EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
 
Exhibit 99.1


 
ITURAN LOCATION AND CONTROL LTD. AND ITS SUBSIDIARIES

ITURAN LOCATION AND CONTROL LTD. PRESENTS
RESULTS FOR THE FULL YEAR & FOURTH QUARTER 2016

Record 2016 results: revenue of $200m, net profit of $32m & EBITDA of $60m

AZOUR, Israel – February 27, 2017 – 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, 2016.

Highlights of 2016
·
Net subscribers adds amounted to 109 thousand, with 1.057 million subscribers at year-end;
·
Revenue of $199.6 million;
·
Gross and operating margins of 51.1% and 24.1%, respectively;
·
EBITDA of $59.6 million (29.9% of revenues);
·
Generated $41.5 million in operating cash flow;
·
Total dividends of $20 million issued to shareholders for 2016;
·
Ended 2016 with $31.5 million in net cash (including marketable securities);

Highlights of the Fourth Quarter of 2016
·
Net subscribers adds in the quarter amounting to 22 thousand;
·
Revenue of $50.4 million;
·
Gross margins of 52.4% and operating margins at 25.8%;
·
EBITDA of $16.0 million or 31.9% of revenues;
·
Generated $14.4 million in operating cash flow;
·
Dividend of $8.5 million declared for the quarter;
·
Board of Directors updates dividend policy going forward to increase dividend predictability and transparency, guaranteeing at minimum $5 million per quarter;

Fourth Quarter 2016 Results
Revenues for the fourth quarter of 2016 were $50.4 million, representing an increase of 15.0% from revenues of $43.8 million in the fourth quarter of 2015. 74% of revenues were from location based service subscription fees and 26% were from product revenues.

Revenues from subscription fees increased by 16% over the same period last year. The growth was driven primarily due to the increase in the subscriber base, which expanded from 948,000 as of December 31, 2015, to 1,057,000 as of December 31, 2016.

Product revenues increased by 12% compared with the same period last year. The main contribution to growth was due to higher product sales in Israel.

Gross profit for the fourth quarter of 2016 was $26.4 million (52.4% of revenues), an increase of 18% compared with $22.3 million (50.9% of revenues) in the fourth quarter of 2015. The gross margin in the quarter on subscription fees improved to 65.5% compared with 62.9% in the same period last year. The gross margin in the quarter on products was 14.9% compared with 17.8% in the same period last year.

Operating profit for the fourth quarter of 2016 was a record $13.0 million (25.8% of revenues), an increase of 26% compared with an operating profit of $10.3 million (23.6% of revenues) in the fourth quarter of 2015.

During the quarter, share in affiliates, net was an income of $105 thousand versus a loss of $957 thousand in the same quarter of last year.

EBITDA for the quarter was a record $16.0 million (31.9% of revenues), an increase of 13.4% compared to an EBITDA of $14.2 million (32.3% of revenues) in the fourth quarter of 2015.

Net profit was a record $9.3 million in the fourth quarter of 2016 (18.4% of revenues) or fully diluted EPS of $0.44, an increase of 50% compared with a net profit of $6.2 million (14.1% of revenues) or fully diluted EPS of $0.29 in the fourth quarter of 2015.

Cash flow from operations for the quarter was a record $14.4 million.

Full Year Results
Revenues for 2016 reached a record $199.6 million, an increase of 14% compared with revenues of $175.6 million in 2015. The subscriber base grew by 109,000 or 11%, net during 2016. The significant strengthening of the US Dollar versus the Brazilian Real and the Argentinean Peso, compared with the levels in 2015, reduced the overall revenue level in US Dollars. Excluding the exchange rate impact, the increase in revenues would have been 20.0% over 2015. 71% of revenues were from location based service subscription fees and 29% from product revenues.

Gross profit for 2016 was a record $102.0 million (51.1% of revenues), an increase of 13.5% compared with $89.9 million (51.2% of revenues) in 2015.

Operating profit for 2016 was a record $48.0 million (24.1% of revenues), an increase of 18.1% compared with an operating profit of $40.6 million (23.1% of revenues) in 2015. Excluding the impact of exchange rates, operating profit would have increased by 28.4% versus last year.

