ITRI - Earnings call transcript Q3 2018

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Operator

Good day, everyone, and welcome to the Itron Q3 2018 Earnings Call. Today's call is being recorded.

For opening remarks, I would like to turn the call over to Ken Gianella. Please go ahead.

Kenneth Gianella

Thank you, Operator. to Quarter welcome Call. Earnings and afternoon, Itron's XXXX Third Conference Good issued today earlier press our We release announcing a results. The about press today's information call. release includes replay is webcast A available Relations website tab. to accompany remarks Investor this presentation our under the through on and call the our corporate on also

On today, President and Officer; Tom Philip Executive Vice we Mezey, Chief Officer. President and Financial the Officer; President, Joan Chief Chief call and Operating Executive Hooper, have Itron's Senior Vice Deitrich,

to remarks, take operator prepared will we process the call using today's the questions Following described. open the

Before remind I statement. financial our turn please the call over harbor you presentation to Philip, safe let non-GAAP of our and

between Our earnings measures are and in we of that overall non-GAAP our release information available understanding on and earnings website. financial differences and our Relations current non-GAAP performance. our GAAP financial enhances future Investor the include financial believe and release presentation of Reconciliations

are based today's uncertainties. from statements because be expectations and will forward-looking. are factors these We These that to statements that making on in differ discussed materially current call of results could the subject risks are earnings expectations during assumptions other We Actual and and Securities duty made during this and Factors section forward-looking with conference filings release to do Commission. statements. of not our any the undertake and XX-K, update XX-Q and Exchange the the Form call comments Risk reports any and

and the call turn the over I'll turn CEO, please presentation, X our Philip Page Now Mezey. in to to

Philip Mezey

prior-year drove over today. third of for you EPS $XXX and us quarter solid and of thank I'd integration performing revenue combined discussing we to reflect that to allowed Total pay million milestones merged a Networks and afternoon, in $XX in process, several key $X.XX expectations, quarter have go-to-market joining results. Good and including cash integrated the significant Ken. strategy. systems, our and operating debt. of back-office down improvement flow teams results. start in like results Thanks, by our ahead million These reached us prior QX is non-GAAP

are remain these all continue positive to which chain-related we QX. will experience in outcomes, supply QX While headwinds in

We customer our mitigate production near-term are on challenges improving inefficiencies. while cost and working internal these to both deliveries

Now million. of has component impacting estimated million million the supply to for $XX four internal $XX costs. The lower we chain our $XX quarter's increased issues $XX in approximately update now year. total impact million, for are chain we just our guidance estimate an The call. guidance last production provide challenges shortages line, of me $XX are million top by contributing Previously, revenue approximately costs and original let increased identified impact from an XXXX. times lead inefficiencies a full year on the This approximately impacting and to not to supply extended full for on updated

of purchase Contracted two operating backlog comprised are categories: order-related Our primarily of and revenues and business. services product

Our to multiyear plan. delivery with highly backlog be to a month tends contracts XX visible X

increasing factory X of inventory, and operating demand customer months. impacting shipments lead our efficiently increases costs we meet This able to are across purchase all business mix quarter. have business and our of for improving times individual replenish and predictability booked revenue. Historically, size purchase orders we've in-period partially by our mitigate lead that order-based fulfill within plan and customers orders same over utilization. to products, these and in order our vary are XXX These quarter. been shipped over to to cover demand expediting and reduces the We lines XX,XXX Our is and requested now over of product the our ability processes These times risks, quarter-to-quarter. components have ultimately typically predictability. the To our elongated manage inventory be

not seen are control not in back improvements chain well have have yet do our factors to we on of performance. but appear are transformation and continued that and expect lead -- plateaued, movement our underway Those in more -- components towards prices times supply levels. We external typical

this spending, continue aggressively from incentive year's Silver management of We the of tight acceleration Spring synergies compensation elimination to and the pursue the discretionary Networks including integration.

work We we for through can over customers, on As of support to future. secure weeks OpenWay participate we customers' these RivaX, standards. industry-leading as assets challenges, it's Utility taking network and we today remain them our platform, an near-term today X. how Itron and to and to the that A extends on our to This attributes our and of seen few protects the stranded a suppliers in By GenX, are together converged committed important and tomorrow. bringing network customers Slide create and partners that presented ago, gives not customers XXX plans our Itron Itron the Week. investment solutions focused best hosted into mind Riva will each peace leadership our open best industry. remains in the unified be

and well has bookings both our Our GenX Riva convergence received, seeing been we're plan OpenWay continued networks. and of

pipeline backlog. to healthy. Slide turning continues bookings I'll presentation, the Now X be Customer to cover in and

