Ituran Location and Control Ltd (ITRN) 2024 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Ituran's first-quarter 2024 results conference call. (Operator Instructions) As a reminder, this conference is being recorded.

女士們先生們，謝謝你們的支持。歡迎參加 Ituran 2024 年第一季業績電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

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 at www.ituran.co.ir. I would now hand over the call to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin?

現在你們應該已經收到公司的新聞稿了。如果您尚未收到，請致電 1-212-378-8040 聯絡 EK 全球投資者關係部的 Ituran 投資者關係團隊，或在公司網站 www.ituran.co.ir 的新聞部分查看。我現在將電話轉交給 EK 全球投資者關係部的肯尼·格林先生。格林先生，您想開始嗎？

Thank you, operator. Good day to all of you and welcome to Ituran's conference call to discuss the first-quarter 2024 results. I would like to thank Ituran's management for hosting this conference call. With me on the line today are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO of Ituran.

謝謝你，接線生。祝大家美好的一天，歡迎參加 Ituran 的電話會議，討論 2024 年第一季的業績。我要感謝 Ituran 管理階層主辦這場電話會議。今天與我通話的有執行長 Eyal Sheratzky 先生； Udi Mizrahi 先生，副執行長兼財務副總裁；以及 Ituran 財務長 Eli Kamer 先生。

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. I would like to remind everyone that the Safe Harbor statements in today's press release also cover the content of this conference call. And now, Eyal, please begin.

Eyal 將首先總結本季的業績，然後由 Eli 總結財務狀況。然後我們將開始問答環節。我想提醒大家，今天新聞稿中的安全港聲明也涵蓋了本次電話會議的內容。現在，埃亞爾，請開始。

Thank you, Kenny. I'd like to welcome all of you to our first-quarter 2024 call, and I would like to thank you for joining us today. We are pleased with our results, especially in the ongoing growth in revenues and continued improvement in profits as well as the additional net subscribers we brought in the quarter, which came in at the high end of our expectations. As our strong financial results demonstrate, our business remains in good shape and continue to be resilient against challenges.

謝謝你，肯尼。歡迎大家參加我們的 2024 年第一季電話會議，並感謝你們今天加入我們。我們對我們的業績感到滿意，特別是收入的持續成長和利潤的持續改善，以及我們在本季度帶來的額外淨訂戶，這超出了我們預期的上限。正如我們強勁的財務業績所表明的那樣，我們的業務保持良好狀態，並繼續抵禦挑戰。

I also want to highlight that part of our resilience is due to Ituran being a globally diverse business with a loyal subscriber base of 2.3 million customers in Israel, Brazil, and other countries in Latin America and around the world.

我還想強調，我們的韌性部分歸功於 Ituran 是一家全球多元化企業，在以色列、巴西以及拉丁美洲其他國家和世界各地擁有 230 萬忠實用戶群。

Our subscriber base added 39,000 subscribers in the quarter at the high end of our expectation of between 35,000 and 40,000 net new subscribers per quarter. This is well in advance of the long-term rate we had in prior years, which was typically between 20,000 and 25,000 per quarter and it's come about due to our more diverse global footprint as well as the new service we continue to bring to our end markets.

本季我們的用戶群增加了 39,000 名用戶，達到了我們每季 35,000 至 40,000 名淨新用戶預期的上限。這遠高於我們前幾年的長期成長率，通常為每季 20,000 到 25,000 件，這是由於我們更加多元化的全球足跡以及我們不斷推出的新服務市場。

I would like to highlight what is happening in the Israeli market. In recent quarters, we've seen steady rise in theft rate which has somewhat intensified in the last quarter. As a result, insurance companies are pushing their customers to install an SVR unit and connect to the theft prevention service even in vehicles that are not new or have a lower initial value than in the past. The outcome of this is that SVR penetration has gone up and our TAM has grown and we, as the clear market leader are enjoying an accelerated growth of subscribers in Israel.

