Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the e2run's first quarter 2022 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 e2run's investor relations team at GK Investor and Public Relations at 1212 or view it in a new section of the company's website, www.iteran.co.il. I will now hand over the call to Mr. Kenny Green of GK Investor Relations. Mr. Green, would you like to begin?

Thank you. Good day to all of you and welcome to Iteran's conference call. We've discussed the first quarter 2022 results. I'd like to thank Iteran's management for hosting this conference call. With me today on the line are Mr. Eyal Sharatsky, CEO, Mr. Udi Mizrahi, Deputy CEO and VP Finance, and Mr. Eli Kamar, CFO of Itolan. Eyal will begin with a summary of the quarter's results, followed by Eli with a summary of the financials. He will then open the call for the question and answer session. I'd like to remind everyone that the safe harbor statement in today's press release also covers the contents of this conference call. And now, Eyal, would you like to begin, please?

Thank you, Kenny. I'd like to welcome all of you and thank you for joining us today. We are very pleased with our financial results, kicking off 2022 with very strong subscriber growth in the first quarter, which is the clearest indication of our success. This is also reflected in the current quarter subscription revenues, which surpassed $50 million, growing at 10% year over year. We grow our overall subscriber base at 43,000 net ads bringing the total to over 1.9 million subscribers. The aftermarket segment added a record of 59,000 subscribers during this quarter. This increase in subscribers came from both the growth in our traditional aftermarket business, but was also boosted by the various growth engines that we have seen over the past few quarters. This included an increased traction from our usage-based insurance UBI business in Israel, working with car financing companies in Brazil and Mexico, new activities with rental companies in South America, as well as continued growth performance from our U.S. business. As I discussed last quarter, we expect this type of subscriber growth to continue throughout this year with expectation of between 140,000 to 160,000 subscribers. Net subscriber ads. And the first quarter's sub-ads is clearly indicating that we are on the right trend. As you can see, it runs as a very strong, healthy, and growing business, and I am very proud of our recent achievements. And this is despite the background of what are many macro challenges. The most notable macro issues which impact us are the supply chain constraints. First, as you know, this is an issue that has already impacted us for much of the past year. Because of the shortage of parts, we have seen significant price increases on scarce components that we need. And we had to buy some components on the spot market at inflated prices. This increases the cost of goods and lowers somewhat the gross margins of the products that we sell. Some of the costs increase. We have been able to pass on, but not all of it. Second impact of this is actually on the large OEMs that we work with that sell cars in Brazil, Argentina, Mexico, Ecuador, and Colombia. The OEMs are unable to manufacture and sell cars to meet the demand. And therefore, we are indirectly impacted as new subscriber ads are below the level of subscription that come to an end. This impact the OEM subscriber base and we had a net decline of 16,000 in the quarter. During the quarter, we used our solid cash position to grow our inventory to ensure that first of all, we continue to have the components we need to build products. And second, to have the product in place for new customers that are coming in which you can see from the strong aftermarket subscriber growth. With regard to the UBI business, one of our main growth engines which has gained strong traction in the past year, As you know, we are now working with all seven major insurance companies in Israel. The Israeli consumer market is becoming 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 typical comments. Our rollout in Israel has proven to be successful, and we look to replicate the success in our other markets in the coming quarters and years. Another growth engine which is gaining traction is our services to the second-hand car market. Because of the shortage of components and ultimately new cars, which I discussed before, the second-hand car market has grown stronger everywhere. This can be seen by the increase in second-hand car prices in the past year, and not just in the U.S., but globally. New fintech startups, as well as the large banks, have come in to provide the financing to this gross market. e2Run provides the location-based and connected car technology to a number of financing customers in Latin America, which will monitor the cars and the driver behavior and lower the risk of the loan against the car. I know that while there is a part and ultimately car shortage, these companies still do not currently sell as much as they could in a healthy market. However, we are growing the business all the time and see the car shortage situation as temporary. We are looking constantly to bring in new financing customers and broaden the service to additional geographies. We are excited about this business and see great potential for additional growth in the coming years. In summary, all in all, I am very pleased with our performance. Both our traditional business and especially our growth engines, which we expect will accelerate our growth in the year ahead. The solid performance can be seen most by the jump in our subscriber base, which has grown well ahead of our traditional expectation, and now stands at between, as I said, 140,000 and 160,000 in a year. And we are at the cusp of a subscriber base of 2 million customers, playing us on a regular monthly basis for one or more of our services. We are pleased with our financial performance, and while As is often the case, there is some noise from currencies and mark-to-mark financial expenses. The big picture shows that we clearly have a healthy and growing business. 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 the financial summary. Eli? Thanks, Eyal.