Slide 1: Third Quarter 2020 Earnings Conference Call
Tom Deitrich – President and Chief Executive Officer Joan Hooper – Senior Vice President and Chief Financial Officer Kenneth Gianella – Vice President, Investor Relations Third Quarter 2020 Earnings Conference Call November 2, 2020 ©2020 ITRON PROPRIETARY ©2020 ITRON PROPRIETARY Q3 2020 Earnings Con
Slide 2: Forward Looking Statements
Forward Looking Statements Certain matters in this presentation and being discussed today, that are not statements of historical fact, constitute forward-looking statements relating to current or future financial performance, management's plans and objectives for future operations, product plans and
Slide 3: Conference Call Agenda
CONFERENCE CALL AGENDA » CEO – Business and Operations Update » CFO – Financial Results » Q&A
Slide 4: Bookings and Backlog
Bookings and Backlog » Q3’20 bookings of $432M » Backlog of $2.8B $3.1 $3.2 $3.0 $2.9 $2.8 » 12-month backlog of $1.1B $1.5 $1.4 $1.3 $1.3 $1.1 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Chart in Billions, actual currency rates. 12-Month Backlog Total Backlog ©2020 ITRON PROPRIETARY Q3 2020 Earnings Conference C
Slide 5: COVID-19 Operational Update
COVID-19 Operational Update Leading indicators to signal that Itron’s operating environment is improving Progress » Itron global factories fully operational » Global supply chain and logistics network stabilized Early Stage Complete » Ongoing customer projects and deployments » Local “shelter-in-pla
Slide 6: Consolidated GAAP Results – Q3'20
Consolidated GAAP Results – Q3’20 $ in millions (except per share amounts) Q3 2020 Q3 2019 Change Revenue $540.2 $624.5 -13% Change in constant currency -14% Gross margin 26.5% 31.5% -500 bps Operating income (loss) ($24.0) $39.4 NM Net income (loss) attributable to Itron, Inc. ($25.4) $16.8 NM Earn
Slide 7: Consolidated Non-GAAP & Cash Results – Q3'20
Consolidated Non-GAAP & Cash Results – Q3’20 $ in millions (except per share amounts) Q3 2020 Q3 2019 Change Non-GAAP operating income $29.7 $66.0 -55% Non-GAAP operating margin 5.5% 10.6% -510 bps Non-GAAP net income attributable to Itron, Inc. $24.6 $41.4 -40% Adjusted EBITDA $39.7 $74.5 -47% Adju
Slide 8: Revenue Year-Over-Year Bridge – Q3'20
Revenue Year-Over-Year Bridge – Q3’20 -20% -14% +4% -14% $624.5 $5.5 $540.2 ($42.3) $2.0 ($49.5) Q3 2019 Device Networked Outcomes FX Q3 2020 Solutions Solutions Chart in Millions, Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart includes roundin
Slide 9: Non-GAAP EPS Year-Over-Year Bridge – Q3'20
Non-GAAP EPS Year-Over-Year Bridge – Q3’20 US$ per share $1.04 $0.26 $0.61 ($0.02) $0.04 ($0.71) Q3 2019 Net Operating Lower Lower FX and Share Q3 2020 Impact Interest Tax Rate Count Expense Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart includ
Slide 10: Device Solutions Segment – Q3'20
Device Solutions Segment – Q3’20 REVENUE, GROSS MARGIN AND OPERATING MARGIN $ in Millions, actual currency $213 » Revenue down 17% and 20% in constant currency $176 • Decrease primarily due to COVID-19 • Latin America impact 19.2% » Gross margin down 750 bps • Due to COVID-19 induced operational ine
Slide 11: Networked Solutions Segment – Q3'20
Networked Solutions Segment – Q3’20 REVENUE, GROSS MARGIN AND OPERATING MARGIN $ in Millions, actual currency $356 $307 » Revenue down 14% as reported and in constant currency • Decrease primarily due to COVID-19 » Gross margin down 460 bps 38.0% • Unfavorable product mix • Decrease due to COVID-19
Slide 12: Outcomes Segment – Q3'20
Outcomes Segment – Q3’20 REVENUE, GROSS MARGIN AND OPERATING MARGIN $ in Millions, actual currency $55 $57 » Revenue up 5% and 4% in constant currency • Higher professional services and maintenance » Gross margin down 90 bps • Decrease due to product mix 36.5% » Operating margin up 130 bps 35.6% • L
