ITRON INC

Previous wording

•Revenues were $609.1 million compared with $541.1 million in 2023, an increase of 13%

Current wording

•Revenues were $615.5 million compared with $560.8 million in 2023, an increase of 10%

Previous wording

•GAAP diluted EPS increased by$0.57 to a diluted income per share of $1.10 in 2024

Current wording

•GAAP diluted EPS increased by$0.83 to $1.70 in 2024

Previous wording

•Total backlog was $4.1 billion and twelve-month backlog was $1.8 billion at June 30, 2024, compared with$4.4 billion and$2.0 billion at June 30, 2023

Current wording

•Total backlog was $4.0 billion and twelve-month backlog was $1.7 billion at September 30, 2024, compared with$4.2 billion and$2.0 billion at September 30, 2023

Previous wording

Highlights and significant developments for thesix months ended June 30, 2024 compared with the six months ended June 30, 2023

Current wording

Highlights and significant developments for thenine months ended September 30, 2024 compared with the nine months ended September 30, 2023

Previous wording

•Revenues were $1.2 billion compared with $1.0 billion in 2023, an increase of $176.8 million, or 17%

Current wording

•Revenues were $1.8 billion compared with $1.6 billion in 2023, an increase of $231.5 million, or 15%

Previous wording

•GAAP diluted EPS increased by $1.95 to a diluted income per share of $2.22 in 2024

Current wording

•GAAP diluted EPS increased by $2.76 to $3.91 in 2024

Previous wording

On June 14, 2024, we entered into an eighth amendment of the 2018 credit facility. In contemplation of the issuance of the 2024 convertible notes, this amendment to the Credit Agreement removed the $500 million maximum amount of convertible notes we could offer.

Current wording

We entered into our credit facility on January 5, 2018 (the 2018 credit facility). On June 14, 2024, we entered into an eighth amendment of the 2018 credit facility. In contemplation of the issuance of the 2024 convertible notes, this amendment to the Credit Agreement removed the $500 million maximum amount of convertible notes we could offer.

Previous wording

On June 21, 2024, we closed the sale of $805 million of convertible notes (the 2024 Notes) in a private placement to qualified institutional buyers, resulting in net proceeds to us of $784 million. The 2024 Notes will accrue interest at a rate of 1.375% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2025. The 2024 Notes will mature on July 15, 2030, unless earlier repurchased, redeemed, or converted in accordance with their terms. Refer to Item 1: Financial Statements (Unaudited), Note 6: Debt, and Note 13: Shareholders' Equity included in this Quarterly Report on Form 10-Q for additional information.

Current wording

On June 21, 2024, we closed the sale of $805 million of convertible notes (the 2024 Notes) in a private placement to qualified institutional buyers, resulting in net proceeds to us of $784 million. The 2024 Notes accrue interest at a rate of 1.375% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2025. The 2024 Notes mature on July 15, 2030, unless earlier repurchased, redeemed, or converted in accordance with their terms. Refer to Item 1: Financial Statements (Unaudited), Note 6: Debt, and Note 13: Shareholders' Equity included in this Quarterly Report on Form 10-Q for additional information.

Previous wording

Global economic impacts, such as pandemics and various ongoing conflicts around the world, may create disruption in customer demand and global supply chains, resulting in market volatility, which our management continues to monitor. In the aftermath of these types of events, global supply chains, including labor, may struggle to keep pace with rapidly changing demand. Temporary imbalance in supply and demand may create business uncertainties that include costs and availability. Efforts continue with suppliers to improve supply resiliency, including the approval of alternate sources. Additionally, inflation in our raw materials and component costs, freight charges, and labor costs may increase above historical levels due to, among other things, the continuing impacts of an uncertain economic environment. We may or may not be able to fully recover these increased costs through pricing actions with our customers. Currently, we have not identified any significant decrease in long-term customer demand for our products and services. For more information on risks associated with global economic challenges, please see our risk in Part I, Item 1A: Risk Factors in our 2023 Annual Report.

