Record adjusted EBITDA of $3.7 million,
representing a $6.1 million improvement year over year
Iteris, Inc. (NASDAQ: ITI), the global leader in smart mobility
infrastructure management, today reported financial results for its
fiscal 2024 first quarter, which ended June 30, 2023.
Fiscal 2024 First Quarter Financial Highlights
- Record revenue of $43.5 million, up 29% year over year
- Gross margins of 38.6%, up 840 basis points year over year and
680 basis points sequentially
- GAAP net income of $2.1 million, or $0.05 per share, a $7.0
million, or $0.16 per share improvement from the prior year
- Record adjusted EBITDA of $3.7 million, or 8.4% of revenue, a
$6.1 million improvement year over year (see “Non-GAAP Financial
Measures and Reconciliation” below for important information)
- A record ClearData™ contract win, valued at over $15.0 million
over four years
- Record bookings of $53.1 million, up 25% year over year
- Record backlog of $123.8 million as of June 30, 2023, up 14%
year over year
- Net cash flow of $3.4 million, reflecting earnings improvement
and strong working capital management, resulting in a cash balance
of $20.0 million as of June 30, 2023
Management Commentary:
“We are very pleased to report record first quarter revenue from
continued strong product and commercial execution, as well as some
customer deployments and associated revenue recognition occurring
earlier than originally anticipated,” said Joe Bergera, President
and CEO of Iteris. “Additionally, we are pleased to report record
adjusted EBITDA for the quarter due to significant sequential and
year-over-year improvements in product gross margins, which
demonstrates our supply chain improvement plan has normalized the
cost of goods sold for our Vantage sensor portfolio.
“Looking ahead, we believe the demand environment for smart
mobility infrastructure management solutions will remain favorable
due to positive secular trends and federal funding from the
Infrastructure Investment and Jobs Act. Given this strong demand
environment and the positive customer response to the Iteris
ClearMobility® Platform, our market-leading technology ecosystem,
we continue to anticipate a five-year organic revenue CAGR of
approximately 14% consistent with our Vision 2027 targets.”
Fiscal Year 2024 Second Quarter and Full Year Outlook
- Second quarter total revenue guidance in the range of $41.0
million to $42.0 million, representing growth of 6% year over year
at the mid-point of the guidance range, which takes into account
that some customer deployments and associated revenue recognition
moved forward into the first quarter
- Second quarter adjusted EBITDA margin guidance in the range of
5% to 7%, representing a significant year-over-year improvement
(see “Non-GAAP Financial Measures and Reconciliation” below for
important information)
- Reiterating full-year total revenue guidance in the range of
$168.0 million to $175.0 million, representing organic growth of
10% year over year at the mid-point of the guidance range
- Reiterating full-year adjusted EBITDA margin guidance in the
range of 7% to 9%, representing a significant year-over-year
improvement (see “Non-GAAP Financial Measures and Reconciliation”
below for important information)
- Reiterating full-year net cash flow guidance in the range of
$12.0 million to $16.0 million, driven by net income improvement
and continued working capital management
GAAP Fiscal Year 2024 First Quarter Financial Results
- Total revenue in the first quarter of fiscal year 2024
increased 29% to $43.5 million, compared with $33.7 million in the
same quarter a year ago. This revenue growth was driven primarily
by increased demand for Iteris’ ClearMobility Platform, in
particular its sensor products.
- Operating expenses in the first quarter decreased 2% in
absolute terms to $14.9 million, compared with $15.1 million in the
same quarter a year ago.
- Net income from continuing operations in the first quarter was
approximately $2.1 million, or $0.05 per share, compared with a net
loss from continuing operations of approximately $4.9 million, or
$(0.11) per share, in the same quarter a year ago. The improvement
was primarily attributable to an improvement in gross margin, which
was impacted in the prior period due to supply chain constraints
and resulting high raw material costs.
Non-GAAP Fiscal 2024 First Quarter Results
In addition to results presented in accordance with generally
accepted accounting principles in the United States (“GAAP”), the
Company has included the following non-GAAP financial measure:
Adjusted income (loss) from continuing operations before taxes,
depreciation, amortization, interest expense, stock-based
compensation expense, restructuring charges, project loss reserves,
acquisition costs, acquisition fair value adjustments, 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) from continuing operations.
