Ituran Location and Control Ltd.

04/23/2026 | Press release | Distributed by Public on 04/23/2026 10:55

Annual Report for Fiscal Year Ending December 31, 2025 (Form 20-F)

ITEM 5
OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.
OPERATING RESULTS
The information contained in this section should be read in conjunction with our financial statements for the year ended December 31, 2025, and related notes and the information contained elsewhere in this annual report. Our financial statements have been prepared in accordance with U.S. GAAP. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. As a result of many factors, such as those set forth under "ITEM 3.D. Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements," our actual results may differ materially from those anticipated in these forward-looking statements.
Outlook
We sell our services and products directly and through our subsidiaries and distributors to several countries mainly Israel and Brazil. In 2025, we experienced increased revenue and growth in most of the markets in which we provide our telematics services. These markets in which we operate, are generally characterized by high vehicle theft rates, and therefore insurance companies and car manufactures are seeking solutions to reduce their losses resulting from car theft and at the same time increasing their sales by adding additional value to the customer. Therefore, we believe the markets in which we operate, especially in Israel and will continue to provide growth and demand for our telematics products and services.
Geographical breakdown
Telematics services' subscriber base
The following table sets forth the geographic breakdown of subscribers to our telematics services as of the dates indicated: (1)

December 31,
2025
2024
2023
Israel
1,039,000
930,000
814,000
Brazil
814,000
725,000
672,000
Others
777,000
754,000
766,000
Total(1)
2,630,000
2,409,000
2,252,000
(1) All numbers provided are rounded, and therefore totals may be slightly different than the results obtained by adding the numbers provided
Revenues
The following table sets forth the geographic breakdown of our revenues for each of our business segments for the relevant periods indicated. (1)
(1)
We attribute revenues to countries based on the location of the customer.
Year ended December 31,
2025
2024
2023
Telematics services
Telematics products
Telematics services
Telematics products
Telematics services
Telematics products
Israel
134.0
62.6
114.1
61.1
104.4
49.9
Brazil
80.5
1.7
81.8
1.6
83.8
2.0
Others
50.1
30.1
46.6
31.1
46.4
33.5
Total
264.6
94.4
242.5
93.8
234.6
85.4

Telematics services segment

We generate revenues from rendering our SVR, fleet management connected car, UBI and other value-added services. A majority of our revenues represent subscription fees paid to us by our customers. We recognize revenues from subscription fees on a monthly basis. Most of our customers are free to terminate their subscription at any time. In the absence of such termination, the subscription term continues automatically. We also generate subscription fees from our fleet management services. Assuming no additional growth in our subscriber base and based on our historical average churn rates of 3% per month in this segment, we can anticipate that at least 90% of our subscription fees generated in a prior quarter will recur in the following quarter.

Telematics products segment
We generate revenues from sale of our telematics products to customers in Israel, Brazil, and other regions which we operate. We currently sell or lease our telematics end-units in each of the above regions. Growth in our subscriber base is the principal driver for the sale of our telematics products. We recognize revenues from sales of our telematics products upon transfer of control to the customer (usually upon delivery).
Cost of revenues
Telematics services segment
The cost of revenues in our telematics services segment consists primarily of staffing, maintenance and operation of our control centers and base stations, costs associated with our staff and costs incurred for private enforcement, licenses, permits and royalties, as well as communication costs and costs due to depreciation of leased products and installation fees. Cost of revenues for sales of our fleet management services also includes payments to a third party who markets our services.
Telematics products segment
The cost of revenues in our telematics products segment consists primarily of the cost of unit of our manufacturers and costs associated with installation fees.
Operating expenses
Research and development
Our research and development expenses consist primarily of salaries, costs of materials and other overhead expenses, primarily in connection with the design and development of our telematics products and software solutions. We expense some of our research and development costs as incurred. Subject to certain criteria we capitalize software development costs. For further information see Note 1S to our consolidated financial statements.
Selling and marketing
Our selling and marketing expenses consist primarily of advertising, salaries, commissions and other employee expenses related to our selling and marketing team and promotional and public relations expenses.
General and administrative
Our general and administrative expenses consist primarily of salaries, bonuses, accounting and other general corporate expenses.
Operating Income
Telematics services segment
Operating income in our telematics services segment is primarily affected by increases in our subscriber base and our ability to increase the resulting revenues without a commensurate increase in our corresponding costs.
Telematics products segment
Operating income in our telematics products segment is primarily affected by our ability to increase sales of our telematics products.
Financing expenses (income), net

Financing income (expenses), net include, inter alia ,short-term and long-term interest expenses, financial commissions, income (expenses) in respect of changes in obligation to purchase non-controlling interests ,and gains (losses) from currency fluctuations from the translation of monetary balance sheet items denominated in currencies other than the functional currency of each entity in the group, gains (losses) in respect of marketable securities and other investments, and expenses related to tax positions.

