by strong growth in our business in both Israel and Brazil in particular. This was mainly as a result of increasing our investment in marketing and sales, and building our platform for growth in the second half of last year." "In Israel, where the strong macro-economic environment has been driving new car sales, we are seeing the fruits of both the recent acquisition of Mapa which is gaining traction amongst our customers, and of our increased recent efforts on customer retention," continued Mr. Sheratzky. "In Brazil, in which we now have nationwide coverage combining GPRS and our location based technology, our services are gaining traction around the country. In fact, in Brazil our net additional subscribers during the first quarter of 2008 were more than twice the average quarterly net increase in subscribers last year. We continue to build strong relationships with the insurance companies and car manufacturers, and we see a strong catalyst which can accelerate our growth in the form of recent regulation requiring all new cars, from June 2009, to include location technology." Mr. Sheratzy concluded, "In the first quarter of 2008, we have already been rewarded for our efforts in 2007. While we had a strong start to the year, I expect that we will continue to show sequential quarterly growth in revenues and profit throughout 2008. Moving forward, we are a leaner business with a strong focus on what we do best- that of providing location based services and related applications, with catalysts for additional growth potential. We hope to continue to share our success with our shareholders throughout the coming years," concluded Mr. Sheratzky. Conference Call Information The Company will also be hosting a conference call later today, May 14th, 2008 at 10:00am ET. 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 at least 10 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
UK Dial-in Number: 0-800-051-8913
ISRAEL Dial-in Number: 03-918-0688
INTERNATIONAL Dial-in Number: +972-3-918-0688
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, at: http://www.ituran.com 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. About Ituran Ituran provides location-based services, consisting predominantly of stolen vehicle recovery and tracking services, as well as wireless communications products used in connection with its location-based services and various other applications. Ituran offers mobile asset location, Stolen Vehicle Recovery, management & control services for vehicles, cargo and personal security. Ituran's subscriber base has been growing significantly since the Company's inception to over 464,000 subscribers distributed globally. Established in 1995, Ituran has approximately 1000 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.
CONSOLIDATED INTERIM BALANCE SHEETS
US dollars
March 31, December 31,
(in thousands) 2008 2007
Current assets
Cash and cash equivalents 86,444 28,669
Investments in marketable securities 10,410 9,558
Accounts receivable (net of allowance for
doubtful accounts) 33,487 27,578
Other current assets 9,237 83,783
Inventories 15,297 13,258
_______ ______
154,875 162,846
----------- ----------
Long-term investments and debit balances
Investments in affiliated companies 1,995 1,869
Accounts receivable 51 49
Loan 558 560
Deferred income taxes 6,067 5,850
Funds in respect of employee rights upon
retirement 2,787 2,513
______ ______
11,458 10,841
---------- ----------
Property and equipment, net 25,864 24,440
--------- ----------
Intangible assets, net 8,867 8,801
--------- ---------
Goodwill 10,388 9,631
--------- ---------
______ ______
Total assets 211,452 216,559
_______ _______
_______ _______
CONSOLIDATED INTERIM BALANCE SHEETS
US dollars
March 31, December 31,
(in thousands) 2008 2007
Current liabilities
Credit from banking institutions 11,161 318
Accounts payable 15,704 12,703
Deferred revenues 6,086 5,335
Other current liabilities 15,394 34,058
______ ______
48,345 52,414
---------- ----------
Long-term liabilities
Liability for employee rights upon retirement 4,533 4,085
Deferred income taxes 1,784 1,715
______ ______
6,317 5,800
---------- ----------
Contingent liabilities, liens and guarantees
Minority interest 3,280 2,860
--------- ----------
Capital Notes 5,894 5,894
--------- ---------
Total shareholders' equity 147,616 149,591
---------- ----------
