ITI - Earnings call 2 2024

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Operator

Good day, and welcome to the Iteris Fiscal Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations. Sir, please go ahead.

Todd Kehrli

Thank you, operator. XX, thank Iteris' participating fiscal financial quarter on and call today's XXXX everyone, ending discuss to results September afternoon, you in for conference second Good XXXX. for its

President Joining us the CFO, Kerry Mr. CEO, Joe Bergera; company's and Shiba. today and Mr. Iteris' are

our their open advance submitted were in for XX, the to company in the Following the October questions covering call, company's instructions that the remarks, investor release Then analysts. questions we'll of XXXX. per sell-side we call dated from press will answer the

risk and X-K, to statements. refers specifically which SEC, cause could should any today valid. time future Before participants from obligation the company's recent of to forward-looking the in be the substantially will undertaking is we subject future we forward-looking documents those to remind are performance. still may in a comments XX-Q of Iteris materially statements Actual discussed change continue, events we'd like on Forms identify company, Iteris regarding that the important the from at that today, to no forward-looking company's statements results updates may to and an XX-K, all based factors time differ contain to the these most future. and statements performance what later call, during assume information, are this is differ to results the future that of company and from which the with of that the not current actual from are are provide guarantees not files one you date, contained make that

Investors company's www.iteris.com. today's find website you'll always, the replay of of the on a section at As call webcast

turn I'd President over Joe, the proceed. please and CEO, Now Iteris' Mr. Joe Bergera. to to like call

Joseph Bergera

XXXX XXXX of attribute total to of representing fiscal afternoon $XX.X good million $XX.X an increase and reported first fiscal and record and growth products subcontractor half you revenue XX% and today. services, all Todd, of I high We rate everyone. quarter you, on respectively. large Thank total of quarter of and projects, to due XX% milestones handful second joining us appreciate in dependencies Iteris Great. achieving revenue strong benefited million, revenue a delayed of demand key of consulting level first previously the deliverables, to which and also our a half. were our from we second for our year-over-year,

$XX.X margin that XXXX reported on basis and first efficiency, half second first fiscal our X,XXX and behind X,XXX our points, profitability gross our dynamics focus million improvement increased we half million, gross basis, our to Our of adjusted quarter representing a chain year-over-year, million increased fiscal EBITDA minutes, $X.X points margins more will supply In issues respectively. fiscal in Due an demonstrates and basis improvement improvement margins on further continued gross a few The $X.X $X.X gross adjusted second are quarter year-over-year detail. operating and respectively. of EBITDA Kerry XXXX margin significant million XXXX address us.

second XXXX total the ClearMobility very of first with an XX% bookings bookings respectively. and representing remains representing Customer ended strong. year-over-year. fiscal total million, million, total strong reported September year-over-year, $XX.X of quarter $XXX to a of results, XXXX half XX, our increase backlog and million we XX% that adoption X% $XX.X of ending period increase Due an record Platform bookings net We of net

our contracts, value total of net any value. customer The ending figures our backlog XXX% which firm total always, orders from reflect As and basis quarter-to-quarter, than backlog. averages about vary a total will bookings on rather customer historical contract our of

about our the share like I'd product portfolio. to some point, this details of performance At

related and first second quarter respectively. half hardware, When products, revenue XX% we million and $XX.X For to representing the sensors year-over-year, of due strong for of X% reported collectively to we of rate priorities historical market commercial market of everything solid categories, solid modernization intersection both second our a refer third-party first ] initiatives, growth XXXX penetrate to include in growth. our and performance. annual superior share in progress adjacent more compared of million, our including vehicle than Xx increase average disproportionate average as is cellular which fiscal continue rate CVXX and the to connected priorities. recurring leveraging market and and fiscal execution category, our rate $XX.X against continue and to our also growth attaching product key revenue XXXX to X% detection teams The to to a a the make Spectra the sensors. sensors half, XX% continued and large-scale Indeed, share, product or revenue business take growing significant features to our categories, Vantage emerging vehicle quarter leadership These the [ winning

[ Vantage modernization order and Vantage Vantage Valley Apex initiative. of Live initiative; quarter customer California for of Vantage Maricopa a include: new is with our detection detection Cedar sensors a modernization the ClearGuide a in notable connected master in purchase in deploy Vantage which our Coachella Park, intersection ] ClearGuide system second of system, comprehensive Governments agreement purchase For and arterial from comprehensive modernization populous multiyear Arizona, fourth software Texas the region-wide most time phase Association nation, a County software our Vantage the sensors initiative, Apex which agreement example, XXXX signal with several use to commitments years; city new second some our citywide for purchase travel county signal for fiscal the over a a our Live detection next be for and Next Blue system, the will vehicle and the Toad to Live executed software intersection and