Taxes on income
Income earned from our services and product sales is subject to tax in the country in which we provide our services or from which we sell our products.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared as accordance with U.S. General Accepted Principles ("GAAP") Certain of our accounting policies require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates on a periodic basis. We base our estimates on historical experience, industry trends, authoritative pronouncements and various other assumptions that we believe to be reasonable under the circumstances. Such assumptions and estimates are subject to an inherent degree of uncertainty. On a regular basis we review the accounting policies assumptions and estimates to verify that our financial statements are in accordance with GAAP and presented fairly.
The following are our most critical accounting policies and the significant judgments and estimates affecting the application of those policies in our consolidated financial statements. For further information see Note 1 to our consolidated financial statements included elsewhere in this report.
Revenue recognition
We and our subsidiaries generate revenue from subscriber fees for the provision of services and sales of systems and products, mainly in respect of fleet management services, stolen vehicle recovery services and other value-added services. To a lesser extent, revenues are also derived from technical support services. We and our subsidiaries sell the systems primarily through their direct sales force and indirectly through resellers.
We apply ASC Topic 606, Revenue from Contracts with Customers ("ASC 606").
In accordance with ASC 606, we determine revenue recognition through the following five steps:

•
Identification of the contract, or contracts, with a customer;

•
Identification of the performance obligations in the contract;

•
Determination of the transaction price;

•
Allocation of the transaction price to the performance obligations in the contract; and

•
Recognition of revenue when, or as, we satisfy a performance obligation.
A contract with a customer exists when certain criteria are met.
For each type of contract, at inception, we assess the goods or service promised in a contract with a customer and identifies the performance obligations. With respect to contracts that are determined to have multiple performance obligations, such as contracts that combine product with services (mostly SVR services) and/or rights to use assets, we allocate the contract's transaction price to each performance obligation using it's the best estimate of the relative standalone selling price of each distinct good or service in the contract. However, when applicable (see below), we estimate the selling prices of certain services using the residual approach. Revenues are recognized when, or as, control of services or products is transferred to the customers at a point in time or over time, as applicable to each performance obligation.
Revenues are recorded in the amount of consideration to which we expect to be entitled in exchange for performance obligations upon transfer of control to the customer, excluding amounts collected on behalf of other third parties and sales taxes.

Our credit terms to customers are, on average, between thirty and ninety days.
We do not adjust the amount of consideration for the effects of a significant financing component since we expect, at most contracts' inception, that the period between the time of transfer of the promised goods or services to the customer and the time the customer pays for these goods or services to be generally one year or less, based on the practical expedient.
In accordance with ASC 606, the Company's revenues are recognized depending on the various products and services as follows:

1.
Revenues from sales of Automatic Vehicle Location ("AVL") products are recognized when the control of the product passed to the customer, usually upon delivery.

2.
Revenues from provision of SVR services are recognized over time, as the customers simultaneously receive and consume the benefits provided by the Company performance as the Company performs.


3.
For arrangements that involve the delivery or performance of multiple products (mostly AVL products), services (such as SVR services) and/or rights to use assets, the Company analyzes whether the goods or services that were promised to the customer are distinct (i.e., if both are met: 1. The customer can benefit from the good or service, either on its own or together with other resources that are readily available; and, 2. The Company's promise to transfer the good or service is separately identifiable from other promises in the contract). If we determine that the product or service is 'distinct' we apply the policy described in 1 or 2 above, as applicable.
We have some arrangements that are determined to have multiple performance obligations that are distinct. For such arrangements, we allocate the contract's transaction price to each performance obligation using the relative standalone selling price of each distinct good or service in the contract. However, in limited circumstances, we estimate the selling prices of the SVR services (which are sold together with AVL products) using the residual approach. Under the residual approach, the standalone selling price of the SVR services was estimated by reference to the total transaction price less the sum of the observable standalone selling prices of all other goods or services promised in the contract. We use this approach since we sold the same type of service in these jurisdictions to different customers (at or near the same time) for a broad range of amounts (thus, the stand-alone selling price was highly variable).

