Smart grid technology supplier Itron Inc.'s business jumped in the first quarter of 2018 due largely to its recent acquisition of Silver Spring Networks Inc. The cost of integrating the former smart grid rivals, however, weighed on Itron's bottom line and is "an ongoing task that's going to take many quarters and a lot of vigilance to ensure that we do this properly," Itron CEO Philip Mezey said on a May 14 earnings call.
In its first quarter incorporating Silver Spring's business under a new segment called "Networks," Itron boosted revenues 27% from a year ago to $607.2 million, beating S&P Capital IQ's consensus estimate by $31.5 million. Excluding its Networks segment, revenues increased by 9%, Mezey said. Itron's total business backlog at end of the first quarter nearly doubled to $3.1 billion from a year ago, lifted by $1.4 billion in acquired business from Silver Spring.
Despite the benefit for Itron's top line, restructuring charges of $88 million, related to a plan announced at the end of February 2018, and "integration-related expenses" for Silver Spring Networks of $63 million drove Itron's first-quarter net loss of $3.74 per share on a GAAP basis, CFO Joan Hooper said on the call. Itron posted adjusted net earnings of 13 cents per share, matching S&P Capital IQ's estimate, down from adjusted net earnings of 57 cents per share in the first quarter of 2017.
Ultimately, Itron expects its restructuring and acquisition of Silver Spring to add net value. The company expects "an additional $50 million of annualized synergies" from the Silver Spring acquisition by the end of 2020, in addition to $45 million to $50 million of annualized savings from restructuring by the same time, Hooper said.
Since the first quarter ended, Itron has announced multiple smart grid technology supply deals with electric utilities, including a new agreement with Mississippi Power Co., a subsidiary of Southern Co., to supply and connect roughly 193,000 smart meters in southern Mississippi. Mississippi regulators approved the utility's proposal for the advanced meters in April. NorthWestern Corp. selected Itron to modernize its electric and natural gas grids in South Dakota and Nebraska, which the companies announced in April.
On the call, Mezey also disclosed a new deal with Jamaica Public Service Company to bring 670,000 electric meters into Itron's cloud-based smart grid network. "Jamaica's nationwide smart grid deployment will extend the utility's smart meter automation benefits and enhance post-storm restorations," the CEO said. Itron previously supplied 51,000 electric meters to the utility in 2016 and 2017.