Itron(US:ITRI)2025-05-01 15:02Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $607 million, a 1% increase year over year, with adjusted EBITDA of $88 million and non-GAAP earnings per share of $1.52, reflecting a 22% increase from the previous year [6][13][14] - Free cash flow improved to $67 million compared to $34 million in the prior year, driven by operational earnings growth and improved working capital [15] Business Line Data and Key Metrics Changes - Device Solutions revenue decreased by 1% year over year to $126 million, but increased by 2% on a constant currency basis, with gross margin at 30% and operating margin at 24.2% [15][17] - Network Solutions revenue was $403 million, with a gross margin of 36.9% and operating margin of 28.8%, showing a slight decrease in gross margin due to product mix [17] - Outcomes revenue grew by 14% year over year to $79 million, with gross margin at 39.2% and operating margin at 18.2%, benefiting from a higher margin revenue mix [18] Market Data and Key Metrics Changes - Bookings for the quarter were in line with expectations, resulting in a book-to-bill ratio of 0.9, with a backlog of $4.7 billion, primarily driven by Network Solutions and Outcomes segments [8][9] Company Strategy and Development Direction - The company is focused on optimizing its factory footprint, strengthening supply chain resilience, and growing recurring revenue to capitalize on future opportunities [20] - Itron aims to enhance its industry leadership through innovative solutions that address environmental, operational, and consumer challenges faced by utilities and cities [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased macroeconomic and trade policy uncertainty but expressed confidence in the company's strategic focus and operational execution [20] - The company expects Q2 revenue to be in the range of $605 million to $615 million, with non-GAAP earnings per share anticipated to grow approximately 12% year over year [19] Other Important Information - The estimated EBITDA impact from tariffs for the year is approximately $15 million, with the majority of the impact expected in the latter half of the year [11][62] - The company has a strong liquidity position, with total debt at $1.265 billion and cash and equivalents at $1.1 billion [14] Q&A Session Summary Question: Impact of tariffs on guidance - Management indicated it is premature to update full-year guidance but noted strong Q1 performance and a positive outlook for Q2 [25][26] Question: Device Solutions segment margins - Management expressed satisfaction with the current margins but noted variability due to seasonal factors and product mix [28][29] Question: Backlog and coverage for the year - Management stated that the demand environment remains strong and the outlook is positive, despite potential macroeconomic uncertainties [32][33] Question: Regulatory environment for software capitalization - Management highlighted that the regulatory environment is constructive, with various mechanisms allowing software purchases to be included in rate bases [39] Question: Tariff mitigation efforts - Management clarified that the $15 million estimate includes mitigation measures and is based on current tariff protocols [43][62] Question: M&A and capital deployment - The company is actively seeking acquisitions to enhance software content and drive growth, prioritizing this over share buybacks [71] Question: Recurring revenue mix in Outcomes - Management reported approximately 70% recurring revenue in Q1, with a goal of reaching 80% in the future [76]