Iteris Reports Fiscal Third Quarter 2013 Results

  Iteris Reports Fiscal Third Quarter 2013 Results

Business Wire

SANTA ANA, Calif. -- January 24, 2013

Iteris, Inc. (NYSE MKT: ITI), a leader in providing intelligent traffic
management information solutions, reported financial results for its fiscal
third quarter ended December 31, 2012. Total revenues for the fiscal third
quarter decreased 6% to $14.0 million compared to $14.9 million in the same
year-ago quarter. Net income in the fiscal third quarter was $1.1 million or
$0.03 per share, compared to $747,000 or $0.02 per share in the year-ago
quarter. Loss from continuing operations was $294,000 or $(0.01) per share in
the fiscal third quarter, compared to income from continuing operations of
$618,000 or $0.02 per share in the year-ago quarter.

Fiscal Q3 2013 Highlights

  *Selected to provide on-call services for two five-year Federal Highway
    Administration (FHWA) contracts valued at up to $67.6 million and $12.6
    million, respectively.
  *Recorded a $1.4 million after-tax gain as a result of deferred payments
    and earn-outs from the sale of the Vehicle Sensors segment. Gross proceeds
    of $1.8 million were collected, bringing the company’s cash position to
    $19.7 million as of December 31, 2012.
  *Total backlog was $38.0 million which included Transportation Systems
    backlog of $31.5 million, iPerform backlog of $3.3 million, and Roadway
    Sensors backlog of $3.2 million. This compares to total backlog of $32.9
    million in the same year-ago quarter and $41.2 million in the previous
    quarter.
  *Signed $4.9 million in new Transportation Systems contracts, bringing
    total backlog to $31.5 million compared to $29.7 million in the same
    year-ago quarter.

Fiscal Q3 2013 Financial Results

The decrease in revenues, as noted above, in the fiscal third quarter was
primarily due to a 23% decline in Roadway Sensors net sales as a result of
delays in customer orders and the effects of Hurricane Sandy.

Gross margin in the fiscal third quarter was 36.8% compared to 36.7% in the
year-ago quarter. Gross margin was impacted in both the fiscal third quarter
and year-ago quarter by a shift in mix toward Transportation Systems and
iPerform contract revenues, which typically provide a lower margin than the
company’s product revenues.

Operating expenses increased 9% to $5.6 million in the fiscal third quarter
from $5.1 million in the year-ago quarter. The increase was primarily due to a
$133,000 charge associated with the change in fair value of contingent
acquisition consideration, whereas in the year-ago quarter, the company
reported a $281,000 benefit.

The company recorded a loss from continuing operations of $294,000 or $(0.01)
per share in the fiscal third quarter, compared to income from continuing
operations of $618,000 or $0.02 per share in the year-ago quarter.

Net income in the fiscal third quarter was $1.1 million or $0.03 per share,
compared to $747,000 or $0.02 per share in the year-ago quarter. The fiscal
third quarter included an after-tax gain of $1.4 million related to deferred
payments and earn-outs from the sale of the company’s Vehicle Sensors segment
in July 2011.

During the fiscal third quarter, Iteris repurchased approximately 388,000
shares of its common stock, bringing the total to approximately 1,430,000
since the company initiated its $3 million share repurchase program in August
2011, which has since expired, and a $3 million share repurchase program
initiated in August 2012. As of December 31, 2012, the company repurchased
approximately $2.1 million shares through these programs.

Management Commentary

“In the third fiscal quarter we experienced a decline in Roadway Sensors
revenues primarily due to the delay of certain orders and East Coast shipping
disturbances resulting from Hurricane Sandy,” said Abbas Mohaddes, president
and CEO of Iteris. “While I am disappointed with the financial results of this
segment and the consequential impact to our overall results for the quarter,
we remain encouraged by our $3.2 million Roadway Sensors backlog and we
received strong bookings in the early part of our fourth quarter. We continue
to believe there is strong demand for our core Roadway Sensors products as
well as our innovative solutions like Vantage Vector™ and the recently
released SmartCycle™ and SmartSpan™.

“Transportation Systems contract revenues were flat year-over-year primarily
due to the timing of a key contract in the prior year period. However, this
segment is well-positioned to capitalize on the recently passed Federal
Highway Bill, as demonstrated by our selection by the FHWA, and we expect
several task orders to be awarded over the next few fiscal quarters.

