Iteris(ITI) - 2024 Q4 - Annual Results

Executive Summary Iteris achieved record FY2024 revenue and profitability, with the CEO highlighting a critical inflection point and reaffirming Vision 2027 targets, while providing a positive FY2025 outlook Fiscal 2024 Financial Highlights Iteris reported record full-year revenue of $172.0 million, a 10% year-over-year increase, driven by strong performance and recovery from previous supply chain issues. The fourth quarter saw record net new bookings of $53.3 million, up 20% YoY. Profitability improved significantly, with full-year GAAP net income turning positive to $3.1 million from a $14.9 million loss in the prior year, and Adjusted EBITDA grew to $12.9 million Fiscal 2024 Fourth Quarter Financial Highlights (YoY) | Metric | Q4 FY2024 | Change (YoY) | | :--- | :--- | :--- | | Revenues | $42.8 million | +1% | | Gross Margins | 37.4% | +558 bps | | Net New Bookings | $53.3 million | +20% (Record) | | Backlog | $123.8 million | +8% | | GAAP Net Income | $0.1 million | +$0.6 million | | GAAP EPS (diluted) | $0.00 | +$0.01 | | Adjusted EBITDA | $2.8 million | +$1.4 million (approx. double) | | Adjusted Net Income | $2.9 million | +$0.04 per share | Fiscal 2024 Full Year Financial Highlights (YoY) | Metric | FY2024 | Change (YoY) | | :--- | :--- | :--- | | Revenues | $172.0 million | +10% (Record) | | Gross Margins | 37.6% | +1,063 bps | | Net New Bookings | $181.6 million | +7% (Record) | | GAAP Net Income | $3.1 million | +$18.0 million | | GAAP EPS (diluted) | $0.07 | +$0.42 | | Adjusted EBITDA | $12.9 million | +$19.5 million | | Adjusted Net Income | $12.7 million | +$0.46 per share | | Cash and cash equivalents | $25.9 million | +55.8% | Management Commentary The CEO, Joe Bergera, stated that fiscal 2024 marked a "critical inflection point" for Iteris, as the company has moved past COVID-19 and supply chain disruptions. He highlighted that the financial benefits of the ClearMobility Platform strategy are now evident. Looking forward, the company expects to benefit from positive tailwinds, including federal funding from the Infrastructure Investment and Jobs Act, and maintains its long-term Vision 2027 growth targets - The company has reached a "critical inflection point" with the impacts of COVID-19 and supply chain disruptions now in the past, leading to four consecutive quarters of YoY revenue and earnings growth[4] - Customer adoption of the ClearMobility Platform is outpacing market growth, resulting in sustained market share gains[4] - The company reaffirms its Vision 2027 targets, which include a five-year organic revenue CAGR of approximately 14% and fiscal 2027 adjusted EBITDA margins between 16% and 19%[5] Fiscal 2025 Outlook For the full fiscal year 2025, Iteris projects total revenues between $188.0 million and $194.0 million, representing an 11% organic growth at the midpoint. Adjusted EBITDA margin is expected to be in the range of 8.0% to 10.0%. For the first quarter of fiscal 2025, revenue is guided to be $43.5 million to $45.5 million, with an Adjusted EBITDA margin of 5.5% to 6.5%, reflecting investments in R&D and sales for new products Fiscal 2025 Full Year Outlook | Metric | Guidance Range | Note | | :--- | :--- | :--- | | Total Revenues | $188.0M - $194.0M | 11% organic growth at midpoint | | Adjusted EBITDA Margin | 8.0% - 10.0% | 150 bps improvement at midpoint | Fiscal 2025 First Quarter Outlook | Metric | Guidance Range | Note | | :--- | :--- | :--- | | Total Revenues | $43.5M - $45.5M | 2% organic growth at midpoint (due to product cycle timing) | | Adjusted EBITDA Margin | 5.5% - 6.5% | 324 bps decline at midpoint (due to R&D/sales investments) | Financial Performance Analysis Iteris demonstrated significant financial recovery in FY2024, with GAAP net income turning positive and Adjusted EBITDA substantially improving due to eased supply chain pressures GAAP Financial Results For fiscal year 2024, GAAP revenue grew 10% to $172.0 million, driven by sensor products and services. The company achieved a net income of $3.1 million, a significant turnaround from a $14.9 million loss in fiscal 2023, primarily due to improved gross margins as supply chain pressures eased. Fourth-quarter revenue increased 1% to $42.8 million, with net income