Adjusted EBITDA in the first quarter of fiscal 2024 was
approximately $3.7 million, or 8.4% of total revenues, compared
with an approximate $2.4 million loss, or (7.3)% of total revenues,
in the same quarter a year ago. The improvement mirrors the
increase in GAAP earnings.
Earnings Conference Call
Iteris will conduct a conference call today to discuss its
fiscal 2024 first quarter results.
Date: Tuesday, August 8, 2023
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: 877-545-0523
International dial-in number: +1 973-528-0016
Participant access code: 635551
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 48722.
About Iteris, Inc.
Iteris is the world’s trusted technology ecosystem for smart
mobility infrastructure management. Delivered through Iteris’
ClearMobility Platform, our cloud-enabled 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 impacts related to the federal government debt ceiling;
our ability to source key raw materials generally and in light of
current global economic and supply chain challenges; potential
adverse impacts due to changes in data sources or availability of
data sources, including the recent announcement by data supplier
Wejo of the appointment of an administrator due to insolvency; 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; unpredictable and unprecedented adverse
effects of the COVID-19 pandemic or other future pandemics,
including impacts on our vendors and our employees; 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.
UNAUDITED CONDENSED
BALANCE SHEETS
(in thousands)
June 30, 2023
March 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
19,994
$
16,587
Restricted cash
274
140
Trade accounts receivable, net
25,429
23,809
Unbilled accounts receivable
8,471
8,349
Inventories
11,534
10,841
Prepaid expenses and other current
assets
4,644
3,128
Total current assets
70,346
62,854
Property and equipment, net
1,315
1,297
Right-of-use assets
7,955
8,345
Intangible assets, net
9,986
10,190
Goodwill
28,340
28,340
Other assets
434
768
Total assets
$
118,376
$
111,794
Liabilities and stockholders’
equity
Current liabilities:
Trade accounts payable
$
15,581
$
12,943
Accrued payroll and related expenses
12,653
12,923
Accrued liabilities
6,454
5,453
Deferred revenue
7,356
6,720
Total current liabilities
42,044
38,039
Long-term liabilities
10,525
10,849
Total liabilities
52,569
48,888
Stockholders’ equity
65,807
62,906
Total liabilities and stockholders’
equity
$
118,376
111,794
ITERIS, INC.
UNAUDITED CONDENSED
STATEMENT OF
OPERATIONS
(in thousands, except per
share amounts)
Three Months Ended June
30,
2023
2022
Product revenues
$
23,658
$
16,381
Service revenues
19,887
17,286
Total revenues
43,545
33,667
Cost of product revenues
12,104
11,657
Cost of service revenues
14,638
11,851
Cost of revenues
26,742
23,508
Gross profit
16,803
10,159
Operating expenses:
General and administrative
5,801
6,412
Sales and marketing
6,290
5,198
Research and development
2,108
2,136
Amortization of intangible assets
651
668
Restructuring charges
—
707
Total operating expenses
14,850
15,121
Operating income (loss)
1,953
(4,962
)
Non-operating income (expense):
Other income (expense), net
199
(23
)
Interest income (expense), net
68
(32
)
Income (loss) from continuing operations
before income taxes
2,220
(5,017
)
(Provision) benefit for income taxes
(95
)
167
Net income (loss) from continuing
operations
2,125
(4,850
)
Loss from discontinued operations before
gain on sale, net of tax
—
(15
)
Net loss from discontinued operations, net
of tax
—
(15
)
Net income (loss)
$
2,125
$
(4,865
)
Income (loss) per share - basic and
diluted
Income (loss) per share from continuing
operations
$
0.05
$
(0.11
)
Loss per share from discontinued
operations
$
—
$
—
Net income (loss) per share
$
0.05
$
(0.11
)
Shares used in basic per share
calculations
42,567
42,380
Shares used in diluted per share
calculations
43,640
42,380
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: Adjusted income (loss) from continuing operations
before interest, taxes, depreciation, amortization, stock-based
compensation expense, and restructuring charges (“Adjusted
EBITDA”).
