Ituran Location and Control Ltd.

Ladies and gentlemen, thank you for standing by. My name is Kenny Green and I'm part of the Investor Relations team at Itaewon. I'd like to welcome all of you to Itaewon's Results Zoom webinar and I would like to thank Itaewon's management for hosting this conference call. All participants other than the presenters are currently muted. Following the formal presentation, I'll provide some instructions for participating in the live question and answer 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 Iturun'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 Kamar, CFO of Iturun. Eyal will begin with a summary of the quarter's results followed by Eli with a summary of the financials. We'll then open the call for the question and answer session. You should have all view it on the company's website. I'd like to remind everyone 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, Piani. I'd like to welcome all of you to our first quarter 2026 results call, and thank you for joining us today. We are very pleased to report a strong start to 2026. with our revenue crossing the $100 million milestone for the first time in our history. For the quarter, overall revenue grew 19% year-over-year to $102.7 million, a record with subscription revenue growth of 21% to $75.4 million. Operating income, EBITDA, and net income, all grow year over year by double digit with EBITDA reaching $26.7 million. During the quarter, we added 40,000 net new subscribers, bringing our total subscriber base to 2,670,000 at the end of March 2026. This is in line with our expected run rate and shows continued healthy organic growth across our core markets. While the pace can vary from quarter to quarter for the full year of 2026, we continue to expect to have between 160,000 and 180,000 next subscribers during the year. Our long-term success in growing our global subscriber base constantly is due to our ongoing efforts in offering new products and services to our existing customers, while at the same time tapping into new market segments and new geographies. Our OEM relationship remains a key growth driver. During the first quarter, we further expanded our strategic partnership with Stellantis through the launch of ConnectFiat, exclusive to the Fiat Strada in South America. This is a fully integrated, end-to-end solution for me to run, covering the embedded hardware, connected vehicle services, the technology backend, and the end-user mobile application. This new program, with an initial three-year term and an option to extend by an additional two years, builds on the partnership we announced with Stellantis in early 2025 and reinforces our role as a complete connectivity platform. partner for global OEMs in our region. Beyond Stellantis, we remain in active discussions with additional OEMs, and this, alongside our existing partnership with Nissan, Renault, General Motors, Yamaha, BMW, and others, gives us strong confidence in our long-term OEM growth trajectory. Beyond our core subscriber-based telematics business, we are advancing the several growth initiatives, which I discussed last quarter in detail, that we believe can become meaningful long-term contributors to e-to-run. These include e-to-run mob, our car rental solution, credit carbon, and our big data capabilities, all which significantly grow our addressable mob. While these initiatives are still early in their commercial development, we are already involved in active discussions with potential customers and partners, and we are seeing interest across multiple markets and use cases. As an example of our big data capabilities, we recently signed an agreement with one of the entities of the Ministry of Transportation in Israel to provide transportation data. helping it better understand commuter patterns and support plans for the future. We expect more such projects in Israel to mature during the coming quarters. Together with our other interesting projects in the pipeline, this highlights the significant long-term potential of Ituran's data capabilities to support governments, transport authorities, commercial centers, OEMs, and other customers while creating scalable revenue opportunities beyond our traditional subscription model. Itran continues to be a strongly cash-generating business with cash flow from operations of $18.2 million in the first quarter. Reflecting our continuing strong profitability, ongoing positive cash flow, and strong balance sheet, the Board of Directors declared a dividend of $10 million for the quarter, which represents $0.50 per share, in line with our standard dividend policy. During the quarter, half a million dollars in shares were purchased under the buyback program. We see our ongoing dividend alongside our buyback program as a reward to our shareholders for their loyalty and long-term support of our company. In summary, we are very pleased with our strong start to 2026, with revenue crossing the $100 million milestone for the first time, double-digit growth in revenue, operating income EBITDA and net income, and continued healthy subscriber addition in line with our goal for the year. At the same time, we continue to look for new avenues to drive further growth across all of our regions. The OEM expansion with Stellantis through Connect Fiat, the launch of e2Run Mob, our car rental solution in the United States, and our partnership with GRIP, the development of Credit Carbon and the monetization opportunities around our big data assets are all examples of this. We remain confident in our ability to deliver continued growth and profitability throughout 2026 and in our long-term strategy to transform Ituran into a significantly larger company. 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 in the press release that we issued earlier today. First quarter revenues were a record $102.7 million, a 19% increase compared with revenues of $86.5 million in the first quarter of last year. Revenues from subscription fees in the quarter were $75.4 million, an increase of 21% year-over-year and represented 73% of total revenues. Product revenues in the quarter were $27.3 million, an increase of 12% year-over-year. The subscriber base expanded to $2,670,000 by the end of the first quarter, an increase of $40,000 from the end of the previous quarter. The geographic breakdown of revenues in the first quarter was as follows. Israel, 57%, Brazil, 22%, rest of the world, 21%. EBITDA for the quarter was $26.7 million, or 26% of revenues, an increase of 15% compared with EBITDA of $23.3 million, or 26.9% of revenues in the first quarter of last year. Net income for the first quarter was of revenues or diluted earnings per share of $0.85, an increase of 15% compared with $14.6 million or 16.9% of revenues or diluted earnings per share of $0.73 in the first quarter of last year. Cash flow from operation for the first quarter of 2026 was $18.2 million. As of March 31, 2026, the company had net cash including multiple securities of $108 million. This is compared with net cash including multiple securities of $107.6 million as of year-end 2025. During the first quarter, it run-paid a dividend to shareholders relating to the third quarter of last year, amounting to a total of $10 million. The Board of Directors declared a dividend of $10 million for the first quarter, or $0.50 per share. The current dividend takes into account the company's continuing strong profitability, ongoing positive cash flow, and strong balance sheet. During the quarter, $0.5 million in shares were purchased under the buyback program. The total remaining authorization is approximately $13 million. Share repurchase will be funded by a valuable cash and will be made accordance with SEC rule 10B-18. And with that, I'd like to open the call for the question and answer session. Operator?