6-K
Ituran Location & Control Ltd. (ITRN)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
May 13, 2020
Commission File Number: 001-32618
Ituran Location and Control Ltd.
(Exact name of Registrant as specified in its Charter)
________________________
3 Hashikma Street, Azour 58001, Israel
(Address of Registrant’s principal executive offices)
________________________
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):
Yes ☐ No ☒
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): ______
On May 13, 2020, Ituran Location and Control Ltd. issued a press release announcing Q1 2020 earnings results with revenues for Q1 2020 of $68.4 million and net profit on a GAAP-basis of $6.4 million.
The following document is attach hereto and incorporated by reference herein:
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
| ITURAN LOCATION & CONTROL LTD. | |||
|---|---|---|---|
| (Registrant) | |||
| By: | /s/ Eyal Sheratzky | ||
| Name: | Eyal Sheratzky | ||
| Title: | Co-Chief Executive Officer | ||
| Date: May 13, 2020 |
Exhibit 99.1
ITURAN LOCATION AND CONTROL LTD. PRESENTS
RESULTS FOR THE FIRST QUARTER OF 2020
AZOUR, Israel – May 13, 2020 – Ituran Location and Control Ltd. (NASDAQ: ITRN), today announced its consolidated financial results for the first quarter of 2020.
Highlights of the first quarter of 2020
| • | Revenue of $68.4 million; |
|---|---|
| • | EBITDA of $15.3 million; |
| --- | --- |
| • | Generated $10.7 million in quarterly operating cash flow; |
| --- | --- |
| • | Net increase in aftermarket subscribers of 17,000; |
| --- | --- |
| • | Total subscribers reached 1,794,000 at the end of the quarter; |
| --- | --- |
Management Comment
Eyal Sheratzky, Co-CEO of Ituran said, “We are pleased with Ituran’s first quarter performance with revenues and operating income ahead of those of the prior quarter, driven by continued subscriber growth in the aftermarket business. This is despite the impact from the COVID-19 pandemic and some currency headwinds.”
Continued Mr. Sheratzky, “Due to the pandemic, in the second quarter we have seen a halt in new car sales globally, and therefore in new subscribers. We have been focusing on reducing expenses across the board, which will allow us to mitigate some of the impact to profitability and cash generation. Consequently, for the second quarter, we expect between a 10-20% reduction in EBITDA.
“Conservatively, the board has decided to suspend our dividend payments for the time being in order to strengthen our cash levels, which will better enable us to weather this significant global crisis, while also providing us with increased capital to take advantage of any opportunities.
Concluded Mr. Sheratzky, “Our ability to remain profitable and cash flow positive during this unprecedented global crisis, demonstrates the overall resilience of our business model, built on the subscription fees of 1.8 million customers distributed globally. I remain optimistic over the long-term, while in the short-term preparing Ituran to overcome the current crisis. I am confident that Ituran will emerge this period as a stronger and more efficient company. ”
First Quarter 2020 Results
Starting from the current quarter, the difference between the GAAP and non-GAAP results has become minimal. Therefore, Ituran will discontinue its reporting of the non-GAAP financial measures from the current first quarter of 2020.
Revenues for the first quarter of 2020 were $68.4 million, a decrease of 7% compared with revenues of $73.6 million in the first quarter of 2019.
The higher average level of the US dollar exchange rate versus the Brazilian real, during the quarter versus the same period last year reduced the overall revenue level in US dollar terms and had a negative impact on the revenue growth rate. In local currency terms, first quarter revenue decline by 4% year-over-year.
72% of revenues were from location-based service subscription fees and 28% were from product revenues.
Revenues from subscription fees were $49.0 million, a decrease of 8% over first quarter 2019 revenues. In local currency terms, subscription fees declined by 3% year-over-year.
The subscriber base amounted to 1,794,000 as of March 31, 2020. This represents an increase of 13,000 over that of the end of the prior quarter. During the quarter, Ituran added 17,000 aftermarket subscribers, while the OEM subscriber base declined by 4,000.
Product revenues were $19.4 million, a decrease of 5% compared with that of the first quarter of 2019.
Gross profit for the quarter was $31.0 million (45.3% of revenues), an 11% decrease compared with gross profit of $34.6 million (47.1% of revenues) in the first quarter of 2019.
The gross margin in the quarter on subscription fees was 54.4%, compared with 57.5% in the first quarter of 2019. The gross margin on products was 22.3%, compared with 19.8% in the first quarter of 2019.
Operating income for the quarter was $10.1 million (14.7% of revenues), a decrease of 25% compared with $13.5 million (18.3% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 22% year over year. As mentioned in prior quarters, the main decline was due to the OEM business as a result of selling of less hardware and reducing the free trial period for new subscribers.
