Itron: First Quarter 2013 Financial Results
Itron, Inc. (ITRI) announced financial results for its first quarter ended March 31, 2013. Highlights include:
Quarterly revenues of $448 million;
Quarterly GAAP diluted net earnings per share of 6 cents;
Quarterly non-GAAP diluted net earnings per share of 31 cents;
Quarterly adjusted EBITDA of $27 million;
Twelve-month backlog of $565 million and total backlog of $1 billion; and
Quarterly bookings of $447 million.
“First quarter revenues were down compared to last year, as expected. Core electricity and water revenues increased, offset by the successful completion of several large OpenWay deployments in North America in 2012,” said Philip Mezey, Itron’s president and chief executive officer. “Overall, lower volumes pressured our gross margin in the quarter while sales, marketing, and general and administrative expenses declined compared with last year. As Itron invests in innovation for the long-term to support smart metering projects around the world, our near-term focus is to improve operating performance through efficiencies. I remain confident about our industry’s future growth prospects and confident in Itron’s ability to lead the transformation to smarter grids and smarter cities.”
Revenues for the quarter were $448 million compared with $572 million in the same period in 2012. Excluding an unfavorable impact of $5 million from changes in foreign currency exchange rates, revenues for the quarter decreased $119 million compared with the prior year period. This decrease was driven by $118 million of lower revenue in the Energy segment related to the completion of several OpenWay projects in North America. The company’s other electricity revenues grew by 10 percent, water revenues grew by 1.5 percent, and other gas revenues declined by 12 percent on a constant currency basis.
Gross margin for the quarter was 31 percent compared with the prior year period margin of 32 percent, driven primary by lower volumes. Gross margin for the Energy segment decreased slightly over the prior year as benefits from efficiencies and lower warranty costs were offset by lower volumes. The gross margin for the Water segment decreased 320 basis points due to an increase in professional services which have lower margins.
GAAP operating expenses were $138 million in the quarter compared with $143 million in the same period last year. The decrease was due to a favorable impact from changes in foreign currency exchange rates of $1 million, decreased corporate general and administrative costs, lower sales and marketing costs in both the Energy and Water segments, and lower intangible asset amortization costs. GAAP operating income for the quarter was $2.3 million compared with $39.6 million in the respective 2012 period. The decrease was attributable to lower gross profit and higher operating expenses as a percent of revenue, driven by the company’s investment in product development, sales and marketing for future global smart metering projects.
GAAP net income and diluted earnings per share (EPS) for the quarter was $2.6 million, or 6 cents per share, compared with net income of $25 million, or 63 cents per share, during the same period in 2012. The decrease in 2013 net income for the quarter was driven by lower gross profit primarily from lower revenues, partially offset by a tax benefit due to the recognition of a $4 million research and development credit related to 2012.
Non-GAAP operating expenses for the quarter, which excludes amortization of intangibles, restructuring charges and acquisition related expenses, decreased $3 million over prior year. The decrease was driven by lower global sales and marketing and corporate general and administrative costs. Non-GAAP operating income was $14.7 million compared with $54.3 million in the same period in 2012. The decrease was attributable to lower gross profit and higher operating expenses as a percent of revenue, driven by the company’s investment in product development, sales and marketing for future global smart metering projects. Non-GAAP net income and diluted EPS for the quarter was $12 million, or 31 cents per share, compared with $36 million, or 91 cents per share, for the same period in 2012. The decrease in non-GAAP net income for the quarter was due to lower gross profit, driven primarily from lower revenues partially offset by the impact of a tax benefit due to the recognition of the 2012 research and development credit.
Free cash flow for the quarter was negative $14 million compared with a positive $42 million in the first quarter of 2012. The decrease over the prior year was due to lower earnings coupled with an increase in trade working capital primarily related to accounts receivables and higher inventory levels intended to be used in future quarters.
Earnings Conference Call:
Itron will host a conference call to discuss the financial results contained in this release at 8:30 a.m. Eastern Time (ET) on April 26, 2013. The call will be webcast in a listen-only mode. The webcast and conference call materials will be made available 15 minutes before the start of the call and are accessible on Itron’s website at http://investors.itron.com/events.cfm. The webcast replay will be available within 90 minutes of the conclusion of the live call and will be available for two weeks. A telephone replay of the conference call will be available at 1:30 p.m. ET on April 26, 2013 through 1:30 p.m. ET on May 1, 2013. To access the telephone replay dial 888-203-1112 or 719-457-0820 and enter pass code 4066711.
Itron is a global technology company. We build solutions that help utilities measure, monitor and manage energy and water. Our broad product portfolio includes electricity, gas, water and thermal energy measurement and control technology; communications systems; software; and professional services. With thousands of employees supporting nearly 8,000 utilities in more than one hundred countries, Itron empowers utilities to responsibly and efficiently manage energy and water resources. Join us in creating a more resourceful world, start here: www.itron.com.
Barbara Doyle, 509-891-3443
Vice President, Investor Relations
Marni Pilcher, 509-891-3847
Director, Investor Relations