Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Itron Inc (ITRI, Financial) reported third-quarter revenue of $615 million, a 10% increase year over year, exceeding expectations.
- The company achieved a record adjusted EBITDA of $89 million, marking a 29% increase year over year.
- Itron Inc (ITRI) has a substantial backlog of $4 billion, with significant bookings of $487 million in the third quarter.
- The company reported a record non-GAAP earnings per share of $1.84, a significant increase from $0.98 a year ago.
- Itron Inc (ITRI) is experiencing strong demand for its smart water and electric solutions, contributing to revenue growth across its business segments.
Negative Points
- The company anticipates a lower revenue growth profile for 2025 due to a high base in 2024 and back-end loaded bookings.
- Outcomes segment gross margin decreased by 360 basis points year-over-year due to a lower margin revenue mix and increased services cost.
- The company faces challenges with regulatory and funding processes, which can delay project award to booking recognition.
- Itron Inc (ITRI) expects a decrease in non-GAAP earnings per share for the fourth quarter compared to the previous year, partly due to a higher effective tax rate.
- The company is still working through non-inflation indexed inventory, with less than 25% remaining to flow through within the next 12 months.
Q & A Highlights
Q: Joan, can you clarify the growth expectations for next year?
A: Joan Hooper, CFO, explained that while they are not ready to provide 2025 guidance, growth is expected, albeit not at the same level as 2024. She emphasized the importance of normalizing 2024 figures due to $125 million of catch-up revenue and noted that the compounded growth from 2024 to 2027 targets is 2.5% to 5%.
Q: Can you discuss the state of the market and the strength of bookings?
A: Thomas Deitrich, CEO, stated that the market remains constructive, driven by utilities' needs to address climate disruption and manage resources better. He noted progress in regulatory and funding processes, with over 50% of the $1 billion pending awards moving forward, supporting a book-to-bill ratio of 1:1 for the year.
Q: How is the adoption of Grid Edge Essentials progressing, and what does it mean for revenue composition?
A: Thomas Deitrich highlighted that Grid Edge Essentials simplifies technology adoption for utilities, broadening market opportunities. He noted that the pace of innovation is increasing, and while Outcomes revenue has been service-heavy recently, it is expected to shift back towards SaaS and licensing, improving margins.
Q: What is the expected impact of recent bookings on future revenue?
A: Joan Hooper mentioned that there is typically a 9 to 12-month lag from booking to revenue realization. The recent bookings are heavily skewed towards Networks and Outcomes, aligning with the current backlog composition, and are expected to contribute to revenue growth in 2026 and beyond.
Q: Can you explain the recent strength in Outcomes and its sustainability?
A: Thomas Deitrich attributed the double-digit growth in Outcomes to the lagging effect of network deployments and recurring revenue. He emphasized that Outcomes is expected to continue growing, driven by recurring revenue and the increasing adoption of grid edge intelligence solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
