Press Release

Itron Announces First Quarter 2020 Financial Results and Provides Update on COVID-19

LIBERTY LAKE, Wash.—(BUSINESS WIRE)—May 4, 2020—Itron, Inc. (NASDAQ:ITRI) announced today financial results for its first quarter ended Mar. 31, 2020. Key results for the quarter include (compared with the first quarter of 2019):
  • Revenue of $598 million, compared with $615 million;
  • Gross margin of 28.7%; compared with 30.5%;
  • GAAP net income of $9 million, compared with a net loss of $2 million;
  • GAAP diluted earnings per share (EPS) of $0.21, compared with GAAP loss per share of $(0.05);
  • Non-GAAP diluted EPS of $0.57, compared with $0.70;
  • Adjusted EBITDA of $52 million, compared with $66 million; and
  • Total backlog was flat at $3.0 billion.

"During these unprecedented times, Itron is committed to supporting our customers who provide critical infrastructure and ensure the grid is resilient and secure," said Tom Deitrich, Itron's president and chief executive officer.

"In the first quarter, our operations were impacted by the pandemic, and we are taking actions to mitigate the impact on the rest of year," continued Deitrich. "As we navigate the COVID-19 pandemic, our top priority continues to be the health, safety and support of our employees and the people in the communities we serve."

Summary of First Quarter Consolidated Financial Results
(All comparisons made are against the prior year period unless otherwise noted)

Total first quarter revenue decreased 3% to $598 million, or 1%, excluding the impact of changes in foreign currency exchange rates.

Device Solutions revenue decreased 9%, primarily due to COVID-19 related delays and the impact of changes in foreign currency exchange rates. Outcomes revenue decreased 2%, while Networked Solutions revenue increased 1%, despite COVID-19 related delays.

Gross Margin
Consolidated company gross margin of 28.7% decreased 180 basis points from the prior year due to product mix and manufacturing inefficiencies.

Operating Expenses and Operating Income
GAAP operating expenses of $145 million decreased $21 million from the prior year due to lower acquisition, integration, restructuring and amortization expenses. Non-GAAP operating expenses of $133 million increased $2 million from the prior year, primarily due to higher product development investment.

GAAP operating income of $26 million increased from the prior year due to lower GAAP operating expenses. Non-GAAP operating income of $39 million decreased compared with the prior year due to lower gross profit and higher product development expense.

Net Income (loss) and Earnings per Share
The net income attributable to Itron, Inc. for the quarter was $9 million, or $0.21 per diluted share, an increase from a net loss of $2 million, or $(0.05) per diluted share, in 2019. The increase was driven by improved GAAP operating income in the current period and a lower GAAP effective tax rate.

Non-GAAP net income, which excludes certain charges including restructuring, acquisition and integration related expenses, corporate transition cost, amortization of intangible assets, amortization of debt placement fees and the income tax effect of those adjustments, was $23 million, or $0.57 per diluted share, compared with $28 million, or $0.70 per diluted share, in 2019. The COVID-19 virus had a negative impact on the first quarter results and played a significant role in the lower year-over-year comparison.

Cash Flow
Net cash provided by operating activities was $19 million in the first quarter compared with $25 million in the same quarter of 2019. Free cash flow was $6 million in the first quarter compared with $14 million in the prior year.

Other Measures
Total backlog was $3.0 billion and 12-month backlog was $1.3 billion, which are both consistent with the prior year. Bookings in the quarter totaled $418 million.

COVID-19 Operational Update
The operating situation remains dynamic during the COVID-19 pandemic. We are closely monitoring and managing the crisis as it relates to our employees, customers and supply chain.

Itron is committed to continuing operations while balancing employee safety, meeting customer delivery needs and adhering to local and country-level mandates. For our employees, we have instituted additional safety protocols and extended employee sick leave as needed for impacted employees.

Regarding our customers, we are seeing some temporarily defer investments, and in some regions, deployments have been temporarily suspended by local or regional governments. We are working with customers and the local governments on the timing to resume operations.

