ITRI - Earnings call transcript Q2 2019

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Operator

Good day, everyone, and welcome to the Itron, Inc. Q2 2019 Earnings Conference Call. Today's call is being recorded. [Operator Instructions].

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

Kenneth Gianella

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

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

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

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

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

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

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

Philip Mezey

thanks us. everyone, Ken. for you, Good afternoon, and Thank joining

performance, to XXXX. second our first are higher-than-anticipated of an the half we announce demand operating well combined segment, quarter. pleased in With with as positioned exit strong improved are we We network solutions customer exceptionally

million. EBITDA XXXX million, revenue hear You'll to was highlight strong Joan QX but adjusted a in free was off non-GAAP cash performance. $X.XX results EPS half details moment, of $XX of our capped performance, and from These $XX the first million, $XXX a flow

a non-GAAP EPS As revenue we guidance our for both raising result, XXXX. and are

X. Turning sales like quarter. some second in our color performance the on Slide to give I'd to

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

bookings deploy in Our of a $XXX in with we This our An spanning multiyear robust very example signing endpoints demand OpenWay Utilities. Liberty and XX a QX of announced strong over pipeline. were bookings states. XXX,XXX quarter's their to XX continue will million, this the be that Riva will customer Solution, recently of project utilities is see across

vary on bookings XXXX. to we ratio of achieve X:X While track are approximately levels for book-to-bill a quarter-to-quarter,

our at on Investor recent been strong discussed operational making progress Day, As initiatives. our we've

and demonstrated well strategy optimization chain is this results. improving by underway, is as supply Our quarter's execution our

months our components While peak an costs supply over continue XX% times remain XXXX. the X component lead of levels, number with over inventory chain see to in easing as and the at constraints has its we since elevated decreased in

to underway. initiatives the our is reduce footprint component manufacturing several transformation We on well costs, are making progress and of

the strong customer supply improving ability with results. better-than-expected to positioned results commitments. targets margin with and us to Our chain demand, half our long-term these customer achieve contributed improve transformation, external first of conditions, meet combined leave combined efforts, gross well our our The to

Joan our the QX guidance. off full call results revised to discuss hand to XXXX now I'll and

Joan Hooper

Thank you, Philip.

mix, versus flat versus increased in the variable American margin X. million to product North in consolidated Solutions market. A Revenue pleased supply are summary charges. and was X% segments year half of of increased are year QX our with of shown XXXX gross last our X higher performance. Networked shown and other on We driven quarter $XXX on compensation, Outcomes Slide chain is XX.X%, results costs results by due second and strength GAAP first very onetime non-GAAP Slide and last

supply As our last the chain began financial constraints global a was second year results. to reminder, when negatively impact the quarter of

we from both a impacted last booked decrease benefit comparisons. year, addition, onetime in In compensation a year-over-year which variable of

per million Moving year. to net the of income was GAAP million share. earnings per compared or prior $X.XX income $X with $XX per share or net in $X.XX share

EBITDA higher quarter Regarding revenue was transition. was expenses. share and delayed expenses year-over-year the from of $XX $X.XX income due XXXX. primarily lower associated million, XX% operating XX.X% per to or due our year metrics. in share million up Non-GAAP revenue. prior Operating spending Adjusted were fall-through from the operating million income down leadership non-GAAP the restructuring compared or Non-GAAP and to benefits with $XX $X.XX net with $XX was or million $XX per the CEO for diluted the

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

both Solutions spec in of by driven and ahead was driven offset due was as well in project Outcomes growth which Device expectations, part segment, FX lower performance Their performing businesses our deployments. in Europe changes. accelerated by expected as decline customer our to Networked Solutions improved the demand the Our smart

decreased revenue X% more but reported, X% currency. each in Solutions give To on of color our as segments, constant the for Device only revenue

meet Europe, ability responsiveness improved to anticipated to and were we the smart book-and-ship requests. spec pleased lower demand in demand customers' we with in-period our the our While

the supply customer performance to in-quarter This quarter's our better-than-anticipated progress chain's revenue have deliver strengthening in on we ability demand. made highlights

majority back North higher-than-anticipated half came demand expected of XXXX. as projects increased constant in the Networked America. new demand acceleration We initially with expand of The footprint currency in continue customer of XX% ongoing higher from deployments the the ramping our Solutions to from of revenue customer and

in constant driven licenses currency software Next, deployment the than increased revenue XX% onetime Outcomes of by anticipated. earlier

on to X. on EPS non-GAAP Moving Slide the bridge year-over-year

and realized the in year. increased of primarily OpEx integration gains Our benefits versus in period. QX share restructuring the operating This businesses, underspending were $X.XX compensation the revenue Outcomes to increase in These an versus offset was EPS higher-margin year. diluted and by year. Solutions the per from due Net partially Networked $X.XX projects non-GAAP improvement with prior and in prior compared $X.XX our contributed the our prior was variable

