Ituran Location and Control (ITRN) 19 Aug 242024 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Ituran Second Quarter 2024 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

You should have all received by now the company's press release.

If you have not received it, please contact Ituran's Investor Relations team at EK Global Investor Relations at 1-212-378-8040 or view it in the News section of the company's website, www.ituran.co.il. I will now hand the call over to Mr. Global EK of Green Investor Relations. Kenny Mr. you would like to begin? Green,

results. day Thank discuss you, XXXX call. to With to quarter's line this Eli and on for Good Ituran's the would management thank are Mr. and welcome quarter Udi with me to of conference call Eli a all you. hosting CFO like conference Kamer, to second the Mr. summary today Mr. the I will a CEO financials. begin by Deputy Eyal Mizrahi, Sheratzky, results, of of summary the of with CEO; Finance; Ituran's and followed Ituran. Eyal VP

will We the this like conference the the that safe please? question-and-answer the harbor Eyal, to call. statement begin, And contents session. of now press for would covers I'd then in you to also everyone open like remind today's call release

to like XXXX thank of I'd today. us call. Kenny. I to quarter you would And you, welcome like to our joining second all Thank for you

our with profit. especially in with in improvement pleased across the continued which we are geographies revenue in second the We growth operate, ongoing results, quarter

pleased also subscribers the quarter, end of at additional expectations. came the brought in are We the solid we which our of high in with level net

against the of negative These which achievements come despite dollar the the sharp in our currency impact U.S. denominated in dollars. devaluation local U.S. lowered quarter, the results presented

currencies, seen we growth accelerated local have in the we measured operate. which in geographies of In in fact, we most

from telematics initiatives of ongoing [ and reflect our growth Our results traction products our solid demand many ]. services location-based for especially increased broad and new

we and This due well continuing markets. more global to our to end end quarter, the subscribers both to initiatives at new per expectations bring are as quarter. subscribers high is subscriber Our XX,XXX new base footprint the of and XX,XXX between net added services our of our as diverse XX,XXX in the

launched driving few subscriber past years, we've growth engines, new a accelerated have growth. and of seeded the number Over initiatives

adjustment have initiative, other one verticals our telematics same limited of engaged to successful providing our the core in our we services. geographies them We which new to At been to geographies. the are actively time, taking expanding business and of are

remember actively and broaden a into existing signed to with our year are new we customers. we may landmark and Santander Bank looking ago, markets solution a finance You that other with agreement

Our SaaS technology shared [ use sharing efficient smartly vehicle matching flexibly ] for of fleet through all-in-one with vehicle fleet helps vehicle unused and demand. owners

we technology We have the including Israel been traction, other States. the to and are gaining geographies, leveraging solid and now United

this Microsoft fleets, seen, in businesses, type few from well with use our leasing and looking I the to Cup as days fleets share rental video the watch you as ago, of their effectively to out and may as a regard have to and see Porsche a the press Carrera significant service of all technology demand efficiently car of collaboration for encourage Brazil, Porsche in vehicles. Also, with companies action. we release put corporate We which for you of are our more of

with such associated leaders. proud a industry and part incredibly of are We be this to

the Additionally, leadership. unit our it telemetry at Porsche the that heart under the the car demonstrates technology demanding fact of system conditions is most runs telematic racing

from used OEM is attractive to goals a capabilities already project in Microsoft, the these make such and our involved associated subscribers, in project throughout as of technologies to apart our of being motorsports One for being Porsche looking down players. in this, year honor new with the bring more developed over the to leverage business it are we to and Ituran and this past latest

throughout very South the they motorcycle Porsche a doing We telematics with a potential, Brazil for with the in work strong total are for I strong new America product addressable recently a given want to thank motorcycle Cup. culture. our market Carrera team exceptional launched significant

We are we in are discussions. active companies, from interest and insurance already and seeing OEMs

major At in services to number the countries also we a discussions additional limited in same OEM car we with are are already our manufacturers, focused work to OEM to South with. the We of addition broaden active majors time, on broaden provide scope to in looking in existing partners, service order are of to that America. the we geographies, which X our

to to in goal of services. stolen provide with is to OEM suit potential many telematics We subscribers see via new vehicle this bring manufacturers The recovery a in the initiative. growth

financial which guidance the ahead the guidance of to always looking in that is EBITDA and subscriber full-year we year, to From Today, of EBITDA we between addition a guidance used $XX for $XX perspective, reiterate growth, we on this to XXXX, provided million remainder million. XXXX, do. earlier our

our further million midterm cross to Looking out, landmark is XXXX. short-, the milestone in $XXX EBITDA

to We meet quarter. continue each our with in subscribers to at XX,XXX XX,XXX around track Even on targets. expect this remain currency subscriber and new net quarter, we growth the headwind

million, our our that of quarter. net ongoing continued dividend the at same is and is $XX of a solid we It the current to This we of dividend policy. shareholders. line our last and million quarter increase the cash over $X generation in strong with Given quarterly year-ago profitability, XX% position level share over continue that issued cash strong with

