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Itron (ITRI) Q2 Earnings Miss Estimates, Revenues Fall Y/Y

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Itron, Inc. (ITRI - Free Report) reported second-quarter 2021 non-GAAP earnings of 28 cents per share, which surged significantly from 3 cents per share in the year-ago quarter. However, the figure declined 46.1% sequentially and missed the Zacks Consensus Estimate by 44%.

Revenues were $489.4 million, which lagged the Zacks Consensus Estimate of $547.4 million. Further, the top line decreased 5.8% sequentially and 4% year over year.

The decline in the top line was attributed to component constraints. The sluggishness in its Networked Solutions segment was another concern.

Nevertheless, the company witnessed a recovery in demand. Device Solutions and Outcomes segments also performed well.

Product revenues were $411.7 million (84.1% of total revenues), down 6.2% year over year. Service revenues totaled $77.7 million (15.9%), which increased 10% from the year-ago quarter.

The company’s bookings were $596 million and the backlog totaled $3.5 billion at the end of the reported quarter.

Itron, Inc. Price, Consensus and EPS Surprise

Itron, Inc. Price, Consensus and EPS Surprise

Itron, Inc. price-consensus-eps-surprise-chart | Itron, Inc. Quote

Segments in Detail

Device Solutions: The company generated revenues of $162.9 million (33.3% of total revenues) from the segment, up 26% from the year-ago quarter.

Networked Solutions: Revenues from the segment were $265.1 million (54.2% of total revenues), down 18% year over year.

Outcomes: The segment generated revenues of $61.4 million (12.5% of total revenues), up 10% on a year-over-year basis.

Operating Details

For the second quarter, Itron’s gross margin was 30.6%, which expanded 340 basis points (bps) on a year-over-year basis. This was driven by an improvement in manufacturing efficiencies and a favorable product mix.

Non-GAAP operating expenses were $123.02 million, up 4.1% year over year.

Non-GAAP operating margin was 5.5%, expanding 150 bps from the year-ago quarter.

Balance Sheet & Cash Flows

As of Jun 30, 2021, cash and cash equivalents totaled $207.1 million, down from $574.6 million as of Mar 31, 2021. Accounts receivables were $336.1 million, down from $365.8 million in the prior quarter.

Long-term debt at the end of the second quarter stood at $479.03 million compared with $496.5 million at the end of the first quarter.

Itron generated $72.7 million of cash from operations in the second quarter compared with $49.9 million in the prior quarter.

It generated a free cash flow of $63.7 million in the quarter under review compared with $39 million in the last reported quarter.

2021 Guidance

For 2021, the company revised down the non-GAAP earnings guidance from $2.30-$2.70 per share to $1.00-$1.50 per share. The Zacks Consensus Estimate for the same is pegged at $2.42.

Itron lowered the revenue guidance from $2.23-$2.33 billion to $2.05-$2.15 billion. The consensus mark for the same is pegged at $2.26 billion.

The company’s 2021 guidance assumes the negative impacts of component constraints.

Zacks Rank & Stocks to Consider

Currently, Itron has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader technology sector are Carrier Global Corporation (CARR - Free Report) , Ametek (AME - Free Report) and Agilent Technologies (A - Free Report) . All companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for Carrier, Ametek and Agilent are currently projected at 14.5%, 10.2% and 13%, respectively.