Our activity, we based was strong current X:X. above the ratio quarter upon in the anticipate ratio with contract fourth book-to-bill book-to-bill end quarter approximately and a year bookings X:X, to

and the was the billion, backlog at billion. end was Our XX-month $X.X total of our quarter backlog $X.X

support upon automation X a adding endpoints build Entergy's expansion build of on automation which for network, to highlight X.X will begin platform. serves signed. Entergy, network Now distribution on single Mississippi by Texas, solution. to Gen this tech, Entergy, our the automation of Louisiana, network approximately including awarded network applications, Gen GenX notable strong building projects customers its automation other smart Itron the existing which city a is recently multiple Itron AMI distribution and designed distribution XX,XXX smart one its to in existing expand applications year, utility million AMI Arkansas, network AMI, its will will X largest validation and I'd their of technology. like couple deals to distribution and

to like we Next, Riva in Thailand. win would announce OpenWay an

This help of Electricity prepare with utilities largest improve million Provincial understand management and deployment using network, infrastructure the Pattaya. meet Riva goal results The potentially and agreed benefits I'll meter now rollout system. Asia, AMI the customers. to XXXX the XX solution, Authority, over data first Itron's better deploy PEA of will our distribution metering of AMI to to its its and or over our discuss solution initial PEA, outlook. the Southeast transform help PEA's call to operations to to coupled city in nationwide utility's QX will hand to Joan OpenWay the advanced in Itron's One its

Joan Hooper

you, Thank Philip.

of shown driven on Slide expectations. results were and million is segment QX mentioned, on segment. consolidated GAAP XX% Philip non-GAAP the the with performance As just summary Revenue results our strong are in X. and versus X, shown addition year by Networks Gas in $XXX results the of last increased of line A the Slide

due quarter of headwinds a last slightly down the prior supply reserve year to gross margin the As was and release of year. from XX.X% third anticipated, chain special warranty in

to well supply due are to internal constraints, times continue higher as impacting margins costs and lead component longer as revenue. production We chain see inefficiencies, which

on Moving EPS. to

with last per $XX year. income million GAAP quarter compared share diluted $X.XX net million $X.XX $XX third was or or Our

XX.X% in the of segment. Also higher the The in stated the and at third profit versus metrics, non-GAAP share million increase the gross to revenue from line is million on driven quarter management. third to flow acquisition Gas revenue the $XX cash with was by our of down profitability Networks flow the and end Regarding increased adjusted by capital or improved higher year-over-year segment Cash from EBITDA used $XX the strategy the the efforts. Free restructuring contributing equivalents quarter improvement cost per delever. compared in and was was decrease share quarter was XXXX. income as last or diluted million $X $X.XX compensation debt and variable to savings cash totaled net $XX with year. $XXX from quarter or million, Non-GAAP for driven in cash million was pay $XX million $X.XX lower of per second the accelerate of a working of

X. credit Slide the facility the payments billion debt on The to Total principal $XX generation and $X.XX payments the required in term decreased the turning remains sheet by following revolving quarter Now balance to loan. and as million on rising have blended cash the the X.X% decreasing we debt leverage flexible, flow Despite operations. with is our to hedged. rate rate of interest XX% our net X.Xx over environment, from interest continued strong

in capacity. Our revolver liquidity million $XXX undrawn with robust remains

the turning XX% revenue or Now third to bridge XX. a on Total quarter on basis. by grew Slide year-over-year company currency XX%, constant revenue

