Ladies and gentlemen, thank you for standing by. Welcome to the Ituran First Quarter 2016 Results Conference Call. All participants are at present in a 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 call GK Investor Relations at 1646-201-9246. I will now hand the call over to Mr. Kenny Green of GK Investor Relations. Mr. Green, would you like to begin?

Thank you, operator. Good day to all of you and welcome to Ituran’s conference call to discuss the first quarter 2016 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. Eli Kamer, CFO; and Mr. Udi Mizrahi, VP, Finance. 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’d like to remind everyone that the Safe Harbor statement in today’s press release also covers the contents of this conference call. And now, Eyal, would you like to begin please?

Thank you, Kenny. I would like to welcome all of you and thank you for joining us today. We are very pleased with our results and especially the growth in our subscriber base. This is the primary metric which indicates the health of our business and it rose at record level business tell us that business has never been better for Ituran. We present our results today showing year-over-year growth, despite the continued currency headwind. And despite the recent outperformance since the beginning of March, the real and peso are still about 10% and 40% below the level of March and last year. While in U.S. dollar term, our first quarter revenues of 7% ahead of those last year, in local currencies our revenues grew overall by 24%. Demonstrating the operating leverage, our first quarter operating income would have shown a very nice 36% growth over last year. Our strong improvement in local currency terms are the fruits of our exceptionally strong subscriber growth seen throughout 2015, adding a record of about 130,000 subscribers in only one year. This growth was due to the extensive work we have done over the past few years to bring new products to market, which expanded our addressable markets by targeting the lower-end in Israel and in Brazil, the uninsured segment of the markets. We do believe that our efforts have expanded our subscriber quarterly growth trend from the 15,000 to 20,000 rate we were seeing in 2014 to the 25,000 plus range now. These higher level of subscriber growth proves that we are seeing tremendous traction in both Brazil and Israel for our new products and services. I want to stress that while every new subscriber add bring us additional revenue, we have an existing operating infrastructure in place to support them. As…

Thanks, Eyal. Revenues for the first quarter of 2016 were $47.2 million, up 7% when compared to revenues of $44.2 million in the first quarter of 2015. When excluding the currency impact of the strengthening U.S. dollar, our year-over-year growth in revenue would have been 24%. Revenue breakdown for the quarter was $32.2 million coming from subscription fees at 1% year-on-year increase. In local currencies, revenues increased by 24% over the first quarter of last year. Product revenues were $15 million, which were a 23% increase over the same quarter last year. Currencies did not have a significant impact on our product revenues. And in local currency, product revenues grew by 23% compared with those of the first quarter last year. The geographic breakdown of revenues in the first quarter was as follows: Israel, 55%; Brazil, 32%; Argentina, 8%; and United States, 5%. Gross margin in the quarter was 50.4% compared with the gross margin of 52.9% in the first quarter of last year. The gross margin on subscription fees was 65.1% and the gross margin on product was 19%. The decrease in the overall gross margin was due to the revenue mix, which include a higher proportion of product revenues. In addition, the weakening of the Brazilian Real and the Argentinean peso versus the U.S. dollar had a negative impact on the gross margin. Operating profit for the first quarter of 2016 was $11.5 million, an increase of 10% compared with an operating profit of $10.5 million in the first quarter of 2015. Excluding the impact of the change in exchange rates over the period, the operating profits would have increased 36% over the first quarter of last year. EBITDA for the quarter was $14.1 million, or 29.9% of revenue, an increase of 7% compared to an EBITDA of…

Thank you. Ladies and gentlemen at this time, we will begin the question and answer session. [Operator Instructions] The first question is from Lena Rogovin of Chardan Capital Markets. Please go ahead.

Hello. Congratulations on the great results. Two questions, if I may. My first question is about revenue segments, it looks like product segment was exceptionally strong, both in absolute terms and in terms of year-on-year growth. The question is, what’s the reason behind that? And is this sustainable growth and sustainable sales? And my second question about CapEx, does first quarter number include CapEx related to the new JV in Argentina? Thank you.

Okay. So, first of all, sales of equipment at Q1 is really higher compared to last year and also one of the largest ever. If you think through the growth of the car importing in Israel, which our sales has a very strong correlation to that industry. And it means that since in Israel we are selling the hardware to the dealers not such as in the Brazilian market, where we lease it, so as long as we are growing our subscribers and growing our market here in Israel, it means that our sales are growing the same. As long as the car importers in Israel, as long as the car population will increase, I believe that it will continue to be strong and [indiscernible] sales. But this again, it depend on each other. Regarding CapEx, the CapEx that we are published for Q1 is – not includes portion of the joint venture, the OEM joint venture in Brazil. All our actual investments in this joint venture appear as expense in our reports, meaning, that our [products] [ph] on the equity side with our partners there.

Thank you.

Okay.

[Operator Instructions] The next question is from Sasha Karim of IPI. Please go ahead.

Hi, guys. Congratulations on the [indiscernible] fantastic execution. Sorry if I missed it but my first question was if you could split out the 37,000 incremental subscribers, would you say they are coming more from Israel this quarter than perhaps in the past, it was specifically more from Brazil? And the follow-on would be, when you look forward, I think you’re now in the range of 25,000 plus additions. Again, could you split out geographically how you think about that?

Based on our [indiscernible], we are not providing geographies data during the quarters. We do it once a year, when we publish the 20-F. So I can’t provide the data. But generally speaking, as I read in my speech most of our growth is based on two geographies, Israel and Brazil, and both contribute to these numbers. We still believe and expect to have more than 25,000 per quarter, but the 25,000 per quarter is a reasonable number. As long as we succeed with our efforts to achieve more than this, we are happy, but we prefer to be conservative. We know that we have some churn. We know that we have some trend in Israel. But looking a year ahead 25,000 per quarter is making sense.

Thanks.

[Operator Instructions] There are no further questions at this time. There’s an additional question from Oshri Kalush of [indiscernible]. Please go ahead.

I have a question regarding the cash flow, what is the reason for the increasing account receivable from $1.4 million to – almost $1.6 million, and for the increasing the other current assets from $1.6 million to $3.2 million? Thanks.

Again, there is a very strong correlation between our growth of sales in Israel, which was dramatically high, and of course, it’s influenced on those items. As long as you’re growing, it’s a part of the results.

All right. Thank you.

All right.

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 for your continued interest and long-term support of our business. I look forward to speaking with you next quarter. Have a good day, bye.

Thank you. This concludes the Ituran first quarter 2016 results conference call. Thank you for your participation. You may go ahead and disconnect.