ITRI - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen. And welcome to the Itron Inc. Year-End Q4 2018 Earnings Conference Call. Today's call is being recorded.

For opening remarks and introduction, I would like to hand things over to Mr. Gianella. Ken sir. ahead, go Please

Ken Gianella

includes Joan you, have President call through Operator. Quarter press to Hooper, Fourth our press Deitrich, And earlier Chief A today's On presentation our to tab. the Investor also the webcast Good Earnings Conference Relations available afternoon. Chief accompany release The and XXXX results. President, a and Vice Executive on announcing Operating President on welcome today, information Senior our Philip Call. about we Financial today call. this Itron's corporate remarks Executive our Thank replay Tom Itron's is We release Officer; Web and site under and Officer. Mezey, call Officer; Chief Vice issued

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

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

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

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

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

Philip Mezey

you, Ken. joining thank Good for Thank you us. and afternoon

today, network and segments while under cover device outcomes. get first solutions, with performance XXXX QX operating lot We let's solutions also of quarter our as have a new expected, started. ended to our so We full

adjusted $XX You will was $XX QX we free a continues a and than favorable adjusted was EBITDA QX had non-GAAP performance; in to X; just hear with due our above healthy $XXX X:X. EPS one-time $X.XX revenue over to highlight moment. pipeline details But million; for Joan performance greater items; be to book-to-bill of another tax quarter our million, guidance XXXX was we the customer ended with ratio cash of million; flow book-to-bill of of strong X.X: ratio of XXXX

backlog total of record was billion. $X.XX the backlog billion was end year the a XX our $X.XX at months Our and

this many which chain, external both made year, on I'll headwinds, business, results. progress resulted revenue We financial expected. unexpected profitability lower internal in we than reflect while tremendous the we encountered and in in our we and past had As areas also of mixed supply

will execution, strategy to for we of long-term momentum, market terms In investors. value customers our which lead strong gained and our

smart our and street smart extend of the By environment. First, as to strengthened business offer portfolio, and end-to-end in allowed their allows acquisition of to navigating deeper of smart industrial the capability this lighting. in us such complexity acquisition Internet leader Silver Networks. position us software space with energy This our we Spring and cities Things the automation customers evolving our into distribution support solutions, the expanding services as product our

million combined communicating under way over a with active and delivered endpoints As we two company, one million management. $XXX have our $XX over

that behind. in industrial no IoT and some largest merges technology largest networks have strengthen companies introduced for the We streetlights of providers us To position one cellular world-class of world. connected the metering, making our of the we of customer largest leaves one deployments the leadership and advanced are the roadmap two long-term,

with capabilities partners all seamless to and our have proliferation customers other of operational standards intelligent point, sensors our We devices, technologies XG through increase the on end manage Our efficiently ensure to and worked reach transport for will NBIoT, securely and to like customers. our the network ability YSEN, platform.

into We of footprint information devices. manage prioritize software continue enable connected customers consumer come. efforts These and decades to organic will successfully our investments needs deeper and drive to higher will our to for their that margin operation, engagement services

our end And strides we $XX $XXX and million expanding expect laser commitment made in operational achieving to executing we over plans through deliver XXXX. committed Finally, savings We are focused gross restructuring million and cumulative improvements. on savings margin integration of to our our XXXX. by cost the tremendous the cumulative by on in on

to discuss progress the with the forward our year results guidance. full on and off will are to look XXXX I hand and XQ We ahead. the now strategy pleased to Joan our

Joan Hooper

you, Philip. Thank

segments. let quarter results, our realigned informational Before networked this February these call fourth the reporting quarter of our I for new device outcomes. first segments remind is review historical solutions, and business me you results to that on discuss We an solutions held XXst under

A networked a by and fourth in lower cost X% driven are in X. of increased Fourth of consolidated last due primarily XX.X% Silver solutions results special expectations. Networks. of with year, Slide last results Slide year, gross were line quarter on strong acquisition higher $XXX than of non-GAAP Spring was XXXX. to performance segment the summary margin shown versus and in the mentioned, warranty quarter Philip on million X results our As Revenue is shown GAAP

