Ladies and gentlemen, thank you for standing by. Welcome to the Ituran Third Quarter of 2024 Results Conference Call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] 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 Ituran'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.ituran.co.il. I will now hand the call over to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin?

Thank you, operator. Good day to all of you, and welcome to Ituran's conference call to discuss the third quarter 2024 results. I would like to thank Ituran's management for hosting this call. With me today are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO of Ituran. 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. I would like to remind everyone that the safe harbor statement in today's press release also covers the content of this conference call. And now, Eyal, would you like to begin, please?

Thank you, Kenny. I'd like to welcome all of you to our third quarter 2024 call, and thank you for joining us today. We are pleased with our third quarter results, presenting steady growth in revenue and profit across the geographies in which we operate. We are also happy to report a high level of 40,000 net subscribers add in the quarter, which came in at the top-end of our expectations. The results were achieved despite the negative impact of the US dollar strength in the quarter, which lowered our local currency denominated results when presented in US dollars. In fact, in local currency term, our growth in most of the geographies in which we operate was even higher. We increased our subscriber base by a net of 40,000 in the quarter, at the high-end of our expectation, which is between 35,000 and 40,000. Our ongoing success reflects continued demand for our location-based product and telematic services, as well as traction from the new initiatives and services we continue to launch in the various geographies in which we operate. Last week, we announced a five-year contract with Nissan Chile. We have a long-term partnership with Nissan, one of the world's leading automakers and OEMs, and have partnered with them for many years in Mexico. Under our new contract with them, Ituran will provide Nissan Chilean customers with vehicle location units pre-installed in three new vehicle models, which potentially is tens of thousands of vehicles over the years. We will also provide telematics and stolen vehicle recovery services. Following Nissan Chile customers' car purchase, they will enjoy a year's free trial of Ituran services paid by Nissan, after which they will have the option to continue with their service, which they will pay to Nissan and Ituran. Customers will have access to comprehensive Nissan branded on vehicle application. Additionally, the customer will also have access to Ituran Chile's 24-hour contact center, assistance in the event of vehicle theft and emergency services such as breakdown assistance and towing. This new agreement in Chile is the culmination of well over a year's discussions on how we can replicate our strong service for Nissan in Mexico and bring this service to their customers in Chile. This new agreement shows the very strong satisfaction that Nissan has from our cooperation in Mexico, and I believe that this will enable us to expand to additional regions with Nissan in future. We are also aiming to build a strong aftermarket business in Chile, leveraging the strong experience we have in this market in many of the other regions in which we operate. We are also in active discussions with a number of major OEM car manufacturers in addition to those that we already work with. We are looking to bring new OEM partners as well as broaden the services we provide existing OEMs to additional countries in South America. We see strong long-term growth potential via this initiative. From a financial perspective, even with the currency headwinds throughout the past year, we remain on track to meet our targets. We reiterate that for 2024, our guidance is full year EBITDA of between $90 million and $95 million. We continue to expect that for the quarter, subscriber growth will be between 35,000 and 40,000 net new subscribers. Given the strong net cash position of over $67 million, our ongoing cash generation, which came to $17.2 million in the quarter, we continue to share a strong quarterly dividend of $8 million with our shareholders. This dividend is at the same level that we issued last quarter and 60% increase over that of the year-ago quarter. Our dividend yield, on an annualized basis, represent a return of over 6%, which is a very solid return from a strong and stable company. We see our ongoing dividend as a reward to our shareholders for their loyalty and long-term support of Ituran. In summary, we remain pleased with Ituran's performance. Our constantly growing subscriber growth will continue to translate into increased revenue, improved margins and better profitability growth over the long-term due to the operating leverage inherent to our business. We aim to enhance our subscriber growth and we are currently engaged in active discussions with a number of major OEMs, car manufacturers, both current and new potential customers to bring our services to additional countries in South America as well as new OEM customers across all our regions. I look forward to updating you on our progress again in the coming quarter. 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 the press release earlier today. Third quarter revenues were $83.5 million, a 3% increase compared with revenues of $81.1 million last year. The strengthening of the US dollar in the third quarter versus the various local currencies in which Ituran operates in impacted the revenues when translated into US dollar. In local currencies, revenues grew by 7% year-over-year. Revenues from subscription fees in the quarter were $59.6 million, a decrease of 1% year-over-year, and in local currencies, an increase of 4%. Product revenues in the quarter were $23.9 million, an increase of 14% year-over-year, and in local currencies, an increase of 15%. The subscriber base expanded to 2,369,000 by the end of the third quarter, an increase of 40,000 from the end of the previous quarter. The geographic breakdown of revenues in the third quarter was as follows: Israel, 53%; Brazil, 23%; rest of world, 24%. EBITDA for the quarter was $23.3 million or 27.9% of revenue, an increase of 4% compared with EBITDA of $22.5 million or 27.8% of revenues in the third quarter of last year. In local currencies, EBITDA grew 9% year-over-year. Net income for the third quarter was $13.7 million or diluted earnings per share of $0.69, an increase of 9% compared to $12.5 million or diluted earnings per share of $0.63 in the third quarter of last year. In local currency, net income grew 14% year-over-year. Cash flow from operations for the third quarter of 2024 was $17.2 million. As of September 30, 2024, the company had cash, including marketable securities, of $67.5 million, and a debt of $0.2 million, amounting to a net cash position of $67.3 million. This is compared with cash, including marketable securities, of $53.6 million, and a debt of $0.6 million, amounting to a net cash position of $53 million as of year-end 2023. The Board of Directors declared dividend for the quarter of $8 million. The current dividend takes into account the company's continuing strong profitability, ongoing positive cash flow and strong balance sheet. And with that, I'd like to open the call for the question-and-answer session. Operator?

