Itron, Inc. Net Debt / EBITDA jumped on 10.3x from 2.0x to 12.3x in 2018 while EBITDA dropped on 66.6%
02/27/2019 • About Itron, Inc. (
$ITRI) • By InTwits
Itron, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 3.1% in 2018, 10.8% in 2017, 8.2% in 2016, 6.8% in 2015, 5.1% in 2014
- Itron, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's a lot of higher than industry average of 13.3%.
- CAPEX is quite volatile: $0m in 2018, $10m in 2017, $9m in 2016, $10m in 2015, $7m in 2014
- In the last 5 years the company invested considerably less than D&A: $241m vs. $428m. In 2018 this situation was still the same: CAPEX was 60 while D&A was 122
- The company has unprofitable business model: ROIC is -3.2%
- It operates with high leverage: Net Debt/EBITDA is 12.3x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Itron, Inc.'s Revenue surged on 17.7%. Revenue growth showed slowdown in 18Q4 - it was 6.6% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 7.7 pp from 10.8% to 3.1% in 2018. During 2014-2018 EBITDA Margin topped in 2017 at 10.8%.
Gross Margin decreased on 2.8 pp from 33.5% to 30.7% in 2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. During the last 5 years SBC as a % of Revenue bottomed in 2015 at 0.75% and was growing since that time.
Net Income margin decreased on 7.0 pp from 2.8% to -4.2% in 2018. During the last 5 years Net Income margin topped in 2017 at 2.8%.
Investments (CAPEX, working capital and M&A)
Itron, Inc.'s CAPEX/Revenue was 2.5% in 2018. The company's CAPEX/Revenue showed almost no change from 2015 to 2018. It's average CAPEX/Revenue for the last three years was 2.4%. To fuel its fast growth Itron, Inc. invested a large share of EBITDA (82.3%) to CAPEX.
Accounts receivable as a % of Revenue decreased slightly on 1.3 pp from 19.7% to 18.4% in 2018. Inventories as a % of Revenue showed almost no change at 9.3% in 2018. Accounts payable as a % of Revenue decreased slightly on 0.71 pp from 19.5% to 18.8% in 2018.
Itron, Inc. has spent
$803m on M&A in 2018 which accounts for 33.8% of revenue.
Return on investment
The company operates at negative ROIC (-3.2%) and ROE (-13.2%). ROIC dropped on 16.9 pp from 13.7% to -3.2% in 2018. ROE dropped on 21.3 pp from 8.1% to -13.2% in 2018. During 2014-2018 ROIC topped in 2017 at 13.7%. During 2014-2018 ROE topped in 2017 at 8.1%.
Leverage (Debt)
Debt level is 12.3x Net Debt / EBITDA and 14.0x Debt / EBITDA. Net Debt / EBITDA jumped on 10.3x from 2.0x to 12.3x in 2018. Debt surged on 65.8% while cash dropped on 31.8%. During 2014-2018 Net Debt/EBITDA bottomed in 2016 at 1.0x and was growing since that time.
Itron, Inc. has no short term refinancing risk: cash is higher than short term debt (422.7%).
Average interest expence paid by the company was 5.7% in 2018.
Management team
Itron, Inc.'s CEO Philip C Mezey is a founder and has spent 6 years with the company. CEO total compensation was
$4,971,887 in 2018 which included
$821,154 salary. Joan S Hooper is a the company's CFO. Joan S Hooper has spent 2 years at the company.
At the end of financial year the company had 1.2% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 8,000 employees. The number of employees increased on 2.6%. Average revenue per employee in 2018 was
$297,015 and it jumped on 14.8%.