New for X deployments first second districts State [ our of Richardson, You the from first citywide the of from York X and recently. ] award of for phase system, purchase VantageRadius and may system. orders detection recall Transportation Vantage our the a Plus purchase deployment A in me about Texas speaking phase Department order of Apex the

added as market year. VantageRadius product reminder, our York was represents the state's a last Iteris, new As product of first to only State qualified a the list New for geographic

I as services and various review portfolio, revenue service $XX.X million, to representing increase and XX% performance Service year-over-year, Software record Service our services, service respectively. million X% a half Data our which of as second includes a services, revenue a consulting Now and quarter offers. want of the XXXX managed $XX.X We fiscal reported of first

growth strong revenue recognition customer with projects of earlier, finally to As service strong benefit large a dependencies that noted milestones. achieved from consulting attributable our couple is revenue timing with some largely demand, subcontractor

second fiscal internal first to we and consulting half, to continue progress on our quarter capacity. XXXX initiatives During labor make improve our

also average We improved per headcount. revenue increasing labor our utilization,

to margins improvement remains labor to in predict, growth contribute we future. expect of mix capacity While and the revenue the growth to our labor in our the pace improving gross while difficult also

drive and portfolio, of in with product a state with market for intelligent following Intelligent electrification; alone, and vehicle transportation, software; than a we Department the agreement develop an as Transportation for confidential strong. reference for and the assessment new architecture first including Florida Software with provide level the our analytics for for to District our Transportation; and Service the second second Systems agencies to development million U.S. use million data of $XX.X communication service half and with bookings: of in automotive notable more the the the of task fiscal the standards quarter million corridor our cooperative In X Data remains as a integrated portfolio XXXX North definition As American consulting the million the infrastructure year-over-year, a $X.X $X.X $X $X of our California; Service contract various global of nation's management a very Ventura to net vehicle of in service new recorded for agreement local to respectively. agreements order quarter for and XX% or services services X% $XX.X demand a representing Department Transportation million-plus of increase and bookings We OEM. a reported million, ClearGuide a County

agencies, ability unique traveling among not ecosystem various operators entities. and our enable and in owner collaboration of the owner mobility public to infrastructure public users, between infrastructure operators, illustrate bookings various only commercial but infrastructure These or other including words, the mobility mobility

introduce customer ClearMobility our we strong of sustain and platform, solutions to new feature adoption important continue To enhancements.

For example, the and released transit and we a first XXXX time and quarter half, well in and version travel signals. as our prioritization data signal vehicle presentation system, features Alpha collection of ClearGuide next-generation fiscal second connected new as

second pleased ending very fiscal we're first half summary, with XXXX bookings adjusted and EBITDA, and quarter net revenue, our In backlog. our

in our source platform to believe which superior degree continue of bolster the business market, we will significant continue to strategy high we platform-based a progress will in position very of growth. scalability and our enhance industry. evolving to the fragmentation a complexity of as and our progress value Additionally, Due model, solution this repeatability, collaboration, to end make

On that to and XXXX back come third second color further the more our quarter for on note, our expectations full the provide for half pass which fiscal Kerry I'll I'll results, and the to to financial after first mic year. discuss quarter

Kerry A. Shiba

year, view was loading This want described that shortages our good year-to-year I of back-end record also fed be exciting some everyone. our growth to looking the as strong especially you that by shape backlog by at compared to commercial you but progress first when and Joe XXXX our in only when to resulted afternoon first anomaly first demonstrated comparisons, underscore bookings. Also, already in supply revenue market revenues. evident and fiscal has progress was last to strength especially curve remind double-digit was the Joe, I half quarter, quarter detail, occurring Because our in or revenue the impacted year, I evident in our of Thanks, evening, noted results. chain want continues half in of a last which a that by

third typical exhibit not Joe half. fiscal fiscal about discusses year when in XXXX. The revenue first occur half, roughly In -- X in sequential with Normally, occurred he And halves. between total usual XXXX, not where the in only seasonality, occurring XX% second year revenue revenue in again did XX-XX did the XX% address split the prior sorry, later design will is also this decline a of I'm the point our a quarter guidance.