Thank you. [Operator Instructions] The first question is from Sergey Glinyanov from Freedom Capital. Please go ahead.

Hello, everyone. So, it's, obviously, very solid results, but we see price continuing decline in service segments might be caused not only currency fluctuation, but something else? Thank you.

Service revenues, as you mentioned, you are talking comparing to last year or comparing to the previous quarter?

Comparing previous year.

To the previous year, yes. So, service revenues did went down by almost $600,000, but the main reason is the currency exchange effect. So, if you exclude it, you are getting -- only the currency on that was about an effect of $3 million. So, basically, their service revenues went up as expected.

Okay. Thank you. Pleased to see operating margin -- better operation margin due to G&A decrease. What is the main components which impacted it?

The margin for the third quarter -- operating margins were 22%, comparing to last year was 20.8%. So basically, the margin went up. And the main reason is the operating leverage in the business model.

Okay. Got it. And yeah, you mentioned that recently you've signed an agreement with Nissan Chile. May any further agreements boost product revenue sales?

The contract is a typical contract that we have for many years with Nissan in Mexico. Of course, Chile is a smaller market than Mexico, but still since it's a longer-term contract, we are talking about tens of thousands of new customers/subscribers because the contract includes hardware and services that Nissan paying directly to us. Add to that, our experience with renewals that allow us to extend the contract also with the renewals to a higher profit and profitability along the years.

Okay. Thank you a lot. That's all my questions.

The next question is from Allen Klee from Maxim Group. Please go ahead.

Yes, hello. Could you talk a little like your partnerships with potential ones or whatever with automakers, financing companies and auto insurance companies? What would you say are the major hurdles to get through to get someone to sign up? And what are the most compelling arguments that you can make to them for someone to decide to sign up? Thank you.

There are several reasons that -- let's call it, the sales cycle in this B2B segment is long. First of all, and this is the basic is a marketing or strategy of each one of these brands or industries leaders that you mentioned, if we consider a car brand manufacturer, which is a very international or if it's a bank such as Santander, or it's insurance companies that can be, again, MAPFRE, Generali, HDI, et cetera. So first of all, it's their decision to go and offer and invest because they have to pay in the end of the day for those solutions in their strategy. So, this is their own decision. Of course, we have a strong role here to convince them that it will be something with benefit. Second, once they decide they have to choose the right partner, and then we get into technology aspect, installations, facilities and how it's spread around large regions, such as Brazil, Mexico and other countries. So, this takes a lot of time. It includes validation. It includes pilots. And third is how the contract looks like, then there is a negotiation that takes time. Usually, customers want to pay less, suppliers want to get more, there are the KPIs, et cetera. So, when you take these three aspects it's taking a long time. And the last one, which is another thing that we should create confidence, when a company such as Nissan has to attach their brand and their large marketing expenses with a brand of a supplier like Ituran because everybody knows in Mexico, for example, that we are the supplier. And every driver that drives a Nissan car and has a problem, it's a Nissan problem. So, they have to know that they attach their brand to a brand which they can trust that it will not downgrade their own brand as this is one of the most important thing that we are very, very, I think, happy with and respected. I hope I answered.

Thank you. Yeah, that was great. Could you talk about the -- some of the bigger countries that you're in, what is about the environment there that makes it attractive for your product? And are there other countries that you see as big opportunities that you will also see to set up positive?

