SYS-CON MEDIA Authors: Sean Houghton, Glenn Rossman, Ignacio M. Llorente, Xenia von Wedel, Peter Silva

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Ituran Location and Control Ltd. Presents Results for the Fourth Quarter 2013

Record Revenue of $43.6m and record EBITDA of $14.6m

AZOUR, Israel, Feb. 19, 2014 /PRNewswire/ -- Ituran Location and Control Ltd. (NASDAQ: ITRN, TASE: ITRN), today announced its consolidated financial results for the fourth quarter and full year ended December 31, 2013.

Highlights of the fourth quarter

  • The highest ever increase in net subscribers in the quarter amounting to 20 thousand, to a record of 741 thousand as of December 31, 2013;
  • Record gross margin at 52.9%;
  • Record EBITDA of $14.6 million or 33.5% of revenues;
  • Generated $12.6 million in operating cash flow; ended the quarter with $46.6 million in net cash (including deposits in escrow);
  • Dividend of $8.0 million declared for the quarter;

Fourth quarter 2013 Results

Revenues for the fourth quarter of 2013 were $43.6 million, representing a 14% growth from revenues of $38.2 million in the fourth quarter of 2012. 74% of revenues were from location based service subscription fees and 26% from product revenues.

Revenues from subscription fees increased 11% over the same period last year. The increase in subscription fees was primarily due to the growth in the subscriber base, which expanded from 667,000 as of December 31, 2012, to 741,000 as of December 31, 2013.

Product revenues increased by 26% compared with the same period last year. This increase was driven primarily by increased sales in Israel.

Gross profit for the fourth quarter of 2013 was $23.1 million (52.9% of revenues), an increase of 20% compared with $19.2 million (50.2% of revenues) in the fourth quarter of 2012.

Operating profit for the fourth quarter of 2013 was $8.0 million (18.4% of revenues), an increase of 0.3% compared with an operating profit of $8.0 million (21.0% of revenues) in the fourth quarter of 2012. There was a one-time operating expense of $3.5 million due to a write-off of goodwill and intangible assets related to Mapa in the fourth quarter of 2013. It is important to note that the write-off is a non-cash item and has no effect on cash or EBITDA generated during the quarter.

Excluding the one-time operating expense, operating income was $11.5 million (26.4% of revenues), and representing an increase of 33% compared with the fourth quarter of last year.

EBITDA for the quarter was $14.6 million (33.5% of revenues), an increase of 20% compared to an EBITDA of $12.2 million (31.8% of revenues) in the fourth quarter of 2012.

Net profit was US$4.0 million in the fourth quarter of 2013 (9.3% of revenues) or fully diluted EPS of US$0.19. Excluding the one-time write-off in the quarter, net profit was $7.5 million (17.3% of revenues) or fully diluted EPS of US$0.36. This is compared with a net profit of US$4.4 million (11.5% of revenues) or fully diluted EPS of US$0.21 in the fourth quarter of 2012.

Cash flow from operations during the quarter was $12.6 million.

Full Year Results

Revenues for 2013 reached $170.2 million, an increase of 13% over revenues of $150.3 million in 2012. The subscriber base grew by a record 74,000 net during 2013.

Gross profit for 2013 was $89.3 million (52.5% of revenues), compared with $75.6 million (49.7% of revenues) in 2012.

Operating profit for 2013 was $38.3 million (22.5% of revenues) compared with an operating profit of $29.9 million (19.9% of revenues) in 2012. Operating expenses in 2013 included one-time expenses of $4.4 million. It is important to note that this expense was a non-cash item and has no effect on cash or EBITDA during the 2013. Excluding these expenses, operating income in 2013 would have been $42.7 million (25.1% of revenues), an increase of 35% compared to 2012.

EBITDA for the year was $54.3 million (31.9% of revenues) compared to an EBITDA of $44.6 million (29.7% of revenues) in 2012, an increase of 22%. 

Net income in 2013 was $23.8 million (14.0% of revenues) or fully diluted earnings per share of $1.13. Excluding the above-mentioned one-time expenses, net income in 2013 was $28.2 million (16.6% of revenues) or fully diluted earnings per share of $1.34.

