Business Wire | Nov 2, 2020 08:30AM EST

Itron Announces Third Quarter 2020 Financial Results and Operational Update

Nov. 02, 2020

LIBERTY LAKE, Wash.--(BUSINESS WIRE)--Nov. 02, 2020--Itron, Inc. (NASDAQ:ITRI) announced today financial results for its third quarter ended Sept. 30, 2020. Key results for the quarter include (compared with the third quarter of 2019):

* Revenue of $540 million, compared with $624 million; * Gross margin of 26.5%; compared with 31.5%; * GAAP net loss of $(25) million, compared with net income of $17 million; * GAAP loss per share of $(0.63), compared with GAAP diluted earnings per share (EPS) of $0.42; * Non-GAAP diluted EPS of $0.61, compared with $1.04; * Adjusted EBITDA of $40 million, compared with $74 million; * Free cash flow of $38 million, compared with $32 million; and * Total backlog of $2.8 billion, compared with $3.1 billion.

"During the third quarter, our team continued to focus on the success of our customers and safely delivered results aligned to our expectations," said Tom Deitrich, Itron's president and chief executive officer.

"While still being negatively impacted by the COVID-19 pandemic, our results have improved sequentially from the second quarter low point," continued Deitrich. "While we navigate the near-term challenges, we continue to innovate and position Itron to capture the growing technology and service need of utilities and cities with our solutions."

Summary of Third Quarter Consolidated Financial Results

(All comparisons made are against the prior year period unless otherwise noted)

Revenue

Total third quarter revenue decreased 13% to $540 million, or 14%, excluding the impact of changes in foreign currency exchange rates. The decrease was primarily due to lower customer demand and operating constraints resulting from COVID-19.

Device Solutions revenue decreased 17%, Networked Solutions revenue decreased 14% and Outcomes revenue increased 5%.

Gross Margin

Consolidated company gross margin of 26.5% decreased 500 basis points from the prior year due to COVID-19 induced manufacturing inefficiencies, inventory reserves and product mix.

Operating Expenses and Operating Income

GAAP operating expenses of $167 million increased $10 million from the prior year due to $44 million of restructuring expenses recognized in the quarter, partially offset by lower SG&A expenses, product development and amortization.

Non-GAAP operating expenses of $114 million decreased $17 million from the prior year due to lower sales, general and administrative expenses and product development.

GAAP operating loss of $(24) million was lower than the prior year due to lower gross profit and higher GAAP operating expenses. Non-GAAP operating income of $30 million decreased compared with the prior year due to lower gross profit.

Net Income (Loss) and Earnings (Loss) per Share

The net loss attributable to Itron, Inc. for the quarter was $(25) million, or $(0.63) per share, a decrease from net income of $17 million, or $0.42 per diluted share, in 2019. The decrease was driven by lower GAAP operating income in the current period and a higher GAAP effective tax rate.

Non-GAAP net income, which excludes certain charges including amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of business, corporate transition cost, acquisition and integration related expenses and the income tax effect of those adjustments, was $25 million, or $0.61 per diluted share, compared with $41 million, or $1.04 per diluted share, in 2019. The lower year-over-year results were primarily due to the negative impact of the COVID-19 virus.

Cash Flow

Net cash provided by operating activities was $45 million in the third quarter compared with $50 million in the same quarter of 2019. Free cash flow was $38 million in the third quarter compared with $32 million in the prior year. The higher free cash flow was due to improved working capital and lower capital expenditures, partially offset by the lower operating income.

Other Measures

Total backlog was $2.8 billion and 12-month backlog was $1.1 billion, compared with $3.1 billion and $1.4 billion, respectively, in the prior year. Bookings in the quarter totaled $432 million.