The and effective expense FX rate lower positive to increase, adjustments in tax rate $X.XX. non-GAAP our interest by and booked $X.XX quarter. The $X.XX lower QX expectation lowered while XX.X%, lower changes respectively, due contributed was effective tax year a EPS full than discrete the

prior now of was XX%. XX QX to gross Solutions XX, segment XX% I'll by margin results revenue the Turning Slides the $XXX Device of with million compared margin through with operating business and year. discuss

due cost that continued in operating was higher second began there chain product This, environment improve, year-over-year materialize quarter lower contributing late still and margins. with to the supply is While to to impact gross last the both mix, year. a of negative to coupled

margin revenue gross some as the Solutions Gross Operating gross development onetime with of costs. customer margin. underspend well was basis prior XX%, and points Networked product and flat XX%. decreased margin million product with as margin offset year, due the mix $XXX lower was XXX to in the

the integration on margin operational Outcomes product gross accelerated development margin was in XX%. restructuring $XX Gross XX XX%, revenue million spend. points The the and deployment operating to year-over-year software was margin of licenses with and points delay onetime efforts. from increased primarily of gross and benefits margin up higher X due

X.Xx. and Cash to second turning XX% quarter, equivalents quarter in payments. improved year of our Now cash flow leverage declined was debt net to lower end due at restructuring billion and million. Free higher $X.XX Slide was was primarily than profitability acquisition the to the XX. $XXX $XX the second and last and million Total

in announced that we for XXXX. our $XX second million In March, a quarter, program. Board repurchase $XX the XX-month million stock total completing million the common share during We $XX repurchased approved planned

generate cash with and our Our access debt, and down have sheet ample $XXX revolving pay balance to credit more to we as continues strengthen liquidity undrawn an facility. flow million free we

Slide XXXX XX. year are our performance, ranges. half updated first into our of full and positioned turning our year With half year are well Now we raising full back guidance strong to the on going the guidance

for this XXXX the year. million is to now we the Our is this to At billion billion versus midpoint, billion higher $X.XX provided revenue guidance. billion $X.XX earlier the guidance previous $X.XX than $X.X $XX

XX.X guidance fall-through guidance is the of We million approximately expect previous average this outlook range raising This midpoint, At in a $X.XX now from guidance outstanding year earnings the per the share. reduced per shares share improvement the share the full driver an are the EPS higher to We a per includes for is EPS $X of the following of $X.XX to to in non-GAAP $X.XX non-GAAP first the a of share. half. improved XXXX. primary revenue. XXX,XXX $X.XX of repurchase count also of shares The

we our and rate for exchange the effective payments guidance, the euro full of full approximately our the interest $XX first tax U.S. XX% in We midpoint year, a million. continue of are foreign year a from half second to to approximately assuming rate of At of the year half X.XX revenue of assume slightly revenue down performance. and is half second the dollar

for some of half we as the second that our this planned to first QX. accelerate expect mentioned the the call Most projects than earlier we well on so on revenue higher half. be originally we call, I as was QX, customer As QX from shift had had year of into QX this

decline second half half the lower EPS perspective, of first guidance second increased versus or low of This OpEx midpoint unusually XX% over the and sequential From half an I shift driven spending levels. is revenue just by our EPS XXXX. the $X.XX the implies in half mentioned first

by of XXXX. on our We track continue announced from remain projects benefit to our end savings restructuring the and achieve to committed previously

our performance, margins summary, first pleased exit positioned we We levels from as and at the In we into gross back exceeded expectations, half the half also we approximately QX continue head our year which with to of year. are well expect increase the and are to XX%.

