Q1 2020 Earnings Call
Today's conference is being recorded.
At this time.
I'd like to turn the conference over to Todd currently.
Oh, Im sorry, our Investor relations.
Please go ahead Sir.
Thank you operator, good afternoon, everyone and thank you for participating in todays conference call to discuss.
Its financial results for its fiscal first quarter 2020 ended June Thirtyth 2019.
Joining us today are terrorists as president and CEO Mr. Jones for sure and the company's CFO Mr. Andy Schmidt.
Following their remarks, we'll open the call for your questions.
Before we continue we'd like to remind all participants that during the course of this call. We may make forward looking statements regarding future events or the future performance of the company, which statements are based on current information are subject to change and are not guarantees of future performance.
Iteris is not undertaking an obligation to provide updates to these forward looking statements in the future.
Actual results may differ substantially from what is discussed today and no one should assume that at a later date the company's comments from today will still be valid.
The terrorists refers you to the documents that the company files from time to time with the FCC specifically the Companys. Most recent forms 10-K, 10-Q, and 8-K, which contain and identify important risk factors that could cause actual results to differ materially from those that are contained in any forward looking statements.
I'd like to remind everyone that you'll find a supplementary report of our first quarter financial metrics as well as a webcast replay of today's call on the Investor Relations section of the company's website.
Hi, terrorists dot com.
Now I'd like to turn the call over dieters as President and CEO Mr. Jon Berger. Please go ahead.
Great. Thank you Todd and good afternoon, everyone. Thanks for joining us today.
As you saw at the close of market, we issued a press release announcing the financial results of our fiscal first quarter ended June 32019.
In Q1, I Cherish reported 26.6 million in total revenue, which represents a 4% increase relative to the same prior year quarter.
Additionally, we secured first quarter total net bookings of 31 million, representing an 11% year over year increase and a 29% sequential increase.
Due to our strong sustained net bookings growth our total first quarter ending backlog rose to 59.8 million, which represents a 20% year over year increase and an 8% sequential increase.
Now let me provide a brief overview of performance by segment.
In Q1, our transportation system segment recognized 12.4 million in revenue, representing a 6% decline versus the same prior year period.
As discussed on prior calls there is some remaining noise in the first quarter comparison due to a change in the structure of the segment's largest customer contract last year.
This noise will be fully behind us starting in our fiscal second quarter ending September 32019.
Despite the decline in recognized revenue. This segment continued to experience strong demand with net bookings increasing 7% to a record first quarter total of 17.3 million.
Similarly, the segment's total ending backlog reached 49.5 million, which represents a 22% increase compared to the same prior year period.
Some of the segment's recent notable bookings include over 4 million in various task orders to provide traffic video and data services, the Virginia Department of transportation.
Please note. This activity is in addition to our management of the dots traffic operation centers, which weve discussed on prior calls.
Other notable bookings, including an additional $3 million in task orders from the Federal Highway administration to continue to enhance the nation's reference architecture for connected and automated vehicle deployments.
Over 2.8 million in task orders from various agencies across the country, including the Bay area Metropolitan Transportation Commission for use of our advanced travel or an emergency information services system.
A new 2 million dollar idea Q contract with the Texas Department of Transportation for Smart Transportation traffic Engineering services, and additional 1.4 million in task orders from O.C. four or five partners for our expanded supported the I four or five improvement project in Orange County, and over 1 million and software as a service contracts from various agencies for you start performance measurement and commercial vehicle operation software products.
In Q1, the roadway sensors segment recorded 12.8 million in revenue versus 10.9 million in the same prior year quarter, representing 18% year over year increase. This result reflects the re normalization of business in Texas. Following the reinstatement of the Texas Smart bike contract as well as especially strong performance in the Midwest southwest in Southern California.
Additionally, we saw general increase in demand during Q1 for vantage lives and we received our largest single order to date for 58 intersections.
At this time, our annualized vantage line renewal rate is 94%.
As stated on prior calls we've seen an increase in the lead time for steel products, such as cabinets and pools due to the current trade environment. These longer lead times may impact our sales because our smart sensors are often deployed alongside these steel products.
