Itron (ITRI) Q1 2026 Earnings Transcript

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Date

April 28, 2026, 10 a.m. ET

Call participants

- Chief Executive Officer — Thomas L. Deitrich

- Chief Financial Officer — Joan S. Hooper

Full Conference Call Transcript

Thomas begins, a reminder that our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance. Reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our Investor Relations website. We will be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could differ materially from these expectations because of factors that were presented in today’s earnings release and comments made during this conference call, as well as those presented in the Risk Factors section of our Form 10-Ks and other reports and filings with the Securities and Exchange Commission. All company comments, estimates or forward-looking statements are made in a good-faith attempt to provide appropriate insight to our current and future operating and financial environment. Materials discussed today, 04/28/2026, may materially change, and we do not undertake any duty to update any of our forward-looking statements. Now please turn to Page 4 of our presentation as our CEO, Thomas Deitrich, begins his remarks.

Thomas L. Deitrich: Thank you, Paul. Good morning, everyone, and thank you for joining our call today. Itron, Inc. had a solid start to the year. Our first quarter results were ahead of expectations due to strong execution from our teams and some first-half projects progressing ahead of schedule. Turning to Slide 4 for the highlights. Revenue of $587 million, adjusted EBITDA of $92 million, non-GAAP earnings per share of $1.49, and free cash flow of $79 million. Turning to Slide 5. While project timing provided a modest tailwind in Q1 revenue, we anticipate the first half to be consistent with our initial guidance.

Overall, the pace of ongoing field deployment of grid-edge technology is well aligned to our expectations with no material constraints for labor or materials. The adoption of flexible and intelligent solutions is accelerating and that is translating into durable, compounding growth over time. Our Outcomes segment grew 22% year-over-year. Total company annual recurring revenue at quarter end was $400 million, up 28% due to strong organic growth plus our recently acquired Resiliency Solutions segment. More broadly, the size and scope of the opportunity funnel remain outsized from historical levels, driven by the age-out of existing infrastructure and new requirements.

Grid modernization is inevitable, and we are confident in the multiyear structural investment to add intelligence to the grid, but we also understand the market we serve. Our customers continue to work in a complex environment balancing global uncertainty, affordability concerns, resiliency imperatives, and growing demand variability. We are confident our product portfolio addresses these disparate needs across electricity, gas, and water systems with flexible implementation models that are well aligned to the specific needs of our utility customers. Turning to Slide 6. Our first quarter bookings were $476 million, bringing the total backlog to $4.4 billion at quarter end, in line with our expectations. The quarter included several notable wins.

We advanced a strategic grid visibility program with Duquesne Light Company. This engagement reflects the growing demand for distributed intelligence and grid-edge computing as utilities modernize their networks to improve reliability, resilience, and operational efficiency. Importantly, this program highlights Itron, Inc.'s abilities to deliver an integrated, first-of-its-kind solution that brings together smart devices, software, and communication to support next-generation grid operations. Additionally, an existing customer that is deploying a safety-enhanced meter program has expanded their development of Intelis StaticCas endpoints. Intelis technology offers numerous safety enhancements, which include automatic and remote shut-off capabilities, as well as reliability and efficiency features that benefit the utility and the consumers they serve.

More broadly, this activity is a perfect example of the unique value that Itron, Inc.'s multi-commodity platform creates for customers and benefits our shareholders through diversification across electricity, gas, and water verticals. The integration of our Resiliency Solutions segment is on track and the team is already contributing meaningfully. In worker safety, we established a new contract with a major U.S. electricity utility. The customer required a best-in-class system to protect thousands of field workers at the job site, leveraging intelligent workflows and real-time hazard recognition. The digital construction management team extended a contract with a large natural gas pipeline customer, a strong signal of the customer value of deploying our platform.