Philip. Now I'll call back to the turn

Philip Mezey

Thank you, Joan.

hard the year. back we're As half of the Joan working mentioned, momentum the to into continue

challenge of We commitments, and consistently value near-term our we'll stakeholders. are operational our of continue ourselves creation to improve to and all accelerate for mindful

about a words has and Itron's way to of Itron is most our not no are talented and Itron as believe truly effective I have in days before ahead. extremely my have been people. decision immense are our person, innovative received opportunity from many I the grateful it, reflection as my one am employees announced, move the with so company and It's that over to and the any been customers, with is My together, brightest with a I'll and accomplishments the achieved team to back with a we've about it's vision world. I creating resourceful look support from dedicated a will work future. I shareholders August we more a on excited pride and I retiring describe the privilege at time years. Itron that President our how be As tomorrow, for There X. CEO Itron no to

Now my Chief introduce my Tom pleasure and to it being Deitrich is Executive President Officer. on and congratulate as named successor

Thomas Deitrich

for our only has and I started, Philip mentor. working hope journey to to utmost and what Thank thank you, Philip. as to for enjoyed these Philip. for been build with can This time most he have moment years. It Philip's take last would great relationships for that X company, and years you our integrity. has Itron our upon the done importantly, employees, and earnings for and investors for I past at build my a worked has for customers, you is all industry almost call with and a him analysts hard our like to as indeed CEO, sincerity I've XX together

It our best is Philip. Board endeavors. wish globe over Thank around of Philip you, behalf employees the my X,XXX and his to partners and him the thank Directors in future pleasure and on all of

our areas like in team we talented you at and honored to to share would priorities hard-working here the on highlight as Before leading progress CEO. start, move employees of I our journey, initial be Q&A, focus and Itron. To our to my I am of remind

Network better Devices and product During our innovation architect customers units our the we serve have Device business to strategy, through and to Solutions. manufacturing our company's years, and X structure the of realigned go-to-market footprint our solutions-oriented reoriented been past working Outcomes, and company's

As recent priorities our and clear, are these company have discussed are Day, we with my priorities at unchanged Investor appointment. our

to as solutions diligently our to first, software by expand of empowering working ways: devices; connected to our second, customers we to that by are allow and on grow We customers as into third, enabling our in smart the many cities with outcome; our value expand and to desired devices our vertical. our with and expand footprint platform deeper them utilities business X and their sensors unique reach our achieve go smart

to our operational as success. flow. first, shareholders will as priorities, CEO our technology leadership, our these our our and customers' continue for execute cash initial create increase leverage be, value we free we As we improve increase extend focus My to

high-quality achieve to outcomes. products to committed provide our services and to continuing consistently are commitments their them by We desired and helping customers fulfill

adviser technology in partners, Second, creation we in to markets serve. strive help of experiences leader to our that solutions be that innovative and our the award-winning we trusted Through the an customers. leverage thought will combine our of global ecosystem the to

smart objectives to to decades with utility focus and to success. that to Empowering operational partner team city finally, an team priorities. the by our space create be value create our customers an enables and our to in asset for us expertise the essential come. Our stakeholders' execute to our And to aligning on our will is leverage

unified and foster continue in that to culture excellent, execution. that will strives We to empowered be engaged, a

and We we build this had focus strong momentum the back start into year, move we company, the and path. a beyond. XXXX are be will a right to to as half of on my the As upon

on chapter As of for and Itron. we create of our our as you look forward with our I execute each the we customers focus will next objectives, our to working create we shareholders. value

all. you Operator, questions. some the take up that call so thank that, open can we With please

Operator

[Operator Genuity. our with question first Chip come Canaccord Instructions]. will from And Moore

Chip Moore

Philip, all I wanted start. to the to over help years, say thanks for the

Philip Mezey

you, Chip. Thank Thanks.

Chip Moore

comment demand Maybe pipeline. in on guess first, you're your customer can seeing like of there. just a a It out on expand bit sounded I what you're you pickup. seeing the

Thomas Deitrich

one. flow can of point deal of a be types out value see higher-value solution opportunities see What of deals North I here. of is continuation in robust Tom our tend Chip. there view. demand, The that strong we that They America. tend Sure, take to we applications to from oriented.

the more AMI might an that's application, you than with be starting solution the out it's network to So do able to and what but really more about there. just think

In clearly, device-oriented us, a bit as smaller a Solutions big also America, would and for Networked Device deal strong region in demand there's the things. to opportunities Europe, Solutions a us in be country. of mixed So robust North bit region region, as country tends from a for big still types for to us we space see and bag It's good good of it primarily APAC is a Europe. be a flow. well but but for

what on of we march the the quick globe So customers. that being is around a really part see the

