Press Release

Itron Announces Third Quarter 2019 Financial Results

LIBERTY LAKE, Wash.—(BUSINESS WIRE)—Nov. 4, 2019—Itron, Inc. (NASDAQ:ITRI) announced today financial results for its third quarter ended Sept. 30, 2019. Key results for the quarter include (compared with the third quarter of 2018):
  • Revenue of $624 million, compared with $596 million;
  • Gross margin of 31.5%; compared with 33.1%;
  • GAAP net income of $17 million, compared with $20 million;
  • GAAP diluted earnings per share (EPS) of $0.42, compared with $0.50;
  • Non-GAAP diluted EPS of $1.04, compared with $1.13;
  • Adjusted EBITDA of $74 million, compared with $81 million; and
  • Total backlog was flat at $3.1 billion.

"We had solid performance in the third quarter," said Tom Deitrich, Itron's president and chief executive officer. "These results were primarily driven by strong demand in our Networked Solutions segment. We continue to see a healthy pipeline of customer activity."

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

Total third quarter revenue increased 5% to $624 million, or 7%, excluding the impact of changes in foreign currency exchange rates.

Networked Solutions revenue increased 11% driven by strong customer deliveries in North America. Device Solutions revenue decreased 3% and Outcomes revenue decreased 1%. Excluding the impact of changes in foreign currency exchange rates, the Device Solutions and Outcomes segments were both up 1%.

Gross Margin
Consolidated company gross margin of 31.5% decreased 160 basis points from the prior year due to higher warranty costs and variable compensation, partially offset by restructuring benefits.

Operating Expenses and Operating Income
GAAP operating expenses of $157 million increased $2 million from the prior year due to higher restructuring and product development expenses. Non-GAAP operating expenses of $130 million increased $4 million from the prior year, primarily due to increased variable compensation.

GAAP operating income of $39 million and non-GAAP operating income of $66 million decreased compared with the prior year due to higher operating expenses and the impact of changes in foreign currency exchange rates.

Net Income (loss) and Earnings per Share
The net income attributable to Itron, Inc. for the quarter was $17 million, or $0.42 per diluted share, a decrease from net income of $20 million, or $0.50 per diluted share, in 2018. The decrease was driven by lower operating income in the current period.

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 $41 million, or $1.04 per diluted share, compared with $45 million, or $1.13 per diluted share, in 2018. The decrease in non-GAAP EPS was due to lower non- GAAP operating income in the current period.

Cash Flow
Net cash provided by operating activities was $50 million in the third quarter compared with $51 million in the same quarter of 2018. Free cash flow was $32 million in the third quarter compared with $37 million in the prior year. The decrease in cash flow was primarily due to the timing of working capital and capital expenditures.

Other Measures
Total backlog was $3.1 billion and 12-month backlog was $1.4 billion, which are both consistent with the prior year. Bookings in the quarter totaled $609 million.

Earnings Conference Call
Itron will host a conference call to discuss the financial results and guidance contained in this release at 5 p.m. EST on Nov. 4, 2019. 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 Nov. 9, 2019. To access the telephone replay, dial 888-203-1112 or 719-457-0820 and enter passcode 4489487.

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, 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, 2018 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.

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 Q3 2019 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