Ituran at 15th Annual LD Micro: Strategic Growth and Expansion

On Thursday, 10 April 2025, Ituran Location and Control (NASDAQ: ITRN) presented at the 15th Annual LD Micro Invitational 2025. The company highlighted its strategic growth initiatives and operational achievements, underscoring a robust financial performance and ambitious expansion plans. While Ituran celebrated its successes, challenges such as currency exchange impacts were also noted.

Key Takeaways

• Ituran added 157,000 net subscribers in 2024, exceeding guidance.
• The company projects 180,000 to 200,000 net subscriber additions for 2025.
• Ituran generated $336 million in revenue and $91 million in EBITDA in 2024.
• A strong balance sheet with $77 million net cash and no debt was highlighted.
• The company distributed $410 million to investors through dividends and buybacks.

Financial Results

In 2024, Ituran achieved significant financial milestones, with revenue reaching $336 million. The company reported an EBITDA of $91 million and a net income of $5.358 billion. Ituran's financial strategy included distributing $410 million to investors through dividends and share buybacks, targeting a minimum dividend yield of 5%. The company also maintained a strong balance sheet with $77 million in net cash and no debt.

Operational Updates

Ituran's business model is heavily reliant on subscription-based services, contributing to 70% of its revenue. The company operates through various channels, including aftermarket consumer networks and OEM partnerships. Ituran's competitive edge lies in its expertise in vehicle recovery in challenging environments and its extensive data utilization from nearly 2.5 million subscribers. Geographically, Ituran is expanding in Brazil's motorcycle market, entering Chile with Nissan, and partnering in India through a joint venture with Lumex.

Future Outlook

Looking ahead, Ituran aims to expand its finance and leasing segments in Latin America and tap into the motorcycle market. The company is promoting the Ituran Mob sharing platform and leveraging big data while addressing privacy concerns. In India, Ituran's joint venture with Lumex, validated by Daimler Mercedes, signals potential growth. Additionally, Ituran plans to expand its finance and insurance products from Israel and the US into Latin America, with Santander as a key customer.

Conclusion

Readers are encouraged to refer to the full transcript for a detailed understanding of Ituran's strategic initiatives and financial performance.

Full transcript - 15th Annual LD Micro Invitational 2025:

Eriad Somer, Ituran Location and Control: We don't have much time. Eriad Somer here. Very proud to present our company, Ituran Location and Control. A high overview of the company. We've been in business for thirty years.

We're actually celebrating our twentieth years on the NASDAQ this year. Market share market cap of well, when I prepared this was $800,000,000 went down a bit in the last few days, obviously. About 3,000 employees, a true global telematics company with operation all over the world, servicing almost 2,500,000 subscribers around the world. As mentioned before, a global a true global telematics company. We'll speak about that in a minute.

What's unique about us is we are a true A to Z type of a company. We are manufacturing our own hardware, our own devices. We write all the software, all the codes. We service the whole shebang, which allows us and give us some advantages to the market. So what we do as a global company, we very well know to identify the needs of each region that we place in and then kind of to tailor our solution to to the needs.

Very, very strong and and and in believing of sharing our success with investors. Up until today, we distributed roughly $410,000,000 back to investors through dividend distribution or share buybacks and so forth. So when you think about a company that is $800,000,000 market cap that already distributed $410,000,000 it speaks louder, I believe. We try to keep the yield at a minimum of 5%. Very strong balance sheet.

Currently, have about $77,000,000 net at hand. No debt. We generate roughly $42,000,000 operational cash on a quarterly basis, and we can speak about that a bit later. Other than that, very strong innovation and partnership with major OEM around the world. We are considered today to be the largest OEM telematics provider in Latin America.

Generally speaking, when we speak about telematics, the location based services, the GPS included, we're talking about a very strong industry estimated at 80,000,000,000 roughly in 2023, with expected to grow to $280,000,000,000 by more and more vehicles are installed with some type of device hardware, our own device. 70% of our revenue comes from the fees and services. So device you have in the vehicle, as long as we have access, we can service that. And we have some very good case studies in our history of big company that started to use us with our own hardware and later on just moved to GM, for example, moved to use devices. Yet we are the service provider and are by far the largest players in Israel.

We believe we are the largest in Brazil. Data is is not as as easy to get over there. And the concept is to go and mimic that that that we are established, as as mentioned, thirty years ago as a spin off from a of the GPS technology that was already obviously heavily used in the army and originally the stolen vehicle recovery product. This SVR solution is something that we've truly mastered and today brought it to a very advanced, proactive system and still 75% of our revenue. You know, last year, we we did about 330 MCO recovery.

The rest come from other telematic services such as fleet management, so forth. Now I have to say that although those are the numbers, it's a bit hard to really put the finger on the breakdown of new just because we bundle a lot of those services. A fleet service, for example, will come automatically with an SVR and so forth. But roughly that's what we're talking about. When we look at our goat, we have an aftermarket channel, goes directly to consumer.