4.
Revenues from SVR services subscription fees and from installation services (related to AVL products that remain as the Company's property), sold to customers within a single arrangement were accounted for revenue recognition purposes, on a combined basis as a single performance obligation, since the installation services element was determined not to be 'distinct'. Therefore, the entire contract fee was recognized over time, on a straight-line basis over the subscription period.

5.
With regards to amounts earned by certain Brazilian subsidiary for arranging a bundle transaction of SVR services subscription together with insurance services to be supplied by a third party insurance company, these revenues are recognized ratably on a straight-line basis over the subscription period , since the amount allocated to us (for the SVR services subscription, and for arranging the transaction), is contingent upon the delivery of the SVR services. As the insurance company is acting as a principal with respect to the insurance component, we recognize only the net amounts as revenues, after deduction of amounts related to the insurance component.

6.
Deferred revenues include unearned amounts received from customers (mostly for future subscription services and extended warranty) but not yet recognized as revenues. Such deferred revenues are recognized as described in paragraph 2 above or paragraph "extended warranty" below, as applicable.
For the years ended December 31, 2025 and 2024 the Company recognized revenue of approximately US$ 22.8 million and US$ 27.1 million, respectively, that was included in the deferred revenue balance at the beginning of each reporting period.

As of December 31, 2025, the aggregate amount of the amounts allocated to remaining unsatisfied performance obligations (deferred revenue) that the Company expects to recognize as revenue in future periods is $42.1 million of which, $27.2 million (64.6%) is expected to be recognized over the next 12 months (and presented as short-term balance), and the remainder amount of $14.9 million (35.4%) is expected to be recognized through 2027.
Extended warranty - In the majority of countries, in which we operate, the statutory warranty period is one year, and the extended warranty covers periods beyond year one. Revenues from extended warranty include warranty services which were sold separately for a monthly fee, or warranty services that were determined to represent a separate performance obligation and were sold together with an AVL unit. Such revenues are recognized over the duration of the warranty periods.

Contingencies
We and our subsidiaries are involved in certain legal proceedings that arise from time to time in the ordinary course of our business and in connection with certain agreements with third parties. Except for income tax contingencies, we record accruals for contingencies to the extent that the management concludes that the occurrence is probable and that the related liabilities are estimable. Legal expenses associated with contingencies are expensed as incurred.
Goodwill and intangible assets
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in business combinations accounted for in accordance with the "purchase method" and is allocated to reporting units at acquisition. Goodwill is not amortized but rather tested for impairment at least annually and whenever events or changes in circumstances indicates that amount of goodwill may not be recoverable in accordance with the provisions of ASC Topic 350, "Intangibles - Goodwill and Other". The annual goodwill assessment is performed as of December 31, each year.

As required by ASC Topic 350, the Company chooses either to perform a qualitative assessment whether the quantitative goodwill impairment test is necessary or proceeds directly to the quantitative goodwill impairment test. Such determination is made for each reporting unit on a stand-alone basis. The qualitative assessment includes various factors such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, earnings multiples, gross margin and cash flows from operating activities and other relevant factors. When the Company chooses to perform a qualitative assessment and determines that it is more likely than not (more than 50 percent likelihood) that the fair value of the reporting unit is less than its carrying value, then the Company proceeds to the quantitative goodwill impairment test. If the Company determines otherwise, no further evaluation is necessary.
When the Company decides or is required to perform the quantitative goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value and an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, if any. Management determines the fair value of its reporting units using the income approach. Within the income approach, the method that is generally used to measure the fair value of a reporting unit is the discounted cash flow method. Management starts with a forecast of the expected net cash flows associated with the reporting unit, which includes the application of a terminal growth rate, and applies a discount rate to arrive at a net present value amount. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. In the performance of the quantitative analysis the Company applies assumptions that market participants would consider in determining the fair value of each reporting unit.
As of December 31, 2025, 2024 and 2023, the Company had four reporting units which include goodwill.