Operational Update and Outlook

Results, while improving sequentially from the second quarter, still reflect the current pandemic operating environment. Our supply chain and logistics situation remain stable. We continue to have all factories up and running with aggressive measures to execute safely across our entire operation. Itron remains vigilant and prepared for regional and local spikes from the pandemic that may potentially disrupt our operations. We see some customers resuming deployments and a strong pipeline of new tenders. To date there have been no contract cancellations or slowing with collections from our customers. However, some new deployments that were expected to start in 2020 have shifted to out years due to pandemic conditions and/or delays in the regulatory approval process. On balance, we were pleased with our team's focus and execution this quarter and we remain on track to achieve our second half 2020 expectations.

Earnings Conference Call

Itron will host a conference call to discuss the financial results and guidance contained in this release at 11 a.m. EST on Nov. 2, 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 http://investors.itron.com/events.cfm. A replay of the audio webcast will be made available at http://investors.itron.com/events.cfm. A telephone replay of the conference call will be available through Nov. 7, 2020. To access the telephone replay, dial 888-203-1112 or 719-457-0820 and enter passcode 6815143.

About Itron

Itron(r) enables utilities and cities to safely, securely and reliably deliver critical infrastructure services to communities in more than 100 countries. Our portfolio of smart networks, software, services, meters and sensors helps our customers better manage electricity, gas and water resources for the people they serve. By working with our customers to ensure their success, we help improve the quality of life, ensure the safety and promote the well-being of millions of people around the globe. Itron is dedicated to creating a more resourceful world. Join us: www.itron.com.

Itron(r) is registered trademarks 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.

Cautionary Note Regarding Forward Looking Statements

This release contains, and our officers and representatives may from time to time make, "forward-looking statements" within 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 are based on our expectations about, among others, revenues, operations, financial performance, earnings, liquidity, earnings per share, cash flows and restructuring activities including headcount reductions and other cost savings initiatives. This document reflects our current strategy, plans and expectations and is based on information currently available as of the date of this release. When we use words such as "expect," "intend," "anticipate," "believe," "plan," "goal," "seek," "project," "estimate," "future," "strategy," "objective," "may," "likely," "should," "will," "will continue," and similar expressions, including related to future periods, they are intended to identify forward-looking statements. Forward-looking statements rely on a number of assumptions and estimates. 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, uncertainties caused by adverse economic conditions, including, without limitation those resulting from extraordinary events or circumstances such as the COVID-19 pandemic and other factors that are more fully described in Item 1A: "Risk Factors" included 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.

The impact caused by the ongoing COVID-19 pandemic includes uncertainty as to the duration, spread, severity, and any recurrence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, impact on overall demand, impact on our customers' businesses and workforce levels, disruptions of our business and operations, including the impact on our employees, limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers. Our estimates and statements regarding the impact of COVID-19 are made in good faith to provide insight to our current and future operating and financial environment and any of these may materially change due to factors outside our control. 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 latest 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. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. 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.

ITRON, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS



(Unaudited, in thousands, except per share data)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Revenues

Product $ 470,658 $ 552,897 $ 1,437,780 $ 1,663,794 revenues

Service 69,526 71,577 210,413 210,293 revenues

Total 540,184 624,474 1,648,193 1,874,087 revenues

Cost of revenues

Product cost of 358,297 389,778 1,072,271 1,176,913 revenues

Service cost of 38,636 38,292 122,588 122,293 revenues

Total cost of 396,933 428,070 1,194,859 1,299,206 revenues

Gross profit 143,251 196,404 453,334 574,881



Operating expenses

Sales, general and 64,982 83,666 215,018 264,640 administrative

Research and 46,224 50,612 148,999 150,551 development

Amortization of intangible 11,183 16,095 33,488 48,185 assets

Restructuring 44,462 6,592 41,531 7,685

Loss on sale of 380 - 57,295 - business

Total operating 167,231 156,965 496,331 471,061 expenses



Operating income (23,980 ) 39,439 (42,997 ) 103,820 (loss)

Other income (expense)

