Ituran Location and Control Ltd (ITRN) 2006 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Ituran Ltd. fourth-quarter 2006 results conference call. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded February 20, 2007.

I would like to remind everyone that the conference call may contain projections or other forward-looking statements regarding future events or the future performance of the Company. These statements are only predictions and may change as time passes. Ituran does not assume any obligation to update that information.

Actual events or results may differ materially from those projected, resulting from changing industry and market trends, reduced demand for the Company's products, the timely development of the Company's new products and their adoption by the market, increased competition in the industry and price reduction, as well as risks identified in the documents filed by the Company with the SEC.

You should have received by now the Company's press release. If you have not received it, please call Gelbart Kahana at 1-866-704-6710. (Repeat phone number).

I will now hand over the call to Mr. Ehud Helft of Gelbart Kahana. Mr. Helft, would you like to begin?

Good morning and good afternoon to all of you. First, accept my apologies for the few minutes of delay. We're going to (indiscernible).

Now, I would like to thank Ituran management for hosting this call to discuss the fourth-quarter and the full-year 2006 results. With me on the call today are Mr. Eyal Sheratzky, Co-CEO; Mr. Eli Kamer, the CFO; and Mr. Udi Mizrachi, the VP of Finance. Eyal, would you like to begin, please?

Welcome, everyone, and thank you for joining us today. Our fourth-quarter results and [strong view for it to run]. Excluding the business with Partner Communications that we closed at the end of the first quarter of 2005, revenues in the year grow 18.3% over last year and net income grow 35.5%.

Our subscription business continued to show strong [asset] growth through the year. We maintained our trend of continually increasing our customer base. And in the fourth quarter, we added 12,600 net new subscribers, which is in line with our long-term growth strength.

Our fourth-quarter results were also particularly strong on the top line and bottom line with revenues growing 23.4% over Q4 last year and net income growing 41.3%. In fact, revenues from the wireless products showed particularly strong growth of 31.4% over those of the fourth quarter last year. We continue to see this business as a strong growth engine for our Company.

Other results from the year demonstrate the strong inherent leverage in our core subscription business model, which means that every new customer on the relevant infrastructure with almost no additional costs bring higher contribution to our profits. During the third quarter, we signed an MOU to acquire ERM, and the acquisition was completed near the end of the fourth quarter.

To remind you, ERM is a manufacturer of leading-edge vehicle alarm and GPRS tracking systems. Even so, this was a small acquisition with the strong synergies and growth potential between ERM and Ituran, as it adds a number of cutting-edge security and tracking solutions to our existing product portfolio. And I look forward to updating you on our progress in this business over 2007 and (technical difficulty).

As start of our growth strategy, we're constantly examining M&A opportunities. And I myself have devoted a portion of my time for this. We're examining a few acquisitions/opportunities that will add strength our presence in markets where we already operate, or will bring us into new geographies. We're committing to doing such deals only if they make strong business and financial sense, and I hope that we will be able to announce such deals during 2007.

And with that, I would like to hand over to Eli for the financials.

As for the financials, revenues for the fourth quarter of 2006 reached $29 million. This represents 23.4% increase compared with revenues of $23.5 million in the fourth quarter of last year. Revenues for the year 2006 were $104.1 million compared with $98.1 million in 2005, representing growth of 15.5%, or 18.3% when excluding the cellular-related business that was discontinued in 2005.

The increase in revenues was driven by the continued growth of the Company's subscriber base and strong growth in sales of the Company's wireless products. Revenue breakdown for the quarter was $14.2 million coming from subscription fees from our location-based services, which showed a year-over-year growth of 16.3%, and $14.8 million coming from product sales which showed a year-over-year growth of 31.4%.

We had somewhat an unusually-strong quarter in product sales, with some of this growth coming from a onetime order from South Korea for additional base stations. In addition, we sold some 15 of the specific regular orders between quarters into the current quarter. Finally, product revenue included one month of revenue contributions from the ERM business recently acquired.

Revenue breakdown for the year was $54 million from subscriber fees and $50 million from wireless products. The geographic breakdown of revenues in the year was as follows -- Israel 38%, the United States 17%, Argentina 10%, Far East project 12%, Brazil 23% with Sao Paulo accounting for a majority of that. Our new venture in Rio is progressing as planned, but contribution to the overall number is still small.