Telematics services:

Under the telematics services segment there are two reporting units with goodwill. For one of which with an allocated amount of approximately US$ 1.9 million of goodwill, the Company performed a qualitative assessment as of December 31, 2025 and 2024, and concluded that the qualitative assessment did not result in a more likely than not indication of impairment, and therefore no further impairment testing was required, with respect to such unit.
For the second reporting unit (resulted from RT acquisition) with an allocated amount of approximately US$ 32.3 million of goodwill (as of December 31, 2025), the Company performed the annual impairment test, as of December 31, 2025 using a quantitative assessment and reached to a conclusion that no impairment should be recorded at that point. The impairment test was performed using the income approach. The measurement of fair value of reporting units as part of goodwill impairment analysis is classified within Level 3 within the fair value hierarchy.
Telematics products:
Under the telematics products segment there are two reporting units with goodwill, for one of which with an allocated amount of approximately US$ 2.2 million of goodwill, the Company performed a qualitative assessment as of December 31, 2025 and 2024, and concluded that the qualitative assessment did not result in a more likely than not indication of impairment, and therefore no further impairment testing was required, with respect to such unit.
For the second reporting unit (resulted from RT acquisition) with an allocated amount of approximately US$ 3.5 million of goodwill (as of December 31, 2025), the Company performed the annual impairment test, as of December 31, 2025, using a quantitative assessment and reached to a conclusion that no impairment should be recorded at that point. The impairment test was performed using the income approach. The measurement of fair value of reporting units as part of goodwill impairment analysis is classified within Level 3 within the fair value hierarchy.
Results of Operations
The following table sets forth for the periods indicated selected items from our consolidated statements of income as a percentage of our total revenues.
Year ended December 31,
Consolidated statements of operations data:
2025
2024
2023
Revenues
Telematics services
73.7
72.1
73.3
Telematics product
26.3
27.9
26.7
Total Revenues
100
100
100
Cost of revenues
Telematics services
30.2
29.8
30.8
Telematics products
20.1
22.4
21.3
Total cost of revenues
50.3
52.2
52.1
Gross profit
49.7
47.8
47.9
Operating Expenses
Research and development expenses
5.8
5.4
5.3
Selling and marketing Expenses
5.1
4.5
4.3
General and administrative expenses, net
17.3
16.7
17.7
Other income, net
-
-
--
Total operating expenses
28.2
26.6
27.3
Operating Income
21.5
21.2
20.6
Other income, net
(0.1
)
-
-
Financing income (expenses), net
(0.5
)
-
(0.5
)
Income before income tax
20.9
21.2
20.1
Income tax
(4.2
)
(4.3
)
(4.2
)
Share in losses of affiliated companies, net
-
(0.1
)
(0.2
)
Net income for the year
16.7
16.8
15.7
Less: net income attributable to non-controlling interests
(0.6
)
(0.8
)
(0.7
)
Net income attributable to company stockholders
16.1
16.0
15.0
Analysis of our Operation Results for the Year ended December 31, 2025 as compared to the Year ended December 31, 2024
Revenues

Total revenues increased from $336.3 million in 2024 to $359.0 million in 2025 or 7%. This increase consisted of an increase of $22.1 million from subscription fees from our telematics services and an increase of $0.7 million from sales of our telematics products.

Telematics services segment

Revenues in our telematics services segment increased by $22.1 million from $242.5 million in 2024 to $ 264.6 million in 2025. The increase was mainly due to an increase in our average annual number of subscribers from 2,330,000 in 2024 to 2,520,000 in 2025.

Telematics products segment

Revenues in our telematics products segment increased from $93.8 million in 2024, to $94.5 million in 2025 or 1%. This increase of $0.7 million was primarily due to an increase in the quantity of units' sales.
Cost of revenues
Total cost of revenues increased from $175.6 million in 2024, to $180.4 million in 2025 or 3%. This increase consisted of an increase of $8.3 million in the telematics services segment and a decrease of $3.4 million in the telematics product segment. As a percentage of total revenues, cost of revenue decreased from 52.2 % in 2024 to 50.3% in 2025.