我想強調一下以色列市場正在發生的事情。最近幾個季度，我們看到竊盜率穩定上升，上個季度加劇。因此，保險公司正在推動客戶安裝 SVR 裝置並連接到防盜服務，即使車輛不是新車或初始價值低於過去。結果是 SVR 滲透率上升，我們的 TAM 成長，而我們作為明顯的市場領導者正在享受以色列用戶的加速成長。

Given the strong net cash position of $53.9 million, our ongoing growth and our solid profitability, we are pleased to again declare a quarterly dividend of $8 million, in-line with the dividend policy we updated just last quarter. We are very pleased to share the fruits of our success and we see our ongoing dividends a reward to our loyal shareholders for their long-term support of our company.

鑑於 5390 萬美元的強勁淨現金頭寸、我們的持續增長和穩健的盈利能力，我們很高興再次宣布派發 800 萬美元的季度股息，這與我們上季度更新的股息政策一致。我們很高興分享我們的成功成果，我們認為持續的股利是對我們忠實股東長期支持我們公司的回報。

Given the stability of our business, last quarter, we began to provide EBITDA guidance in addition to the guidance on subscriber growth, which we used to do. As a reminder, for 2024, our guidance is fully EBITDA of between $90 million and $95 million, and we expect to cross the $100 million EBITDA landmark in 2025.

考慮到我們業務的穩定性，上個季度，除了我們過去所做的用戶成長指導之外，我們還開始提供 EBITDA 指導。提醒一下，對於 2024 年，我們的指導是 EBITDA 為 9,000 萬至 9,500 萬美元，我們預計 2025 年 EBITDA 將突破 1 億美元大關。

We believe that our first-quarter results put us well on track, and we reiterate this expectation. We expect subscriber growth to continue growing at around current rates of between 35,000 and 40,000 net new subscribers per quarter. I note that this expectation are as of today. Our EBITDA expectations are based on relevant currency levels remaining around current average rates and assume that the current global macroeconomic situation globally and political situations specifically in Israel do not significantly worsen.

我們相信第一季的業績讓我們步入正軌，我們重申這一預期。我們預計訂戶數量將繼續以目前每季 35,000 至 40,000 名淨新訂戶的速度成長。我注意到這一預期是截至今天的。我們的 EBITDA 預期是基於保持在當前平均匯率附近的相關貨幣水平，並假設當前全球宏觀經濟狀況和特別是以色列的政治局勢不會顯著惡化。

And in summary, the first quarter of 2024 has started very well with solid performance, and we believe 2024 will continue on these trends. I believe that our constantly growing subscriber growth will continue to translate into increased revenues, increased gross profit with faster growing profitability over the long term due to the operating leverage inherent to our business. And with that, I hand over to Eli. Eli, please go ahead.

總而言之，2024 年第一季開局良好，業績穩健，我們相信 2024 年將繼續保持這些趨勢。我相信，由於我們業務固有的營運槓桿，我們不斷增長的用戶成長將繼續轉化為收入的增加、毛利的增加以及盈利能力的快速增長。就這樣，我把任務交給了伊萊。伊萊，請繼續。

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed result that we issued in the press release earlier today. First quarter revenues were $85 million, a 7% increase compared with revenue of $79.5 million last year. Revenues from subscription fees in the quarter were $60.9 million, an increase of 9% over the first quarter 2023 revenues.

謝謝，埃亞爾。我將提供財務表現的簡短摘要。您可以找到我們今天早些時候在新聞稿中發布的更詳細的結果。第一季營收為 8,500 萬美元，比去年同期的 7,950 萬美元成長 7%。該季度訂閱費收入為 6,090 萬美元，比 2023 年第一季營收成長 9%。

Product revenues in the quarter were $24.1 million, an increase of 2% year over year. This subscriber base expanded to 2,291,000 by the end of the first quarter, an increase of 39,000 from the end of the previous quarter.

