iti-20231231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________________________

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-08762

ITERIS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

1250 S. Capital of Texas Hwy., Building 1, Suite 330

Austin, Texas

(Address of principal executive office)

95-2588496

(I.R.S. Employer

Identification No.)

78746

(Zip Code)

(512) 382-9669

(Registrant’s telephone number, including area code)

(Former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.10 par value

ITI

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of February 2, 2024, there were 42,908,024 shares of our common stock outstanding.

Table of Contents

Table of Contents

ITERIS, INC.

Quarterly Report on Form 10-Q

Table of Contents


PART I.	FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS	1

	UNAUDITED CONDENSED BALANCE SHEETS AT DECEMBER 31, 2023 AND MARCH 31, 2023	1

	UNAUDITED CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2023 AND 2022	2

	UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2023 AND 2022	3

	UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2023 AND 2022	4

	NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33

ITEM 4.	CONTROLS AND PROCEDURES	33

PART II.	OTHER INFORMATION	35

ITEM 1.	LEGAL PROCEEDINGS	35

ITEM 1A.	RISK FACTORS	35

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	35

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	35

ITEM 4.	MINE SAFETY DISCLOSURES	36

ITEM 5.	OTHER INFORMATION	36

ITEM 6.	EXHIBITS	37

Unless otherwise indicated in this report, the “Company,” “we,” “us” and “our” refer to Iteris, Inc. ClearMobility®, Iteris®, and Vantage® are among, but not all of, the trademarks of Iteris, Inc. Any other trademarks or trade names mentioned herein are the property of their respective owners.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Iteris, Inc.

Unaudited Condensed Balance Sheets

(In thousands, except par values)


	December 31, 2023		March 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	21,185	$	16,587
Restricted cash	338		140
Trade accounts receivable, net of allowance for doubtful accounts of $418 and $357 at December 31, 2023 and March 31, 2023, respectively	24,859		23,809
Unbilled accounts receivable	8,596		8,349
Inventories	11,456		10,841
Prepaid expenses and other current assets	3,615		3,128
Total current assets	70,049		62,854
Property and equipment, net	1,290		1,297
Right-of-use assets	7,332		8,345
Intangible assets, net	10,021		10,190
Goodwill	28,340		28,340
Other assets	570		768
Total assets	$	117,602	$	111,794
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	14,249	$	12,943
Accrued payroll and related expenses	10,877		12,923
Accrued liabilities	5,304		5,453
Deferred revenue	8,619		6,720
Total current liabilities	39,049		38,039
Lease liabilities	6,301		7,641
Deferred income taxes	483		422
Unrecognized tax benefits	38		79
Other long-term liabilities	3,159		2,707
Total liabilities	49,030		48,888
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $1.00 par value:
Authorized shares — 2,000
Issued and outstanding shares — none	—		—
Common stock, $0.10 par value:
Authorized shares - 70,000 at December 31, 2023 and March 31, 2023
Issued and outstanding shares — 42,793 at December 31, 2023 and 42,808 at March 31, 2023	4,280		4,282
Treasury stock	(15)		(891)
Additional paid-in capital	192,876		190,082
Accumulated deficit	(128,569)		(130,567)
Total stockholders' equity	68,572		62,906
Total liabilities and stockholders' equity	$	117,602	$	111,794

See accompanying Notes to Unaudited Condensed Financial Statements

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Iteris, Inc.

Unaudited Condensed Statements of Operations

(In thousands, except per share amounts)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022

Product revenues	$	23,133	$	22,852	$	70,189	$	60,021
Service revenues	18,996		17,834		59,048		53,591
Total revenues	42,129		40,686		129,237		113,612
Cost of product revenues	12,985		15,981		38,175		47,664
Cost of service revenues	13,595		12,885		42,446		37,418
Cost of revenues	26,580		28,866		80,621		85,082
Gross profit	15,549		11,820		48,616		28,530
Operating expenses:
General and administrative	5,226		5,499		17,371		16,904
Sales and marketing	6,421		5,780		18,947		16,652
Research and development	2,858		2,047		7,531		6,356
Amortization of intangible assets	650		651		1,952		1,970
Restructuring charges	—		—		—		707
Total operating expenses	15,155		13,977		45,801		42,589
Operating income (loss)	394		(2,157)		2,815		(14,059)
Non-operating income (expense):
Other income, net	141		135		388		229
Interest income (expense), net	39		—		109		(332)
Income (loss) before income taxes	574		(2,022)		3,312		(14,162)
Provision for income taxes	(219)		(27)		(281)		(149)



Net income (loss)	$	355	$	(2,049)	$	3,031	$	(14,311)

Net income (loss) per common share
Basic net income (loss) per share	$	0.01	$	(0.05)	$	0.07	$	(0.34)
Diluted net income (loss) per share	$	0.01	$	(0.05)	$	0.07	$	(0.34)

Shares used in basic per share calculations	42,944		42,341		42,798		42,336
Shares used in diluted per share calculations	43,784		42,341		43,762		42,336

See accompanying Notes to Unaudited Condensed Financial Statements

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Iteris, Inc.