In terms of subscriber number, we reached a total of 396,000 at the end of the fourth quarter of 2006 compared with 339,000 at the end of 2005, a growth of 16.8%. In the quarter, we achieved an additional 12,600 net subscribers, which is in line with our long-term growth expectation.

Gross margin in the quarter was 46.1% compared with 48.2% in the fourth quarter of 2005. The lower gross margin is mainly as a result of the business mix in the quarter, with an increased portion of product sales which carry a lower margin than revenue from subscribers.

In addition, since our service fees in Israel are linked to the dollar, the weakness of the dollar versus the shekel caused a relative increase in our shekel-related costs. Additionally, the costs in setting up our business in Rio had a lowering effect on our margin.

Our gross margin for the year was 48.3% compared with 47.2% in 2005. Overall, we expect our gross margin to show continued year-over-year growth throughout 2007, as our member numbers continue to grow around new regions and our fixed costs diminish as a percentage of our revenues.

Operating expenses in the quarter were 23.6% of revenues, an improvement compared with 24.9% in the fourth quarter of last year. Operating expense for the year were 24.5%, an improvement over 25.1% as reported in 2005.

Operating profit for the fourth quarter of 2006 was $6.5 million compared with $5.5 million in the fourth quarter of 2005. This represents year-on-year growth of 18.4%. Operating profit for the year was $24.7 million compared with $19.9 million in 2005, representing growth of 24.1%. Excluding these three effects, our fourth-quarter 2006 operating and gross margin would have surpassed those of last year.

Net profit was $5.2 million in the fourth quarter of 2006, representing a growth of 41.3% opposite $3.7 million as reported for the fourth quarter of 2005. Net profits for 2006 was $19.3 million compared with $14.4 million in 2005. Excluding the discontinued business with Partner, the growth was 35.5%.

Fully diluted EPS in the fourth quarter of 2006 was $0.22 compared with $0.16 per fully diluted share in the fourth quarter of 2005. Fully diluted EPS for 2006 was $0.82 compared with $0.71 in 2005. At the end of the year, we had 23.5 million in fully diluted shares.

Cash flow from operations during the fourth quarter of 2006 was $5.2 million and for the year as a whole was $18.3 million. As of December 31, 2006, the Company had a net cash position including marketable securities of $59.4 million compared with $54.7 million on December 31, 2005. During the year, cash was used for the purchase of ERM, as well as a portion of the approved $10 million share buyback last quarter. To date, Ituran has purchased 50,000 shares totaling $0.9 million.

I will now hand back to Eyal.

Looking back, 2006 has been a strong year for us. Overall, we continue to be very pleased with the results and the direction in which the Company is progressing. Our visibility remains excellent, and I do believe we will continue to grow our business over this year and beyond, maintaining double-digit growth in our top line in 2007 as well with a higher growth rate in our net profits due to the leverage in our business model.

And with that, I will now be happy to take your questions. Operator, please?

(OPERATOR INSTRUCTIONS). Amy Nam, JPMorgan.

It's Amy Nam for Paul Coster. My first question -- regarding gross margins, could you give a little bit more color as to what happened there sequentially? I believe on the last call, you had said that you expected them to be flat with the third quarter. So I'm just wondering, how much of that was related to unexpected product mix from Korea, and how much of that was related to kind of Rio startup costs that are still dragging those margins down?

If you're looking at the gross margin, first of all, you're right. The gross margin in the fourth quarter of '06 was 46.1. If you were to compare it to last year to the fourth quarter, there was a decrease. The lower gross margin is mainly as a result of the business mix in the quarter with an increased portion of the product sales, which carried a lower margin if you compare it to the service segment.

In addition to that, if we're talking about the service segment, which you just mentioned, in Israel, [simtop] services in Israel are linked to the dollar. And the dollar has been with a weakness versus the shekel, if you compare it to last year about 8%. It caused a relative increase in our shekel-related costs.

Also, there is additional the cost of Rio that last year was not in our P&L. And in this year, we have it. All of those effects decreased the gross margin. But as Eli mentioned before, if you exclude those effects, the gross margin increased compared to last year.

I guess kind of related to that, Korea and China. Can you give an update as to what the expectations are for the business there? Were some of the product strengths that you saw in the fourth quarter from Korea? Is that -- was that earlier than expected? So should we kind of bake that into our expectations for the first part of '07?

