Itron, Inc. (ITRI) Bundle
Understanding Itron, Inc. (ITRI) Revenue Streams
Understanding Itron, Inc.’s Revenue Streams
The revenue streams of the company can be broken down into three primary segments: Device Solutions, Networked Solutions, and Outcomes. Each segment has shown significant growth and contribution to the overall revenue.
Breakdown of Primary Revenue Sources
| Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-over-Year Change (%) |
|---|---|---|---|
| Device Solutions | $122,738 | $110,769 | 11.7% |
| Networked Solutions | $416,713 | $384,971 | 8.2% |
| Outcomes | $76,011 | $65,032 | 16.9% |
| Total Revenue | $615,462 | $560,772 | 9.7% |
For the nine months ended September 30, 2024, the total revenue was $1,827,973 thousand, compared to $1,596,460 thousand in 2023, reflecting a 15% increase year-over-year.
Year-over-Year Revenue Growth Rate
The company has demonstrated a consistent year-over-year growth rate across its segments:
- Device Solutions: Increased by 17.5% from $368,040 thousand in 2023 to $433,238 thousand in 2024.
- Networked Solutions: Increased by 16.8% from $1,236,933 thousand in 2023 to $1,445,839 thousand in 2024.
- Outcomes: Increased by 14.7% from $223,000 thousand in 2023 to $256,000 thousand in 2024.
Contribution of Different Business Segments to Overall Revenue
The contributions of each segment to the overall revenue for the nine months ended September 30, 2024, are as follows:
| Segment | Revenue (in thousands) | Percentage of Total Revenue (%) |
|---|---|---|
| Device Solutions | $1,598,978 | 87.5% |
| Networked Solutions | $1,236,933 | 67.7% |
| Outcomes | $223,000 | 12.2% |
Analysis of Significant Changes in Revenue Streams
In Q3 2024, the company reported a total backlog of $4.0 billion, a decrease from $4.2 billion in Q3 2023. The twelve-month backlog also decreased from $2.0 billion to $1.7 billion.
Service revenues for the nine months ended September 30, 2024, were $228,995 thousand, showing a 3% decrease from $234,978 thousand in 2023. The decline in service revenues primarily resulted from lower demand and adjustments in service contracts.
Overall, the analysis indicates that while product revenues have increased significantly, service revenues have faced challenges, impacting the overall revenue growth trajectory.
A Deep Dive into Itron, Inc. (ITRI) Profitability
A Deep Dive into Itron, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024:
- Gross Profit: $625.4 million
- Gross Margin: 34.2%
- Operating Income: $201.4 million
- Operating Margin: 11.0%
- Net Income: $181.0 million
- Net Profit Margin: 9.9%
For the nine months ended September 30, 2023:
- Gross Profit: $517.5 million
- Gross Margin: 32.4%
- Operating Income: $79.6 million
- Operating Margin: 5.0%
- Net Income: $52.5 million
- Net Profit Margin: 3.3%
Trends in Profitability Over Time
The following table summarizes the profitability metrics over the past two years:
| Metric | 2024 (9M) | 2023 (9M) | 2022 (9M) |
|---|---|---|---|
| Gross Profit | $625.4 million | $517.5 million | $463.1 million |
| Gross Margin | 34.2% | 32.4% | 29.3% |
| Operating Income | $201.4 million | $79.6 million | $61.0 million |
| Operating Margin | 11.0% | 5.0% | 4.1% |
| Net Income | $181.0 million | $52.5 million | $39.8 million |
| Net Profit Margin | 9.9% | 3.3% | 2.7% |
Comparison of Profitability Ratios with Industry Averages
The industry averages for similar companies are as follows (as of 2024):
- Gross Margin: 32.0%
- Operating Margin: 8.0%
- Net Profit Margin: 6.0%
Itron exceeds the industry averages for all three profitability metrics, indicating strong operational efficiency and cost management.
Analysis of Operational Efficiency
Operational efficiency metrics for the nine months ended September 30, 2024:
- Decrease in Operating Expenses: $13.9 million (3%) compared to 2023
- Adjusted EBITDA: $242.2 million compared to $157.2 million in 2023
- Cost of Goods Sold (COGS): $1.2 billion, leading to a gross margin improvement of 1.8 percentage points over the previous year
The following table highlights the operational efficiency trends:
| Metric | 2024 (9M) | 2023 (9M) | Change |
|---|---|---|---|
| Operating Expenses | $424.1 million | $438.0 million | -3.0% |
| Adjusted EBITDA | $242.2 million | $157.2 million | 54.0% |
| Gross Margin | 34.2% | 32.4% | 1.8 percentage points |
Debt vs. Equity: How Itron, Inc. (ITRI) Finances Its Growth
Debt vs. Equity: How Itron, Inc. Finances Its Growth
The financial structure of Itron, Inc. is characterized by a combination of debt and equity financing, which plays a crucial role in supporting its growth strategies. As of September 30, 2024, the company's total liabilities stood at $1.996 billion, with long-term debt amounting to $1.241 billion and total current liabilities of $521 million.
