Itron Announces Fourth Quarter and Full Year 2023 Financial Results

Rhea-AI Summary

Itron, Inc. (NASDAQ:ITRI) reported strong financial results for the fourth quarter and full year of 2023, with revenue reaching $577 million and $2.2 billion, marking a 23% and 21% increase, respectively. The company's gross profit rose by 39% and 37%, reaching $196 million and $714 million for the quarter and full year. GAAP net income attributable to Itron, Inc. saw a significant increase to $44 million and $97 million, with GAAP diluted earnings per share reaching $0.96 and $2.11. Non-GAAP diluted EPS also increased to $1.23 and $3.36. Adjusted EBITDA and free cash flow showed substantial improvements, reflecting the company's operational efficiency and strong performance.

Positive

• Strong financial results for the fourth quarter and full year of 2023.
• Revenue increased by 23% and 21% compared to the previous year.
• Gross profit rose by 39% and 37% for the quarter and full year.
• GAAP net income and diluted earnings per share experienced significant growth.
• Adjusted EBITDA and free cash flow improved significantly.
• Company's operational efficiency and supply chain improvements contributed to the positive results.

Negative

• None.

Insights

Financial Analyst

The robust revenue and gross profit growth reported by Itron, Inc. reflect a significant improvement in the company's operational execution and supply chain management. The 23% year-over-year increase in revenue, combined with a 39% rise in gross profit, indicates not only a strong demand for Itron's products but also an enhanced ability to deliver on that demand. The substantial improvement in adjusted EBITDA, up 99% for the quarter, suggests a marked increase in the company's operational efficiency. This level of growth outpaces average industry benchmarks and underscores the company's competitive positioning in the utilities management sector.

Investors should note the increase in both GAAP and Non-GAAP operating income, which points to the company's successful cost management strategies, despite a rise in operating expenses. The reported free cash flow of $39 million, a considerable increase from the previous year's negative cash flow, is a testament to the company's improved liquidity and financial health. The backlog of $4.5 billion provides visibility into future revenue, potentially reassuring stakeholders of sustained operational performance.

Market Research Analyst

Itron's performance can be partly attributed to the broader trends in the utilities sector, where there is a growing emphasis on smart infrastructure and efficient resource management. The company's record quarterly revenue levels in the Networked Solutions and Outcomes segments align with the increasing demand for grid edge intelligence and advanced analytics. These trends are driven by a global push towards energy efficiency and the modernization of aging utility infrastructure.

The company's outlook for the first quarter of 2024 and the full year indicates confidence in its continued growth trajectory. With projected revenue between $2.275 to $2.375 billion and Non-GAAP diluted EPS between $3.40 to $3.80, Itron is positioning itself to capitalize on the ongoing digital transformation in the utility sector. Stakeholders should consider the company's strategic direction, which is focused on addressing the complexities of energy and water management, a sector that is increasingly influenced by regulatory changes and technological advancements.

Energy Sector Analyst

The impressive financial results reported by Itron underscore the company's pivotal role in the energy and water management sector. The significant growth in its Networked Solutions and Outcomes segments indicates that Itron is successfully leveraging its expertise in grid edge intelligence to meet the evolving needs of utilities and cities. As urbanization continues and environmental concerns become more pressing, Itron's solutions for modernizing critical infrastructure are likely to see sustained demand.

It is important to recognize the strategic importance of Itron's improved supply chain conditions, which have enabled the company to meet increased customer deliveries. This operational resilience is crucial in a sector that is sensitive to disruptions, such as those caused by geopolitical tensions or natural disasters. Itron's ability to navigate these challenges and maintain efficient operations is a strong indicator of its potential to remain a leader in the provision of essential services for energy and water management.

LIBERTY LAKE, Wash.--(BUSINESS WIRE)-- Itron, Inc. (NASDAQ:ITRI), which is innovating new ways for utilities and cities to manage energy and water, announced financial results for its fourth quarter and full year ended Dec. 31, 2023. Key results for the quarter and full year include (compared with the fourth quarter and full year of 2022):

• Revenue of $577 million and $2.2 billion, increased 23% and 21%;
• Gross profit of $196 million and $714 million, increased 39% and 37%;
• GAAP net income attributable to Itron, Inc. of $44 million and $97 million, increased $22 million and $107 million;
• GAAP diluted earnings per share of $0.96 and $2.11, increased $0.47 and $2.33;
• Non-GAAP diluted EPS of $1.23 and $3.36, increased $0.52 and $2.23;
• Adjusted EBITDA of $68 million and $226 million, increased 99% and 137%; and
• Free cash flow of $39 million and $98 million, increased $57 million and $93 million

“Itron’s fourth quarter results were very strong, and we concluded 2023 with good operational momentum.” said Tom Deitrich, Itron’s president and CEO. “Our operations remained efficient and critical supply availability continued to improve resulting in record quarterly revenue levels for our Networked Solutions and Outcomes segments.