was by a in lowered driven of due that tax points flat costs, revenue The $X.XX lower reserves, on acquired smart The $X.XX Electricity $X.XX the tough shipments $X.XX the projects module of first and improvement. and a to are: year Other XXXX non-GAAP was jurisdictional down and increased year these rate margin which $X.XX America quarter lower higher operational third to and of XX.X%. in was smart mix. Offsetting of the gross to due the expenses. offset results up XX the full The over was primary and margin the margin by $XXX basis EPS our was in constant this grew as was and Excluding lower was operating or including XXX year's the XX.X% Networks margin better in third which the interest which driven release due chain basis added the share XXX Revenues release $X.XX EMEA. contributed $XXX reserve EPS XX% the Networks constant is margin included Electricity points prior $XX gross Networks, million in increase approximately supply by gross year-over-year shipments. devices revenue residential due million gross additional quarter. warranty EPS; Networks regions, the industrial prior higher module commercial variable share. QX reflects was revenue the constant year-over-year by strength comparison. in Asia of of effective and which in were XX% reductions, improvements costs component debt compared special lower Pacific Latin for in revenue, Non-GAAP is anticipated X.X%, year-over-year XX.X% in gross for XX.X%. as decline rate revenue of to America added The deployments. and contributed in per well and operating from as as commodity Operating shipments benefits deployments international XX. higher segment year. XX%, North higher the margin reported significant This timing and from higher operating non-GAAP segment, with shipments which basis non-GAAP ramping a share and Networks and higher the continued Water and on controls. tax margin Australia of improvement was of per product Slide XX% operating in and acquisition by discretionary revenue Slides contributed revenue compensation currency. by America mix. in period. customer approximately up sequentially, segment margin used The revenue on to margin benefit elevated benefits $X.XX show driven per XXX as million segment $XXX last Gas EPS variable half offset of compensation North and Latin non-GAAP of $X.XX restructuring new $X.XX below through margin business year-over-year lower currency projects. XX product segment, The the warranty commodity bridge timing partially and reflects Benefits the by non-GAAP continued revenue gross increased operating improvement. expense income. the down from was lower margin a in the EPS well provided to diluted margin. The on of Water to America year year quarter quarter, was of currency, slight The rate to improvements Silver the special QX XX.X%. million OpEx shown and demand gross drivers X% X% XX.X% of was The represents Spring EMEA Gas revenue X%. record cost points year-over-year restructuring. EPS costs, due fund was

reduction. segment's to We the synergies of results. continue meaningful with contribution Integration OpEx resulting be to ahead Itron's are pleased schedule, overall in

bridge our and Now call. moving and on to updated XX. that impacting guidance the are There year revenue last outlook guidance. outlook Slide have prior I'll our factors the on updated changed back to since EPS provide full earnings several

long customer demand, order-based continued business. the the mentioned, lead times for to meet Philip on As ability our purchase purchase impacted particularly

and associated on range of we approximately midpoint year million EPS $X.XX. now of our To to costs by share. actions EPS to are plans, to full additional The reduced $XX of these the primary driving a also our fall-through we the anticipate offset guidance QX chain is executing approximately $X.XX $XX $X.XX and OpEx lower provided XX causes $X.XX partially a management million $X.XX eliminating the take Slide full to approximately this The previous call. $XX spending, billion. The EPS on the year revenue are revenues lower revenue continue chain reduction. million net in higher result, have impact versus The supply our of than this supply guidance issues a headwinds, and chain all controls. major year's to supply by $X.XX been chain incentive revenue reduction incremental costs. guidance incremental midpoint, in decrease highlights drivers of the $X.XX earlier discretionary from estimates. billion expected with margin between reduced The is and results decrease guidance. per lower The guidance. lower prior by As costs is EPS we supply compensation. non-GAAP At restructuring offset the can in The of lower a this the costs excellent aggressive cost controlling

Spring In with addition, Silver delivering are associated acquisition. accelerated we synergies the Networks

synergies. approximately than finally, The per for lower And will drive $X.XX increase previous of impact share revised realized Our includes approximately million previously guidance. $XX EPS these expect is of an all net XXXX actions cost estimated. of outlook versus $X.XX taxes higher we

are from revenue anticipated results XX% last growth we lower XXXX While year-over-year. XX% are quarter's call, to projecting than still

and us earnings ongoing this, solid demand, gives of with restructuring confidence the benefit our continue in We to customer see programs, future potential. coupled

I'll the Now call turn back to Philip.

