) second-quarter 2012 adjusted earnings were $1.16 compared with
$1.20 in the year-earlier quarter. Adjusted earnings surpassed the
Zacks Consensus Estimate of 96 cents per share.
Including amortization expenses, restructuring costs and
acquisition related expenses, earnings in the quarter were 79 cents
per share compared with 84 cents in the year-ago quarter.
Total revenues during the quarter fell 5.4% to $579.1 million,
although beating the Zacks Consensus Estimate of $565 million. The
decline in revenues was attributable to the decrease in Gas
revenues along with $35 million negative effect of foreign currency
translation, partially offset by North American OpenWay project
revenues and growth at the Water segment.
Cost and Margins
Cost of goods sold decreased 9.1% to $382.4 million. Gross
profit increased 2.5% to $196.7 million. Consequently, gross margin
expanded 270 basis points to 34%. The improvement was driven by
lower warranty costs, OpenWay projects, product mix and lower
production costs at the Energy and Water segments.
Adjusted operating expenses increased 3% to $129.6 million in
the quarter. Expenses increased due to sales and marketing
initiatives, ameliorated product development initiatives, partially
offset by negative foreign currency translation.
Adjusted operating profit increased 1.5% to $67.2 million.
Including one-time items, operating income decreased to $48 million
in the reported quarter from $98 million in the year-ago
Cash and cash equivalents decreased to $102.8 million as of June
20, 2012, from $133.1 million as of December 31, 2011. Cash from
operations increased to $92.4 million for the first six months of
2012 from $87.7 million in the year-ago comparable period. The
debt-to-capitalization ratio remained flat at 33% as of June 30,
2012 compared with as of December 31, 2010.
During the quarter, Itron repurchased 419,600 shares of its
common stock at an average price of $36.66 per share. The company
has repurchased approximately 1.5 million shares of Itron common
stock at an average price of $36.33 per share since the inception
of the program, representing 3.7% of total shares outstanding as of
The company expects revenues to remain in the range of $2.1-$2.2
billion for 2012. Adjusted earnings are expected to lie within the
band of $3.80-$4.00 per share for 2012.
Itron has been significantly increasing its footprint in the
global arena. It has partnered with Australia's largest water
utility, Sydney Water, to replace old meters with Itron's high
efficiency ones. It has strengthened its foothold in China with the
opening of the manufacturing facility in Suzhou Industrial
Itron intended to increase its focus on the energy and water
technology platforms that could be used in other products
worldwide, leveraging its development efforts. As per its strategy,
the company aimed at strengthening its focus on Latin America as
well as Asia Pacific regions.
Itron faces competition from companies like
General Electric Company
Cooper Industries Ltd.
Badger Meter Inc.
). Itron retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on the stock.
BADGER METER (BMI): Free Stock Analysis Report
COOPER INDS PLC (CBE): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis Report
ITRON INC (ITRI): Free Stock Analysis Report
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