“We have entered a new era of complexity for the responsible, reliable management of energy and water resources, and Itron’s leadership in providing grid edge intelligence, data insights, analytics and automation are essential to our customers' success. Our solutions address this complexity head on and support our customers' efforts to modernize critical infrastructure.”

Summary of Fourth Quarter Consolidated Financial Results
(All comparisons made are against the prior year period unless otherwise noted)

Revenue

Total fourth quarter revenue increased 23%, to $577 million. The increase was due to strong operational execution and improved supply chain conditions, which enabled higher customer deliveries.

Device Solutions revenue increased 13%, or 9% in constant currency, due primarily to increased demand for smart water meters and communication modules.

Networked Solutions revenue increased 30%, due to higher activity levels associated with ongoing and new deployments enabled by improved supply chain conditions.

Outcomes revenue increased 10%, or 9% in constant currency, due primarily to increased recurring and one-time services, partially offset by decreased software license activity during the quarter.

Gross Margin

Total company gross margin of 34.0% increased 390 basis points due to cost efficiencies and a higher margin product mix.

Operating Expenses and Operating Income

GAAP operating expenses of $147 million increased $19 million from the prior year, and Non-GAAP operating expenses of $135 million increased $20 million from the prior year.

GAAP operating income of $49 million was $37 million higher than the prior year, and Non-GAAP operating income of $61 million was $36 million higher than the prior year. Both GAAP and Non-GAAP increases were due primarily to higher gross profit, partially offset by higher operating expenses.

Net Income and Earnings per Share (EPS)

Net income attributable to Itron, Inc. for the quarter was $44 million, or $0.96 per diluted share, compared with a net income of $22 million, or $0.49 per diluted share in 2022. The increase was driven by higher GAAP operating income, partially offset by higher tax expense.

Non-GAAP net income, which excludes the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of businesses, strategic initiative expenses, currency translation write-off, goodwill impairment, acquisition and integration, and the tax effect of excluding these expenses, was $57 million, or $1.23 per diluted share, compared with $32 million, or $0.71 per diluted share in 2022. The increase was due to higher non-GAAP operating income, partially offset by higher tax expense.

Cash Flow

Net cash provided by operating activities was $48 million in the fourth quarter compared with $(13) million in the prior year. Free cash flow was $39 million in the fourth quarter compared with $(18) million in the prior year. The increase in cash flow was due primarily to higher earnings, partially offset by increased cash taxes paid.

Other Measures

After bookings of $839 million during the fourth quarter, total backlog at quarter end was $4.5 billion.

Q1 2024 Outlook and Full Year 2024 Guidance Update

First quarter 2024 financial outlook:

• Revenue between $575 and $585 million
• Non-GAAP diluted EPS between $0.80 and $0.90

Full year 2024 financial guidance:

• Revenue between $2.275 to $2.375 billion
• Non-GAAP diluted EPS between $3.40 to $3.80

Earnings Conference Call

Itron will host a conference call to discuss the financial results contained in this release at 10 a.m. EST on February 26, 2024. Interested parties may listen to the conference call on a live webcast. The webcast, along with a supplemental presentation, may be accessed from the company’s website at https://investors.itron.com/events.cfm. Participants should access the webcast 10 minutes prior to the start of the call. A webcast replay of the conference call will be available through March 5, 2024 and may be accessed on the company's website at http://investors.itron.com/events.cfm.

About Itron

Itron is a proven global leader in energy, water, smart city, IIoT and intelligent infrastructure services. For utilities, cities and society, we build innovative systems, create new efficiencies, connect communities, encourage conservation and increase resourcefulness. By safeguarding our invaluable natural resources today and tomorrow, we improve the quality of life for people around the world. Join us: www.itron.com.