Actually, no, since we reported that the Korean customer accelerated the phase two and three. We worked very hard on this expansion. And of course, we realized revenues for this part of the Korean business since Q3. And it's continued in Q4. So actually, we realized more revenue that we expected of the Korean contract in 2006.

I must add that we, in Q4, after the soft launch of [Serol], there was some need for additional base stations to cover better the area, so we an one-time -- I would say -- order. And we supplied it during Q4, and this resulted with additional revenues, which you can see that a portion of the Far East revenues was higher than in Q3.

Could you give us a little bit of color as to what's going on in China at this point?

In China at this point, we're finalizing the -- I would say -- the first phase of Beijing and Shanghai is almost finalized. And we are absolutely waiting for additional orders for a unit. We got the first order during the last year, and we start to supply it. We still didn't supply all of the order.

And recently, we got another order. But again, since it's a low portion or a low amount of units, it didn't require us to report it on a different basis. So still, we have orders for units. It's quite low. And we are waiting -- specifically the Shanghai operation will be much more promising in the next quarter of 2007.

Kind of moving on to the competitive landscape, Eyal, can you give an update as to what you're seeing there? Is there any ASP pressures or changes in competitive dynamics?

No. As I said, I think in the last conference call when we talked about the customer desertion that we had in Brazil and I was asked about this issue as well. Since I remember Ituran, this was since we established the Company, the competition was always in the air. And nothing actually changed in 2006.

Of course, sometimes, there is more aggressive competitors. And then, it's become more calm. I would say that the current situation, today, there is a status quo between our main competitors, (indiscernible) Pointer in Israel. It's LoJack in Argentina and Brazil and of course other smaller competitors in Argentina and Brazil. So actually, I would say that I am not -- Ituran is not facing more stronger competition compared to the past.

Then last question and I'll let somebody else jump in. With regards to the M&A activity, or what you're evaluating, what is the specific geography or market segments that may or may not be part of your current product portfolio there, looking attractive to you from an acquisition standpoint?

So, I will divide it to two main targets for acquisition. One target, which we call it more local target, is to extend the products and the services portfolio that we can offer to the current customers of Ituran, which the customer base today around geographies, I would say close to 400,000. And by doing those acquisitions, also concentrating in having solution to approach different segments that we -- the traditional Ituran solution, we are facing difficulties. So this will be one aim of the total acquisition program.

And we will see -- I hope shortly -- we will see one or two acquisitions which will allow a local operator, such as the Israeli operator or the Brazilian operator to increase revenues and segments. This is one target.

The other target, which is more -- it's taking more time to finalize those kinds of negotiations. And to finalize our analyization about the risk is expansion to new geographies. And in that case, we're very concentrating in acquiring market leaders that has the right model, which is similar to the Ituran model. And the main aspect is a recurring revenue model in a market that has already adopted this model.

We're now concentrating in Europe, and we're talking across Europe because we understood that to start looking for new geographies -- new countries in Europe, and waiting for regulation approval to the bandwidth, it's almost impossible. So we will do it absolutely by acquisitions.

And I must admit that after exploring the markets, we found some interest -- some interesting targets of companies to acquire. We're now talking to some of them. Of course, it's not something that is happening 24 hours. But hopefully, since we are spending a lot of time and efforts, we will achieve expansion -- geography expansion with our core business by acquisition during 2007.

We're judging small-to-medium, even some bigger opportunities. When I am talking about small opportunities, we're talking about companies that we're evaluating them in around 10 to $20 million. And the other, more large cycle acquisitions, we're talking about 40 to $80 million. And again, we're not yet in any negotiation that's getting to the point that I have something to declare.

Maynard Um, UBS.

This is [Tom Calooney] on behalf of Maynard. A couple questions -- first one, I was wondering, can you give an update on the progress of the Rio de Janeiro business? I think in your last call you mentioned that you were still building out that region. And I am just wondering, when do you anticipate the buildout for that region to be completed? And is that more of a second-half 2007 story as to when you think you can see some of the benefits -- material benefits?

So Rio de Janeiro is a -- growing as our plans. We're now talking about -- during January, which is -- don't forget, this is the month before the carnival. This is usually a typical vacation season. But still, we succeed to add few hundreds per month of new subscribers.