Although the situations vary somewhat by region. We believe lead times have generally stabilized within a six to 12 month range, which is the new normal and is factored into our current forecast.
In Q1, our agriculture and weather analytics segment recognized 1.4 million in revenue, which represents a 1% increase compared to the same prior period quarter.
This result reflects some noise due to a true up in the prior year period Associate the previously discussed elimination of a third party royalty for Clearpath weather.
Excluding this factor both product lines continue to experience solid revenue and bookings growth in fact, the segments bookings increased 139% on a year over year basis, and 101% on a sequential basis.
During our first quarter, we continued to add new clear eyed customers, while deepening our relationships with existing customers. Some recent notable customer wins include one of the world's largest seed producers committed to integrate clearag into its customer facing applications as well as utilize clearags environmental intelligence to support internal research and development activities.
Indigo Haggen agricultural technology company focused on biologics selected clearag to enhance its agronomists facing crop modeling platform as well supported seed treatment research and development efforts and Fluoro sat and Australian crop health solution provider selected Clearags location specific environmental intelligence to enhance his decision support platform.
With that I'd like to turn the call over to Andy to walk through our financial results.
Thank you Joe and good afternoon, everyone.
Okay. Following up on Joe's introduction to our financial highlights and summary of key revenue drivers I'll focus and provide an update of our three business segments from a modeling perspective and finished with our balance sheet.
As a reminder, our press release issued today includes financial tables, which include current quarter year to date financial information and our pro forma reconciliation and segment information.
We also publish a key financial metrics document, which is posted on our website under Investor Relations link under financial reports, which provides a trend view of key financial metrics.
Looking at our Q1 of fiscal 20, there are two important dynamics to keep in mind.
First we completed our confidentially marketed public offering in our current reporting period.
We also incurred significant expense related to the acquisition of elder Kirk and our Q1 of 2000.
It should be noted that the AG acquisition was not completed until July 2nd which is our Q2.
So while you will see the full effect of our capital raising their current period results you will only see certain expenses related to the acquisition in our results.
Specifically, we recognized approximately $156000 of onetime third party expense and our GAAP Q1 fiscal 20 results.
We have added this category to our non-GAAP reconciliation this period to provide a clearer view of our year over year operating results.
Please refer to the non-GAAP reconciliation provided in our press release for more detail.
Okay, let's consider our three business segments and business model updates staying consistent with Joe's order I'll start with transportation systems.
Joe outlined our continued favorable bookings and backlog trends and significant new contract wins.
Consistent with past quarters, our Q1 year over year comp is difficult as our prior year periods still includes part of the original FIDA TLC contract.
Current period gross margin of 33.7% compares favorably with last years, 30.8%.
The favorable gross margins can be attributed to product mix subcontinent component. This period was approximately 13% less than it was.
The year ago period.
In terms of contribution margin operating costs of $2.6 million in Q1 is down from our prior year of $2.7 million.
You know the favorable product mix combined with lower operating expenses resulted in an increase in contribution margin.
Q1 contribution margin of 12.7% compares favourably to 10.3% for the prior year period.
A key significance, while our revenue was down 6% year over year, our contribution margin dollars increased $200000 to $1.6 million for Q1 of 2000.
Switching to a sensor segment as Joe noted, we saw a significant year over year growth in this segment led by the comeback of the Texas region.
A unique aspect of the Texas market is our strong third party product distribution business, while we have seen a return to strong sales of a tourist traffic in Texas three normalization of business in the region naturally includes a step up in sales of third party product.
This is an important point as the overall gross margins for the Texas region is slightly lower than the other geographies due to the unique product mix.
Specifically, Texas third party distribution represented approximately 14% of overall sensors revenue versus a typical run rate of 10%.
The overall product mix resulted in Q1 20 gross margins of 42.3% as compared to 48.7% for the prior year period.
Q1 operating expense of $3.1 million is down from last year's $3.5 million.
Putting it all together Q1 contribution margin of 18.2% compares very favourably to 16.9% for previous year.