commentary Joe Moving to down like gross the the provided. on would some the profit to income I expand line. statement

from this last variances noted, and far quarterly XXXX, Joe components, negative was million the year. $X.X fiscal worse purchase we performance for purchases year electronics of impact second semiconductors In and the largest chain price quarter same was quarter aftermarket was year. than of the other of last expensed which dynamics million $X.X As the in by our gross of reflected negative supply profit impact about fiscal

are issues what behind operational impacts now chain reiterate to the Just negative Joe XXXX and cost fiscal the said, us. of supply

XXXX which From a volume. $X.X is fiscal higher with profit Products approximately gross higher $XXX,XXX than XXX% improved X,XXX%, of improvement the of in supply million, increasing increased improvement consolidated year-over-year due reflective year. about perspective, profit gross second the overall, XX% driven chain X.X% higher by by profit gross improved prior quarter revenue. Services and to remainder the

at Looking gross margins.

quarter point more improvement for X,XXX in increase aggregate, of XX.X% points for XXX negative chain services. would to cost in fluctuations decline from The second clearly basis a a reflect was improved issues quarter. driven gross changes supply product XX.X% ongoing products, total. which reached the last offset expected this basis The in And the than by basis Products year for point us, year's second reaching current with behind be mix. margin year impact X,XXX

of same the the tight year's very mix same XX.X% prior when levels the to measured Gross from and decline points were year, spending a XX.X% aggregate was than resulting higher margin imposed year the cost higher In in period quarter in compared the this basis for period. of second revenue. a crisis. primarily prior labor as general, in controls experienced percentage second the year XXX for current midst subcontractor quarter of services year the higher last chain supply expenses in Operating with reflect

nearly a due to a The most significant ago. was XX% trying X the some costs with for years G&A settlement of terms companies contract which to G&A competitor, litigation is year agreement dispute increase the between the with a executed current particular in category, relitigate increase X of

compensation R&D some In the driver marketing in development. costs, costs, increased higher for we and Increased we and software a increase sales primary costs. to experienced expenses litigation were addition revenues equity in temporary also investment while the contractor adjustments to for

gross The just profit net factors revenue, explain to comparison in and discussed adjusted the and expense, operating related operating major EBITDA. fundamentally income income,

first compared to million quarter, a year million XXXX, This the last turnaround second million year. to EBITDA $X.X which the the at of balance $X.X $XX.X time of and million quarter, second of for period the prior was fiscal of -- the As million. higher Joe above year. at which end adjusted last mentioned, same the Total at the balance the for adjusted at last million, $X.X last an million end the was when over half quarter improvement EBITDA this slightly right brings cash same the $XX was year was $XX.X than of $XX.X

Cash flow balance quarter management. million million initially and paid quarter's the normally continues that discussed last for to last in the higher a and annual sheet $X this XX-Q. of included strong for year year's in contractor return payments payment reflect for prime combination a product a a from we improvement Form The bonuses second income to in quarter $X.X fiscal out second performance

While cutoffs, future improvement foundation balance for the improvement good going always provide can forward. sheet in be term sheet and management trajectory cash continued affected earnings balance around short the liquidity

I the XXXX that, and closing provide guidance turn With update our comments. some then to call discuss will who Joe, fiscal will now over back

Joseph Bergera

due mobility smart cloud the as connected long-term The management technology trends represents significant artificial been that's committed historic of opportunity federal Kerry. by Congress include funding that market the infrastructure XXXX, positive and infrastructure, vehicles. to you, Thank through Great. as intelligence and autonomous adoption well a

characterized products customer established by with costs is benefiting stickiness, a market services. switching the Additionally, high portfolio and of broad superior and companies

reach, customer extremely about remain optimistic brand the front capabilities, opportunity given of significant extensive our platform and the Iteris. long-term we Therefore, in equity of breadth

which fleet and public Fusion and enhance Vantage will events. operators at and ClearMobility sensor application in to accelerate which of for valuable features our will will edge XXXX, and artificial of vehicle Cloud; cloud in data connected cloud sensor our an our cloud-based aggressive capture international suite includes connected of strategy; a agencies, and connected streamline our portfolio introduction that and deliver data will new and includes a vehicle certain addition international ability for state-of-the-industry system Over road Iteris solutions data registration system major powered benefits presentation administration following the by continue fiscal vehicles, a balance to to against map that the next-generation planning for additional Apex the Vantage transportation line, the our identify, tax collection of significant intelligence in vehicle APIs; applications releases: our predict the verify sets that fuel ClearMobility commercial