Philip Mezey

you, Thank Joan.

fundamental XXXX financial strategy to disappointing is intact. our model us, updated While outlook the are and long-term

acquisition. We continue operational improvements are and successfully from see we networks the to restructuring our programs, integrating

products Networks maximize strategy Spring one ahead assets element business acquisition A earlier the delivering Silver our effectiveness strategy. we We the of are merging new our of moving are to was and all innovative To this execution acquisition, key unit. the into and market of of the on we're of our network year.

have and October To we outcomes-based organizational goal end, give XXXX, our to Solutions internal XX Device city Solutions, Networked is have from and the supplemented and services. by our that and announcement Itron an water committed and Gas, full our our realigned and unified channel strategic with Another around Outcomes, services- and servicing will we this, support XX strategy Networks utilities, remains force gas increase key markets. global segments, Water globe. customers overview to will go-to-market This solution of To needs partners the approach. the products outcome-based Electricity, end-to-end structure our unique new recognizes electric existing need and Itron utility with business single of solutions. of smart as sell and with the that achieve along to a the an the of portfolio to X, segments. sales and Slide our these focused new of be

operations. this anticipate solutions will Networked higher with to to interoperability ensure our investors into while a three XXXX. delivery now insight this the integrated late value growth and under perspective basis segments: providing operations accelerate network new and development, We QX and release on our consistency promote With operating February worldwide to will and in Outcomes, service valuable change, our manage our outcome-based segments. solutions, will manufacturing Device Solutions among continue structure earnings our in beginning a report operating global product We operations and in we

how have in will to segments investment on We to XXXX versus separate community the new historical our view informational provide calls ones. more these details

business into structure, we milestones an our plan addition, the for and In and XXXX Day strategy success. new in go have deeper will we to where product long-term roadmap Investor

execution. We for working and future on positioning the company improving are the near-term

acquisitions, Solid open a from industry on please, Thank as flow business our with continue a generation, let's Operator, position to bookings, will strengthen and some up questions. take the call leader. an strong recent year-over-year focus growth our our to combined uplift technology in cash you.

Operator

with go Genuity. Instructions]. we'll [Operator Moore Chip And first to Cannacord

Chip Moore

the maybe in Wonder purchase if solely and we is you the lead could guidance. that start issue, can revenue updated contemplating of that component the with talk about bulk And the elevated orders? Is times?

Philip Mezey

order amount what we the a routinely to to the the lead operating lead us higher are components the it continue that and These the primary elongated is that as on prices business, to have, business fulfill impact that side some these mentioned and purchase quicker of work of there to leads we of times area. really have and purchase for times yes, purchase internal order turn difficult made to we led Chip, effect order increased But the demand secondary us. that's more -- inefficiencies on. also So,

we're actively internal of inventory offset cost order, represent qualifications, reductions we So much component strain stage management, purchase as and activities. on that working business to these that very lead improving, said, as other parts the times

Chip Moore

And you're little you Philip, customers, a conversations having with talk about bit can them.

thing, they And to understanding? elevated are things these it's times, you they can an are there Given guys? lead work do industrywide with

Philip Mezey

been clearly of focused they an being is and predictability here, are very transparent not have issue so are and improving time, associated strains with performance. all our At make commitments which the on we're to impacts why same there being as about we of aware generally mean, industrywide you supportive And phenomenon, said, the I us. of this. and so this are is and able

Chip Moore

just Got it. one And more.

fewer a components that? I significant think that now? it components fewer plateaued. you Are imply You it sounds seeing talked you was lead mentioned that like parts about with of time. XXX-plus on it's that out Does on things,

Thomas Deitrich

Tom. the we it this times have take specifically capacitors, on. would last portion that carries jump end that I been the across That the inductors, the and about several say Chip, things electronics sort, lead way of is see, portfolio, passives, I'll think for one. op it's resistors, quarters. in the that the that is of to in constrained industry

back start typical. more seen haven't to pull times lead to We be

stand it's haven't market seen is further to in what but any component overall, running seen. we've almost the We increases, still

Chip Moore

strategy sales Good last while. thinking see. a it. from global with Got new you single been we've one talk And potential The to works me. in that's been maybe you're one that? for the about, the That's helpful. for Can how -- Philip, about force, synergy

