Latest news with #JoanHooper
Yahoo
15-05-2025
- Business
- Yahoo
ITRI Q1 Earnings Call: Margin Expansion and Software Growth Offset Revenue Miss
Resource management provider Itron (NASDAQ:ITRI) missed Wall Street's revenue expectations in Q1 CY2025, with sales flat year on year at $607.2 million. On the other hand, the company expects next quarter's revenue to be around $610 million, close to analysts' estimates. Its non-GAAP profit of $1.52 per share was 15.3% above analysts' consensus estimates. Is now the time to buy ITRI? Find out in our full research report (it's free). Revenue: $607.2 million vs analyst estimates of $614.1 million (flat year on year, 1.1% miss) Adjusted EPS: $1.52 vs analyst estimates of $1.32 (15.3% beat) Adjusted EBITDA: $87.93 million vs analyst estimates of $83.5 million (14.5% margin, 5.3% beat) Revenue Guidance for Q2 CY2025 is $610 million at the midpoint, roughly in line with what analysts were expecting Adjusted EPS guidance for Q2 CY2025 is $1.35 at the midpoint, above analyst estimates of $1.29 Operating Margin: 12.6%, up from 10.4% in the same quarter last year Free Cash Flow Margin: 11.1%, up from 5.7% in the same quarter last year Market Capitalization: $5.19 billion Itron's first quarter performance was shaped by favorable shifts in product mix and continued operational execution, as highlighted by CEO Tom Deitrich. The company saw expansion of gross margins and operating efficiency, particularly due to disciplined manufacturing and customer demand for its grid edge intelligence platform. CFO Joan Hooper pointed to record margins in Device Solutions and improved recurring revenue in Outcomes as supporting factors for margin growth, despite revenue coming in flat compared to the prior year. Looking ahead, management noted that expected tariff impacts and a stable demand environment are key themes for the remainder of the year. Deitrich acknowledged the fluid tariff landscape, estimating a $15 million EBITDA effect for 2025, but emphasized that mitigation strategies and ongoing supply chain adjustments should help maintain margin strength. Hooper added that recurring software revenue and disciplined capital allocation remain top priorities as Itron navigates macroeconomic and trade uncertainties. First quarter performance was driven by a favorable product mix, margin expansion, and continued demand for advanced grid intelligence solutions. Management emphasized operational discipline, recurring software growth, and resilience to evolving trade policies. Margin Expansion Through Product Mix: Gross margin reached a quarterly record, supported by a shift toward higher-margin products in Device Solutions and Outcomes. Portfolio pruning and a move away from legacy electric offerings contributed to improved profitability. Software and Recurring Revenue Growth: Outcomes segment revenue grew 14% year-over-year, with management highlighting four consecutive quarters of double-digit growth. Recurring software licenses made up approximately 70% of Outcomes revenue, with an ultimate goal of reaching 80%. Grid Edge Platform Adoption: Customer adoption of Itron's distributed intelligence and grid edge platforms continued, with 14.4 million endpoints shipped and another 10 million-plus in backlog. Key utility projects—including those with FirstEnergy and Public Service Company of New Mexico—drove demand for solutions that enhance outage detection and infrastructure agility. Tariff and Supply Chain Management: The company's regional supply strategy, including significant manufacturing in the U.S. and USMCA-compliant sourcing from Mexico, is helping to mitigate tariff impacts. Management estimates a $15 million net EBITDA impact from current tariffs for 2025, with most of the cost expected in the second half of the year. Constructive Regulatory Environment: Management described a supportive regulatory backdrop for utility software purchases, with the majority of states enabling rate-base inclusion for software and performance-based rates, facilitating ongoing Outcomes segment growth. Management's outlook for the next quarter and the remainder of the year centers on navigating tariff headwinds, sustaining margin improvements, and driving recurring software revenue growth, while acknowledging macroeconomic and regulatory uncertainties. Tariff Impact Mitigation: Itron is focused on offsetting anticipated tariff impacts through regional manufacturing, sourcing flexibility, and selective pricing adjustments, aiming to minimize disruption to margins and profitability. Recurring Revenue Expansion: Strategic emphasis remains on growing the Outcomes software segment, with management targeting a higher proportion of recurring revenue and ongoing margin expansion through product mix and operational leverage. Stable Utility Demand: The company sees steady customer demand for infrastructure modernization and grid intelligence solutions, although management noted that broader macroeconomic shifts could affect order timing or project execution later in the year. Noah Kaye (Oppenheimer): Asked if tariff headwinds would alter full-year guidance; management said it is too early to update, but current mitigation keeps guidance on track. Ben Kallo (R.W. Baird): Questioned regulatory progress on utilities capitalizing software; Tom Deitrich pointed to positive trends and mechanisms in most states enabling inclusion in rate bases. Jeff Osborne (TD Cowen): Inquired about the timing of tariff cost impacts and CapEx implications; management expects most tariff costs in the year's second half and no material change to capital expenditures. Joe Osha (Guggenheim): Sought clarity on margin sustainability in Outcomes after strong results; Joan Hooper said margins will fluctuate with software mix but expects year-over-year margin growth. Chip Moore (ROTH Capital Partners): Asked about capital allocation priorities; Joan Hooper indicated acquisitions to expand software capabilities are the top focus, with active exploration of potential deals. In the coming quarters, the StockStory team will closely monitor (1) the pace of recurring revenue growth in the Outcomes segment, (2) the effectiveness of tariff mitigation strategies as new trade measures are implemented, and (3) ongoing customer adoption of Itron's grid edge and distributed intelligence solutions. We will also watch for updates on potential software-focused acquisitions, which could accelerate recurring revenue and margin expansion. Itron currently trades at a forward P/E ratio of 20.7×. Should you double down or take your chips? Find out in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
03-05-2025
- Business
- Yahoo
Itron Inc (ITRI) Q1 2025 Earnings Call Highlights: Record Gross Margin and Strong Cash Flow ...