And since we compare it to three months ago, we're very pleased with the growth. And hopefully with continuation of this growth rate, Rio de Janeiro will be in a breakeven point in two to three quarters from now hopefully.

And then, changing subjects slightly, on the AMR side, I think -- is that business still tracking kind of ahead of your expectations, or how -- what have you seen in Q4 then? Anything different in Q4 than what you thought in prior quarters?

Actually, Q4 compared to Q3 wasn't higher growth. But compare it to Q4 of 2005 and compare all the year 2006 to 2005, one of the most growing division in our group was the AMR with a very impressive growth rate, which we're not yet publish it. But of course, during the 20-F, when we will do it, you will see it has a very -- we had a very large experience of high growth in 2006. And based on Ituran's estimation, which is our customer, [Enwall], 2007 should repeat somehow the 2006 growth.

And then going back to -- I guess as a follow-on to Amy's M&A question, typically, do you -- as you look at these, what's kind of a thought from kind of a business sense, financial sense. It is there a hard and fast rule as to whether you would -- is it only accretive deals that you look at, or would you also consider neutral or potentially even dilutive deals if it made sense from a long-term strategic standpoint?

There was some interference from the line. Did you ask about the acquisitions potentially?

I just kind of wanted to get a little more color on the financials. Do you typically only look at deals that are accretive, or would you consider deals that are neutral or potential even diluted?

Actually, when we are checking potential deals, and we're doing our calculations, I can't say with strong confidence an answer -- the last point of your question is that we're considering acquisition with multiples which represents lower multiples than the industry of Ituran, which would allow us besides thinking strategic, and besides making the right acquisition to support our results in the future, of course to create value by diluting the multiple of Ituran once we're making the acquisition.

But the first and the most important component for the acquisition is to see strategically that it is easy to consolidate it. It's easy to cooperate with a target company. And usually, when we're talking about new regions, of course, one of the components is the management skills. And we're not intend to create turnaround. We intend to leverage the know-how of this Company with Ituran's know-how, Ituran's back office, and Ituran brands.

And then lastly, on the tax rate, I think previously, you had guided to 27, 28%. In that still the right number to use going forward, or should we look at maybe a lower tax rate (multiple speakers)?

I think for this year for 2007, our estimation is on the range between the 28 to 29%, something like that.

So even though the tax rate (technical difficulty) prior quarter was I think less than 26%?

Yes, actually, in 2006, we were expected also higher than the actual number. We prefer to be more conservative in the tax aspects. As you know, there is some influences during the year, and we prefer to be conservative in taking the higher percentage range than to do the opposite. Hopefully, we will succeed with some different results during the year to lower risks.

Yair Reiner, CIBC.

Hello, most of my questions have been answered. Just to go back to Korea for a moment, should we expect that kind of the bulk of phase 2 and 3 is still going to happen in 2007? And to my calculations, it seems that you still have about 12 million or so left of what could do in 2007. Is that in ballpark?

First of all, since we accelerated it even during Q3 and 4, it might be a little bit less. But generally speaking, it's almost this amount in terms of quarters versus Enwall's results. Since [Insurol], as I mentioned to Amy at the beginning, they had some problems that we had to add. And they both -- our customers [both] additionally in base stations, now they are exploring the soft launching Insurol.

Also, they're already deciding -- sign a contract for phase 2 and 3. But there are some technological interference in the bandwidth, which our customer has solved it based on our engineers and the customers and professionals. It will be solved in the short term. And if this is the case, so everything will be on the line. Of course, can be some volatility during the quarters over quarters.

But in terms of our plans for 2007 to finalize phase 2 and 3, as long as the bandwidth interference, which is not related to the system and it is not related to Ituran or its telematics hardware, so as long as they will solve it as they declare, everything will be online. If not, things might change. And phase 2 and 3 can be delayed. But as long as we are understanding now, the professionals, it shouldn't be the case. Let's wait and see.

And then, assuming that there aren't any serious delays in the implementation, when do you expect to have meaningful end unit revenues from Korea? Should that be something we think about ramping in 2008 and later or do you think you might even see it a little bit in 2007?

Of course, as long as the system infrastructure is delayed, so the assumptions for end units should be delayed accordingly. Actually, we didn't provide on purpose any estimations of end units orders besides general understanding that if a customer is buying infrastructure and is spending tens of millions of dollars, his interest is to buy as soon as possible the end units. But it can be -- it can provide a service before the system 100%, technically operating with no interference. We found it in Brazil. We found it in the cost in Argentina, and now this is the case.