This is compared with a net income in 2012 of $24.9 million (16.6% of revenues) or fully diluted earnings per share of $1.19. During 2012, there was a net one-time income of $3.4 million. Excluding this one-time income net income in 2012 was $21.5 million (12.6%) of revenues. Excluding all the one time effects, net income in 2013 grew by 31% compared with net income in 2012.  

Cash flow from operations for 2013 was a record $46.7 million.

As of December 31, 2013, the Company had net cash, including deposits in escrow, of $46.6 million or $2.22 per share. This is compared with $34.2 million or $1.63 per share as at December 31, 2012.

Dividend

For the fourth quarter, a dividend of $8.0 million was declared in line with the Company's stated policy of issuing at least 50% of net profits in a dividend, on a quarterly basis.

For the full year of 2013, the dividend issued including that of the fourth quarter of 2013, was $18 million, representing 76% of the full year net income.

Eyal Sheratzky, Co-CEO of Ituran said, "We are very pleased with the results of the quarter, especially the record growth in subscribers in both the quarter and the full year. Furthermore, our financial performance throughout 2013 was fantastic with the year being a record year for Ituran in terms of revenue, profitability and cash flow. As our results demonstrate, the operating leverage built into our business model contributed to our top line growth and enabled us to substantially benefit from the continued growth in our subscriber base. We look forward to maintaining our growth trend and continue to improve our margins as we move through 2014."

Conference Call Information

The Company will also be hosting a conference call later today, February 19, 2014 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: 1 888 668 9141
ISRAEL Dial-in Number: 03 918 0609
CANADA Dial-in Number: 1 866 485 2399
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.

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 741,000 subscribers distributed globally. Established in 1995, Ituran has over 1,300 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.

Company Contact

Udi Mizrahi

[email protected]

VP Finance, Ituran

(Israel) +972 3 557 1348

International Investor Relations

Ehud Helft & Kenny Green

[email protected]  

GK  Investor Relations

(US) +1 646 201 9246 

** Financial Tables to Follow **



CONSOLIDATED BALANCE SHEETS




US dollars


December 31,

 (in thousands)

2013

2012




Current assets



Cash and cash equivalents

41,697

29,453

Deposit in escrow

4,982

-

Accounts receivable (net of allowance for doubtful accounts)

29,239

26,190

Other current assets

18,437

15,399

Inventories

14,506

14,747





108,861

85,789




Long-term investments and debit balances



Deposit in escrow

-

4,939

Investments in affiliated company

1,423

160

Investments in other company

88

82

Other non-current assets

1,022

1,890

Deferred income taxes

3,781

4,174

Funds in respect of employee rights upon retirement

6,649

5,515





12,963

16,760




 

Property and equipment, net

32,546

34,156




Intangible assets, net

546

2,591




Goodwill

5,986

8,043




Total assets

160,902

147,339



CONSOLIDATED BALANCE SHEETS



US dollars


December 31,

 (in thousands)

2013

2012




Current liabilities



Credit from banking institutions

38

221

Accounts payable

11,436

9,524

Deferred revenues

9,852

9,526

Other current liabilities

29,396

22,373





50,722

41,644




Long-term liabilities



Liability for employee rights upon retirement

9,607

7,915

Provision for contingencies

2,599

3,864

Other current liabilities

880

460

Deferred revenues

1,033

806

Deferred income taxes

576

643





14,695

13,688




Equity:



Stockholders' equity

90,918

88,027

Non - controlling interest

4,567

3,980

Total equity

95,485

92,007




Total liabilities and shareholders' equity

160,902

147,339





CONSOLIDATED STATEMENTS OF INCOME



US dollars

US dollars

(in thousands

   Year ended

     December 31,

     Three month period
        ended December 31,

except per share data)

2013

2012

2013

2012

 

Revenues:





Location-based services

126,951

114,565

32,197

29,128

Wireless communications products

43,216

35,753

11,429

9,099







170,167

150,318

43,626

38,227






Cost of revenues:





Location-based services

44,850

44,974

11,160

11,292

Wireless communications products

36,015

29,786

9,388

7,739







80,865

74,760

20,548

19,031






Gross profit

89,302

75,558

23,078

19,196

Research and development expenses

2,414

2,066

619

527

Selling and marketing expenses

9,715

8,489

2,357

2,016

General and administrative expenses

34,483

33,439

8,568

7,997

Other expenses, net

4,400

1,617

3,487

632






Operating income

38,290

29,947

8,047

8,024

Other (expenses) income

(166)

6,755

(166)

-

Financing income (expenses) , net

238

987

94

(28)






Income before income taxes

38,362

37,689

7,975

7,996

Income tax

(12,807)

(11,690)

(3,401)

(3,326)

Share in losses of affiliated





companies, net

(1)

(39)

-

(10)

    Net income for the period

25,554

25,960

4,574

4,660

Less :Net income attributable

To non-controlling interest

(1,792)

(1,080)

(526)

(250)






Net income attributable to the  company

23,762

24,880

4,048

4,410






Basic and diluted earnings  per

Share  of attributable  to company's

Stockholders

1.13

1.19

0.19

0.21






Basic and diluted weighted average

Number of shares outstanding

20,968

20,968

20,968

20,968



CONSOLIDATED STATEMENTS OF CASH FLOWS



 US dollars

US dollars


Year ended

December 31,

Three months period ended
December 31 ,

(in thousands)

2013

2012

2013

2012

Cash flows from operating activities





Net income for the year

25,554

25,960

4,574

4,660

Adjustments to reconcile net income to net cash from operating activities:





Depreciation, amortization and impairment of goodwill

16,038

14,671

6,566

4,151

Loss from sale of affiliated company

166

-

166

-

Exchange differences on principal of deposit and loans, net

317

55

88

233

Gains in respect of trading marketable securities

-

(2)

-

-

Increase in liability for employee rights upon retirement

1,095

888

174

185

Share in losses  of affiliated companies, net

1

39

-

10

Deferred income taxes

(413)

1,698

(419)

1,417

Capital  losses  on sale of property and equipment, net

19

23

12

2

Decrease (increase) in accounts receivable

(609)

(300)

1,891

2,165

Decrease (increase) in other current assets

(663)

2,023

52

9,121

Decrease (increase) in inventories

1,354

(3,609)

(1,706)

(962)

Increase (decrease) in accounts payable

1,446

(372)

(113)

(956)

Increase (decrease) in deferred revenues

(227)

1,532

(189)

339

Increase (decrease) in other current liabilities

2,622

(2,445)

1,525

(3,432)

Write-off account receivable in respect of sale of subsidiary

-

(484)

-

(484)

Litigation obligation (litigation obligation adjustment)

-

(7,462)

-

(7,462)






Net cash provided by operating activities

46,700

32,215

12,621

8,987






Cash flows from investment activities





Increase in funds in respect of employee rights upon retirement,





Net of withdrawals

(718)

(662)

(236)

(164)

Capital expenditures

(14,216)

(9,676)

(1,176)

(4,854)

Investments in affiliated company

(1,400)

-

(1,400)

-

Deposit

217

(291)

(100)

(10)

Proceeds from sale of property and equipment

651

319

166

43

Sale of marketable securities

-

70

-

-

Repayment of loan to former employee

-

355

-

-

Company no longer consolidated

-

326

-

-

Net cash used in investment activities

(15,466)

(9,559)

(2,746)

(4,985)

 

Cash flows from financing activities





Short term credit from banking institutions, net

(7)

(310)

(496)

(363)

Repayment of long term loans

(182)

(44)

(68)

(11)

Dividend paid

(16,075)

(33,308)

(3,596)

(5,192)

Dividend paid to non-controlling interest

(1,286)

(1,141)

(53)

(122)

Settlements of litigation obligation in connection with financial transaction

-

7,462

-

7,462

Net cash provided by (used in) financing activities

(17,550)

(27,341)

(4,213)

1,774

Effect of exchange rate changes on cash and cash equivalents

(1,440)

(1,132)

(585)

(15)

Net Increase(decrease) in cash and cash equivalents

12,244

(5,817)

5,077

5,761

Balance of cash and cash equivalents at beginning of year

29,453

35,270

36,620

23,692

Balance of cash and cash equivalents at end of year

41,697

29,453

41,697

29,453

 

SOURCE Ituran Location and Control Ltd.

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