EBITDA for the year was a record $59.6 million (29.9% of revenues), an increase of 13.4% compared to an EBITDA of $52.6 million (30.0% of revenues) in 2015. Excluding the impact of exchange rates, EBITDA would have increased by 23.4% versus last year.

Share in the loss of affiliates, net was $449 thousand in 2016, compared with $2.4 million last year.

Net income in 2016 was a record $32.1 million (16.1% of revenues) or fully diluted earnings per share of $1.53. This is an increase of 29% compared with a net income in 2015 of $25.0 million (14.2% of revenues) or fully diluted earnings per share of $1.19. Excluding the impact of exchange rates, net income would have increased by 40.5% versus last year.

Cash flow from operations for 2016 was a record $41.5 million.

As of December 31, 2016, the Company had net cash, including marketable securities, of $31.5 million or $1.50 per share. This is compared with $28.9 million or $1.38 per share as at December 31, 2015.

2
 
Dividend
For the fourth quarter of 2016, a dividend of $8.5 million was declared in line with the Company’s stated current policy of issuing at least 50% of net profits in a dividend, on a quarterly basis.

For the full year of 2016, the dividend issued including that of the fourth quarter of 2016, was $20 million, representing 62.3% of the full year net income.

Dividend Policy Update

The Board of Directors approved a change to the dividend policy.

The new policy calls for a dividend of $5 million, at minimum, per quarter. This policy goes into force starting from the dividend for the first quarter of 2017.

Until the fourth quarter of 2016, the dividend policy provided for an annual dividend distribution in an amount not less than 50% of the Company’s annual net income.

According to the Company’s dividend policy and Israeli law, an annual dividend will only be declared  and  paid  if,  in  the  discretion  of  the  Board  of  Directors,  there  is  no  reasonable foreseeable concern that the distribution will prevent the Company from being able to meet the terms of Company’s existing and contingent liabilities, as and when due, all based on Company’s needs as will be determined from time to time.

The distribution of dividends is further limited by Israeli law to the greater of retained earnings and earnings generated over the two most recent years. The Company’s dividend policy may change from time to time at the discretion of the Board of Directors.

The payment of dividends may be subject to Israeli withholding taxes.

Management Comment
Eyal Sheratzky, Co-CEO of Ituran said, “We are very pleased with our fourth quarter results ending the strongest year in our history with $200 million in revenue, despite the year-over-year negative effect of currency variations. Our results demonstrate strong improvements in gross and operating margins, which are built on the leverage inherent to our business model from our continually growing subscriber base. Our end-markets in Israel and Brazil continue to demonstrate strength through ongoing demand an interest in our products and solutions. I look forward to continued growth as we move through 2017 and beyond.”

Continued Mr. Sheratzky, “Our dividends allow us to share the fruit of our success with our shareholders. Today, the Board of Directors updated our dividend policy in order to make our distributions more predictable and transparent going forward. We believe our new policy demonstrates our ongoing commitment to our shareholders which continue to support us over the long-term.”

3
 
Conference Call Information

The Company will also be hosting a conference call later today, February 27, 2017 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: 1 888 604 5839
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 1 million subscribers distributed globally. Established in 1995, Ituran has over 1,500 employees worldwide, provides its location based services and has a market leading position in Israel, Brazil, Argentina and the United States.
 
Company Contact   International Investor Relations
Udi Mizrahi
udi_m@ituran.com
VP Finance, Ituran
(Israel) +972 3 557 1348
  
Ehud Helft
ituran@gkir.com
GK  Investor Relations
(US) +1 646 201 9246
 
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ITURAN LOCATION AND CONTROL LTD. AND ITS SUBSIDIARIES
 
Consolidated Financial Statements
as of December 31, 2016

 
 
ITURAN LOCATION AND CONTROL LTD. AND ITS SUBSIDIARIES
 
Consolidated Financial Statements
As of December 31, 2016
 
Table of Contents
 
 
Page
Consolidated Financial Statements:
  
2-3
4
5-6
 
 
CONSOLIDATED BALANCE SHEETS

   
US dollars
  
   
December 31,
  
(in thousands)
  
2016
    
2015
  
             
Current assets
            
Cash and cash equivalents
    
31,087
      
27,016
  
Investment in marketable securities
    
398
      
2,035
  
Accounts receivable (net of allowance for doubtful accounts)
    
