View:
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 26, 2005
--------------------------------------
Date of Report (Date of Earliest Event Reported)
ITRON, INC.
----------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Washington 000-22418 91-1011792
--------------------------------- --------------------- -----------
(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
2818 N. Sullivan Road, Spokane, WA 99216
---------------------------------------------------------------------------
(Address of Principal Executive Offices, Zip Code)
(509) 924-9900
---------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
None
---------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On April 26, 2005, Itron, Inc. issued a press release announcing
the financial results for the first quarter ending March 31, 2005.
A copy of this press release and accompanying financial statements
are attached as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit
Number Description
- -------------- -----------------------------------
99.1 Press Release dated April 26, 2005.
The information presented in this Current Report on Form 8-K may contain
forward-looking statements and certain assumptions upon which such
forward-looking statements are in part based. Numerous important factors,
including those factors identified in Itron, Inc.'s Annual Report on Form 10-K
and other of the Company's filings with the Securities and Exchange Commission,
and the fact that the assumptions set forth in this Current Report on Form 8-K
could prove incorrect, could cause actual results to differ materially from
those contained in such forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ITRON, INC.
Dated: April 26, 2005 By: /s/ STEVEN M. HELMBRECHT
------------------------
Steven M. Helmbrecht
Sr. Vice President and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
- -------------- -----------------------------------
99.1 Press Release dated April 26, 2005.
Exhibit 99.1
Itron Reports Strong First Quarter 2005 Financial Results; GAAP EPS of 4 Cents
and Pro Forma EPS of 32 Cents on Revenues of $116.5 Million
SPOKANE, Wash.--(BUSINESS WIRE)--April 26, 2005--Itron, Inc.
(NASDAQ:ITRI), today reported its financial results for the quarter
ended March 31, 2005. Revenues were $116.5 million for the quarter,
compared with $65.6 million in the first quarter of 2004. The majority
of the increase results from the Electricity Metering acquisition
completed July 1, 2004.
-- We shipped approximately 935,000 automatic meter reading (AMR)
modules in the first quarter of 2005 compared with 820,000 in
the first quarter of 2004. In addition, we shipped
approximately 375,000 electricity meters with embedded Itron
AMR in the first quarter of 2005. Prior to the Electricity
Metering acquisition on July 1, 2004, revenues from shipments
of electricity meters with our AMR embedded were in the form
of royalties only.
-- Electricity Metering revenues, which include electricity
meters with embedded AMR, were $54.1 million in the first
quarter of 2005.
-- Meter Data Collection (MDC) revenues in the quarter were $49.7
million compared with $54.7 million in the first quarter of
2004. The lower 2005 revenues result primarily from lower
average selling prices for standalone electric AMR modules and
lower royalty revenues.
-- Software Solutions revenues were $12.7 million in the quarter,
up from $10.9 million in the first quarter of last year.
On a GAAP basis, net income was $817,000, or 4 cents per diluted
share for the quarter, compared with a net loss in the first quarter
of 2004 of $738,000, or 4 cents per diluted share. Pro forma net
income for the quarter was $7.3 million, or 32 cents per diluted
share, compared with $2.2 million, or 10 cents per diluted share in
the first quarter of 2004. Pro forma earnings exclude the amortization
of intangible assets and debt placement fees, restructurings and
non-cash stock compensation. A schedule reconciling GAAP income and
EPS to pro forma income and EPS is attached to this release.
New order bookings were $117 million for the quarter compared with
$66 million in the first quarter of last year, and $128 million in the
fourth quarter of 2004. Twelve-month backlog, which represents the
portion of backlog that will be earned over the next twelve months,
was $116 million at March 31, 2005, compared with $79 million a year
ago and $97 million at December 31, 2004. Total backlog was $190
million compared with $155 million a year ago and $179 million at
December 31, 2004.
"We are off to a great start in 2005," said LeRoy Nosbaum,
chairman and CEO. "AMR projects are moving forward at a number of
utilities this year and we are very pleased with the flow of orders so
far. The addition of electricity metering and our actions to
streamline operations last year resulted in solid operating margins
during the quarter."
