Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. My name is Kenny Green. I am part of the Investor Relations team at Ituron. I would like to welcome all of you to Ituron's Results Zoom webinar, and I would like to thank Ituron's management for hosting this call. All participants other than the presenters are currently muted, and following the formal presentation, I'll provide some instructions for participating in the live Q&A session. I would like to remind everyone that this conference call is being recorded and the recording will be available from the link in the earnings press release and on Ituron's website from tomorrow. With me today on the call are Mr. Eyal Sharatsky, CEO, Mr. Udi Mizrahi, Deputy CEO and VP Finance, and Mr. Eli Kammer, CFO of Ituron. Eyal will begin with a summary of the quarter's results, followed by Eli with a summary of the financials. We will then open the call for the question and answer session. You should have all by now received the company's press release. If not, please view it on the company's website. 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 the associated presentation. And now, Eyal, would you like to begin, please?

Thank you, Kenny. I'd like to welcome all of you to our fourth quarter and full year 2025 results call, and thank you for joining us today. Before I begin, I'd first like to acknowledge the war between Israel and the United States against Iran. We honor the brave airboats of the Israeli Defense Forces and U.S. military personnel and their air forces, and we sincerely wish for their swift and safe return home. We hope the war will draw to a quick resolution and lead to lasting peace for all countries in the Middle East. And now to the results. We are very happy with the results of the fourth quarter as well as the full year of 2025. Our best ever and record across all key parameters. For the quarter, overall revenue growth was 13% to almost $94 million. A record with subscriber revenue growth at 15%, EBITDA growth to over $25 million. a record for us and puts our yearly EBITDA run rate in excess of the $100 million milestones for the first time. In addition, we generated a significant amount of cash in the quarter at $29.4 million, our highest ever, and as I will discuss later, Given our very strong balance sheet, we have decided to share all the rewards of our success in 2025 with our shareholders through a special dividend and increased buyback in addition to the regular dividend. Our growth and success in 2025 continue to be driven by long-term efforts in bringing new value-adding telematics and connected car products and services to both existing as well as new customers globally. Throughout the year, we were particularly successful at bringing additional new OEM partners to our growing roster. Examples during 2025 were Stellantis, Renault, Yamaha, and BMW, we are in active discussions with others. Beyond our new partnership with Fiat that we announced last week, we hope to bring additional ones in future. Our results show an ongoing expansion in our large subscriber base, reaching at year-on-year over 2.6 million subscribers. In the fourth quarter, We added 42,000 net subscribers, adding 221,000 net new subscribers in 2025, a record year for subscriber growth for e2run. I remind you that in Q1, our new OEM agreement with Stellantis bordered subscribers into e2run, which gave us a bump in net new subscriber ads in that quarter. Our net ads in recent years has tended to be in the 40,000 plus per quarter range. Looking ahead, while the rate can vary between quarters, we expect to maintain this overall current net subscribers add run rate, which means for 2026, we would expect to add between 160 to 180 thousands net during the year. I want to summarize some of our new activities, which we believe will contribute to our growth and success in the mid-term, over the coming years. These all have the potential to completely transform the company. First, our e2Run Mob smart mobility platform. is a differentiated solution enabling remote vehicle access, real-time telematics, and efficient management for shared mobility, rental fleet, and specialized vehicle application. It1 Mob was first launched in Brazil and Israel, where it has gained solid traction among fleet operators and rental companies. Building on this success, we recently introduced the platform to the U.S. market and recently establish dedicated e-to-run mob operations there. We see a clear opportunity among small and mid-sized car rental companies seeking to improve operational efficiency and the end-user rental experience. This is the first time we are coming to the U.S. market, the largest rental market in the world, with over 17,000 small to mid-sized car rental companies, with a solution that is unique, with a real need in the market, and therefore has the potential to gain significant market share. In addition, It Run Mob is expanding into new verticals. In the past few weeks, we announced a partnership with leading Israel-based motorsport data analytics company, GRIP. Under this agreement, Ituran Mob becomes GRIP's official IoT technology provider, combining Ituran's real-time telemetry with GRIP's AI-powered analytics platform for racing drivers. Based on industry estimates, there are over 60,000 racing events each year, with closer to 1 million participants, representing a large addressable market for our technology. Our goal is that this partnership will already connect thousands of new vehicles in 2026. As you may have seen in the video we published together with the press release, the technology is deployed in some of the most demanding operating environments, professional racing and track day driving. demonstrating the robustness, precision, and scalability of our solution. The higher complexity of this technology allows us to generate a high ARPU for this type of services. Ituran MOB represents another new long-term growth avenue alongside our core telematics and subscriber-based businesses. Credit Carbon is a new and unique initiative being developed by Turan that enables drivers of electric and other zero-emission vehicles to participate economically in the global transition to low-carbon transportation, something that has not previously been accessible to individual drivers. Today, while companies that emit carbon dioxide can purchase carbon credits to offset their emissions, There has been no efficient, scalable mechanism for individuals who actively reduce