Chip Moore

Joan, in then helpful. decline magnitude deployments, talk when segments. That's it. us Got in QX we think the about should more And give some maybe about, acceleration And QX? of for guess, the how you, color you you I the can any sequential of from on that

Joan Hooper

Yes. second would range half of is to $XX first accelerating estimated I and the -- that million talk of into million $XX say half I would revenues. about

primarily little fairly Outcomes. maybe Networked a it's are The So sizable. Solutions segments bit and of

decent So well. margin as

as well. the And so that half trend explain helps half really second EPS to first

Chip Moore

Great. And That's helpful. last one maybe one.

think you now? those abated. think you Do I seem mentioned are book-and-ship issues in Europe that have problems to you behind

Thomas Deitrich

Tom I Chip. here again. do,

supply in environment couple seen. consistent over that last that in seen think improvement you've pretty I results chain reflected That's the of a the quarters. the we've

issues it. lead we've From We feeling numbers also our can a go can -- in make as we're last well of we up about much the ebb the time. time also in as you we're and inventory that better year and will of built had inventory flow But it of see to naturally see where that forward a lead we to peak that positioned chain metric bit good sure as things we have year or in it's We're improvement, we that substantially probably point. but back communicate half really well. the of components environment that revenue the supply for some more use as on the table, the we this were leaving improved long as time down the XX% terms from

Joan Hooper

able we're because execution guidance, And midpoint, certainly, that's is $XX million the part our at when revenue on raise business. the of book-and-ship of to increased

Chip Moore

Great.

and you luck. And good Congrats, thank Philip, Tom. Okay.

Philip Mezey

you. Thanks, Chip. Thank

Thomas Deitrich

Chip. Thanks,

Operator

Oppenheimer. come will question next with Our Noah Kaye from

Noah Kaye

Philip, on It's on of pleasure. your next course, journey. of becoming congratulations we been wish And, a phase CEO. well you Tom, the

Philip Mezey

Noah. Thanks,

Noah Kaye

with Joan, to would out think questions margins. of lower year-over-year headwind. a you ask as I start I comp incentive to a around couple like called

mentioned, obviously, Networks you components higher out the But better terms also had you in costs. and from impact little also called some of the bit Outcomes then growth, Devices. You trends maybe and favorable mix a

So margin understand basically it line maybe would of get understand be kind for if just us kind gross the we you how helpful and on the we main of components can do bridging flattish can gross margin. to any

Joan Hooper

Yes.

So little bit. let me clarify a

the made comp So variable comp I increased declining comments year-over-year, comp. not actually is variable variable

pressure put on actually a Device bit to margins. year-over-year margins little serves the are of down. that So The

is product equation are in the issue. that mix of year. the -- this say so part would But And I tariffs

So any time million run anywhere this tariffs. to $X $X from Tariffs million quarter. have wouldn't year, last a it

as certainly to be flows margins. to ebbs going that's items the So one well. there's some of the and natural And again,

point, important QX. is we'll rate in XX% we hit exit I remain The that the confident that think,

Noah Kaye

And a that headwind? how was much comp Okay. roughly variable as

Joan Hooper

Yes.

haven't We really out, that Noah. given number

last in recall, having about variable comps. we a you benefits of reverse If year, talked

overall the to a be expect year-over-year this year year. But versus all was last So to and performance had we negative our positive variable exacerbated it was relative around year where comp. impact somewhat last actually we because year this

Noah Kaye

Okay.

obviously, you cost second and what how level as said We're to an just quarter longer-term so improving you're understand, forward in XX% in you're kind look I 'XX? exit the can to the at booking, of laid the And is XQ. at think on right to looking of rate the level to for Or about here, you is start XX% sustainable? as of situation this that that trying you you a obviously XXXX? for building some rate, improve initiatives of pointed in exit here. off some because, is mix this high out the that place, you've row Just putting margin mean targets it components

Joan Hooper

Yes, our reiterated the backlog from and I said, the call, still think so. on I improve certainly, what's you based feel is we the to there. and we've mean probably third coming And we XX% expect now. as This into quarters. confident

Investor guidance expect gave from and 'XX didn't to XXXX margins we continue improve to the XXXX Day, 'XX to 'XX. the while at we guidance, to give So we

Noah Kaye

any what you And from incremental Okay. there impact past announced -- it's Is tariffs. Friday? this via called tariff just obviously, out tweet was