Interest income 354 517 2,165 1,379

Interest (10,810 ) (12,868 ) (33,771 ) (39,899 ) expense

Other income (2,607 ) (2,759 ) (3,414 ) (6,463 ) (expense), net

Total other income (13,063 ) (15,110 ) (35,020 ) (44,983 ) (expense)



Income (loss)before income (37,043 ) 24,329 (78,017 ) 58,837 taxes

Income taxbenefit 11,985 (6,152 ) (366 ) (20,692 ) (provision)

Net income (loss) (25,058 ) 18,177 (78,383 ) 38,145

Net income attributable to 299 1,330 1,092 3,759 noncontrolling interests

Net income (loss)attributable to $ (25,357 ) $ 16,847 $ (79,475 ) $ 34,386 Itron, Inc.



Net income (loss)per common share $ (0.63 ) $ 0.43 $ (1.98 ) $ 0.87 - Basic

Net income (loss)per common share $ (0.63 ) $ 0.42 $ (1.98 ) $ 0.86 - Diluted



Weighted averagecommon shares 40,337 39,478 40,199 39,508 outstanding -Basic

Weighted average common shares 40,337 39,903 40,199 39,884 outstanding - Diluted

ITRON, INC.

SEGMENT INFORMATION



(Unaudited, in thousands)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Product revenues

Device Solutions $ 174,039 $ 211,096 $ 501,157 $ 644,254

Networked 282,677 330,487 898,465 978,259 Solutions

Outcomes 13,942 11,314 38,158 41,281

Total Company $ 470,658 $ 552,897 $ 1,437,780 $ 1,663,794



Service revenues

Device Solutions $ 2,089 $ 2,253 $ 6,415 $ 8,573

Networked 23,982 25,734 73,519 70,305 Solutions

Outcomes 43,455 43,590 130,479 131,415

Total Company $ 69,526 $ 71,577 $ 210,413 $ 210,293



Total revenues

Device Solutions $ 176,128 $ 213,349 $ 507,572 $ 652,827

Networked 306,659 356,221 971,984 1,048,564 Solutions

Outcomes 57,397 54,904 168,637 172,696

Total Company $ 540,184 $ 624,474 $ 1,648,193 $ 1,874,087



Gross profit

Device Solutions $ 20,528 $ 40,945 $ 64,843 $ 122,451

Networked 102,295 135,406 332,368 388,717 Solutions

Outcomes 20,428 20,053 56,123 63,713

Total Company $ 143,251 $ 196,404 $ 453,334 $ 574,881



Operating income (loss)

Device Solutions $ 11,017 $ 27,905 $ 28,095 $ 81,717

Networked 71,404 105,637 237,466 298,994 Solutions

Outcomes 12,044 10,843 29,468 35,620

Corporate (118,445 ) (104,946 ) (338,026 ) (312,511 ) unallocated

Total Company $ (23,980 ) $ 39,439 $ (42,997 ) $ 103,820

ITRON, INC.

METER AND MODULE SUMMARY



(Unaudited, Units in thousands)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Itron Endpoints

Standard endpoints 3,890 5,420 12,410 16,460

Networked endpoints 3,860 3,940 11,950 12,180

Total endpoints 7,750 9,360 24,360 28,640



ITRON, INC.