Gross margin was 44% during the quarter compared with 46% in the
first quarter of last year and 42% in the fourth quarter of 2004.
-- Meter Data Collection segment gross margin of 42% in the first
quarter of 2005 reflects a decline of 7 points from MDC gross
margin in the first quarter of 2004, and is primarily
attributable to lower average selling prices for separate
electric AMR modules and lower royalty revenues.
-- Software Solutions gross margins improved from 29% in the
first quarter of 2004 to 45% in the first quarter of 2005 due
to better utilization of professional services staffing as a
result of workforce reductions during 2004, along with higher
maintenance revenue due to a larger installed base.
-- Electricity Metering gross margin of 45% for the quarter was
approximately 5 points higher than in the previous quarter due
to higher volumes, product mix changes and the phasing out of
low margin manufacturing support services as of December 31,
2004.
Sales and marketing, product development and general and
administrative expenses were $35.1 million for the quarter, compared
with $26.5 million in the first quarter last year. However, as a
percentage of revenues, those expenses were 30% of revenues for the
quarter compared with 40% in the first quarter of last year. The
improved operating leverage in 2005 reflects the lower level of
spending required for Electricity Metering marketing and product
development due to its more narrowly focused product line, as well as
operating efficiencies and cost savings from headcount reductions in
2004.
Intangible asset amortization expenses were $9.7 million in the
first quarter of 2005 compared with $2.0 million in the first quarter
of 2004. Interest expense was $4.6 million for the quarter compared
with $754,000 in the first quarter of last year. Increases in both are
attributable to our Electricity Metering acquisition.
Operating activities generated $24.9 million in cash during the
quarter compared with $14.0 million in the first quarter of 2004. We
made a total of $20.0 million of optional repayments during the first
quarter of 2005 on our senior credit facility term loan, bringing the
balance to $129.6 million at March 31, 2005. Total debt was $257.6
million at March 31, 2005 compared with $278.2 million at December 31,
2004.
On April 19, 2005, we completed two amendments to our senior
secured credit facility. Those amendments resulted in a 50 basis point
reduction in the term loan interest rate, an increase to our maximum
consolidated leverage and consolidated senior debt ratios, and
increases in our letter of credit limit and our revolver commitment.
On April 25, 2005, we made another optional repayment of $5.0 million
on the term loan.
Business Outlook:
Our outlook for 2005 does not include any impact related to the
expensing of stock options. We expect to implement FASB's Statement
123R, which requires the expensing of stock options and ESPP shares
issued at a discount, in 2006. Expensing of stock options will
decrease gross margin, increase operating expenses and influence our
effective tax rate.
"Prospects for large new meter/AMR projects are indeed
encouraging," said Nosbaum. "However, orders on a number of projects
that have been publicly talked about by customers have not yet been
placed. As such, the upward revision to our outlook for 2005 is
primarily based on our stronger than expected first quarter results."
For the full year 2005, we expect:
-- Revenues to be between $510 and $520 million (previous
guidance was $505 to $515 million).
-- Pro forma diluted earnings per share between $1.50 and $1.55
(previous guidance was $1.40 to $1.45).
-- Operating cash flow between $75 and $85 million (previous
guidance was $70 to $80 million).
Use of Non-GAAP Financial Information:
To supplement our consolidated financial statements presented in
accordance with GAAP, we use certain non-GAAP measures, including pro
forma earnings and EPS and EBITDA. Pro forma earnings and EPS are
adjusted from GAAP-based results to exclude certain costs and expenses
that we believe are not indicative of our core operating results. Pro
forma results are one of the primary indicators management uses for
evaluating historical results and for planning and forecasting future
periods. We believe pro forma results provide consistency in our
financial reporting which enhances our investor's understanding of our
current financial performance as well as our future prospects. Pro
forma results along with EBITDA measures should be viewed in addition
to, and not in lieu of, GAAP results.