We from annualized X%, and loyalty company solid to reward return basis long-term support Ituran. on which a Our for [ ongoing our return represents over an a is their a dividend of of ]. see our strong very as shareholders dividend yield

initiatives on our local another look summary, which is over I growth accelerate as results growth XXXX. we In FX quarter And of the when to We many performance, XXXX in this continue the time especially that would second trend highlighted, of solid long is clear the to the currencies. and remove passes the we term. expect given will in of quarter mid- at believe noise

the will operating some as mature. And faster to I to subscriber you due leverage increased over our revenue, of growing increased that, business. ahead. Eli. constantly profitability to forward profit updating long to initiatives please Eli, into ultimately growing the with in our inherent I hand Our further translate term go gross over growth look with

a results. will short of summary I provide Thank you, financial the Eyal.

can You issued today. we detailed release the in more find earlier press results that the

quarter second compared in million $XX.X with impacts in revenues were translated a versus of currencies dollar $XX.X strengthening dollars. when quarter U.S. the increase revenue the Ituran of U.S. year. last Second operates the revenue X% million, which The various in local the into

from XX.X% of the breakdown quarter of in Brazil, of for $XX.X EBITDA In an year. an X% the subscriber base Revenue World, XX%; increase the by increase Rest geographic and previous local revenue local The of expanded X% in increase million subscription second revenues from of XX%; of of of year-over-year. in grew XX.X% quarter. the year-over-year revenues the last X% million, In second increase compared an were X% an currency, X,XXX,XXX the year-over-year quarter the by million in an local in was XX,XXX revenue, of of increase and to Israel, were end quarter follow: $XX.X quarter quarter of increase quarter, the currencies, $XX.X in currencies, XX%. EBITDA end revenue with fees of an the as or local EBITDA X%. Product million, second currency, XX%. grew or of The $XX.X X% year-over-year. was of

$X.XX, the or in share with of net diluted of $XX.X Net XX% $XX.X second In an year. $X.XX income X% local increase currency, was the of million diluted share quarter million income for per earnings of quarter compared per last or grew second earnings year-over-year.

Cash quarter operations of million. flow for the from second $XX.X XXXX was

position $XX.X $X.X securities, company XXXX, of cash, $XX marketable cash, June XX, amounting to of cash million net $XX.X of is million, $X.X including of marketable of net This $XX.X had a XXXX. amounting the cash compared million of securities, a position including debt year-end million, million of of million. a as a debt As and and with to

current the Directors The profitability, Board and company's dividend for strong dividend $X declared of takes positive of continued account ongoing flow quarter the strong The balance into a sheet. cash million.

I'd session. Operator? the And call for question-and-answer that, with open to like the

from Barclays. question [Operator Instructions] Reimer first Chris of The is

product could to quarter. this the stronger wondering what quarter? Congratulations on you the some contributed solid if about I talk was growth of

Mainly, that customers, focused but also hardware; they first which third-party had have our on strong called main all, which they which if -- of a a a company mainly we and I as quarter. many subsidiary, a supplier, focus remind are you ERM, is is,

have Since world. they are volatility among we on they because have some quarters the selling different it's really depend almost remember to only around hardware, from customers

on changes in And pricing, or you're environment was it. in pricing macro your any the Got if geographies? seeing -- this of pricing in any environment, changing I pressures wondering

is The No. answer no.

to main Ituran, have that subscriber We the remember again, fees. is source revenue to, the

average to We have about ARPU the is $XX. that understand

look by can on historical say, So user, sell as that the more to see the Regards order much in And and case, sensitivity prices subscribers. low. in quite you field and end the hardware low the quite that very we low numbers, itself, is this we our as pressure definition, if I in among as our well. margin are don't more get are

you it. the and I missed and been this housekeeping if aftermarket I on one apologize release, subscribers. had press for Got just previously And more OEM the but giving breakout

a So reporting? it quarter. change Is I in that this didn't see

we that do it. not will to it I'm try yes, Actually, did But constantly. sure we

divided. the high, the when I are think very because difference are we -- is differences

it quarter, balanced more I think this that was probably.