______ ______
Total liabilities and shareholders' equity 211,452 216,559
_______ _______
_______ _______
CONSOLIDATED INTERIM STATEMENTS OF INCOME
US dollars
Three months period ended
March 31 ,
(in thousands except per share
data) 2008 2007 2007
Pro-Forma
(*)
Revenues:
Location-based services 19,828 14,603 14,603
Wireless communications
products 12,986 13,335 8,663
______ ______ ______
32,814 27,938 23,266
---------- ---------- -----------
Cost of revenues:
Location-based services 7,191 5,058 5,058
Wireless communications
products 10,482 9,669 7,623
______ ______ ______
17,673 14,727 12,681
---------- ---------- ----------
______ _______ ______
Gross profit 15,141 13,211 10,585
Research and development
expenses 106 713 101
Selling and marketing expenses 2,641 1,582 1,424
General and administrative
expenses 6,082 4,845 4,476
Other ( income) expenses, net 35 (11) -
_______ ______ ______
Operating income 6,277 6,082 4,584
Financing income ( expenses ),
net (4,371) 311 331
______ ______ _____
Income before taxes on income 1,906 6,393 4,915
Taxes on income (781) (1,725) (1,199)
______ ______ ______
1,125 4,668 3,716
Share in losses of affiliated
companies, net (16) (57) (58)
Minority interests in income of
subsidiaries (247) (224) (195)
______ ______ ______
Net income for the period 862 4,387 3,463
______ ______ ______
______ ______ ______
Earnings per share:
Basic 0.04 0.19 0.15
______ ______ ______
______ ______ ______
Diluted 0.04 0.19 0.15
______ ______ ______
______ ______ ______
Weighted average number of
shares outstanding (in
thousands):
Basic 22,107 23,321 23,321
______ ______ ______
______ ______ ______
Diluted 22,116 23,482 23,482
______ ______ ______
______ ______ ______
(*) Exclude the contribution of Telematics Wireless LTD - the sale of the
company was completed on December 31, 2007.
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
US dollars
Three months period
ended March 31 ,
(in thousands) 2008 2007
Cash flows from operating activities
Net income for the period 862 4,387
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 2,219 1,378
Exchange differences on principal of deposit and
loan, net 48 (24)
Exchange differences on principal of marketable
securities (43) (240)
Increase in liability for employee rights upon
retirement 111 158
Share in losses of affiliated companies, net 16 57
Deferred income taxes (579) 17
Capital loses (gains) on sale of property and
equipment, net 33 (13)
Minority interests in profits of subsidiaries, net 247 224
Increase in accounts receivable (3,633) (3,804)
Decrease (increase) in other current assets (199) 150
Increase in inventories and contracts in process,
net (946) (2,990)
Increase in accounts payable 1,953 2,472
Increase (decrease) in deferred revenues 311 (176)
Decrease in other current liabilities 1,393 (315)
______ ______
Net cash provided by operating activities 1,793 1,281
------ ------
Cash flows from investing activities
Increase in funds in respect of employee rights
upon retirement, net of withdrawals (67) (134)
Capital expenditures (2,751) (2,366)
Proceeds from sale of property and equipment 132 76
Investment in affiliated companies - (500)
Investment in marketable securities (1,673) (1,055)
Sale of marketable securities 1,652 9,008
Proceeds from sale of subsidiary 58,720 -
_______ ______
Net cash used in investment activities 56,013 5,029
------- -------
Cash flows from financing activities
Short-term credit from banking institutions, net 10,817 92
Repayment of long-term loans - (337)
Purchase of shares from treasury (13,212) -
_______ ______
Net cash used in financing activities (2,395) (245)
------- ------
Effect of exchange rate changes on cash and cash
equivalents 2,364 737
------- -------
_______ ______
Net increase in cash and cash equivalents 57,775 6,802
Balance of cash and cash equivalents at beginning
of period 28,669 43,812
_______ ______
Balance of cash and cash equivalents at end of
period 86,444 50,614
_______ ______
_______ ______
Company Contact
Udi Mizrachi (udi_m@ituran.com)
VP Finance, Ituran
(Israel) +972-3-557-1348
International Investor Relations
Ehud Helft
Kenny Green
info@gkir.com
GK Investor Relations
(US) +1-646-201-9246
Investor Relations in Israel
Oded Ben Chorin (oded@km-ir.co.il)
KM Investor Relations
(Israel) +972-3-5167620
Ituran Location and Control Ltd
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