MIAMI, April 15,
2024 /PRNewswire/ -- Ituran Location and
Control (NASDAQ: ITRN) added $8
million to its dividend pool after a strong Q4, pushing its
forward-looking yield to 6%. That attractive yield comes after the
company posted record across-the-board financial metrics, including
a 9% revenue increase year-over-year to $320
million, net income of $48
million, an increase of 30% year-over-year, and a 10%
increase in EBITDA to $87 million. As
of last Friday's close, ITRN's market cap is about $521 million.
That performance helped generate a bullish price target from an
analyst at Barclay's, who models that Ituran shares could touch
$35 within the next twelve months, an
over 33% increase from current levels. That model likely factors in
record revenues and the company generating $77 million in FY2023 operating cash flow,
resulting from a string of deals from global companies interested
in its revolutionary telematics and connected car ecosystem. The
interest is warranted. Comparably, while some of ITRN's competitors
do one or two things well, Ituran does many by leveraging strength
from a full spectrum of innovative software solutions, in-vehicle
sensors, and unique services and system functionality that do more
than address challenges; they overcome them.
That distinction is a competitive advantage.
Ituran is Ushering in the Shift in Mobility
Technology
Moreover, it's led to Ituran strengthening its leadership
position in the emerging mobility technology field by providing
value-added location-based services, particularly its full suite of
services for the modern connected car. Served by its 2,800
employees from offices worldwide, Ituran is the largest OEM
telematics provider in Latin
America, with its products and applications used by
customers in over 20 countries. By the end of 2023, Ituran products
and services subscribers reached almost 2.3 million, increasing by
186,000 during the year and meeting growth guidance despite the
challenging economic and geopolitical market landscapes.
As expected from record operating performances, Ituran ended the
year financially solid, with year-end net cash and marketable
securities of $53 million. That led
to the increased dividend and the repurchase of $6.6 million in shares, representing a 6% passive
income yield and a value driver from a forward-looking valuation
perspective. The latter is significant, noting that the company
only has about 20 million shares outstanding on a fully diluted
basis.
Operating Momentum After an Impressive Q4/2023
Further supporting growth momentum, year-end results were fueled
higher by an impressive Q4. For the period, net subscriber growth,
meaning recurring revenue stream providers, increased by 42,000
when combining the new aftermarket subscribers of 38,000 with the
net increase in OEM subscribers of 4,000. Revenues increased by 4%
to $78 million, leading to net income
of $12 million, 26% higher than a
year ago. The performance prompted the Board to increase the
dividend policy by 60% to $8 million
for the quarter, a run rate of $32
million per year, based on the growing profitability and
strong operating cash flow.
It also led to optimistic guidance about expectations in 2024.
Management said it expects to add approximately 35,000 to 40,000
net new subscribers each quarter during 2024, contributing to
EBITDA projections between $90-95
million. In 2025, EBITDA is targeted to surpass $100 million. Management noted that these targets
are based on current exchange rates and assumed that Israel's current global macroeconomic and
political situation does not significantly change. Results also
show business resiliency.
Hardware installations and, therefore, product revenues were
paused for at least several weeks following the outbreak of war in
Israel on October 7. That caused some declines in a
quarterly comparison. However, year-over-year, Ituran growth was
impressive. Moreover, despite supply-chain issues, gross margins
stayed strong, with subscription revenues around 58% and the gross
margin on products at 22%. That facilitated Q4 operating income
increasing by 8% to $16.5 million,
compared to $15.3 million in the
fourth quarter of last year.
Value Drivers are Active in 2024
Factoring together financial results, interim project updates,
and 2024 guidance, the company guided for growth to continue this
year. Additionally, the company will continue its previously
announced $25 million share buy-back
program, which increased to $35
million last February. With roughly $6.7 million remaining under that authorization,
it's timely and accretive during challenging markets.
More than solid financial performance contributing to growth,
ITRN noted during its recent conference call that value drivers
should continue to accrue from different segments, including those
created by insurance companies and car owners, especially in
Israel, who are looking for
effective security systems to protect assets.
In other countries, Ituran is focused on monetizing market
opportunities on the B2B side, working with financial institutions
to offer asset protection and security solutions when they provide
loans to new car buyers. In Latin
America, where there has been an increase in car theft and
damage from violence, the company is focused on penetrating those
markets more quickly this year to capitalize on that
revenue-generating market opportunity and add traction to its goal
of surpassing $100 million in 2025
EBIDTA.
Combining the sum of Ituran's parts and those expected to be
added, the company is well-positioned to reach that intention.
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SOURCE Ituran Location and Control, Ltd.