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Itron (ITRI) Earnings & Revenue Beats on Estimates in Q2

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Itron, Inc. (ITRI - Free Report) reported adjusted earnings of 71 cents per share in second-quarter 2017, up 9% from 65 cents recorded in the year-ago quarter. Earnings also surpassed the Zacks Consensus Estimate of 67 cents by a margin of around 6%. Results include the impact of the Comverge acquisition that contributed $5 million of distributed energy management (DEM) revenue reported in the Electricity segment.

Including one-time items, the company reported earnings of 36 cents per share, down 31% from 52 cents witnessed in the prior-year quarter.

Total revenue decreased around 2% year over year to $503 million, but comfortably beat the Zacks Consensus Estimate of $483 million. Foreign currency exchange rates had an unfavorable impact of around $6 million on revenues. Improvement in the Electricity segment was offset by decline in the Gas and Water segments.

Cost of goods sold went down 5.3% to $325 million from $343 million recorded in the year-earlier quarter. Gross profit improved 5% year over year to $117.9 million. Gross margin advanced 230 basis points (bps) year over year to 35.4%, driven by improvement across all segments.

Adjusted operating expenses declined 3% year over year to $126 million. Higher sales and marketing, along with acquisition and integration-related expenses were partially offset by lower legal and professional services fees, reduced headcount in general and administrative areas and lower amortization of intangible assets.

Itron posted adjusted operating income of $53.3 million compared with $41.6 million posted in the year-ago quarter. Operating margin expanded 250 bps to 10.6% in the quarter.

Itron, Inc. Price, Consensus and EPS Surprise
 

Itron, Inc. Price, Consensus and EPS Surprise | Itron, Inc. Quote

Segment Performance

Electricity Segment: Net sales at the Electricity segment climbed 7.5% year over year to $250.3 million in second-quarter 2017 driven by smart projects in North America and Asia-Pacific regions and the addition of distributed energy management revenues. The segment reported adjusted operating income of $27.1 million, up 18% from $23 million in the year-ago quarter.

Gas Segment: The segment’s sales dropped 8% year over year to $138.7 million affected by lower meter volumes partially mitigated by strong communication module shipments in North America. Adjusted operating income came in at $22.2 million, down 18% year over year.

Water Segment: The Water segment reported sales of $114.1 million, down 12% from $130 million recorded in the prior-year quarter. Lower product revenues in North America and EMEA along with the timing of new tenders and customer orders in 2017, were partially offset by increased sales in Latin America. The segment reported adjusted operating profit of $18.6 million, up 18% from $15.7 million posted in the comparable period last year.

Financial Position

Itron had cash and cash equivalents of $127.9 million at the end of second-quarter 2017 compared with $133.6 million at the end of 2016. The company recorded cash from operations of $93.4 million in the reported quarter compared with $51.1 million recorded in the year-ago quarter.

Bookings and Backlog

Itron had bookings of $416 million in second-quarter 2017, up 19% year over year. In the reported quarter, backlog came in at $1.6 billion and the 12-month backlog totaled $860 million, up 21% and 25%, respectively, compared with second-quarter 2016. The Comverge acquisition contributed $113 million and $44 million to total and 12-month backlog, respectively.

Guidance

Itron has raised guidance for fiscal 2017 reflecting strong business performance and the addition of distributed energy management solutions to its platform. The company now expects revenue between $2.03 million and $2.06 billion, up from $1.9–$2.0 billion. Adjusted earnings per share are expected to range between $2.95 and $3.15 from the prior guidance of $2.80–$3.10.

Share Price Performance



In the past one year, Itron has outperformed the industry it belongs to. The company’s shares have gained around 71% compared with 44.5% growth recorded by the industry.

Itron currently carries a Zacks Rank #2 (Buy).

Other Key Picks

Other stocks worth considering in the same space include Cognex Corporation (CGNX - Free Report) , Fortive Corporation (FTV - Free Report) and Teradyne, Inc. (TER - Free Report) . Cognex sports a Zacks Rank #1 (Strong Buy) while Fortive and Teradyne carry a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Cognex Corporation has an positive average earnings surprise of 19.46% in the last four quarters. Fortiv has delivered an average positive earnings surprise of 5.80% in the past four quarters. Teradyne generated a positive average earnings surprise of 23.76% over the trailing four quarters.

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