Current wording

Global economic impacts, such as pandemics and various ongoing conflicts around the world, may create disruption in customer demand and global supply chains, resulting in market volatility, which our management continues to monitor. In the aftermath of these types of events, global supply chains, including labor, may struggle to keep pace with rapidly changing demand. Temporary imbalance in supply and demand may create business uncertainties that include costs and availability. Efforts continue with suppliers to improve supply resiliency, including the approval of alternate sources. Additionally, inflation in our raw materials and component costs, freight charges, sanctions, tariffs, and labor costs may increase above historical levels due to, among other things, the continuing impacts of an uncertain economic environment. We may or may not be able to fully recover these increased costs through pricing actions with our customers. Currently, we have not identified any significant decrease in long-term customer demand for our products and services. For more information on risks associated with global economic challenges, please see our risk in Part I, Item 1A: Risk Factors in our 2023 Annual Report.

Previous wording

While we have limited direct business exposure in areas with current conflict, such as Ukraine and Israel, military actions globally and any resulting sanctions could adversely affect the global economy, as well as further disrupt the supply chain. A major disruption in the global economy and supply chain could have a material adverse effect on our business, prospects, financial condition, results of operations, and cash flows. The extent and duration of the military action, sanctions, and resulting market and/or supply disruptions are impossible to predict but could be substantial, and our management continues to monitor these events closely.

Current wording

While we have limited direct business exposure in areas with current conflict, such as Ukraine and Israel, military actions globally and any resulting sanctions or tariffs could adversely affect the global economy, as well as further disrupt the supply chain. A major disruption in the global economy and supply chain could have a material adverse effect on our business, prospects, financial condition, results of operations, and cash flows. The extent and duration of the military action, sanctions, tariffs, and resulting market and/or supply disruptions are impossible to predict but could be substantial, and our management continues to monitor these events closely.

Previous wording

Total revenues increased $68.0 million, or 13%, in the current 2024 quarter, compared with the same period in 2023. Product revenues increased by $68.1 million, and service revenues decreased $0.1 million. Device Solutions increased by $5.4 million; Networked Solutions increased by $51.8 million; and Outcomes increased by $10.8 million when compared with the same period last year. Changes in exchange rates unfavorably impacted total revenues by $1.7 million, of which $1.1 million impacted Device Solutions.

Current wording

Total revenues increased $54.7 million, or 10%, in the current 2024 quarter, compared with the same period in 2023. Product revenues increased by $57.9 million, and service revenues decreased $3.2 million. Device Solutions increased by $12.0 million; Networked Solutions increased by $31.7 million; and Outcomes increased by $11.0 million when compared with the same period last year. Changes in exchange rates favorably impacted total revenues by $1.0 million, of which $0.5 million impacted Device Solutions.

Previous wording

Total revenues increased $176.8 million, or 17%, compared with the same period in 2023. Product revenues increased by $179.6 million, and service revenues decreased by $2.8 million. Device Solutions increased by $13.9 million; Networked Solutions increased by$145.8 million; and Outcomes increased by $17.1 million when compared with the same period last year. Changes in exchange rates unfavorably impacted total revenues by$0.5 million, all of which impacted Networked Solutions.

Current wording

Total revenues increased $231.5 million, or 15%, compared with the same period in 2023. Product revenues increased by $237.5 million, and service revenues decreased by $6.0 million. Device Solutions increased by $25.9 million; Networked Solutions increased by$177.6 million; and Outcomes increased by $28.1 million when compared with the same period last year. Changes in exchange rates favorably impacted total revenues by$0.5 million.

Previous wording

Gross margin in the 2024 period was 34.6%, compared with 32.1% in 2023. Product sales gross margin increased to 33.1% for the quarter in 2024, compared with 30.7% in 2023. Gross margin on service revenues increased to 45.0% in 2024, compared with 41.2% in 2023.

Current wording

Gross margin in the 2024 period was 34.1%, compared with 33.4% in 2023. Product sales gross margin increased to 32.6% for the quarter in 2024, compared with 30.9% in 2023. Gross margin on service revenues decreased to 43.9% in 2024, compared with 48.4% in 2023.

Previous wording

Gross margin was 34.3%, compared with 31.9% in 2023. Product sales gross margin increased to 32.7%, compared with 29.7% in 2023, and gross margin on service revenues increased to 45.2%, compared with 44.5% in 2023.

Current wording

Gross margin was 34.2%, compared with 32.4% in 2023. Product sales gross margin increased to 32.7%, compared with 30.1% in 2023, and gross margin on service revenues decreased to 44.8%, compared with 45.8% in 2023.

Previous wording

Operating expenses increased $7.0 million for the second quarter of 2024 as compared with the same period in 2023. This was primarily the result of an increase of $9.3 million in sales, general and administrative expenses, primarily driven by increased labor costs and professional services.

