Iteris, Inc. (NASDAQ: ITI), the global leader in smart mobility infrastructure management, today reported financial results for its fiscal 2024 third quarter ended December 31, 2023.
Fiscal 2024 Third Quarter Financial and Business Highlights
Fiscal 2024 Year-to-Date Financial Highlights
Management Commentary:
“We are pleased to report year-to-date organic revenue increased 14% from last year despite a return to normal pre-COVID seasonality in the third quarter,” said Joe Bergera, President and CEO of Iteris. “In addition to the strong nine-month revenue performance, improvements in our gross margins drove a significant, $18.1 million year-to-date increase in adjusted EBITDA relative to the same prior year period.
“Although the return to pre-COVID seasonality will also affect fiscal 2024 fourth quarter prior year comparisons, we continue to experience strong demand for our ClearMobility® Platform and expect to end the fiscal year with 10% revenue growth at the midpoint of our guidance range. Over the long term, we continue to anticipate strong organic revenue growth consistent with our Vision 2027 targets, which assume a five-year organic revenue CAGR of approximately 14%, as well as expanding operating leverage that will drive further adjusted EBITDA margin improvement.”
Fiscal Year 2024 Full Year Outlook
GAAP Fiscal Year 2024 Third Quarter Financial Results
Non-GAAP Fiscal 2024 Third Quarter Results
In addition to results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Iteris (the “Company”) has included the following non-GAAP financial measure: net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, project loss reserves, other legal expenses, and executive severance and transition costs (“Adjusted EBITDA”). A discussion of the Company’s use of this non-GAAP financial measure is set forth below in the financial statements portion of this release under the heading “Non-GAAP Financial Measures and Reconciliation,” along with a reconciliation of Adjusted EBITDA to net income (loss).
Adjusted EBITDA in the third quarter of fiscal 2024 was $3.1 million, or 7.4% of total revenues, compared with a $0.4 million loss, or (1.0)% of total revenues, in the same quarter a year ago. The improvement primarily mirrors the increase in GAAP earnings.
Earnings Conference Call
Iteris will conduct a conference call today to discuss its fiscal 2024 third quarter results.
Date: Thursday, February 8, 2024
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: 888-506-0062
International dial-in number: +1 973-528-0011
Participant access code: 537202
If joining by phone, please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MKR Investor Relations at 1-213-277-5550.
To listen to the live webcast or view the press release, please visit the investor relations section of the Iteris website at www.iteris.com.
A telephone replay of the conference call will be available approximately two hours following the end of the call and will remain available for one week. To access the replay, dial +1-877-481-4010 (US Toll Free), or +1 919-882-2331 (International) and enter replay passcode 49720.
About Iteris, Inc.
Iteris is the world’s trusted technology ecosystem for smart mobility infrastructure management. Delivered through Iteris’ ClearMobility® Platform, our AI-powered end-to-end solutions monitor, visualize and optimize mobility infrastructure around the world, and help bridge legacy technology silos to unlock the future of transportation. That’s why more than 10,000 public agencies and private-sector enterprises focused on mobility rely on Iteris every day. Visit www.iteris.com for more information, and join the conversation on Twitter, LinkedIn and Facebook.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This release may contain forward-looking statements, which speak only as of the date hereof and are based upon our current expectations and the information available to us at this time. Words such as "believes," "anticipates," "expects," "intends," "plans," "seeks," "estimates," "may," "will," "can," and variations of these words or similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements about the Company’s anticipated demand and growth opportunities, conversion of bookings to revenue, the impact and success of new solution offerings, the Company’s acquisitions, our future performance, growth and profitability, operating results, and financial condition and prospects. Such statements are subject to certain risks, uncertainties, and assumptions that are difficult to predict, and actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.
Important factors that may cause such a difference include, but are not limited to, federal, state and local government budgetary issues, spending and scheduling changes, funding constraints and delays, and impact related to the federal government debt ceiling; uncertainties regarding potential multiple negative impacts that may occur in the future due to COVID-19 or other similar global health emergencies; our ability to source key raw materials in the global supply chain; the timing and amount of government funds allocated to overall transportation infrastructure projects and the transportation industry; risks related to our ability to recruit, integrate and/or retain key talent; our ability to replace large contracts once they have been completed; the effectiveness of efficiency, cost, and expense reduction efforts; our ability to successfully complete and integrate acquired assets and companies; our ability to specify, develop, complete, introduce, market and gain broad acceptance of our new and existing product and service offerings; the potential unforeseen impact of product and service offerings from competitors, increased competition in certain market segments, and such competitors’ patent coverage and claims; any softness in the markets that we address; and the impact of general economic and political conditions and specific conditions in the markets we address, and the possible disruption in government spending and commercial activities, such as import/export tariffs, terrorist activities or armed conflicts in the United States and internationally. Further information on Iteris, Inc., including additional risk factors that may affect our forward-looking statements, as contained in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and our other SEC filings that are available through the SEC's website (www.sec.gov).
