Ladies and gentlemen, thank you for standing by. Welcome to the Ituran Fourth Quarter and Full Year 2023 Results Conference Call. All participants are 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 at www.ituran.co.il. I will now hand over the call to Mr. Ehud Helft of EK Global Investor Relations. Mr. Helft, would you like to begin?

Thank you, operator. Good day to all of you and welcome to Ituran’s conference call to discuss the fourth quarter and full year 2023 results. I would like to thank Ituran management for hosting this call. With me today on the call are Mr. Eyal Sheratzky, CEO; Mr. Udi Mizrahi, Deputy CEO and VP Finance; and Mr. Eli Kamer, CFO. 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 in the press release also cover the content of this conference call. And now, Eyal, would you like to begin, please?

Thank you, Ehud. I’d like to welcome all of you to our fourth quarter and full year 2023 call. I’d like to thank you for joining us today. We are pleased with our 2023 results, which was a record year for Ituran. We are all the more pleased given that we achieved these strong results despite difficult first quarter in which our country faced a major terrorist attack at the start of the quarter, which resulted in a war which effectively pause the economy for a few weeks. This new challenge followed by many challenges that everyone has faced over the past few years, including the Corona pandemic, supply chain issues and recently a slowing global economy. As our strong financial result demonstrate, our business is in very good shape and resilient against challenges. I want to also highlight as part of the reason for our reliance is that Ituran is a global diverse business based on a loyal subscriber base of more than 2.2 million customers, primarily in Israel and Brazil, but also in many other countries in Latin America, as well as elsewhere in the world. And therefore, any impact in one specific region will have a limit effect on Ituran’s overall business. The initial impact of the war on new car sales in Israel, which drives our new subscribers in that country and aftermarket product sales, temporarily caused a complete pause in the local car market. However, this pause was relatively short lived and as of end of January 2024, new car sales in Israel continue at a former long-term trend and new car sales were up 3% year-over-year. Our subscriber base continued to show strong growth adding 42,000 subscribers in the quarter, well ahead of our expectations of between 30,000 and 35,000 that we shared with…

Thanks, Eyal. I will provide a short summary of the financial results. You can find the more detailed results that we issue in the press release earlier today. Fourth quarter revenues were $77.8 million, a 4% increase compared with revenue of $74.9 million last year. Fourth quarter revenue was somewhat impacted by the outbreak of war in Israel on October 7. Furthermore, the revenue, as demonstrated denominated in U.S. dollar terms, was impacted by a significant devaluation of the Argentinian peso as well as the temporary weakness in the Israeli shekel against the U.S. dollar during the quarter. In local currency terms, fourth quarter revenues grew by 6% compared with that of the fourth quarter of last year. Revenues from subscription fees in the quarter were $59.4 million, an increase of 10% over the fourth quarter 2022 revenues. In local currency terms, the increase was 12% compared with that of the fourth quarter of last year. Product revenues in the quarter were $18.4 million, a decrease of 13% year-over-year and in local currency terms, product revenues decreased by 9% year-over-year. The decline in product revenue was mainly due to the – hardware installation in Israel following the outbreak of war on October 7. Revenues for full year 2023 were a record $320 million, a 9% increase over the $293.1 million reported in 2022. Revenues from subscription fees were a record $234.5 million, representing an increase of 12% over 2022. Product revenues were $85.4 million, representing an increase of 2% compared with 2022. The subscriber base expanded to 2,252,000 by year end, marketing an increase of 42,000 from the end of the previous quarter and 186,000 over 2023. During the fourth quarter, there was an increase of 38,000 net in the aftermarket subscriber base and an increase of 4,000 net in…

Thank you. [Operator Instructions] The first question is from Chris Reimer of Barclays. Please go ahead.

Hi, thanks for taking my questions. I was wondering, first off, if you could talk about some of the drivers behind the subscriber guidance and maybe what are some of the dynamics you’re seeing in the different geographies.

The main drivers today are coming from, I would say, different driver in different segments. First of all, in Israel, the cars rate is increasing, it started during 2023 and is continue as we faced it every night, I would say. And in that case, it means that more insurance companies and more car owners are looking for security systems. And since our solution, I think is the most excellent one, so we get more and more requests for new subscribers. This is in Israel. And in other countries, we have one that thinks that we are more and more focused on B2B, such as the financial institutions for having a solution when they provide the loans to new car buyers, as well as security needs, which also there is increase in violence and car theft also in Latin America. So this is the main drivers.