Current wording

Operating expenses increased $3.4 million for the third quarter of 2024 as compared with the same period in 2023. This was primarily the result of an increase of $3.1 million in sales, general and administrative expenses, primarily driven by increased labor costs.

Previous wording

Operating expenses decreased $17.2 million for the six months ended June 30, 2024 as compared with the same period in 2023. This was primarily the result of a $37.4 million decrease in restructuring costs and a $1.3 million decrease in amortization of intangible assets. The decrease was partially offset by an increase of $19.8 million in sales, general and administrative expenses and a $2.3 million increase in research and development expenses, both driven by increased labor costs and professional services. For additional details, refer to Item 1: Financial Statements (Unaudited), Note 12: Restructuring included in this Quarterly Report on Form 10-Q.

Current wording

Operating expenses decreased $13.9 million for the nine months ended September 30, 2024 as compared with the same period in 2023. This was primarily the result of a $37.5 million decrease in restructuring costs and a $1.1 million decrease in amortization of intangible assets. The decrease was partially offset by an increase of $22.8 million in sales, general and administrative expenses and a $1.9 million increase in research and development expenses, both driven by increased labor costs and professional services. For additional details, refer to Item 1: Financial Statements (Unaudited), Note 12: Restructuring included in this Quarterly Report on Form 10-Q.

Previous wording

Total other income (expense) for the three and six months ended June 30, 2024 was income of $2.4 million and $4.8 million, compared with net expense of $0.8 million and $2.5 million in the same period in 2023.

Current wording

Total other income (expense) for the three and nine months ended September 30, 2024 was income of $8.5 million and $13.3 million, compared with net income of $0.8 million and net expense of $1.7 million in the same periods in 2023.

Previous wording

The net other income for the six months ended June 30, 2024, as compared with the same period in 2023, was primarily driven by the $5.6 million increase in interest income as well as increased other income driven by a $1.7 million foreign currency loss recognized in the six months ended June 30, 2023.

Current wording

The net other income for the three months ended September 30, 2024, as compared with the same period in 2023, was driven by the $10.8 million increase in interest income primarily due to interest earned from the cash proceeds of the 2024 Notes, offset by an increase in other interest expense driven by a $2.8 million interest accrual for the 2024 Notes recognized during the period.

Previous wording

For the three and six months ended June 30, 2024, our income tax expense was $15.2 million and $28.6 million, compared with income tax expense of $9.2 million and $9.1 million for the same periods in 2023. Our tax rate for the three and six months ended June 30, 2024 of 23% and 22% differed from the federal statutory rate of 21% due to the impact of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, U.S. taxation of foreign earnings including GILTI (Global Intangible Low-Taxed Income), net of Section 250 deduction, Subpart F income, a benefit related to stock-based compensation, tax credits, state taxes, and uncertain tax positions. Our tax rate for the three and six months ended June 30, 2023 of 27% and 41%, differed from the federal statutory rate of 21% due to the impact of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, U.S. taxation of foreign earnings including GILTI (Global Intangible Low Taxed Income), net of Section 250 deduction, Subpart F income, an expense related to stock-based compensation, tax credits, and uncertain tax positions.

Current wording

For the three and nine months ended September 30, 2024, our income tax expense was $3.5 million and $32.1 million, compared with income tax expense of $15.4 million and $24.5 million for the same periods in 2023. Our tax rate for the three and nine months ended September 30, 2024 of 4% and 15% differed from the federal statutory rate of 21% due to the impact of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, U.S. taxation of foreign earnings including GILTI (Global Intangible Low-Taxed Income), net of Section 250 deduction, Subpart F income, a benefit related to stock-based compensation, tax credits, state taxes, and uncertain tax positions. During the quarter, approximately $14 million in discrete tax benefits were recorded related to the favorable resolution of a foreign tax audit. Our tax rate for the three and nine months ended September 30, 2023 of 28% and 31%, differed from the federal statutory rate of 21% due to the impact of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, U.S. taxation of foreign earnings including GILTI (Global Intangible Low-Taxed Income), net of Section 250 deduction, Subpart F income, an expense related to stock-based compensation, tax credits, and uncertain tax positions.

Previous wording

Revenues increased $5.4 million, or 5%. Changes in foreign currency exchange rates unfavorably impacted revenues by $1.1 million. The 2024 increase in revenues was driven primarily by increased smart water and electric product sales.

