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

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Itron, Inc. ITRI 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 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, Ametek AME and Agilent Technologies A. 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.


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