Itron, Inc. (ITRI) has reported an EPS of 84 cents in the fiscal 2011 second quarter results, compared with 61 cents in the year-earlier quarter.
The quarter noted a benefit of 19 cents pertaining to discrete tax benefits. Excluding this benefit, adjusted EPS amounted to $1.20 versus 94 cents in the year-ago quarter.
Total revenue during the quarter amounted to $612.4 million versus $567.3 million in the prior year quarter.
Cost and Margins
Costs of goods sold increased to $421.3 million from $393.3 million in the year-ago quarter. Gross profit also soared to $191.1 million from $174.1 million in the prior-year quarter. Consequently, gross margins also rose 50 basis points year over year to 31.2%.
Operating income declined to $48.1 million from $50.0 million in the year-earlier quarter, thereby contracting operating margin by 100 basis points year over year to 7.8%.
Financial Position
As of June 30, 2011, cash and cash equivalent declined slightly to $168.3 million from $169.5 million as of December 31, 2011.
As of June 30, 2011, debt-to-capitalization ratio of the company improved to 17.4% from 18% as of March 31, 2011 and 23.4% as of December 31, 2010.
Cash from operations also declined to $87.7 million at the end of second quarter from $117.1 million at the end of the prior year period.
Outlook
For FY11, Itron expects revenues in the range of $2.3 billion to $2.4 billion; while EPS is projected in the range of $4.20 to $4.60.
Our Take
The technology-based advanced metering infrastructures (AMI) and automated meter reading (AMR) markets have very bright growth prospects for Itron. Two driving forces facilitating AMI and AMR growth are the cost reduction strategies implemented by almost all the companies to deal with the economic recession and the other is its slow recovery, necessitating efficient allocation of energy supply to meet the increasing demand. We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.
Itron is a leading technology provider to the global energy and water industries. It is the world's leading provider of intelligent metering, data collection and utility software solutions, with nearly 8,000 utilities worldwide relying on its technology to optimize the delivery and use of energy and water. It competes with the likes of General Electric Co. (GE) and Roper Industries Inc. (ROP).
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