Itron Announces First Quarter 2021 Financial Results
Itron, Inc. (NASDAQ:ITRI) announced today financial results for its first quarter ended March 31, 2021. Key results for the quarter include (compared with the first quarter of 2020):
-
Revenue of
$520 million , compared with$598 million ; -
Gross margin of
32.2% ; compared with28.7% ; -
GAAP net income of
$13 million , compared with$9 million ; -
GAAP diluted earnings per share (EPS) of
$0.30 , compared with$0.21 ; -
Non-GAAP diluted EPS of
$0.52 , compared with$0.57 ; -
Adjusted EBITDA of
$50 million , compared with$52 million ; -
Free cash flow of
$39 million , compared with$6 million ; and -
Total backlog of
$3.4 billion , compared with$3.0 billion .
"Overall, I am pleased with our ability to execute in what continues to be a challenging environment," said Tom Deitrich, Itron's president and chief executive officer. “While we are continuing to see improvement, business headwinds are likely to persist through the first half of the year."
Summary of First Quarter Consolidated Financial Results
(All comparisons made are against the prior year period unless otherwise noted)
Revenue
Total first quarter revenue decreased
Device Solutions revenue decreased
Gross Margin
Consolidated company gross margin of
Operating Expenses and Operating Income
GAAP operating expenses of
GAAP operating income of
Net Income and Earnings per Share
Net income attributable to Itron, Inc. for the quarter was
Non-GAAP net income, which excludes certain charges including amortization of intangible assets, amortization of debt placement fees, debt extinguishment, restructuring, loss on sale of business, corporate transition cost, acquisition and integration related expenses and the income tax effect of those adjustments, was
Cash Flow
Net cash provided by operating activities was
Other Measures
Total backlog was
Impact of First Quarter Capital Markets Transactions
During the first quarter, Itron completed convertible note and equity offerings to accelerate de-levering and improve strategic and balance sheet flexibility. The completion of these transactions and use of proceeds resulted in changes to the average diluted shares outstanding and interest expense expected for the full year, which impact our non-GAAP EPS guidance range provided on February 24, 2021.
On February 24, 2021, Itron provided full year 2021 non-GAAP EPS guidance in a range of
A reconciliation of forward-looking non-GAAP diluted EPS to the GAAP diluted EPS has not been provided because we are unable to predict with reasonable certainty the potential amount or timing of restructuring and acquisition and integration related expenses and their related tax effects without unreasonable effort. These items are uncertain, depend on various factors and could have a material impact on GAAP results for the guidance period.
Earnings Conference Call
Itron will host a conference call to discuss the financial results and guidance contained in this release at 10 a.m. EDT on May 3, 2021. 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, 2021. To access the telephone replay, dial 888-203-1112 or 719-457-0820 and enter passcode 4211257.
About Itron
Itron® enables utilities and cities to safely, securely and reliably deliver critical infrastructure services to communities in more than 100 countries. Our portfolio of smart networks, software, services, meters and sensors helps our customers better manage electricity, gas and water resources for the people they serve. By working with our customers to ensure their success, we help improve the quality of life, ensure the safety and promote the well-being of millions of people around the globe. Itron is dedicated to creating 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.
Cautionary Note Regarding Forward Looking Statements
This release contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical factors nor assurances of future performance. These statements are based on our expectations about, among others, revenues, operations, financial performance, earnings, liquidity, earnings per share, cash flows and restructuring activities including headcount reductions and other cost savings initiatives. This document reflects our current strategy, plans and expectations and is based on information currently available as of the date of this release. When we use words such as "expect", "intend", "anticipate", "believe", "plan", "goal", "seek", "project", "estimate", "future", "strategy", "objective", "may", "likely", "should", "will", "will continue", and similar expressions, including related to future periods, they are intended to identify forward-looking statements. Forward-looking statements rely on a number of assumptions and estimates. 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. Therefore, you should not rely on any of these forward-looking statements. 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, uncertainties caused by adverse economic conditions, including, without limitation those resulting from extraordinary events or circumstances such as the COVID-19 pandemic and other factors that are more fully described in Part I, Item 1A: Risk Factors included in our 2020 Annual Report and other reports on file with the SEC. We undertake no obligation to update or revise any forward-looking statement, whether written or oral.