Current wording

Revenues increased $12.0 million, or 11%. Changes in foreign currency exchange rates favorably impacted revenues by $0.5 million. The 2024 increase in revenues was driven primarily by increased smart water and electric product sales.

Previous wording

Revenues increased $13.9 million, or 6%. Changes in foreign currency exchange rates unfavorably impacted revenues by $0.1 million. The 2024 increase in revenues was driven primarily by increased smart water and electric product sales.

Current wording

Revenues increased $25.9 million, or 8%. Changes in foreign currency exchange rates favorably impacted revenues by $0.5 million. The 2024 increase in revenues was driven primarily by increased smart water and electric product sales.

Previous wording

For the six months ended June 30, 2024, gross margin was 25.0%, compared with 20.9% for the same period in 2023. The 410 basis point increase over the prior year was primarily due to an improved product mix.

Current wording

For the three months ended September 30, 2024, gross margin was 27.2%, compared with 24.3% for the same period in 2023. The 290 basis point increase over the prior year was primarily due to improved volume and manufacturing efficiencies.

Previous wording

For the three months ended June 30, 2024, gross margin was 26.3%, compared with 21.8% for the same period in 2023. The 450 basis point increase over the prior year was primarily due to an improved product mix.

Current wording

For the nine months ended September 30, 2024, gross margin was 25.7%, compared with 22.0% for the same period in 2023. The 370 basis point increase over the prior year was primarily due to an improved product mix and manufacturing efficiencies.

Previous wording

Operating expenses decreased $3.1 million, or 29%, compared with 2023. The decrease was primarily due to lower product development costs.

Current wording

Operating expenses decreased $2.4 million, or 26%, compared with 2023. The decrease was primarily due to lower product development costs.

Previous wording

Operating expenses decreased $4.4 million, or 22%, for the first six months of 2024, compared with the same period in 2023. The decrease was primarily due to lower product development costs.

Current wording

Operating expenses decreased $6.8 million, or 23%, for the first nine months of 2024, compared with the same period in 2023. The decrease was primarily due to lower product development costs.

Previous wording

Revenues increased $51.8 million, or 14%, in 2024 compared with 2023. The increase was primarily from product revenues due to the ramp of ongoing and new project deployments and improved component supply enabling us to fulfill the previously constrained customer demand.

Current wording

Revenues increased $31.7 million, or 8%, in 2024 compared with 2023. The increase was primarily from product revenues due to the ramp of new projects and ongoing deployments.

Previous wording

Revenues increased $145.8 million, or 22%, for the first six months of 2024 compared with the same period in 2023. The increase was primarily from product revenues due to the ramp of ongoing and new project deployments and improved component supply enabling us to fulfill the previously constrained customer demand.

Current wording

Revenues increased $177.6 million, or 17%, for the first nine months of 2024 compared with the same period in 2023. The increase was primarily from product revenues due to the ramp of new projects and ongoing deployments.

Previous wording

Gross margin was 36.9% for the period ending June 30, 2024, compared with 33.8% in 2023. The 310 basis point increase was primarily related to favorable product and solutions volumes and mix.

Current wording

Gross margin was 35.9% for the period ending September 30, 2024, compared with 35.1% in 2023. The 80 basis point increase was primarily related to favorable product volumes and improved operational efficiencies.

Previous wording

Gross margin was 37.0% for the 2024 period, compared with 33.8% in 2023. The 320 basis point increase was primarily related to favorable product and solutions volumes and mix as well as improved operational efficiencies.

Current wording

Gross margin was 36.6% for the 2024 period, compared with 34.3% in 2023. The 230 basis point increase was primarily related to favorable product and solutions volumes and mix as well as improved operational efficiencies.

Previous wording

Operating expenses increased $1.4 million, or 4%, for the quarter in 2024, compared with the same period in 2023. The increase was primarily related to higher product development costs.

Current wording

Operating expenses increased $1.7 million, or 5%, for the quarter in 2024, compared with the same period in 2023. The increase was primarily related to higher product development costs.

Previous wording

Operating expenses increased $5.0 million, or 8%, for the first six months of 2024, compared with the same period in 2023. The increase was primarily related to higher product development costs.

Current wording

Operating expenses increased $6.7 million, or 7%, for the first nine months of 2024, compared with the same period in 2023. The increase was primarily related to higher product development costs.