It depends on the region. Obviously, region is a bit different. But with a network of installers, I can tell you that, for example, in Israel, let's say, vehicle recovery services, obviously that helps us very much to lead the market over there. We have an OEM manufacturer channels. Today we work with several car manufacturers to either differentiate them from competition or just to give added value services to their customers and customers.

Next, we sell directly to finance companies. Any different finance company that would like to add telematics to have better risk mitigation and asset protection, asset recovery and so forth. So this is something that we've been doing for many, many years. We started in The U. S.

Since then, we took it to Latin America. Very strong relationship with Santander, for example. We have a slide about that, too. And then lastly, insurance company is a very strong channel for us. Insurance companies, obviously, in the stolen vehicle recovery services, but as well as UBI, usage based insurance.

Usage based insurance is a product that we introduced to the market in Israel maybe four or five years ago already, that is working very well and allows insurance company to tailor the premium to consumer based on the driver behavior, based on how they drive. If we take a minute to speak about our competitive advantages, I think we have to start with the know how. At the end of the day, the technology, GPS, GPRS, the cellular is is is almost a commodity today. What really makes us unique is how we take the technology and and are able to provide our services. So when I say know how, trust me to recover a vehicle in the pavelas of Brazil or in Israel where a vehicle that is stolen in Tel Aviv, the big city, can find itself within twenty five, thirty minutes in in the West Bank where it's impossible to recover.

To recover that vehicle quickly, there is a lot of know how, there is a lot of experience. You to have the right connection with the law enforcement and insurance companies and have your own team. And that's what Ituran is doing very, very well. We have a very high rate of stolen vehicle recovery, therefore, why insurance company like to work with us. Aside from that, a very strong market share, as mentioned before.

We have boots on the ground. Boots on the ground in those regions is what really help us to give superior service and keep our results very high. We're leveraging big data today, as mentioned, almost 2,500,000 subscribers, almost 2,500,000 vehicles that are driving around the world and provide a lot of data. We try to take that and build different tools, different type of information that we provide to our customers. And that may be the point to also say that the most important KPI for a company like ours will be the ability to add net subscribers on a quarterly basis.

We'll touch let's touch about it now actually. So when you look at the company history, we've been growing roughly 12% organic year over year. The jump that you see there in 2018 is a company that we acquired, a company that we've been joint ventured six or seven years prior to that to provide services, telematic services in Latin America, and then we decided to go ahead and and acquire the company. But other than that, you see a very steady growth, organic growth of subscribers actually since inception. And and the reason why when I say that the the most important KPI is that the ability to add subscribers when when you understand our very strong business model, 70% of our revenue comes from service, from subscription based.

So obviously, our margins are better with every subscriber we are able to add. Every subscriber cost me less to service. And we are very adamant about focusing about adding subscribers. 2024, our guidance was anywhere between 140,000 to 160,000 net addition subscriber. We ended the year with 157,000, so very in the upper end of our estimation.

And knowing all the growth engines that we have currently that we'll touch in a minute, management feel confident enough to increase the guidance for 2025. We believe we'll close the year with anywhere between 180,000 to 200,000 net subscriber addition for the year. A quick map of where you can find Ituran's operation. You'll see that what's colored in blue is regions that we have Ituran specific offices and and people, but we also have a network of distributors. Generally speaking, we believe that when to penetrate the market, sometimes it's better to just go with a local player that already knows the market, knows how to sell, but just need a better technology.

And we have some success story in South Africa or Ukraine even and so forth. Financials. If you look at our Q4 twenty twenty four, you'll see that roughly 52% of our revenue coming from Israel at this point. That was a big number for Q4, but roughly 50% is coming from Israel. About 25% is coming from Brazil, and then we have 25% that's come from the rest of the world.

Maybe instead of focusing on Q4, let's look at the whole year of 2024 versus 2023. So as mentioned, we were able to add 157,000 net subscribers. It's a big number, $336,000,000 in revenue, almost 90 well, 91,000,000 in EBITDA, $5,358,000,000 in net income, and as mentioned, almost $75,000,000 in net operation cash flow. Now it's important to understand as a true global company, exchange rate does affect us. Now, we have a natural hedging within the business that in every region that we operate, both our revenues and expenses are in local currency, which is good.

But obviously, when we translate that into dollars to report our performances, it makes an effect. So just to if you take 2024 with 2023 exchange rate, the numbers are even more impressive, I believe, eight percent growth in revenue, 11% in operating profits, and so forth. Quick slide to show what I mentioned before. The company, really since our IPO, believed in sharing the success. Our system generates a lot of cash.