33,865
      
27,436
  
Other current assets
    
35,522
      
22,437
  
Inventories
    
14,351
      
12,781
  
     
115,223
      
91,705
  
                 
Long-term investments and debit balances
                
Investments in affiliated company
    
11,975
      
4,705
  
Investments in other company
    
85
      
78
  
Other non-current assets
    
1,515
      
1,166
  
Deferred income taxes
    
2,280
      
2,279
  
Funds in respect of employee rights upon retirement
    
7,868
      
7,174
  
     
23,723
      
15,402
  
                 
Property and equipment, net
    
35,644
      
31,514
  
                 
Intangible assets, net
    
23
      
26
  
                 
Goodwill
    
3,406
      
3,356
  
             
Total assets
    
178,019
      
142,003
  

2
 
CONSOLIDATED BALANCE SHEETS
 
   
US dollars
  
   
December 31,
  
(in thousands)
  
2016
    
2015
  
             
Current liabilities
            
Credit from banking institutions
    
3
      
155
  
Accounts payable
    
18,624
      
10,466
  
Deferred revenues
    
10,762
      
9,210
  
Other current liabilities
    
26,738
      
21,750
  
     
56,127
      
41,581
  
                 
Long-term liabilities
                
Liability for employee rights upon retirement
    
11,751
      
10,637
  
Provision for contingencies
    
435
      
622
  
Deferred revenues
    
1,034
      
973
  
Other non-current liabilities
    
501
      
369
  
     
13,721
      
12,601
  
Equity:
                
Stockholders' equity
    
102,229
      
83,698
  
Non - controlling interest
    
5,942
      
4,123
  
Total equity
    
108,171
      
87,821
  
         
Total liabilities and shareholders’ equity
    
178,019
      
142,003
  


3

CONSOLIDATED STATEMENTS OF INCOME

   
US dollars
    
US dollars
  
 
  
Year ended
 December 31,
    
Three months period
 ended December 31 ,
  
(in thousands except per share data)
  
2016
    
2015
    
2016
    
2015
  
                         
Revenues:
                        
Location-based services
    
141,940
      
127,683
      
37,267
      
32,088
  
Wireless communications products
    
57,634
      
47,945
      
13,094
      
11,703
  
     
199,574
      
175,628
      
50,361
      
43,791
  
Cost of revenues:
                                
Location-based services
    
48,916
      
46,823
      
12,850
      
11,897
  
Wireless communications products
    
48,627
      
38,924
      
11,139
      
9,616
  
     
97,543
      
85,747
      
23,989
      
21,513
  
                                 
Gross profit
    
102,031
      
89,881
      
26,372
      
22,278
  
Research and development expenses
    
2,895
      
2,401
      
813
      
702
  
Selling and marketing expenses
    
10,074
      
9,303
      
2,603
      
2,391
  
General and administrative expenses
    
40,228
      
37,801
      
10,115
      
9,126
  
Other expenses, net
    
836
      
(268
)
    
(137
)
    
(251
)
Operating income
    
47,998
      
40,644
      
12,978
      
10,310
  
Financing income, net
    
2,056
      
1,189
      
810
      
415
  
Income before income taxes
    
50,054
      
41,833
      
13,788
      
10,725
  
Income tax expenses
    
(14,877
)
    
(12,822
)
    
(3,932
)
    
(3,165
)
Share in gains (losses) of affiliated company, net
    
(449
)
    
(2,439
)
    
105
      
(975
)
Net income for the period
    
34,728
      
26,572
      
9,961
      
6,603
  
Less:  Net income attributable to non-controlling interest
    
(2,589
)
    
(1,601
)
    
(704
)
    
(421
)
Net income attributable to the  company
    
32,139
      
24,971
      
9,257
      
6,182
  
                                 
Basic and diluted earnings  per Share  of attributable  to company’s Stockholders
    
1.53
      
1.19
      
0.44
      
0.29
  
                                 
Basic and diluted weighted average Number of shares outstanding
    
20,968
      
20,968
      
20,968
      
20,968
  

4

CONSOLIDATED STATEMENTS OF CASH FLOWS

   
US dollars
    
US dollars
  
   
Year ended
 December 31,
    
Three months period
 ended December 31 ,
  
(in thousands)
  