of $0.1 million compared to a $0.5 million loss in the prior-year quarter - Q4 FY2024: Revenue increased 1% to $42.8 million, driven by consulting services and software. Net income was $0.1 million, an improvement from a $0.5 million loss YoY, mainly due to better gross margins as supply chain costs normalized[7][9] - Full Year FY2024: Revenue grew 10% to $172.0 million, driven by sensor products and ClearMobility Platform services. Net income was $3.1 million, a turnaround from a $14.9 million loss in FY2023. This improvement was largely attributed to the reduced negative impact of high raw material costs, which had adversely affected FY2023 by approximately $16.0 million[10][12] - Full-year operating expenses increased 9% to $61.8 million, with over half of the increase due to higher litigation expenses. As a percentage of revenue, operating expenses declined by 32 basis points[11] Non-GAAP Financial Results In fiscal 2024, Adjusted EBITDA was $12.9 million (7.5% of revenue), a substantial improvement from a loss of $6.6 million in the prior year. This turnaround reflects the easing of supply chain constraints that negatively impacted fiscal 2023 by about $16.0 million. For the fourth quarter, Adjusted EBITDA doubled to $2.8 million (6.7% of revenue) from $1.4 million a year ago, mirroring the increase in GAAP earnings - Q4 FY2024: Adjusted EBITDA was approximately $2.8 million, or 6.7% of revenue, compared to $1.4 million, or 3.3% of revenue, in the prior-year quarter. The improvement was similar to the increase in GAAP earnings[14] - Full Year FY2024: Adjusted EBITDA was approximately $12.9 million, or 7.5% of revenue, a significant recovery from a loss of $6.6 million, or (4.2)% of revenue, in fiscal 2023[15] - The improvement in full-year Adjusted EBITDA was primarily due to the normalization of supply chain issues and raw material costs, which had negatively impacted fiscal 2023 by an estimated $16.0 million[15] Financial Statements The company's financial statements reflect improved liquidity and profitability in FY2024, with increased assets and a significant swing to net income Unaudited Condensed Balance Sheets As of March 31, 2024, Iteris reported total assets of $123.4 million, up from $111.8 million the previous year. The increase was primarily driven by a significant rise in cash and cash equivalents to $25.9 million. Total liabilities increased to $53.5 million from $48.9 million, while stockholders' equity grew to $69.9 million from $62.9 million, reflecting improved profitability Balance Sheet Summary (in thousands) | Account | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $25,850 | $16,587 | | Total current assets | $75,931 | $62,854 | | Total assets | $123,445 | $111,794 | | Total current liabilities | $43,330 | $38,039 | | Total liabilities | $53,538 | $48,888 | | Stockholders' equity | $69,907 | $62,906 | Unaudited Statement of Operations For the fiscal year ended March 31, 2024, total revenues increased 10% to $172.0 million. Gross profit saw a substantial increase to $64.6 million from $42.0 million in the prior year, with gross margin improving significantly. The company swung from an operating loss of $14.5 million in FY2023 to an operating income of $2.8 million in FY2024, resulting in a net income of $3.1 million, or $0.07 per diluted share Statement of Operations Summary - Full Year (in thousands) | Account | Year Ended March 31, 2024 | Year Ended March 31, 2023 | | :--- | :--- | :--- | | Total revenues | $171,987 | $156,052 | | Gross profit | $64,586 | $42,018 | | Total operating expenses | $61,767 | $56,533 | | Operating income (loss) | $2,819 | $(14,515) | | Net income (loss) | $3,131 | $(14,855) | | Diluted net income (loss) per share | $0.07 | $(0.35) | Statement of Operations Summary - Q4 (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total revenues | $42,750 | $42,440 | | Gross profit | $15,970 | $13,488 | | Operating income (loss) | $4 | $(456) | | Net income (loss) | $100 | $(544) | Non-GAAP Reconciliations Iteris provides non-GAAP reconciliations for Adjusted EBITDA and Adjusted Net Income to offer clearer insights into operational performance by excluding specific non-recurring items Explanation of Non-GAAP Measures Iteris uses