Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the Eturan fourth quarter 2021 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not received it, please contact Eturan's investor relations team at gkinvestor and public relations at 1-212-378-8040 or view it in the news section of the company's website, www.eturan.co.il. I would now like to hand the call over to Mr. Ehud Helst of GK Investor Relations. Mr. Helst, would you like to begin?

Yeah, thank you, Operator. Good day to all of you and welcome to Eturan's conference call to discuss the fourth quarter and full year 2021 results. I would like to thank E2R Management for hosting this conference call. With me today on the call are Mr. Ayar Sharadsky, the co-CEO, Mr. Uli Mizrahi, Deputy CEO and VP Finance, and Mr. Eli Kamal, the CFO of E2R. Ayar will begin with a summary of the quarter results, followed by Eli with a summary of the financials. We will then open the call for the questions and answers session. I would like to remind everyone that Safe Harbor and the press release also covers the contents of this conference call. And now, Ayar, would you like to begin, please?

Thank you, Ehud. I'd like to welcome all of you and thank you for joining us today. We are very pleased with our financial results. They represent a year of recovery in growth, returning to double-digit revenue growth, as well as strong profitability and double-digit EBITDA growth. We reported full-year revenues of $271 million and EBITDA of $73 million, a level we have only surpassed once in our history. I would like to focus on the very solid growth in the subscriber base, which was the most notable aspect of our fourth quarter 2021 results. We grow our subscriber base at the highest rate we have seen in our history with 44,000 net ads, bringing the total of almost 1.9 million subscribers. The aftermarket segment added 50,000 subscribers during the quarter and is approaching 1.5 million subscribers. The growth in subscribers came from both our traditional businesses and was boosted by our growth engines. These include increased traction from our usage-based insurance, UBI business in Israel, working with car financial companies in Brazil and Mexico, new activities with rental companies in South America, as well as growth from our US business. We expect this type of subscriber growth to continue into next year, and we have raised our expectation which were typically 20,000 to 25,000 net subscriber growth per quarter, or 80,000 to 100,000 per year, to between 140,000 and 160,000 per year in 2022. I want to discuss it runs overall ARPU. The new growth engines are at a lower revenue per user than the average of our traditional aftermarket business, which will have the effect of lowering our overall ARPU. However, I highlight that our gross margins on the lower ARPU subscribers are similar to that of the existing business. In addition, as our business scales up faster, we can better harvest the operating leverage which is inherent to our business model, where typically each individual subscriber rate does not require any growth in operating expenses. And those subscribers tend to stay with us for a long period. I would like to stress that while 2021 has so far been a strong year for it to run in terms of new subscriber growth, the real benefit from the additional subscribers that we gained in the past year will benefit us more toward the end of 2022, 2023 and beyond. With regard to the UBI business, in 2021 we won significant business and we are now working with all the seven major insurance companies in Israel. We continue to see increased traction as the Israeli consumer market become increasingly educated to the value that they gain by using a usage-based insurance plan, rather than fixed, especially since the walk-from-home trend has significantly reduced the typical commit. The corona slowdown created plenty of new markets and opportunities, and over that time, new car sales around the world went down. As I explained last quarter, we identified a strong second-hand car market in many of our geographies in Latin America, and new fintech startups as well as the large banks have come in to provide the financing in this market. However, they need a provider of location-based and connected car technology, such as E2One, to monitor the cars and driver behavior, and by this lower the risk of the loan against the car. We are quickly moving forward and are already working with financing companies with our solution. We're excited about this business and see great potential for additional growth in the coming years. I would like to address the electronic component shortage that has been widely reported over the past year and remains an issue for everyone. Despite the demand vastly exceeding the supply and high prices, we have successfully been managing through the shortage to date. In the current quarter, Q1 2022, we will see increased costs for raw components for our products, which will temporarily lower our product gross margins in the first half of 2022. It is important to note that as primarily a subscriber service business, the impact on it to run to date has been low, and has primarily been on the product revenue side which has smaller effect on our bottom line. Our continued profitability and ongoing cash generation enable us to share the rewards of our success with our shareholders. We have two programs. One is our regular dividends of $3 million to shareholders, and we issued a total of $12 million in 2021. Our second program is our share buyback. During 2021, we purchased $7.3 million worth 280,000 shares of Rituan. In summary, I am very pleased with our performance, both our traditional business and especially our growth engines, which we have seeded over the past few quarters, which we expect will accelerate our growth in the years ahead. The solid performance can be seen in the jump in our subscriber base, which has grown well ahead of our expectations and has allowed us to increase those expectations for the current year. I am more excited now than ever with our long-term potential over the coming years. And I will now hand the call over to Eli for a financial summary. Eli?