Slide 13: Debt and Liquidity Overview
Debt and Liquidity Overview US$M Debt » Net leverage-Street 4.3x at end of Q3’20 » No debt payments due in 2020 » Term Loan due 2024 and Senior Note 2026 $805 » Blended interest rate of 2.7% Free Cash Flow and Liquidity » Free cash flow of $38M » $400M draw on revolving credit facility to ensure suf
Slide 14: Appendix
APPENDIX
Slide 15: Consolidated GAAP Results – YTD'20
Consolidated GAAP Results – YTD’20 $ in millions (except per share amounts) YTD 2020 YTD 2019 Change Revenue $1,648.2 $1,874.1 -12% Growth in constant currency -11% Gross margin 27.5% 30.7% -320 bps Operating income (loss) ($43.0) $103.8 NM Net income (loss) attributable to Itron, Inc. ($79.5) $34.4
Slide 16: Consolidated Non-GAAP & Cash Results – YTD'20
Consolidated Non-GAAP & Cash Results – YTD’20 $ in millions (except per share amounts) YTD 2020 YTD 2019 Change Non-GAAP operating income $88.5 $185.9 -52% Non-GAAP operating margin 5.4% 9.9% -450 bps Adjusted EBITDA $122.9 $213.2 -42% Adjusted EBITDA margin 7.5% 11.4% -390 bps Non-GAAP earnings per
Slide 17: Revenue Year-Over-Year Bridge – YTD'20
Revenue Year-Over-Year Bridge – YTD’20 -20% -7% -2% -11% $1,874.1 $1,648.2 ($133.7) ($75.0) ($3.5) ($13.6) YTD 2019 Device Networked Outcomes FX YTD 2020 Solutions Solutions Chart in Millions, Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart incl
Slide 18: Non-GAAP EPS Year-Over-Year Bridge – YTD'20
Non-GAAP EPS Year-Over-Year Bridge – YTD’20 US$ per share $2.60 $0.20 $1.21 $0.10 ($0.06) ($1.63) Q3 2019 Net Lower Lower FX and Share Q3 2020 Operating Interest Tax Rate Count Impact Expense Quarterly totals reflect actual currencies; all variances other than FX exclude currency impact. Chart inclu
Slide 19: Device Solutions Segment – YTD'20
Device Solutions Segment – YTD’20 REVENUE, GROSS MARGIN AND OPERATING MARGIN $ in Millions, actual currency $653 » Revenue down 22% and 20% in constant currency • Decrease primarily due to COVID-19 $508 » Gross margin down 600 bps • Due to COVID-19 induced operating inefficiencies and product mix 18
Slide 20: Networked Solutions Segment – YTD'20
Networked Solutions Segment – YTD’20 REVENUE, GROSS MARGIN AND OPERATING MARGIN $ in Millions, actual currency $1,049 $972 » Revenue down 7% as reported and in constant currency • Decrease primarily due to COVID-19 37.1% 34.2% » Gross margin down 290 bps • Unfavorable product mix • Primarily due to
Slide 21: Outcomes Segment – YTD'20
Outcomes Segment – YTD’20 REVENUE, GROSS MARGIN AND OPERATING MARGIN $ in Millions, actual currency $173 $169 » Revenue down 2% as reported and in constant currency • Decrease due to timing of customer projects 36.9% 33.3% » Gross margin down 360 bps • Tough YoY compare with strong mix of higher-mar
Slide 22: Revenue – FX Impact Summary
Revenue – FX Impact Summary $ in Millions Average USD/Euro: Average USD/Euro: $1.17 Q3’20 vs $1.11 Q3’19 $1.13 YTD’20 vs $1.12 YTD’19 Revenue Q3'20 YoY Change YoY Change Revenue YTD'20 YoY Change YoY Change Excluding FX Excluding FX Device Solutions $176.1 -17.4% -19.8% Device Solutions $507.6 -22.3
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures To supplement our consolidated financial statements presented 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, adjusted EBITDA
Slide 24: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ©2020 ITRON PROPRIETARY Q3 2020 Earnings Conference Call | 24
Slide 25: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ©2020 ITRON PROPRIETARY Q3 2020 Earnings Conference Call | 25
Slide 26: Thank You
INVESTOR RELATIONS CONTACTS Kenneth P. Gianella Vice President, Investor Relations 669-770-4643 ken.gianella@itron.com Rebecca Hussey Manager, Investor Relations 509-891-3574 rebecca.hussey@itron.com Thank You www.itron.com