Itron(US:ITRI)2024-08-01 12:35Itron Second Quarter 2024 Financial Results Financial Highlights Itron reported strong financial results for the second quarter of 2024, with significant year-over-year growth in revenue, gross profit, net income, and adjusted EBITDA Financial Highlights Summary | Metric | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $609 million | +13% | | Gross Profit | $210 million | +21% | | GAAP Net Income | $51 million | +$27 million | | GAAP Diluted EPS | $1.10 | +$0.57 | | Non-GAAP Diluted EPS | $1.21 | +$0.56 | | Adjusted EBITDA | $77 million | +56% | | Free Cash Flow | $45 million | +$9 million | - CEO Tom Deitrich highlighted the successful quarter, with revenue exceeding expectations, noting record revenue in the Networked Solutions and Outcomes segments due to strong execution2 Summary of Second Quarter Consolidated Financial Results The company's consolidated results for Q2 2024 showed broad-based improvement, with total revenue growing 13% to $609 million and gross margin expanding by 250 basis points to 34.6% Revenue Analysis Revenue Growth by Segment | Segment | Revenue Growth (YoY) | Key Driver | | :--- | :--- | :--- | | Total Revenue | +13% | Strong operational execution | | Device Solutions | +5% (+6% constant currency) | Growth in smart water sales | | Networked Solutions | +14% | Ongoing and new project deployments | | Outcomes | +16% | Increase in recurring revenue and services | Profitability Analysis - Q2 gross margin increased by 250 basis points to 34.6% year-over-year, primarily due to a higher margin product mix and operational efficiencies3 Profitability Metrics | Metric | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | | GAAP Operating Income | $65 million | +$30 million | | Non-GAAP Operating Income | $69 million | +$28 million | | GAAP Net Income | $51 million | +$27 million | | Non-GAAP Net Income | $56 million | +$26 million | - The increase in net income was driven by higher operating income and interest income, partially offset by higher tax expenses45 Cash Flow and Other Key Metrics The company generated strong cash flow in the second quarter, with free cash flow increasing to $45 million, despite a decrease in total backlog to $4.1 billion Cash Flow Summary | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $52 million | $42 million | | Free Cash Flow | $45 million | $36 million | - The increase in free cash flow was primarily attributed to higher earnings6 Backlog and Bookings | Metric | Q2 2024 | Prior Year | | :--- | :--- | :--- | | Total Backlog | $4.1 billion | $4.4 billion | | Quarterly Bookings | $447 million | N/A | Business Outlook Itron provided a positive outlook for Q3 2024 and significantly raised its full-year 2024 guidance for both revenue and non-GAAP diluted EPS, reflecting strong performance and confidence Q3 2024 Outlook | Metric | Q3 2024 Outlook | | :--- | :--- | | Revenue | $590 - $600 million | | Non-GAAP Diluted EPS | $1.10 - $1.20 | Full Year 2024 Guidance | Metric | Updated Full Year 2024 Guidance | Previous Guidance (Feb 2024) | | :--- | :--- | :--- | | Revenue | $2.385 - $2.415 billion | $2.275 - $2.375 billion | | Non-GAAP Diluted EPS | $4.45 - $4.65 | $3.40 - $3.80 | Consolidated Financial Statements The consolidated financial statements provide a detailed view of Itron's financial performance and position, showing significant growth in revenue and net income, and an increase in cash and cash equivalents Consolidated Statements of Operations Consolidated Statements of Operations (USD thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenues | $609,069 | $541,070 | | Gross Profit | $210,460 | $173,947 | | Operating Income | $64,647 | $35,100 | | Net Income Attributable to Itron, Inc. | $51,318 | $24,201 | | Diluted EPS | $1.10 | $0.53 | Segment Information Total Revenues by Segment (USD thousands) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Device Solutions | $118,550 | $113,160 | | Networked Solutions | $412,704 | $360,930 | | Outcomes | $77,815 | $66,980 | Gross Profit by Segment (USD thousands) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Device Solutions | $31,231 | $24,719 | | Networked Solutions | $152,157 | $121,873 | | Outcomes | $27,072 | $27,355 | Consolidated Balance Sheets Consolidated Balance Sheets (USD thousands) | Metric | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $920,639 | $302,049 | | Total current assets | $1,689,455 | $1,049,438 | | Total assets | $3,283,940 | $2,604,263 | | Long-term debt, net | $1,239,772 | $454,827 | | Total liabilities | $2,023,249 | $1,272,832 | | Total Itron, Inc. shareholders' equity | $1,239,563 | $1,310,911 | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (USD thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $93,025 | $42,989 | | Net cash used in investing activities | ($47,820) | ($13,220) | | Net cash provided by financing activities | $576,839 | $770 | | Increase in cash and cash equivalents | $618,590 | $30,780 | Non-GAAP Financial Measures and Reconciliations Itron utilizes non-GAAP financial measures to provide supplemental information on core business performance, excluding items like amortization and restructuring costs, with detailed reconciliations to GAAP measures - Management uses non-GAAP measures for financial decision-making and executive compensation, believing they offer greater transparency into recurring core operating results1223 Non-GAAP Reconciliation Summary (Q2 2024, USD thousands) | Reconciliation Summary (Q2 2024) | GAAP (USD thousands) | Adjustments (USD thousands) | Non-GAAP (USD thousands) | | :--- | :--- | :--- | :--- | | Operating Income | $64,647 | $4,437 | $69,084 | | Net Income | $51,318 | $4,784 | $56,102 | Key Reconciled Metrics (USD thousands) | Key Reconciled Metrics | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Adjusted EBITDA | $77,105 | $49,300 | | Free Cash Flow | $44,607 | $35,964 |