Ituran Location and Control Q2 2025 Earnings Call Transcript

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August 19, 2025

Key Takeaways

  • Positive Sentiment: Ituran reported record Q2 revenues of $86.8 M and added 40,000 net subscribers, remaining on track for 220–240 K net additions in 2025.
  • Negative Sentiment: A two-week suspension of economic activity in Israel due to the war with Iran led to a 6% decline in product revenues and modest FX headwinds deflating USD-denominated results.
  • Positive Sentiment: The launch of a new motorcycle telematics product gained traction across geographies, highlighted by a partnership with BMW Motoraid in Brazil targeting tens of thousands of new subscribers.
  • Positive Sentiment: Ituran generated $22.4 M in operating cash flow and the board declared a $10 M dividend (50¢ per share), delivering an annual yield of ~5% and retaining $6 M in its buyback program.
  • Neutral Sentiment: EBITDA was $22.9 M (26.4% margin), down slightly from last year due to one-time anniversary expenses and currency effects, but up 2% in local currency terms.
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Earnings Conference Call
Ituran Location and Control Q2 2025
00:00 / 00:00

There are 6 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. My name is Kenny Green. I am part of the Investor Relations team at Ituran. I would like to welcome all of you to Ituran's results Zoom webinar, and I would like to thank Ituran's management for hosting this call. All participants other than the presenters are currently muted.

Operator

And following the formal presentation, I'll provide some instructions for participating in the live Q and A session. I would like to remind everyone that this conference call is being recorded and the recording will be available from the link in the earnings press release and on Ituran's website from tomorrow. With me today on the call are Mr. Eyal Sheretsky, CEO Mr. Udi Mizrahi, Deputy CEO and VP, Finance and Mr.

Operator

Eli Kamer, CFO of Ituran. Eyal will begin with a summary of the quarter's results followed by Eli with a summary of the financials. We will then open the call for the question and answer session. You should have all by now received the company's press release. If not, please view it on the company's website.

Operator

I'd like to remind everyone that the Safe Harbor statement in today's press release also covers the contents of this conference call and the associated presentation. And now, Eyal, would you like to begin, please?

Speaker 1

Thank you, Kenny. I'd like to welcome all of you to our second quarter twenty twenty five results call and thank you for joining us today. I'm pleased to report another solid quarter for Ituran. We've continued to execute on our strategic objectives, delivering steady growth. This was achieved despite a war between Israel and Iran during the quarter, which led to an approximate two week suspension of economic activities in Israel.

Speaker 1

On the positive side, during the quarter, Itran celebrated its thirtieth birthday, of which 20 of those has been as a public company, and we hosted a company event for employees, management, and partners. This is a significant milestone, and I am proud in what we have been able to accomplish over the years, thanks to our dedicated employees and management. We aim to continue our path of growth and profitability for the decade ahead. Our results show an ongoing expansion across our target geographies in our large subscriber base of over 2,500,000 subscribers. In the second quarter, we added 40,000 net subscribers and we remain on track for twenty twenty five subscriber growth to reach between 220,240 net subscribers.

Speaker 1

In all our geographies, we continue to launch attractive new and advanced telematics products and services, adding value to our customer base, including a new product targeted to motorcycles owners, which is seeing solid traction. The strengthening of the dollar versus many of the local currencies in which we operate compared with the second quarter of last year had a slight deflating impact on our financial results when denominated in US dollars. In local currencies, in each of our regions, I note that we grow slightly ahead of what our US dollar denominated results suggest. We had a good second quarter, and I want to summarize some of our activities, which will continue to contribute to our growth and success. We continue to see solid demand for our location based product and telematics services in all our regions as well as traction from our new initiative and services.

Speaker 1

As I mentioned earlier, the war with Iran in second quarter had a short but intensive economic impact in the country as the country came to economic standstill for about two weeks. This impacted new car sales, which led to a slight delay in product sales. A high car theft rate in Israel continued to provide strong demand for our services in the country, and we are reaching additional new subscribers from part of the market that were previously untapped by us, such as lower priced new vehicles or the second hand car market. Finally, our usage based insurance business in Israel is seeing good traction and bringing continued strong subscriber growth in Israel. In Latin America, we continue to expand our reach in the motorcycle market, and we announced a new partnership with BMW Motoraid in Brazil.

Speaker 1

Motorcycle represent a significant market opportunity, being the top mode of transportation in many parts of the world. It significantly increased our total addressable market. Our new product targeting motorcycle continues to gain traction across all our geographies in South America. With Brazil as our starting point, we plan to scale into other high growth motorcycle markets through partnerships with local OEMs as well as sales to the aftermarket. Ituran generated a high level of cash in the quarter, amounting to $22,400,000 in operating cash flow during the quarter.

Speaker 1

Ituran is focused on shareholder value creation, and as such, the board of directors decided to issue a dividend of $10,000,000 to shareholders. I remind you that at the end of last year, we increased our dividend policy by 25%, from issuing $8,000,000 per quarter to $10,000,000 This represents 50¢ per share. Our dividend yield on an annualized basis represents a return of around 5%, which is a very solid return from a strong and stable company. We see our ongoing dividend as a reward to our shareholders for the loyalty and long term support of our company. At the same time, as of the end of the quarter, we had around $6,000,000 still available under our buyback program, which we intend to deploy over the coming quarters.