Thomas Deitrich

the of consumer details fully clarity all. by things not What difficult. without related that Yes. more time at be frame are assess full into the thus is it, that Very level household goods, goods, to our difficult see policy far to having to it we seem much coming the in September is segment

the to expect be material guidance year. of small is we will, So here, do the of terms our the you Please our business relatively don't rest that surface, of amount remember it if China in we attack for in do where previously impacts, per $X China quarter do have which to from mentioned. million manufacturing that was any seen to we and Joan we million China, components that tends which for be that $X in buy is region. We

environment don't as know keenly available and worse, it's aware, I information on very So negotiating between today. much a China. you're And to the difficult level that based it gets expect the U.S. active but of

something it's to we have mitigate that to go watch forward. So and we'll continue as

Operator

Osha we'll JMP question from take from Joseph a Securities. Next

Hilary Cauley

in Osha. on very for Join you the wish I Joe Philip. today, is happy retirement, Hilary train actually This a

Philip Mezey

you. Thank

Hilary Cauley

on kind detail are where improvement? the of could you if was stand earlier of just that more on that initiatives for supply optimization. some chain first, driving it we a the you little touched about just, So provide wondering I

Thomas Deitrich

some North more into supply another around our behind the which that pass the initially that. when some or But the period. We factories announced over of on our back have in optimization for the are focused still I'll plan, reforming in operation us side in we of it some we comment that in we're on start are we European transition midst in minor That XXXX some XXXX, now, that essentially where chain started we America. and affect activities of is the of initiatives X. perhaps Joan to and

in in with say the specifically So chain, more ballgame of on with European to innings which of our side, middle we optimizing terms would our I started type overall, go XXXX supply we're the plan. that of

Joan Hooper

at feel going was to as say, you for Yes. of we're kind chart, in a Tom we initiatives. at chain, on beyond provided said, Investor innings, the of we I manufacturing of little Day, kind gave there's that Day supply lot Investor these various what XXXX And at the opportunity if probably look beyond you even opportunity continuing as of for inning rationalization middle even estimates by XXXX overall so earlier the we a for innings initiatives. service; described

Hilary Cauley

as conversations more opportunity. if Okay. water at the see Great. wondering And and share, opportunity you any could become was then when we I meaningful the you're when having looking progress might you're a that there with meters, was

Thomas Deitrich

we'll meter have The marketplace question, now, water different different proliferate and our we Sure. water in in which that that opportunities. I your was portfolio meter, static market referenced and a the sizes with for years to several was European into had think, continue there in

offering are in expect depending the of frame. And version part customer the stronger on would pilots of XXXX We kind to that as into goes, on North I that we meter. be testing really look time our how of that American and

ramping consistent meaningful before testing time with in product kind into and frame. what in So a the XXXX of said we've

Operator

to go we'll Robert with Stephens McCarthy Next Inc.

Robert McCarthy

Well, congratulations, Philip, a on career. great

the kind bit -- think give you and biggest I you maybe kind want little can And not reconciliation is puts the but talk you where of it the items a GAAP within GAAP give? could what did of reconciliation is question around biggest takes? to Where restructuring? just here, Was variable? the are First as

Joan Hooper

restructuring on it's sort really this probably to be big Those a And say, release press the charges are new reconciliation the the amortization. quarter, amortization, so the didn't non-GAAP. press payments. it's last wire. In as page primarily our should of we any very But GAAP have release of any is the it's So ones. restructuring of any out you type

Robert McCarthy

that we I is then terms of of mix, just obviously, in back of exit in that. terms be get wanted color around the backlog, margin how but must somewhat to going your for about given forward? terms rate any your And anything half, in of be you'd confident comment Clearly, in should backlog you worst the thinking gross mix, Okay. there I kind existing mean better

Thomas Deitrich

Sure.

