LIBERTY LAKE, Wash. — August 1, 2024 — Itron, Inc. (NASDAQ: ITRI), which is innovating the way utilities and cities manage energy and water, announced today financial results for its second quarter ended June 30, 2024. Key results for the quarter include (compared with the second quarter of 2023):

• Revenue of $609 million, increased 13%;
• Gross profit of $210 million, increased 21%;
• GAAP net income attributable to Itron, Inc. of $51 million, increased $27 million;
• GAAP diluted earnings per share of $1.10, increased $0.57 per share;
• Non-GAAP diluted EPS of $1.21, increased $0.56 per share;
• Adjusted EBITDA of $77 million, increased 56%; and
• Free cash flow of $45 million, increased $9 million.

"The second quarter of 2024 was successful for Itron.” said Tom Deitrich, Itron’s president and CEO. “Revenue of $609 million was above our expectations, with segment level record revenue occurring in our Networked Solutions and Outcomes segments. The entire organization is performing well and rising to the challenge of supporting our customers’ missions to ensure safe, reliable and efficient access to energy and water resources for consumers.”

Summary of Second Quarter Consolidated Financial Results

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

Revenue

Total second quarter revenue increased 13%, to $609 million, due to strong operational execution and the conversion of previously constrained revenue.

Device Solutions revenue increased 5%, or 6% in constant currency, due primarily to growth in smart water sales.

Networked Solutions revenue increased 14%, due primarily to ongoing and new project deployments.

Outcomes revenue increased 16%, due primarily to an increase in recurring revenue and services.

Gross Margin

Itron's second quarter gross margin of 34.6% increased 250 basis points from the prior year due to higher margin product mix and operational efficiencies.

Operating Expenses and Operating Income

GAAP operating expenses of $146 million increased $7 million from the prior year. Non-GAAP operating expenses of $141 million increased $9 million.

GAAP operating income of $65 million was $30 million higher than the prior year and non-GAAP operating income of $69 million was $28 million higher than the prior year. Both increases were due to higher gross profit, partially offset by higher operating expenses.

Net Income and Earnings per Share

Net income attributable to Itron, Inc. for the quarter was $51 million, or $1.10 per diluted share, compared with net income attributable to Itron, Inc. of $24 million, or $0.53 per diluted share in 2023. The increase was driven by higher GAAP operating income and interest income, partially offset by higher tax expense.

Non-GAAP net income attributable to Itron, Inc., which excludes the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, (gain) loss on sale of business, acquisition and integration, and the tax effect of excluding these expenses, was $56 million, or $1.21 per diluted share, compared with $30 million, or $0.65 per diluted share, in 2023. The increase was due to higher non-GAAP operating income and interest income, partially offset by higher tax expense.

Cash Flow

Net cash provided by operating activities was $52 million in the second quarter compared with $42 million in the prior year. Free cash flow was $45 million in the second quarter compared with $36 million in the prior year. The increase in free cash flow was primarily due to higher earnings.

Other Measures

Total backlog at quarter end was $4.1 billion compared with $4.4 billion in the prior year. Bookings in the quarter totaled $447 million.

Q3 2024 Outlook and Full Year 2024 Guidance Update

Outlook for the third quarter of 2024 is as follows:

• Revenue between $590 and $600 million
• Non-GAAP diluted EPS between $1.10 and $1.20

Itron's guidance for the full year 2024 has been updated as follows:

• Revenue between $2.385 to $2.415 billion vs. February 2024 guidance of $2.275 to $2.375 billion
• Non-GAAP diluted EPS between $4.45 to $4.65 vs. February 2024 guidance of $3.40 to $3.80

Earnings Conference Call

Itron will host a conference call to discuss the financial results contained in this release at 10 a.m. EDT on August 1, 2024. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the company’s website at investors.itron.com. Participants should access the webcast 10 minutes prior to the start of the call. A webcast replay of the conference call will be available through August 9, 2024 and may be accessed on the company's website at investors.itron.com.

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 plans, 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 and other factors that are more fully described in Part I, Item 1A: Risk Factors included in our Annual Report on Form 10-K for the year ended Dec. 31, 2023 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 accounting principles generally accepted in the United States (GAAP), we use certain adjusted or non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share (EPS), adjusted EBITDA, free cash flow, and constant currency. 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. We believe 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. When providing future outlooks and/or earnings guidance, a reconciliation of forward-looking non-GAAP diluted EPS to the GAAP diluted EPS has not been provided because we are unable to predict with reasonable certainty the potential amount or timing of restructuring related expenses and their related tax effects without unreasonable effort. These costs are uncertain, depend on various factors and could have a material impact on GAAP results for the guidance period. 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.

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