“As we have discussed previously,” continued Mohaddes, “the government and
commercial markets for real-time, actionable traffic and weather information
analytics are expanding rapidly. We are participating in this emerging market
by investing in people, products, and services within our iPerform segment,
and are encouraged by the $3.3 million backlog. While our near-term focus
remains on delivering our IterisPeMS performance measurement and management
software to public agencies, we are planning for iPerform to pursue commercial
opportunities in the media and automotive sectors, offering both data services
and analytics.

“In spite of the challenging third quarter, our overall business outlook
remains strong as we continue to strengthen our foundation with software-based
traffic management solutions,” concluded Mohaddes. “We are committed to
further expanding our sales, marketing, and research and development teams,
particularly within iPerform, and anticipate announcing further developments
in the coming quarters. Both the public and commercial markets are much in
need of our traffic data services and analytics, and we believe our
investments in this area will build shareholder value.”

Conference Call

Iteris will conduct a conference call later today (January 24, 2013) at 4:30
p.m. ET (1:30 p.m. PT) to discuss its fiscal third quarter results. Iteris’
CEO Abbas Mohaddes and CFO Jim Miele will host the call, followed by a
question-and-answer period. 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 Liolios Group at 1-949-574-3860.

Date: Thursday, January 24, 2013
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Dial-In Number: 1-877-941-2068
International: 1-480-629-9712
Conference ID#: 4585995

The conference call will be broadcast live and available for replay via the
investor relations section of the Iteris website at: www.iteris.com.

A telephone replay of the call will also be available after 7:30 p.m. ET on
the same day through February 7, 2013.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay pin number: 4585995

About Iteris, Inc.

Iteris Inc. is a leader in providing intelligent information solutions to the
traffic management market. The company is focused on the development and
application of advanced technologies and software-based information systems
that reduce traffic congestion, provide measurement, management and predictive
traffic analytics, and improve the safety of surface transportation systems.
By combining its patented products, decades of expertise in traffic
management, and information technologies, Iteris offers a broad range of
Intelligent Transportation System (“ITS”) solutions to customers worldwide.
The firm is headquartered in Santa Ana, California, with offices nationwide
and in the Middle East. For more information, please call 888-329-4483 or
visit www.iteris.com. You can also visit us on Facebook, Twitter, and YouTube.

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:

This earnings release contains forward-looking statements based on our current
expectations, estimates, and projections about our business, our industry, the
U.S. and global economies, federal funding for transportation and
infrastructure projects as well as management's beliefs, and certain
assumptions made by us. Words such as “anticipates,” “expects,” “intends,”
“plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will,” and
variations of these words are intended to identify forward-looking statements.
Such statements speak only as of the date hereof and are subject to change. We
undertake no obligation to revise or update publicly any forward-looking
statements for any reason. These statements include, but are not limited to,
statements about the Company’s expansion and business strategies and
anticipated growth opportunities, the impact and success of new product
introductions and acquisitions, our future performance, growth, operating
results, financial condition and prospects, and the market demand for and
acceptance of our products, technologies and services. Such statements are not
guarantees of future performance and are subject to certain risks,
uncertainties, and assumptions that are difficult to predict. Accordingly, our
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, as well as
constraints and budget delays; the timing and amount of government funds
allocated to overall transportation infrastructure projects and the
transportation industry; the potential impact of the newly passed Federal
Highway Bill on the Intelligent Transportation industry and the expected
benefits to Iteris; 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 basis; our ability to specify, develop, complete,
introduce, market, and transition our products and technologies to volume
production in a timely manner; 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 develop, market and sell software-based solutions,
specifically our IterisPeMS software; our ability to successfully identify,
complete and integrate acquisitions of products, technologies and companies;
our ability to further expand our revenues and introduce and gain broad
acceptance for new and recently introduced technologies, products or services
and the 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, is 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

                                                    December 31,  March 31,
                                                     2012           2012
                                                     (unaudited)
ASSETS:
Cash                                                 $   19,714     $  18,701
Trade accounts receivable, net                       8,458          11,081
Costs and estimated earnings in excess of billings   6,903          5,360
on uncompleted contracts
Inventories                                          2,907          2,454
Prepaid expenses and other current assets            1,321          425
Current portion of deferred income taxes             2,904          2,904
Total current assets                                     42,207        40,925
                                                                       
Long-term portion of deferred income taxes               5,757         6,761
Property and equipment, net                          1,734          1,948
Goodwill                                             17,318         17,318
Intangible and other assets, net                     2,470          2,788
Total assets                                         $   69,486     $  69,740
                                                                    