So our total or backlog so. runs billion $X.X

the So the above -- Because $X that backlog billion of roughly in next months to way of Outcomes $X.X that's roughly the being makeup buy business. is billion. the of system X/X the and American is segment X/X, X/X is business. of amount that The majority customers XX way the Network types and North our works, the

to you and know, tends as gives margins margin ahead into us as visibility business, gross that than Device our slightly So margins or mix revenue Networks us. higher gross business the and well Outcomes materially as have the the higher coming that's of

Robert McCarthy

any and the obviously just market in of or part New opportunity York edification, you awareness incident? you in we is headlines the general for there the that withdraw from that finally, in blackout And saw early given learnings July, for or

Thomas Deitrich

was I on hearing echo line. okay. some the oh, you. Oh, There trouble some had

So And That was those to segment and our of other of to automation face our be help and problems but resiliency factors only higher, of in focused our the other way types lot for that and we target we customers offerings what of increases would importance be can the which customers the and the is a services, mean of on is solve the that? our that market more point that grid things. distribution, acceleration just we a external robust some anything really we it. on we in that products the see a our is specific to more reliability there, provide, New need. doesn't out or business, of we able those with are general more types it from pleased of of anything solutions market need say York we're I of learned see case the help with evidence

Operator

question next Katter David with from Baird. Our will come

David Katter

Mine might but more on answered, have maybe tariffs. been X

wondering and of guys I year-over-year year your changed that in what's just a embedded you revised the estimated was of has $X.XX just impact EPS you I think at beginning the guys from that tariffs. previously guidance provided. how kind

Joan Hooper

take you're that, David. -- actually up little so Yes. cutting just bit. I'll And a

tariffs I'd the the I we how think and current the question say does at guidance what of the to was it's beginning, basically expected same. current in our So view compared

David Katter

perfect. is one get it. end on be a in Are based in out? the quarter expecting improvement on then going kind And your Or That's at to kind Got increase of the more step backlog? gross of here sequential every to you that progression margin. from the of there year QX

Joan Hooper

bit we the of expectation again, better. for not the gave I a business Well, say it's would exit rate type that's that little be of QX XX%. going to sequentially every quarter

on based quarter, As have customer needs. customer can move you you saw projects this

move, in if bring if projects the lot to effect. of they Outcomes higher margins with push a to so they out, the or our Network opposite And tend segment it;

But to expect be improve grow gross we and year. to continue variability. some quarter-to-quarter, So there every could margin

David Katter

congratulations, Got And also it. Philip.

Philip Mezey

Thank you, David.

Operator

with question Company. and will Cowen Our from Osborne Jeff come next

Jeffrey Osborne

Best restructuring you. to quick go I and $XX I or figures Joan, us my an $XX of here. of Maybe, and last Philip. it wrong. million update OpEx, of you where think an COGS split is Can questions process time, A are left? you might starting but with million have much was couple give between luck, and on just how the equal

Joan Hooper

year in gave say Spring will that entering a this and might different. a be actually precise there's of I in but color, no been the the XXXX would even so that you're basically remainder primarily be the we more it is stuff XXXX, half last the overall deck slide Day, accelerating anything's in Investor the quarter, At savings and more. if changed Silver had achieved about right around Yes. $XXX Roughly million.

hope the be to most Spring end by done So year. of Silver this we with of

Jeffrey Osborne

Remind me, the side or is on the bulk of in the Silver G&A COGS? Spring

Joan Hooper

of actually as and R&D again, Spring Silver say in across It's the It's OpEx P&L. And it just G&A. most well. It could COGS. in was achieved XXXX both. be of side OpEx. half not It's was I'd

into by -- a end initially, might still be So of complete will trickle the expect it it be some most we of bit there -- little to XXXX, and 'XX.

Jeffrey Osborne

can Got it. Analyst given leverage detail at you a the That's targets just But down for And helpful. first 'XX versus second the Day. the the about of half and lot 'XX is gave helpful. the onetime offer second there any be you for we flow should cash Just general outlook the half? of comments thoughts items terms half, consider? or would perspective Any in

Joan Hooper

around give sequential because color to that No. a customer second try timing half related half accelerated. little And again, it's would first to the projects of the to got I really

So no cash at all flow. issues on

As our this I'd up flow about. than a expect we what EPS little our a cash than originally to went talked higher be year guidance actually little bit,

Jeffrey Osborne

it. assume, for for of part mentioned just then it And the what Networking, us was remind ship, is for folks? the that for business there, can upside typical book-and-ship you anyone Got maybe Devices. I you book and You was but

in helpful. Just be put perspective that would

Joan Hooper

ahead. Go ahead, Go Tom.