If we don't have a specific need for the cash, an M and A or development or anything else, we believe in sharing that. We like to have strong positive cash, mentioned, currently at $77,000,000 with no debt. But just to be ready for whatever the market has to offer, right? We always listen in. But other than that, we distribute.

We actually, Q4, we increased our quarterly dividend to $10,000,000 a minimum of $10,000,000 And so far, as you can see, we have a combination between a share buyback and dividend, but heavily on the dividend, and we believe that that's how it's going to continue. All right. So let's we have roughly ten more minutes. Some of the growth engines looking forward and why we feel very positive with our performances and our future, everything I'm going say should be said is coming on top of our regular business that keeps on fueling this machine. I can tell you, for example, in Israel, part of the reason why we are so dominant in there is that the insurance company mandating SVR services for for several, you know, type of vehicles.

So obviously, customer has to get some type of service and Ituran as the leader gets a lot of them. But when we're looking at some of the the future growth engine, what we are looking is growing the finance and leasing segment in mainly in Latin America, Brazil, in Mexico, we'll speak about that. Motorcycle is a huge potential in Latin America. Motorcycles are really untapped market yet in telematics. One should understand that in many countries, definitely in Latin America, a motorcycle is maybe not what we used to in in The US.

It's not just a Sunday afternoon ride. That that's a that's a form of transportation that that gets stolen a lot. So there is a there is true demand for telematics. Ituran Mob is a sharing platform that we've developed, and we are pushing that to either rental companies or any company that would like to have a sharing platform. It's a it's a very nice, you know, full platform that that provide companies, all they need in reality, let's say, to to rent a vehicle to a consumer without ever seeing the consumer, even touching the the vehicle.

And and big data as as a future growth, we we definitely see how there is demand for this data. Obviously, is privacy issues and stuff like that. So we we are very careful with that aspect. But we but we see that there is a demand from cities, from from counties to know what vehicles are doing and that's something that we are working on. So, specifically, if we're looking at the geographical expansion, if we look at Brazil, Brazil is a growing market.

There is still the the telematic penetration in Brazil is still very, very low. Obviously, it's a very big very big country with with many people. And we are expanding that on a daily basis. Motorcycle is something that we're excited about. We already have roughly, I would say, probably close to 1,000 subscriber new subscriber on a monthly basis coming from motorcycles.

Yet the potential is much bigger than that. We work with some big OEM to make it happen. In Israel, where we have a very strong market share, we were really the players that push telematic penetration higher, but we're still only at roughly 45%. So we think the growth is definitely there. We are expanding that into other vehicles, to EVs, to motorcycles as well and so forth.

Chile, it's not a mistake that I didn't write anything here. We just don't know yet. No. The reality is that we we recently introduced Chile. We were brought to Chile by Nissan, the OEM company that we work heavily in for many years in in Mexico.

They're they're so happy with with the the service and the product that they brought us into Chile recently. And once we're in Chile now, we have, really the the synergy to bring our other aftermarket services to the to to the region. India is something that's definitely worth mentioning to the point of get its own slide, right? Huge market, huge potential, over two fifty million registered vehicle, but with a very big challenge of cost, Super sensitive to the to the cost. Ituran identified the potential many years ago back in 02/2017, I believe.

We established a a joint venture, a fifty fifty joint venture with a local car parts manufacturer called Lumex with the with the intention of of seeing how we can provide telematic devices in India. We we've been speaking about that for years. This is not something that we necessarily think that's gonna affect p and l immediately. Yet, we are super proud and happy to say that about two or three months ago, we announced the first kind of crack at the ice, a very successful validation with Daimler, Mercedes Daimler, the the trucking commercial vehicles in India. They've been testing us for over a year and a half, fifteen thousand devices, and then chose us to be their provider.

So the potential is big. It's slow, but we're very happy that we that we are there. And we feel that once the market will mature enough for telematics, we'll be, staged very well there. OEM, we constantly working with more and more OEM and growing our penetration into the same OEM or meaning, introducing, more models of the same OEM. We currently work with both GM and Nissan and in in very advanced talks with other OEM that we hope to be able to discuss soon.

And then lastly, maybe another word about the finance and insurance, our product. As mentioned, we brought this product both from Israel and The US into Latin America. It's been working very well. A key customer over there is Santander. Doing great in Brazil, now taking it to other regions and the potential is very high.

I I can't finish a presentation without speaking about, you know, a hidden gem in our balance sheet, that's worth mentioning. Ituran was was the first investor, almost a seed investor to big companies they called Bringg, b r I n g g. Bringg is a SaaS technology company focusing on the kind of the last mile and improving, logistic They have very big companies. They're privately company, Brink, so we can't really disclose too much information, although we have a seat at the board and so forth.

But Brink invested sorry, raised a hundred million dollar in in the last round back in June of twenty twenty one with a valuation of $1,000,000,000. And Ituran still holds 16.2 of that company. It's important to understand firm you'd like to target, we can reach them across

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