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Itron (ITRI) Q3 Earnings and Revenues Surpass Estimates

Zacks Equity Research

Itron, Inc. ITRI reported third-quarter 2019 non-GAAP earnings of $1.04 per share, which beat the Zacks Consensus Estimate by 37 cents. The figure was down 8% from the year-ago quarter but up 19.5% sequentially.

Revenues came in at $624.47 million, which surpassed the Zacks Consensus Estimate by 1%. Further, the figure improved 5% year over year or 7% on a constant-currency basis.

The top line was driven by robust performance of the company’s networked solutions segment. Further, solid customer demand acted as a tailwind.

Product and services revenues — which accounted for 88.5% and 11.5% of total revenues — improved 5.2% and 1.2%from the year-ago quarter, respectively.

Its bookings were $609 million and backlog was $3.1 billion during 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: Revenues in this segment decreased 3% year over year but increased 1% on a constant-currency basis. The decrease was due to lower electric smart step demand in the EMEA region, partially offset by increased water shipments globally.

Networked Solutions: Revenues from this segment increased 11% from the year-ago quarter and 12% on a constant-currency basis. This increase was primarily driven by stronger-than-expected demand in North America. Further, growing customer deployments contributed to the results.

Outcomes: Revenues in this segment were down 1% year over year but increased 1% on a constant-currency basis. The decrease was due to decline in prepaid shipments in the EMEA region. However, the company witnessed persistent growth in North America deployments.

Operating Details

In the third quarter, Itron’s gross margin was 31.5%, down 160 basis points (bps) from the prior-year period. The decrease was due to an unfavorable product mix and higher warranty costs.

Non-GAAP operating expenses were $130.4 million, up 2.9% year over year. This increase was due to increased variable compensation.

Further, non-GAAP operating margin came in at 6.3%, down 70 bps from the year-ago quarter.

Balance Sheet and Cash Flows

At the end of the third quarter, cash and cash equivalents totaled $140.9 million, up from $135.7 million in the second quarter. Accounts receivables were $468.5 million, up from $466.4 million in the second quarter.

Itron generated $50 million cash from operations compared with $53.1 million in the second quarter.

Moreover, the company generated free cash flow of $32 million, down from $38.04 million in the second quarter.

2019 Guidance

For 2019, the company has maintained its revenues guidance in the range of $2.45-$2.50 billion. The Zacks Consensus Estimate for revenues is pegged at $2.47 billion.

Zacks Rank and Other Stocks to Consider

Itron currently carries a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the broader technology sector include Stamps.com Inc. STMP, AMETEK, Inc. AME, and Carvana Co. CVNA. While Stamps.com sports a Zacks Rank #1 (Strong Buy), AMETEK and Carvana carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Stamps.com, AMETEK and Carvana is currently projected at 15%, 10.91% and 9%, respectively.

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