Moving net fourth cents share, to $X.XX share, year. last or was GAAP diluted income per $XX million or $X with quarter per billion earnings compared $X.XX

included to QX XXXX reform related tax U.S. enacted results one-time You tax legislation. may recall charge newly the a

lower net working quarter $X.XX QX. per the contributed acquisition the $X.XX $XX flow share, diluted end to due income Regarding non-GAAP of per million as lower as effective XXXX equivalents $XX $XX rate million than revenue. year-over-year tax cash timing $XX million share fourth Cash increase. the metrics, $X.XX or with and million million EPS quarter restricted EBITDA at million, or the compared from cash adjusted share was A in quarter, the $XXX related XXXX. of well per year, Free was $XX restructuring of up prior fourth was or the in capital, primarily and outflows. XX% was for Non-GAAP

decreased slightly Turning net X, principal $X from generate positive sheet further cash credit flexible payments required of X.X on The the flow. Slide operations with following total under to remains just revolving the to and balance billion over to payments continue term facility QX and leverage debt loan. times, our free

of year-over-year EPS constant Networked year-over-year. to revenue revenue the grew revenue Device discrete lower rate by time Total and which to $X.XX on Silver year. revenue reported turning Partially was integration lower grew and Outcomes in of was EPS points continued was and acquisition used basis. normalizing constant XX% $X.XX chain as open EPS on XX.X%. Now currency. the higher margin impact in Spring The Device last XXX warranty in $X.XX XXXX technology $X.XX year. on currency, roadmap cost, discrete tax mix and year-on-year. currency was $XX acquisition. through solutions down down in revenue million warranty one-time margin diluted constant currency XX.X% Spring lower Silver tax Networks per XX. on finance and basis bridge bridge these gross $XXX with X% $X.XX on increase revenue XXX margin XX.X%, items was fourth booked solutions to year-over-year these million quarter. in results year. or driven was deployment expense XX higher revenue XXXX a of by The decreased for Slide Silver expense, deployments. XX. non-GAAP mix. The invest benefitted improved share quarter, benefits debt software segment year-over-year of offsetting driven the in inefficiencies up by way The points favorable to of expenses the Slide improved expect smart we down in expense, the continued margin Operating due lower revenue component year-over-year QX software. not per XX.X%, was interest which by scale solutions the increase to strength prior million improvements was contributed and future after by for well Networked Spring margin share the in lower shipments, gross X% versus operating to margin year-over-year. to as prior as higher Slide X% was QX. business is quarters. partially was Operating America by product combined $X a and expense EMEA and was XX.X%, points Networks by energy per constant gross of X% had EPS expenses. gross non-GAAP as compared the North fourth Networks. tax in driven continue slightly negative on $XXX was product We company do share flat by to business following from the the Higher Outcomes non-GAAP special XX.X% gross special with by of to down Net due operational rate, a one completion the higher operating offset higher basis margin show margin lower solutions due lower XX higher development supply basis XXX driven

on comparison to results to a XXXX like XXXX. provide we before move I'd meaningful Now, XXXX normalize guidance, our more to to

the allows booked FX in a fluctuations. drivers $XX and Slide have in XXXX currency The that current dollar euro rates, year-over-year lower Turning for prepared operational we rate In the XXXX, due USD tax been movement onetime on normalization revenue to XXXX. normalizes us today's to in would approximately exchange focus rates. benefits revenue FX bridge EPS million have XX, to non-GAAP versus to performance and rates our primarily the

discrete of XX are for X.XX dollar XXXX. we to rates rate booked XX% rate of tax XXXX this This This non-GAAP to very the also in we share. rate per is This tax versus XX%. a normalization normalize chart, one-time the $X.XX close On effective normalization forecasted forecasting XXXX XXXX, to versus equates euro-to-US brings For EPS XXXX comparison. for tax items. realized actual the X.XX rate