This is a heavy infrastructure. This is a very sophisticated technology. So as long as we address to the investors and we will continue to do it. Until the moment that we have something more formal to declare, we don't now how many and what will be the first quarter of big quantities of end units. Hopefully, if everything will go on their way, interference will be solved.

So in the second half of this year, we should expect orders of end units. If there will be delays, of course this will delay as well.

That's clarifying. A question on the vehicle recovery business. Can you talk a little bit about your efforts to expand the market, kind of go after uninsured motorists and so forth? How is that progressing in Brazil and (indiscernible) efforts in that regard (indiscernible) as well?

Brazil is -- for us, is the only market that we use this strategy. This is based on the knowledge that in Brazil, there is a big population that their decision is not to insure their car. It is not typical to Israel. It's not typical to Argentina. So we tried, and we succeed to penetrate this segment and to date continue. The reason I would say again, we use the term "status quo" between the ratio of insurance companies and corporate compared with the uninsured population, which represents today on the incremental subscriber base, about 30%, one-third of our total end user subscribers.

It has its benefits, and it has a disadvantage as well as everything in life. The advantage is that we can charge much higher price per month, and the disadvantage is that always to keep these customers. For many years, it is much more difficult than you have a relationship with an insurance company or car dealer, which usually the decision-making is much more longer-term.

Best of luck for 2007.

Bill Benton, William Blair.

If you could -- you guys usually offer the subscribers by geography (indiscernible) at anymore points? Are you able to offer some color on that right now?

We're not providing it now -- again, not only because of commercial reasons, not because of investor reasons. Anyhow, we're very proud of the geographical growth. You'll see it on the 20th when we will be launch around June.

But actually, I can tell that in every one of our geographies, we succeed to grow our subscribers. Some general word. In Brazil, besides the onetime event that we faced in Q3 that reduced a little bit our expectation to net growth in Brazil, still we succeed to grow as we have planned again without the specific events -- Argentina in line with our expectation, and Israel -- this is the second or even the third year that is beating our expectations -- Israel as we declared. And I remember my roadshow in [NASDAQ] as a cash cow with no growth potential, succeed to continue to grow, and even much more aggressively than we expected. I am happy with that.

And then with regard to South Korea, could you give us -- you talk about these kind of onetime orders. Could you size it for us a little bit?

And then with regard to -- you're talking about some technical delays, and I know you expect to be solved. But it sounds like they're not going to be solved probably by the end of the first quarter here. And while I'm sure you expect your year-over-year revenue to be up nicely, is it fair to assume that you could see a sequential decline in revenue, absent the acquisition contribution?

As we already realized the revenues on those projects -- is a different method than orders and sales. We are -- realized revenues, based on the progress of building the infrastructure, maintaining the infrastructure and deploy it.

In regards to the interference, it's not always going hand-in-hand with the -- our accountant methods, analyze unrealized revenues. But to be more conservative, here's the situation. We will be very radical in terms of the interference of a third party.

Just to give you explanation, before I finish this answer, in order to operate the Ituran system, the differential time of arrival technology, you have to hold -- license for a bandwidth. And this license requires in order to be on exclusive basis or at least on a primary service on those bandwidth.

And even if there is a third party, which can be military in the worst-case and can be some [regu-communication] pirates, which is the best situation, because it's easy to solve, so in that case it interferes the opportunity to provide a service.

Specifically, if you're a new operator and you want to make a hard launch, so the Korean together with us agreed that it won't be commercially marketing wise to be aggressive in advertising and promotion, while the service cannot be 100% accurate. So this is not always should be again hand-in-hand with our revenues realization, but it always was conservative, always will be conservative.

So if we will find the things are not very clear to us, might be that the answer to your question is yes. Might be that we will have to reduce our revenue realization in South Korea. And this is the reason (indiscernible) that there can be volatility between quarters. If you're asking us what is our expectation for the year, as long as our professional and the Korean professional, we're clear that this should be sold and should be sold fast, we're in line with our annual expectations.

Then, how much of that onetime contribution -- you kind of talked about with South Korea in terms of the incremental big difference?

It was a few hundred thousand dollars, a little bit more than that.

