Ladies and gentlemen, thank you for standing by. Welcome to the Ituran Q1 2025 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. 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. Good day to all of you, and welcome to Ituran's conference call to discuss our Q1 2025 results. I would like to thank Ituran's management for hosting this conference call. With me today on the call are Mr. Eyal Sheratzky (CEO), Mr. Udi Mizrahi, Deputy CEO and VP Finance, 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 contents of this conference call. Eyal, would you like to begin, please? Thank you, Kenny. I'd like to welcome all of you to our Q1 2025 result call, and thank you for joining us today. We are pleased with our Q1 results, presenting another quarter of year-over-year growth in revenue and profit across the geographies in which we operate. In the first quarter, we added a very high level of new subscribers, amounting to 99,000 net. With this strong jump, we reached a major milestone, crossing 2.5 million subscribers ahead of our expectation. The significant growth in the subscriber base during the quarter was partly due to an additional contribution from a new telematics service agreement that we signed with major car OEM manufacturer, Stellantis. As an initial part of this agreement in March, Stellantis switched their SVR subscriber base to Ituran, and Ituran began providing services to these subscribers. Given the jump in subscribers, we increased our expectations for 2025 subscriber growth to between 220,000 and 240,000 net new subscribers, implying a further 120,000-140,000 net new subscribers in the upcoming three quarters. The hard work we've done over the past year in bringing new and attractive applications, products, and services has brought these highly positive results. Looking ahead, we believe over the long term, the net subscribers add will trend upward. Even while presenting excellent results, I want to add that, similar to the last quarters, while showing growth in U.S. dollar terms, the strengthening of the dollar versus many of the local currencies in which we operate, and in particular the Brazilian real and the Mexican peso, had a deflating impact on our financial results when denominated in U.S. dollar. In local currencies, in each of our regions, I note that we grew ahead of what our U.S. dollar denominated results suggest. Our success reflects ongoing and growing demand for a location-based product and telematics services in all our regions, as well as traction for our new initiatives and services. With a good first quarter, I want to summarize some of our activities, which will continue to contribute to our growth and success. Israel, the high car theft rate, is providing strong demand for our services and enabling us to reach additional new subscribers from part of the market that was previously untapped by us, such as lower-priced new vehicles or the second-hand car markets. Our Usage-Based Insurance business in Israel continues to gain strong traction, bringing us new subscribers, and is one of the reasons why we continue to see strong subscriber growth in Israel. Our product for motorcycles is gaining traction across all our geographies in South America. Motorcycles significantly increase our total addressable market and continue to represent a very significant untapped market for us in all our regions. As I mentioned earlier, during the first quarter, we were very pleased to have signed a new OEM agreement with Stellantis, our new OEM customer. We made the strategic decision to begin working with Ituran for telematics services, and in March, we started providing our services to their subscriber base. Stellantis is the largest car manufacturer in Latin America, which includes Fiat, Jeep, Peugeot, and many others that choose to work with us because of their satisfaction with our technological and service capabilities. While contributing to both our top and bottom line, because we currently have with them an initial and limited OEM SVR service agreement, the Stellantis subscribers are at lower ARPU than the Ituran average. Following this initial agreement, we expect in the near future to broaden our scope of services to Stellantis. We view this new OEM agreement as an important milestone in expanding our OEM relationships globally. We believe it opens the door to further collaborations with Stellantis in additional geographies, as well as the potential to provide additional telematics services to the customer base. We remain in discussion with a number of other major OEM car manufacturers, in addition to those that we already work with, in order to bring our services to their subsidiaries elsewhere in South America. Ituran is a cash-generating company, and we generated $15.5 million in operating cash flow during the quarter. Ituran is focused on shareholder value creation, and as such, the board of directors decided to issue a dividend of $10 million to shareholders. I remind you that in Q4 2024, we increased our dividend policy by 25% from issuing $8 million per quarter to $10 million. This represents $0.50 per share. Our dividend yield, on an annualized basis, represents a return around 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 our company. In summary, we remain pleased with Ituran's performance. The first quarter was a quarter of continued growth for Ituran, particularly in terms of top-line revenue and subscriber growth, as well as from a strategic perspective, bringing a new OEM relationship and deal to Ituran. We believe we will continue to see growth throughout 2025, adding between 220,000 and 240,000 new subscribers in 2025. At the same time, we look for more avenues for accelerating our business even further across all our regions. We are very pleased to have reached a major milestone of Ituran with 2.5 million paying subscribers, and I would like to thank and congratulate all our employees for this amazing achievement. 