The impact caused by the ongoing COVID-19 pandemic includes uncertainty as to the duration, spread, severity, and any resurgence of the COVID-19 pandemic including other factors contributing to infection rates, such as reinfection or mutation of the virus, the effectiveness or widespread availability and application of vaccines, the duration and scope of related government orders and restrictions, impact on overall demand, impact on our customers’ businesses and workforce levels, disruptions of our business and operations, including the impact on our employees, limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers. Our estimates and statements regarding the impact of COVID-19 are made in good faith to provide insight to our current and future operating and financial environment and any of these may materially change due to factors outside our control. For more information on risks associated with the COVID-19 pandemic, please see our risk in Part I, Item 1A: Risk Factors in our 2020 Annual Report.
Non-GAAP Financial Information
To supplement our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (GAAP), we use certain adjusted or non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share (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. We believe 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. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies.
ITRON, INC. |
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||
|
|
|
|
|
||||||||
(Unaudited, in thousands, except per share data) |
|
|
||||||||||
|
|
|
Three Months Ended March 31, |
|||||||||
|
|
|
2021 |
2020 |
||||||||
Revenues |
|
|
||||||||||
|
Product revenues |
$ |
442,804 |
|
|
$ |
528,137 |
|
|
|||
|
Service revenues |
76,770 |
|
|
70,278 |
|
|
|||||
|
|
Total revenues |
519,574 |
|
|
598,415 |
|
|
||||
Cost of revenues |
|
|
||||||||||
|
Product cost of revenues |
307,691 |
|
|
384,681 |
|
|
|||||
|
Service cost of revenues |
44,839 |
|
|
42,168 |
|
|
|||||
|
|
Total cost of revenues |
352,530 |
|
|
426,849 |
|
|
||||
Gross profit |
167,044 |
|
|
171,566 |
|
|
||||||
|
|
|
|
|
||||||||
Operating expenses |
|
|
||||||||||
|
Sales, general and administrative |
75,992 |
|
|
80,498 |
|
|
|||||
|
Research and development |
51,727 |
|
|
53,781 |
|
|
|||||
|
Amortization of intangible assets |
8,973 |
|
|
11,165 |
|
|
|||||
|
Restructuring |
(1,980 |
) |
|
(248 |
) |
|
|||||
|
Loss on sale of business |
1,392 |
|
|
— |
|
|
|||||
|
|
Total operating expenses |
136,104 |
|
|
145,196 |
|
|
||||
|
|
|
|
|
||||||||
Operating income |
30,940 |
|
|
26,370 |
|
|
||||||
Other income (expense) |
|
|
||||||||||
|
Interest income |
542 |
|
|
553 |
|
|
|||||
|
Interest expense |
(10,475 |
) |
|
(11,277 |
) |
|
|||||
|
Other income (expense), net |
(2,766 |
) |
|
1,066 |
|
|
|||||
|
|
Total other income (expense) |
(12,699 |
) |
|
(9,658 |