Telematics services segment

Cost of revenues for our telematics services segment increased from $100.2 million in 2024, to $108.4 million in 2025 or 8%. This increase was primarily due to an increase in salary expenses of approximately $8.1 million. As a percentage of total revenues for this segment, cost of revenues decreased from 41.3% in 2024 to 41.0 % in 2025.
Telematics products segment

Cost of revenues for our telematics products segment decreased from $75.4 million in 2024, to $72.0 million in 2025 or 4.6%. This decrease was mainly due to the change in the mixture of products sales. As a percentage of total revenues for this segment, cost of revenues decreased from 80.5% in 2024, to 76.2% in 2025.
Operating expenses
Research and development.

Our research and development expenses increased from $18.1 million in 2024 to $20.8 million in 2025. As a percentage of total revenues, research and development expenses increased from 5.4 % in 2024 to 5.8% in 2025.

Selling and marketing

Our selling and marketing expenses increased from $15.3 million in 2024 to $18.4 million in 2025. As a percentage of total revenues, selling and marketing expenses increased from 4.5% in 2024 to 5.1% in 2025.

General and administrative

General and administrative expenses increased from $56.2 million in 2024, to $62.5 million in 2025. The increase was mainly due to an increase in salary expenses of approximately $5.0 million and an increase in professional expenses in amount of $0.9 million. As a percentage of total revenues, general and administrative expenses increased from 16.7% in 2024 to 17.4% in 2025.

Operating income

Total operating income increased from $71.2 million in 2024, to $77.0 million in 2025 or 8.2%. This increase of approximately $5.8 million reflects an increase of $3.3 million in the operating income in the telematics service segment and a decrease of $2.5 million in the operating income in the telematics products segment.

Telematics services segment

Operating income in our telematics services segment increased from $69.2 million in 2024 to $72.5 million in 2024, or 4.8%. This increase was mainly attributed to the increase of our average base of subscribers from 2,330,000 subscribers in 2024 to 2,520,000 subscribers in 2025.
As a percentage of income in our telematics services segment revenues, operating income in our telematics services segment decreased from 28.5% in 2024 to 27.4% in 2025.

Telematics products segment

Operating income in our telematics products segment increased from $2.0 million in 2024 to $4.5 million in 2025. This increase in was mainly attributed to the increase in other product costs and sales mixture.
As a percentage of income in our telematics products segment revenues, operating income in our telematics products segment increased from 2.1 % in 2024 to 4.8% in 2025.

Financing income (expenses), net

Financing expenses net, was $1.9 million in 2025 compared with $0.1 million income in 2024.
The decrease in the financing income was mainly due to an increase in losses in respect of exchange rate effect in an amount of $3.7 million and on the other hand, an increase of income in respect of deposit in an amount of $1.1 million

Income Tax
Income Tax expenses increased from $14.6 million in 2024, to $14.9 million in 2025 or 2.2 %. As a percentage of income before tax, income tax expenses decreased from 20.5% in 2024 to 19.9% in 2025 mainly due to the countries profit mixture.
Analysis of our Operation Results for the Year ended December 31, 2024 as compared to the Year ended December 31, 2023
Revenues

Total revenues increased from $320.0 million in 2023 to $336.3 million in 2024 or 5.1%. This increase consisted of an increase of $8.0 million from subscription fees from our telematics services and an increase of $8.3 million from sales of our telematics products.

Telematics services segment

Revenues in our telematics services segment increased by $8.0 million from $ 234.5 million in 2023 to $242.5 million in 2024, or 3.4%. The increase was mainly due to an increase in our average annual number of subscribers from 2,186,000 in 2023 to 2,330,000 in 2024.

Telematics products segment

Revenues in our telematics products segment increased from $85.4 million in 2023, to $93.8 million in 2024 or 9.7%. This increase of $8.3 million was primarily due to an increase in the quantity of units' sales.

Cost of revenues
Total cost of revenues increased from $166.8 million in 2023, to $175.6 million in 2024 or 5.3%. This increase consisted of an increase of $ 1.5 million in the telematics services segment and an increase of $7.3 million in the telematics product segment. As a percentage of total revenues, cost of revenues increased slightly from 52.1% in 2023 to 52.2% in 2024.

Telematics services segment

Cost of revenues for our telematics services segment increased from $98.7 million in 2023, to $100.2 million in 2023 or 1.5%. This increase was primarily due to an increase in salary expenses of approximately $2.0 million, a decrease in depreciation and amortization expenses of approximately $1.5 million and an increase in installation and communication costs expenses of approximately $0.5 million. As a percentage of total revenues for this segment, cost of revenues decreased from 42.1% in 2023 to 41.3% in 2024.

