Ituran Location & Control Ltd. Q3 FY2024 earnings call

Eyal Sheratzky welcomed everyone to the call, noting steady growth in revenue and profit across geographies, with 40,000 net subscribers added, at the top end of expectations. Despite US dollar strength, local currency growth was higher. Announced a five-year contract with Nissan Chile, providing vehicle location units, telematics, and stolen vehicle recovery services, aiming to build aftermarket business in Chile and expand with Nissan to other South American regions. Eli Kamer provided financial details: revenues, subscription vs product revenues, subscriber base, EBITDA, net income, cash flow, and net cash position. The Board declared a $8 million dividend for the quarter.

Third quarter revenues were $83.5 million, a 3% increase compared to $81.1 million last year. In local currencies, revenues grew by 7% y-o-y. Subscription fees were $59.6 million, a 1% y-o-y decrease but 4% increase in local currencies. Product revenues were $23.9 million, a 14% y-o-y increase and 15% increase in local currencies. Subscriber base expanded to 2,369,000 by end of third quarter, an increase of 40,000 from previous quarter. Geographic breakdown of revenues: Israel 53%, Brazil 23%, rest of world 24%. EBITDA for the quarter was $23.3 million (27.9% of revenue), up 4% y-o-y. Net income was $13.7 million, up 9% y-o-y. Cash flow from operations for third quarter 2024 was $17.2 million. As of Sept 30, 2024, net cash position was $67.3 million.

Reiterated 2024 full-year EBITDA guidance of between $90 million and $95 million. Expected quarterly subscriber growth to be between 35,000 and 40,000 net new subscribers. Continued to share a quarterly dividend of $8 million.

Q: Sergey Glinyanov asked about price decline in service segments and operating margin improvement.

A: Eli Kamer explained service revenues down due to currency exchange, operating margin up due to operating leverage.

Q: Sergey asked about Nissan Chile agreement boosting product revenue.

A: Eyal Sheratzky said the contract is long-term with tens of thousands of new subscribers and renewals.

Q: Allen Klee asked about big countries and opportunities.

A: Eyal Sheratzky mentioned Latin America has strong brand, security needs, and specific solutions in countries like Brazil.

Q: Allen Klee asked about usage-based insurance.

A: Eyal Sheratzky discussed usage-based insurance in Israel, Argentina, Mexico, and the sales cycle.

Q: Josh Strauss asked about Israel market stability during war, Bringg updates, and cash flow.

A: Eyal Sheratzky talked about car theft rate increase supporting business in Israel, Bringg is a private entity with no value on balance sheet, and Eli Kamer said cash flow item volatility needs further checking.