There is -- the basic for us is that we have a lot of experience, and we have a lot of, let's say, large operation, and our brand is strong in almost most of the countries in Latin America. This is something very important. Then, the needs in those countries is stronger. The security, people are more -- have more security problems. They need more -- I would say, someone or a solution that will provide them more confidence. And this is the main reason. This is, I would say, the main driver. Then, each country has a different mentality. In Brazil, for example, most of the people cannot afford themselves a full insurance, as an example. So, we found a solution like you know, the ICS, which is kind of Ituran with insurance. And in that case, we are selling something very unique, which is only car theft insurance, monthly payment. And this is something that allowed a large segment that do not insure his car, and on the other hand, it attached other insurance companies to do it with us and not create cannibalism for their main business. And also, when you talk about -- if we go to other segment, again, which is the car manufacturers or car dealers, they want to offer and to show their customers that they take care for their security, they care for their car even after they took it out from the dealer. So, this is the reason why Latin America, I would say, more globally emerging are market better ground for Ituran businesses.

Thank you. My last question is, you look at -- you're involved in usage-based insurance. And can you talk about how -- what you do and where you see the opportunity there?

It comes from a basic idea that as much as the driver drives more mileage or his driving skills are better and more secure, so insurance companies will have less expenses because they will have less accidents and they will have less payment of claims. So, on the other hand, insurance companies can get something which they can customize the premium. So, when you attach these two, I think, to components is something that we thought going to be very interesting for insurance companies. It takes also time. It's a longer sales cycle, because we know that insurance companies is something very traditional, very large corporates. So, it takes time to change from the traditional methods to something which is more customized depend on technology. I am happy that in Israel, we succeed to do it about two, two-and-a-half years ago by convincing the first insurance company that adopt our solution. Since then, I would say that major portion of the insurance industry and the insurance companies in Israel decided to join this train and adopt our technology. And in terms of technology, we have two types of offers. One offer includes using our hardware and service that our hardware for this solution has a module that provides the data that allow to evaluate the risk of the driver online and then create the right billing method for his risk. And the second is without a hardware, using phone, the iPhone or the Android application that we attach to our software and also with some partners that we integrated in order to do it without hardware in the car. In terms of our own, I would say, profitability, it's very equal. The prices are different, depends what is the contract and the program that each insurance companies did with us. We started it in Israel, and it's something that's very grown. And we start putting some seeds also in insurance industries in Argentina and now in Mexico. It's not yet, I would say, mature enough. The needs in those markets or how insurance companies still look at that, it's something that will take more time because we have to convince them, and it's also, in Israel, it took us a few years. Our experience and track record in Israel will I think -- or I see will support a faster penetration also to other geographies that we operate.

That's great. I actually did have one other question I just thought of. For your announcement with Santander, could you just explain what you think the size of that opportunity could be?

The announcement with Santander was, I think, almost two years ago. This is when we started the contract, by the way, also after almost a year of a pilot. And we are talking about hundreds of thousands of subscribers that derive from their needs to secure their collateral when they provide loans to car buyers. This is something that we aim to expand and to extend to more years. And it means that on an annual basis, it provide us tens thousands of subscribers, but we have to be aware that those subscribers are for 18 months or 24 months. And when they finish their loan or their risk to pay the loan going or decreasing then, of course, Santander release them from the service with Ituran. So, it's kind of a cycle. So, in the end, it will be hundreds of thousands of subscribers, the net should be around 100,000 or 150,000 in the end of the -- on average every year. Only in Brazil, by the way. Only on Brazil I hope, and we are doing our efforts to extend it to other Santander regions in Latin America.

Okay. Thank you very much.

The next question is from Chris Reimer from Barclays. Please go ahead.

Yeah, hi. Thanks for taking my questions. A couple of quick ones from me. Can you just remind us if there's any seasonality with either of your revenue line?

No. Most of our -- first of all, we have a diversified business, diversified between segment, very diversified between geographies. So, even if there is something, which is not material in one area, which I cannot appoint specifically, but I'm saying in general, still it will be hedged by others, there is no seasonality as a group.

Got it. Yeah. And just touching on the motorcycle insurance products, can you give any color as to how that's trending? What's the initial reaction been like?

It started then -- motorcycle insurance is a very risky segment for insurance because there is a lot of car theft. It's easy to steal motorcycle more than steal a car. But we succeed to develop a solution which provide more security to those motorcycles. And even here, we have two different, I would say, drivers. In Israel, for example, people that buy motorcycles, they do not insure their motorcycle. So, they use our solution to reduce their risk as a motorcycle owner, because we have a high rate of recovery of motorcycle based on the technology and using AI with Ituran back-office software. And in Brazil, since the motorcycle market is very, very large compared to the total vehicle market and insurance companies needs and want to insure motorcycles, but the risk was very high. So, we succeed to reduce it, and we came out with this proposal about a year ago, and we see more and more traction with ramping up our customer base, that base -- that get also motorcycles driver and motorcycle insurers.

