10q10k10q10k.net

What changed in ITRON, INC.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of ITRON, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+294 added−322 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in ITRON, INC.'s 2023 10-K

294 paragraphs added · 322 removed · 239 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

53 edited+10 added−7 removed27 unchanged
Biggest changeThe portfolio includes hardware products used for measurement, control, or sensing, with and without communications capability; a combination of endpoints and network infrastructure with embedded intelligence that is designed and sold as a complete solution to acquire and transport application-specific data; distribution automation - intelligent communication for the modern grid allowing secure, low-voltage distribution-system automation and control; distributed energy resource management (DERMs) to connect, analyze, and optimize distributed energy resources; and value-added services, software, and products that organize, analyze, and interpret data to gain insights, make decisions, and inform actions.
Biggest changeThe portfolio includes hardware products used for: • measurement, control, or sensing • a combination of endpoints and network infrastructure with embedded intelligence that is designed and sold as a complete solution to acquire and transport application-specific data • distribution automation - intelligent communication for the modern grid allowing secure, low and medium-voltage distribution-system automation and control • distributed energy resource management (DERMs) to connect, analyze, and optimize distributed energy resources such as rooftop solar installations and electric vehicles, water operations and management, gas operations and safety applications • value-added services, software, and products that organize, analyze, and interpret data to gain insights, make decisions, and inform actions We also offer managed services, Software-as-a-Service (SaaS), Network-as-a-Service (NaaS), technical support services, licensed hardware technology, and consulting services. 2 Table of Contents Industry Drivers Utilities and municipalities are experiencing rapid change related to affordability, reliability and sustainability, which is impacting how they operate critical infrastructure, manage scarce resources, address impacts of climate disruption, and interact with their customers.
Our comprehensive solutions and data analytics also help our customers address operational issues including increasing demand on resources, non-technical loss, leak detection, environmental and regulatory compliance, integrating renewable and distributed energy sources, and improving operational reliability. Itron solutions include technology, software, and services delivered as part of a standalone, one-time purchase or end-to-end solution over multiple years.
Our comprehensive solutions and data analytics also help our customers address operational issues including increasing demand on resources, non-technical loss, leak detection, environmental and regulatory compliance, integrating renewable and distributed energy sources, and improving operational reliability. Our solutions include technology, software, and services delivered as part of a standalone, one-time purchase or an end-to-end solution over multiple years.
For smaller utilities and most municipalities, we typically use an indirect sales channel that extends the reach of Itron's solutions by empowering trusted partners with the right tools, training, and technology to grow their business, deliver results, and help these customers better manage energy and water. These channels consist of distributors, agents, partners, and meter manufacturer representatives.
For smaller utilities and most municipalities, we typically use an indirect sales channel that extends the reach of Itron's solutions by providing trusted partners with the right tools, training, and technology to grow their business, deliver results, and help these customers better manage energy and water. These channels consist of distributors, agents, partners, and meter manufacturer representatives.
Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions includes products and software for the implementation, installation, and management of communicating devices and data networks.
Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated head-end management and application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions includes products and software for the implementation, installation, and management of communicating devices and data networks.
The growing demand for energy, water, and municipal services coupled with the proliferation of renewable energy sources, smart communicating devices, sensors, and multiple data-producing technologies as well as the growing need to manage distributed energy resources is forcing providers to rethink how they operate and service their communities.
The growing demand for energy, water, and municipal services coupled with the proliferation of renewable energy sources, smart communicating devices, sensors, and multiple data-producing technologies, as well as the growing need to manage distributed energy resources, is forcing providers to rethink how they operate and service their cities.
Refer to Item 1A: Risk Factors for a discussion of risks associated with strategic alliances. 5 Table of Contents Intellectual Property Our patents and patent applications cover a range of technologies that relate to standard metering, smart metering solutions and technology, meter data management software, knowledge application solutions, and IIoT.
Refer to Item 1A: Risk Factors for a discussion of risks associated with strategic alliances. Intellectual Property Our patents and patent applications cover a range of technologies that relate to standard metering, smart metering solutions and technology, meter data management software, knowledge application solutions, and IIoT.