EBITDA for the quarter was $15.3 million (22.4% of revenues), a decrease of 21% compared with $19.3 million (26.2% of revenues) in the first quarter of last year. In local currency terms, the decline would have been 16% year over year.
Net income for the first quarter of 2020 was $6.4 million (9.3% of revenues) or fully diluted earnings per share of $0.31, a decrease of 21% compared with $8.1 million (10.9% of revenues) or fully diluted earnings per share of $0.38 in the first quarter of last year. In local currency terms, the decline would have been 17% year over year.
Cash flow from operations for the first quarter of 2020 was $10.7 million.
As of March 31, 2020, the Company had cash, including marketable securities, of $50.l million and debt of $63.5 million, amounting to a net debt of $13.4 million. This is compared with cash, including marketable securities, of $54.3 million and debt of $67.9 million, amounting to a net debt of $13.6 million, as of December 31, 2019.
Conference Call Information
The Company will also be hosting a conference call later today, May 13, 2020 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: 1 888 407 2553
ISRAEL Dial-in Number: 03 918 0610
CANADA Dial-in Number: 1 866 485 2399
INTERNATIONAL Dial-in Number: +972 3 918 0610
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, 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 industry 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 approaching 2 million subscribers using its location based services with a market leading position in Israel and Latin America. Established in 1995, Ituran has approximately 3,000 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 | International Investor Relations |
|---|---|
| Udi Mizrahi<br><br> <br>udi_m@ituran.com<br><br> <br>Deputy CEO & VP Finance, Ituran<br><br> <br>(Israel) +972 3 557 1348 | Ehud Helft<br><br> <br>ituran@gkir.com<br><br> <br>GK Investor & Public Relations<br><br> <br>(US) +1 646 201 9246 |
ITURAN LOCATION AND CONTROL LTD.
Condensed Consolidated Financial Statements
as of March 31, 2020
ITURAN LOCATION AND CONTROL LTD.
Condensed Consolidated Financial Statements
as of March 31, 2020
Table of Contents
| Page | |
|---|---|
| Condensed Consolidated Interim Financial Statements: | |
| Condensed Consolidated Balance Sheets | 2-3 |
| Condensed Consolidated Statements of Income | 4 |
| Condensed Consolidated Statements of Cash Flows | 5 |
ITURAN LOCATION AND CONTROL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
| US dollars | ||||
|---|---|---|---|---|
| March 31, | Decmber 31, | |||
| (in thousands) | 2020 | 2019 | ||
| (unaudited) | ||||
| Current assets | ||||
| Cash and cash equivalents | 49,858 | 53,964 | ||
| Investments in marketable securities | 268 | 358 | ||
| Accounts receivable (net of allowance for doubtful accounts) | 46,327 | 45,090 | ||
| Other current assets | 41,020 | 49,201 | ||
| Inventories | 25,526 | 25,537 | ||
| 162,999 | 174,150 | |||
| Non- Current investments and other assets | ||||
| Investments in affiliated companies | 835 | 1,666 | ||
| Investments in other companies | 3,612 | 3,260 | ||
| Other non-current assets | 3,203 | 3,365 | ||
| Deferred income taxes | 8,602 | 10,385 | ||
| Funds in respect of employee rights upon retirement | 11,231 | 11,476 | ||
| 27,483 | 30,152 | |||
| Property and equipment, net | 43,381 | 48,866 | ||
| Operating lease right-of-use assets, net | 12,139 | 12,626 | ||
| Intangible assets, net | 21,650 | 23,355 | ||
| Goodwill | 49,970 | 50,086 | ||
| Total assets | 317,622 | 339,235 |
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ITURAN LOCATION AND CONTROL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)
| US dollars | ||||
|---|---|---|---|---|
| March 31, | December 31, | |||
| (in thousands) | 2020 | 2019 | ||
| (unaudited) | ||||
| Current liabilities | ||||
| Credit from banking institutions | 19,618 | 18,110 | ||
| Accounts payable | 20,069 | 22,656 | ||
| Deferred revenues | 27,488 | 29,146 | ||
| Other current liabilities | 34,569 | 31,153 | ||
| 101,744 | 101,065 | |||
| Non- Current liabilities | ||||
| Long term loan | 43,891 | 49,803 | ||
| Liability for employee rights upon retirement | 17,344 | 17,000 | ||
| Deferred income taxes | 2,788 | 2,867 | ||
| Deferred revenues | 8,963 | 9,763 | ||
| Others non-current liabilities | 239 | 241 | ||
| Operating lease liabilities, non-current | 8,724 | 10,839 | ||
| Obligation to purchase non-controlling interests | 11,748 | 11,743 | ||
| 93,697 | 102,256 | |||
| Stockholders’ equity | 116,009 | 129,330 | ||
| Non-controlling interests | 6,172 | 6,584 | ||
| Total equity | 122,181 | 135,914 | ||