non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income, to provide additional insight into its operational performance by excluding items like stock-based compensation, amortization, restructuring charges, and other specific legal expenses. The company believes these measures help investors understand underlying business trends and performance. Key adjustments for fiscal 2024 included $2.8 million in specific legal expenses related to a contract dispute - The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income to supplement GAAP results, believing they clarify underlying performance trends[29][30] - Adjustments to GAAP net income include interest, taxes, depreciation, amortization, stock-based compensation, restructuring charges, certain legal expenses, and acquisition earnout payments[29][33] - A notable adjustment for FY2024 was $2.8 million in legal costs for a specific breach of contract dispute, which the company considers infrequent and unusual. The trial is scheduled for September 2024[33] Reconciliation of Net Income (Loss) to Adjusted EBITDA For the full fiscal year 2024, Iteris reconciled a GAAP net income of $3.1 million to an Adjusted EBITDA of $12.9 million. Key adjustments included adding back amortization ($3.3M), stock-based compensation ($3.0M), and other legal expenses ($2.8M). For the fourth quarter, a GAAP net income of $0.1 million was reconciled to an Adjusted EBITDA of $2.8 million Adjusted EBITDA Reconciliation - Full Year (in thousands) | Account | Year Ended March 31, 2024 | Year Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (loss) | $3,131 | $(14,855) | | Adjustments (selected) | | | | Amortization expense | $3,286 | $3,179 | | Stock-based compensation | $2,965 | $2,890 | | Other legal expense | $2,843 | $— | | Adjusted EBITDA | $12,894 | $(6,624) | Adjusted EBITDA Reconciliation - Q4 (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (loss) | $100 | $(544) | | Other legal expense | $989 | $— | | Adjusted EBITDA | $2,848 | $1,412 | Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Adjusted EPS For fiscal year 2024, Adjusted Net Income was $12.7 million, or $0.29 per diluted share, a significant improvement from an Adjusted Net Loss of $7.0 million, or ($0.17) per share, in the prior year. For the fourth quarter, Adjusted Net Income was $2.9 million, or $0.07 per diluted share, up from $1.5 million, or $0.03 per share, year-over-year. The adjustments are similar to those for Adjusted EBITDA but exclude interest, taxes, and depreciation Adjusted Net Income & EPS - Full Year | Metric | Year Ended March 31, 2024 | Year Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (loss) | $3,131 K | $(14,855) K | | Adjusted Net Income (Loss) | $12,717 K | $(7,005) K | | Adjusted EPS - Diluted | $0.29 | $(0.17) | Adjusted Net Income & EPS - Q4 | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (loss) | $100 K | $(544) K | | Adjusted Net Income (Loss) | $2,897 K | $1,458 K | | Adjusted EPS - Diluted | $0.07 | $0.03 | Other Information This section provides details on the investor conference call and important disclosures regarding forward-looking statements and associated risks Conference Call Information Iteris scheduled a conference call for 4:30 p.m. Eastern time on June 13, 2024, to discuss the fiscal fourth quarter and full-year 2024 results. Dial-in details and a webcast link were provided, along with information for a telephone replay available for one week after the call - A conference call was held on June 13, 2024, to discuss financial results[16] - A webcast and a telephone replay of the call were made available to investors[17] Safe Harbor Statement The report contains forward-looking statements regarding the company's future performance, growth, and demand for its products. These statements are subject to various risks and uncertainties, including government funding for transportation, competition, supply chain disruptions, and general economic conditions, which could cause actual results to differ materially - The release includes forward-looking statements about future performance, growth, and profitability[19] - Key risks include reliance on government funding, supply chain interruptions, competition, and the ability to integrate acquisitions and retain key talent[20]