Itron (ITRI) Q1 Earnings and Revenues Surpass Estimates

Itron, Inc. ITRI reported adjusted first-quarter earnings of 44 cents per share, which surged 100% from the year-ago quarter. Earnings  surpassed the Zacks Consensus Estimate of 42 cents.

Including one-time items, the company reported earnings of 26 cents per share compared to 14 cents per share in the year-ago quarter.

Operational Update

Total revenue jumped 11% to $498 million from $447 million in first-quarter 2015. Revenues also surpassed the Zacks Consensus Estimate of $469 million. Foreign currency exchange rates had an unfavorable influence of around $16 million on revenues. Excluding the foreign currency impact, revenues were up 15.5% year over year, escalated primarily by a significant increase in product volumes in the U.S. and EMEA regions.

Cost of goods sold went up 8.5% to $334.4 million from $308 million in the prior-year quarter. Gross profit grew 18% year over year at $163 million. Gross margin expanded 180 basis points (bps) to 32.8%, driven by increased volumes, favorable product mix, manufacturing efficiencies and lower special warranty costs in the Water segment.

Adjusted operating expenses increased 11% year over year to $131 million, due to higher general and administrative and product development costs. Consequently, Itron's adjusted operating income went up to $32 million from $19 million in the year-ago quarter, supported by the robust performance in revenue and gross margin.

Segment Performance

Electricity Segment: Net sales at the Electricity segment enhanced 13% year over year to $217.3 million. The segment reported adjusted operating income of $14.4 million, surged significantly 181% from $5 million in the year-ago quarter.

Gas Segment: The segment's sales rose 11.3% year over year to $139 million. Adjusted operating income was $19.2 million, a 15.7% year-over-year jump.

Water Segment: The Water segment reported sales of $141 million, up 8.6% from $129.8 million in the prior-year quarter. The segment reported adjusted operating profit of $19.4 million, up 86.4% year over year.

Financial Position

Itron ended the quarter with cash and cash equivalents of $132.6 million compared with $131 million as of 2015-end. The company generated cash flow from operations of $33.8 million during the first quarter, compared to cash usage of $4 million a year ago.

Bookings and Backlog

Itron had bookings of $394 million in the quarter. The company reported 12-month backlog of $785 million and total backlog of $1.5 billion during first-quarter 2016.

Zacks Rank

Itron currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the sector worth considering are Cognex Corp. CGNX, Adobe Systems Inc. ADBE and Benchmark Electronics Inc. BHE. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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