該季度產品營收為 2,410 萬美元，年增 2%。截至第一季末，該用戶群擴大至 2,291,000 人，較上一季末增加 39,000 人。

During the quarter, there was an increase of 33,000 net in the aftermarket subscriber base and then an increase of 6,000 net in the OEM subscriber base. The geographic breakdown of revenues in the first quarter was as follows, Israel, 52%; Brazil, 26%; rest of world, 22%.

本季度，售後市場用戶群淨增 33,000 名，OEM 用戶群淨增 6,000 名。第一季營收地域分佈如下：以色列，52%；巴西，26%；世界其他地區，22%。

EBITDA for the quarter was $22.3 million or 26.3% of revenue, an increase of 7% compared with EBITDA of $20.8 million or 26.2% of revenues in the first quarter of last year. Net income for the first quarter was $13 million or diluted earnings per share of $0.66, an increase of 15% compared to $11.4 million or diluted earnings per share of $0.56 in the first quarter of last year.

本季 EBITDA 為 2,230 萬美元，佔營收的 26.3%，比去年第一季的 EBITDA 2,080 萬美元，佔營收的 26.2% 成長了 7%。第一季淨利潤為 1,300 萬美元，或攤薄後每股收益為 0.66 美元，較去年第一季的 1,140 萬美元或攤薄後每股收益 0.56 美元增長 15%。

Cash flow from operation for the first quarter of 2024 was $11.4 million. As of March 31, 2024, the company had cash including marketable securities of $54.2 million and debt of $0.3 million, amounting to a net cash position of $53.9 million. This is compared with cash, including marketable securities of $53.6 million and debt of $0.6 million, amounting to a net cash position of $53 million as of year end 2023.

2024 年第一季的營運現金流為 1,140 萬美元。截至 2024 年 3 月 31 日，該公司擁有現金 5,420 萬美元，包括有價證券和 30 萬美元債務，淨現金部位為 5,390 萬美元。相較之下，現金（包括 5,360 萬美元的有價證券和 60 萬美元的債務）截至 2023 年底的淨現金部位為 5,300 萬美元。

The Board of Directors declared a dividend for the quarter of $8 million, in line with the company's recently updated dividend policy, which was increased by 60% in the previous quarter. The current dividend 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 session. Operator?

董事會宣布本季​​股利為 800 萬美元，符合該公司最近更新的股利政策，較上一季增加了 60%。目前的股息考慮了公司持續強勁的獲利能力、持續的正現金流和強勁的資產負債表。接下來，我想開始問答環節。操作員？

(Operator Instructions) Chris Reimer, Barclays.

（操作員說明）Chris Reimer，巴克萊銀行。

Yeah, thanks for taking my questions and congratulations on the strong results. I wanted to ask if you could comment about the product mix, specifically as it pertains to the gross margin. Any comment on moving parts around that would be helpful.

是的，感謝您回答我的問題並祝賀我們取得了優異的成績。我想問您是否可以對產品組合發表評論，特別是與毛利率有關的評論。任何關於移動部件的評論都會有幫助。

Hi. So basically, during the first quarter of 2024, our sales, which are derived from the Israeli market was much higher than the average since we had to compensate Q4 when the war started and there was almost a shutdown of two months, which were October and November. So I think that it's not a typical quarter in terms of the ratio between the sales and the services. This is basically the major difference. It not represent forward, this sales amount.

你好。所以基本上，在2024 年第一季度，我們來自以色列市場的銷售額遠高於平均水平，因為戰爭開始時我們必須對第四季度進行補償，並且幾乎停工了兩個月，即10 月和10月和2024 年。因此，我認為就銷售和服務之間的比率而言，這不是一個典型的季度。這基本上是主要區別。它不代表未來的銷售額。

Got it. And more specifically also around Israel, can you comment on any of the trends you're seeing versus last quarter? And if maybe you're seeing some traction that's outperforming your expectations.