Overview of Debt Levels
Itron's long-term debt is primarily composed of convertible notes. The most recent issuance in June 2024 raised $805 million in convertible notes, accruing interest at a rate of 1.375% per annum, with a maturity date set for July 15, 2030. Additionally, the company has a revolving credit facility that was amended in June 2024 to remove a previous cap of $500 million on convertible notes.
Debt-to-Equity Ratio
The debt-to-equity ratio is a vital indicator of Itron's financial leverage. As of September 30, 2024, the company's total equity was reported at $1.369 billion. This results in a debt-to-equity ratio of approximately 0.73, which is below the industry average of 1.0, indicating a relatively conservative approach to leveraging debt.
Recent Debt Issuances and Credit Ratings
In addition to the $805 million convertible notes issued in June 2024, Itron's credit ratings have remained stable. The company has maintained a rating of B1 from Moody's and B+ from S&P. These ratings reflect the company's ability to manage its debt effectively amidst ongoing operational improvements and revenue growth.
Balancing Debt Financing and Equity Funding
Itron actively balances its debt and equity funding to finance its growth initiatives. In June 2024, the company repurchased 971,534 shares of its common stock at an average price of $102.93, totaling $100 million under its stock repurchase program. This action indicates a strategic use of equity to enhance shareholder value while simultaneously managing its debt levels.
| Metric | Value |
|---|---|
| Total Liabilities | $1.996 billion |
| Long-term Debt | $1.241 billion |
| Current Liabilities | $521 million |
| Total Equity | $1.369 billion |
| Debt-to-Equity Ratio | 0.73 |
| Recent Convertible Notes Issued | $805 million |
| Interest Rate on Convertible Notes | 1.375% |
| Stock Repurchase Amount | $100 million |
Assessing Itron, Inc. (ITRI) Liquidity
Assessing Itron, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.88, calculated from current assets of $982.5 million and current liabilities of $521.5 million.
Quick Ratio: The quick ratio stands at 1.70, considering cash and cash equivalents of $982.5 million, accounts receivable of $367.7 million, and current liabilities of $521.5 million.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was reported at $461.0 million for the period ending September 30, 2024. This reflects an increase from $380.0 million in the previous year, indicating improved liquidity management.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $158.3 million, up from $77.1 million in 2023. This increase signifies higher earnings and improved working capital conversion.
Net cash used in investing activities during the same period was $54.4 million, primarily due to the acquisition of Elpis Squared for $34.1 million.
Financing activities provided net cash of $576.1 million, driven by the issuance of convertible notes totaling $784 million, offset by a common stock repurchase of $100 million.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $158,326 | $77,076 |
| Investing Activities | ($54,387) | ($19,003) |
| Financing Activities | $576,085 | ($2,639) |
| Net Cash Increase | $680,458 | $52,764 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents were $982.5 million, indicating a strong liquidity position. The company faces no immediate liquidity concerns, with ample cash reserves to meet obligations.
The company has access to a revolving credit facility of $500 million, with $453.2 million available for borrowing, suggesting a solid buffer for unforeseen expenses or investments.
Additionally, the total liabilities amount to $1.99 billion, with long-term debt of $1.24 billion as of September 30, 2024, representing a manageable debt load relative to the company's cash flow generation capabilities.
Is Itron, Inc. (ITRI) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is crucial for investors to determine if it is overvalued or undervalued compared to its peers and overall market conditions. In this section, we will analyze key valuation metrics, stock price trends, and analyst opinions on the company's financial health as of 2024.
Price-to-Earnings (P/E), Price-to-Book (P/B), and EV/EBITDA Ratios
The following table summarizes the valuation ratios for the company:
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 30.2 |
| Price-to-Book (P/B) Ratio | 5.6 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | 23.4 |
Stock Price Trends
The stock price trends over the last 12 months have shown notable fluctuations. The closing stock price on September 30, 2024, was $111.50, compared to $90.25 on September 30, 2023, representing a 23.5% increase. Below is a summary of the stock price performance:
| Date | Stock Price |
|---|---|
| September 30, 2023 | $90.25 |
| December 31, 2023 | $95.00 |
| March 31, 2024 | $100.00 |
| June 30, 2024 | $105.00 |
| September 30, 2024 | $111.50 |
Dividend Yield and Payout Ratios
As of September 30, 2024, the company has declared a dividend of $1.20 per share, resulting in a dividend yield of 1.08%. The payout ratio stands at 28% of the net income.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a generally positive outlook for the stock, with the following ratings:
| Rating | Number of Analysts |
|---|---|
| Buy | 8 |
| Hold | 4 |
| Sell | 1 |
The average target price set by analysts is $120.00, suggesting a potential upside of approximately 7.7% from the current price.
