Ituran Location and Control Ltd. Net Income jumped on 38.5% and Revenue increased on 8.0%
03/11/2019 • About Ituran Location and Control Ltd. (
$ITRN) • By InTwits
Ituran Location and Control Ltd. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ituran Location and Control Ltd. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.2%. At the same time it's in pair with industry average of 7.4%
- CAPEX is quite volatile: $9m in FY2018, $7m in FY2017, $4m in FY2016, $2m in FY2015, $6m in FY2014
- The company has highly profitable business model: ROIC is 35.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.3x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ituran Location and Control Ltd.'s Revenue increased on 8.0%. Revenue growth showed acceleration in 18Q4 - it increased 29.2% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.63 pp from 3.1% to 3.7% in 2018. During 2014-2018 EBITDA Margin bottomed in 2017 at 29.9%.
Gross Margin decreased slightly on 0.62 pp from 50.9% to 50.3% in 2018. Gross Margin declined at -0.64 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 2.2 pp from 25.5% to 23.3% in 2018.
Net Income margin increased on 5.3 pp from 18.7% to 24.0% in 2018. During 2014-2018 Net Income margin bottomed in 2015 at 14.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 8.6% in 2018. The company showed decline in CAPEX/Revenue of 2.1 pp from 10.7% in 2015 to 8.6% in 2018. For the last three years the average CAPEX/Revenue was 7.4%.
Return on investment
The company operates at high and attractive ROIC (35.1%) and ROE (43.4%). ROIC dropped on 13.3 pp from 48.5% to 35.1% in 2018. ROE increased on 5.0 pp from 38.4% to 43.4% in 2018. During the last 5 years ROE bottomed in 2015 at 28.6% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.3x and Debt / EBITDA is 1.0x. Net Debt / EBITDA jumped on 0.8x from -0.5x to 0.3x in 2018. Debt surged on 152,360% while cash jumped on 39.3%.
Ituran Location and Control Ltd. has no short term refinancing risk: cash is higher than short term debt (486.8%).
Valuation and dividends
Ituran Location and Control Ltd.'s trades at EV/EBITDA 9.7x and P/E 11.9x.
Financial and operational results
FY ended 12/31/2018
Ituran Location and Control Ltd. ($ITRN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 182.1 | 175.6 | 199.6 | 234.6 | 253.3 | 8.0% |
| Gross Profit | 97.1 | 89.9 | 102.0 | 119.4 | 127.3 | 6.7% |
| SG&A | 47.9 | 47.1 | 50.3 | 59.8 | 59.0 | -1.3% |
| EBITDA | 59.0 | 53.5 | 59.6 | 70.1 | 77.0 | 9.9% |
| Net Income | 30.4 | 25.0 | 32.1 | 43.8 | 60.7 | 38.5% |
Balance Sheet
|
|---|
| Cash | 38.4 | 27.0 | 31.1 | 36.9 | 51.4 | 39.3% |
| Short Term Debt | 0.0 | 0.2 | 0.0 | 0.0 | 10.6 | 21,897.9% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 62.6 | |
Cash flow
|
|---|
| Capex | 15.0 | 18.7 | 13.6 | 16.2 | 21.7 | 34.6% |
Ratios
|
|---|
| Revenue growth | 7.0% | -3.6% | 13.6% | 17.6% | 8.0% | |
| EBITDA growth | 9.0% | -9.3% | 11.4% | 17.5% | 9.9% | |
|
|---|
| Gross Margin | 53.3% | 51.2% | 51.1% | 50.9% | 50.3% | -0.6% |
| EBITDA Margin | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% | 0.5% |
| SG&A, % of revenue | 26.3% | 26.8% | 25.2% | 25.5% | 23.3% | -2.2% |
| Net Income Margin | 16.7% | 14.2% | 16.1% | 18.7% | 24.0% | 5.3% |
| CAPEX, % of revenue | 8.2% | 10.7% | 6.8% | 6.9% | 8.6% | 1.7% |
|
|---|
| ROIC | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% | -13.3% |
| ROE | 33.5% | 28.6% | 34.6% | 38.4% | 43.4% | 5.0% |
| Net Debt/EBITDA | -0.7x | -0.5x | -0.5x | -0.5x | 0.3x | 0.8x |
Ituran Location and Control Ltd. ($ITRN) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 63 | 58 | 53 | 79 | | 12.5% | 0.6% | -11.9% | 29.2% |
| EBITDA | 19 | 18 | 17 | 23 | | 12.6% | 2.6% | -2.4% | 26.1% |
| Net Income | 11 | 12 | 26 | 15 | | -13.1% | 14.9% | 147.4% | 54.6% |
Balance Sheet
|
|---|
| Cash | 35 | 36 | 56 | 51 | | 28.1% | 33.2% | 75.2% | 39.3% |
| Short Term Debt | 0 | 0 | 8 | 11 | | 0.0% | 0.0% | 5,432.4% | 21,897.9% |
| Long Term Debt | 0 | 0 | 77 | 63 | | | | | |
Ratios
|
|---|
| Gross Margin | 49.9% | 50.1% | 54.1% | 48.1% | | -0.2% | -2.5% | 3.7% | -1.8% |
| EBITDA Margin | 30.4% | 30.9% | 31.8% | 29.0% | | 0.0% | 0.6% | 3.1% | -0.7% |
| Net Income Margin | 17.9% | 20.8% | 48.8% | 19.2% | | -5.3% | 2.6% | 31.4% | 3.2% |
Peers in Communications Equipment
Below we provide Ituran Location and Control Ltd. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.3% | 5.1% | 2.8% |
|---|
| Ituran Location and Control Ltd. ($ITRN) | | -3.6% | 13.6% | 17.6% | 8.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 40.5% |
|---|
| Ituran Location and Control Ltd. ($ITRN) | 53.3% | 51.2% | 51.1% | 50.9% | 50.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| F5 Networks, Inc. ($FFIV) | 31.2% | 31.5% | 30.3% | 29.9% | 30.1% |
| |
|---|
| Median (65 companies) | 5.3% | 4.7% | 5.5% | 6.0% | 4.6% |
|---|
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.2% | 1.9% | 1.8% | 1.6% |
|---|
| Ituran Location and Control Ltd. ($ITRN) | 8.2% | 10.7% | 6.8% | 6.9% | 8.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| Ceragon Networks Ltd. ($CRNT) | -5.8% | 13.8% | 13.2% | 16.2% | 17.6% |
| |
|---|
| Median (70 companies) | 1.2% | 2.0% | 2.2% | 2.1% | 0.3% |
|---|
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.8x | -0.8x | -0.9x | -0.8x | -0.3x |
|---|
| Ituran Location and Control Ltd. ($ITRN) | -0.7x | -0.5x | -0.5x | -0.5x | 0.3x |