Thomas Deitrich

both of We order things. our in well business total Networked the Device in ship and Book Solutions of about is the something of have PBUs. XX% both as shows on book-and-ship and up that's business across the of as those that business, side probably

the well on did situation. fulfilling we general, with chain the on No revenue of book-and-ship particular things. the concerns side based in So supply

Jeffrey Osborne

to good mind. don't you other if It's hear. ones, quick Two

of Can of the us an because You mix challenges of working give some mix. just are? what you were margins mentioned down that example year-over-year

Joan Hooper

terms year may primarily mix what last had the we versus of this just that's Yes. in have It's deployments year of issue. a more customer issue

Jeffrey Osborne

that But pretty to just think U.K. of for a scrubbed was heard the quarter about Got then and being America quarter X small North hard put a My you ago, we the assumption it. you guidance. updated outlook two what's how -- softer And and exposure if think the to meter SMETS U.K. strength. little Brexit about as for I particular? piece talked about in it's total But I talked I your qualified. or a wanted revenue, is you this should think right, Europe a in particular? you bit was pretty in and perspective probably a the

Thomas Deitrich

scheme our U.K., business. for amount our with particularly difference one around of have of the types recurring not But other. business shipped tried within things. revenue a in within small tend there part contained that And you again, the slowdown again, that's contained fair how in U.K. and us guidance. little the relatively products grand caught around within that small get bit know in There relatively of the to We Brexit or guidance a of But the are a meters what work. we've up some is our U.K. are contemplate that's the and way depending that a it's contained would would of on to us border which, Indeed, happen material for in could

Jeffrey Osborne

folks. quarter any Europe Makes softness then I'm America? the more Or a to the and geography in -- this Europe France-related? North you in exposure strength as given just sense, of trying was fundamentals what's And a are Tom. to get the for the perspective to better put underlying sense

Thomas Deitrich

Sure.

EMEA region portion that the I put is in color some Europe. of big behind the in the So general, Western if indeed economies biggest

have to pretty Germany. exposure We and France some big

are down actually things for deployments strong the that to what to market saw because happening. of okay We in base quite more the and do there compared us cycle. like their the of where broader area to And just expected traditional terms our The water in we quite indeed, that things expectations. indeed we of life start is slow was

the as and So I it think smart of economies, spec Germany large-scale more European Western France in meters related.

Joan Hooper

unexpected. were not again, And those

talked our projects to customer when back QX the we about XXXX call specifically we talked France. about particularly go some of in you If ending guidance,

Operator

a Raymond James. Pavel with from Molchanov we'll question Next take

Pavel Molchanov

credit on in process In you're than revolving rather debt debt million the $XXX of the and paying out but slide, facility, down course, specifically you more. taking of liquidity cash, called

So I'm those lines? that curious, should sign to we read additional that as a M&A along anything opportunities or open you're

Joan Hooper

No.

treasure capital chest if is in what that It's good there, talked Our just to pay out at than the for that different to delever. position. you a point to Day. obviously us leaves -- had no about down cash and we allocation having go strategy Investor opportunity We debt wanted

Pavel Molchanov

Okay.

the I then in XXs the Is rate state. item, I as that historically up obviously, talked But of minor quarter-to-quarter. something half a down, blended always the steady it's And average of kind year? and the of kind the low Clear. Okay. the second about still for know housekeeping bounces you've for suppose. company, tax case

Joan Hooper

a for be will year. half it the in Well, higher since projecting XX% bit little full second the Yes. we're the

particularly quarter, we XX% the back the same guided to the half first it's second one than that. the But February. same bit originally so is the that in was, And lower was a little the -- year, for full

Pavel Molchanov

over basis. tax a QX Well GAAP rate Okay. XXX% on was

Joan Hooper

the a and On a I yes. XX% I Pavel. The basis, rate XX.X% the that is quoted is non-GAAP. GAAP apologize, non-GAAP

Operator

question-and-answer Tom remarks. our for conclude I'll time, the to over At this back turn conference does That session. Deitrich closing

Thomas Deitrich

on And Great. you today. remains as about I for forward expect to the to next Melissa. our our Thank unchanged, you unchanged the Thank going call customers We our step look in very is you, good forward. our call. much. joining what forward should you remains feel think year. our focus start the we business and improving Thank And updating you, strategy we everyone, quarter's

Operator

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

access audio passcode dialing does replay of or the Thank www.itron.com. participation. can our for That conference to X-XXX-XXX-XXXX or your today. conclude You the you for go with X-XXX-XXX-XXXX by company's website, XXXXXXX the

Itron (ITRI) 5 Aug 192019 Q2 Earnings call transcript