Transcript Document

Investor Presentation
Eyal Sheratzki, co-CEO
August 2009
Safe Harbor Disclosure
Except for statements of historical fact, the information presented herein constitutes forwardlooking statements within the meaning of and subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking
statements by terminology such as "expect," "estimate," "anticipate," "intend," "predict,"
"believe," and similar expressions and variations thereof. Such forward-looking statements
include statements regarding the intent, belief, current expectations or projections about future
events of Ituran Location and Control Ltd. Readers are cautioned that these forward looking
statements are not guarantees of future performance and involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or
achievements of Ituran Location and Control Ltd. to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include without limitation, general economic and business conditions, the loss of
market share, changes in the competitive landscape, failure to keep up with technological
advances and other factors over which Ituran Location and Control Ltd. has little or no
control. Ituran Location and Control Ltd. undertakes no obligation to revise or update these
forward-looking statements to reflect events or circumstances after the date hereof.
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Our Business
location–based services and products
primarily for stolen vehicle recovery
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Company Overview
Overview
High Visibility
Subscription
Model
Globally
Diversified
Strong Operating
Leverage
533k subscribers
1000 employees with
Q209 revenues
at end of Q2-09
12k net subscriber
adds in quarter
operations in
$28.4m
Israel, Brazil,
Argentina and US
Q209 EBITDA
NASDAQ, TASE:
ITRN
Market cap* ~$200m
Net cash $58m
Recent ‘08 dividend
$3.7m
$8.9m
Q209 EPS
*Based on share price of $9.50
as at August 20, 2009
$0.12
Company History
1994
Incorporated as
subsidiary of
Tadiran
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1995
Moked Ituran
acquired Company
from Tadiran
1999
Acquired
Telematics from
Tadiran ($10m)
1998
IPO on
TASE
2000
Entered
Brazilian
market
2005
NASDAQ
IPO
2007
Purchase 100% of
MAPA ($13m)
2006
Purchase 51%
of ERM ($2.8m)
2007-end
Sold Telematics
($90m)
Increasing focus on core business
providing global location-based services
Why Ituran?
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Our Business
Location–Based Services
Stolen vehicle
recovery
(SVR)
Fleet
management
Personal
location
Concierge
(Mr.Big)
Currently over
90% of revenues
Location–Based Products
RF Products
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GPS/GPRS
Products
(ERM)
Personal
Navigation
(MAPA)
SVR Business Overview and Drivers
Quick and very high
(85%+) vehicle recovery
rate
Growing (18% LT CAGR)
subscriber base
International (Israel,
Brazil, Argentina, US)
Diversified technologies
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(both RF and GPS/GPRS)
Increasing
car
ownership
and demand
for security
Competitive Advantages
The best overall solution for
location–based applications
• 14 years operating SVR
business
• Strong management
ability and experience
Experience
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• Both RF and GPS/GPRS
• RF provides reliable
performance in dense
urban areas
• High resistance to
jamming
• Real time alerts
Technology edge
•
•
•
•
SVR
Fleet management
Concierge (Mr. Big)
Location
Full suite of locationbased services
Growth Drivers – Brazil
Growth Strategy
Highlights
 Sao Paulo and Rio: Use RF system for
increased reliability in urban areas
 Nationwide: GPS/GPRS technologies
 End of ‘08 subscribers: 135k with
around 50-70k gross subscribers added on
an annual basis- continues to grow quickly
 Actual and target segments:
 Insurance companies
 High uninsured population
 Car manufactures and car Dealers
Ituran is growing much faster
than its competitors in Brazil
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Looking to the long-term future
Penetrate new
segments such as
car manufactures
and car dealers in
existing regions
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Expand operations
and leverage knowhow into new
regions with a focus
on emerging
markets
Use customer
relationships to upsell added value
services:
Mr. Big, Mapa
Defensive in Current Environment
Stable, cash generating
business in Israel
New
regulation
and growing
business in
Brazil
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Increased
requirement
for asset
protection in
downturns
Increased
demand for
Ituran’s
services
Financial Overview
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Financial Highlights
Subscription services: strong visibility
and recurring revenue stream
• 90%+ of previous quarters’ fees expected to
roll into next quarter
High profitability with strong cash
flow generation
Significant long-term operating
leverage
• Minimal cost in adding new subscriber
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Q2 2009 Summary
Q2 2009 Highlights
Annual Revenue & Opex
 Revenues of $28.4m
40
35
35.2
Total
revenue
30
28.4
25
8.0
Opex
18.7
14.4
5
0
2008
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 Strong cash flow from operations
of US$5.1 million
 EPS of $0.12 vs $0.12 in Q2 2008
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 Strong net subscriber growth in
Brazil
 Strong operating margin of 21.1%
vs 19.3% in Q208
9.7
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 YoY shortfall due to strong
increase in US Dollar vs Brazilian
Real, Argentinean Peso & Shekel
Q2
2009
Q2
Cost of
revenues
Long-Term Subscriber Growth
Subscribers (‘000)
Q2 2009 Highlights
600


500
400
300
200
339
100
396
511
533
2008
2009
H1
444
263
0
2004
15
2005
2006
2007
Subscribers at period ended
Additional 12k net subscriber
adds in Q2, reaching 533k
Strong subscriber adds in Brazil
Long-term Revenue Growth Model
FY 2008 Highlights
Annual Revenue Growth
 Improved gross, operating and net
margins
 Strongly increased penetration in
Brazil
140
132.6
120
124.8
100
80
Total
revenue
104.1
33.8
90.1
60
Opex
22.6
40
67.6
20
47.6
69.4
53.9
Cost of
revenues
0
2005
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 Israeli business generating strong
positive cash flow
37.5
25.5
2006
2007
2008
 Enhanced relationships with
insurance companies and began
targeting car manufacturers
Summary
High-visibility, low risk subscription model with strong operating
leverage
Growth potential in Brazil & Argentina
High profitability and cash generating
Strong cash position for acquisitions
Defensive in current global economic environment
Experienced team with proven track record and established
relationships
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Thank you
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