Speaker 1

In summary, we remain pleased with Iran's ongoing performance. We believe we will continue to see growth throughout 2025, adding between 220,240 new subscribers in 2025. At the same time, we look for more avenues for accelerating our business even further across all our regions. And with that, I hand over to Eli. Eli, please go ahead.

Speaker 2

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results that we issued in the press release earlier today. Second quarter revenues were a record $86,800,000, a 2% increase compared with revenues of $84,900,000 in the second quarter of last year. The overall strengthening of the US dollar in the second quarter versus some of the various local currencies in which Ituran operates in impacted the revenues when translated into US dollars.

Speaker 2

In local currencies, revenues grew by 4% year over year. Revenues from subscription fees in the quarter were $63,800,000 an increase of 6% year over year and in local currencies, an increase of seven percent. Product revenues in the quarter were $23,000,000, a decrease of 6% year over year. Product sales were impacted due to a cessation of new sales during the twelve day war between Israel and Iran during the quarter. The subscriber base expanded to 2,548,000 by the end of the second quarter, an increase of $40,000 from the end of the previous quarter.

Speaker 2

The geographic breakdown of revenues in the second quarter was as follows: Israel, 54% Brazil, 23% rest of world, 23. EBITDA for the quarter was $22,900,000 or 26.4% of revenues, a decrease of 1% compared with EBITDA of $23,100,000 or 27.2% of revenues in the second quarter of last year. In local currencies, EBITDA grew 2% year over year. Operating expenses in the quarter were slightly higher due to a onetime operating expense in the second quarter related to the company wide celebration of our thirty years milestone. In the second quarter, finance expenses were 1,300,000 compared with finance income of $100,000 in the second quarter of last year.

Speaker 2

The expenses this quarter was due to the strongly increased level of the Israeli shekel compared to the US dollar at the end of the quarter, which led to a lowering in value of US dollar linked deposits in Israel, which caused a noncash finance expenses on those deposits. Net income for the second quarter was $13,500,000 or diluted earning per share of 68¢, an increase of 2% compared to $13,100,000 or diluted earning per share of 66¢ in the second quarter of last year. In local currencies, net income grew 6% year over year. Cash flow from operation for the 2025 was $22,400,000. As of 06/30/2025, the company had net cash including multiple securities of $88,700,000.

Speaker 2

This is compared with net cash including multiple securities of $77,300,000 as of year end 2024. The board of directors declared a dividend of $10,000,000 for the quarter. The current dividends takes into account the company's continuing strong profitability, ongoing positive cash flow and strong balance sheet. And with that, I'd like to open the call for the question and answer

Operator

Our first question will be from Chris Raymer of Barclays. Chris, please go ahead.

Speaker 3

Yeah. Hi. You can hear me okay?

Speaker 4

Yeah.

Speaker 3

Well, thanks for taking my questions. First off, I'd like to ask how should we

Operator

Chris, we lost you for a second. Please repeat your question.

Speaker 3

Hi. Sorry. How should we be looking at growth into the second half? And would you say you've seen a bounce back in Israel?

Speaker 4

Actually, we still track with our with our forecast of 220 to 240,000 subscribers. So I believe that this is will be the growth in subscribers in the second according to this, we will have the the growth in the second half of the year.

Speaker 3

Right. Okay. And can you provide any more color on the BMW deal? What's the potential potential scope of customers, and when might we see impact?

Speaker 4

Actually, BMW Motorcycles in Brazil are signed with us a kind of partnership agreement, and they're going to install our motorcycle solution with their with their motorcycle, with the BMW motorcycle. It's a very strong brand in Brazil. In terms of numbers, usually, when we sign OEM contracts, we get kind of roughly projections for numbers, but they never commit. But based on the relationship, the the the negotiation, and the discussions, we are quite confident that we are talking about tens of thousand of new subscribers every year in the coming years.

Speaker 3

Quite. Thanks. That's helpful. And maybe for Ellie, how should we be looking at the financial expenses going forward?

Speaker 5

Hi, Chris. Financial expenses usually, you know, if you look at the past, our average is, you you know, around breakeven or a little bit positive, like, until half a million dollars. But the financial expenses slash income is really linked to the FX and our deposits of cash that we have. This quarter specifically, we had the deposit linked to the US dollars here in Iran Israel, which were attributed to the dividend that we are going to pay. And due to the fact that in the June, the shekel got stronger significantly, that affected our financial expenses.

Speaker 5

So basically, it's not in cash flow, but this is. So going forward, it's hard to say.

Speaker 3

Got it. Okay. Thanks. That's helpful. That's it for me.

Operator

That looks like that's all the questions we have in the queue. I'll hand it back to Eyal for the closing statement. Eyal, please go ahead.

Speaker 4

Thank you, Kenny. On behalf of the management of Ituran, I would like to thank you, our shareholders, for your continued interest and long term support of our business. We look forward to continuing our accomplishments over the next decade. If you are interested in meeting or speaking with us, feel free to reach out to our investor relations team. And with that, we end our call.

Speaker 4

Thank you, and have a good day.

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