Great, thanks. And just touching on the EBITDA guidance you gave forward for 2025 at about well surpassing $100 million. How much – how many sub adds would that be roughly based on.

What actually we show in the last two years, and what we expect in 2024 is, generally speaking, is around 150,000, 10%, more or less. And while we’re considering this number of subscribers with assuming that the output is not going to change dramatically, because some of the services that we provide are generating lower ARPU. But on the other end, we increase a lot of upsells. For example, in Israel, when we sell SVR, which is, let’s call it, this is the traditional and bread and butter, still very high percentage of those customers are adding, for example, application payments. And in that case, the ARPU in Israel is growing. So overall, we consider conservatively that the ARPU will stay and with this number of subscribers. And by the way, add to this the operating leverage assumptions, we are not expecting that the growth of our expenses will decrease, let’s say, every year. The additional expenses will decrease every year, so we can build this model to provide this guidance.

Got it. Thanks. That’s very helpful. That’s it for me.

The next question is from Boris Schneider of More. Please go ahead.

Hi guys, congratulations on strong execution and we appreciate the guidance that you provided. I think that’s a great help for long-term investors as well. Question in terms of expenses, that quarter you mentioned that you had some one-off expenses related to the events in Israel. So if you can quantify the number. I know you said, it’s not very significant, but just to understand what’s the impact on net income this quarter.

As you can see, actually when we talked last quarter about the war, actually we expect frame and a little bit more expenses and a little bit more, let’s say decreasing in sales in Israel, but generally speaking, without giving the specific number because it’s not material anyway, talking about some hundreds of thousands of dollars in the expenses, which are directly for contribution to the needs in Israel for the world, which today of course, we don’t – most of it we don’t have any more.

Okay. And in terms of guidance, so your subscription guidance mentioned roughly 6%. I think that’s at the lower end. And if I look at the EBITDA guidance, it’s lower. So my question is obviously the model, your financial – your business model is based on operating leverage and quite significant one. So the guidance appears to be quite conservative. What do you think on this?

First of all, we have to understand that there is no zero cost, because part of this – we talk here when we say the number about 160,000 talking about the net, don’t forget that we have a total sale and that the churn, what we provide as a net is after the churn. This is first to understand. So in terms of growth is a very high growth, but there is a churn. Regard to cost from two reasons, one is the conservative reason, and second is because in order to grow 160,000 net still it’s not zero cost. Some places we are financing the hardware, which is part of the service. And its appear in the amortization. And also we – from time to time, we have to provide a direct solution to specific customers. So we have to add R&D. So practically you’re right that its appear to be higher growth in the EBITDA, which will be more correlative to the growth of subscribers. I believe that I want it to be higher. But when we provide guidance, we have to be conservative with the guidance. So this is the main reason.

Okay. I appreciate it. Thank you.

The next question is from Abba Horwitz of OSP. Please go ahead.

Hi, good afternoon. Congratulations on a very nice quarter and just all the all around guidance. I just wanted to know if you could update us on Bringg it’s been a while that we’ve heard about Bringg, if you could maybe talk about if there’s anything new to share.

Usually when we spoke about Bringg, since it’s kind of a financial holding, we have 17% point from the shareholders was when we did the rounds. We know that about two years ago we made a very impressive round when the Bringg raised more than $100 million. Since then, the company doesn’t need to do another round. So this is why we didn’t inform anything, because from the operational side point of view, we are not allowed since we have only 17%. But the company has its business plan and its looks like, its stick to the business plan and things are going as planned.

Very good. Are you guys looking at any other investments outside of your own stock?

No, except Bringg, which also in the last, I think, more than seven years, we didn’t invest. We did only investment as an angel [ph]. Ituran is always investing only in companies which is in our field. And in the last five years, we are doing it or we will – we’re – we did it when we acquired Road Track, or in the future when we go for a full acquisition again to create synergy and part of consolidation results. So Bringg is actually – Bringg and save a one as the only financial holdings that we have today.

Okay. Thanks very much.

[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?

Yes. On behalf of management of Ituran, I would like to thank you, our shareholders, for your continued interest and long-term support at our business. We hope to be speaking with some of you over the coming quarter. And if you are interested in meeting or speaking with us, feel free to reach out to our Investor Relation team. And with that, we end our call. Thank you and have a good day.

Thank you. This concludes the Ituran fourth quarter and full year 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.