ITERIS, INC. |
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UNAUDITED CONDENSED |
|||||
BALANCE SHEETS |
|||||
(in thousands) |
|||||
|
|||||
|
December 31,
|
March 31,
|
|||
Assets |
|
|
|||
Current assets: |
|
|
|||
Cash and cash equivalents |
$ |
21,185 |
$ |
16,587 |
|
Restricted cash |
|
338 |
|
140 |
|
Trade accounts receivable, net |
|
24,859 |
|
23,809 |
|
Unbilled accounts receivable |
|
8,596 |
|
8,349 |
|
Inventories |
|
11,456 |
|
10,841 |
|
Prepaid expenses and other current assets |
|
3,615 |
|
3,128 |
|
Total current assets |
|
70,049 |
|
62,854 |
|
Property and equipment, net |
|
1,290 |
|
1,297 |
|
Right-of-use assets |
|
7,332 |
|
8,345 |
|
Intangible assets, net |
|
10,021 |
|
10,190 |
|
Goodwill |
|
28,340 |
|
28,340 |
|
Other assets |
|
570 |
|
768 |
|
Total assets |
$ |
117,602 |
$ |
111,794 |
|
Liabilities and stockholders’ equity |
|
|
|||
Current liabilities: |
|
|
|||
Trade accounts payable |
$ |
14,249 |
$ |
12,943 |
|
Accrued payroll and related expenses |
|
10,877 |
|
12,923 |
|
Accrued liabilities |
|
5,304 |
|
5,453 |
|
Deferred revenue |
|
8,619 |
|
6,720 |
|
Total current liabilities |
|
39,049 |
|
38,039 |
|
Long-term liabilities |
|
9,981 |
|
10,849 |
|
Total liabilities |
|
49,030 |
|
48,888 |
|
Stockholders’ equity |
|
68,572 |
|
62,906 |
|
Total liabilities and stockholders’ equity |
$ |
117,602 |
$ |
111,794 |
ITERIS, INC. |
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UNAUDITED CONDENSED |
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STATEMENT OF OPERATIONS |
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(in thousands, except per share amounts) |
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||
Product revenues |
$ |
23,133 |
|
$ |
22,852 |
|
$ |
70,189 |
|
$ |
60,021 |
|
|||
Service revenues |
|
18,996 |
|
|
17,834 |
|
|
59,048 |
|
|
53,591 |
|
|||
Total revenues |
|
42,129 |
|
|
40,686 |
|
|
129,237 |
|
|
113,612 |
|
|||
Cost of product revenues |
|
12,985 |
|
|
15,981 |
|
|
38,175 |
|
|
47,664 |
|
|||
Cost of service revenues |
|
13,595 |
|
|
12,885 |
|
|
42,446 |
|
|
37,418 |
|
|||
Cost of revenues |
|
26,580 |
|
|
28,866 |
|
|
80,621 |
|
|
85,082 |
|
|||
Gross profit |
|
15,549 |
|
|
11,820 |
|
|
48,616 |
|
|
28,530 |
|
|||
Operating expenses: |
|
|
|
|
|||||||||||
General and administrative |
|
5,226 |
|
|
5,499 |
|
|
17,371 |
|
|
16,904 |
|
|||
Sales and marketing |
|
6,421 |
|
|
5,780 |
|
|
18,947 |
|
|
16,652 |
|
|||
Research and development |
|
2,858 |
|
|
2,047 |
|
|
7,531 |
|
|
6,356 |
|
|||
Amortization of intangible assets |
|
650 |
|
|
651 |
|
|
1,952 |
|
|
1,970 |
|
|||
Restructuring charges |
|
— |
|
|
— |
|
|
— |
|
|
707 |
|
|||
Total operating expenses |
|
15,155 |
|
|
13,977 |
|
|
45,801 |
|
|
42,589 |
|
|||
Operating income (loss) |
|
394 |
|
|
(2,157 |
) |
|
2,815 |
|
|
(14,059 |
) |
|||
Non-operating income (expense): |
|
|
|
|
|||||||||||
Other income, net |
|
141 |
|
|
135 |
|
|
388 |
|
|
229 |
|
|||
Interest income (expense), net |
|
39 |
|
|
— |
|
|
109 |
|
|
(332 |
) |
|||
Income (loss) before income taxes |
|
574 |
|
|
(2,022 |
) |
|
3,312 |
|
|
(14,162 |
) |
|||
Provision for income taxes |
|
(219 |
) |
|
(27 |
) |
|
(281 |
) |
|
(149 |
) |
|||
Net income (loss) |
$ |
355 |
|
$ |
(2,049 |
) |
$ |
3,031 |
|
$ |
(14,311 |
) |
|||
|
|
|
|
|
|||||||||||
Net income (loss) per common share |
|
|
|
|
|||||||||||
Basic net income (loss) per share |
$ |
0.01 |
|
$ |
(0.05 |
) |
$ |
0.07 |
|
$ |
(0.34 |
) |
|||
Diluted net income (loss) per share |
$ |
0.01 |
|
$ |
(0.05 |
) |
$ |
0.07 |
|
$ |
(0.34 |
) |
|||
|
|
|
|
|
|||||||||||
Shares used in basic per share calculations |
|
42,944 |
|
|
42,341 |
|
|
42,798 |
|
|
42,336 |
|
|||
Shares used in diluted per share calculations |
|
43,784 |
|
|
42,341 |
|
|
43,762 |
|
|
42,336 |
|
ITERIS, INC.