CONSOLIDATED BALANCE SHEETS



(Unaudited, in thousands) September 30, December 31, 2020 2019

ASSETS

Current assets

Cash and cash equivalents $ 586,167 $ 149,904

Accounts receivable, net 386,920 472,925

Inventories 205,178 227,896

Other current assets 173,906 146,526

Total current assets 1,352,171 997,251



Property, plant, and equipment, net 205,930 233,228

Deferred tax assets, net 72,305 63,899

Other long-term assets 47,929 44,686

Operating lease right-of-use assets, net 78,190 79,773

Intangible assets, net 144,888 185,097

Goodwill 1,114,511 1,103,907

Total assets $ 3,015,924 $ 2,707,841



LIABILITIES AND EQUITY

Current liabilities

Accounts payable $ 232,236 $ 328,128

Other current liabilities 76,509 63,785

Wages and benefits payable 91,225 119,220

Taxes payable 15,482 22,193

Current portion of debt 21,406 -

Current portion of warranty 32,118 38,509

Unearned revenue 117,729 99,556

Total current liabilities 586,705 671,391



Long-term debt, net 1,313,459 932,482

Long-term warranty 10,969 14,732

Pension benefit obligation 103,273 98,712

Deferred tax liabilities, net 1,854 1,809

Operating lease liabilities 68,847 68,919

Other long-term obligations 133,552 118,981

Total liabilities 2,218,659 1,907,026



Equity

Common stock 1,381,774 1,357,600

Accumulated other comprehensive loss, net (154,013) (204,672)

Accumulated deficit (455,865) (376,390)

Total Itron, Inc. shareholders' equity 771,896 776,538

Noncontrolling interests 25,369 24,277

Total equity 797,265 800,815

Total liabilities and equity $ 3,015,924 $ 2,707,841

ITRON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited, in thousands) Nine Months Ended September 30,

2020 2019

Operating activities

Net income (loss) $ (78,383 ) $ 38,145

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 72,306 85,691

Non-cash operating lease expense 15,252 13,847

Stock-based compensation 20,638 21,064

Amortization of prepaid debt fees 3,029 3,686

Deferred taxes, net (9,439 ) 4,990

Loss on sale of business 57,295 -

Restructuring, non-cash 6,518 (2,147 )

Other adjustments, net 3,856 (6,121 )

Changes in operating assets and liabilities

Accounts receivable 82,087 (39,385 )

Inventories 8,978 (15,762 )

Other current assets (12,862 ) (10,494 )

Other long-term assets (2,547 ) 7,945

Accounts payable, other current liabilities, (82,775 ) (4,063 ) and taxes payable

Wages and benefits payable (28,446 ) 30,220

Unearned revenue 15,098 6,746

Warranty (10,894 ) (5,506 )

Other operating, net 10,860 (756 )

Net cash provided by operating activities 70,571 128,100



Investing activities

Net payments related to the sale of business (748 ) -

Acquisitions of property, plant, and equipment (36,297 ) (44,570 )

Other investing, net 3,573 9,977

Net cash used in investing activities (33,472 ) (34,593 )



Financing activities

Proceeds from borrowings 400,000 50,000

Payments on debt - (100,313 )

Issuance of common stock 5,059 7,117

Repurchase of common stock - (25,000 )

Prepaid debt fees (184 ) (175 )

Other financing, net (2,285 ) (5,221 )

Net cash provided by (used in) financing 402,590 (73,592 ) activities



Effect of foreign exchange rate changes on cash, (3,426 ) (543 ) cash equivalents, and restricted cash

Increase in cash, cash equivalents, and 436,263 19,372 restricted cash

Cash, cash equivalents, and restricted cash at 149,904 122,328 beginning of period

Cash, cash equivalents, and restricted cash at $ 586,167 $ 141,700 end of period

About Non-GAAP Financial Measures

The accompanying press release contains non-GAAP financial measures. 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, free cash flow, and constant currency. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and other companies may define such measures differently. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures".

We use these non-GAAP financial measures for financial and operational decision making and/or as a means for determining executive compensation. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and ability to service debt by excluding certain expenses that may not be indicative of our recurring core operating results. These non-GAAP financial measures facilitate management's internal comparisons to our historical performance, as well as comparisons to our competitors' operating results. Our executive compensation plans exclude non-cash charges related to amortization of intangibles and certain discrete cash and non-cash charges, such as acquisition and integration related expenses, or restructuring charges. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because they provide greater transparency with respect to key metrics used by management in its financial and operational decision making and because they are used by our institutional investors and the analyst community to analyze the health of our business.