Revenue: $607 million, increased 1% year-over-year. Adjusted EBITDA: $88 million, increased 15% with a margin of 14.5%. Non-GAAP Earnings Per Share: $1.52, up from $1.24 a year ago. Free Cash Flow: $67 million, compared to $34 million a year ago. Gross Margin: 35.8%, a quarterly record, up 180 basis points year-over-year. GAAP Net Income: $65 million or $1.42 per diluted share, compared to $52 million or $1.12 per share last year. Bookings: $530 million, with a book-to-bill ratio of 0.9 to 1. Backlog: $4.7 billion at quarter end. Device Solutions Revenue: $126 million, gross margin of 30%, operating margin of 24.2%. Network Solutions Revenue: $403 million, gross margin of 36.9%, operating margin of 28.8%. Outcomes Revenue: $79 million, gross margin of 39.2%, operating margin of 18.2%. Total Debt: $1.265 billion, net debt of $142 million. Cash and Equivalents: $1.1 billion. Second Quarter Revenue Outlook: $605 million to $615 million. Second Quarter Non-GAAP EPS Outlook: $1.30 to $1.40 per diluted share. Warning! GuruFocus has detected 3 Warning Sign with ITRI. Release Date: May 01, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Itron Inc (NASDAQ:ITRI) reported a strong first quarter with revenue of $607 million, adjusted EBITDA of $88 million, and non-GAAP earnings per share of $1.52. The company achieved a record gross margin of 35.8%, driven by favorable product mix and operational efficiencies. Itron Inc (NASDAQ:ITRI) has a robust backlog of $4.7 billion, with Network Solutions and Outcomes segments representing over 95% of total bookings. The company continues to see strong customer demand for its grid edge intelligence platform, enhancing infrastructure agility and reliability. Itron Inc (NASDAQ:ITRI) reported a significant increase in free cash flow to $67 million, reflecting strong operational earnings growth and improved working capital. Bookings for the first quarter were $530 million, resulting in a book-to-bill ratio of 0.9, which may indicate a potential slowdown in future revenue growth. The tariff environment remains dynamic, with an estimated EBITDA impact of $15 million for the year, which could affect profitability. Device Solutions revenue decreased by 1% year-over-year, indicating potential challenges in this segment. The company faces macroeconomic and trade policy uncertainties, which could impact future demand and financial performance. Despite strong performance, Itron Inc (NASDAQ:ITRI) has not updated its full-year guidance, indicating potential caution regarding future market conditions. Q: Given the strength of Q1 and expectations for Q2, are you comfortable with the full-year guidance despite the tariff impacts? A: Thomas Deitrich, CEO, mentioned it's premature to update full-year guidance. While Q1 and Q2 are ahead of expectations, the tariff situation remains dynamic, and they will reassess after Q2 earnings. Joan Hooper, CFO, added that the first half EPS is up 10% versus consensus, indicating a strong start to the year. Q: How should we think about the segment margins for devices going forward, given the record margins achieved? A: Joan Hooper, CFO, stated that while it's premature to update long-term targets, they are pleased with the progress. The mix shift and portfolio pruning have contributed to the strong margins, but variability is expected quarter-to-quarter. Q: Can you provide insights into the regulatory environment for capitalizing software in the rate base? A: Thomas Deitrich, CEO, explained that the regulatory environment is constructive, with mechanisms varying by state. Performance-based rates are becoming more common, and the company structures deals to align with customer business plans, supporting continued growth in software sales. Q: What is the impact of tariffs on your financials, and how are you mitigating these effects? A: Thomas Deitrich, CEO, noted that the $15 million EBITDA impact includes current tariffs and mitigation measures like alternate sourcing and pricing adjustments. The impact is expected to be more pronounced in the latter half of the year. Q: How do your grid edge intelligence solutions assist in blackout situations like the recent one in Spain and Portugal? A: Thomas Deitrich, CEO, highlighted that their solutions provide visibility and control at the grid edge, aiding in segmentation, microgrid solutions, and demand response. These capabilities help minimize damage and restore power more quickly during outages. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