improve We our our expect bookings of should release in support total rate as of dynamics size benefits, sets. the XXXX further an our drive other among individual these to increase fiscal plan data adoption customers expanding share bookings. continue our wallet to the monetization average of ClearMobility of and above-market well growth increase mobility existing as the Among Platform,

our operational to network, capacity portfolio, of our we'll the addition labor success on teams. consulting pursue priorities, function to distributor and In focusing of productivity of our solutions the key our customer continue maturity internal including

on As our labor improvement call earnings already internal have measurable a year-to-date reminder, prior our in the produced tactics a capacity. outlined

our Kerry which want some the build address X I guidance, points made. of on also has important Before dynamics. emphasize to that I And

prior year's our not year-over-year revenue in First, chain curve than since normal our the shipments comparisons seasonality half, XXXX into product second first half making did normal. supply half the reflect tougher pushed second fiscal some constraints

federal in cause second And of occur unlikely moved quarter temporary but degree but certainly we're that change some into to guidance some to was delays. half additionally, our of near-term funding uncertainty, first forward our revenue due to to the could year. is budget a anticipated Second, service levels fiscal conservatism applying XXXX long-range some this

revenue $XXX third which representing to to revenue by to we're we're total third of With quarter guidance year of our significant X% which our revenue of the $X year-over-year represent our million continues range million, the of expectations. range quarter end improvement and the midpoint. related mix for growth in $XX seasonality, million the low midpoint. represents and in $XX range reflects context, guidance fiscal respect XX% for at of XXXX to XXXX the X%, growth full year-over-year bringing providing providing million, million, a fiscal product X% at $XXX raising EBITDA We're organic new this normal range revenue, With to also to adjusted

million. EBITDA in We're for revenue XXXX maintaining range to cash fiscal flow well guidance X% to net of our our of X% an as margin the million the adjusted of in guidance as $XX fiscal $XX range XXXX

our representing XX% XX% additional in million a revenue Iteris fiscal progressive range midpoint. to result substantial a of estimate fiscal XXXX on track any benefits Looking X-year of anticipate revenue, achieve margins before target. beyond other million $XXX remains In the With XXXX, XXXX the the fiscal in in acquisitions, adjusted increase range XXXX believe words, to we continue to in we $XXX CAGR XX%. we Vision annual scale to of organic EBITDA revenue at from to

improvements Additionally, be XXXX our in would will would our that, acquisition targets. resume Operator, additive our open questions to up delighted line be enable we comments. Vision for please? could any and that, you to which With anticipate program, organic to respond Iteris liquidity to the we

Operator

with is Jeff first Yes, Riley. Instructions] Our [Operator from indeed. Van question Sinderen coming B.

Jeff Van Sinderen

bookings just circle seeing you maybe business your I that how Joe, actually manifest back activity start or could And guess, in the budget and customer and are continue? when uncertainty? or to customer projects federal we

Joseph Bergera

Sure.

projects right. the did see be shutdown, in in government order we some did And result, in So marketplace. clear, environment the execution. task some and a said, a But really as quarter, federal slip second will extremely I the our say delays remains about we're that as some overall, strong, to we of to bullish anticipation

resolution regarding or there be it's exactly continuing to we've of nature fact annual the a In unclear we to the what that, to budget. extend might will federal anticipate advise budget conserve look again, light like reach certain -- yet the administration and in processing of an agreement activities the begin to that to would Biden order funding, down agencies whether slow will

likely things, down half, slowing a the experienced as and so to second of And couple result shifting we in the in that's to probably right.

has again, at and period. then over funding revenue overall which we remain approved state result already X-year level, have that -- at And of for a which some the But third strong positive about local there our in collection IIJA, the as and a that allows really apologize. the the in sorry, I'm could but quarter effect we quarter, could I expect second environment, would slight Congress slowdowns, margin the negative be a

Jeff Van Sinderen

Okay. mean, That's on I through we get wood. hopefully, helpful. we're as the And that fourth quarter. then into Knock

budget? I what I and my needs sort far you what question than happen reacceleration, you thinking talked to So to manifest that guess year, other gave -- about the the be for guidance federal growth but for just about we know would of as as just feel

Joseph Bergera

Yes.