Switching to AG and weather as Joe previously outlined we had a very positive bookings and revenue dynamics for this segment. This period. However, the year over European outperformance is somewhat obscured by a onetime revenue pickup of approximately $250000 and our Q1 of fiscal 19.
Gross margins for AG and weather a 57.2% this within expectations given to $1.44 billion in revenue for the quarter and compares to 58.8% for the previous year period.
While the year over year gross margin comparison represents a slight decline the onetime revenue adjustments attributed to Q1 of fiscal 19 had no associated cost to sales. This led to higher than expected gross margins for the fiscal 19 quarter.
Operating expenses continue to improve current quarter Opex at 1.86 million compares favourably to 1.98 million for the previous year period.
The segment's contribution loss of approximately $1 million for Q1 compares favorably to last year's loss of 1.14 million.
And all we continued to post continuous quarters of improved financial performance in this segment.
In terms of corporate expense, which includes unallocated public company expense accounting finance 80, marketing HR facilities expenses. So on we've essentially stabilize given our many growth initiatives.
Corporate expense for Q1 to 20 was $4.3 million on a GAAP basis, which includes $156000 of nonrecurring acquisition expense.
Netting out nonrecurring acquisition expense corporate expense was $4.2 million.
We expect recurring corporate to be closer to 4 million, but had approximately $225000 of accounting accrual adjustments associated with our fiscal year end.
Finally, let me address our balance sheet.
Our Q1 was very unique period due to the capital raise in regard to share count we started the fiscal year with 33.4 million shares of common stock outstanding.
Hi, Res added about 6.2 million shares, leaving us with 39.6 million shares at June Thirtyth 2019.
The share count does not include shares issued at July 2nd in conjunction with the purchase of Albuquerque.
In terms of cash we began or fiscal year with approximately $9 billion in cash and short term investments.
Taking that capital raise out of the equation, we only used about 300000 in cash during the period, including capital expense, that's a great change pace for this company.
In particular, we have made great improvements in our working capital position.
Inventories associated with their sensors segment have dropped from 2.9 million at the beginning of the year to $2.4 million as we return to scale in that business.
In addition, we saw a reduction in accounts receivable of about $450000 from the beginning of the year. Despite the acceleration of the sensors business.
Ending cash and short term investments at June Thirtyth 2019 was 35.4 million comprised of approximately $8.7 million for operating plus $26.7 million generated from the capital raise.
As a final comment we saw non-GAAP operating loss of $360000. This period.
32% improvement over the same period last year, we certainly have a clear view a positive gap non-GAAP operating income for this fiscal year.
At this point I will turn the call back to Joe.
Great. Thank you Andy.
Hi Terrace remains in a strong position to capitalize on favorable secular trends in smart transportation and digital agriculture and during fiscal year 2020, we will continue to introduce product and service innovations to expand our addressable market and enhance our competitive differentiation as we further develop highly meaningful high margin SaaS models in both of our end markets.
I'll provide some commentary on our approach by segment and our associated expectations for the balance of fiscal year 2020.
While bookings growth may fluctuate within any given quarter the opportunity pipeline for our transportation systems segment continues to reach new highs and our conversion rates remain favorable. Therefore this segment continues to anticipate strong bookings through fiscal year 2020, with the highest rate of opportunity conversion coming from three areas first customer adoption of our software products, such as clear guide and our advanced traveler and emergency information system.
Second customer adoption of our business process outsourcing and managed services offerings, such as intersections of service, which the software enabled managed service and three additional penetration in three strategic geographies, the Midwest, where we intend to build upon the local team we absorbed in the third quarter of fiscal 2019.
Texas for our transportation systems segment continues to co marketing co sell with our roadway sensors segment, which is the dominant intersection detection vendor in the state and Florida, where the recent acquisition of Albuquerque, and will accelerate our ongoing organic initiatives.
And our second quarter ending September 30, the transportation systems segment should realize year over year growth in the mid teens as historic levels of prior period bookings convert to revenue and we consolidate the financial results of the reason Albuquerque and acquisition.
