Santa Ana, Calif.-based Iteris Inc., best known in the trucking industry for its lane departure warning system, reported record revenues for its second fiscal quarter.


For the quarter ended Sept. 30, Iteris reported net sales and contract revenues of $19.1 million, representing a 12.3 percent increase compared to net sales and contract revenues of $17 million reported in the same quarter of the prior fiscal year. The increase was primarily a result of a 29.2 percent increase in Transportation Systems revenues to $8 million. Roadway Sensors net sales for the quarter were $7.6 million, while Vehicle Sensors net sales were $3.5 million.

Gross margins declined slightly to 41.3 percent in the second quarter compared to 42.8 percent in the prior year quarter, mainly as a result of product mix. The company expects the current mix to remain relatively the same for the remainder of its fiscal year. Operating expenses during the quarter were $5.8 million, representing an increase of 17.1 percent from $5 million in the prior year quarter. Operating expenses increased as a percent of net sales and contract revenues to 30.5 percent in the 2008 quarter from 29.2 percent in the prior year quarter, while declining from 36.7 percent reported in the quarter ended June 30, 2008.

"I am pleased to report strong revenue growth and solid profitability for our fiscal second quarter," said Abbas Mohaddes, president and CEO. "I am particularly pleased with our Transportation Systems consulting segment, which reported outstanding growth when compared to the prior year quarter and currently has record backlog of $35.7 million. I believe this is a testament to our sales and marketing efforts and the need for our products and services despite the state of the overall economy."

The company reported operating income of $2.1 million and net income of $1.1 million, or $0.03 per share, for the quarter ended Sept. 30, compared to operating income of $2.3 million and net income of $2.2 million, or $0.06 per share, in the same quarter of the prior fiscal year. In the prior year quarter, net income was positively affected by an income tax benefit of approximately $214,000 generated through the release of valuation allowance against certain deferred tax assets. There was no such release of valuation allowance for the 2008 period.

For the six months ended Sept. 30, net sales and contract revenues were $36.5 million, representing an increase of 11.5 percent compared to net sales and contract revenues of $32.7 million in the same period of the prior fiscal year. Operating income was $3.4 million compared to $3.9 million in the same period of the prior fiscal year. The company reported net income of $1.7 million, or $0.05 per share, for the six months ended Sept. 30, 2008, compared to net income of $3.3 million, or $0.09 per share, for the same period in the prior fiscal year.

On October 16, Iteris entered in a new $19.5 million credit facility with California Bank and Trust. The facility consists of a $12 million revolving line of credit, and a $7.5 million term loan, which should be available to the company any time between now and May 2009 for the sole purpose of repaying the $7.8 million in outstanding convertible debentures. The company currently has no borrowings on this new line of credit and had approximately $4 million of cash-on-hand as of Sept. 30.

"Iteris completed the second fiscal quarter in the strongest financial position in company history," Mohaddes said. "We have significantly strengthened our balance sheet and access to working capital, demonstrating the confidence our bank has in Iteris' markets, strategic plan, cash flow and the viability of our business. While the recent turbulence in the U.S. and global economies may adversely affect our business in ways that we cannot currently anticipate or control, we believe that the need and demand for Iteris' products and services remains strong today. We plan to continue to diligently lay a solid foundation for future growth and profits."

To date, 66 U.S. heavy truck fleets have selected the Iteris LDW system, collectively representing an estimated 49,000 vehicles, while testing of the LDW systems continues with 85 heavy truck fleets that the company estimates represent more than 157,000 vehicles.

In addition, in early August, Iteris was named the exclusive distributor of Delphi's Forward Collision Warning System for North American commercial vehicles.