EPS XXXX billion EPS XXXX to reduces versus important FX and on normalization $X.XX. the adjusted FX actual adjusting rates, operational an embedded So is forecasted tax an is FX revenue and per from understand billion of $X.XX basis $X.XX $X.XX This after our non-GAAP And adjusted normalize the for tax on the guidance. rate share non-GAAP and basis. in performance revenue to

guidance solutions the normalized device is non-GAAP non-GAAP XXXX. EPS X% XX. partially US revenue growth in the segment. assumptions EMEA rate of in and $XX.XX The year-on-year X% exchange just of midpoint. outcomes the XX%; a device the The is million. solutions guidance or assumes improvement guidance $X.XX double rate network full-year to a in revenue shares over X% We X.XX mentioned; on XXXX very the a average per year XXXX of the billion strong are $X.XX anticipate Now, million; range following expense between midpoint, year-over-year lower average Slide $X.XX revenue share. to EPS to dollar to reduction non-GAAP to range on foreign by non-GAAP solutions is currency The a performance. effective outstanding EPS XX be segments, segment the the to nearly a XX% $X.XX range approximately attributable total guidance decline X% normalized guidance represents and high basis business, and X% to at Other growth. full tax is At approximately guidance billion interest offset The of digit the constant that moving currency of euro growth of to XXXX single-digit in for

EPS from bridge guidance of our year-over-year. we the and normalized key XX, Slide $X.XX highlight driver non-GAAP the to $X.XX of XXXX the XXXX to of midpoint Turning

year. discussed, We offsetting of includes addition is and additional through restructuring year-over-year flow from of well revenue synergies. share. ongoing year-over-year as programs this category increase benefits increase the the to the compensation EPS versus prior as This per $X.XX expect operational net just Partially the variable performance I acquisition by

XX%. in We of in To environment be the the half color the QX to with exit year. of the our over rate some expect to line first gross XXXX, have we also assumed of an second year half improving margin approximately add profile the gross XXXX supply-chain in margin

All anticipate our the points the basis expect XXX per basis to XXXX combined, results. share of XXX gross operational supply-chain we to of XXXX, will and our margins points of half constraints the net second half from improve Looking normalized initiatives. we by performance $X.XX operational easing over first improvement versus

significant on Moving a tariffs other anticipate XXXX increase We levels. guidance. factors in XXXX projected in to over our in

reduce to $X.XX are anticipated working we chain we of charges, per While our strategy share currently supply negative EPS the year-on-year impact. tariff approximately

a and normalized these by this in versus year-over-year. We the decreased per key will situation. assumptions rate continue increase of XXXX, in XXXX tax XX% to monitor count. are global Combined year-over-year Other share XX% $X.XX of EPS share the rate in

income. rate jurisdictional is that mix XXXX than to XXXX due expect of slightly higher tax We

We growth you and outcomes restructuring revenue are and encouraged throughout we solutions XXXX, outlook. networked will update improvement by segments. in the strong our margin our And progress on

outlook, on the call long-term restructuring I'd our be the the Day details model, Investor also well to operating of on segments, outlook at an City. provide turn our for efforts. New holding strategy I Center market June back our Before Philip, roadmap and to XXth be on realigned updates posted information More coming updates as like as will event the technology Nasdaq business and weeks. announce Investor in to on our will each we our plan in We on Thursday, York

Now, I'll call back turn the Philip. to

Philip Mezey

Thank you, Joan.