Earnings Conference Call:
Itron will host a conference call to discuss the financial results
contained in this release at 1:45 p.m. PST on April 26, 2005. The call
will be webcast in a listen-only mode by Thomson/CCBN and can be
accessed online at www.itron.com, "About Itron - Investor Events."
Investors may also listen to the live call through Thomson's
StreetEvents Network at www.fulldisclosure.com or
www.streetevents.com. The live webcast will begin at 1:45 p.m. (PST)
and webcast replays will begin shortly after the conclusion of the
live call and will be available for two weeks. A telephone replay of
the call will also be available approximately one hour after the
conclusion of the live call, for 48 hours, and is accessible by
dialing (888) 203-1112 (Domestic) or (719) 457-0820 (International)
and entering passcode #3013943.
Forward-Looking Statements:
This release contains forward-looking statements concerning
Itron's operations, financial performance, sales, earnings and cash
flow. These statements reflect our current plans and expectations and
are based on information currently available. They rely on a number of
assumptions and estimates, which could be inaccurate, and which are
subject to risks and uncertainties that could cause our actual results
to vary materially from those anticipated. Risks and uncertainties
include the rate and timing of customer demand for the Company's
products, rescheduling of current customer orders, changes in
estimated liabilities for product warranties, changes in laws and
regulations, and other factors which are more fully described in our
Annual Report on Form 10-K for the year ended December 31, 2004 on
file with the Securities and Exchange Commission. Itron undertakes no
obligation to update publicly or revise any forward-looking
statements.
About Itron:
Itron is a leading technology provider and critical source of
knowledge to the global energy and water industries. More than 2,800
utilities worldwide rely on Itron technology to deliver the knowledge
they require to optimize the delivery and use of energy and water.
Itron delivers value to its clients by providing industry-leading
solutions for electricity metering, meter data collection, energy
information management, demand side management and response, load
forecasting, analysis and consulting services, distribution system
design and optimization, Web-based workforce automation, commercial
and industrial customer care and residential energy management. To
know more, start here: www.itron.com.
Statements of operations, reconciliation between GAAP and pro
forma income and EPS, reconciliation of GAAP net income to EBITDA,
segment information and balance sheets follow.
ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended
March 31,
------------------
Revenues 2005 2004
--------- --------
Sales $104,202 $55,016
Service 12,268 10,586
--------- --------
Total revenues 116,470 65,602
--------- --------
Cost of revenues
Sales 59,199 29,607
Service 6,273 6,123
--------- --------
Total cost of revenues 65,472 35,730
--------- --------
Gross profit 50,998 29,872
Operating expenses
Sales and marketing 13,239 9,654
Product development 11,914 10,222
General and administrative 9,966 6,626
Amortization of intangibles 9,716 2,027
Restructurings 390 2,382
--------- --------
Total operating expenses 45,225 30,911
--------- --------
Operating income (loss) 5,773 (1,039)
Other income (expense)
Interest income 4 17
Interest expense (4,567) (754)
Other income (expense), net 101 266
--------- --------
Total other income (expense) (4,462) (471)
--------- --------
Income (loss) before income taxes 1,311 (1,510)
Income tax (provision) benefit (494) 772
--------- --------
Net income (loss) $817 $(738)
========= ========
Earnings per share
Basic net income (loss) per share $0.04 $(0.04)
========= ========
Diluted net income (loss) per share $0.04 $(0.04)
========= ========
Weighted average number of shares outstanding
Basic 21,451 20,656
Diluted 22,737 20,656
ITRON, INC.