Non-GAAP operating expenses and non-GAAP operating income - We define non-GAAP operating expenses as operating expenses excluding certain expenses related to the amortization of intangible assets, restructuring, loss on sale of business, corporate transition cost, and acquisition and integration. We define non-GAAP operating income as operating income excluding the expenses related to the amortization of intangible assets, restructuring, loss on sale of business, corporate transition cost, and acquisition and integration. Acquisition and integration related expenses include costs, which are incurred to affect and integrate business combinations, such as professional fees, certain employee retention and salaries related to integration, severances, contract terminations, travel costs related to knowledge transfer, system conversion costs, and asset impairment charges. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of expenses that are related to acquisitions and restructuring projects. By excluding these expenses, we believe that it is easier for management and investors to compare our financial results over multiple periods and analyze trends in our operations. For example, in certain periods, expenses related to amortization of intangible assets may decrease, which would improve GAAP operating margins, yet the improvement in GAAP operating margins due to this lower expense is not necessarily reflective of an improvement in our core business. There are some limitations related to the use of non-GAAP operating expenses and non-GAAP operating income versus operating expenses and operating income calculated in accordance with GAAP. We compensate for these limitations by providing specific information about the GAAP amounts excluded from non-GAAP operating expense and non-GAAP operating income and evaluating non-GAAP operating expense and non-GAAP operating income together with GAAP operating expense and operating income.

Non-GAAP net income and non-GAAP diluted EPS - We define non-GAAP net income as net income attributable to Itron, Inc. excluding the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of business, corporate transition cost, acquisition and integration, and the tax effect of excluding these expenses. We define non-GAAP diluted EPS as non-GAAP net income divided by the weighted average shares, on a diluted basis, outstanding during each period. We consider these financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP measures and evaluating non-GAAP net income and non-GAAP diluted EPS together with GAAP net income attributable to Itron, Inc. and GAAP diluted EPS.

For interim periods, beginning the first quarter of 2019, the budgeted annual effective tax rate (AETR) is used, adjusted for any discrete items, as defined in ASC 740 - Income Taxes. The budgeted AETR is determined at the beginning of the fiscal year. The AETR is revised throughout the year based on changes to our full-year forecast. If the revised AETR increases or decreases by 200 basis points or more from the budgeted AETR due to changes in the full-year forecast during the year, the revised AETR is used in place of the budgeted AETR beginning with the quarter the 200 basis point threshold is exceeded and going forward for all subsequent interim quarters in the year. We continue to assess the AETR based on latest forecast throughout the year and use the most recent AETR anytime it increases or decreases by 200 basis points or more from the prior interim period.

Adjusted EBITDA - We define adjusted EBITDA as net income (a) minus interest income, (b) plus interest expense, depreciation and amortization of intangible assets, restructuring, loss on sale of business, corporate transition cost, acquisition and integration related expense, and (c) excluding income tax provision or benefit. Management uses adjusted EBITDA as a performance measure for executive compensation. A limitation to using adjusted EBITDA is that it does not represent the total increase or decrease in the cash balance for the period and the measure includes some non-cash items and excludes other non-cash items. Additionally, the items that we exclude in our calculation of adjusted EBITDA may differ from the items that our peer companies exclude when they report their results. We compensate for these limitations by providing a reconciliation of this measure to GAAP net income (loss).

Free cash flow - We define free cash flow as net cash provided by operating activities less cash used for acquisitions of property, plant and equipment. We believe free cash flow provides investors with a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. The same limitations described above regarding our use of adjusted EBITDA apply to our use of free cash flow. We compensate for these limitations by providing specific information regarding the GAAP amounts and reconciling to free cash flow.

Constant currency - We refer to the impact of foreign currency exchange rate fluctuations in our discussions of financial results, which references the differences between the foreign currency exchange rates used to translate operating results from the entity's functional currency into U.S. dollars for financial reporting purposes. We also use the term "constant currency", which represents financial results adjusted to exclude changes in foreign currency exchange rates as compared with the rates in the comparable prior year period. We calculate the constant currency change as the difference between the current period results and the comparable prior period's results restated using current period foreign currency exchange rates.