2016
    
2015
    
2016
    
2015
  
Cash flows from operating activities
                        
Net income for the period
    
34,728
      
26,572
      
9,961
      
6,603
  
Adjustments to reconcile net income to net cash from operating activities:
                                
Depreciation, amortization and impairment of goodwill
    
11,635
      
11,962
      
3,065
      
3,840
  
Gain from sale of subsidiary, net
    
-
      
(951
)
    
-
      
(951
)
Loss (gains) in respect of trading marketable securities
    
(115
)
    
(666
)
    
(20
)
    
(238
)
Increase in liability for employee rights upon retirement
    
1,024
      
717
      
64
      
215
  
Share in losses (gains) of affiliated company, net
    
449
      
2,439
      
(105
)
    
957
  
Deferred income taxes
    
(1,114
)
    
(85
)
    
(278
)
    
(1,025
)
Capital (gain) losses  on sale of property and equipment, net
    
(52
)
    
(31
)
    
(34
)
    
(21
)
Decrease (increase) in accounts receivable
    
(6,115
)
    
117
      
1,355
      
201
  
Decrease (increase) in other current and non-current assets
    
(10,473
)
    
(879
)
    
(1,393
)
    
(794
)
Decrease (increase) in inventories
    
(1,424
)
    
(658
)
    
(698
)
    
(909
)
Increase (decrease) in accounts payable
    
7,814
      
(1,176
)
    
2,978
      
(84
)
Increase (decrease) in deferred revenues
    
1,496
      
(246
)
    
(161
)
    
618
  
Increase (decrease) in other current and non-current liabilities
    
3,619
      
(1,201
)
    
(369
)
    
(739
)
Net cash provided by operating activities
    
41,472
      
35,914
      
14,365
      
7,673
  
                                 
Cash flows from investment activities
                                
Increase in funds in respect of employee rights upon
                                
retirement, net of withdrawals
    
(644
)
    
(804
)
    
(62
)
    
(229
)
Capital expenditures
    
(13,645
)
    
(18,724
)
    
(4,596
)
    
(3,592
)
Investment in marketable securities
    
(3,154
)
    
(11
)
    
(1,078
)
    
(11
)
Investments in affiliated company
    
(8,920
)
    
(5,966
)
    
(1,739
)
    
(1,327
)
Repayment of  loans from affiliated companies
    
1,512
      
-
      
1,512
      
-
  
Sale of subsidiary
    
-
      
(266
)
    
-
      
(266
)
Proceed from (invest in) long term deposit
    
16
      
(341
)
    
-
      
(20
)
Sale of marketable securities
    
4,633
      
-
      
1,018
      
-
  
Proceeds from sale of property and equipment
    
342
      
406
      
209
      
(277
)
Net cash used in investment activities
    
(19,860
)
    
(25,706
)
    
(4,736
)
    
(5,722
)
                                 
Cash flows from financing activities
                                
Short term credit from banking institutions, net
    
(152
)
    
160
      
-
      
(287
)
Dividend paid
    
(17,088
)
    
(17,590
)
    
(3,774
)
    
(2,861
)
Dividend payment to non-controlling interest
    
(994
)
    
(1,229
)
    
(54
)
    
-
  
Net cash used in financing activities
    
(18,234
)
    
(18,659
)
    
(3,828
)
    
(3,148
)
Effect of exchange rate changes on cash and cash equivalents
    
693
      
(2,951
)
    
(346
)
    
(1,221
)
Net Increase(decrease) in cash and cash equivalents
    
4,071
      
(11,402
)
    
5,455
      
(2,418
)
Balance of cash and cash equivalents at beginning of period
    
27,016
      
38,418
      
25,632
      
29,434
  
Balance of cash and cash equivalents at end of period
    
31,087
      
27,016
      
31,087
      
27,016
  
 
Supplementary information on financing and investing activities not involving cash flows:
During the years 2016 and 2015, the company purchased property and equipment in an amount of US$ 224 thousand and US$ 40 thousand, respectively, using a directly related liability.

In November 2016, the Company declared a dividend in an amount of US$ 4.1 million. The dividend was paid in January 2017.

 
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