Iteris (ITI) 8-KIteris Reports Record Fiscal 2024 Full Year Revenue of $172.0 million, Up 10% Year Over Year

“Our fiscal 2024 full-year results demonstrate Iteris has achieved a critical inflection point,” said Joe Bergera, president and CEO of Iteris. “With the impact of COVID-19 and associated supply change disruptions in our rearview mirror, we are pleased to see the financial and operational benefits of our platform strategy reflected in four consecutive quarters of year-over-year revenue and earnings growth. Likewise, we are delighted that customer adoption of our ClearMobility Platform continues to outpace market growth rates, resulting in sustained market share gains.

“Looking ahead, we believe our portfolio of smart mobility infrastructure management solutions will continue to benefit from positive tailwinds, including historic federal funding from the Infrastructure Investment and Jobs Act. Therefore, 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 further adjusted EBITDA margin improvement consistent with our fiscal 2027 target of adjusted EBITDA margins in the range of 16% to 19% of revenue.”

Revenues in the fourth quarter of fiscal 2024 increased 1% to $42.8 million, compared with $42.4 million in the same quarter a year ago. This growth was driven primarily by increased services revenue, in particular for consulting services and software.

Operating expenses in the fourth quarter increased $2.0 million to $16.0 million, with almost half of the increase due to higher litigation expenses, and partially the result of higher research and development costs.

Net income in the fourth quarter was approximately $0.1 million, or $0.00 per share, compared with a net loss of approximately $0.5 million, or $(0.01) per share, in the same quarter a year ago. The improvement was primarily attributable to the reduced negative impact on gross margins caused by supply chain constraints and the resulting high raw material costs.

Revenues in fiscal 2024 increased 10% to $172.0 million, compared with $156.1 million in fiscal 2023. This growth was driven primarily by revenue increases for our sensor products, and Services associated with our ClearMobility Platform solutions.

Operating expenses in fiscal 2024 increased 9% to $61.8 million, compared with $56.5 million in fiscal 2023, but declined 32 basis points when measured as a percentage of revenue. Approximately 54% of the $5.2 million cost increase was due to higher litigation expenses, with the remainder primarily reflecting increased sales and marketing cost and higher research and development expenses.

Net income in fiscal 2024 was approximately $3.1 million or $0.07 per share, compared to a net loss of approximately $14.9 million, or $(0.35) per share, in the previous year period. The improvement was primarily attributable to the reduced negative impact on gross margins caused by supply chain constraints and the resulting high raw material costs, which negatively impacted fiscal 2023 by approximately $16.0 million.

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, other legal expenses, and acquisition earnout payments (“Adjusted EBITDA”). Components of this financial measure may be adjusted from time to time to reflect specific events and circumstances as they occur. A discussion of the Company’s use of these non-GAAP financial measures 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 fourth quarter of fiscal 2024 was approximately $2.8 million, or 6.7% of total revenues, compared with approximately $1.4 million, or 3.3% of total revenues, in the same quarter a year ago. The improvement mirrors the increase in GAAP earnings as described above, except for the current year’s increase in other legal expenses.

Adjusted EBITDA in fiscal 2024 was approximately $12.9 million, or 7.5% of total revenues, compared with approximately $6.6 million loss, or (4.2)% of total revenues in fiscal 2023. The Adjusted EBITDA improvements reflect the effect of supply chain constraints and the resulting increase in raw materials costs, which negatively impacted fiscal 2023 by approximately $16.0 million.

Iteris will conduct a conference call today to discuss its fiscal fourth quarter and full fiscal year 2024 results.

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.

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 50705.

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, the timing and amount of government funds allocated to overall transportation infrastructure projects and the transportation industry; 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, litigation and claims; any softness in the markets that we address; interruptions or other significant disruption in our supply chain which may negatively impact our ability to ship products and/or the cost of our products; risks related to our ability to recruit, integrate and/or retain key talent; our ability to replace large contracts once they have been completed; our ability to successfully complete and integrate acquired assets and companies; our ability to raise additional capital; the impact of any litigation or other legal proceedings; any errors in our software that might exist or might in the future exist; any disruption caused by any future data protection breaches, system security failures, cyber threats or unauthorized access to our or our customers’ data; pandemic and epidemic events, such as COVID-19, which may have a continuing impact on our future operating results; 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 potential government shutdowns, rising interest rates, 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).

When viewed with our financial results prepared in accordance with GAAP and accompanying reconciliations, we believe Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS 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 tables below. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS 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 alternative to net cash provided by (used in) operating activities as measures 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, Adjusted Net Income (Loss), Adjusted EPS and non-GAAP operating performance measures internally as complementary financial measures to evaluate the performance and trends of our businesses. We present Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS 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, Adjusted Net Income (Loss), Adjusted EPS 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, Adjusted Net Income (Loss), Adjusted EPS, and the related financial ratios should not be considered as measures 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, Adjusted Net Income (Loss), Adjusted EPS and the related financial ratios only as supplemental information. See our audited financial statements contained in our Form 10-K. However, despite the above limitations, we believe that Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, and the related financial ratios 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 or Adjusted Net Income (Loss):

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. The following tables present a reconciliation of historical net income (loss) to Adjusted EBITDA and the presentation of Adjusted EBITDA as a percentage of net revenues, and a reconciliation of historical net income (loss) to Adjusted Net Income (Loss) and the presentation of Adjusted EPS.