When viewed with our financial results prepared in accordance
with accounting principles generally accepted in the U.S. (“GAAP”)
and accompanying reconciliations, we believe Adjusted EBITDA
provides 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, as presented in this press release, is a
supplemental measure of our performance that is not required by or
presented in accordance with GAAP. It is not a measurement of our
financial performance under GAAP and should not be considered as an
alternative to net income (loss) or any other performance measures
derived in accordance with GAAP, or as an alternative to net cash
provided by operating activities as a measure of our liquidity. The
presentation of this measure 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 because we believe that it provides useful information with
respect to our ability to meet our operating commitments.
Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations
include:
- It does not reflect our cash expenditures, future requirements
for capital expenditures or contractual commitments;
- It does not reflect changes in, or cash requirements for, our
working capital needs;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements;
- It is not adjusted for all non-cash income or expense items
that are reflected in our statements of cash flows;
- It does not reflect the impact on earnings of charges resulting
from matters unrelated to our ongoing operations; and
- Other companies in our industry may calculate Adjusted EBITDA
differently than we do, limiting its usefulness as a comparative
measure.
Because of these limitations, Adjusted EBITDA 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 audited financial statements contained in our Form 10-K.
However, in spite of the above limitations, we believe that
Adjusted EBITDA is useful to an investor in evaluating our results
of operations because it:
- Is widely used by investors to measure a company’s operating
performance without regard to items excluded from the calculation
of such terms, which can vary substantially from company to company
depending upon accounting methods and book value of assets, capital
structure and the method by which assets were acquired, among other
factors;
- Helps investors to evaluate and compare the results of our
operations from period to period by removing the effect of our
capital structure from our operating performance; and
- Is used by our management team for various other purposes in
presentations to our Board of Directors as a basis for strategic
planning and forecasting.
The following financial items have been added back to or
subtracted from our net income (loss) when calculating Adjusted
EBITDA:
- Income tax expense. This amount may be useful to investors
because it represents the taxes that might be payable for the
period and the change in deferred taxes during the period, and
therefore could reduce cash flow available for use in our
business.
- Depreciation expense. Iteris excludes depreciation expense
primarily because it is a non-cash expense. These amounts may be
useful to investors because it generally represents the wear and
tear on our property and equipment used in our operations.
- Amortization expense. Iteris incurs amortization of intangible
assets in connection with acquisitions. Iteris also incurs
amortization related to capitalized software development costs.
Iteris excludes these items because it does not believe that these
expenses are reflective of ongoing operating results in the period
incurred. These amounts may be useful to investors because it
represents the estimated attrition of our acquired customer base
and the diminishing value of product rights.
- Interest expense. Iteris excludes interest expense because it
does not believe this item is reflective of ongoing business and
operating results. This amount may be useful to investors for
determining current cash flow. For the three months ended June 30,
2023, interest expense includes amortization of the remaining
capitalized deferred financing costs due to the termination of the
Credit Agreement (see Note 11, Long-Term Debt, to the Financial
Statements for more information).
- Stock-based compensation. These expenses consist primarily of
expenses from employee and director equity based compensation
plans. Iteris excludes stock-based compensation primarily because
they are non-cash expenses and Iteris believes that it is useful to
investors to understand the impact of stock-based compensation to
its results of operations and current cash flow.
- Restructuring charges. These expenses consist primarily of
employee separation expenses, facility termination costs, and other
expenses associated with Company restructuring activities. Iteris
excludes these expenses as it does not believe that these expenses
are reflective of ongoing operating results in the period incurred.
These amounts may be useful to our investors in evaluating our core
operating performance.
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) from continuing operations to Adjusted
EBITDA and the presentation of Adjusted EBITDA as a percentage of
net revenues were as follows:
Three Months Ended June
30,
2023
2022
(In Thousands)
Net income (loss) from continuing
operations
$
2,125
$
(4,850
)
Income tax expense
95
(167
)
Depreciation expense
150
159
Amortization expense
783
822
Interest expense
—
32
Stock-based compensation
525
848
Other adjustments:
Restructuring charges
—
707
Total adjustments
$
1,553
$
2,401
Adjusted EBITDA
$
3,678
$
(2,449
)
Percentage of total revenues
8.4
%
(7.3
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808187329/en/
Iteris Contact Kerry A. Shiba Chief Financial Officer,
Treasurer and Secretary Tel: (949) 270-9457 Email:
kshiba@iteris.com
Investor Relations MKR Investor Relations, Inc. Todd
Kehrli Tel: (213) 277-5550 Email: iti@mkr-group.com
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