Got it. Thanks. That's it from me.

The next question is from Josh Strauss from Pekin Hardy. Please go ahead.

Yeah, I had a couple of questions. First, I'd like to talk about the core market of Israel. It's rather impressive that you guys have had the consistency of business in the face of the biggest war since the Yom Kippur war and in the face of pretty rough economy in Israel right now with GDP down double-digits. And so, I guess I can't imagine there's a lot of importing of new cars coming in right now, and I'm just trying to get my arms around how you're able to keep the business as stable as it is. So, let's just start there.

Okay. So, first of all, you're right, the car importers went down. It's because of the situation, because of the dollar and the cost for cars here, et cetera. But things that support our growth in Israel, even at these tough times is that the car theft rate went dramatically high. And this is not something unique. We have to understand in countries where there is no or there is security problems or economic problems, usually the violence is growing. And when the violence is growing, it means that also car theft rate going. And this situation, Ituran, I would say, getting more attraction and the needs of solutions such as we provide become stronger. So, just to explain, this is the first year after almost a decade that we get tens of thousands of cars that when they were bought a year or two years ago, the insurance companies didn't ask for a security system. Now, when they want to renew their insurance policy, they send us to install security system when 90% of them install Ituran. So, in one hand, we are losing brand new cars, but on the other hand, we get a more, let's call it, kind of a second-hand or old car. Regard the rest of the business -- I'm not sure as long as I remember, I'm not sure that the GDP in Ituran went down when we talk about [a year] (ph). But of course, the war at the beginning of 2024 and of course, October, November, December '23, everything here was shut down, but we recovered and except living not in a very quiet area, the things are moving and the commercial life almost become to normal.

Right. Well, that's helpful. Certainly, most of the population in the Tel Aviv, Jerusalem area that's not particularly surprising, but it just, from -- for us on the other side of the pond, it's hard to imagine it's a stable business in the middle of this war, but thanks for the color. Can we talk about Bringg? Is there any updates here on what's going on with Bringg?

I, of course, cannot provide specific numbers and everything. It's a private entity, and we have only 17%, but talking general information, Bringg has a business plan. And this year, they succeed to achieve the business plan. It's a growing SaaS company. We understand that the last round that was done on a valuation of $1 billion and the investment that led by inside partners of more than $100 million, there was different times in terms of financial market for startups. So, of course, it's not a thing that we can do now, for example, to liquid our holdings whether it's by IPO or by M&A or by sell it in the market. So, we prefer to be wise and we wait. Of course, we are in part of the Board members. We know what's going on, and we're really optimistic regard being in a good position in the future to do it. I just want to remind you that Bringg value in our balance sheet is zero. So, I believe that in the future, it will contribute or will be a bonus of profits.

Right. No, I remember all too well. And the market values is at zero too, and they shouldn't. I agree. One more question. So, I was looking at your cash flow statement and you've got almost a $4 billion gap in terms of increasing in other current and non-current assets. And I just year-over-year and I wanted to know what's going on there? What does that mean?

Which item you're talking about? For which period?

In your cash flow statement, year-over-year, it doesn't show much of a -- it's not much of a difference from a nine-month standpoint, but in a three-month standpoint, there's a $4 million difference in terms of increase in other current and non-current assets. This year, you had an increase of $957,000, last year was a decrease of $2.9 million.

I'm trying to find it so I can help you.

It's in the cash flow statement.

Let me check and we can get back to you on that because there is nothing specific that -- probably it's working capital that there is a volatility between quarters or between periods. There is nothing specific that on this item that can change, but again, we can check it and get back to you.

Yeah, I'm very curious on whether or not it's revenues on the balance sheet that have not yet hit an income statement or something like that. So, yeah, please just shoot me a note or give me a call, let me know what the story is there.

Okay.

But that's it for now. Great quarter, guys, keep going, and looking forward to see the stock going [north to $40] (ph).

[Operator Instructions] There are no further questions at this time. Before I ask Mr. Sheratzky to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available tomorrow on Ituran's website, www.ituran.co.il. Mr. Sheratzky, would you like to make your concluding statement?

On behalf of the management of Ituran, I would like to thank our shareholders for your continued interest and long-term support of our business. In the coming months, we will be meeting with investors and presenting at [LD Micro and Needham] (ph), and we hope to see you soon there. If you are interested in meeting or speaking with us, feel free to reach out to our Investor Relations team. And with that, we end our call, and have a good day.

Thank you. This concludes the Ituran third quarter of 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.