These are only a few examples of the kind of mission-critical problems that Itron, Inc. is uniquely positioned to solve. As a result, our backlog profile continues to evolve in quantity and quality. Outcomes and Resiliency Solutions combined now represent 25% of total backlog, and that share is growing. The reason we are winning is straightforward. We help customers make one investment dollar do more. Our solutions are designed to create multiple opportunities for value across the useful life, deepening relationships, expanding our installed base, and generating durable recurring revenue streams. With that, I will turn it over to Joan to walk through the first quarter financials in detail.

Joan S. Hooper: Thank you, Thomas. Please turn to Slide 7 for a summary of consolidated GAAP results. First quarter revenue of $587 million was above our outlook range due to an acceleration of certain first-half project deployments. As expected, revenue was down versus last year, primarily due to the timing of large Networks projects. Gross margin was 450 basis points higher than last year due to favorable mix and operational efficiencies. GAAP net income of $53 million, or $1.18 per diluted share, compares to $65 million, or $1.42, in the prior year. The decrease was due to higher GAAP operating expenses related to the two recently completed acquisitions as well as lower interest income.

Regarding non-GAAP metrics on Slide 8, adjusted gross margin of 40.7% increased 490 basis points versus 2025. Non-GAAP operating income of $84 million and adjusted EBITDA of $92 million both increased 5% year-over-year. Non-GAAP net income for the quarter was $68 million, or $1.49 per diluted share, versus $1.52 a year ago. The year-over-year decline was due to lower interest income, partially offset by higher operating income. Free cash flow was $79 million in Q1 versus $67 million a year ago. The increase was primarily due to lower tax payments. Year-over-year revenue growth by business segment is on Slide 9.

Device Solutions revenue decreased 9% on a constant currency basis due to the expected decline in legacy electricity products in EMEA and the timing of projects in North America. Network Solutions revenue decreased 14% on a constant currency basis due to the timing of large deployments. Outcomes revenue increased 20% on a constant currency basis driven by higher recurring and services revenue. Our new segment, Resiliency Solutions, which includes the Urbint and LocustView acquisitions, contributed $16 million of revenue in Q1. Moving to the non-GAAP year-over-year EPS bridge on Slide 10. Our Q1 non-GAAP EPS of $1.49 per diluted share decreased $0.03 year-over-year.

Operating income contributed an increase of $0.05 per share, but this was more than offset by the negative impact of lower interest income at $0.13 per share. Lower tax expense had a positive year-over-year impact of $0.01 per share, and FX, share count, and other items had a positive impact of $0.04 per share. Turning to Slides 11 through 14, I will review Q1 segments compared with the prior year. Device Solutions revenue was $124 million with adjusted gross margin of 35.4% and operating margin of 29.7%. Both margin results are segment-level quarterly records. Adjusted gross margin increased 540 basis points year-over-year and operating margin was up 550 basis points due to favorable mix and operational efficiencies.

Network Solutions revenue was $351 million with adjusted gross margin of 40.8% and operating margin of 31.4%. Adjusted gross margin increased 390 basis points year-over-year due to favorable mix and operational efficiencies, and operating margin was up 260 basis points. Outcomes revenue was $96 million with adjusted gross margin of 41.7% and operating margin of 23.3%. Adjusted gross margin increased 250 basis points year-over-year due to a higher margin revenue mix, and operating margin increased 510 basis points due to higher operating leverage. Resiliency Solutions had revenue of $16 million, adjusted gross margin of 73%, and operating margin of 27%. Turn to Slide 15 and I will review liquidity and debt at the end of Q1.

Total debt was $1.61 billion, and cash and equivalents were $713 million. Our cash balance declined approximately $300 million versus year-end 2025, due to the net impact of the January acquisition of LocustView, the February issuance of $[inaudible] of zero-interest convertible senior notes, the March $460 million repayment of the company’s 2021 convertible senior notes, the February share repurchase of $[inaudible], and free cash flow generation of $79 million during the first quarter. As of March 31, net leverage was 2.4 times. Now please turn to Slide 16 for our second quarter outlook. We anticipate Q2 revenue to be within a range of $560 million to $570 million, which at the midpoint is down 7% versus last year.