Itron^® is a registered trademark of Itron, Inc. All third-party trademarks are property of their respective owners and any usage herein does not suggest or imply any relationship between Itron and the third party unless expressly stated.

Cautionary Note Regarding Forward Looking Statements

This release contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical factors nor assurances of future performance. These statements are based on our expectations about, among others, revenues, operations, financial performance, earnings, liquidity, earnings per share, cash flows and restructuring activities including headcount reductions and other cost savings initiatives. This document reflects our current strategy, plans and expectations and is based on information currently available as of the date of this release. When we use words such as "expect", "intend", "anticipate", "believe", "plan", "goal", "seek", "project", "estimate", "future", "strategy", "objective", "may", "likely", "should", "will", "will continue", and similar expressions, including related to future periods, they are intended to identify forward-looking statements. Forward-looking statements rely on a number of assumptions and estimates. Although we believe the estimates and assumptions upon which these forward-looking statements are based are reasonable, any of these estimates or assumptions could prove to be inaccurate and the forward-looking statements based on these estimates and assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors. Therefore, you should not rely on any of these forward-looking statements. Some of the factors that we believe could affect our results include our ability to execute on our restructuring plans, our ability to achieve estimated cost savings, the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, adverse impacts of litigation, changes in laws and regulations, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock-based and bonus compensation, increasing volatility in foreign exchange rates, international business risks, uncertainties caused by adverse economic conditions, including without limitation those resulting from extraordinary events or circumstances and other factors that are more fully described in Part I, Item 1A: Risk Factors included in our Annual Report on Form 10-K for the year ended Dec. 31, 2022 and other reports on file with the Securities and Exchange Commission. Itron undertakes no obligation to update or revise any information in this press release.

Non-GAAP Financial Information

To supplement our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (GAAP), we use certain adjusted or non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share (EPS), adjusted EBITDA, free cash flow, and constant currency. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent supplemental information used by management in its financial and operational decision making. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies. When providing future outlooks and/or earnings guidance, a reconciliation of forward-looking non-GAAP diluted EPS to the GAAP diluted EPS has not been provided because we are unable to predict with reasonable certainty the potential amount or timing of restructuring related expenses and their related tax effects without unreasonable effort. These costs are uncertain, depend on various factors and could have a material impact on GAAP results for the guidance period. A more detailed discussion of why we use non-GAAP financial measures, the limitations of using such measures, and reconciliations between non-GAAP and the nearest GAAP financial measures are included in this press release.

Itron, Inc.

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ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
			Three Months Ended December 31,							Twelve Months Ended December 31,
				2023			2022				2023			2022
Revenues
	Product revenues		$	502,007		$	392,744			$	1,863,489		$	1,500,243
	Service revenues			75,166			74,747				310,144			295,321
		Total revenues		577,173			467,491				2,173,633			1,795,564
Cost of revenues
	Product cost of revenues			340,504			283,836				1,292,170			1,102,475
	Services cost of revenues			40,279			42,857				167,555			170,900
		Total cost of revenues		380,783			326,693				1,459,725			1,273,375
Gross profit				196,390			140,798				713,908			522,189
Operating expenses
	Sales, general and administrative			81,603			77,729				312,779			290,453
	Research and development			53,919			46,627				208,688			185,098
	Amortization of intangible assets			4,485			6,266				18,918			25,717
	Restructuring			7,121			(2,528	)			43,989			(13,625	)
	Loss on sale of businesses			(8	)		323				667			3,505
	Goodwill impairment			—			—				—			38,480
		Total operating expenses		147,120			128,417				585,041			529,628
Operating income (loss)				49,270			12,381				128,867			(7,439	)
Other income (expense)
	Interest income			3,346			1,266				9,314			2,633
	Interest expense			(1,870	)		(1,793	)			(8,349	)		(6,724	)
	Other income (expense), net			(1,284	)		(1,073	)			(2,446	)		(4,213	)
		Total other income (expense)		192			(1,600	)			(1,481	)		(8,304	)
Income (loss) before income taxes				49,462			10,781				127,386			(15,743	)
Income tax benefit (provision)				(4,555	)		11,169				(29,068	)		6,196
Net income (loss)				44,907			21,950				98,318			(9,547	)
	Net income (loss) attributable to noncontrolling interests			521			(262	)			1,395			185
Net income (loss) attributable to Itron, Inc.			$	44,386		$	22,212			$	96,923		$	(9,732	)
Net income (loss) per common share - Basic			$	0.98		$	0.49			$	2.13		$	(0.22	)
Net income (loss) per common share - Diluted			$	0.96		$	0.49			$	2.11		$	(0.22	)
Weighted average common shares outstanding - Basic				45,501			45,179				45,421			45,101
Weighted average common shares outstanding - Diluted				46,039			45,419				45,836			45,101

