Iteris Inc (New) (NYSE MKT:ITI) Q2 2019 Earnings Conference Call Transcript

Nov 06, 2018 • 04:30 pm ET

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Iteris Inc (New) (NYSE MKT:ITI) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Iteris Fiscal Second Quarter 2019 Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Todd Kehrli of the MKR Group. Please go ahead, sir.

Executive
Todd Kehrli

Thank you, operator. Good afternoon, everyone, and thank you for participating in today's conference call to discuss Iteris' financial results for 2019 fiscal second quarter ended September 30th, 2018. Joining us today are Iteris' President and CEO, Mr. Joe Bergera; and the company's CFO, Mr. Andy Schmidt. Following their remarks, we'll open the call for your questions.

(Forward-Looking Cautionary Statements)

I would like to remind everyone that a webcast replay of today's call will be available via the Investor Relations section on the company's website at www.iteris.com. In the Investor Relations section, you will also find a document with many of the financial metrics that we've previously provided in our prepared remarks. We think it is more efficient to provide investors these metrics in a single easy-to-read document rather than for us to read these metrics in our prepared remarks.

With that said, I'll now turn the call over to Iteris' President and CEO, Mr. Joe Bergera.

Executive
Joe Bergera

Great. Thank you, Todd, and good afternoon, everybody. Thanks for joining us today. As you saw at the close of market, we issued a press release announcing the financial results for our fiscal second quarter ended September 30, 2018. In Q2, Iteris recorded $24.4 million in total revenue, which represents a 3.3% decline year-over-year. The result is due to the timing of two events: first, the change in our contract to manage the Virginia Department of Transportation's transportation operation centers, which had its first full quarter revenue effect show up in this period's results; and second, the continued under-performance in the Texas market for intersection detection.

Aside from the temporary impact of these events, we continue to experience consistent growth across all other areas of the business. In Q2, our Transportation Systems segment recognized $12.4 million in revenue versus $13.1 million in the prior year quarter, which included about $1.5 million of quarterly revenue that we lost when VDOT restructured our transportation operations center contract. While the segments Q2 revenue declined 5.6% year-over-year due to the contract change, we continue to experience solid growth, excluding the TSE effect. Therefore, we believe the Transportation Systems segment could fully replace the forgone TSE revenue by year-end depending on how quickly the segment is able to accelerate the rate of conversion of our expanding backlog.

Indeed, the Transportation Systems segment experienced another significant increase in new orders, securing $20 million in added backlog. The segment ended the second quarter with $48.4 million in backlog, which is an 18.9% sequential increase against the segment's first quarter ending backlog of $40.7 million. The Transportation Systems segment recorded wins across all of its lines of business, Consulting Software and Managed Services, which includes business process outsourcing.

Some of the recent notable wins include a new program management and