As previously mentioned, Q1 benefited from an acceleration of first-half projects. Our current view of 2026 is consistent with our thinking when we set the annual outlook back in February. We anticipate second quarter non-GAAP EPS to be within a range of $1.25 to $1.35 per diluted share, which at the midpoint is down approximately 8% year-over-year after normalizing for the tax rate and the level of interest income. Now I will turn the call back to Thomas.

Thomas L. Deitrich: Thank you, Joan. Utilities today are managing energy and water systems under increasing strain. Those systems were not designed for the complexity created by distributed energy resources, increasing industrial and AI-driven demand, resource scarcity, and escalating weather volatility. At the local level, electricity distribution networks are often significantly underutilized, and our customers draw an important conclusion: while investment in new generation and transmission is essential, the fastest electron available to them is the one they already have. Itron, Inc. solutions unlock time-to-power using existing capacity by working with the right data and the ability to act on it.

Itron, Inc. serves as the intelligence layer for our customers, delivering multipurpose networks, analytics, and applications that give grid operators the visibility to optimize their distribution infrastructure. Industry data suggests utility distribution spending will continue to grow at least through the end of the decade. We believe this represents a durable structural trend and that modernization will benefit consumers while reducing waste across the system. I am encouraged by our team’s strong execution this quarter. The operating environment remains volatile, domestically and globally, and that volatility creates risks. We have built a more resilient business and are delivering consistent results through these crosswinds.

Our focus is unchanged: backlog quality, recurring revenue growth, margin discipline, cash generation, and above all, ensuring our customers are successful with every engagement. Itron, Inc. is well positioned for a multiyear grid buildout that has already begun and is expected to continue for years to come. Thank you for joining us today. Operator, please open the line for some questions.

Operator: Thank you. To withdraw your question, simply press 1-1 again. Please stand by while we compile the queue roster. Our first question coming from the line of Noah Kaye with Oppenheimer. Your line is now open.

Noah Kaye: Thanks so much. You know, first, just hoping to get a little bit more color on what drove the acceleration of project timing in 1Q. And then you were very helpful in noting the first half as a whole is kind of consistent with what you had assumed in February. What the guidance had implied in February was a pickup in the back half. So can you help us think through what might be impacting the step down in run rate in 2Q and then what might account for a pickup in the back half of the year?

Joan S. Hooper: Yes. Let me start, and then a timing comment. We did mention in our prepared remarks that Q1 was better than we had guided to because of an acceleration of projects from the first half of the year. It was primarily in the Network business, but also a little bit in Devices. If you take the combination of Q1 actuals with the midpoint of our Q2 guidance, it is actually slightly higher than what we would have expected back in February—slightly higher on revenue and actually higher on gross margin, EBITDA, and EPS. So the first half is shaping up as expected.

Regarding the back half, yes, we knew the year would be more end loaded when we entered the year. We talked about it on last quarter’s call. What would drive an uptick in the second half are project deployments primarily in Networks. Certainly Outcomes continues to grow; we would expect that. Same for Resiliency Solutions. Devices is roughly flat. So that growth is going to have to happen from Networks deployments.

Thomas L. Deitrich: I would add just a bit on the operational side of things. What we saw in Q1 was no constraints when it comes to supply chain. Material was fine, labor was fine, customer deployments were ticking along quite nicely, and that led to some of the overage that you saw in the Network space primarily. Turns were at the level that we expected. We went in, and I think we even commented on this in our previous call, that turns were expected to be a little bit higher, and indeed they were.

So all in all, the market was well aligned to our expectations within the normal push and pull where some of the Network deployments were moving a little bit faster.

Noah Kaye: And then, Thomas, you mentioned the outsized funnel. I wondered if you could give us a little bit more commentary on the behavior patterns you are seeing no