Telematics products segment

Cost of revenues for our telematics products segment increased from $68.1 million in 2023, to $75.4 million in 2024 or 10.8%. This increase was mainly due to the increase in our products' sales and the change in the mixture of products sales. As a percentage of total revenues for this segment, cost of revenues increased from 79.7% in 2023, to 80.5% in 2024.
Operating expenses
Research and development.

Our research and development expenses increased from $17.0 million in 2023 to $18.1 million in 2024. As a percentage of total revenues, research and development expenses increased from 5.3% in 2023 to 5.4% in 2024.

Selling and marketing

Our selling and marketing expenses increased from $13.6 million in 2023 to $15.3 million in 2024. As a percentage of total revenues, selling and marketing expenses increased from 4.3% in 2023 to 4.5% in 2024.

General and administrative

General and administrative expenses decreased from $56.6 million in 2023, to $56.2 million in 2024 or 1%. The decrease was mainly due to a decrease in salary expenses of approximately $0.6 million As a percentage of total revenues, general and administrative expenses decreased from 17.7% in 2023 to 16.7 % in 2024.

Operating income

Total operating income increased from $ 66.0 million in 2023, to $71.2 million in 2024 or 7.9%. This increase of approximately $ 5.2 million reflects an increase of $4.1 million in the operating income in the telematics service segment and an increase of $1.1 million in the operating loss in the telematics products segment.

Telematics services segment

Operating income in our telematics services segment increased from $65.1 million in 2023 to $69.2 million in 2024, or 6.3%. This increase was mainly attributed to the increase of our average base of subscribers from 2,160,000 subscribers in 2023 to 2,330,000 subscribers in 2024.

As a percentage of income in our telematics services segment revenues, operating income in our telematics services segment increased from 27.7% in 2024 to 28.5% in 2024.

Telematics products segment

Operating income in our telematics products segment increased from $0.9 million in 2023 to $2.0 million in 2024. This increase in operating income was mainly attributed to the increase in product sold and sales mixture.
As a percentage of income in our telematics products segment revenues, operating income in our telematics products segment increased from 1.1% in 2023 to 2.1% in 2024.

Financing income (expenses), net

Financing income, net, was $0.1 million in 2024 compared with an expenses of $1.6 million in 2023.
The decrease in the financing expenses was mainly due to a decrease in exchange rate differences in an amount of $1.7 million.

Income Tax
Income Tax expenses increased from $13.4 million in 2023, to $14.6 million in 2024 or 9.2%. As a percentage of income before tax, income tax expenses slightly decreased from 20.7% in 2023 to 20.5% in 2024 mainly due to the countries profit mixture.

Impact of Currency Fluctuations on Results of Operations, Liabilities and Assets
Although we report our consolidated financial statements in dollars, in 2023, 2024 and 2025, a portion of our revenues and direct expenses was derived in other currencies. For fiscal years, 2023 ,2024 and 2025 we derived approximately 25.3%, 23.1% and 22.4% of our revenues in dollars and other currencies, 48.2%, 52.1% and 54.6% in NIS 26.5%, 24.8% and 22.9% in Brazilian Reals. In fiscal years, 2023, 2024 and 2025, 27.0%, 25.1% and 23.5% of our expenses were incurred in dollars and other currencies, 51.2%, 55% and 56.5% in NIS and 21.8%, 19.9% and 20.0% in Brazilian Reals.
Exchange differences upon conversion from our functional currency to dollars (presentation currency) are accumulated as a separate component of accumulated other comprehensive income under stockholders' equity. In the year 2025, accumulated other comprehensive income increased by $ 18.3 million. In the year 2024, accumulated other comprehensive income decreased by $12.4 million. In the year 2023, accumulated other comprehensive income increased by $0.8 million.
The fluctuation of the other currencies in which we incur our expenses or generate revenues against the dollar has had the effect of increasing or decreasing (as applicable) reported revenues, cost of revenues and operating expenses in such foreign currencies when converted into dollars from period to period. The following table illustrates the effect of the changes in exchange rates on our revenues, gross profit and operating income for the periods indicated (each for December 31):
Year ended December 31,
2023
2024
2025
Actual
At 2022 exchange rates (1)
Actual
At 2023 exchange rates (1)
Actual
At 2024 exchange rates
Revenues
319,978
329,420
336,257
344,146
359,023
350,084
Gross profit
153,161
158,291
160,620
163,895
178,577
173,866
Operating income
65,955
67,422
71,169
73,518
77,028
75,567