of Glinyanov is The Freedom next from Sergey question Markets. Capital

foreseeable your outlook future? sales growth for Maybe for results. provide Pretty good rate the could product you

of Again, to monthly the that program sell the the lease done is mentioned Israeli remind I like by In can company. World, the with our I or than which all say, XX% would I that we by as of mainly sales subsidiary almost, product and our fees. it more we a revenues, our Rest

it's about had to about on between something pressure, inventory quarters always to it's mainly dependent talk our and our inventory distributors, hardware cetera. decision, our, et because let's I when selling say, their volatility that subsidiary some And

any we expecting that are think I not So growth. specific

that on an annual think the number I is basis. average

an judge it You have annual basis. on to

it or Is all when markets -- where related to have Okay. you presence? the

services -- XX% our it's our of services. More No. see to you and our than the is is hardware of Because to lease the geography is P&L integrated product. in that it. We what divided revenues

part is you see CapEx you see CapEx, hand, revenues. here, what okay, service it's in in cash the the it, the of one in the report. flow And So in

our subsidiary, the see see of more in don't our which supplier is total Israel of only than and you So What revenues. you a in hardware. is XX% sales

next is of The from Oppenheimer. question Eli Goldberg

know want product if the launched? about just that, some that could insights provide should think we -- how you you And you guys I more about motorcycle forward? to guys going

I I QX, would I in, in months say, we'll I call it mentioned do of ago, the a our started, main our again. We two it course, will solution but few think just also launch in that -- to channels.

and is mentality; and that realized companies provide high-end And portion wasn't is We is high. a One and very because motorcycle is I by expensive that vehicles or would companies to and common, kind motorcycle is even those the high in of case, motorcycles in to market insurance by insurance market, Brazil. that with of Honda. very Brazilian risk Yamaha the say, theft of insurance didn't there happy

our now in already discussions solution, risk, Thanks motorcycle selling And the to our more that interested it's sell case, are owners. insurance or companies policies we to motorcycles. to which are in in that for start show solutions insurance reduced we

more it not started the I and I ramp ICS can in to with -- believe cars, high. in that wouldn't much a contribution like starts the it's X, And is we size. in it for profit be that So But the currently revenue up. year say past, material or the

order convince it's cannot putting in we also a get we focus show order can from motorcycle. report in deal, telematic yet OEM manufacturers in which second benefits solution but with or and segment as motorcycle customer for to connectivity a them in The a to car final OEM, discussions and contract what them something did is their I are which segment, a this a an what with

offer. else, So have we this is something now which to

Israel, is and mainly way, cars It's in a want solution, add do insure of contributed We something simple subscribers, than growth have that the to I I their already also motorcycles the for ] year, thousands in by sales more in for to not which And a motorcycle. different more our motorcyclists offering -- of theft. now a solution and in -- already [ than Brazil, this last we -- have Israel, in only motorcycles. example, solution. for

expensive; very our having to instead insure, Ituran by because course, of So so very, their insurance which don't join solution they base. risk a the nothing as reduce is motorcycle find decide they owner customer and, here a of installing

going growth would should talking for ahead, say how at Ituran? look we follow-up, to at? another And Okay. investors you about the look 'XX What even,

XXX,XXX the of SaaS Even EBITDA, have X.X and we close side, the of it's I'm customer EBIT year, second, means company, a kind the million that ] a and always our grow, important our the EBITDA. since to first profit not [ on to operating is profit have are an the so we we in But when we very model, and because revenue of to XXX,XXX considering base it all, we're EBIT grow growth our influence margin and subscribers. expecting if a dramatic. leverage

$XXX to And we not we in for a it's guidance -- put achieve EBITDA a we still, in of million. goal. something goal, but And And believe believe of already we if I it's that we that it that XXXX put is as point, provide kind will get guidance, also, XXXX. as a

to Since something type, way of different of emerging control our most them or currencies to QX. operation the way, have are predict happened, put here. any we our don't revenues in -- comes markets, it's like note by and from to and I Now, have a currencies that the

the impressive that it's now. So million, very of say it's when -- I this But think as gross currencies of I terms quite in profit, is is based course, on $XXX goal. a

The next Investment Boris Schneider of question is More from House.

the is of there quarters this growth. compared to which that XX on are previous obviously, ARPU -- question was My declined roughly quarters quarter,

to is So the or ARPU dollar? it lower the the going because more currency of margin what other products? besides sales else Is against in depreciation there OEM

the would say even QX you eliminate is the we FX, that if that for think ARPU I higher.

that local currencies, you ARPU. this a is reason have we the ARPU. see only So lower In higher

big taking up car dealers, currencies. lower, local lower, solutions right, like some the ARPU data you're Although still OEM our there's is is that application it's still, for the sell but we in variety

no are time. at There Instructions] [Operator questions this further

tomorrow his ask www.ituran.co.il. closing Mr. website, would be with call I to remind to statement, on Sheratzky this participants will Before a I available of go that ahead like replay Ituran's

Sheratzky, make would you a concluding like Mr. to statement?

our X On we would ] you, behalf of and conferences meeting see continued our management with some Ituran, shareholders, I business. of support coming of you the presenting for thank In long-term hope Micro Needham, [ months, and and your to will at investors the to be of and we like interest there. LD

a reach Relations or our speaking interested us, with with free you, out Investor have that, to And Thank good are you our meeting feel end to call. day, If in team. guys. we and

Thank your conference This XXXX Ituran second concludes you. the of quarter participation. results call. Thank for you

You ahead go may and disconnect.