by we very is a device America and parts the up-sell backlog supported we by times. we've our where outcome and XXX times with be solutions Last our continue over six business. expect lead ship pleased softer decreased has a supply-chain to network with North market, are business will strong guidance, in over at in momentum record European while we see grow in significant months. In That Joan quarter, solutions XXXX. rates do As business units pipeline will easing and This lead and slight our discussed, bookings our book facing reported XX%. approximately now of

decrease margin ways and have not promising, go is standing to While efforts. still the we on a our still gross improvement are

and costs, to our continue rotate aggressively to higher and solutions continue profit are manufacturing price increases, lower business margins. to we'll We with targeting selective introduce

an segments. go deeper outlook new we and we Investor As our upcoming into the both Joan Day have and mentioned, where will strategy for our company

that XXXX, the Q&A, our turn wanted infrastructure. meters strategy our top our are get and products quality I our XXXX. with supply execution it the and The to in impact to business. into continue are in on part and delivery device product XXXX. the customers. a focused customers' we and to Safety Starting for planned optimization manufacture with quality of delivering be factory With solutions priority Before prompt our demand headwinds of we in some sensors segment we to of over customers' critical and meeting improved insight our realignment chain

regions, future of solution a and expand products for including a We as meter to with the a new solutions the for will intelistatic continue market, in basis across release device the electric IEC the gas introduction gas water product portfolio meter prepayment markets new and globally. of our for platform new serve development next-generation all our electricity that will

planned Moving to we strategy our for even our product solutions our space. the growth We devices metrology sensing, about roadmap in us business industrial and energy smart network IoT control. in networked city expand allowing continued leader to support and look and to an and solutions, Combined selection partnerships, of networked we with being in are the investments, reaffirm of technology XXXX. will excited greater

business. continues As and former finally created GenX of manage managed the form company; And investment for the will grow, RivaX, assets distributed to outcomes acquisition; segment, three within our position our come. outcomes in Spring platform to and OpenWay analyze the of from assets existing decades solutions; our Networks of Itron's and energy devices outcomes the data demand our and strong customers Riva for the smart converge the services management Silver from was Comverge to proliferation the networks and infrastructure

our we that focused analyze on endpoint management portfolio turnkey and to interpret growing working that With all that range of data segments, and from still value-add our to of outcomes excited are software are delivering We unit. lay efficiencies scale. be outcomes we products analytics, and business fastest Overtime, ahead about are data. services, a at of the expect solutions for through organize, the opportunities

with our Spring the We and are experience Silver integration of balancing growth portfolios. the and improvement margin Comverge during Networks customers'

and and flow, with higher outcomes open segment some will our data We will call products and our Operator, value gross cash By growth for margins for margin on take are customers with you. improve business. and our This for increase deliver curve security shareholders. our the the expansion operating please the we combining questions. customers investing ahead execution our margin and future Thank free near-term outcomes on strategy long-term capabilities analytics offerings. of to

Operator

Chip first Canaccord. [Operator today Instructions] We'll take from the Moore, question

Chip Moore

I margin new the the progression appreciate color we How versus gave should segment? guidance margins you on first about the structure. there reporting on Joan to talk in back half they half. the way by is think a about that with maybe

Joan Hooper

looking the I relative chain second in. supply specific of on We're that not things the margins again, is to doing of you function of segments' get can a provide half some half restructuring mean contribution. the based historical guidance. the as But versus a going more feel kicking segment we're as first well easing But

Chip Moore

And the What was anything to that lingering there quarter. the quarter? the think just from a special follow margins, current about going up on into and on warranty in

Tom Deitrich

made there during take behind is problem, period. as to The location problems a the we've manufacturing some we in error Since meaning I'll understood our was from on. that This one. from had was then, was was product the mistake was manufactured bound, made an forward. Tom, certain moved had and that that What going We sure affected X restructuring that was bring-up. product part going it we Y, of a transfer location corrected product time it in a learn and that the

XXXX. expected overhang into no So,

Operator

Oppenheimer. The next is Noah question Kaye,

Noah Kaye

we can line. the if Maybe top just start with

be? to devices pointed single your and Is is the you year-over-year decline digit digits high Your of being view down to going high-single comments EMEA. market around where

Joan Hooper

But would The anywhere in market with XXXX is some our other zero then build devices probably from growth. strong of answer. may program and had no. a France and Linky say, market I the to want very X% for programs. our we Tom start I'll to

of more continue XXXX. that and it's So won't function really XXXX into a in up they projects ramped