RECONCILIATION BETWEEN GAAP NET INCOME (LOSS) AND PRO FORMA INCOME
AND EPS
(Unaudited, in thousands, except per share data)
Three Months Ended
March 31,
-----------------
PRO FORMA NET INCOME 2005 2004
------- --------
GAAP basis income (loss) before income taxes $1,311 $(1,510)
Adjustments to GAAP basis income (loss) before income taxes
Amortization of intangibles 9,716 2,027
Amortization of debt placement fees 676 191
Restructurings 390 2,382
Non-cash stock compensation 73 -
------- --------
Total adjustments 10,855 4,600
Adjusted income before income taxes 12,166 3,090
Income tax provision (4,832) (922)
------- --------
Pro forma net income $7,334 $2,168
======= ========
PRO FORMA EARNINGS PER SHARE
Basic
Weighted average number of basic shares outstanding 21,451 20,656
Basic pro forma net income per share $0.34 $0.10
======= ========
Diluted
Weighted average number of basic shares outstanding 21,451 20,656
Employee stock option shares 1,286 1,184
------- --------
Weighted average number of diluted shares
outstanding 22,737 21,840
Pro forma net income $7,334 $2,168
======= ========
Diluted pro forma net income per share $0.32 $0.10
======= ========
ITRON, INC.
RECONCILIATION BETWEEN GAAP NET INCOME (LOSS) AND EBITDA
(Unaudited, in thousands)
Three Months Ended
March 31,
----------------
2005 2004
-------- -------
GAAP basis net income (loss) $817 $(738)
Adjustments to GAAP basis net income (loss)
Interest income (4) (17)
Interest expense 4,567 754
Income tax provision (benefit) 494 (772)
Depreciation and amortization 12,980 4,440
-------- -------
Total adjustments 18,037 4,405
EBITDA $18,854 $3,667
======== =======
ITRON, INC.
SEGMENT INFORMATION
(Unaudited, in thousands)
Three Months Ended March 31,
2005 2004
-----------------------------
Revenues
Hardware Solutions
Meter Data Collection $49,676 $54,746
Electricity Metering 54,106 -
-------- --------
Total Hardware Solutions 103,782 54,746
Software Solutions 12,688 10,856
-------- --------
Total Company $116,470 $65,602
======== ========
Gross profit
Hardware Solutions
Meter Data Collection $21,044 $26,777
Electricity Metering 24,277 -
-------- --------
Total Hardware Solutions 45,321 26,777
Software Solutions 5,677 3,095
-------- --------
Total Company $50,998 $29,872
======== ========
Operating income (loss)
Hardware Solutions
Meter Data Collection $16,028 $21,774
Electricity Metering 19,889 -
Other unallocated costs (6,021) (3,349)
-------- --------
Total Hardware Solutions 29,896 18,425
Software Solutions (2,652) (6,974)
Corporate unallocated (21,471) (12,490)
-------- --------
Total Company $5,773 $(1,039)
======== ========
ITRON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands) March 31, December 31,
2005 2004
-------------- ----------------
ASSETS
Current assets
Cash and cash equivalents $15,628 $11,624
Accounts receivable, net 73,885 90,097
Inventories 42,821 45,459
Deferred income taxes, net 19,416 22,733
Other 9,992 5,477
-------------- ----------------
Total current assets 161,742 175,390
Property, plant and equipment, net 54,821 59,690
Intangible assets, net 152,420 162,137
Goodwill 115,671 117,471
Deferred income taxes, net 32,194 27,252
Other 15,257 15,211
-------------- ----------------
Total assets $532,105 $557,151
============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
expenses $32,408 $37,439
Wages and benefits payable 15,642 13,947
Current portion of debt 2,108 35,647
Current portion of warranty 6,430 7,243
Unearned revenue 19,851 22,991
-------------- ----------------
Total current liabilities 76,439 117,267
Long-term debt 252,474 239,361
Project financing debt 3,018 3,227
Warranty 4,857 6,331
Other obligations 6,445 6,535
-------------- ----------------
Total liabilities 343,233 372,721
Shareholders' equity
Preferred stock - -
Common stock 215,811 211,920
Accumulated other comprehensive
income 688 954
Accumulated deficit (27,627) (28,444)
-------------- ----------------
Total shareholders' equity 188,872 184,430
-------------- ----------------
Total liabilities and
shareholders' equity $532,105 $557,151
============== ================
CONTACT: Itron, Inc.
Mima Scarpelli Vice-president,
Investor Relations and Corporate Communications
509-891-3565
mima.scarpelli@itron.com