More specifically, we expect Albert gerken to contribute approximately $1.5 million in revenue in the second quarter, which is a seasonally slow quarter for Albert Gergen due to factors unique to the Florida market, including project disruptions associated with the hurricane season.
We further expect to complete a substantial amount of our post acquisition integration activity in the same corridor, which will offset the segment level operating income benefit from the acquisition in the period.
In the second half of fiscal 2020, we expect Albuquerque to contribute over 4 million in inorganic revenue to the transportation system segment.
And the combination of this inorganic revenue and the revenue conversion from the prior period bookings will support segment level revenue growth in the high teens with continued improvement in segment level operating income margins.
Now, let's discuss the roadway sensors segment.
With the re normalization of the Texas intersection detection market. We continue to expect the roadway sensors segment to report full year revenue growth of more than 10%.
The segments primary growth drivers include first several product innovations that further enhance our competitive differentiation second an increase in product revenue and also SaaS revenue attributable advantage lives, our SaaS based intersects analytics platform and three implementation of certain programs to enhance the productivity of our direct and indirect sales channels.
Given typical seasonality in other market constraints, such as the timing of agency fiscal years. The segment second quarter revenue growth should exceed 10% year over year, while second half revenue growth is expected to be in the single digits year over year.
Additionally, we continue to expect the segment's full year operating income margin to increase relative to last year's annual operating income margin due to product mix and sales efficiencies.
And finally, let's discuss our agriculture and weather analytics business.
The repositioning of clear AG as an environmental intelligence and Agronomic solution platform continues to improve our customer adoption, while also creating operating efficiencies.
As we progress through fiscal year 2020, we will continue to strengthen clearags, new market position and increase our overall market share.
Our commercial activities will focus on penetration in existing strategic accounts acquisition of new agriculture equipment and irrigation OEM customers.
And adoption by Allied providers in North America and Europe .
As our revenue growth accelerates, we expect our net investment and clear active further decline to about $4 million for the full year, which is a significant improvement compared to our prior year performance.
In summary, we anticipate our full year fiscal year 2020 consolidated rate of revenue growth to reach the mid teens and we further expect the combined effect of incremental margin dollars from the revenue growth our transportation systems in roadway sensors segments, a decrease in our net investment and clear AG and the accretive effect of the Albuquerque and acquisition to yield a non-GAAP operating profit for the year.
With that we'd be delighted to respond to your questions and comments.
Operator.
Thank you.
Ladies and gentlemen, if you would like to ask a question.
Please signal by pressing star one on your telephone keypad.
If you're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.
Again press Star one to ask a question, we'll pause for just a moment I'll, let everyone an opportunity to signal for questions.
We'll take our first question from Steve Dyer of Craig Hallum Capital Group.
Hey, guys Ryan said go on for Steve Dyer.
It Ryan.
First off so several nuclear AG awards, and it seems like a steady cadence every quarter of new business expansions with.
Existing customers.
And you talked about the the cash burn in the operating loss.
Significantly lower this year.
But when do we really see that hockey stick inflection in revenue I'm from all this new business is that something that can happen. Later this year next year, just any cadence I guess on how to think about that over the next several quarters and years.
Yeah, So a couple of things so.
First of all our internal plan and that yeah.
But general directional guidance that were providing reflects the continued base hits that we keep coming in with every single quarter.
So that leads to consistent growth we have talked previously about the fact that we expect some acceleration this year and for the full year, we expect the rate of revenue growth to be generally in the range of the bookings growth prior year, which was in the low 30% I definitely reflects improvement over prior year with respect to the hockey stick. The it again, we're looking to continue to deliver base hits the.
Significant inflection would come.
Most likely from the conversion of an existing strategic relationship with a large multinational agro business into an enterprise agreement, which is something we've talked about on previous calls and I think probably you are that's one way of asking that question do we have line of sight to that enterprise deal today situation remains the same we remain in discussions with all of our large agro businesses about potential enterprise wide deployment of Clearags. When one of those deals converts there would be a dramatic acceleration in the rate of revenue growth generally speaking now that being said because it's a SaaS model the way that that booking gets recognized could result in a slightly more modest step up than the rate of growth in the bookings would be because.
