SANTA ANA, Calif. – June 7, 2018 – Iteris, Inc. (NASDAQ: ITI), the global leader in applied informatics for transportation and agriculture, today reported financial results for its fiscal fourth quarter and full year ended March 31, 2018.
Fiscal Full Year 2018 Financial Highlights
- Total revenue increased 8% year over year to a record $103.7 million
- Transportation Systems revenue increased 11% year over year to $54.5 million
- Agriculture and Weather Analytics revenue increased 8% year over year to $4.9 million, with segment gross margins expanding 210 basis points
- Roadway Sensors revenue increased 5% year over year to $44.5 million
- Net loss per share of $(0.11) GAAP; $(0.04) Non-GAAP
Fiscal Fourth Quarter 2018 Financial Highlights
- Total revenue remained consistent with fiscal 2017 at $25.3 million
- Transportation Systems revenue increased 4% year over year to $13.1 million, with segment gross margins expanding 370 basis points
- Agriculture and Weather Analytics revenue increased 1% year over year to $1.4 million, with segment gross margins expanding 510 basis points
- Roadway Sensors revenue declined 4% year over year to $10.8 million due to continued choppiness in Texas following last year’s Hurricane Harvey
- Net loss per share of $(0.07) GAAP; $(0.04) Non-GAAP
”We are pleased with our full-year revenue performance, ending the fiscal year with a record $104 million in annual revenue,” said Joe Bergera, president and CEO. “Additionally, all of our reporting segments made significant progress on their product roadmaps, as well as related commercial and operational initiatives that will benefit the company going forward.”
“In fiscal Q4, our Roadway Sensors segment continued to encounter choppiness in Texas, as Houston and other Gulf Coast cities rebalanced reconstruction priorities against previously planned improvement projects in the aftermath of last year’s unprecedented weather disasters,” continued Mr. Bergera. “Despite the near-term quarterly fluctuations, we expect Iteris to be a net beneficiary of reconstruction spending in the region over the long term.”
In conclusion, Mr. Bergera noted “we remain focused on capturing the significant opportunities in front of Iteris. Our extensive customer relationships, unique multi-disciplinary expertise, and robust software and IoT platforms provide an excellent foundation for Iteris to capitalize upon favorable long-term trends in both the smart transportation and digital agriculture markets.”
GAAP Fiscal Fourth Quarter 2018 Financial Results
Total revenue in the fourth quarter of fiscal 2018 remained consistent with fiscal 2017 at $25.3 million. The fourth quarter saw increases of 3.6% in Transportation Systems and 0.6% in Agriculture and Weather Analytics revenue. This was offset by a decrease of 4.4% in Roadway Sensors, which is attributed to the continued effects of the 2017 hurricanes that impacted our business in Texas.
Operating expenses in the fourth quarter were $12.8 million, compared with $13.4 million in the same quarter a year ago.
Regarding selling, general and administrative expenses (SG&A), our selling expenses increased approximately $879K, driven primarily by increases in our Transportation Systems segment, which experienced a higher than normal level of RFP activity during the period. Our Roadway Sensors segment realized an increase in selling expenses due to certain incentive programs. Our Agriculture and Weather Analytics segment also realized an increase in expenses, which in this case is attributable to the restructuring of our sales organization to support the segment’s updated go-to-market strategy. Administrative expenses were flat year over year; however, the company did experience an increase in spend during the period to adopt the new ASC 606 revenue recognition rules, which were offset by capitalization of internal labor to implement a new ERP system, as well as reduced internal control related costs for Sarbanes Oxley compliance.
Research and development (R&D) expenses increased approximately $800K year over year, driven primarily by higher capitalization of internally developed software in fiscal 2017, for example VantageLive! development costs, and lower capitalization in fiscal 2018.
Finally, fourth quarter fiscal 2017 saw the impairment of goodwill related to our Agriculture and Weather Analytics segment, while there was no goodwill impairment in Q4 of fiscal 2018.
Operating loss in the fourth quarter was $2.8 million, compared with an operating loss of $3.5 million in the same quarter a year ago. Net loss in the fourth quarter was $2.4 million, or ($0.07) per share, compared with a net loss of $3.4 million, or ($0.10) per share in the year-ago quarter.
GAAP Fiscal 2018 Full Year Financial Results
Total revenue in fiscal 2018 increased 8.1% to a record $103.7 million, compared with $96.0 million in fiscal 2017. The increase was driven primarily by a 10.6% increase in Transportation Systems, a 5.2% increase in Roadway Sensors and a 7.7% increase in Agriculture and Weather Analytics year over year. Operating expenses for fiscal year 2018 were $45.4 million, compared with $42.6 million for the previous year period.