Tom Deitrich

Noah, past nailed trend smart is migration think devices based that's that meters specific on time. project transitions we're Joan don't I is and about specific full country from now would that. It This between function a would in meters. know similar think that that. other transition a calling timing. we is I it. thought of I over occurring rollouts expressing There's I talked about and It's the No, the and networks. to standard we more way what about just the a no way reference

Noah Kaye

I the constraints. guess doubt. quarter just in not a your able for some you that related question mean, last being of fill business for supply no just that embedded Is issue that 'XX? or because longer view your and the an of avoidance guidance talked I book to ship about in of is

Tom Deitrich

What through. chain environment is a supply improve, the actually continue to chain do is work happening We while to during reflected improve the take see we starting in little the think guidance. to and the XXXX, will environment supply it fall that's

So back year the that we overhang on. in the saw last half guess back continues I revenue of

in Although, rate year, lower XXXX. should it's throughout improve this a but probably at

Noah Kaye

then the guess about I profitability And of just turning profile to thinking the business.

profitability but you guess around, XX is taking the to midpoint math right. the devices coming if wanted guidance your said about And type number going like in we should side. called really tariffs. year-over-year. my 'XX? implied than just and you a had assumptions. of expansion sure so as working any see from backlog in doing I headwind digit call network, thinking close million you're the bookings understand the little where nice I'm to losing other look revenues Are be XXX margin business and considerations to margin double I'm is But It out to not exiting on EBITDA guidance, bps You Really good healthy the just And backwards to that year. in for. seems other might a strong you're -- number lower a looks in slower which there I'm about we it, bit out that

Joan Hooper

puts of you if deck net the to that share in takes the in to, the again Well, operational has and XX improvement a $X.XX it. Slide talk lot per of went I

has to some really restructuring benefits So higher lowering and networked of obviously in devices, from But revenue. again, there. coming there And higher is offsets revenue is and it have in the going be there. solutions outcomes

recall, you we zeroed variable So if in XXXX. out comp

we various restored And have in so some comp XXXX.

be out netted there So in that well. would as all

that's Silver particular, in there As business well we just in. software general deployments so is come when Springs have lumpiness the factored to as all real projects some in in and out,

at in with quite which as XXXX, looking a off We’re and is backlog, quite there's that guidance we reflected healthy you roll And in that's that been indicated. profile as know the our our well.

Noah Kaye

squeeze can one if just And more I in.

own my comprehension. for Just

China? you think color? tariff you incremental you list this Where wanted it’s the I seen of think come that I give little we've bit manageable, for us headwinds. just Is the just Because year. are it Can and a from? previously, so as really out to expecting three how more playing that understand to

Philip Mezey

as speak. affected; east-west ongoing tend in products; an there are China-based pretty phenomenon, as that connectors. some be even of generally is in probably of generally to the commodities cables types the Asia-based a is or casting discussions the metals; are so of more as we global focus Those things are environment Obviously, types It fluid, types not are play. that north-south meaning of and well goods

wanted much by call, we can Clearly, be. to sure to but working our tough make finding mitigate we as could rules is better it's possible those within ways we chain of transparent our supply of things. we as that that So objective sidestep as as but the were to some develop to

mission but our just that's So pointed today. saw I to what out ongoing we

Operator

come question Osborne, and Company. Cowen from Next will Jeff

Jeff Osborne

at is change top I'm or on of terms any assumptions just approach with I'm if years? was your aggressive? versus any more past, line and philosophy you years Is end. curious came and how guidance. in what the up conservative, my you backlog, philosophy down there just the curious or different the look Couple sat more prior questions as on in

Joan Hooper

is say process. No, there I it's new segment. similar Obviously, a would

Springs we so this segment. would new have Silver been last electric watering, old year are gas time So our integrating we and there had when

last So think the we which funnels. with talk we re-casting business at look week, a what reasonable have to at backlog. We obviously the process. come it’s is same shared history, range. sales but the go through the we We the look progress up leaders of and We with