Previous wording

Revenues increased $17.1 million, or 13%, for the first six months of 2024, compared with 2023. This increase was driven by growth in recurring managed services, delivery services, distributed energy management, and revenue for grid planning solutions from the Elpis Squared acquisition.

Current wording

Revenues increased $28.1 million, or 14%, for the first nine months of 2024, compared with 2023. This increase was driven by services and the Elpis squared acquisition. This revenue growth was partially offset by a decrease in software.

Previous wording

Gross margin decreased to 34.8% for the second quarter of 2024, compared with 40.8% for the same period last year. The 600 basis point decrease was driven by increased services cost and lower software sales in the current period.

Current wording

Gross margin decreased to 35.0% for the third quarter of 2024, compared with 38.6% for the same period last year. The 360 basis point decrease was driven primarily by increased services costs.

Previous wording

Gross margin decreased to 34.9% for the period ending in 2024, compared with 41.8% for last year. The 690 basis point decrease was driven by increased services cost and lower software sales in the current period.

Current wording

Gross margin decreased to 35.0% for the period ending in 2024, compared with 40.7% for last year. The 570 basis point decrease was driven by increased services cost and product mix in the current period.

Previous wording

Operating expenses for the 2024 period increased $1.7 million, or 12%, compared with the same period last year. This was primarily related to increased product development investment.

Current wording

Operating expenses for the 2024 period increased $0.6 million, or 4%, compared with the same period last year. This was primarily related to increased product development investment.

Previous wording

Operating expenses for the first six months of 2024 increased $3.0 million, or 10%, compared with the same period last year. This was primarily related to increased product development investment.

Current wording

Operating expenses for the first nine months of 2024 increased $3.6 million, or 8%, compared with the same period last year. This was primarily related to increased product development investment.

Previous wording

Operating expenses not directly associated with an operating segment are classified as Corporate unallocated. These expenses increased $6.9 million, or 9%, for the three months ended June 30, 2024 compared with the same period in 2023. This increase was primarily the result of $8.9 million increase in sales, general and administrative expenses, driven by increased labor costs and professional services. This increase was partially offset by a $1.0 million decrease in restructuring costs.

Current wording

Operating expenses not directly associated with an operating segment are classified as Corporate unallocated. These expenses increased $3.4 million, or 5%, for the three months ended September 30, 2024 compared with the same period in 2023. This increase was primarily the result of $2.8 million increase in sales, general and administrative expenses, driven by increased labor costs.

Previous wording

For the first six months of 2024, Corporate unallocated expenses decreased $20.7 million, or 11%, compared with the 2023 period. This was primarily the result of a $37.4 million decrease in restructuring costs, as well as a $1.3 million decrease in amortization of intangible assets. The decreases were offset by a $18.4 million increase in sales, general and administrative expenses, primarily driven by increased labor costs and professional services.

Current wording

For the first nine months of 2024, Corporate unallocated expenses decreased $17.3 million, or 6%, compared with the 2023 period. This was primarily the result of a $37.5 million decrease in restructuring costs, as well as a $1.1 million decrease in amortization of intangible assets. The decreases were offset by a $21.2 million increase in sales, general and administrative expenses, primarily driven by increased labor costs and professional services.

Previous wording

Cash and cash equivalents were $920.6 million at June 30, 2024, compared with $302.0 million at December 31, 2023. The $618.6 million increase in cash and cash equivalents in the 2024 period was primarily the net proceeds provided by the convertible notes issuance and cash provided by operations as a result of higher earnings, partially offset by cash used in investing activities for the acquisition of Elpis Squared.

Current wording

Cash and cash equivalents were $982.5 million at September 30, 2024, compared with $302.0 million at December 31, 2023. The $680.5 million increase in cash and cash equivalents in the 2024 period was primarily the net proceeds provided by the convertible notes issuance and cash provided by operations as a result of higher earnings, partially offset by cash used in investing activities for the acquisition of Elpis Squared.

Previous wording

Cash provided by operating activities during the six months in 2024 was $93.0 million compared with $43.0 million during the same period in 2023. The increase was primarily due to increased earnings and working capital conversion, partially offset by higher restructuring and variable compensation payouts in 2024.

Current wording

Cash provided by operating activities during the nine months in 2024 was $158.3 million compared with $77.1 million during the same period in 2023. The increase was primarily due to increased earnings and working capital conversion, partially offset by higher restructuring payments in 2024.