Philip Mezey

Yes. Thanks, gas with certainly addition networks sales the Chip. and we water mean, an we a of Silver I Spring see forces separate have the -- force. acquisition, sales Networks operated separate electric

is, an absolutely water. us a are forces, gives So common -- cities we have on and sales sales sales of related there these services data going have that always data electric to the as smart use to but force levels to another drive also on manage think, this managed greater we're across gas, that really the more us I the integrate and that integrated multiple needs the collecting electric outcomes But further covers But and through to focus excellence. move under both customers to we and networks, gives the as combination, frequently utilities, thing was opportunity also networks to number to of commodities, had and we analytics value. and serve said, we've really, opportunity And the the our of broadly. provide value emphasize opportunity, to the

Operator

from our Noah Oppenheimer. we'll to with next go And Kaye question

Noah Kaye

these the in fact industrywide greater prices, the of in purchase point constraints back what's the go and get your to to thing? that ability at order To constraints, these an price business this it's elevated given business, part that the

Thomas Deitrich

by that The competitive ability Yes, but it a reasonably Noah, differently the ability see That generally We remains move is I'll out Tom take at again. can, and there. so do to pace, selective. competitive. here great business to we to when price price. pretty I move large, pretty one. same don't it remains It starts

the it's it's with doing expediting is So and here that visibility times the lead staging it's self-help, tends our and products need. see. we customers things the working the best That inventory, really medicine they that get the medicine it's best on and services to like problems alternate of be we for shipments to have best the sourcing,

Noah Kaye

All right.

you it $XX you've $XX pricing next or of from this given next strong low a believe in about -- for say, from higher to growth uplift, gets guided if we prior again that there's revenue into million but I to year those so this So thinking be year. about the pushed much follows QX, that if Should earlier book-to-bill And factors? so bookings year. let's let's guidance, of that, achievable talked end two just confidence mid-single-digit the million to not down organic as say number

Philip Mezey

that tends not contract. say firm would unable out. as is that business business to bill. fulfill that, and unlike to purchase our if a Others book I and of It predicable think which we're would order be the able fill, pushes to Noah, are I that business backlog

So small to to those some if it orders, business would that's able fulfill. -- that upon to I tends elsewhere. based push purchase our amount. others our then of does -- Others move fulfill ability say a are

this Typically, further point. to opportunity order are the XXXX. And would business. on optimistic really business, remained we -- the market of bookings as before, in so demand the growth we have best we not of strength the of go want fulfill recapture the improve in have the of purchase predictor level has that activity the strong, in is we've level future can And rate to that a state the our where As that suggests we the our side been. backlog, terms we percentage activity, and many times order purchase I at absolutely about ability seen of discussed

Noah Kaye

from Again, the for current thank And to guidance. Sure. just bridge. prior walk the you

two incentive as 'XX? big dollars, those more in repeatable give we little if mentioned ask, management think kind about were dimension, moving comp just just if us for So what's bit factors. possible, of you of I what you and greater a can the kind synergies Can as

Joan Hooper

that can But I able to Yes. I be bit the the the amount. to piece Silver put did going little out synergies. that know you in of give script a don't was the exact color. Springs I'm we break

started for for the benefits, primarily the full in synergy were Last million. P&L original million. million we another we $X when we increasing the increased guidance by OpEx And that about So it the about realized assuming year. quarter, year, $XX quarter, this we're $X about of by

now are million we of source the from full $XX expecting in synergies So a this year.

If you recall, roughly million. the full was amount of synergies $XX

half So roughly XXXX. realized give exact year. and provided to be think color. as little provide about bit we million of February, might $XX comp, achieved we able split a we it be incentive of more XXXX and our remaining this in guidance so The and being will between the amount equally But haven't

Noah Kaye

Yes. I if follow-up. $XX through Any million a sneak $XX And already? that million, one in you've gotten could update quick a just that now to

Joan Hooper

we've merge to equally $XX the get we up out. the is still to -- get obviously, million -- the we we our strive for I would go is still G&A million. to in -- really say had mentioned all were able and remaining but to more, the think area. I But split $XX would million had We've planning say and number mean, But again, anticipated with, number just about between I will XXXX. $XX I right No. XXXX quicker than heads it's are that we organizations

Operator

Osha go Joe to And with Securities. we'll JMP next

Joseph Osha

incentive about comp. Sorry management that

Philip Mezey

It's appropriate.

Joseph Osha

Yes.

