) reported first-quarter 2014 adjusted earnings of 31 cents per
share, which was flat year over year. The reported figure
surpassed the Zacks Consensus Estimate of 26 cents.
Including one-time items such as amortization, restructuring and
acquisition-related expenses, the compan y reported a loss per
share of 1 cent as compared with earnings of 6 cents per share in
the year-ago quarter. In addition, the reported quarter included
a goodwill impairment charge in the Electricity segment.
Total revenue increased 6% year over year to $475 million and
came ahead of the Zacks Consensus Estimate of $442 million.
Favorable product mix and higher volumes primarily drove the rise
Cost of goods sold went up 4% year over year to $320 million.
Gross profit rose 10% to $154.5 million from $140.1 million in
the year-ago quarter. Consequently, gross margin increased 120
basis points (bps) to 32.5%, aided by the favorable impact of
product mix and increased volumes, particularly in the Gas and
Adjusted operating expenses increased 5.2% year over year to $132
million. Adjusted operating profit increased 53% year over year
to $23 million. Itron reported an operating profit of $4.5
million in the reported quarter compared with $2.3 million in the
Net sales at the Energy Segment increased 2.5% year over year to
$180 million compared with the year-ago quarter. However, the
segment reported an adjusted operating loss of $15.9 million for
the quarter compared with a loss of $14.0 million in the year-ago
The segment's sales rose 6.7% year over year to $146 million.
Adjusted operating income for the quarter was $28.1 million, up
29% from $21.8 million in the year-ago quarter.
The Water Segment reported sales of $148.5 million in the
quarter, up 10% from $134.9 million in the prior-year quarter.
Adjusted operating income for the quarter was $23.4 million, a
46% jump from $16.1 million in the year-ago quarter.
As of Mar 31, 2014, cash and cash equivalents amounted to $146.3
million versus $124.8 million as of Dec 31, 2013. Cash flow from
operating activities was $66.8 million in the reported quarter,
compared with $0.6 million in the prior-year quarter.
The debt-to-capitalization ratio was 28.6% as of Mar 31, 2014
against 30.3% as of Dec 31, 2013. Free cash flow in the reported
quarter was $58 million, an improvement from negative $14 million
in the first quarter of 2013, mainly due to higher operating
income and decreased working capital primarily related to
accounts payable and lower capital expenditures.
During the quarter, the company repurchased 75,203 shares for
$2.9 million. The repurchases were made under the $50 million
share repurchase program authorized by the board of directors for
a 12-month period beginning Mar 2013.
Itron also announced its board's authorization of a new share
repurchase program of up to $50 million for a 12-month period
beginning from Mar 8, 2014.
Bookings and Backlog
Itron had bookings of $745 million in the quarter with a
book-to-bill ratio of 1.6x. Total backlog increased 30% year over
year and came in at $1.3 billion at the quarter-end.
Itron expects acquisition of new business to generate over $80
million of the incremental revenues by the end of 2016, with the
growth beginning to materialize in 2015. Increased revenues
will drive earnings before interest, taxes, depreciation and
amortization (EBITDA) by 300 to 400 bps.
In addition, Itron's continuous focus on cost reduction and
efficiency improvement will likely benefit the electricity
segment. The company is also targeting to increase the levels of
outsourced printed circuit board assembly, which will help to
reduce costs by $10 million annually. Itron's continuous
investment to boost the long-term growth potential of all three
businesses will also be accretive going forward.
We believe that Itron will benefit from its consistent focus on
lowering costs and capital expenditure. Moreover, a strong
backlog, new contracts, flexible business operations and
expansion in emerging markets are likely to drive long-term
Liberty Lake, WA-based Itron Inc., along with its subsidiaries,
is one of the principal technology providers to energy and water
industries worldwide. It produces electricity, gas, water and
heat meters, data collection and utility software solutions as
well as various other associated metering products. The company
provides its services to residential, commercial and industrial
customers, along with transmission and distribution customers.
Itron currently carries a Zacks Rank #3 (Hold). A better-ranked
stock in the electrical test equipment sector is
), which has a Zacks Rank #2 (Buy).
) first-quarter fiscal earnings per share of 67 cents beat the
Zacks Consensus Estimate by a penny. Efficient expense management
and a stronger mix aided results.
) reported first-quarter 2014 earnings of 11 cents per share,
which surpassed the Zacks Consensus Estimate of 7 cents.
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