Ituran Location and Control Ltd. (NASDAQ:ITRN) Q2 2023 Earnings Call Transcript

Eyal Sheratzky: First of all, the investment in the small, as you said, we see our start-ups, which is linked to potential systems or for mobility market, it’s something that has nothing with the loan that we took because we do it. It’s – let’s say, on an arrogant way, it’s not a material cash that we use. The main cash needs that we did was to, as you said, to acquire Road Track. Now it’s the last payment of our loan after these 5 years, and simultanically of course, increase our cash flow position and cash flow generation. So actually, as we did in the past, we have not any intent to keep the money for nothing in the bank. So first of all, we will do our best to find – to use the money that we generate for growth, which means most of the time for acquisition, for partnerships and things like this.

If we find it, this is the first priority. But this is not something easy. We are conservative. We don’t want just to spend money and say that we did. By the way, regard Road Track, today, we are very happy that we did it. The contribution of Road Track today it’s called it run. It’s fully emerged to the business and integrated and we create a synergy and everything now is as we sought to do. And since we did it on a conservative way, it succeeded. If we find something that will be good for our inorganic growth, we will do it first. Of course, if not, or meanwhile, as long as we generate cash, of course, we will let all our shareholders, of course, to benefit from this cash flow. As – by the way, we did simultanically with the debt because if you can, for example, take this quarter, you see that almost $7 million went back to the shareholders or buy dividend or buyback.

And of course, if we will generate more cash and we will not need it for growth, we will or at least I will recommend our Board to increase this dividend or buyback, of course, depend on the situation. But we will not keep the money. We always think how to grow with this money.

Unidentified Analyst: Great. Okay, well, thank you very much. Good luck, guys.

Eyal Sheratzky: Thank you very much.

Operator: [Operator Instructions] The next question is from Abba Horwitz from Old School Partners. Please go ahead.

Abba Horwitz: Thank you. Hi and congratulations on a real milestone. This is quite an amazing quarter relative to the last couple of years. I wanted to really drill down on the motor cycle opportunity. And if I may ask, how are you selling anything to the motorcycle market? And where – how rapidly do you see this being implemented? And how meaningful can it be to the overall business?

Eyal Sheratzky: Okay. So I will divide it for the two different markets. One is the Israeli market where we, for a few years already sell a product and service for motorcycles. But we have to understand that in Israel, which is different than in Latin America, the motorcycle trend is quite low, meaning most of the people buy cars than expensive motorcycle. So the market here in Israel, for us, is a niche. I mean, we do it with the insurance company sometimes or with some dealers. But what we realized after we cover the car environment in Latin America, and again, we looked for additional growth segments. We understood that, for example, in Brazil, cars and motorcycle ratio is very not similar, but almost similar. Millions of motorcycle being sell every year in – only in Brazil.