Non-GAAP Financial Measures and Reconciliation
In addition to results presented in accordance with GAAP, the Company has included the following non-GAAP financial measure in this release: net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, project loss reserves, other legal expenses, and executive severance and transition costs (“Adjusted EBITDA”).
When viewed with our financial results prepared in accordance with GAAP and accompanying reconciliations, we believe Adjusted EBITDA and the related financial ratios provide additional useful information to clarify and enhance the understanding of the factors and trends affecting our past performance and future prospects. We define these measures, explain how they are calculated and provide reconciliations of these measures to the most comparable GAAP measure in the table below. Adjusted EBITDA and the related financial ratios, as presented in this press release, are supplemental measures of our performance that are not required by or presented in accordance with GAAP. They are not a measurement of our financial performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP, or as alternatives to net cash provided by (used in) operating activities as a measure of our liquidity. The presentation of these measures should not be interpreted to mean that our future results will be unaffected by unusual or nonrecurring items.
We use Adjusted EBITDA non-GAAP operating performance measures internally as complementary financial measures to evaluate the performance and trends of our businesses. We present Adjusted EBITDA and the related financial ratios, as applicable, because we believe that measures such as these provide useful information with respect to our ability to meet our operating commitments.
Adjusted EBITDA and the related financial ratios have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:
Because of these limitations, Adjusted EBITDA and the related financial ratio should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information. See our Unaudited Condensed Financial Statements contained in this Press Release. However, in spite of the above limitations, we believe that Adjusted EBITDA and the related ratio are useful to an investor in evaluating our results of operations because these measures:
The following financial items have been added back to or subtracted from our net income (loss) when calculating Adjusted EBITDA:
It is impractical to attempt to reconcile expected Adjusted EBITDA to expected GAAP net income (loss) because many of the adjustments are difficult to forecast, including stock-based compensation because it depends on the price of our stock in the future, which is difficult to predict. Reconciliations of historical net income (loss) to Adjusted EBITDA and the presentation of Adjusted EBITDA as a percentage of net revenues were as follows:
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||
|
2023 |
2022 |
2023 |
2022 |
|||||||||||
|
(In Thousands) |
||||||||||||||
Net income (loss) |
$ |
355 |
|
$ |
(2,049 |
) |
$ |
3,031 |
|
$ |
(14,311 |
) |
|||
Provision for income taxes |
|
219 |
|
|
27 |
|
|
281 |
|
|
149 |
|
|||
Depreciation expense |
|
136 |
|
|
153 |
|
|
422 |
|
|
461 |
|
|||
Amortization expense |
|
779 |
|
|
770 |
|
|
2,349 |
|
|
2,396 |
|
|||
Interest (income) expense |
|
(39 |
) |
|
— |
|
|
(109 |
) |
|
332 |
|
|||
Stock-based compensation |
|
822 |
|
|
438 |
|
|
2,218 |
|
|
1,982 |
|
|||
Other adjustments: |
|
|
|
|
|||||||||||
Restructuring charges |
|
— |
|
|
— |
|
|
— |
|
|
707 |
|
|||
Other legal expenses |
|
835 |
|
|
— |
|
|
1,854 |
|
|
— |
|
|||
Acquisition earnout payments |
|
— |
|
|
248 |
|
|
— |
|
|
248 |
|
|||
Adjusted EBITDA |
$ |
3,107 |
|
$ |
(413 |
) |
$ |
10,046 |
|
$ |
(8,036 |
) |
|||
Percentage of total revenues |
|
7.4 |
% |
|
(1.0 |
)% |
|
7.8 |
% |
|
(7.1 |
)% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240208565886/en/
Iteris Contact
Kerry A. Shiba
Senior Vice President, Chief Financial Officer, Secretary and Treasurer
Tel: (949) 270-9457
Email: [email protected]
Investor Relations
MKR Investor Relations, Inc.
Todd Kehrli
Tel: (213) 277-5550
Email: [email protected]