LIBERTY LAKE, Wash.—(BUSINESS WIRE)—May 6, 2019—Itron, Inc. (NASDAQ:ITRI) announced today financial results for its first quarter ended March 31, 2019. Key results for the quarter include:
- Revenue of $615 million, compared with $607 million in the first quarter of 2018;
- Gross margin of 30.5%, compared with 29.6% in the first quarter of 2018;
- GAAP net loss of $2 million, compared with a net loss of $146 million in the first quarter of 2018;
- GAAP loss per share of $0.05, compared with a loss of $3.74 in the first quarter of 2018;
- Non-GAAP diluted EPS of $0.70, compared with $0.13 in the first quarter of 2018;
- Adjusted EBITDA of $66 million, compared with $40 million in the first quarter of 2018; and
- Total backlog of $3.0 billion, compared with $3.1 billion at the end of the first quarter of 2018.
"We are seeing benefits from our operational initiatives, including the realigned business segments, which are executing and performing well. In addition, ongoing transformation and integration initiatives are contributing to improved results." continued Mezey."
Summary of First Quarter Consolidated Financial Results
(All comparisons made are against the prior year period unless otherwise noted)
Total revenue increased 1% to $615 million, or 5% excluding the impact of changes in foreign currency exchange rates, in the first quarter.
Networked Solutions revenue increased 11% and Outcomes increased 2% driven by continued strength in North America deployments. Device Solutions revenue decreased 11% due to the impact of changes in foreign currency exchange rates and lower shipments in Europe.
Consolidated company gross margin of 30.5% increased from 29.6% in the prior year. The increase was driven by favorable product mix, including higher-margin software deliveries.
Operating Expenses and Operating Income
GAAP operating expenses of $166 million decreased $154 million from the prior year primarily due to lower restructuring, acquisition and integration related expenses. Non-GAAP operating expenses of $131 million decreased $21 million from the prior year in part due to benefits from restructuring and integration initiatives.
GAAP operating income increased to $21 million from a loss of $140 million in the first quarter of 2018. The increase is due to lower GAAP operating expenses, primarily restructuring, acquisition and integration related expenses, and higher gross profit. Non-GAAP operating income increased to $57 million from $28 million in 2018 driven by lower non-GAAP operating expenses and improved gross profit.
Net Income (loss) and Earnings per Share
The net loss attributable to Itron for the quarter was $2 million, or $0.05 per share, a decrease from a net loss of $146 million, or $3.74 per share, in 2018. The net loss improvement was driven by higher operating income.
Non-GAAP net income, which excludes certain charges including restructuring, acquisition and integration related expenses, amortization of intangible assets, and amortization of debt placement fees, was $28 million, or $0.70 per diluted share, compared with $5 million, or $0.13 per diluted share, in 2018. The increase in non-GAAP EPS was due to higher non-GAAP operating income and a lower effective tax rate.
Net cash provided by operating activities was $25 million in the first quarter compared with negative $24 million in the same quarter of 2018. Free cash flow was $14 million in the first quarter compared with negative $42 million in the prior year. Higher cash flow was driven primarily by higher operating income and less cash outlays related to restructuring, acquisition and integration related expenses.
Total backlog was $3.0 billion and 12-month backlog was $1.4 billion at the end of the quarter, compared with $3.1 billion and $1.4 billion, respectively, in the prior year quarter. Bookings in the quarter totaled $473 million.
Earnings Conference Call
Itron will host a conference call to discuss the financial results and guidance contained in this release at 5 p.m. EDT on May 6, 2019. The call will be webcast in a listen-only mode. Webcast information and conference call materials will be made available 10 minutes before the start of the call and will be accessible on Itron's website at investors.itron.com. A replay of the audio webcast will be made available at investors.itron.com. A telephone replay of the conference call will be available through May 11, 2019. To access the telephone replay, dial 888-203-1112 or 719-457-0820, and enter passcode 5342456.
Cautionary Note Regarding Forward Looking Statements
This release contains "forward-looking statements" within in the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical factors nor assurances of future performance. These statements relate to our expectations about, among others, revenues, operations, financial performance, earnings, earnings per share and cash flows. Although we believe the estimates and assumptions upon which these forward-looking statements are based are reasonable, any of these estimates or assumptions could prove to be inaccurate and the forward-looking statements based on these estimates and assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors. Therefore, you should not rely on any of these forward-looking statements. Some of the factors that we believe could affect our results include our ability to achieve estimated cost savings, the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, adverse impacts of litigation, changes in laws and regulations, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock-based and bonus compensation, increasing volatility in foreign exchange rates, international business risks and other factors that are more fully described in our Annual Report on Form 10-K for the year ended Dec. 31, 2018 and other reports on file with the Securities and Exchange Commission. Itron undertakes no obligation to update or revise any information in this press release.
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, adjusted EBITDA margin, constant currency 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. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. The company believes these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. 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.
Itron Q1 2019 Earnings Statement.
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.
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