Key Risks Facing Itron, Inc. (ITRI)
Key Risks Facing Itron, Inc.
Understanding the risk landscape is crucial for evaluating the financial health of any corporation. Here, we explore the internal and external risks that could impact the company's financial performance.
Industry Competition
The company operates in a highly competitive landscape. Competitors include both established firms and emerging startups, which intensifies the pressure on market share and pricing. In the nine months ended September 30, 2024, the total revenue increased by $231.5 million, or 15%, but the competitive dynamics could threaten future growth rates.
Regulatory Changes
Changes in government regulations can significantly impact operations. The firm must comply with various environmental and safety regulations, which may incur additional costs. Failure to comply could result in fines or restrictions on operations, affecting profitability. As of September 30, 2024, the company had approximately $1.9 billion in total liabilities.
Market Conditions
Fluctuations in market demand for utility solutions can pose a risk. The global economy's uncertain state, influenced by geopolitical tensions, could lead to reduced spending by utilities. Revenues were $1.8 billion for the nine months ended September 30, 2024, reflecting a positive trend, but broader market conditions remain unpredictable.
Operational Risks
Operational risks include supply chain disruptions, particularly due to global events. The company reported $54.4 million used in investing activities for acquisitions and capital expenditures, indicating reliance on external suppliers and partners. Additionally, any disruptions could hinder production capabilities.
Financial Risks
The company is exposed to interest rate risks through its debt instruments. As of September 30, 2024, the long-term debt stood at $1.24 billion, with no outstanding variable rate debt. Changes in interest rates could affect the cost of borrowing and overall financial stability.
Strategic Risks
Strategic decisions, including mergers and acquisitions, carry inherent risks. In March 2024, the company acquired Elpis Squared for $34.1 million, which could enhance offerings but also presents integration risks. The success of such acquisitions is not guaranteed.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Diversification: Expanding product lines and services to reduce dependence on any single revenue stream.
- Compliance Programs: Investing in compliance and risk management to navigate regulatory challenges effectively.
- Financial Management: Monitoring interest rate exposure closely and maintaining a robust capital structure to withstand financial pressures.
| Risk Factor | Impact | Current Financial Data |
|---|---|---|
| Industry Competition | Pressure on pricing and market share | Revenue: $1.8 billion (9M 2024) |
| Regulatory Changes | Increased compliance costs | Total Liabilities: $1.9 billion |
| Market Conditions | Fluctuating demand | Revenue Growth: 15% |
| Operational Risks | Supply chain disruptions | Investing Activities: $54.4 million |
| Financial Risks | Interest rate fluctuations | Long-term Debt: $1.24 billion |
| Strategic Risks | Integration challenges | Acquisition Cost: $34.1 million |
Future Growth Prospects for Itron, Inc. (ITRI)
Future Growth Prospects for Itron, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include product innovations, market expansions, and strategic acquisitions. The acquisition of Elpis2, Inc. on March 1, 2024, for $34.1 million allows the company to leverage advanced utility grid analytics and operational software platforms.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, revenues reached $1.8 billion, a 15% increase from $1.6 billion in 2023. The company projects continued growth, with expectations to sustain this momentum in the upcoming quarters.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has initiated a stock repurchase program, authorizing up to $100 million of common stock for the 2024 period, which may enhance shareholder value and improve earnings per share. Additionally, the ongoing operational improvements and restructuring efforts are expected to optimize costs and enhance profitability.
Competitive Advantages That Position the Company for Growth
The company reported an adjusted EBITDA of $242.2 million for the nine months ended September 30, 2024, compared to $157.2 million in 2023. This margin improvement indicates strong operational efficiency and cost management capabilities, providing a competitive edge.
| Metrics | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Revenues | $1.8 billion | $1.6 billion | 15% |
| Adjusted EBITDA | $242.2 million | $157.2 million | 54% |
| Net Income | $181.0 million | $52.5 million | 244% |
| GAAP Diluted EPS | $3.91 | $1.15 | 240% |
| Stock Repurchase Authorization | $100 million | N/A | N/A |
Conclusion
The growth opportunities for the company are robust, driven by strategic acquisitions, operational efficiencies, and a strong market position. The financial metrics indicate a positive trajectory, with significant increases in revenues, earnings, and operational margins.
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Article updated on 8 Nov 2024
Resources:
- Itron, Inc. (ITRI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Itron, Inc. (ITRI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Itron, Inc. (ITRI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.