Ituran Location Control Ltd (ITRN)

Financial Analyst Report on Ituran Location Control Ltd

Report Date: April 29, 2025
Period Covered: Full Year 2024
Form Type: 20-F

1. Overview

Ituran Location Control Ltd (NASDAQ: ITRN) is a leading provider of telematics services—predominantly stolen vehicle recovery (SVR) and fleet management—and a designer/manufacturer of related telematics hardware. Operating in Israel, Brazil, Argentina, Mexico, Ecuador, Colombia and the U.S., the company combines GPS/GPRS, network triangulation and proprietary technology to serve 2.409 million subscribers.

2. Profit and Debt Analysis

• Net Income (2024): US$53.654 M vs. US$48.137 M in 2023 (+11.5%)
• Revenue (2024): US$336.257 M (+5.1% YoY)
• Gross Margin (2024): 47.8% vs. 47.9% in 2023
• Operating Income (2024): US$71.169 M vs. US$65.955 M in 2023 (+7.9%)
• Debt (Dec 31, 2024): US$0.35 M (short-term + long-term) vs. US$0.36 M in 2023
• Cash & Marketable Securities (2024): US$1,094 M, up from US$868 M in 2023

3. Drivers of Performance

• Subscriber Growth: Average annual subscribers increased to 2.350 M (2024) from 2.186 M (2023), driving service revenue.
• Product Sales: Hardware sales rose 10.1% YoY on higher unit shipments.
• Cost Control: Service cost ratio fell from 41.3% to 41.3% and product cost ratio remained stable at ~80.5% of segment revenues.

4. Pros and Cons

Pros:

• Recurring subscription model with low incremental service costs
• Strong cash generation and net cash position
• Global footprint with diversified revenue streams
• Leading market positions in Israel (monopoly) and growing Latin American presence

Cons:

• Regulatory and licensing risks in multiple jurisdictions
• Foreign exchange volatility, especially BRL/NIS/USD
• Reliance on third-party manufacturing and network infrastructure
• Exposure to geopolitical instability in Israel and economic cycles in target markets

5. Conclusion

Ituran’s 2024 results demonstrate solid top-line growth, margin resilience and strong free cash flow. With virtually no net debt and over US$1 billion in liquidity, the company is well-positioned to fund strategic expansion, R&D and potential M&A. Key risks include regulatory/ licensing hurdles, FX fluctuations and competition in mature markets. Overall, Ituran maintains a healthy financial profile and growth trajectory.

• Revenue by segment (2024): – Telematics Service: US$242.5 M (72.1%)
– Telematics Products: US$93.8 M (27.9%)

• Revenue by geography (2024): – Israel: US$175.2 M (52.1%)
– Brazil: US$83.5 M (24.8%)
– Others (Argentina, Mexico, Ecuador, Colombia, U.S.): US$77.6 M (23.1%)

• Subscriber base by region (end 2024): – Israel: 930,000
– Brazil: 725,000
– Others: 754,000

Ituran’s financial health is robust: consistent subscriber growth fuels stable recurring revenue, while equipment sales provide incremental upside. The minimal net debt and ample cash reserves support ongoing R&D, network expansion and potential bolt-on acquisitions. Inflationary pressures and interest-rate increases have been absorbed to date, though FX volatility remains a key monitoring point—management’s use of hedges mitigates much of the risk. Regulatory licensing in new markets (e.g., frequency approvals) and evolving data privacy/cybersecurity mandates will require close attention. Given strong free cash flow, market leadership in core regions and disciplined cost management, Ituran is poised for moderate growth but must navigate geopolitical and regulatory headwinds carefully to sustain its trajectory.