知道了。更具體地說，在以色列周圍，您能評論一下您所看到的與上季度相比的趨勢嗎？如果您可能看到一些超出您預期的牽引力。

Yes, so the situation in Israel and it didn't start because of the war, so it's kind of a trend that started soon after the COVID. And it's ramped up in the last two years. And today we are facing a material, I would say, growth in cost of freight. When cost of freight is high, it means that the insurance companies are increasing the insurance premiums and also much more needs security solutions for the car to prevent these car thefts.

是的，以色列的情況並不是因為戰爭而開始的，所以這是新冠病毒爆發後不久就開始的趨勢。而且近兩年來有所增加。我想說，今天我們面臨貨運成本的實質成長。當運費成本高時，意味著保險公司正在提高保險費，也更需要汽車的安全解決方案來防止這些汽車被偷。

And in that case, when we are the dominant player in Israel by providing this solution, we see high attraction, high request. And as I said in my speech, we are even facing something that we never faced in the 30-years of -- since the inception of the company, is that even car models, which are, let's call it second-hand, that when they was bought as a brand new car three and five years ago and they didn't install security and SVR solution, today, when they come to renew their insurance policy, they're required to put location and SVR solutions. And it means that, as you mentioned, we are see growth in Israel, which is more than we expected for this year. Yes.

在這種情況下，當我們透過提供這種解決方案成為以色列的主導者時，我們會看到很高的吸引力和很高的要求。正如我在演講中所說，我們甚至面臨著自公司成立以來 30 年來從未遇到過的事情，即使是汽車模型，我們稱之為二手車，當他們是三五年前買的新車，沒有安裝安全性和SVR解決方案，今天，當他們續保時，他們被要求安裝位置和SVR解決方案。正如您所提到的，這意味著我們看到以色列的成長，這超出了我們今年的預期。是的。

That's great. Thanks. That's it for me.

那太棒了。謝謝。對我來說就是這樣。

(Operator Instructions) Boris Schneider, More Mutual Funds.

（操作員指示）Boris Schneider，更多共同基金。

Yes, hi. Just a question on your 20-F on the growth in Brazil, which is actually even higher than the growth in Israel. So if you could speak on what's driving that and how do you see this going forward.

是的，嗨。只是關於巴西成長的 20-F 問題，實際上巴西的成長甚至高於以色列。那麼，您能否談談推動這一趨勢的因素以及您對未來的看法。

Just to be clear, the 20-F is actually representing the year 2023. And I can, of course, give information regard 2023. And as you remember, during the end of '22, we signed a contract with Santander Bank regard providing a solution for finance. Finance, that they provide for cars -- for car buyers. And this supports our growth in Brazil in 2023.

需要明確的是，20-F 實際上代表 2023 年。當然，我可以提供有關 2023 年的資訊。正如您所記得的，在 22 年底，我們與桑坦德銀行簽署了一份合同，旨在提供金融解決方案。他們為汽車購買者提供金融服務。這將支持我們在 2023 年在巴西的成長。

It's continued, by the way, because it's under the contract also in 2024. But we have to take into consider that there is always after 18-months. This is the contracts, a churn.

順便說一句，它仍在繼續，因為它也在 2024 年的合約中。但我們必須考慮到18個月之後總會有的。這就是合同，一種攪動。

So the growth from Santander by definition will decrease. Although, we are selling the same quantities, but the growth is not the same as when the contract started because always at the beginning, there is no churn. After 18-months, the churn is come. So I'm not expecting that ‘24 in Brazil will be the same growth as it was in ‘23.

因此，桑坦德銀行的成長按照定義將會下降。雖然我們銷售的數量相同，但成長與合約開始時不一樣，因為總是在開始時，沒有流失。18 個月後，客戶流失就來了。因此，我預計巴西 24 月的成長率不會與 23 月相同。

But on the other segments, we are not see any dramatic changes, meaning we continue to sell our retail solution. There is always some volatility between (inaudible) and the expectations are to keep the same numbers. And looking forward, we are doing a lot of, I would say, work in order to penetrate new segment and expand the financial customers. So I -- for -- talking for mid and longer term, I am expecting that we will continue to show growth in Brazil as well.

