• Revenue: $607 million, increased 1% year-over-year.
• Adjusted EBITDA: $88 million, increased 15% year-over-year.
• 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 in the prior year.
• Bookings: $530 million, 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.
• Net Leverage: 0.4 times.
• Q2 Revenue Outlook: $605 million to $615 million.
• Q2 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.

Positive Points

• 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 substantial backlog of $4.7 billion, indicating strong future demand and stability.
• The Outcomes segment showed impressive growth, with a 14% year-over-year increase in revenue, driven by increased recurring revenue and software licenses.
• The company is well-positioned to navigate macroeconomic uncertainties due to its strategic focus and operational execution, which align with customer needs.

Negative Points

• 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 orders.
• The tariff environment remains dynamic, with an estimated EBITDA impact of $15 million for the year, which could affect profitability.
• Device Solutions revenue was down 1% year-over-year, indicating potential challenges in this segment.
• The Network Solutions segment experienced a slight decrease in gross margin due to product mix, which could impact future profitability.
• There is uncertainty regarding the macroeconomic environment and trade policies, which could potentially affect customer demand and overall business performance.

Q & A Highlights

Q: Can you provide more details on the expected EBITDA impact of tariffs and how it affects your full-year guidance? A: Thomas Deitrich, President and CEO, mentioned that it's premature to update the full-year guidance. The first quarter was ahead of expectations, and the second quarter is also expected to be strong. The $15 million EBITDA impact from tariffs is being managed through mitigation measures, but it's too early to adjust the full-year outlook.

Q: What are your expectations for the Device Solutions segment margins going forward? A: Joan Hooper, CFO, stated that while it's premature to update long-term targets, the segment is performing ahead of expectations. The margins may vary quarter-to-quarter due to seasonal factors, but the company is pleased with the progress in the devices business.

Q: How should we interpret the removal of the 12-month backlog from your investor presentation? A: Thomas Deitrich explained that the removal was to avoid confusion as it fluctuates significantly. The overall demand environment remains strong, and the company is confident in its current trajectory despite macroeconomic uncertainties.

Q: Can you discuss the regulatory environment for capitalizing software in the rate base? A: Thomas Deitrich noted that the regulatory environment is constructive, with many states allowing performance-based rates. The company structures deals to align with customer business plans, and the outcomes segment has seen consistent double-digit growth.

Q: What is the timing of your tariff mitigation efforts, and how should we think about their impact? A: Thomas Deitrich indicated that most of the $15 million net tariff impact is expected in the back half of the year. This is due to the timing of pricing adjustments, sourcing changes, and existing inventory levels.

Q: How do your grid edge intelligence solutions help in blackout situations like the recent one in Spain and Portugal? A: Thomas Deitrich explained that their solutions provide visibility and control at the grid edge, aiding in segmentation and microgrid solutions. While the Spain and Portugal blackout was more transmission-related, their technologies can help minimize damage and restore power faster.

Q: With your current financial position, what are your priorities for capital deployment? A: Joan Hooper stated that the priority is finding acquisitions that enhance software content and drive outcomes growth. The company is actively exploring opportunities, particularly in the software space, to strengthen its portfolio.

Q: Can you elaborate on the mix between setup and recurring revenues in the Outcomes segment? A: Thomas Deitrich mentioned that recurring revenue was about 70% in Q1, which is slightly lower than their ultimate goal of 80%. The mix can vary quarterly, but the focus remains on increasing recurring revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.