Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the Eteron second 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 Eteron's investor relations team at EK Global Investor Relations at 1-212-378-8040 or view it in the news section of the company's website www.eteron.co.il. I would now like to hand the call over to Mr. Ehud Helft of EK Global Investor Relations. Mr. Helft, would you like to begin?

Thank you, operator. Good day to all of you, and welcome to EITRAN's conference call to discuss the second quarter 2022 results. I would like to thank EITRAN management for hosting this conference call. With me today on the call are Mr. Eyal Sharadsky, the CEO, Mr. Udi Mizrachi, Deputy CEO and VP Finance, and Mr. Eli Kamar, the CFO of EITRAN. Eyal 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'd like to remind everyone the Safe Harbor and the press release also covers the content of this conference call. And now, Eyal, 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 the results of the second quarter, especially at a time when component supply chains remain tight and new car sales remain constrained. In particular, the above-average growth in our aftermarket subscriber base has continued for the second quarter this year and we have so far added 91,000 subscribers in 2022, well on target to reach the top end or even exceed our expected range of between 140,000 to 160,000 for the year. This is also reflected in the current quarter subscription revenues, which surpassed $52 million, growing at 11% year over year and 4% sequentially. We grow our overall subscriber base at a record of 48,000 net ads, bringing the total to just shy of 2 million subscribers as of June end. The primary contributor was the aftermarket segment, which added 50,000 subscribers during the quarter, the third quarter in a row in which we have experienced this increased level. 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. As I shared with you last quarter, the expectations for subscriber growth is between 140,000 to 160,000 net subscribers ad for the year. The second quarter sub-ads are clearly indicating that we are well on the right track. and that we will likely surpass the high end of the target range that we set for ourselves. Our overall results demonstrate that it runs as a strong, healthy, and growing business, and I'm very proud of our recent achievements, despite the background of what are many macro challenges. As we discussed with you in our last quarter's call, the shortage of electronic components is the most notable macro issue impacting us. While some of the component costs we've been able to pass on to customers, we indicated that our product growth margins would be impacted, which has been clear in the first two quarters of this year. However, the good news is that we now see stabilization in the components market, and we are now buying at more normal prices. The improvement in the situation should be reflected in our growth margin toward the end of this year. As we also discussed last quarter, another impact of the component shortage has been on the major car OEMs, which are less able to manufacture cars to meet demand, and therefore we are indirectly impacting in our OEM subscriber base. However, even here we have seen an improvement. The decline of 2,000 subscribers in our OEM base in Q2 has diminished compared with the 16,000 decline that we experienced in Q1. In summary, all in all, I am very pleased with our performance. I am most pleased with the ongoing strength in subscriber growth, which is the key to our long-term profitable growth. We are at the cusp of a subscriber base of 2 million customers paying us on a regular monthly basis for one or more of our services. Both ongoing solid performance in our traditional aftermarket businesses and especially our growth engines are driving this subscriber growth. This subscriber growth will ultimately translate into increased subscriber revenue growth and profitability in the year ahead. As we enter the second half of 2022 and many of the challenges seem to be moving behind us, I'm more excited now than ever with our long-term potential. And with that, I hand over to Eli. Eli, please go ahead.