emissions, such as electric vehicle drivers, to generate and monetize verified carbon savings. This solution will create a new incentive for EV adoption while opening an additional revenue stream for it to run by providing the platform that connects carbon emitters with carbon savers. It leverages our existing technology, subscriber base and infrastructure with minimal incremental cost. This initiative has been developed internally over years, leveraging our regulatory, technological and data expertise. The solution is highly differentiated and is currently undergoing testing and validation. We are in advanced stages and have received encouraging early feedback. We expect initial commercial deployment toward year-end 2026. The timing is favorable right now as global awareness and regulatory pressure to reduce carbon emissions around the world continue to accelerate expanding the addressable market. Another new initiative is leveraging our big data capabilities. Over many years, Ituran has built one of the largest and richest vehicle telematics data sets in our markets, encompassing decades of driving behavior, usage patterns, location data, and vehicle performance across millions of connected vehicles. Anonymize and aggregate insight derived from our extensive road use, driver behavior, and transportation data set with decades of data can support governments, transport, ministries and local authorities in optimizing traffic flow, improving road safety and informing infrastructure planning. Our data can also support leading vehicle OEMs in advancing driver assistance and autonomous driving capabilities, providing deep understanding of actual road usage and training systems to better reflect real-world driving behavior. We are actively exploring multiple avenues to monetize this significant asset. Overall, our big data capabilities threaten customer retention, support margin expansion, and provide a highly scalable platform for future growth beyond traditional subscription revenues. And finally, as I discussed earlier, 2025 was the most successful year in Ethereum's history. As such, given our strong profitability, very strong cash generation, and balance sheet with well over $100 million in cash and no debt, the board declared a total dividend of $30 million for the fourth quarter, consisting of our regular $10 million quarterly dividend and an additional $20 million special dividend. Therefore, for the full year, we will have shared a total of $60 million in dividends, representing approximately 100% of our net income, which amounts to dividend yield of around 7% based on our year-end share price. This is an excellent dividend yield, for a strong, stable, and continually growing company, demonstrating record results year in, year out. Beyond all this, and in line with the feedback we hear from many of our investors, we also declared an addition to our buyback of up to $10 million. During 2025, we bought back $3.1 million in shares, or a total of 85,000 E2RN shares. We believe all this reflects our commitment to creating value and generating capital for our shareholders, while at the same time continuing to develop new products and services and invest in long-term growth at e2run. We see our ongoing dividend and share buyback as a reward to our shareholders for the loyalty and long-term support of our company. In summary, we remain very pleased with its run performance in the fourth quarter, and more generally, it runs long-term and ongoing performance in 2025. At the same time, we look for more revenues to bring further growth to our business across all our regions, and the recent product launches I spoke about earlier are examples for this. Additionally, We will continue to partner with the new OEMs, as we have successfully done throughout 2025, as well as new financing companies and other lending companies. 2025 marked 20 years as a public company and 30 years as a company. We look forward to continued success over the next decades, and I thank our shareholders for the long-term support of our business. And with that, I hand over to Eli. Eli, please go ahead.

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results that we issued in a press release earlier today. Fourth quarter revenues were $93.5 million, a 13% increase year-over-year. Subscription revenues were $71.2 million, up 15% and representing 76% of total revenues. Product revenues were $22.4 million, up 5% year-over-year. Our subscriber base reached 2,630,000 at the end of 2025, an increase of 42,000 in default water and 221,000 year-over-year. The geographic breakdown of revenues in the fourth quarter was as follows. Israel, 55%, Brazil, 23%, rest of the world, 22%. EBITDA in the fourth quarter was 25.3%. for the fourth quarter was $15.3 million or diluted earnings per share of $0.77, an increase of 10% year-over-year, and compared to $13.8 million or diluted earnings per share of $0.70 in the fourth quarter of last year. Cash flow from operations Now, taking a look at the full year 2025 results. Revenues for 2025 were a record $359 million, a 7% increase over the $336.3 million reported in 2025. 24% of revenues were from location-based services subscription fees and 26% were from product revenues. Revenues from subscription fees were $264.6 million, representing an increase of 9% over 2024. EBITDA for 2025 were $96.2 million, 26.8% of revenues, an increase of 5% compared year-over-year. Net income in 2025 diluted EPS of $2.92, an increase of 8% compared with net income of $53.7 million, 16% of revenues, or fully diluted EPS of $2.70 in 2024. Cash flow from operation for the year was $88.6 million. As of December 31, 2025, net cash and multiple securities totaled $107.6 million. This is compared with net cash including multiple securities of $77.2 million as of year-end 2024. The board declared a $30 million dividend. special dividend and a $10 million dividend in line with our dividend policy. In addition, during the quarter we purchased $1.6 million in shares under our buyback program. As of the end of the year, we had around $3.5 million remaining available under this program. However, the Board today approved a $10 million funded from a valuable cash and accessed in accordance with SEC Rule 10b-18. This means that as of today, there is $13.5 million available under the buyback program. The current dividend and buyback takes into account the company's continuing strong profitability, ongoing positive cash flow, and strong balance sheet.