Jeff Osborne

And then know don’t a guidance Joan, year-ago. called up I when can tax me. those benefits, forget and those you I if But XXXX some were with from the with remind included out. non-recurring of came you

Joan Hooper

No, most of the tax benefits that occurred in XXXX, most of them occurred in QX.

looked tax So XXXX our at actually negative if you QX non-GAAP rate X%. it's

that of had of large settlements the as end we returns So as the rolled different had we countries, year. statute several limitations, tax off multi-year expirations at settled, well some that

phenomena. So it QX really was

Jeff Osborne

is way weren't out variable people absolute in 'XX. you you paid $X.XX then called I the then want can numbers the back program. in $XXX and your are what on we dollar would with basis In 'XX this be last year And terms any comp Slide million restructuring What how is 'XX, benefit particular of in be XX the two onion as And peel particular guess an helpful? there on paid that of to year. those and have but

Joan Hooper

that's one. you about to restructuring, the you talked variable give that sensitive a can pretty I we But give number. going not comp, have I'm so

We're million. that. opening XXXX his to in a million in 'XX programs, little we've Phillip Silver of So the over restructuring $XX XXXX as about mentioned through laid $XXX Spring, which three out totaled comments,

OpEx million, equally it look and 'XX as and million in 'XX as in think $XX embedded to split our $XX another line, at are million, the So gross million so the come, equally those between and million margin $XX 'XX. I below roughly above it $XX $XX line about roughly between about guidance. think and And

Jeff Osborne

then say to it variable the that the safe And would is be comp next.

comp puts takes. If largest there Is you You break to and largest? are out. variable said restructuring want the second the multiple and it

Joan Hooper

the well, is mean, No fall revenue quite through large I right. as

So revenue growth have well. as embedded we here

The the variable there's add-back. fall sizable is numbers through comp again, revenue So number. but of lots

mix. got You've

You've got happened that that effect the 'XX. even you all go was the 'XX, different late things rate merits in run in get

So there's all factor in. have we things to

Jeff Osborne

had specifically or or 'XX can the that second The half on deposits And just to improves? investors give anecdote future and you what about you qualifying you're supply, or supply I as one constraints. last chain the comfort new give doing you Are would just on suppliers? be specific talk developing was of us mitigate can helpful. putting for Anything cash that

Philip Mezey

take components What of I roll have that have of you have on working is is bigger some of making one. make we that sure multi-sourcing can as diversity been Sure, best forecast can We've we the we activities. doing It a the sure mentioned to number And ones. products in. supply been hard accuracy.

We have inventory. buffered

and that’s our available when sheet could ship more you book sure in our here can making and bought business business, the we most our So of to anticipate give job diversity that try that prepared. is today us and that see it was balance exposed best to to do be supply. The of and part

half really times quoted Phillip building way hundreds. couple than we in to selected have through, using work But improvement to And of this a XX% quarters the finding ahead its while its that lead are based visibility second on manage about of do products are multi-sourcing year it's health We of had way buffering it that six of inventory do are a seeing on more fully for situation. and see the starting will today. to down, months the lead that's end we what your the is So still the best quarter-over-quarter do we take for improved of number, measure terms and more see chain. medicine. indeed the many better the steady but anticipate supply number We environment by as better the come components time that that

Tom Deitrich

a many is lot achievement structural reported regularly. plan items line improvements. There the of around is that owners maybe administered structure of and very says, Jeff quite identified that comment it these an a just And is then this and on very,

Jeff Osborne

follow-up And on don’t maybe just that, a you mind. if

an lose revenue relates there guidance is 'XX, wasn’t it have losing issue? issue. revenue 'XX you your or maybe 'XX. anything lost potentially, to as it of way a But there as in revenue to that in in Did is competitors in the any So components to was relates indicated some it there