Just general revenue recognition practices so.
Again, you know right now our plan is to continue to bring in new customers deliver base hits, we will convert those customers ultimately into an enterprise deal, but I don't have immediate line of sight to that.
Great very helpful Joel.
As it relates to SAS revenue I don't think I heard it in the prepared remarks, you gave it last quarter, but what was the recurring SaaS revenue in the quarter and then how does that compare to the prior period quarter.
I'm, sorry, you're talking about for AG weather analytics or on an enterprise basis enterprise basis, I guess, if you want to break it out between segments. So you can do that as well, but primarily looking overall.
Yeah. So.
Is there is a little bit.
Noise there because in the transportation systems segment, where we have our largest amount of software revenue we are.
Transitioning some of our existing customers specific where I've helps customers to clear guide, which is our new SaaS platform.
Is somewhat difficult to strictly differentiate as to whether some of that revenue should be in a true.
<unk> considered more of a traditional hosted model versus a SAS, but generally speaking right now our total enterprise SaaS revenue would be in excess of $15 million and our total enterprise software revenue would be in excess of $20 million.
Great.
Then as it relates to.
The cash so if you take out the 6 million for the acquisition I get 29 million of pro forma cash.
You know what are your thoughts there I guess is that are you expecting to use it you need it for organic initiatives or can you sell fund yourself at this point and then as you think about more M&A is are there certain.
Segments that you're targeting or technologies or you know how should we think about that.
Yeah, and if you want to talk so sure yes.
Yeah, we are very clear that when we did the raise it was not for.
Organic purposes, it's primarily for inorganic.
If you look at our current period, you know again, our non-GAAP results of about $368000 loss, that's basically the amount of our capex and so when you look at the reduction in cash from 9 million to 8.7 million. They tend to be the same number what's great about that is you from an operations perspective, we really didn't use cash as period. It's just we're not very capital intensive, but you know basically right now their cash usage is just for minor capex.
When we start looking going forward, we started out the year at $368000 non-GAAP loss now Oh, the gerken layering in.
We expect again every quarter that are non-GAAP performance to accelerate.
So that as we get into certainly you know our third and fourth quarter very.
Positive cash flow and we'll end the year at a positive cash flow perspective from operations.
And then just a follow on to that Ryan so to.
As Andy said you know the intent is really to reserve the net proceeds from the C. M. P O for strategic views, which really translates.
Into potential future acquisitions, and again just to reiterate there is no need to use that cash for current operating needs.
Great. Thanks, guys all hop back in the queue.
Great. Thank you.
Thank you well take our next question from Jeff Van Sinderen of B. Riley and company.
Hi, Good afternoon, and I know you guys gave some some metrics on Texas in your prepared comments, but just wondering if you can speak more about what you're seeing in Texas with the new smart by program in place and what the outlook is for that region for your business.
Yeah sure Thanks, Jeff happy to do that so to be clear.
We saw largely in normal returned a business in Texas there was.
Arguably some pent up demand, which got released in the first quarter.
We were slightly above plan in that market, but I want to be clear that the 18% growth for the business unit does not reflect.
A one time dramatic increase in sales from Texas as we've said all along.
The Texas market is only going to be able to absorb so much of our product at any given point in time, and we think it will take a number of quarters for the sales that did not occur in the prior fiscal year and ultimately flow through.
So just again to be clear, we had very strong sales.
Nationwide with some.
Improvement above results above plan in Texas.
At this point as I said in my prepared remarks, we expect that the Texas market is re normalized and we would continue to expect consistent growth in the Texas market as has been the case for the last several years with the exception of F.Y. 19, when we actually saw negative growth every single quarter due to the fact that we did not have access to the smart by contract.
Okay. Good that's helpful.
And then just kind of from a broader perspective, Joe you've been there for a few years and.
Maybe you could just give us your sense of how you're seeing the nature of the new projects that are coming on evolving versus kind of the older projects a few years ago, maybe touch on.
How the SaaS component is becoming more important and.
Where you see the SaaS penetration headed for you over time.