ITRON, INC.
SEGMENT INFORMATION
(Unaudited, in thousands)
			Three Months Ended December 31,							Twelve Months Ended December 31,
				2023			2022				2023			2022
Product revenues
	Device Solutions		$	112,620		$	99,142			$	452,718		$	433,354
	Networked Solutions			366,637			270,798				1,331,546			1,002,156
	Outcomes			22,750			22,804				79,225			64,733
		Total Company	$	502,007		$	392,744			$	1,863,489		$	1,500,243
Service revenues
	Device Solutions		$	923		$	1,190			$	3,008		$	5,356
	Networked Solutions			24,285			30,316				118,745			117,112
	Outcomes			49,958			43,241				188,391			172,853
		Total Company	$	75,166		$	74,747			$	310,144		$	295,321
Total revenues
	Device Solutions		$	113,543		$	100,332			$	455,726		$	438,710
	Networked Solutions			390,922			301,114				1,450,291			1,119,268
	Outcomes			72,708			66,045				267,616			237,586
		Total Company	$	577,173		$	467,491			$	2,173,633		$	1,795,564
Gross profit
	Device Solutions		$	30,566		$	11,289			$	105,917		$	61,778
	Networked Solutions			136,873			98,820				499,725			361,975
	Outcomes			28,951			30,689				108,266			98,436
		Total Company	$	196,390		$	140,798			$	713,908		$	522,189
Operating income (loss)
	Device Solutions		$	19,853		$	2,600			$	65,690		$	26,703
	Networked Solutions			102,869			70,339				368,921			248,268
	Outcomes			14,479			17,458				50,346			46,247
	Corporate unallocated			(87,931	)		(78,016	)			(356,090	)		(328,657	)
		Total Company	$	49,270		$	12,381			$	128,867		$	(7,439	)
Total Gross Margin				34.0	%		30.1	%			32.8	%		29.1	%

ITRON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
			December 31, 2023			December 31, 2022
ASSETS
Current assets
	Cash and cash equivalents		$	302,049		$	202,007
	Accounts receivable, net			303,821			280,435
	Inventories			283,686			228,701
	Other current assets			159,882			118,441
		Total current assets		1,049,438			829,584
Property, plant, and equipment, net				128,806			140,123
Deferred tax assets, net				247,211			211,982
Other long-term assets				38,836			39,901
Operating lease right-of-use assets, net				41,186			52,826
Intangible assets, net				46,282			64,941
Goodwill				1,052,504			1,038,721
		Total assets	$	2,604,263		$	2,378,078
LIABILITIES AND EQUITY
Current liabilities
	Accounts payable		$	199,520		$	237,178
	Other current liabilities			54,407			42,869
	Wages and benefits payable			135,803			89,431
	Taxes payable			8,636			15,324
	Current portion of warranty			14,663			18,203
	Unearned revenue			124,207			95,567
		Total current liabilities		537,236			498,572
Long-term debt, net				454,827			452,526
Long-term warranty				7,501			7,495
Pension benefit obligation				63,887			57,839
Deferred tax liabilities, net				697			833
Operating lease liabilities				32,656			44,370
Other long-term obligations				176,028			124,887
		Total liabilities		1,272,832			1,186,522
Equity
	Common stock			1,820,510			1,788,479
	Accumulated other comprehensive loss, net			(81,190	)		(94,674	)
	Accumulated deficit			(428,409	)		(525,332	)
		Total Itron, Inc. shareholders' equity		1,310,911			1,168,473
	Noncontrolling interests			20,520			23,083
		Total equity		1,331,431			1,191,556
		Total liabilities and equity	$	2,604,263		$	2,378,078

ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)			Year Ended December 31,
				2023			2022
Operating activities
	Net income (loss)		$	98,318		$	(9,547	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization of intangible assets		55,763			66,763
		Non-cash operating lease expense		16,454			16,257
		Stock-based compensation		28,357			21,881
		Amortization of prepaid debt fees		3,664			3,499
		Deferred taxes, net		(34,646	)		(32,635	)
		Loss on sale of businesses		667			3,505
		Goodwill impairment		—			38,480
		Restructuring, non-cash		385			(624	)
		Other adjustments, net		(169	)		11,678
Changes in operating assets and liabilities, net of acquisitions and sale of businesses:
	Accounts receivable			(19,494	)		5,064
	Inventories			(52,118	)		(68,124	)
	Other current assets			(42,410	)		(16,695	)
	Other long-term assets			2,317			(5,436	)
	Accounts payable, other current liabilities, and taxes payable			(43,657	)		45,085
	Wages and benefits payable			44,700			(21,749	)
	Unearned revenue			28,329			18,466
	Warranty			(3,778	)		(5,497	)
	Restructuring			29,866			(40,981	)
	Other operating, net			12,423			(4,890	)
		Net cash provided by operating activities		124,971			24,500
Investing activities
	Net proceeds (payments) related to the sale of businesses			(772	)		55,933
	Acquisitions of property, plant, and equipment			(26,884	)		(19,747	)
	Business acquisitions, net of cash and cash equivalents acquired			—			23
	Other investing, net			4,348			4,307
		Net cash provided by (used in) investing activities		(23,308	)		40,516
Financing activities
	Issuance of common stock			3,674			3,452
	Repurchase of common stock			—			(16,972	)
	Prepaid debt fees			(2,471	)		(697	)
	Other financing, net			(4,711	)		(4,520	)
		Net cash used in financing activities		(3,508	)		(18,737	)
Effect of foreign exchange rate changes on cash and cash equivalents				1,887			(6,851	)
Increase in cash and cash equivalents				100,042			39,428
Cash and cash equivalents at beginning of period				202,007			162,579
Cash and cash equivalents at end of period			$	302,049		$	202,007

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, free cash flow, and constant currency. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and other companies may define such measures differently. For a reconciliation of each non-GAAP measure to the most comparable financial measure prepared and presented in accordance with GAAP, please see the table captioned Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures.

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

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

Non-GAAP net income and non-GAAP diluted EPS – We define non-GAAP net income as net income (loss) attributable to Itron, Inc. excluding the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of businesses, strategic initiative expenses, software project impairment, Russian currency translation write-off, goodwill impairment, acquisition and integration related expenses, and the tax effect of excluding these expenses. We define non-GAAP diluted EPS as non-GAAP net income divided by diluted weighted-average shares outstanding during the period calculated on a GAAP basis and then reduced to reflect the anti-dilutive impact of the convertible note hedge transactions entered into in connection with the 0% convertible notes due 2026 issued in March 2021. We consider these financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP measures and evaluating non-GAAP net income and non-GAAP diluted EPS together with GAAP net income (loss) attributable to Itron, Inc. and GAAP diluted EPS.

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

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

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

The tables below reconcile the non-GAAP financial measures of operating expenses, operating income, net income, diluted EPS, adjusted EBITDA, and free cash flow with the most directly comparable GAAP financial measures.