So we're growth target. the as hasn't guidance year, And anticipating XX%, again, at said, XXXX changed. That through growth. we're on clearly based our for again, anticipating midpoint current of about at XX% average the an of rate Vision of I the our midpoint, XXXX,

about want deceleration half. year is in comps, impacting this What kind the of it's make of year And the so first first talking prior half second very clear half the this rate the you the that to, year, second the anticipating of we I'm just comparisons of year-over-year any unusual not are right? all, I -- comparisons, at of in if look to growth

rate was prior revenue the again, it's strong. year-over-year not that unusual year look to be going as curve. to growth, the you if of Although due at But

market again, extremely is ahead, think going looking the But to robust. we remain

are Platform, in what strong continue and ClearMobility continue and met our to we already we'd smart really that out which make expect market has even acceptance, to investments We think with building marketplace. launching. the with accelerate capabilities And continue by we force sales we're that of in most think also to the some productive we or the sales have that new far channel

the execute like projecting the at to the any rates order absent externality, over years grow to think really of last XXXX. just we in and to we through we unusual continue that rate we're particularly So have that couple need

Jeff Van Sinderen

you mentioned capabilities. then And just product Okay.

second. The just new that developing, and So maybe there. on you you're to you that touch can for capabilities sensors we the that can have speak maybe a

Joseph Bergera

Yes, sure.

variety So the sensors sensors doing. really our of X major software, both some our are that at it using capabilities a artificial of in increasing And our an again, focus as and we're for cloud. at products, and And is a there safety. But level, lot focus all intelligence. our of the on we're things of us that edge exploiting the both well is as across

so we're going be talking that's lot. to And a about something

an the something for to increasing also will able of we expectation increasingly to discussed of to the the frankly, then a we're in the infrastructure become infrastructure we And our on to levels prevalent. think longer-term of unique already, communication. the over horizon, capitalize And positioning the focused and company creates be increasing availability that that And vehicle and additionally, need that connected because vehicles in remain we also position opportunity really position and, that. a on capitalize autonomy

products activity safety as to enabling broadly software those and And the autonomous we'll of vehicle that connect our more road So some of with generally again, are about launch in be map. sensors specific we'll we our respect referred my important of I that capabilities themes some be themes the both talking to for both X and script.

Operator

from question next with coming Sigdahl Ryan Our Craig-Hallum. is

Unknown Analyst

got for Raman Ryan. is gross ] on the a question This margin. on [ Matthew I

think a margin gross side, the we It's on about Just how rest the nicely the side. quarter-over-quarter, of but weaker the service do little product for year? on improved

Joseph Bergera

that? talk Kerry, want do you to to

Kerry A. Shiba

Sure.

anything is I second a we forward. it's And that think I think or again baseline fair quarter I may was unusual. still is forward. some the basically unexpected second going going think fluctuation mix-driven. see quarter I the that And the don't product slight think exhibiting downtick sequentially in

intersection would tend go certainly mix kind A happened be positions. the third-party products of the that of integrator the that We system. couple amount of things episodically in be, contractually an through to hitting oftentimes,

a that very, those on small, any, have and them. very markup we we certain So products if don't manufacture, and buy sell

they're a the to at secondarily, then the of not sensors, of sensors. economy we still expect have would volumes, in so new we introducing And are Apex achieved we term. low that our see medium our longer still relatively and line And scale

depending some products, big and affected. get in-line goes that, between some items, how then relatively but higher-value third-party going on fluctuations of Not quarter-to-quarter will So sensor be the as changes a of will to products small result our mix occur. these our it of some

Unknown Analyst

Okay. helpful. of side, then capacity. talked you out target know guys labor know in exiting about that last to on too. subcontractor Great. we're still called That's And capacity you Or the year kind the I closer guys on? the the kind Is of call, in quarter, of looking that that is at? kind that issue mid-teens I there growth going more

So...

Joseph Bergera

for Yes, sure.

the market highly to continues be technical transportation-related So particularly tight, disciplines. labor for

to a we continue so of energy it. put lot And against

where on year-to-date we nice a way labor about a need. to of we X/X As the probably capacity, actually I basis, us got mentioned, pretty saw increase our which in

or little remain that and can't the transportation about say a while the less they be say some there labor more be conditions that I'd in more expectation. needs second done work track to probably against easier tight, And focused to is of market ago, half. very It something these we're original it's disciplines. specific are overall, I maybe does bit and on same thing probably a on. clear, But we'll So year the the remain that were market than technical

not would we're that But overly I concerned. say

we're about progress the we we against think that I plan I less as feel making more plan expected. outlined. And that had we think or good

Operator

Mike Our next coming with Latimore question Northland. is from

Aditya Dagaonkar

Latimore. This and were some recurring? Could revenue is your on you give behalf Aditya bookings of what on Mike percentage color of

