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Press Release

Itron Announces First Quarter 2013 Financial Results

LIBERTY LAKE, Wash.—April 26, 2013—Itron, Inc. (NASDAQ:ITRI) announced today 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."

Financial Results
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.

Non-GAAP Financial Information
To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA and free cash flow. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent supplemental information used by management in its financial and operational decision making. Specifically, these non-GAAP financial measures are provided to enhance investors' overall understanding of our current financial performance and our future anticipated performance by excluding infrequent or non-cash costs, particularly those associated with acquisitions. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. Our non-GAAP financial measures may be different from those reported by other companies. A more detailed discussion of why we use non-GAAP financial measures, the limitations of using such measures, and reconciliations between non-GAAP and the nearest GAAP financial measures are included in this press release.

Related Documents
Itron Q1 2013 Earnings Statement.


About Itron

Itron enables utilities and cities to safely, securely and reliably deliver critical infrastructure services to communities in more than 100 countries. Our portfolio of smart networks, software, services, meters and sensors helps our customers better manage electricity, gas and water resources for the people they serve. By working with our customers to ensure their success, we help improve the quality of life, ensure the safety and promote the well-being of millions of people around the globe. Itron is dedicated to creating a more resourceful world. Join us: www.itron.com.

Itron® and OpenWay® are registered trademarks of Itron, Inc. All third-party trademarks are property of their respective owners and any usage herein does not suggest or imply any relationship between Itron and the third party unless expressly stated.

PR Contact

Alison Mallahan

Senior Public Relations Manager

(509) 891-3802