| Total liabilities and equity | 317,622 | 339,235 |
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ITURAN LOCATION AND CONTROL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| US dollars | ||||||
|---|---|---|---|---|---|---|
| (in thousands | Three months period<br><br> ended March 31, | |||||
| except per share data) | 2020 | 2019 | ||||
| (unaudited) | ||||||
| Revenues: | ||||||
| Telematics services | 48,976 | 53,159 | ||||
| Telematics products | 19,398 | 20,445 | ||||
| 68,374 | 73,604 | |||||
| Cost of revenues: | ||||||
| Telematics services | 22,342 | 22,577 | ||||
| Telematics products | 15,063 | 16,390 | ||||
| 37,405 | 38,967 | |||||
| Gross profit | 30,969 | 34,637 | ||||
| Research and development expenses | 3,886 | 3,751 | ||||
| Selling and marketing expenses | 3,059 | 2,930 | ||||
| General and administrative expenses | 13,923 | 14,446 | ||||
| Other expenses, net | 27 | 4 | ||||
| Operating income | 10,074 | 13,506 | ||||
| Other expenses, net | (10 | ) | (73 | ) | ||
| Financing expenses, net | (654 | ) | (1,015 | ) | ||
| Income before income tax | 9,410 | 12,418 | ||||
| Income tax expenses | (1,926 | ) | (3,497 | ) | ||
| Share in losses of affiliated companies ,net | (903 | ) | (868 | ) | ||
| Net income for the period | 6,581 | 8,053 | ||||
| Less: Net loss (income) attributable to non-controlling interest | (214 | ) | 4 | |||
| Net income attributable to the Company | 6,367 | 8,057 | ||||
| Basic and diluted earnings per share attributable to Company’s stockholders | 0.31 | 0.38 | ||||
| Basic and diluted weighted average number of shares outstanding (in thousands) | 20,813 | 21,256 |
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ITURAN LOCATION AND CONTROL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| US dollars | ||||||
|---|---|---|---|---|---|---|
| Three months period<br><br> ended March 31, | ||||||
| (in thousands) | 2020 | 2019 | ||||
| (unaudited) | ||||||
| Cash flows from operating activities | ||||||
| Net income for the period | 6,581 | 8,053 | ||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||
| Depreciation and amortization | 5,223 | 6,115 | ||||
| Interest and exchange rate on short and long term credit | (598 | ) | (13 | ) | ||
| Loss in respect of trading marketable securities | 90 | 28 | ||||
| Increase in liability for employee rights upon retirement, net | 834 | 274 | ||||
| Share in losses of affiliated company, net | 903 | 868 | ||||
| Deferred income taxes | 798 | 84 | ||||
| Capital losses from sale of property and equipment, net | 60 | 6 | ||||
| Decrease (increase) in accounts receivable | (4,491 | ) | 4,929 | |||
| Increase in other current and non-current assets | (528 | ) | (301 | ) | ||
| Decrease (increase) in inventories | (378 | ) | 1,292 | |||
| Increase (decrease) in accounts payable | 190 | (1,596 | ) | |||
| Decrease in deferred revenues | (1,403 | ) | (2,548 | ) | ||
| Increase (decrease) in other current and non-current liabilities | 3,380 | (2,778 | ) | |||
| Increase in obligasion for purechase non-controling interests | 51 | 494 | ||||
| Net cash provided by operating activities | 10,712 | 14,907 | ||||
| Cash flows from investment activities | ||||||
| Increase in funds in respect of employee rights upon | ||||||
| retirement, net of withdrawals | (108 | ) | (75 | ) | ||
| Capital expenditures | (3,451 | ) | (6,930 | ) | ||
| Investments in affiliated and other companies | (496 | ) | (13 | ) | ||
| Proceed from long term deposit | (22 | ) | (78 | ) | ||
| Sale of marketable securities,net | - | 384 | ||||
| Proceeds from sale of property and equipment | 166 | 27 | ||||
| Net cash used in investment activities | (3,911 | ) | (6,685 | ) | ||
| Cash flows from financing activities | ||||||
| Short term credit from banking institutions, net | 2,660 | (1,818 | ) | |||
| Repayment of long term loan | (4,285 | ) | - | |||
| Dividend paid | (5,050 | ) | (4,909 | ) | ||
| Dividend paid to non-controlling interest | - | (538 | ) | |||
| Net cash used in in financing activities | (6,675 | ) | (7,265 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | (4,232 | ) | 694 | |||
| Net Increase (decrease) in cash and cash equivalents | (4,106 | ) | 1,651 | |||
| Balance of cash and cash equivalents at beginning of period | 53,964 | 51,398 | ||||
| Balance of cash and cash equivalents at end of period | 49,858 | 53,049 |
Supplementary information on financing and investing activities not involving cash flows:
In March 2020, the Company declared a dividend in the amount of US$ 5 million. The dividend was paid in April 2020
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