) |
|
||||
|
|
|
|
|
||||||||
Income before income taxes |
18,241 |
|
|
16,712 |
|
|
||||||
Income tax provision |
(4,661 |
) |
|
(7,550 |
) |
|
||||||
Net income |
13,580 |
|
|
9,162 |
|
|
||||||
|
Net income attributable to noncontrolling interests |
977 |
|
|
478 |
|
|
|||||
Net income attributable to Itron, Inc. |
$ |
12,603 |
|
|
$ |
8,684 |
|
|
||||
|
|
|
|
|
||||||||
Net income per common share - Basic |
$ |
0.30 |
|
|
$ |
0.22 |
|
|
||||
Net income per common share - Diluted |
$ |
0.30 |
|
|
$ |
0.21 |
|
|
||||
|
|
|
|
|
||||||||
Weighted average common shares outstanding - Basic |
41,526 |
|
|
40,043 |
|
|
||||||
Weighted average common shares outstanding - Diluted |
41,964 |
|
|
40,474 |
|
|
||||||
ITRON, INC. |
||||||||||||
SEGMENT INFORMATION |
||||||||||||
|
|
|
|
|
||||||||
(Unaudited, in thousands) |
|
|
||||||||||
|
|
|
Three Months Ended March 31, |
|||||||||
|
|
|
2021 |
|
2020 |
|||||||
Product revenues |
|
|
||||||||||
|
Device Solutions |
$ |
170,331 |
|
|
$ |
200,168 |
|
|
|||
|
Networked Solutions |
258,703 |
|
|
315,437 |
|
|
|||||
|
Outcomes |
13,770 |
|
|
12,532 |
|
|
|||||
|
|
Total Company |
$ |
442,804 |
|
|
$ |
528,137 |
|
|
||
|
|
|
|
|
||||||||
Service revenues |
|
|
||||||||||
|
Device Solutions |
$ |
2,450 |
|
|
$ |
2,111 |
|
|
|||
|
Networked Solutions |
29,611 |
|
|
25,408 |
|
|
|||||
|
Outcomes |
44,709 |
|
|
42,759 |
|
|
|||||
|
|
Total Company |
$ |
76,770 |
|
|
$ |
70,278 |
|
|
||
|
|
|
|
|
||||||||
Total revenues |
|
|
||||||||||
|
Device Solutions |
$ |
172,781 |
|
|
$ |
202,279 |
|
|
|||
|
Networked Solutions |
288,314 |
|
|
340,845 |
|
|
|||||
|
Outcomes |
58,479 |
|
|
55,291 |
|
|
|||||
|
|
Total Company |
$ |
519,574 |
|
|
$ |
598,415 |
|
|
||
|
|
|
|
|
||||||||
Gross profit |
|
|
||||||||||
|
Device Solutions |
$ |
32,296 |
|
|
$ |
32,367 |
|
|
|||
|
Networked Solutions |
112,759 |
|
|
121,750 |
|
|
|||||
|
Outcomes |
21,989 |
|
|
17,449 |
|
|
|||||
|
|
Total Company |
$ |
167,044 |
|
|
$ |
171,566 |
|
|
||
|
|
|
|
|
||||||||
Operating income (loss) |
|
|
||||||||||
|
Device Solutions |
$ |
21,701 |
|
|
$ |
18,198 |
|
|
|||
|
Networked Solutions |
79,291 |
|
|
88,680 |
|
|
|||||
|
Outcomes |
10,336 |
|
|
8,198 |
|
|
|||||
|
Corporate unallocated |
(80,388 |
) |
|
(88,706 |
) |
|
|||||
|
|
Total Company |
$ |
30,940 |
|
|
$ |
26,370 |
|
|
||
ITRON, INC. |
||||||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||||||
|
|
|
|
|
|
|||||||
(Unaudited, in thousands) |
March 31, 2021 |
|
December 31, 2020 |
|||||||||
ASSETS |
|
|
|
|||||||||
Current assets |
|
|
|
|||||||||
|
Cash and cash equivalents |
$ |
574,592 |
|
|
|
$ |
206,933 |
|
|
||
|
Accounts receivable, net |
365,826 |
|
|
|
369,828 |
|
|
||||
|
Inventories |
169,412 |
|
|
|
182,377 |
|
|
||||
|
Other current assets |
150,271 |
|
|
|
171,124 |
|
|
||||
|
|
Total current assets |
1,260,101 |
|
|