Joseph Bergera

to to you Yes. Kerry, talk do that? want

Kerry A. Shiba

the repeat you Could question again? sorry. I'm

Joseph Bergera

recurring? was What percent and of bookings revenue

Kerry A. Shiba

we at but very, roughly overall. very revenues a up Let's XX%. we've growth from revenues basis, been percent you high our -- to that rate We're about from it of see. of nominally, products mask On recurring percentage look growing a seeing at the when total, recurring a tends that in ended revenue as

Joseph Bergera

as growth they recurring -- I the were quarter. maybe bookings exceptionally XX% in high. also, was were then that believe XX%, think, reminder, for bookings But the And the high low I a

to I like first XX% the growth in think it quarter. was XX%

bookings -- to the for recurring total overall, that XX% revenue the above contribution of current revenue our believe through we XXXX. to revenue, meaning total So the for are first recurring on increase was the revenue I track of well continue that half, to

Aditya Dagaonkar

growth? the Any it. Got color on pipeline

Joseph Bergera

the sales remains yes, pipeline, as think strong. interest, consistent we our environment demand Platform market exceeding extremely said And that overall, adoption with expectations, I've The even so the that. ClearMobility before, Yes. original market of is perhaps

So when overall our remains continues healthy. it we look overall to pipeline, grow, extremely at

high. remain exceptionally win rates Our

X best I in All more I've pursue transactions. would say impacts continue us said that we before, of or probably does class more that transactions, to susceptible big they're in to industry. being our X that make those timing said, and as as more the large of on any

as for of and bookings that we again couple second example in very had extremely strong In perfect large growth. was bookings where had growth the a we in to transactions historic had quarter some period first bookings quarter result, the of the occur was it The in closed rate lower And that but we a actually had pulled in us, quarter first. first. that quarter, we a into second the than the bookings second was the we growth, anticipated

market. overall our in course, growth drive rates. growth our continued excess confident especially think and again, being expect, these of continue a growth will medium-term I of of lumpiness, long-term on we and in continued of large very, And we basis, revenue be more backlog about very as bookings to will that some continue overall, growth should transactions. market But pursue to to you degree feel ultimately, there But more superior

Operator

Our Instructions] Tim [Operator you. Thank Hutton. from Moore is with next question coming E.F.

Timothy Moore

companies, difficult lapping you, congratulations line, mean, next period service the just top not in year. the of sales products are half a of months. on a lot strong Thanks, the and of both facing the comps beat and and I X

So you're not an only boat.

that And a when perspective, I question. pretty the anymore. you're -- much for first not Kerry. a another and really an just with maybe from From now a follow of prior want one you -- thread chain on operational headwind done supply up Maybe much constraints to start

got hiring mostly You've and you the is drag this And finish circuit expansion margin eventually, be in-house the internal training. maybe boards. minimalized subcontractors' as usage

So I gross know you're look kind next to you out goal not quarter, summer June think you comp? a not of do margin or guidance, unrealistic is giving XX% next tough when after year lapped September you a stretch an quarter but

Kerry A. Shiba

continuing -- margin Yes. first mentioned, factors revenue two, one. going continue for the number you And help off, we'll to to area of continued growth improve manufacturing progression, the margin side Tim, the do leverage work on in works should basically, and see the think, also. our which in contribute that progressively better our OpEx, in when I certainly, to get there that us Number progression. the obviously, some area on improvement in I that to things leverage operationally, EBITDA think to are we're about business. the supply you that And our is are chain think sensor

I going to going to our mix, we as to that's that's continue a then obviously, positive to, think, improve point And labor also.

there's would what to going that in clearly sales see I So the forward. we wind think respect directionally with

Timothy Moore

your X/X way subcontractors to would be think Joe, accomplished? rate hiring Are less you appreciate by Kerry. expensive I get February? how kind then, more do color. XX%, need you of it, and That's And internal of you you'll Good. -- maybe the labor I helpful for for mean, or you of when January kind

Joseph Bergera

Yes, I first effect. will, we some actually point. would higher like began you kind to from that a quarter if the you lag as that expect see impact, of there's level initiatives in the a to introduce that because of would We've begun expect, at

that about forward. X/X the want reputation. future it's clear, And going a to focus going by the has just But my January. is this to people. it not of something to that continue -- And this tight. brand so for will We'd is, expect relatively the don't I expectation course, be labor to on way sure lost have would there to fantastic remain be yes, we'd make Iteris foreseeable we're be on markets I employee of

funnel, our engage really with finding interest we're and to by so candidates Iteris. candidates working as extend in with we more really, make And an effort strong basically those

we to our have especially want what rates, a sure labor make I and it speaking, tight market high attrition is. given everyone within again, certainly unusually generally probably that understands And industry,

and a we story. doing we've once want them get to because be people of So keep exciting employees lot part of our around a been here, things, of lot we

Timothy Moore

That's really helpful color.