Philip Mezey

business. months a specifically are We call which the $XX quarter of million, XXX that providing on buffering has a that of the the by feeling guidance the And feel to talked to captured that supply-chain revenue on over what talked which number and provided. captured we've about or for bring that guidance, margin the of number about, inventory business, the numbers recent and effect shorter both cycle through in did challenge six the effects the is the we our is Tom parts EPS business, of purchase order accurately we've actually down constraints in give that capturing revenue led within initiatives that and some

Joan Hooper

still indicated, so some of will are effect if the probably you first revenue, Tom in second. as there the on hangover more net are And year half than the

Jeff Osborne

don’t the tax quarter, you relates But Joan, last squeezing I was unforeseen benefit to original guidance. fourth the for one you had one in that And mind. it apologize that if in the as

all worst. the flagged tax do sure jurisdictions trying XX I'm $X.XX? we hadn’t those the in sense did they and… when would But do trying pieces in reconcile have weren't get you the that So you headwind think about to How come moving showed I'm of Slide that you the to and of would numbers but $X.XX the some been in. a of what just just have up, if you on just plan if obviously,

Joan Hooper

tax a to basically that go we back million in $X half got. our the benefit an guided you about embedded was discrete probably million to of that so or and call, had range, about of range $X last what If we EPS

settlements So we the rest in that of come statute it to was limitation weren't came that expecting or exploration. in,

not you might an the expires whether expires. particular you where statute So that of or don't it a until with issue different are XX/XX, in have lots you jurisdictions to have going jurisdiction know really

we you. half we so it about say in forecast. guidance that was And provided would baked typically don't But in EPS the I of that the bake

Operator

has Osha Joe Securities, JMP question. next From the

Joe Osha

things. of couple A

warranty comments that margin is charges year, other recur aren’t first maybe the flattish, I suggest or the the the gross missing am the per fact when combined The margin there guidance headwinds in that of part in something? the issue this given to back some those QX. going First, to might with your that of Joan fact

Joan Hooper

No, be timing software it’s to going the deployment. related of primarily

lot warranty if different puts natural with dip doesn't a from will go QX have in that The it's opposite So a lot the takes special of gross you way. of way, QX in not in recurring that. opposite going so QX, a margin software have you're in to and reoccur

is puts it's lot one things. of the would say I So takes different biggest But goes other and software a the way. that

Joe Osha

half? And then recur of second being the that the in those don't idea

Joan Hooper

software deployment is Well very based. project again, a

particular with So single quarter. don't every customers, they necessarily go

that very some did projects recognize to quarter, fourth large business. be software the margin the that in So revenue have allowed that we high to concluded us tends and

Joe Osha

in on thank how one efforts? for half you then any we Or occurs but as the through gross these exception about about margins earlier the as savings margin the an the detail down you break reduction the organic question. basically should Second cost return of would the revenue to that being cost from to static improvement those rises? flowing think Is of as with benefits there be year, second think gross

Joan Hooper

Well again, there in mix there's as well.

and the margin higher are our networks, outcomes solutions business, device than those extent are the business businesses growing, shrinking. to are which So

that going are have mix benefit you So to well. as the of

Joe Osha

be there. some the think flow to about what then see wondering I business's XXXX? how cash So are thoughts can EBITDA would improvement free in ability we there trending. question is generate And last I'm is organic the your

Joan Hooper

for this about million think the would healthy This $XX flow. cash we double of flow year, year. be I generated cash the continues next free expect to very year. free I to to close that

Joe Osha

And that… or is driving management, capital that operational just is or that working improvement what's

Joan Hooper

It will of combination both. a

Operator

Raymond question next will come from The Molchanov, James. Pavel

Pavel Molchanov

normalized. consumers headwind in seeing? have so, be InQX of the consistent in situation And other largely as components last to and Is talking has many the component commented a MLCCs you're that the with what culprit shortages, continue right I two, main months suppliers which now? and recall QX, on the three was about component with And that MLCCs. if