ITRON, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except per share data)
TOTAL COMPANY RECONCILIATIONS				Three Months Ended December 31,							Twelve Months Ended December 31,
					2023			2022				2023			2022
	NON-GAAP OPERATING EXPENSES
		GAAP operating expenses		$	147,120		$	128,417			$	585,041		$	529,628
			Amortization of intangible assets		(4,485	)		(6,266	)			(18,918	)		(25,717	)
			Restructuring		(7,121	)		2,528				(43,989	)		13,625
			Loss on sale of businesses		8			(323	)			(667	)		(3,505	)
			Strategic initiative		—			—				5			(675	)
			Software project impairment		—			(8,719	)			—			(8,719	)
			Russian currency translation write-off		—			—				—			(1,885	)
			Goodwill impairment		—			—				—			(38,480	)
			Acquisition and integration		(27	)		(136	)			(144	)		(506	)
		Non-GAAP operating expenses		$	135,495		$	115,501			$	521,328		$	463,766
	NON-GAAP OPERATING INCOME
		GAAP operating income (loss)		$	49,270		$	12,381			$	128,867		$	(7,439	)
			Amortization of intangible assets		4,485			6,266				18,918			25,717
			Restructuring		7,121			(2,528	)			43,989			(13,625	)
			Loss on sale of businesses		(8	)		323				667			3,505
			Strategic initiative		—			—				(5	)		675
			Software project impairment		—			8,719				—			8,719
			Russian currency translation write-off		—			—				—			1,885
			Goodwill impairment		—			—				—			38,480
			Acquisition and integration		27			136				144			506
		Non-GAAP operating income		$	60,895		$	25,297			$	192,580		$	58,423
	NON-GAAP NET INCOME & DILUTED EPS
		GAAP net income (loss) attributable to Itron, Inc.		$	44,386		$	22,212			$	96,923		$	(9,732	)
			Amortization of intangible assets		4,485			6,266				18,918			25,717
			Amortization of debt placement fees		860			845				3,489			3,323
			Restructuring		7,121			(2,528	)			43,989			(13,625	)
			Loss on sale of businesses		(8	)		323				667			3,505
			Strategic initiative		—			—				(5	)		675
			Software project impairment		—			8,719				—			8,719
			Russian currency translation write-off		—			—				—			1,885
			Goodwill impairment		—			—				—			38,480
			Acquisition and integration		27			136				144			506
			Income tax effect of non-GAAP adjustments		(183	)		(3,803	)			(10,339	)		(8,466	)
		Non-GAAP net income attributable to Itron, Inc.		$	56,688		$	32,170			$	153,786		$	50,987
		Non-GAAP diluted EPS		$	1.23		$	0.71			$	3.36		$	1.13
		Non-GAAP weighted average common shares outstanding - Diluted			46,039			45,419				45,836			45,305
TOTAL COMPANY RECONCILIATIONS				Three Months Ended December 31,							Twelve Months Ended December 31,
(Unaudited, in thousands, except per share data)					2023			2022				2023			2022
	ADJUSTED EBITDA
		GAAP net income (loss) attributable to Itron, Inc.		$	44,386		$	22,212			$	96,923		$	(9,732	)
			Interest income		(3,346	)		(1,266	)			(9,314	)		(2,633	)
			Interest expense		1,870			1,793				8,349			6,724
			Income tax (benefit) provision		4,555			(11,169	)			29,068			(6,196	)
			Depreciation and amortization		13,750			16,151				55,763			66,763
			Restructuring		7,121			(2,528	)			43,989			(13,625	)
			Loss on sale of businesses		(8	)		323				667			3,505
			Strategic initiative		—			—				(5	)		675
			Software project impairment		—			8,719				—			8,719
			Russian currency translation write-off		—			—				—			1,885
			Goodwill impairment		—			—				—			38,480
			Acquisition and integration		27			136				144			506
		Adjusted EBITDA		$	68,355		$	34,371			$	225,584		$	95,071
	FREE CASH FLOW
		Net cash (used in) provided by operating activities		$	47,895		$	(13,030	)		$	124,971		$	24,500
			Acquisitions of property, plant, and equipment		(8,580	)		(4,861	)			(26,884	)		(19,747	)
		Free Cash Flow		$	39,315		$	(17,891	)		$	98,087		$	4,753

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240226951756/en/

Itron, Inc.

Paul Vincent

Vice President, Investor Relations

(512) 560-1172

David Means

Director, Investor Relations

(737) 242-8448

Investors@itron.com

Source: Itron, Inc.

FAQ

What were Itron, Inc.'s (NASDAQ:ITRI) revenue figures for the fourth quarter and full year of 2023?

Itron, Inc. reported revenue of $577 million for the fourth quarter and $2.2 billion for the full year of 2023, representing a 23% and 21% increase, respectively.

How much did Itron, Inc.'s (NASDAQ:ITRI) gross profit increase by for the fourth quarter and full year?

Itron, Inc.'s gross profit increased by 39% and 37% for the fourth quarter and full year, reaching $196 million and $714 million, respectively.

What was the GAAP net income attributable to Itron, Inc. for the fourth quarter and full year of 2023?

The GAAP net income attributable to Itron, Inc. was $44 million for the fourth quarter and $97 million for the full year of 2023.

What were the GAAP diluted earnings per share for Itron, Inc. in the fourth quarter and full year of 2023?

Itron, Inc.'s GAAP diluted earnings per share were $0.96 for the fourth quarter and $2.11 for the full year of 2023.

What was the Non-GAAP diluted EPS for Itron, Inc. in the fourth quarter and full year of 2023?

Itron, Inc.'s Non-GAAP diluted EPS was $1.23 for the fourth quarter and $3.36 for the full year of 2023.