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Accounts payable and other current liabilities       $   11,531     $  11,926
Term debt                                            -              634
Total current liabilities                            11,531         12,560
Long-term liabilities                                   1,057        1,708
Total liabilities                                        12,588        14,268
Stockholders’ equity                                    56,898       55,472
Total liabilities and stockholders’ equity           $   69,486     $  69,740



ITERIS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

                            Three Months Ended       Nine Months Ended
                             December 31,              December 31,
                             2012        2011         2012        2011
                                                                    
Total revenues               $ 13,994     $ 14,881     $ 45,802     $ 43,166
Cost of revenues              8,843      9,417      28,316     25,828 
Gross profit                   5,151        5,464        17,486       17,338
                                                                    
Operating expenses:
Selling, general and           4,382        4,371        13,509       13,501
administrative
Research and development       902          868          2,369        2,476
Amortization of intangible     161          141          483          343
assets
Change in fair value of
contingent acquisition        133        (281   )    (188   )    (639   )
consideration
Total operating expenses      5,578      5,099      16,173     15,681 
Operating income (loss)        (427   )     365          1,313        1,657
Non-operating income
(expense):
Other income, net              1            3            9            4
Interest income (expense)     12         (13    )    (2     )    (64    )
net
Income (loss) from
continuing operations          (414   )     355          1,320        1,597
before income taxes
Benefit (provision) for       120        263        (475   )    (715   )
income taxes
Income (loss) from             (294   )     618          845          882
continuing operations
Gain on sale of
discontinued operation,        1,391        129          1,478        1,244
net of tax
Gain from discontinued        -          -          -          28     
operation, net of tax
Net income                   $ 1,097     $ 747       $ 2,323     $ 2,154  
                                                                    
                                                                    
Income (loss) per share
from continuing operations   $ (0.01  )   $ 0.02      $ 0.03      $ 0.03   
- basic and diluted
Gain per share from sale
of discontinued operation    $ 0.04      $ 0.00      $ 0.04      $ 0.04   
- basic and diluted
Income per share from
discontinued operation -     $ -         $ -         $ -         $ 0.00   
basic and diluted
Net income per share -       $ 0.03      $ 0.02      $ 0.07      $ 0.06   
basic and diluted
                                                                    
Shares used in basic per      33,532     34,217     33,657     34,337 
share calculations
Shares used in diluted per    33,641     34,271     33,759     34,443 
share calculations



ITERIS, INC.
UNAUDITED SEGMENT REPORTING DETAILS
(in thousands)

                         Roadway   Transportation            
                          Sensors    Systems          iPerform    Iteris, Inc.
                                                                  
Three Months Ended
December 31, 2012
Total revenues            $ 5,081    $    7,972       $ 941       $  13,994
                                                                  
Segment operating         $ 243      $    981         $ 66        $  1,290
income
Corporate and other                                                 (1,717  )
income (expense), net
Operating loss                                                    $  (427    )
                                                                  
                          Roadway    Transportation
                          Sensors    Systems          iPerform    Iteris, Inc.
                                                                  
Nine Months Ended
December 31, 2012
Total revenues            $ 19,485   $    23,786      $ 2,531     $  45,802
                                                                  
Segment operating         $ 3,228    $    2,559       $ (69   )   $  5,718
income (loss)
Corporate and other                                                 (4,405  )
income (expense), net
Operating income                                                  $  1,313   
                                                                  
                                                                  
                          Roadway    Transportation
                          Sensors    Systems          iPerform    Iteris, Inc.
                                                                  
Three Months Ended
December 31, 2011 *
Total revenues            $ 6,598    $    7,994       $ 289       $  14,881
                                                                  
Segment operating         $ 840      $    654         $ (52   )   $  1,442
income (loss)
Corporate and other                                                 (1,077  )
income (expense), net
Operating income                                                  $  365     
                                                                  
                          Roadway    Transportation
                          Sensors    Systems          iPerform    Iteris, Inc.
                                                                  
Nine Months Ended
December 31, 2011 *
Total revenues            $ 21,234   $    21,643      $ 289       $  43,166
                                                                  
Segment operating         $ 4,087    $    1,742       $ (52   )   $  5,777
income (loss)
Corporate and other                                                 (4,120  )
income (expense), net
Operating income                                                  $  1,657   

* Segment information has been restated to conform with current year
presentation


Contact:

Liolios Group, Inc.
Scott Liolios or Cody Slach
Investor Relations
Tel: 1-949-574-3860
ITI@liolios.com
 
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