Itron Inc ((ITRI)) has held its Q1 earnings call. Read on for the main highlights of the call.
Itron Inc’s recent earnings call painted a generally positive picture, highlighting strong earnings growth, margin expansion, and significant bookings and backlog levels. Despite these positive developments, there were concerns regarding a revenue decline in the Network Solutions segment and potential tariff impacts on EBITDA.
Revenue Growth and Margin Expansion
Itron reported first-quarter revenue of $607 million, marking a 1% increase year-over-year. The company achieved a record gross margin of 35.8%, which was 180 basis points higher than last year. This improvement was driven by a favorable product mix and operational efficiencies, showcasing the company’s ability to enhance profitability.
Strong Earnings Growth
Non-GAAP earnings per share rose to $1.52, up from $1.24 a year ago. Adjusted EBITDA reached $88 million, reflecting a 15% increase and setting a company record with an EBITDA margin of 14.5%. These figures underscore Itron’s robust financial performance and operational strength.
Device Solutions and Outcomes Segment Performance
The Device Solutions segment achieved a record gross margin of 30% and an operating margin of 24.2%. Additionally, Outcomes revenue grew by 14% year-over-year, supported by increased recurring revenue and software licenses, indicating strong demand for Itron’s solutions.
Bookings and Backlog
Bookings in the first quarter totaled $530 million, an increase of $169 million from the previous year. The backlog remained near record levels at $4.7 billion, reflecting strong customer demand and providing a solid foundation for future revenue.
Network Solutions Revenue Decline
Network Solutions revenue saw a 1% year-over-year decline, attributed to an unusually high level in Q1 2024, which included the catch-up of previously constrained revenue. This segment’s performance remains a concern amidst otherwise positive results.
Tariff Impact on EBITDA
The estimated EBITDA impact for the year due to tariffs is approximately $15 million, net of mitigation measures such as alternate sourcing and pricing adjustments. This highlights the challenges posed by the dynamic tariff environment.
Forward-Looking Guidance
During the earnings call, Itron provided guidance for the upcoming period, anticipating second-quarter revenue between $605 million and $615 million. Non-GAAP earnings per share are expected to range from $1.30 to $1.40, indicating a year-over-year growth of approximately 12% at the midpoint. The company remains vigilant about the potential $15 million EBITDA impact from tariffs, though mitigation measures are in place.
In summary, Itron Inc’s earnings call reflected a generally positive sentiment with strong earnings growth and margin expansion. While concerns about the Network Solutions segment and tariff impacts persist, the company’s robust bookings and backlog provide a solid foundation for future growth. Investors and stakeholders can look forward to continued performance improvements and strategic measures to mitigate external challenges.