Lastly, regarding our supply chain, we adhere with local government mandates and have temporarily stopped production in some of our manufacturing facilities and are actively working to ramp production back up now in a safe and productive manner. While component supply is generally improving from early COVID-19 impacted regions, constraints remain in global logistics and component supplies.

Guidance Suspended
The scope and magnitude of the COVID-19 pandemic was not anticipated in our full year 2020 guidance provided on February 24, 2020. As a result, we are suspending our prior guidance for the full year 2020 due to the uncertainty of the impact of the COVID-19 pandemic. As the situation and our visibility improves, we will update our annual outlook.

With this unique situation, we will provide some insight into the second quarter based on the best information and scenarios as we see them today. We estimate second quarter revenue to be between $475 million to $500 million, non-GAAP EPS to be a loss of $(0.30) to $(0.10) and free cash flow to be in a range of negative $(85) million to $(70) million. We currently expect the second quarter to be the low point of the year for these three metrics.

Earnings Conference Call
Itron will host a conference call to discuss the financial results and guidance contained in this release at 5 p.m. EDT on May 4, 2020. The call will be webcast in a listen-only mode. Webcast information and conference call materials will be made available 10 minutes before the start of the call and will be accessible on Itron's website at A replay of the audio webcast will be made available at A telephone replay of the conference call will be available through May 9, 2020. To access the telephone replay, dial 888-203-1112 or 719-457-0820 and enter passcode 2789980.

Cautionary Note Regarding Forward Looking Statements
This release contains "forward-looking statements" within in the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical factors nor assurances of future performance. These statements relate to our expectations about, among others, revenues, operations, financial performance, earnings, earnings per share and cash flows and restructuring activities including headcount reductions and other cost savings initiatives. Although we believe the estimates and assumptions upon which these forward-looking statements are based are reasonable, any of these estimates or assumptions could prove to be inaccurate and the forward-looking statements based on these estimates and assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors. Therefore, you should not rely on any of these forward-looking statements. Some of the factors that we believe could affect our results include our ability to execute on our restructuring plan, our ability to achieve estimated cost savings, the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, adverse impacts of litigation, changes in laws and regulations, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock-based and bonus compensation, increasing volatility in foreign exchange rates, international business risks and other factors that are more fully described in our Annual Report on Form 10-K for the year ended Dec. 31, 2019 and other reports on file with the Securities and Exchange Commission. Itron undertakes no obligation to update or revise any information in this press release.

Due to the fluid nature of the COVID-19 pandemic that has had global economic impacts including disrupting global supply chains and creating market volatility, Company estimates regarding the impact of COVID-19 on current or on 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 as "estimates", "insight", or "beliefs" are made as of today, May 4, 2020 and may materially change due to such factors including, but are not limited to, uncertainties caused by adverse economic conditions, extraordinary events or circumstances and their impact on our customers' businesses and workforce levels, disruptions of our business and operations, including limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers. For more information on risks associated with the COVID-19 pandemic, please see Itron's updated risk in Part II, Item 1A, "Risk Factors" of our Q1 2020 10- Q filing with the SEC.

Non-GAAP Financial Information
To supplement our consolidated financial statements, which are prepared in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, adjusted EBITDA margin, constant currency and free cash flow. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent supplemental information used by management in its financial and operational decision making. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. The company believes these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. Our non-GAAP financial measures may be different from those reported by other companies. A more detailed discussion of why we use non-GAAP financial measures, the limitations of using such measures, and reconciliations between non-GAAP and the nearest GAAP financial measures are included in this press release.

Related Documents
Itron Q1 2020 Earnings Statement.

About Itron

Itron is a proven global leader in energy, water, smart city, IIoT and intelligent infrastructure services. For utilities, cities and society, we build innovative systems, create new efficiencies, connect communities, encourage conservation and increase resourcefulness. By safeguarding our invaluable natural resources today and tomorrow, we improve the quality of life for people around the world. Join us:

Itron® is a registered trademark of Itron, Inc. All third-party trademarks are property of their respective owners and any usage herein does not suggest or imply any relationship between Itron and the third party unless expressly stated.


Ken Gianella

Vice President, Investor Relations

(669) 770-4643


Rebecca Hussey

Program Manager, Investor Relations

(509) 891-3574