Yeah sure I'd be happy to so one of the biggest differences between where we are today and where we were a few years ago is.
I think reflected in the bookings growth. So first of all we have significant continued increases in net bookings for the transportation systems business unit I do want to caution that as these numbers get really big you know there could be some fluctuations from quarter to quarter, but.
Overall, the long term trend will has been positive will continue to be positive I'm. If you start to Peel that away and you look at what's driving that what's interesting is you see a lot of big orders. So I went through some of the most notable orders in the most recent period, where we booked our net bookings were 17.3 million.
I mean, if you add up the bookings that I discussed there they reflect about $14 million of that 17.3. Those are all million dollar plus orders that radically different from where we were four years ago. When our average order was about 50000. So thats one of the biggest changes that does present some challenges as we end up with our portfolio of projects having.
You know relatively small set of really big projects and we still have lots of them that are small over time, that's going to balance out.
But again the biggest changes in the size of the deals that we're closing that has a lot of benefits to us it there's fairly high sales and marketing cost in this business, whether it's all very large deal or it's a very small deal. Obviously, therefore would rather go after the larger deals larger deals tend to be longer term oftentimes multi year in duration. So that allows us to get better utilization as opposed to when you're trying to reallocate staff almost continuously across very small very short term projects. So its definitely improving the financial characteristics of the business.
And then with respect to the nature of those larger projects you are in fact, seeing a big shift from traditional consulting which.
Was made up the bulk of the business for transportation systems for years ago, two businesses more recurring in nature and they are two different types of recurring revenue.
In the transportation systems business unit today.
There is an increasing amount of software related and more specifically staff and then the second is there is an increasing number of managed services are increasing amount of managed services revenue as well and as we look forward, we would anticipate that the recurring revenue again coming from both managed services and software will grow at a much faster rate than the consulting revenue, which will change the overall financial characteristics of that business unit.
With respect to the roadway sensors business Theres less change in the financial characteristics to date, the vantage live revenue still continues to be less than 2%.
The business units total revenue, but we're starting to see.
A faster rate of adoption and even more importantly of deployment other advantage live implementations, which allows us to start recognizing revenue more quickly and we will gradually see a shift in the revenue profile for the roadway sensors business unit as well to include more recurring revenue.
Okay. Good.
Great to hear.
And then just one last one if I could quickly throw it in.
Just anything to report back in terms of the integration process with AG just wondering if there's anything there that.
It's worth pointing out.
Yeah, no actually it's a great question and it's something we're spending a lot of time on we have a very very comprehensive integration plan and we're working extremely closely with with Albert Gerken team on that at this point everything is proceeding exactly on plan.
Just to remind folks is awesome have asked that question previously integration is going to occur on a staggered basis at this point out, but gurkin is operating in the Florida market as Albert Gerken Antiterrorist company, we are starting to align commercial activities.
And various employment.
HR policies financial and other operating back office systems will gradually be transitioned from Abbott Gherkins legacy systems to ours over the course of the current fiscal year and the expectation is that the business will be fully integrated antiterrorist at the start of our next fiscal year.
Okay. Thanks for taking all my questions and best of luck this quarter.
Great. Thanks, Jeff.
Thank you once again, ladies and gentlemen, if you would like to ask a question. Please press star one now.
We'll take our next question from Joseph Osha JMP Securities.
Hi, This is actually Hilary on for Joe.
I just had one question for you guys I was wondering if you could talk a little bit about the.
Upside to the to the acquisition, particularly as you look to use that to kind of grow your intersections.
Offering and what that scaling kind of looks like.
Sure Andy you want to get cracking that sure so.
Yes, as we've talked to when we first started introducing the acquisition.
We feel have a kirchen has a very.
Unique model that we look in terms of let's say the business process outsourcing part of our business that we look to emulate and bring into other markets were very strong. So that we expect that to be a net adder as we go into the end of our fiscal year and the start of next fiscal year in terms of intersection as a service again.
Again, it's going to be the relationships and it's going to be for lack of a better word that footprint within the different geographies that help us accelerate that initiative.