Based on average exchange rates during the period. Those columns are Non-GAAP information.
Our policy remains to reduce exposure to exchange rate fluctuations by entering into foreign currency forward transactions that mainly qualify as hedging transactions under ASC Topic 815, "Derivatives and Hedging", the results of which are reflected in our income statements as revenues or cost of revenues. The result of these transactions, which are affected by fluctuations in exchange rates, could cause our revenues, cost of revenues, gross profit and operating income to fluctuate.

B.
LIQUIDITY AND CAPITAL RESOURCES
We fund our operations primarily from cash and cash equivalents generated from operations. As of December 31, 2023, 2024 and 2025 we had $53.4 million, $ 77.4 million and $107.6million in cash and marketable securities and $86.1 million, $106.8 million and $133.5 million in working capital, respectively. We hold most of our cash and cash equivalents in US dollars or the local currency of their location.
As of December 31, 2025 we had no a short term loans. As of December 31, 2024 we had a short term loans at the amount of $ 0.1 million. As of December 31, 2023 we had a long term loan at the amount of $0.2 million and a short term loans at the amount of $0.4 million. As of December 31, 2023, 2024 and 2025, we also had $2.1 million, $1.1million and $4.1 million, respectively, available to us under existing lines of credit. As of December 31, 2023 we utilized $0.6 million of our credit line As of December 31,2024 we utilized $ 0.1 million of our credit line. As of December 31, 2025 we did not utilize any of our credit line.
We believe that our cash flow from operations, availability under our lines of credit and cash and marketable securities will be adequate to fund our capital expenditures, contractual commitments and other demands and commitments for the foreseeable future as well as for the long-term. We believe that cash flow generated from operations and cash available to us from our credit facilities will be sufficient to cover future expansion of our various businesses into new geographical markets or new products, as currently contemplated and as we describe herein. However, if existing cash and cash generated from operations are insufficient to satisfy our liquidity requirements, we may seek financing elsewhere by selling additional equity or debt securities or by obtaining additional credit facilities.
As of December 31, 2023 , 2024 and 2025 we had long-term liabilities of $ 24.6 million, $27.6 million and $35.1 million, respectively, for employee rights upon retirement for certain of our employees that become payable upon their retirement. Our Israeli employees are entitled to one month's salary, equal to the applicable monthly salary at the time of such employee's retirement, for each year of employment, or a portion thereof, upon retirement. This liability is partially funded by deposit balances maintained for these employee benefits in the amount of $18.5 million, $21.8 million and $28.5 million, as of December 31, 2023, 2024 and 2025, respectively. The deposited funds include profits accumulated up to the balance sheet date and may be withdrawn upon the fulfilment of the obligation pursuant to Israeli severance pay laws or labor agreements.
In Ecuador, there are two unique Laws which are relevant to our activities:

1.
Remittance tax (Impuesto a la Salida de Divisas) - Remittance tax of 5% is imposed on the transfer of money abroad in cash or through pay checks, transfers, or courier of any nature carried out with or without the mediation of the Ecuadorian financial system, including transfer from foreign bank accounts. Dividends are exempt from this tax, under certain considerations.

2.
Labor profit sharing - Although it is not considered a tax, companies are obligated to pay 15% of their pre-tax earnings to their employees. This payment is considered a deductible expense for CIT computation purposes.
In Mexico, All Mexican employers, whether individuals or entities, are required to calculate and pay mandatory profit- sharing payments to employees within 60 days following the filing of their annual Mexican tax return. The obligation for employers to make such payments is based on the legal provisions in Section IX of Article 123 of the Political Constitution of the United Mexican States, which establishes that employees shall have the right to participate in their employer's profits in the amount of 10% of such employer's taxable income. As such, the following types of employees have the right to receive profit sharing payments: (a) permanent employees hired to carry out normal, long-term work for an employer, without regard to the number of days worked during the January 1 through December 31, 2019 fiscal year; (b) eventual permanent employees who have worked for an employer fewer than 60 days, whether continuously or sporadically, during the fiscal year referred to above; (c) former employees who have the right to claim profit sharing payments, when such rights have not lapsed.