Unaudited Condensed Statements of Cash Flows

(In thousands)


	Nine Months Ended December 31,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	3,031	$	(14,311)



Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Right-of-use asset non-cash expense	1,547		2,839
Deferred income taxes	20		36
Depreciation of property and equipment	422		461
Stock-based compensation	2,218		1,982
Amortization of intangible assets	2,349		2,396
Loss on disposal of equipment	—		8
Changes in operating assets and liabilities:
Trade accounts receivable	(1,050)		1,171
Unbilled accounts receivable and deferred revenue	2,104		(1,174)
Inventories	(615)		(4,500)
Prepaid expenses and other assets	(289)		534
Trade accounts payable and accrued expenses	(1,178)		1,809
Operating lease liabilities	(1,874)		(2,066)
Net cash provided by (used in) operating activities	6,685		(10,815)
Net cash used in operating activities - discontinued operations	—		(329)
Net cash provided by (used in) operating activities	6,685		(11,144)
Cash flows from investing activities
Purchases of property and equipment	(415)		(512)
Capitalized software development costs	(1,891)		(992)
Net cash used in investing activities	(2,306)		(1,504)


Cash flows from financing activities
Proceeds from stock option exercises	362		45
Proceeds from ESPP purchases	268		232
Tax withholding payments for net share settlements of restricted stock units	(30)		(61)
Repurchases of common stock	(183)		(884)
Net cash provided by (used in) financing activities	417		(668)
Increase (decrease) in cash, cash equivalents and restricted cash	4,796		(13,316)
Cash, cash equivalents and restricted cash at beginning of period	16,727		23,809
Cash, cash equivalents and restricted cash at end of period	$	21,523	$	10,493
Supplemental cash flow information:


Supplemental schedule of non-cash investing and financing activities:
Lease liabilities arising from obtaining right-of-use assets	$	534	$	291
Capitalized software development costs in accounts payable and accrued liabilities	$	532	$	—

See accompanying Notes to Unaudited Condensed Financial Statements

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Iteris, Inc.

Unaudited Condensed Statements of Stockholders’ Equity

(In thousands)


	THREE AND NINE MONTHS ENDED DECEMBER 31, 2023
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2023	42,808	$	4,282	369	$	(891)	$	190,082	$	(130,567)	$	62,906
Stock option exercises	60	6		—	—		251		—		257
Issuance of shares pursuant to vesting of restricted stock units, net of payroll withholding taxes	1	—		—	—		(6)		—		(6)
Stock-based compensation	—	—		—	—		525		—		525

Net income	—	—		—	—		—		2,125		2,125
Balance at June 30, 2023	42,869	$	4,288	369	$	(891)	$	190,852	$	(128,442)	$	65,807
Stock option exercises	44	4		—	—		83		—		87
Issuance of shares pursuant to Employee Stock Purchase Plan	92	9		—	—		259		—		268
Stock-based compensation	—	—		—	—		871		—		871
Issuance of shares pursuant to vesting of restricted stock units, net of payroll withholding taxes	78	8		—	—		(12)		—		(4)
Issuance of shares pursuant to vesting of performance stock units, net of payroll withholding taxes	40	4		—	—		(18)		—		(14)
Treasury stock retirement	(300)	(30)		(300)	884		—		(854)		—
Deferred shares held within rabbi trust	—	—		22	(2)		2		—		—
Net income	—	—		—	—		—		551		551
Balance at September 30, 2023	42,823	$	4,283	91	$	(9)	$	192,037	$	(128,745)	$	67,566
Stock option exercises	5	1		—	—		17		—		18
Stock-based compensation	—	—		—	—		822		—		822
Issuance of shares pursuant to vesting of restricted stock units, net of payroll withholding taxes	5	—		—	—		(6)		—		(6)
Repurchase of common stock	—	—		40	(183)		—		—		(183)
Treasury stock retirement	(40)	(4)		(40)	183		—		(179)		—
Deferred shares held within rabbi trust	—	—		60	(6)		6		—		—
Net income	—	—		—	—		—		355		355
Balance at December 31, 2023	42,793	$	4,280	151	$	(15)	$	192,876	$	(128,569)	$	68,572

See accompanying Notes to Unaudited Condensed Financial Statements

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Iteris, Inc.

Unaudited Condensed Statements of Stockholders’ Equity

(In thousands)

(Continued)


	THREE AND NINE MONTHS ENDED DECEMBER 31, 2022
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount		Shares	Amount


Balance at March 31, 2022	42,416	$	4,242	—	$	—	$	186,720	$	(115,712)	$	75,250
Stock option exercises	1	—		—	—		1		—		1
Issuance of shares pursuant to vesting of restricted stock units, net of payroll withholding taxes	4	—		—	—		24		—		24
Stock-based compensation	—	—		—	—		848		—		848
Treasury stock purchases	—	—		300	(884)		—		—		(884)
Net loss	—	—		—	—		—		(4,865)		(4,865)
Balance at June 30, 2022	42,421	$	4,242	300	$	(884)	$	187,593	$	(120,577)	$	70,374
Stock option exercises	27	3		—	—		41		—		44
Issuance of shares pursuant to Employee Stock Purchase Plan	84	9		—	—		223		—		232
Stock-based compensation	—	—		—	—		696		—		696
Issuance of shares pursuant to vesting of restricted stock units, net of payroll withholding taxes	108	11		—	—		(94)		—		(83)
Net loss	—	—		—	—		—		(7,397)		(7,397)

SEC Form 10-Q filed by Iteris Inc.