Regarding SG&A, selling expenses increased approximately $1.6 million, driven primarily by increases in our Transportation Systems segment. These expenses are attributable to increased RFP activity during the year. Administrative expenses increased $2.4 million year over year. Key drivers include charges related to the realignment of our Agriculture and Weather Analytics group, expenses related to the adoption of ASC 606, and increases in stock compensation expenses.
R&D expenses increased approximately $1.1 million year over year, driven primarily by the refactoring of our iPeMS software offering, enhancements of insights related to our Agriculture and Weather Analytics segment, and enhancements to our VantageLive! platform.
Finally, fiscal 2017 saw the impairment of goodwill in our Agriculture and Weather Analytics segment, while there were no goodwill impairment charges in fiscal 2018.
Operating loss in fiscal 2018 was $5.6 million, compared with an operating loss of $5.2 million in fiscal 2017. Net loss in fiscal 2018 was approximately $3.5 million, or ($0.11) per share, compared with net loss of approximately $4.8 million, or ($0.15) per share, in fiscal 2017, primarily driven by the passage of new tax legislation known as the Tax Cuts and Jobs Act, which provided an income tax benefit of $1.7 million.
Non-GAAP Fiscal Q4 2018 Financial 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 measures: non-GAAP operating expenses, non-GAAP operating loss, non-GAAP net loss and non-GAAP basic and diluted net loss per share. These non-GAAP financial measures exclude the following items: (a) stock compensation expense; (b) depreciation; (c) amortization; (d) Agriculture and Weather Analytics segment realignment; (e) loss on impairment of goodwill; (f) audit fee overruns; (g) financial consulting service fees; (h) severance and transition related costs paid to the company’s former chief executive officer; (i) the estimated tax effect of the foregoing non-GAAP adjustments; (j) the recording of a valuation allowance on the company’s deferred tax assets; and (k) the impact of the 2017 Tax Cuts and Jobs Act (“Tax Act”). 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”, which also includes a reconciliation of such non-GAAP financial measures to their most comparable GAAP financial measures for the three and 12 months ended March 31, 2018, 2017 and 2016.
Non-GAAP operating expenses in the fourth quarter increased to $11.6 million, compared with $10.8 million in the same quarter a year ago. Non-GAAP operating loss in the fourth quarter was $1.4 million, compared with an operating loss of approximately $767,000 in the same quarter a year ago. Non-GAAP net loss in the fourth quarter was approximately $1.4 million, or ($0.04) per share, compared with a net loss of approximately $674,000, or ($0.02) per share, in the same quarter a year ago.
Non-GAAP Fiscal 2018 Full Year Financial Results
Non-GAAP operating expenses in fiscal 2018 were $42.2 million, compared with $38.5 million in fiscal 2017. The increase was primarily attributable to planned increases in sales and marketing expenses in the Transportation Systems segment, as well as planned investments in R&D expenses across all segments to develop and improve our product offerings. Non-GAAP net loss for fiscal 2018 was approximately $1.4 million or $(0.04) per share, compared with a net loss of approximately $376,000, or ($0.01) per share, for fiscal 2017.
Earnings Conference Call
Iteris will conduct a conference call today to discuss its fiscal fourth quarter and full year 2018 results.
Date: Thursday, June 7, 2018
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific Time)
Toll-free dial-in number: 1-800-263-0877
International dial-in number: 1-646-828-8143
Conference ID: 5132802
A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through June 14, 2018. To access the replay dial information, please click here.
About Iteris, Inc.
Iteris is the global leader in applied informatics for transportation and agriculture, turning big data into big breakthrough solutions. We collect, aggregate and analyze data on traffic, roads, weather, water, soil and crops to generate precise informatics that lead to safer transportation and smarter farming. Municipalities, government agencies, crop science companies, farmers and agronomists around the world use our solutions to make roads safer and travel more efficient, as well as farmlands more sustainable, healthy and productive. 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 growth opportunities, the impact of the new management team, the impact and success of new product introductions and acquisitions, our future performance, growth, operating results, 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 policy changes, constraints and delays; the timing and amount of government funds allocated to overall transportation infrastructure projects and the transportation industry; the potential unforeseen impact of product and service offerings from competitors, increased competition in certain market segments and other competitive pressures; our ability to secure additional Transportation Systems consulting contracts and successfully complete such contracts on a timely and cost-effective basis; our ability to specify, develop, complete, introduce, market and gain broad acceptance of our new and existing products and technologies the timing and successful completion of customer qualification of our products and the risks of non-qualification; the availability of components used in the manufacture of certain of our products; the effectiveness of efficiency, cost, and expense reduction efforts; our ability to successfully identify, complete and integrate acquisitions of products, technologies and companies; our ability to retain, integrate and incentivize our new management team and their ability to shape the strategic direction of the company and implement change; risks related to our ability to recruit and/or retain key talent; 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 related to terrorist activity or armed conflict 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).
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