Itron posts record margins as AI, data center buildout reshape long-term prospects

Itron Inc. surprised Wall Street with higher-than-expected profits during the second quarter and a rosy forecast for the rest of the year, sending shares of Spokane’s largest publicly traded company 25% higher on Tuesday.

The Liberty Lake-based company sells power metering and energy savings technology and works with companies such as Avista and other utilities across the world providing sensors, meters and software to manage power grids. It had been a promising division of Avista until it was spun off in 1993.

The company hopes to benefit from record U.S. electricity demand, boosted in part by the buildout of AI data centers.

“Itron delivered record gross margin, earnings well ahead of our expectations, and strong free cash flow in the second quarter, with revenue in line with our outlook – clear evidence of the structurally better earnings power this team has built,” Itron executives said in a statement.

The company earned profits of $53.3 million on revenues of $563 million during the quarter that includes April, May and June.

A mix of structural improvements in margins, coming from manufacturing improvements and recent acquisitions have accelerated the company’s adjusted gross margin to a record 41.4%. The company says it is shifting to higher-margin grid software products, which boost profitability. Despite record margins, sales revenue declined 7%.

Itron’s good fortunes come during the same time as its longtime partner, Avista, is in the middle of a proposed rate-case increase and balancing proposed data centers, which require large amounts of electricity, with public skepticism.

Itron CEO Thomas L. Deitrich acknowledged the potential of data centers.

“I would say that the observation that generation and transmission investment is at a historic level clearly is valid. The country is going through a renaissance and rapid amount of demand growth. Utilities have to keep up with that,” he said. “All of that generation and transmission just provides loads that eventually land on top of distribution systems that were never meant to handle it.”

That exact dynamic is playing out with Avista, which paused talks earlier this summer with a data center developer seeking up to 500 megawatts of power. That would be more than half of what all residential and business customers use combined in Spokane County.

Pat Ehrbar, the director of regulatory affairs at Avista, said the company will not have customers foot the bill for data center development.

“They will pay all the costs associated with serving them,” Ehrbar said in an interview with the Spokesman. “I’m a customer, I don’t want to pay for them. … They should be subsidizing us.”

Ehrbar sees the data center as an opportunity to provide relief for Avista ratepayers.

“We see this as an affordability play, not as an earnings play,” he said.