The accompanying tables have more detail on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures and the related reconciliations between these financial measures.

ITRON, INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES



(Unaudited, inthousands, except per share data)



TOTAL COMPANY Three Months Ended Nine Months Ended SeptemberRECONCILIATIONS September 30, 30,

2020 2019 2020 2019

NON-GAAP OPERATING EXPENSES

GAAP operating $ 167,231 $ 156,965 $ 496,331 $ 471,061 expenses

Amortization of intangible (11,183 ) (16,095 ) (33,488 ) (48,185 ) assets

Restructuring (44,462 ) (6,592 ) (41,531 ) (7,685 )

Loss on sale of (380 ) - (57,295 ) - business

Corporate - (57 ) 33 (1,613 ) transition cost

Acquisition and integration 2,348 (3,834 ) 738 (24,593 ) related expense

Non-GAAP operating $ 113,554 $ 130,387 $ 364,788 $ 388,985 expenses



NON-GAAP OPERATING INCOME

GAAP operating $ (23,980 ) $ 39,439 $ (42,997 ) $ 103,820 income (loss)

Amortization of intangible 11,183 16,095 33,488 48,185 assets

Restructuring 44,462 6,592 41,531 7,685

Loss on sale of 380 - 57,295 - business

Corporate - 57 (33 ) 1,613 transition cost

Acquisition and integration (2,348 ) 3,834 (738 ) 24,593 related expense

Non-GAAP $ 29,697 $ 66,017 $ 88,546 $ 185,896 operating income



NON-GAAP NET INCOME & DILUTED EPS

GAAP net income (loss) $ (25,357 ) $ 16,847 $ (79,475 ) $ 34,386 attributable to Itron, Inc.

Amortization of intangible 11,183 16,095 33,488 48,185 assets

Amortization of debt placement 972 1,240 2,898 3,555 fees

Restructuring 44,462 6,592 41,531 7,685

Loss on sale of 380 - 57,295 - business

Corporate - 57 (33 ) 1,613 transition cost

Acquisition and integration (2,348 ) 3,834 (738 ) 24,593 related expense

Income tax effect of (4,658 ) (3,269 ) (6,037 ) (16,131 ) non-GAAP adjustments

Non-GAAP net income $ 24,634 $ 41,396 $ 48,929 $ 103,886 attributable to Itron, Inc.



Non-GAAP diluted $ 0.61 $ 1.04 $ 1.21 $ 2.60 EPS



Non-GAAP weighted average common shares 40,559 39,903 40,507 39,884 outstanding - Diluted



ADJUSTED EBITDA

GAAP net income (loss) $ (25,357 ) $ 16,847 $ (79,475 ) $ 34,386 attributable to Itron, Inc.

Interest income (354 ) (517 ) (2,165 ) (1,379 )

Interest 10,810 12,868 33,771 39,899 expense

Income tax (11,985 ) 6,152 366 20,692 provision

Depreciation and 24,076 28,623 72,306 85,691 amortization

Restructuring 44,462 6,592 41,531 7,685

Loss on sale of 380 - 57,295 - business

Corporate - 57 (33 ) 1,613 transition cost

Acquisition and integration (2,348 ) 3,834 (738 ) 24,593 related expense

Adjusted EBITDA $ 39,684 $ 74,456 $ 122,858 $ 213,180



FREE CASH FLOW

Net cash provided by $ 44,785 $ 50,037 $ 70,571 $ 128,100 operating activities

Acquisitions of property, (7,248 ) (18,059 ) (36,297 ) (44,570 ) plant, and equipment

Free Cash Flow $ 37,537 $ 31,978 $ 34,274 $ 83,530

View source version on businesswire.com: https://www.businesswire.com/news/home/20201102005180/en/

CONTACT: Itron, Inc. Kenneth P. Gianella Vice President, Investor Relations (669) 770-4643

CONTACT: Rebecca Hussey Manager, Investor Relations (509) 891-3574