Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ituran Location and Control Ltd (ITRN, Financial) reported a 7% year-over-year increase in fourth-quarter revenues, reaching $82.9 million.
- The company added 40,000 net subscribers in the fourth quarter, reaching the top end of their expectations.
- A successful joint venture in India with LUMAX and a contract with Daimler India are expected to drive future growth.
- A new 5-year contract with Nissan in Chile and recognition as 'Supplier of the Year' by Nissan in Mexico highlight strong OEM partnerships.
- The Board of Directors increased the quarterly dividend by 25%, reflecting strong cash flow and a solid financial position.
Negative Points
- The strengthening of the USD negatively impacted financial results when translated from local currencies.
- Gross margins were affected by the product mix and sales volatility across different regions.
- Currency volatility, especially due to changes in the US presidency, poses challenges for financial predictions.
- The OEM segment, while growing, operates at lower margins compared to the retail market.
- ARPU (Average Revenue Per User) may face downward pressure due to the introduction of new solutions and OEM contracts with lower ARPU.
Q & A Highlights
Q: In the press release, you mentioned product mix impacted on gross margin. Could you elaborate on that? Is the primary effect from sales for two-wheeled vehicles?
A: The gross margin is affected by the product mix we sell across various regions and countries. This mix changes due to volatility between quarters, which is the main effect on gross margins.
Q: You outlined a positive subscriber growth expectation. What is the main point of growth you see for 2025?
A: In Israel, we are gaining market share, and the high car theft rate is driving demand for security systems. Our usage-based insurance solution is also gaining traction. In Brazil, our motorcycle solution is attracting interest from dealers and manufacturers. We are also expanding our finance segment and OEM partnerships, which should contribute to growth in 2025.
Q: Do you still expect $100 million EBITDA in 2025?
A: Our operations in local currencies meet or exceed expectations. However, due to significant currency volatility, the USD guidance is less meaningful. If currencies return to February 2024 levels, we might meet or exceed the target. We focus on subscriber growth as a more reliable indicator of business strength.
Q: Are you going to increase subscription fees in 2025? If yes, what rate should we expect in local currencies for Israel and Brazil?
A: We continuously evaluate pricing to maximize profitability. If inflation impacts us, we may adjust prices, but no decision has been made yet.
Q: Can you comment on the contribution of OEM subscribers versus retail?
A: OEM growth typically has lower margins due to large B2B commitments. The major portion of our growth still comes from the retail market, but we are adding OEM subscribers, which will contribute more in the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