|
930,262 |
|
|
|||
|
|
|
|
|
|
|||||||
Property, plant, and equipment, net |
199,650 |
|
|
|
207,816 |
|
|
|||||
Deferred tax assets, net |
94,620 |
|
|
|
76,142 |
|
|
|||||
Other long-term assets |
57,599 |
|
|
|
51,656 |
|
|
|||||
Operating lease right-of-use assets, net |
74,815 |
|
|
|
76,276 |
|
|
|||||
Intangible assets, net |
122,861 |
|
|
|
132,955 |
|
|
|||||
Goodwill |
1,118,322 |
|
|
|
1,131,916 |
|
|
|||||
|
|
Total assets |
$ |
2,927,968 |
|
|
|
$ |
2,607,023 |
|
|
|
|
|
|
|
|
|
|||||||
LIABILITIES AND EQUITY |
|
|
|
|||||||||
Current liabilities |
|
|
|
|||||||||
|
Accounts payable |
$ |
181,606 |
|
|
|
$ |
215,639 |
|
|
||
|
Other current liabilities |
70,890 |
|
|
|
72,591 |
|
|
||||
|
Wages and benefits payable |
90,383 |
|
|
|
86,249 |
|
|
||||
|
Taxes payable |
14,256 |
|
|
|
15,804 |
|
|
||||
|
Current portion of debt |
400,000 |
|
|
|
18,359 |
|
|
||||
|
Current portion of warranty |
22,024 |
|
|
|
28,329 |
|
|
||||
|
Unearned revenue |
130,403 |
|
|
|
112,928 |
|
|
||||
|
|
Total current liabilities |
909,562 |
|
|
|
549,899 |
|
|
|||
|
|
|
|
|
|
|||||||
Long-term debt, net |
496,531 |
|
|
|
902,577 |
|
|
|||||
Long-term warranty |
17,310 |
|
|
|
13,061 |
|
|
|||||
Pension benefit obligation |
115,257 |
|
|
|
119,457 |
|
|
|||||
Deferred tax liabilities, net |
1,806 |
|
|
|
1,921 |
|
|
|||||
Operating lease liabilities |
65,822 |
|
|
|
66,823 |
|
|
|||||
Other long-term obligations |
100,512 |
|
|
|
113,012 |
|
|
|||||
|
|
Total liabilities |
1,706,800 |
|
|
|
1,766,750 |
|
|
|||
|
|
|
|
|
|
|||||||
Equity |
|
|
|
|||||||||
|
Common stock |
1,768,517 |
|
|
|
1,389,419 |
|
|
||||
|
Accumulated other comprehensive loss, net |
(150,309 |
) |
|
|
(138,526 |
) |
|
||||
|
Accumulated deficit |
(421,742 |
) |
|
|
(434,345 |
) |
|
||||
|
|
Total Itron, Inc. shareholders' equity |
1,196,466 |
|
|
|
816,548 |
|
|
|||
|
Noncontrolling interests |
24,702 |
|
|
|
23,725 |
|
|
||||
|
|
Total equity |
1,221,168 |
|
|
|
840,273 |
|
|
|||
|
|
Total liabilities and equity |
$ |
2,927,968 |
|
|
|
$ |
2,607,023 |
|
|
|
ITRON, INC. |
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||
|
|
|
|
|||||||||
(Unaudited, in thousands) |
Three Months Ended March 31, |
|||||||||||
|
|
|
2021 |
|
2020 |
|||||||
Operating activities |
|
|
|
|||||||||
|
Net income |
$ |
13,580 |
|
|
|
$ |
9,162 |
|
|
||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||||||
|
|
Depreciation and amortization |
21,810 |
|
|
|
24,031 |
|
|
|||
|
|
Non-cash operating lease expense |
4,330 |
|
|
|
5,496 |
|
|
|||
|
|
Stock-based compensation |
6,498 |
|
|
|
8,482 |
|
|
|||
|
|
Amortization of prepaid debt fees |
2,695 |
|
|
|
1,007 |
|
|
|||
|
|
Deferred taxes, net |
2,109 |
|
|
|
4,062 |
|
|
|||
|
|
Loss on sale of business |
1,392 |
|
|
|
— |
|
|
|||
|
|
Restructuring, non-cash |
(45 |
) |
|
|
(955 |
) |
|
|||
|
| |||||||||||