And then the accounts receivable, the pickup there sequentially, would that be related to the acquisition, or were there some -- some of these -- like you were talking about -- the product shipments to South Korea that may have gone out late and paid back early in the current quarter?

If you're comparing to 2005, actually there were two reasons. One, as you mentioned is the acquisition of ERM. When we consolidated all the accounts receivable but in the revenues, we consolidated only one month, since the beginning of December.

And the second reason is the growth in the revenues. If you compare Q4 2006 to Q4 2005, which is an increase of more than 30%, and therefore the great results in the sales -- in the product sales. And therefore, it's the explanation for the accounts receivable increase.

Then just a last question on the SG&A -- sequential up maybe about 400,000. How much of that would be related to the acquisition?

On the G&A on the expenses?

And SG&A. G&A, I mean, not SG&A.

It's not material. We're talking about even less than $100,000.

Andrew Spinola, Needham & Company.

Eyal, you made the comment earlier that you expected the AMR business in 2007 to be something similar to 2006. Did you mean that you expected it to show similar growth in '07, or be at similar revenue levels in '07?

No, I meant growth. I'm not sure that it will repeat the same growth rate. But at least in terms of absolute numbers of revenue growth, we are understanding from our customer that we should expect it to duplicate 2006. Of course if this will be the case, or in terms of a percentage, it should be lower. But still, it's a very impressive growth number.

Is that all coming from the water meter business, or do you expect additional types of business in '07?

When I am talking now and what we show in 2006, all of it was regard to the water meters. But not talking about it, and beside these expectations, as spare expectation, we are working towards electricity AMRs. And if we will succeed, to sign one or two contracts. During 2007, it will be additional to what I said.

Last quarter, you mentioned there had been defections or [desertions] -- I forget the word you used in Brazil from that one specific customer that was repositioning. You had said that you thought it might impact the fourth quarter and potentially even the first quarter. Were there any additional subscriber losses in the fourth quarter due to that situation? And is there going to be an expected impact in the first quarter?

Yes. Of course, it was much more lower as we knew and expected in Q3. And this is why we succeed to show -- or to come back to 13 -- almost 13,000 net subscribers. It is the same customer that the main impact was in Q3. And we have additional low impact in Q4, and maybe in Q1. But actually, as you could see, we're back to the reason that these are higher than Q3.

Last question, my understanding is that your wireless revenue that comes from Korea and China as well as the AMR revenue is generally higher margin than the wireless revenue you get out of your subscriber business. And yet, if I look at '06 versus '05, it's been pretty big, about a 600 basis point increase as a percentage of sales of US revenue. And China and Korea are picking up as a percentage of revenue. And yet, the gross margin in the wireless business is relatively flat here at 29%.

Do you still expect it to increase going forward, as those two businesses grow as a percentage of your wireless revenue? Or is there sort of an offset on the subscriber side that's basically keeping you flat here at 29?

Actually, based on these mechanic -- mechanism, we should expect higher gross margins. And we said it in longer-term expectation, we should be between 30 to 35%. And hopefully, it's as we thought; it will be on a longer-term.

(indiscernible), Oscar Gruss.

(indiscernible) the gross margin. What are Rio setup costs and shekel appreciation? And continuing in the third quarter of '07, how do you see gross margin in the next two quarters in '07?

We actually -- we're not expecting the gross margin to continue to decline. But we are expecting it to increase. And in terms of year-over-year, as we show this year, we are expecting it in 2007.

The shekel influence, of course, it's only one portion of the total revenues of Ituran to present a very close to one-third of the total revenues. And Israel is showing anyway high growth in volumes.

So to talk about specific quarters, always there can be the influence that happened in Q4. But to talk again about an annual rate, and more -- more longer vision, based on our model, we should increase the gross margins as we do year-over-year always.

There are no additional -- (OPERATOR INSTRUCTIONS).

There is no additional question?

There are no additional questions at this time. At this time, I would like to hand over the call to Mr. Sheratzky. Would you like to make your concluding statement?

Yes, so, I would like to thank all our employees for their hard work in 2006 in bringing a successful year. I'd also like to thank you, our investors, for your support and for joining us today. And I look forward to sticking with you next quarter. And hopefully 2007 will be in line with our track record. Thank you very much and have a good day.

This concludes the Ituran Ltd. fourth-quarter 2006 results conference call. Thank you for your participation. You may go ahead and disconnect.