Next question so, good, -- been the -- wins if them. very and months I've last and X In maybe the think contract and you of is I recording even Kerry have XX or it's you back kind last the been months. watching

at curious you really that maybe side is when from given are think you to of Service a topic I up get process revenue reached step $XX million that really margin Software scale, need a about solutions is I the margin. gross more least gross that recurring XX% virtualization investors or as cloud-based think

So do December you kind think that may maybe you year, get for can next still be to on inflection of Maybe that? you track point?

Joseph Bergera

to now be Tim, to December. will you like between comments think continue I'll Kerry, chime we next in. and to notable. will be offer And totally it I transparent, Well, and make progress then some I'd

through the statements. financial it will flow I think

be to early So inflection will hit December. critical I'm sure point see able whether next as But the progress you as that guys that making. will we not we're

of be think first be fiscal fiscal subsequent in that year. more likely year, which I to the subsequent the it's of the beginning would half

April sometime following of I'd September between and probably So year. the say

Kerry A. Shiba

think any I to or anything don't Tim. I to add add to have more color that that, to

Joseph Bergera

people Tim, to which think the there, then you you're benefit, to is not I get you well, going want sure, not like, do see don't want case. though, I any to make understand, until

along to improvements You continue the see will way. step

Timothy Moore

just a stick if seeing more targets then. No, ladder then any it's update mean, is and then Your for asking improvement That's funnel valuations yes, you're tuck-in And become hockey over incremental we of is no. gross something step push you months? totally another margin the get I little maybe of on about. more talked it. and bit And few a Kerry, the acquisition -- last reasonable on the appetite? I lastly, have

Joseph Bergera

you want at take do to a Kerry, that? crack

Kerry A. Shiba

anything actively we're liquidity Tim, a can start right there's to now. not new perspective position yes, sure search from where obviously, I'm to again. Well, if in report we a

acquisition, to careful in to know, fit accretive. -- of are for find a anybody the be technology, good want trying candidates are in still our looks fit for things We cost for be because that the we that as acquisitions all we But you process want to culture, leverage.

that in think have from to But -- the I with up We valuation companies. sell that probably still I smaller as expect I bit talked. the not wake more lag continue start to I in from, a side of the think, indicate late but that had reality guess significantly the changed would -- exhibit discussions expectations little these there's itself, have would we last the to time

expectations we're be I So to to with But would overall. same that on the not focus same overpay think I just remain going the also. careful and -- the we reiterate

Joseph Bergera

And expectations. are certain thing to are But some reached as the think that seeing more you that out sort of -- like like beginning are it's are that targets. that therefore, interest those expect, a I from profile kind the of Those I probably to wait accurate interested necessarily is Tim, to point not companies able potential realistic more more that of and, I X add of it a say who most are attractive position guess financial we would we might exhibit probably ones that kind that in. stronger we're in the to of companies targets

tug on there. bit a some pull and little there's going So of like

more targets. certainly that think funnel to we and with substantive I point, expand Kerry's increasingly to have to But conversations continue our various

those are be going necessarily to just about that be there the we're to want I that the that that fact actionable do probably believe right opportunities clear do get really before us. to long. would now interest greatest arguably of I are too So terribly not more But

Timothy Moore

hear That makes across that starting I'm industry. the sense. to

lot, and a those Joe thanks So Kerry, That's my thanks it for for insights. questions.

Joseph Bergera

Tim. Thanks, Great.

Kerry A. Shiba

Thanks, Tim.

Operator

Bergera, before are your you closing more questions answer no any like remarks? making Thank covering you. analysts. questions to investor Would there from Mr.