Tom Deitrich

of the some better our some I go of view. than little to normalize from versions. want the the too shape to don't MLCCs of are case sizes point depends legacy of are bit technology, size the but on technical, starting smaller some in older a

passives quite yet, getting better, troubling. So other is MLCC say would not to but being another solved one I so MOSFETs and discreet, that be tends

chip MLCC in that’s So resistors.

technology specific So hotspots type. and depending each of age those you one in some get of on

Pavel Molchanov

electric or the impact, biggest had into? States of standpoint just utilities Has bankrupt. modernizing in the broader any we perhaps AMI issues the to from a infrastructure the in PG&E Western up that avoid had on United ran negative, willingness question obviously to grid, that utility go the trying invest of positive Follow modernization, the

Tom Deitrich

it say, about sitting regulatory United But require it's infrastructure to the say not that broadening conferences reliability that I attend, that hardening and events electric has has discussion in a we to beneficial mean resiliency. storm I beneficial climatic utility So in and that yes, a with and years. a be super is conferences the many awareness impact. hurricane the It's the bombs feel Sandy is polar a way California sign would therefore, volatile additional And infrastructure. investments to sad grid The that I is is the Southern States. and just made water -- going going are coming in that gas do there wildfires and and to

Operator

Katter, will question Our David next come from Baird.

David Katter

to longer It one wanted business. on some tail sequentially ask backlog. booked the seems like a quick I you

backlog trend And So I -- you and the down? total play was of that dynamics months whether if the seeing with could you're there. longer some going that's going a wondering XX the talk up

Ken Gianella

in our slight was XX just the the we I with at backlog, mean a change. total and The in X.XX out ratio backlog came change. X.XX record it’s months about came

that So flat perspective. it's on

on the of a we business. associated And that to four year that mix do you heavily with that, when network roll-off three you see of call, two the towards weighted thirds said normally the As backlog.

So for in fit backlog the one for additions that have we have the and the ratio to we pretty in the amount models see see there. that profile that much I we year

David Katter

touched could next which at two the navigate how years. headwinds the progress? the over impacted to talk optimize chain? of know supply on restructuring, but some chain then the need cadence one million the focused quick was have and Or supply both on $XX I Has you high to of that headwinds the have restructuring the this I the with the delayed you on And supply chain. about a managed was just one. more level you wondering if how the

Tom Deitrich

outside and would materially don’t extra has has the I motion. certainly you it's flight. it I say timing situation. talk some that know best see much I materially to it. with the has team financial don’t there of say know impact saw some I are but would programs that changed It it what would you that that affected stress of But timing it the has don't probably in that cope used Certainly, created that the it the I too resources here changed on put I and know in

Joan Hooper

I did. we had the been a us they not think what of lot said than is chain more That hurt midst the has restructuring, hit supply in

So manufacturers power leverage purchasing the contract useful. to was very of the ability

Operator

the questions. or Philip remarks. back closing time, And conference there no hand will further for additional are to everyone, at this any I Mezey

Philip Mezey

everyone. Thank you

very supply was of So the and only face. not all plans, second And of in upon the 'XX our obviously pressure, and in restructuring and had significant there that's some obscured gone that projecting of of XXXX, do. from momentum us drive us progress has thing made for the know for on in again, however tremendous that offices; heavy amount that projects are half lifting But we Silver And feel we're to is quite think systems place strong. the appropriately we strongly of are lot based that and as XXXX, that well; some financial acquisition the you entering margin headwinds to absolutely XXXX the to Spring, which a strategic in terms integration view; progress, gone we that of as by in integration of which the we back chain our continue the and first identified. is point continued margins with is prudent misses opportunity half of that extremely in but

you all soon. to you interest thank for to So and talking forward all look your

Operator

Ladies available this an and gentlemen, audio of will be today's conference replay afternoon. there

company's you your all with can and today's or disconnect. www.itroncom. Thank the That can You XXXXXXX, past site X-XXX-XXX-XXXX, participation or access does for X-XXX-XXX-XXXX the dialing code audio may replay to Web you you the by of conference. go now conclude

Itron (ITRI) 27 Feb 192018 Q4 Earnings call transcript