Financial and operational results
FY ended 12/31/2018
Itron, Inc. ($ITRI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,948 | 1,884 | 2,013 | 2,018 | 2,376 | 17.7% |
| Gross Profit | 614 | 557 | 660 | 677 | 730 | 7.9% |
| SG&A | 345 | 317 | 322 | | | |
| EBITDA | 99 | 129 | 165 | 218 | 73 | -66.6% |
| EBIT | 0 | 53 | 96 | 155 | -50 | -132.1% |
| Interest expence | 10 | | | 14 | 58 | 320.4% |
| Tax | 4 | 22 | 50 | 74 | -13 | -116.9% |
| Net Income | -24 | 13 | 32 | 57 | -99 | -273.2% |
| Stock Based Compensation | 18 | 14 | 18 | 21 | 31 | 46.0% |
Balance Sheet
|
|---|
| Cash | 112 | 131 | 134 | 176 | 120 | -31.8% |
| Accounts Receivable | 347 | 331 | 352 | 398 | 437 | 9.8% |
| Inventory | 154 | 190 | 163 | 194 | 221 | 13.8% |
| Accounts Payable | 184 | 186 | 173 | 262 | 310 | 18.2% |
| Short Term Debt | 30 | 11 | 14 | 20 | 28 | 44.4% |
| Long Term Debt | 294 | 359 | 290 | 594 | 988 | 66.5% |
Cash flow
|
|---|
| Capex | 44 | 44 | 44 | 49 | 60 | 21.1% |
| Acquisitions | | 6 | 1 | 99 | 803 | 708.0% |
Ratios
|
|---|
| Revenue growth | -0.1% | -3.3% | 6.9% | 0.2% | 17.7% | |
| EBITDA growth | -371.4% | 30.6% | 27.7% | 32.6% | -66.6% | |
|
|---|
| Gross Margin | 31.5% | 29.6% | 32.8% | 33.5% | 30.7% | -2.8% |
| EBITDA Margin | 5.1% | 6.8% | 8.2% | 10.8% | 3.1% | -7.7% |
| EBIT Margin | 0.0% | 2.8% | 4.8% | 7.7% | -2.1% | -9.8% |
| SG&A, % of revenue | 17.7% | 16.8% | 16.0% | | | |
| SBC, % of revenue | 0.9% | 0.7% | 0.9% | 1.1% | 1.3% | 0.3% |
| Net Income Margin | -1.2% | 0.7% | 1.6% | 2.8% | -4.2% | -7.0% |
| CAPEX, % of revenue | 2.3% | 2.3% | 2.2% | 2.5% | 2.5% | 0.1% |
|
|---|
| ROIC | 0.0% | 5.6% | 10.8% | 13.7% | -3.2% | -16.9% |
| ROE | -3.1% | 2.0% | 5.1% | 8.1% | -13.2% | -21.3% |
| Net Debt/EBITDA | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x | 10.3x |
| Interest expence / Average debt | 3.1% | | | 3.0% | 5.7% | 2.7% |
People
|
|---|
| Insider ownership | 1.2% | 1.2% | 1.2% | 1.2% | 1.2% | 0.0% |
| Employees | 8,000 | 7,900 | 7,300 | 7,800 | 8,000 | 2.6% |
| Revenue/Employee, th. $ | 243 | 238 | 276 | 259 | 297 | 14.8% |
Itron, Inc. ($ITRI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 607 | 586 | 596 | 587 | | 27.1% | 16.5% | 22.4% | 6.6% |
| EBITDA | -109 | 51 | 72 | 59 | | -342.0% | -2.4% | 31.7% | -10.4% |
| Net Income | -146 | 3 | 20 | 24 | | -1,019.3% | -81.2% | -22.3% | 1,241.4% |
Balance Sheet
|
|---|
| Cash | 144 | 163 | 109 | 120 | | -23.4% | 27.4% | -20.7% | -31.8% |
| Short Term Debt | 16 | 20 | 24 | 28 | | 5.0% | 20.4% | 33.3% | 44.4% |
| Long Term Debt | 1,106 | 1,099 | 1,005 | 988 | | 283.5% | 257.3% | 230.8% | 66.5% |
Ratios
|
|---|
| Gross Margin | 29.6% | 30.1% | 33.1% | 30.1% | | -3.4% | -5.3% | -1.0% | -1.7% |
| EBITDA Margin | -18.0% | 8.8% | 12.1% | 10.0% | | -27.5% | -1.7% | 0.9% | -1.9% |
| Net Income Margin | -24.0% | 0.5% | 3.3% | 4.1% | | -27.3% | -2.3% | -1.9% | 3.7% |
Peers in Electronic Equipment & Instrum
Below we provide Itron, Inc. benchmarking against other companies in Electronic Equipment & Instrum industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 4.5% | 0.3% | 4.6% | 9.1% |
|---|
| Itron, Inc. ($ITRI) | | -3.3% | 6.9% | 0.2% | 17.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 42.7% | 42.3% | 41.2% | 41.8% | 42.0% |
|---|
| Itron, Inc. ($ITRI) | 31.5% | 29.6% | 32.8% | 33.5% | 30.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.5% | 3.9% | 3.0% | 3.0% | 4.2% |
|---|
| Itron, Inc. ($ITRI) | 5.1% | 6.8% | 8.2% | 10.8% | 3.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| Itron, Inc. ($ITRI) | 2.3% | 2.3% | 2.2% | 2.5% | 2.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 1.3% |
|---|
| Itron, Inc. ($ITRI) | 0.0% | 5.6% | 10.8% | 13.7% | -3.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| OSI Systems, Inc. ($OSIS) | -0.0x | -0.2x | 0.3x | 1.7x | 2.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.9x | -0.8x | -0.9x |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