I on the think that move of staying $XXX this that then, question year? sort reasonable as follow-up Is next mean $XXX can about does a operating at through that level to expectation? we million previous million to So expenses

Joan Hooper

will and restructuring Silver board will the as Obviously, on next for the plan operating reset our incentive agree our plan be we to will continuation of integration based we there benefits again, management Well XXXX. year. some programs Spring with the whatever continue

would you way. in to So the be an And not OpEx do in again, to call. next a other exact that the able give go guidance. that We'll position

Joseph Osha

is falloff full And guide it's and dropping looking so year your just revenue guiding just then follow-up, to does down, you're your and it Okay. as right? non-GAAP $X.XX, non-GAAP lower a what's the And is at that that year-to-date, then margin? $X.XX, just big in $X.XX getting a gross QX, suggested Is on sequentially. a pretty decline the exactly? Because there math. which that the dramatic And Or I'm in QX. a going

Joan Hooper

very, We record QX on a gas quarter high margin. with which for the very mentioned Yes. call, come modules, really was

And bridge gross to from QX margins. probably lower QX would so accept item as the we biggest that's

Joseph Osha

All right.

So you're June, of -- you're like I going really, -- to June-ish QX? we kind word this renormalize as that about June-ish, level to June-ish think level

Joan Hooper

Yes.

I thing would XX%, tax estimated the year our an XX% we other guidance, full provided would a had mention, this of The in which rate quarter. QX, imply we higher obviously, than

Joseph Osha

Itron maybe sorry difficulties of unique magnitude you're that's pain going and of then of other seems enterprises. having. middle that some so to the it is anything on we manufacturing the terms like tough, forth? if I the you're terms the that similar last in And there It supply just Is but I'm in -- relative cover here of Okay. the high of one for -- fact moving seems companies. level me. in be chain It as to here there are unique challenges

Thomas Deitrich

only it activities of we hard diverse clearly technologies, make are I pretty complexity generation it's bit the and that a work here. self-help that certainly That us some are of set restructuring gain supply shortages at of a portfolio lots we robust itself, others. the and Tom have of to more industrywide plenty new designed consolidation to initiatives. are top those our Joe, through. continue our look on Yes. a have absolutely I lens. us them of chain The in we that time adds momentum for very as it is some stuff; of there through challenge on older supply things. of judging We diverse so factories a and there's can products very, of that see. we've chain undertaken Certainly, product

Operator

And next Pavel we'll go Raymond James. Molchanov Instructions]. with [Operator to

Pavel Molchanov

questions top ask to A of line. about actually I want about lot margin.

market address order the of track to a throughout to and pretty on Your get cetera. of chatter would your economic your et stock economic just scenario? previous were you like drop in into with a How kind experience directly recessionary Itron's recession October we risk, I'd based severe if had kind macro impacted escalated cycles. be flow slowdown, about as record, revenue

Philip Mezey

Thanks.

think I great a question.

water utility all, providing XX its windows periods environment And and of to in the a windows market in is capital environment. industry, on of market. X, recessionary -- customers, -- the critical are capital the time, which gas which as period utility are recessionary strongly market so plans focus planning and over typically our fluctuate quickly so electricity, where a is and holds strong a utilities demand utility I does a tend the up typically that XX say, First in over year not longer

supply and however, of point. secondary Were somewhat we of snap a products. in demand creating the a challenges that effect, us relation strongly would currently passive back, other off to at variety would reasons, is we're the specialty expect that a benefit with economy facing demand outsized these do other chain for in the supply industry fall to have to economic chain which this to The is number roaring supply of that's components

Pavel Molchanov

question in A on swimming different point. be We'll slightly components Right. subject. that a at

still You're there? from to Silver track been targeting kind to free announcements 'XX? you the Are had Spring obviously I generate debt-to-EBITDA still by the of the flow. that cash get target starting of original on think end X.Xx

Joan Hooper

end is have haven't Xx year. 'XX, we closer getting level. But we planning interim get an is to that given to actually of yes, so stated What answer the by Yes. still to that we're the down

Operator

& next to with go Needham We'll Sean Company. Hannan

Sean Hannan

my Here's half component topic IT -- to me chain. quick. is the other for coverage supply of back because Coming really the

And Is component, improvements in there a some specific through I've Is you guys, where push few we've level really whether up they're so to as as of folks? of trying are very some of that's next and and component actually it's redesign a observed some OEMs happening? only back are to coming to tightness. through that had communicate thus, some trying into, navigate I've customers, been -- getting the to redesign pressured players lot graduate seen the work. them to being terms a and recently. of from some pressure next the through the generation, extend and lot EMS And it's