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. Q1 revenues were a record $86.5 million, a 2% increase compared with revenues of $85 million in the first quarter of last year. The strengthening of the U.S. dollar in the first quarter versus various local currencies in which Ituran operated impacted the revenues when translated into U.S. dollar. In local currency, revenues grew by 7% year-over-year. Revenues from subscription fees in the quarter were $62.2 million, an increase of 2% year-over-year, and in local currency, an increase of 9%. Product revenues in the quarter were $24.3 million, an increase of 1% year-over-year, and in local currencies, an increase of 3%. The subscriber base expanded to 2,508,000 by the end of the first quarter, an increase of 99,000 from the end of the previous quarter. The geographic breakdown of revenues in the first quarter was as follows: Israel, 55%; Brazil, 23%; rest of the world, 22%. EBITDA for the quarter was $23.3 million, or 26.9% of revenues, an increase of 4% compared with EBITDA of $22.3 million, or 26.3% of revenues in the first quarter of last year. In local currencies, EBITDA grew 12% year-over-year. Net income for the first quarter was $14.6 million, or diluted earnings per share of $0.73, an increase of 12% compared to $13 million, or diluted earnings per share of $0.66 in the first quarter of last year. In local currency, net income grew 20% year-over-year. Cash flow from operations for the first quarter of 2025 was $15.5 million. As of March 31, 2025, the company had net cash, including multiple securities, of $75.7 million. This is compared with the net cash, including multiple securities, of $77.2 million as of year-end 2024. The Board of Directors declared a dividend of $10 million for the quarter. The current dividend takes into account the company's continuing strong profitability, ongoing positive cash flow, and strong balance sheet. I would like to open the call for the question-and-answer session. Operator. Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. If you have a question, please use the raise-hand button located at the bottom of your screen. The first question is from Sergey Glinyanov of Freedom Capital Markets. Please go ahead. Good day, gentlemen. Do you hear me well? Yes, loud and clear. Great. In terms of new agreements, does it imply you set up your equipment and provide services for each produced car by Stellantis in Latin America, or do you have some options for them? Hi, Sergey. This agreement that we report, that we published, is currently at this stage, as we said, is to provide services based on technology which was already implemented in the past in the cars of Stellantis. Of course, we see this agreement as an opportunity to broaden the relationship, and probably in the future, we hope that we will have the ability to add other services as well as hardware in some models. What we published yesterday is to provide services. Okay, got it. Is total effect on your subscription base in place? It seems you raised your subscription base guidance range by 40,000 in midpoint, exactly what we saw in Q1, considering previous run rate. This agreement was. [audio distortion] Hello? Yeah, yeah. This agreement is in place since March, meaning in Q1, there is almost zero influence. It is also important for me to mention, when we talk about services, and specifically OEM deals, which were large quantities, but with a lower ARPU. It is taking time that it becomes material because do not forget, we had before this quarter about 2.4 million subscribers. The additional influence in the short term is smaller. The important thing in each and one of these contracts is that we are talking about longer-term relationships. We are talking about growing customer base from this customer, and when it is exponentially increased, the margins increase. The contribution to the total results of Ituran will appear in the future, but then it will be more material. I don't think that it's the right way to judge a contract now for this quarter or for the next quarter because the customer base, the revenues that we have from subscribers at all are much higher than only this. In the future, these contracts will be ramping up every month, every quarter, and it will be more contribution to our results. Okay, what did primarily affect your ramp-up of subscription base? Because recently, it was roughly 40,000 per quarter, and now we see that it is roughly 100,000. Actually, the agreement includes at the first stage gaining to Ituran a bulk of Stellantis car owners, okay, as the first stage, and then they will continue on an annual basis based on their sales. The number that we show at Q1, it's not a typical number. This is why we provide expectation that the next quarters will continue to be about 40,000 per quarter and not as Q1, almost 100,000. We got an initial bank of customers at one time now. Of course, they will be with us a few years according to the contract. Now, every month, Stellantis will continue to add subscribers, but it will be not on the same level that the initial one was. Yeah, I got it. That's exactly what I'm interested in. Now turning to your financial figures, Eli, that's a question for you, I guess. Product gross margin is increasing substantially. Have Ituran taken some steps to improve that, and what should we think about it for the next couple of quarters? Gross margin, if we split it into two, if we're talking about the gross margin related to the telematics services, it's actually improved a little bit, and this is due to the operating leverage that we have in our business model. If you're asking me for the future, as long as we continue to increase our subscriber base, I don't see any reason why the gross margin on the telematics services shouldn't improve a little bit. Regarding the telematics products' gross margins that increased, then it relates to cost savings that we are doing all the time and volatilities between the quarters because there is a mix of products that sometimes change from that you are selling one or more products with a different gross margin. That is a little bit of volatility as well. Yeah, thank you. Got it. What about operation expenses? It seems your R&D and marketing expenditures rise faster than revenue. What should we think about it? If I'm looking at the R&D expenses, it more or less represents about 5.5% of the revenues, and it's quite stable along the time. If you're asking me going forward, that's a reasonable assumption to use for the future. Okay, understood. I think the last question is, is increased CapEx attributable to new agreements, and what level should we expect to hold 2025? Yeah, regarding CAPEX, you have to remember that it includes a lot of consideration of volatility due to the fact of a couple of things. One, the companies making purchases of machines, vehicles, and hardware that's not spread equally among the quarters. Second, also inventory, I'll not say fixed assets or