Technology

Why Is Itron (ITRI) Down 12.5% Since Last Earnings Report?

It has been about a month since the last earnings report for Itron (ITRI). Shares have lost about 12.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Itron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Itron's Q4 Earnings Beat Estimates, Revenues Miss

Itron, Inc. reported fourth-quarter 2018 non-GAAP earnings of 88 cents per share, beating the Zacks Consensus Estimate of 68 cents.

However, the figure decreased 22.1% on a sequential basis and 12.9% year over year.

Total revenues came in at $587 million, which grew 7% from the year-ago quarter but decreased 1.5% sequentially. The figure missed the Zacks Consensus Estimate of $596.4 million.

The year-over-year revenue growth was driven by strengthening product portfolio and improving demand for the company’s products. Further, the Networked Solutions segment and buyout of Silver Spring Network contributed significantly to top-line growth.

Top-Line Details

Product revenues of $516.7 million (accounting for 88% of its total revenues) increased 4.8% and service revenues of $70.3 million (contributing the remaining 12%) grew 21.4% from the year-ago quarter.

Itron’s bookings were $786 million, up 32.5% year over year. The company’s backlog came in at $3.2 billion, increasing a whopping 81% on a year-over-year basis. Further, its 12-month backlog came in at $1.35 billion, up 45% from the year-ago quarter.

Operating Details

Itron’s gross margin in the fourth quarter was 30.1%, which contracted 170 basis points (bps) from the prior-year period. This was due to higher special warranty costs.

Non-GAAP operating margin came in at 9.5%, contracting 180 bps from the year-ago quarter.

Non-GAAP operating expenses were $127.9million, up 7.4% year over year. This increase was due to the inclusion of departmental expenses related to acquisitions.

Balance Sheet and Cash Flows

At the end of the fourth quarter, cash and cash equivalents totaled $120.2 million compared with $109 million at the end of the third quarter. Accounts receivables were nearly $437.2 million, decreasing from $449.6 million in the third quarter.

Itron generated $42 million cash from operations compared with $51 million in the third quarter.

Moreover, the company generated free cash flow of $25 million, down from $37 million in the third quarter.

Guidance

For 2019, Itron expects revenues within $2.35-$2.45 billion and non-GAAP earnings in the range of $2.35-2.75 per share.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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