ITRON, INC. Q3 FY2024 earnings call

• Third quarter results were ahead of expectations with revenue of $615 million, adjusted EBITDA of $89 million, non-GAAP earnings per share of $1.84, and free cash flow of $59 million.
• Backlog at the end of the third quarter was $4 billion and bookings during the quarter were $487 million. Notable bookings included Arkansas Valley Electric Cooperative selecting Itron's GenX technology, CenterPoint Energy working with Itron on gas endpoints, and expanded support of Duke Energy for grid edge capabilities.
• Consolidated GAAP revenue increased 10% year-over-year to $615 million, with gross margin of 34.1% due to operational efficiencies. Non-GAAP operating income increased 34% year-over-year, adjusted EBITDA was a record $89 million, and free cash flow was $59 million.
• Fourth quarter outlook: revenue expected to be between $600 million to $610 million, non-GAAP EPS range $1 to $1.10. 2024 full-year revenue expected to be $2.428 billion to $2.438 billion, non-GAAP EPS $5.28 to $5.38.
• Operational highlights included the Inspire customer event, announcement of Grid Edge Essentials offering, and release of a resourcefulness report on AI in the utility industry.

Device Solutions revenue was $123 million, increasing 10% on a constant currency basis, primarily driven by growth in smart water sales and electric demand. Network Solutions revenue was $417 million, growing 8% year-over-year, driven by increased volume from new projects and ongoing deployments. Outcomes revenue was $76 million, increasing 16% on a constant currency basis, primarily due to higher recurring revenue services and software. Device Solutions gross margin was 27.2% with an operating margin of 21.6%, Network Solutions had a gross margin of 35.9% and operating margin of 27.7%, while Outcomes had a gross margin of 35% and operating margin of 14.7%.

• Fourth quarter revenue预计在$600 million到$610 million之间，非GAAP每股收益预计在$1到$1.10之间。
• 2024全年收入预计在$2.428 billion到$2.438 billion之间，非GAAP每股收益预计在$5.28到$5.38之间。
• 目前没有提供2025年的正式财务指引，但提到2027年的财务目标仍然适用。

Actual results could differ materially from forward-looking statements because of factors presented in the earnings release, comments during the call, and risks in the Form 10-K and other SEC filings.

Q: Ben Kallo asked about growth next year and market deals.

A: Joan Hooper mentioned not giving 2025 guidance yet, noted $125 million of catch-up revenue in 2024 and back-end loaded bookings. Tom Deitrich said market remains constructive with progress on regulatory and funding front.

Q: Jeffrey Osborne asked about water segment strength and M&A pipeline.

A: Tom Deitrich said water has performed above expectations but turns rate may slow, M&A focus is on accelerating Outcomes growth rate.

Q: Noah Kaye asked about Grid Edge Essentials and outcomes mix.

A: Tom Deitrich discussed grid edge intelligence, Grid Edge Essentials, and outcomes segment's recurring revenue potential. Joan Hooper said normalized tax rate is about 25%.

Q: Joseph Osha asked about bookings mix and revenue roll-forward.

A: Tom Deitrich said bookings skewed towards Networks and Outcomes, devices has different turn rate. Joan Hooper said lag from booking to revenue is 9-12 months.

Q: Pavel Molchanov asked about outcomes growth and virtual power plants.

A: Tom Deitrich said outcomes growth due to 12-month lag from networks, and outcomes involved in virtual power plant applications like Grid Edge Optimizer.

Q: Austin Moeller asked about water vs electricity demand and inventory.

A: Tom Deitrich said electricity likely outpaces water growth, and most non-inflation indexed inventory will flow through in next 12 months.

Q: Scott Graham asked about CAGR and pipeline.

A: Joan Hooper explained CAGR from 2024 to 2027 is 2.5%-5%, $1 billion pipeline is timing issue, not fundamental shift. Joan also talked about non-GAAP margin variability.

Q: Chip Moore asked about Q4 outlook and margins.

A: Joan Hooper said Q4 revenue midpoint slightly down from Q3, factoring out Q3 tax benefit and higher OpEx, gross margin flat to slightly down.