ITRON, INC. Q2 FY2025 earnings call

• Itron delivered solid second quarter results despite macroeconomic and trade policy uncertainties, with revenue of $607 million, adjusted EBITDA of $90 million, non-GAAP earnings per share of $1.62, and free cash flow of $91 million. • Set new quarterly records for margins, profitability, and cash flow, driven by execution of strategy and expansion of customers' infrastructure. • Differentiated Outcomes segment drove growth, with over 15.3 million distributed intelligence endpoints shipped by end of Q2. • Long-term market outlook positive, but near-term customers and regulators face complex environment leading to slower project deployments and delayed decisions. • Lowered full-year revenue outlook midpoint by ~3% but raised full-year EPS outlook midpoint by 13%.

Device Solutions: Revenue decreased 8% on a constant currency basis, primarily due to expected decline in legacy electric product sales, partially offset by growth in water. Networked Solutions: Revenue decreased 1% year-over-year, primarily due to nonrecurrence of revenue catch-up from last year. Outcomes: Revenue increased 9% year-over-year due to continued growth in recurring revenue and software licenses. Device Solutions revenue was $113 million, Networked Solutions was $409 million, and Outcomes was $85 million.

• Lowered full-year revenue outlook midpoint by approximately 3%, with full-year revenue expected to be in the range of $2.35 billion to $2.4 billion. • Raised full-year non-GAAP earnings per share outlook midpoint by 13%, with range $6 to $6.20 per diluted share. • Q3 revenue anticipated to be between $570 million to $585 million, with non-GAAP EPS range $1.45 to $1.55 per diluted share. • Maintained outlook for full year book-to-bill ratio of 1:1 or higher.

• Macroeconomic and trade policy uncertainties. • Slower project deployments and delayed decisions in certain areas due to complex environment for customers and regulators. • Regulatory complexity potentially affecting project timelines and revenue recognition.

Q: Noah Kaye asked about margins and revenue outlook, specifically backing into EBITDA margins and near-term outlook.

A: Joan Hooper said EBITDA margin higher than expected due to structural changes in device business, and Tom Deitrich noted backlog portion rather than book and ship is seeing slowing, with customers reprioritizing projects.

Q: Jeff Osborne followed up on regulatory approval sequencing and macro vs micro factors causing delays.

A: Tom Deitrich said it's more about customers living within annual CapEx budgets this year despite multiyear budget increases, and there's some sequencing of projects affecting timelines.

Q: Joseph Osha asked about regulators' complexity reflecting product complexity.

A: Tom Deitrich said it's more about regulators balancing consumer costs and utility needs for new technology, not specifically product complexity.

Q: Scott Graham asked about 2027 aspirational goals and mix factors.

A: Joan Hooper said no change to 2027 targets and mix factors vary by segment, with device business benefiting from water growth and segments pruning portfolios to accelerate margin growth.