Thomas Deitrich

here. Tom So

think you products out. life think component as I be seen have number In consumer more there's that goods, of of a dynamics. general, different to shorter so lots quick-moving. shortages, cycles, we've point pretty tend that Certainly, they

jump You components. to newer Older a generation have they lagging new and platform products, onto be industrial tend a sooner. out, products, more coming technology

constrained a bit with the the longer. new newer build As component ones capacity in they comes suppliers, onboard, technologies, little stay that generally and older capacity

be as the a do work person selective of newer to happens what move what you redesigns or you fight got and base it solve look lens, generation; multisource to the other industrial product jump into supply an So secure would -- way at you've out it's and through go our on choices: almost the both. employ a current of technology. wait we to actually problem. the best and guys discussion Certainly, with some bit from kind a We to if You for the when components, two battle to

sense to makes jump it and in redesign. Sometimes

Sometimes it version we makes have. sense to the with that stick

So it collaboration We we in employ do the answer, generally and very situational-dependent. with it's both, supplier. the is

they in it jump and that to new sometimes, a technology, to Sometimes makes push doesn't. others, sense;

Sean Hannan

a the And battle. they to getting get right? really well, of very right? and into, Is to holding kind point, that of stuck because And to of it's expand capital. little these that parts, the a in at want don't component commoditized Understood. bit guys, Right. this any don't money We're a bag, want common lot problem, are they put that's so the

Thomas Deitrich

they last in the the bag, situation, guys new that. of type Agree, when we this a stranded then and holding really discrete of got of lot time in were a where caught the yes. built left with capacity were And were lot

if reticent being anticipated to alone you than It's I anyone sort the whole capacity chain crunch, terms in think a technologies. jump build to had started lagging probably to bit it generation of longer bit making a little supply little when new will, they're last anywhere, in the let happen. more of

Sean Hannan

we sounds your if be have in around or Fully Just a It's or that be for didn't and elements, probably a of might it's like bit to get the viewpoints to understood. it's not obviously, or to your door. as the scenario guy. at to large, some facilities going pressures, there's -- few it's There's feel have than these product overtime it want is better in been a get quarters line. remove sentiments hitting order some be, little least it outsourced have even this where probably When that? sounds now, us going But top general painful right to or is it's might front internal ago, they running months as like whether tracking, hitting otherwise, demand-wise, if accurate? -- we business your out

Philip Mezey

mean, these excellent supply both of as there strong not chain on to very on tremendous online, that strong of a Sean, -- and that synergies performance growth, it's our supply issues, underlying the backlog for point, that, on chain and think said, that that only opportunity acquired benefits we're leaving more opportunity. fact, headwinds restructuring segment. have both basis, combined Networks operating I of really are side, I masking organic you us improvement is as but in some continue an internally we've the And we're bringing tremendous we there to improve constraints also there's the once this see, execution is in

Operator

Mezey the for to additional Philip would time, turn back any closing call I this over At comments. or like to

Philip Mezey

Okay. you, everyone. Well, thank

debt, generation, supply But the ongoing control our deleverage, number we as the our time, conditions, the cash activities same a of challenges. results supply very course, at in Of particular, chain discussed, very been to have and there are internally chain offset within QX The flow strong. challenging. were

with of to the extremely continue We network be pleased the segments. performance

point thing such result very optimism a strongly And across installed us continue Entergy acquisition opportunities to as Itron we've overall, as solution legacy on well. various revenue out, activity. one about gives and said, have DA of synergy market Just automation we the as of to for the base, a this announcement, very cross-selling to that work cross-selling pleased strong distribution about level the offering

segments update outlook reporting you talk as our So to to XXXX, well forward in all providing of soon. for new we'll you as you. we look on Thank an February and for

Operator

There audio conference today's replay this will of an be available afternoon.

replay the of audio with can you You for www.itron.com. to by call. your passcode XXXXXXX. company's the XXX-XXX-XXXX Or or This website, dialing go the access participation. Thank XXX-XXX-XXXX, does today's concludes

Itron (ITRI) 5 Nov 182018 Q3 Earnings call transcript