Again, Florida market is very important it's a very robust market in terms of intelligent transportation initiatives. So we feel it's a fertile ground for us to actually push that forward.
As Joe said, we're already experiencing very strong renewal rates in our existing launch, but this is a particular product that we look forward to actually accelerating given its sticking to that nature and assess nature of it.
And now with Florida is a very.
Let's say.
Available market to us given the acquisition, we think are going to see some good things come from that.
So just to add to that it's difficult to provide sort of.
Quantitative figure as to the degree of acceleration at this point, but from a timing perspective.
I will share that.
The.
Because of the typical length of procurement process in our market I would not expect to see a significant.
Inflection.
In.
Relative to the already planned adoption rate for intersections service as a result of the Alba Gergen acquisition this fiscal year.
I think it would be next fiscal year, where would start to realize that benefit and as Andy was alluding to we think that the Florida market is probably the primary geographic market, where we would realize that rate of acceleration.
But at this point, it's difficult to provide more sort of quantitative specificity, but hopefully that gives you kind of a general sense as to what we're thinking.
Excellent. Thank you.
Thank you well take our next question from Mike Latimore of Northland capital markets.
Hi, guys this phone on for Mike.
I have two questions.
How do you see opportunity pipeline beyond the Texas market.
In that segment.
I'm, sorry that beyond the PTX Mark in the wood segment.
Our transportation segment basically.
Okay. So I'm going to assume you mean transportation systems I'm going to talk about both transportation systems in roadway sensors. So.
With respect to.
Roadway sensors, let's start there as we've talked about previously, Texas by far largest market, 25% of the segments revenue comes out of the Texas market and Fynineteen, we actually saw a decline in our year over year revenue in that segment as a result of not having access to smart my contract, which pulled down the overall results for the business unit, which is very frustrating for all of us because we were seeing growth everywhere, except for Texas, but that was masked by this unique circumstance that we saw in Texas now as we look forward. We continue to think that the Texas market is going to be a very robust market.
For our roadway sensors business because of the overall economic and population growth in the region, which we would expect to support sustained growth in definitely in that in the Texas market that being said it is a highly competitive market and we always have to stay on top of our game and to that end, we continue to introduce new product innovations and we have additional product innovations I talked in my prepared remarks, which are expected to bring to market. Later, this year, which will reinforce our leadership position not only nationwide, but specifically in Texas now with respect to the transportation systems segment.
Just to remind folks while Texas are by far our largest market for roadway sensors, it's actually one of the smaller markets for our transportation systems segment.
And we believe it represents a significant growth opportunity for our transportation systems business to provide.
Our traditional consulting services managed services and also software products and we do expect to see growth across all those different lines of business and in fact, it's worth noting that.
Texas, So far has been arguably the largest geographic market.
As.
As to intersections of service adoption and we would expect that to continue for a lot of reasons one because of the fact that we've installed a lot of intersection detection equipment.
Being modern.
And and usually connected.
To either private network or the cloud.
It is.
Already.
Technically.
Easy to deploy our intersection of the service model at.
Core doors in the Texas market and then Additionally, we tend to find Texas is really oftentimes on sort of.
Leading and edge of the technology curve generally and more specific with respect to traffic engineering.
So again, the Texas market represents a significant growth opportunity for our transportation systems across all lines of business and specifically a major growth area for intersection in the service.
Thank you once again, ladies and gentlemen, if you would like to ask a question. Please press star one now.
At this time there no further questions in the queue I will like to turn the floor back over to management for closing remarks.
Cooper are great. So thank you operator.
And we appreciate everyone's support and thoughtful questions.
On the Investor Relations front wanted to make sure everyone was where we'll be presenting at several upcoming conferences.
Two in particular in the near term. So please look for us to the Doherty and company institutional Investor Conference in Minneapolis on September five and at the Craig Hallum Capital Group, 10th annual Alpha Select Conference in New York City on November 12.
If you are attending these conferences would love to see you. Please come see our presentation and or visit with us in the meantime, we look forward to updating you again on our continued progress when we report our results.
For the second quarter of F y 20.
With that we'll conclude today's call. Thanks, everybody.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.