Dividends
In February 2024 the board of directors approved the increase of quarterly dividend to $8 million. This latter amount of quarterly dividends was declared on February 29, May 28 and November 21, 2024. In February 2025 the board of directors approved the increase of quarterly dividend to $10 million commencing from payment declared on April 3, 2025. On March 5, 2026, the Board of Directors approved a one-time dividend distribution of $30 Million dollars.
As part of implementation of our Board of Directors decision of $25 million share repurchase program, Share repurchases were funded by our wholly owned subsidiary with available cash. Repurchases of the Company's ordinary shares were based on Rule 10b-18 terms. During the years 2019 and 2021 we purchased 227,828 and 228,725 of our shares for approximately $6 million each year. During the year 2021, we also directly purchased additional 50,995 shares for approximately $1.3 million not through publicly announced plans. During 2022 we purchased additional 357,362 shares for approximately $5 million. During 2023 we purchased additional 282,644 shares for approximately $ 6.6 million. During year 2025 we purchased our shares as detailed in item 16E.
As of the date of this report, the updated quantity of treasury shares are 3,666,789 (including the aforementioned 655,909 shares which are entitled to dividend distributed). The following table sets forth the components of our historical cash flows for the periods indicated:

Year ended December 31,
2025
2024
2023
Net cash provided by operating activities
88,578
74,267
77,218
Net cash used in investing activities
(24,180
)
(15,940
)
(17,229
)
Net cash used in financing activities
(42,707
)
(31,769
)
(32,934
)
Effect of exchange rate changes on cash and cash equivalents
8,503
(2,635
)
(1,471
)
Net increase/decrease in cash and cash equivalents
30,194
23,923
25,584
Years ended December 31 ,2025, December 31, 2024 and December 31, 2023
Net cash provided by operating activities.
Our operating activities provided cash of $77.2 million in 2023, $74.3 million in 2024 and $88.6 million in 2025.
Cash from operating activities in 2025 increased in an amount of approximately $14.3 million, this increase was mainly due to the decrease in other current assets and decrease in inventory.
Net cash used in investing activities.
Net cash used in investing activities in 2025 in an amount of approximately $24.2 million, included capital expenditure in the amount of $21.8 million.
Net cash used in investing activities in 2024 in an amount of approximately $15.0 million, included capital expenditure in the amount of $13.6 million
Net cash used in investing activities in 2023 in an amount of approximately $17.2 million, included capital expenditure in the amount of $14.2 million.
Net cash used in financing activities.
Net cash used in financing activities in 2025 in an amount of approximately $42.7 million consisted primarily of cash dividend payment in an amount of approximately $39.5 million and acquisition of company shares in an amount of $3.1 million.
Net cash used in financing activities in 2024 in an amount of approximately $31.8 million consisted primarily of a repayment of short and long term credit from financial institution in an amount of $ 0.4 million and cash dividend payment in an amount of approximately $31.3 million.
Net cash used in financing activities in 2023 in an amount of approximately $32.9 million consisted primarily of a repayment of short and long term credit from financial institution in an amount of $11.4 million, cash dividend payment in an amount of approximately $14.9 million and acquisition of company shares in an amount of approximately $6.6 million.

C.
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
Most of our research and development activities take place in Israel, Mexico, Colombia and Ecuador. Our Research and Design department is constantly working on upgrading the service infrastructure and improving our fleet management applications, including by introducing new services and uses of the system, while utilizing both internal development staff and outsourcing such activities to third parties, as well as developing new service platforms for cellular/GPS based devices.
Expenditures for research and development activities undertaken by us were approximately $20.8 million in 2025, $18.1 million in 2024 and $17.0 million in 2023.

D.
TREND INFORMATION
The COVID-19 pandemic had no impact on our business during year 2025. Nevertheless, in case this pandemic or similar in effect will erupt this may have an adverse effect on our business.
Please see Item 4.A. - History and Development of the Company and Item 4.B. - Business Overview above for trend information.

E.
CRITICAL ACCOUNTING ESTIMATES
Elaborated discussion on critical accounting policies and estimates please see above pages 23-25.
Ituran Location and Control Ltd. published this content on April 23, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 23, 2026 at 16:55 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]