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LIBERTY LAKE, Wash.—(BUSINESS WIRE)—May 3, 2017--Itron, Inc. (NASDAQ:ITRI) announced today financial results for its first quarter ended March 31, 2017. Key financial metrics for the quarter include:
- Revenues of $478 million, compared with $498 million in the first quarter of 2016;
- Gross margin of 32.9 percent, an increase of 10 basis points compared with the first quarter of 2016;
- GAAP diluted earnings per share of 40 cents, an increase of 54 percent compared with the first quarter of 2016; and
- Non-GAAP diluted earnings per share of 57 cents, an increase of 30 percent compared with the first quarter of 2016.
Summary of First Quarter Consolidated Financial Results
(All comparisons made are against the prior year period unless otherwise noted)
Total revenue for the quarter decreased 4 percent to $478 million compared with $498 million in the first quarter of 2016. Changes in foreign currency exchange rates unfavorably impacted revenue by approximately $5 million for the quarter.
Higher revenue in the Electricity segment was offset by decreased revenue in the Water and Gas segments. Electricity revenue increased 10 percent, driven by smart metering projects in North America and Asia-Pacific regions. Water segment revenue decreased 19 percent primarily due to the completion of several large contracts in Europe, the Middle East and Africa (EMEA) and North America regions that contributed substantial revenues in the first quarter of 2016. Gas revenue decreased 11 percent, also primarily driven by the timing of contracts in EMEA and North America.
Gross margin for the quarter improved to 32.9 percent compared with the prior year period margin of 32.8 percent. The improvement was driven by favorable product mix, primarily in the Gas segment. The Gas business achieved record gross margin of 41 percent in the quarter.
Operating expenses for the quarter were $127 million compared with $140 million in 2016. The decrease was driven primarily by lower general and administrative expenses resulting from higher fees incurred in 2016 related to a legal settlement and completion of our 2016 audit.
Operating Income, Net Income and Earnings per Share
GAAP operating income was $30 million for the quarter compared with $24 million in 2016. Non-GAAP operating income also improved to $38 million for the quarter compared with $32 million in 2016.
Net income for the quarter was $16 million, or 40 cents per diluted share, compared with net income of $10 million, or 26 cents per diluted share, in 2016. Non-GAAP net income for the quarter increased to $22 million, or 57 cents per diluted share, compared with $17 million, or 44 cents per diluted share, in 2016.
The increases in GAAP and non-GAAP operating income were driven by improved gross margin and lower operating expenses. GAAP and non-GAAP earnings per diluted share reflect the company's higher operating income in addition to lower effective tax rates.
Net cash provided by operating activities was $63 million in the first quarter of 2017 compared with $34 million in the same quarter in 2016. Free cash flow was $54 million for the first quarter compared with $25 million in the prior year quarter. The increases in operating and free cash flow were driven by strong working capital management, offsetting higher variable compensation payments.
Bookings in the quarter totaled $424 million, an increase of 8 percent compared with bookings in the first quarter of 2016. Total backlog was $1.6 billion and 12-month backlog was $819 million at the end of the quarter, up 7 percent and 4 percent, respectively, compared with the first quarter of 2016.
Earnings Conference Call
Itron will host a conference call to discuss the financial results and guidance contained in this release at 5:00 p.m. EDT on May 3, 2017. 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 http://investors.itron.com/events.cfm. A replay of the audio webcast will be made available at http://investors.itron.com/events.cfm. A telephone replay of the conference call will be available through May 8, 2017. To access the telephone replay, dial (888) 203-1112 (Domestic) or (719) 457-0820 (International) and enter passcode 9719829.
Forward Looking Statements
This release contains forward-looking statements within in the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our expectations about revenues, operations, financial performance, earnings, earnings per share, cash flows and restructuring activities including headcount reductions and other cost savings initiatives. 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. Some of the factors that we believe could affect our results include our ability to execute on our restructuring plan, 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 December 31, 2016 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 2017 Earnings Statement.
Itron is a world-leading technology and services company dedicated to the resourceful use of energy and water. We provide comprehensive solutions that measure, manage and analyze energy and water. Our broad product portfolio includes electricity, gas, water and thermal energy measurement devices and control technology; communications systems; software; as well as managed and consulting services. With thousands of employees supporting nearly 8,000 customers in more than 100 countries, Itron applies knowledge and technology to better manage energy and water resources. Together, we can create a more resourceful world. Join us: www.itron.com.
Itron® is a registered trademark 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.
For additional information, contact:
Vice President, Investor Relations
(509) 891 3443
Program Manager, Investor Relations