Joseph Bergera

X I and questions answer, wanted remarks. do have I that. to Thank We closing brief some that like very would investor actually to Yes. you. then I make will

to number the that, local discussed. And that formula the an formula overall agencies. we start have with increase Iteris seen has pipeline, infrastructure So increase budgets the general, since the state that the is opportunities whether and or to sales which last an investors, over size IIJA of flow local in opportunities see in has some an our of question answer system in started from and the to the increase due transportation is questions X size the begun in we quarters. funding first state flowing resulted did funding and to into In consistent of that's sales in just number in turn, the

resources them impacting not funding. impacting the said, That also to increase labor add have the us. been able many entire not however, market for program disperse And agencies internal and then just It's tight. remains that in really necessary that's to the the

funding awards and tail it's So continue contract to rather our last state length, be a the going agencies of statutory seen a dispensing that result, than we've local pretty to IIJA flow. X-year IIJA come steady And not as long even waves deploy are as to there's and agencies due the delay sort experiencing in right? expectation beyond really funding, a

It's to money agencies, money and going to clear, disperse but state be funding highly transfer So they're to fungible. nonspecific. or able be formula local is to

been that going fast state the expectation will that liked in that after to push term IIJANs to continue [ has certain And difficulty to to to of through so ]. do. And they that system some our and spend the occur the local be as able that's is have by all otherwise because would agencies we're as these order agencies we've there seen funds --

provide is All Streets on So question development whether of the initiatives. second an could update the Safe Iteris For

All the Streets grant of has in initial And XXX DoT or of Safe sum roadways. and National tranche Roadway grant it, action has nation's U.S. the of DoT's One planning the the average year to XXXX. of of a to of as as of call of for Safety or and also size who type you type calendar Strategy, is for those X defined so SSXA is implementation first other strategy referred And U.S. our supports tranche an SSXA of $XXX total quarter deaths injuries grant SSXA grants. And included or program million, grant grants. X is don't referred first know, represents $XXX,XXX. planning For goal grants. that X the announced a action on the U.S. grants grants which DoT types

of than grant implementation improvement public safety. XX% the that about details agencies to for domain, has in XX the meaning a And to is the about determined then to awarded After total awards that average money improve these planning technology of $XXX arguably grants. was the grants. they're size physical infrastructure, substantially the of grants the focused initial for out be there $XX million, about advanced of sum Iteris we're implementation used implementation talking more that reviewing now to that XX% grants the on going an million. included of larger Obviously, importantly, grants are it representing because

take contractor. noted implementation even grant or there's the then a federal award we take to additional funding issues will of XX able issue can a as for agency the from IIJA notice to before months U.S. to a fact to an task So planning executed. a in can it requirements due receives that that XX XX And And the in local to local task longer, grant to our the work, of before order that's a the it because of order white published grant. an programming action nature XX need be be months some September, DoT's under paper and agency

precluded task under implementation order. or in action who planning discussed work be performing a associated may as an an anyway, our white paper, So under from task work contractors order perform

planning over grants So grants larger, prioritizes to it's in be the implementation to orders because don't task actual related in grants precluded related those. task not want implementation pursuing we general, but always from general, to case, Iteris are orders and

XX% to of went technology $XX I issue is although agencies the a contract first is anyway, Iteris in grants. X for those total had And in physical focus and process of X on grants a implementation XX% executed infrastructure. already been that just been that assets final X as has local has million. value this the to And we're task can additional -- and So the represents very sum those total specified say of And early on task funding grants those with mentioned, that funding execution. SSXA to the all implementation such tranche then grants, for awarded Iteris action additionally, all grant opposed grant technology. awarded grants orders, already I implementation that total of as are orders the task pending the orders of an that beginning technology

extremely feel SSXA as And with like beginning SSXA expect doing through receive from more system. these programs finally from well to to we and to task continue orders grant grant the we're grants. we move anyway, competitive funding is So other

those we of our I also Jobs So and a wanted anyway, governance hope investment And to investor done investor are of in closing site. infrastructure and update I published fully we've X environment, available -- which we've on And recently, having annual addition I presentation. and the those mention published paper, and couple both to documents completely questions to white -- Act a did social so addressed specifically, offer to our remarks. want that recent

Northland XX. And to Northland and be to delighted they if XX Additionally, participating you attending, we're have I'm Securities going an would artificial conference in Security. in you're hope join. intelligence you'll be December virtual contact we hosted sure interested by on

want to on you And updating in that continued again our quarter XXXX meantime, I say we of third the when to forward results. our look we progress fiscal all report

today's with And everyone. we're call. that, conclude to you, going Thank so

Operator

we you you gentlemen. participation. and Thank conference, concludes lines this disconnect may and your at thank you, today's time, for ladies and your This

Iteris (ITI) 9 Nov 232024 Q2 Earnings call transcript