Over 2 million subscribers poised for a strong Ituran Location & Control (ITRN) in 2023

Ituran Location & Control (ITRN) reported its fourth quarter results this morning. Despite continued unfavorable foreign exchange pressure, earnings for the period increased 6.5% from the previous year to $74.9 million, just above consensus expectations of $74.6 million. rice field. After four consecutive quarters of decline, he dropped to 2,000 on an original equipment manufacturer (OEM) subscriber base. Pressure from rising currency and transportation costs, as well as pressure from unrealized losses on equity investments, had a significant impact on earnings, with earnings per share at 47 cents, 5 less than analysts had expected of 52 cents. Cent lower. As expected, this still represents a decent profit growth of 2.2% year-over-year. This resulted in ITRN generating free cash flow of $8.2 million during the fourth quarter, adding another $1.5 million to its already strong net cash balance to $16 million, while spending $3 million on share repurchases, We were able to pay a dividend of $2.8 million.

In addition, the company added a total of 185,000 new subscribers last year, thanks to much higher-than-expected subscriber growth due to increased demand, especially from financial firms looking to insure used cars in Latin America. significantly exceeded its annual target. 140,000-160,000. As a result, there are now approximately 2.1 million paying subscribers, and this number is expected to continue growing by 180,000 to 200,000 per year. In addition, the operational leverage of ITRN’s business model should allow these new subscribers to be added without corresponding significant cost increases, and the company expects further improvements in component availability and pricing in the future. If so, I think you are correct. We continue to enjoy strong top-line growth and margin expansion and are well-positioned to grow our earnings and free cash flow production even stronger in 2023.