Iteris Reports Record Fourth Quarter Revenue of $26.1 Million

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, 2019.

Fiscal Fourth Quarter 2019 Financial Highlights

• Record total revenue of $26.1 million, up 3.2% year over year and 12.8% sequentially
• Total net bookings of $24.1 million, up 64.2% year over year and 12.5% sequentially
• Transportation Systems revenue of $12.9 million, down 1.1% year over year and up 14.2% sequentially
• Agriculture and Weather Analytics revenue of $1.7 million, up 22.9% year over year and 10.0% sequentially
• Roadway Sensors revenue of $11.4 million, up 6.0% year over year and 11.6% sequentially

Fiscal Full Year 2019 Financial Highlights

• Total revenue of $99.1 million, down 4.4% year over year
• Total net bookings of $107.1 million, up 23.5% year over year
• Transportation Systems revenue of $49.8 million, down 8.6% year over year
• Agriculture and Weather Analytics revenue of $5.8 million, up 18.9% year over year
• Roadway Sensors revenue of $43.5 million, down 2.0% year over year

Management commentary

"We are pleased to resume growth and report record fourth quarter revenue,” said Joe Bergera, president and CEO. "We began fiscal year 2019 with atypical headwinds due to structural changes to two of our largest customer contracts, which masked the underlying strength of our business model. At this time, we have largely retired those headwinds and expect the business to normalize in fiscal year 2020.”

"During fiscal year 2019, Iteris continued to introduce innovative new solutions to capitalize on favorable secular trends in both our markets – smart transportation and digital agriculture. As a result, our total fiscal year 2019 net bookings increased 23.5% to $107 million. The demonstrated demand for our products and services is further confirmation that our business fundamentals are solid and aligned with market trends.”

GAAP Fiscal Fourth Quarter 2019 Financial Results

Total revenue in the fourth quarter of fiscal 2019 increased 3.2% to $26.1 million compared with $25.3 million in the same quarter a year ago. The fourth quarter saw increases of 22.9% in Agriculture and Weather Analytics and 6.0% in Roadway Sensors. This was offset by a decrease of 1.1% in Transportation Systems.

Operating expenses in the fourth quarter were $12.3 million, compared with $12.8 million in the same quarter a year ago. The decrease was primarily due to the absence of costs related to the restructuring of our Agriculture and Weather Analytics segment sales organization to support the segment’s updated go-to-market strategy, which took place in the fourth quarter of fiscal 2018.

Operating loss in the fourth quarter was $2.5 million, compared with an operating loss of $2.8 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 $2.4 million, or ($0.07) per share in the year-ago quarter.

GAAP Fiscal 2019 Full Year Financial Results

Total revenue in fiscal 2019 decreased 4.4% to $99.1 million, compared with $103.7 million in fiscal 2018. The decrease was driven primarily by an 8.6% decrease in Transportation Systems, and a 2.0% decrease in Roadway Sensors year over year. This was slightly offset by an 18.9% increase Agriculture and Weather Analytics year over year.

Operating expenses for fiscal year 2019 were $46.6 million, compared with $45.4 million for the previous year period. The increase was primarily due to an increase in business development costs aimed at the pursuit of large contracts in the Transportation Systems segment.

Operating loss in fiscal 2019 was $8.0 million, compared with an operating loss of $5.6 million in fiscal 2018. Net loss in fiscal 2019 was approximately $7.8 million, or ($0.23) per share, compared with net loss of approximately $3.5 million, or ($0.11) per share, in fiscal 2018, 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 in fiscal 2018.

Non-GAAP Fiscal Q4 2019 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-based compensation; (b) depreciation; (c) amortization; (d) Agriculture and Weather Analytics segment realignment; (e) loss on impairment of goodwill; (f) the estimated tax effect of the foregoing non-GAAP adjustments; and (g) the impact of the 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, 2019, 2018 and 2017.

Non-GAAP operating expenses in the fourth quarter was relatively consistent at $11.5 million, compared with $11.6 million in the same quarter a year ago. Non-GAAP operating loss in the fourth quarter was relatively consistent at $1.4 million, compared with an operating loss of $1.4 million in the same quarter a year ago. Non-GAAP net loss in the fourth quarter was approximately $1.3 million, or ($0.04) per share, compared with a net loss of approximately $1.4 million, or ($0.04) per share, in the same quarter a year ago.

Non-GAAP Fiscal 2019 Full Year Financial Results

Non-GAAP operating expenses in fiscal 2019 were $43.3 million, compared with $42.2 million in fiscal 2018. The increase was primarily attributable to an increase in business development costs aimed at the pursuit of large contracts in the Transportation Systems segment. Non-GAAP net loss for fiscal 2019 was approximately $3.7 million or $(0.11) per share, compared with a net loss of approximately $1.4 million, or $(0.04) per share, for fiscal 2018.

Earnings Conference Call

Iteris will conduct a conference call today to discuss its fiscal fourth quarter and full year 2019 results.

Date: Monday, June 3, 2019
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific Time)
Toll-free dial-in number: 1-888-204-4368
International dial-in number: +1 720-543-0214
Conference ID: 5091277

To listen to the live or archived webcast of the earnings call or to view the press release, please visit the investor relations section of the Iteris website at www.iteris.com.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through June 10, 2019. 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 impact and success of new product introductions and acquisitions, our future performance, growth and profitability, operating results, financial condition and prospects, and new management team. 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; the potential impact of product and service offerings from competitors and such competitors’ patent coverage and claims; 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).

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 measures in this release: non-GAAP operating expenses, non-GAAP operating (loss) income, non-GAAP net income and non-GAAP basic and diluted earnings per share from continuing operations. These non-GAAP financial measures exclude the following items: (a) stock-based compensation; (b) depreciation; (c) amortization; (d) Agriculture and Weather Analytics segment realignment; (e) loss on impairment of goodwill; (f) the estimated tax effect of the foregoing non-GAAP adjustments; and (g) the impact of the Tax Act .

Iteris believes that the presentation of these non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to its financial condition and results of operations. Iteris’ management believes that the use of these non-GAAP financial measures provides consistency and comparability among and between results from prior periods or forecasts and future prospects, and also facilitates comparisons with other companies in its industry. The company’s management believes that the exclusion of the items described above provides insight into core operating results, the ability to generate cash and underlying business trends affecting performance. Iteris has chosen to provide this information to investors to enable them to perform additional analysis of past, present and future operating performance, and as a supplemental means to evaluate ongoing core operations.

Management uses certain non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies' financial information and should be considered as a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

Details of the items excluded from GAAP financial results in calculating non-GAAP financial measures and explanatory footnotes are as follows:

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