但在其他領域，我們沒有看到任何巨大的變化，這意味著我們繼續銷售我們的零售解決方案。（聽不清楚）與保持相同數字的期望之間總是存在一些波動。展望未來，我想說，我們正在做很多工作，以滲透新的細分市場並擴大金融客戶。因此，就中長期而言，我預計我們也將繼續在巴西實現成長。

Okay. And previously you mentioned, also in your last several calls, I think you mentioned on insurance of the motorcycles, which is the vertical that you didn't penetrate in Brazil. Is there any update on this?

好的。之前您提到過，也在最近幾次通話中，我想您提到了摩托車保險，這是您在巴西沒有滲透的垂直領域。這方面有更新嗎？

Yes, of course, there is no update. We just started to sell solutions for motorcycles. It's something quite new. So it still not has a dramatic influence our subscriber base in Brazil. But we see again that it's ramping up.

是的，當然，沒有更新。我們剛開始銷售摩托車解決方案。這是相當新的事情。因此，它仍然沒有對我們在巴西的用戶群產生巨大影響。但我們再次看到它正在加速。

And I believe that, as always, when you issue a new solution for a new segment, it's -- and when we're talking about subscribers and when the company has 2.3 million, so it's taking time until it's something that it's become more material. So I believe that during 2025. 2026, the motorcycle segments will support the additional growth that we expect.

我相信，一如既往，當你為一個新的細分市場發布一個新的解決方案時，當我們談論訂閱者並且公司擁有 230 萬用戶時，所以需要時間才能變得更加實質性。因此，我相信在 2025 年、2026 年期間，摩托車細分市場將支持我們預期的額外成長。

Okay. And last -- final question. In terms of gross margin for your product, it was low, even lower than during the crisis of the supply chain. How should we think about in the future quarters?

好的。最後一個問題。你們產品的毛利率很低，甚至比供應鏈危機期間還低。未來幾季我們該如何思考？

Yes, it was a little bit low, like 4% less. But you need to remember that usually there is a mixture of products that we are selling all over the country. So basically, this is the range, more or less. So let's say, gross margin of 20%, a little bit up or down, but that's the range.

是的，有點低，例如少了 4%。但您需要記住，通常我們在全國各地銷售的產品都是混合的。基本上，這就是或多或少的範圍。假設毛利率為 20%，有一點上升或下降，但這就是範圍。

Thanks.

謝謝。

There are no further questions at this time. Before I ask Mr. Sheratzky to go ahead with his closing statements, I would like to remind participants that a replay of this call will be available tomorrow on Ituran's app website, www.ituran.co.ir. Mr. Sheratzky, would you like to make your closing statements.

目前沒有其他問題。在我請 Sheratzky 先生繼續其結束語之前，我想提醒與會者，明天將在 Ituran 的應用程式網站 www.ituran.co.ir 上重播本次電話會議。 Sheratzky 先生，您願意總結發言嗎？

Yes. 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 hope to speak with some of you over the coming quarters. 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. Thank you and have a good day.

是的。我謹代表 Ituran 管理層感謝您，我們的股東，感謝您對我們業務的持續關注和長期支持。我們希望在未來幾個季度與你們中的一些人交談。如果您有興趣與我們會面或交談，請隨時聯繫我們的投資者關係團隊。至此，我們結束通話。謝謝你，有美好的一天。

Thank you. This concludes Ituran's first-quarter of 2024 results conference call. Thank you for your participation. You may now go ahead and disconnect.

謝謝。Ituran 2024 年第一季業績電話會議至此結束。感謝您的參與。現在您可以繼續並斷開連接。