inventory that we are using in Brazil and Argentina, that usually depends on we can buy it on bulks and things like that. Q1, for your question, was higher than the average, but looking forward, the CapEx should go down if you would compare, I mean, the second quarter and moving forward. Okay, thank you. Got it. Yeah, I have one more question about insurance market in LatAm. Just wondering and would like to hear your thoughts about it. What do you expect from LatAm insurance market? For instance, in Brazil, despite car thefts declining, insurance costs rise rapidly, especially for the most popular cars like Fiat. Do you consider it as a potential opportunity for Ituran in terms of consumer demand transitioning to UBI insurance? What are your perspectives for the next couple of years on that sales field? First of all, we do not see declining cars' rate. We have to understand that with all the respect to Ituran, when we have a few hundred thousand cars, when we talk about tens of millions driving on the roads, still, we usually have a better approach to cars which are more popular to be stealing, whether it is insurance companies or even consumers. We do not see the trend that you mentioned. I know that some models, sometimes it has a volatility, but overall, we see a high demand in Brazil for car theft solution, specifically the insurance companies that we work with, and especially the audience when we talk about Ituran Conseguro that we approach. We do not see that. Regarding UBI, I said it in the past, we are always knocking on the doors of our partners, the insurance companies, and provide them these solutions. Unfortunately, Brazil, as well as Mexico, which is the two largest countries in South America, the insurance companies are not willing to explore this journey, which means to change their actuary methodology and implement software and integration with this solution. The only country, by the way, that we succeed to have some deals, is Argentina. I think that the competition between insurance companies, digital insurance companies' penetrations, prices that went down and will continue probably will create more vertical ground for accepting a UBI solution. Once it will happen, I believe, and we do the best that we can to be there based on the strong relationship that we have with major players in the insurance industry. Currently, Brazil and Mexico, in the short future, are not the market that we expect to sell the UBI. Okay, that's all from me. Thank you for taking my questions, gentlemen. Thank you. The next question is from Chris Reimer of Barclays. Please go ahead. Hi, thanks for taking my questions, and congratulations on the strong results. You mentioned the lower ARPU for customers on deals of the type of Stellantis with the bulk customers. I was wondering if you could talk a little bit about the attrition rates and customers that leave or are finished with their contracts. Does it work that you get new customers at a higher ARPU, or because of these large deals, are some of the new customers coming in at a lower ARPU than the ones that are leaving? First of all, it should be clear that our customer is Stellantis. I mean, all the accounts and the calculation and the ARPU and everything done through them. The customer gets it as a free trial as a part of, let's say, having the car, he has these services, which for us is good because we don't have to convince the customer. We don't have to work consumer by consumer. The checks come from one institutional player, etc. Once the time, which is usually between two to three years, sometimes five years of these free services, we have the ability to approach the customers when they finish the free trial and to offer them the services, which, by the way, has two additional, I would say, benefits. First of all, the prices that we offer the renewals are higher because to convince Stellantis to pay for hundreds of thousands of subscribers, of course, it's related to a very high discount or lower ARPU. When you go customer by customer, when we do the renewals, if they had satisfaction with the three or five years of services, it will be easier for us to convince them to pay a higher service fee. This is the situation here. We don't have the churn, I would say, is lower because there is no economic pressure on the driver or the car owner. Got it. Yeah, okay. By the way, the situation with all the OEM deals now, regarding the ARPU, I'm not sure if you asked this specifically, but I would add that the ARPU is lower because it's only service. We are not listing any hardware which we have to integrate in the monthly service fees like we do, for example, with Nissan. It is only the service, so it's lower. Second, we are talking about kind of services that since we do not have the hardware and all the back office related to the hardware, the margins are dramatically higher than a typical service or full connected car services, where the ARPU is higher, but the gross cost is also higher. The direct cost is also higher. The margin is higher here. Got it. Thanks. That's really helpful. I was wondering if you could talk a little about the dynamics in the market for the product revenues and how you see the pipeline evolving throughout the year. Theoretically, again, usually the pipeline regarding we have orders, but it is on a daily basis that we receive. Of course, there are some backlogs of orders that we know from OEMs that we plan and we manufacture the units in order to provide it. We are ready always to promote or to provide the deliveries to our customers. We have stock, enough stock, whenever they need. Of course, based on demand, we can increase the inventory or reduce the inventory based on that. Regarding the gross margins that you mentioned, there is a lot of volatility over here along the quarters. This is why it is very hard to say, but I would say even going forward, around the 20%-25% makes sense to me on a gross margin for the product revenues, but it depends on the product mix. Got it. Thanks. That's it for me. Thank you. 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 you, our shareholders, for your continued interest and long-term support of our business. If you're interested in meeting or speaking with us, feel free to reach out to our investor relations team. With that, we end our call. Thank you and have a good day. Thank you. This concludes the Ituran First Quarter 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.