However, if new or amended laws or regulations impose significant operational restrictions and compliance requirements upon the Company or its products, the Company's business, capital expenditures, results of operations, financial condition and competitive position could be altered. 6 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Set forth below are the names, ages, and titles of our executive officers as of February 27, 2023.
However, if new or amended laws or regulations impose significant operational restrictions and compliance requirements upon the Company or its products, the Company's business, capital expenditures, results of operations, financial condition and competitive position could be altered. 6 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Set forth below are the names, ages, and titles of our executive officers as of February 26, 2024.
Consequently, we operate within a large and complex competitive landscape, and our competitors range from small companies to large, established corporations. Some of our competitors have diversified product portfolios and participate in multiple geographic markets, while others focus on specific regional markets and/or certain types of products, including some low-cost suppliers of devices based in Asia.
Consequently, we operate within a large and complex competitive landscape, and our competitors range from small companies to large global entities. Some of our competitors have diversified product portfolios and participate in multiple geographic markets, while others focus on specific regional markets and/or certain types of products, including some low-cost suppliers of devices based in Asia.
Ware 54 Vice President, General Counsel and Corporate Secretary Thomas L. Deitrich is President and Chief Executive Officer and a member of our Board of Directors. Mr. Deitrich was appointed to his current position and to the Board of Directors in August 2019. Mr.
Ware 55 Senior Vice President, General Counsel and Corporate Secretary Thomas L. Deitrich is President and Chief Executive Officer and a member of our Board of Directors. Mr. Deitrich was appointed to his current position and to the Board of Directors in August 2019. Mr.
Our primary competitors include LM Ericsson Telephone Company, Landis+Gyr, Mueller Water Products, and Xylem, Inc. (formerly Sensus). We believe that our competitive advantage is based on our in-depth knowledge of the industries we serve, our capacity to innovate, and our ability to provide complete end-to-end integrated solutions.
Our primary competitors include LM Ericsson Telephone Company, Landis+Gyr, Mueller Water Products, and Xylem, Inc. We believe that our competitive advantage is based on our in-depth knowledge of the industries we serve, our capacity to innovate, and our ability to provide complete end-to-end integrated solutions at scale.
Total bookings and backlog include certain contracts with a termination for convenience clause, which will not agree to the total transaction 3 Table of Contents price allocated to the remaining performance obligations disclosed in Part II, Item 8: Financial Statements and Supplementary Data, Note 17: Revenues.
Total bookings and backlog include certain contracts with a termination for convenience clause, which will not agree to the total transaction price allocated to the remaining performance obligations disclosed in Part II, Item 8: Financial Statements and Supplementary Data, Note 17: Revenues.
Reeves served as Vice President of Engineering at Black Pearl from 2003 to 2004 and was Vice President of Engineering at Commerce One from 2001 to 2003, and prior to that held leadership positions at several startup technology companies. 7 Table of Contents Christopher E. Ware is Vice President, General Counsel and Corporate Secretary. Mr.
Reeves served as Vice President of Engineering at Black Pearl from 2003 to 2004 and was Vice President of Engineering at Commerce One from 2001 to 2003, and prior to that held leadership positions at several startup technology companies. Christopher E. Ware is Senior Vice President, General Counsel and Corporate Secretary. Mr.
No single customer represented more than 10% of total revenues for the years ended December 31, 2022, 2021, and 2020. Our 10 largest customers in each of the years ended December 31, 2022, 2021, and 2020, accounted for approximately 32%, 25%, and 33% of total revenues.
No single customer represented more than 10% of total revenues for the years ended December 31, 2023, 2022, and 2021. Our 10 largest customers in each of the years ended December 31, 2023, 2022, and 2021, accounted for approximately 36%, 32%, and 25% of total revenues.
This approach allows us to reduce the costs related to our manufacturing overhead and inventory and also allows us to adjust more quickly to changing customer demand. These manufacturing partners assemble our sub-assemblies and products using design specifications, quality assurance programs, and standards that we establish and procure components and assemble our products based on demand forecasts.
This approach allows us to reduce the costs related to our manufacturing overhead and inventory and allows us to adjust more quickly to changing customer demand. These manufacturing partners produce our sub-assemblies and products using design specifications, quality assurance programs, and standards that we establish and procure components and assemble our products based on demand 4 Table of Contents forecasts.
Twelve-month backlog represents the portion of total backlog that reflects our understanding of customer's desired deployment over the next 12 months. The actual revenue recognized and timing of revenue earned from backlog may vary based on actual currency rates at the time of shipment, supply constraints, and adjusted customer project timing.
Twelve-month backlog represents the portion of total backlog that reflects our understanding of customer's desired deployment over the next 3 Table of Contents 12 months. The actual revenue recognized and timing of revenue earned from backlog may vary based on actual currency rates at the time of shipment, availability of critical supply components, and adjusted customer project timing.
In 2018, we strengthened our ability to deliver a broader set of solutions and to increase the pace of growth and innovation in the utility, smart city, and broader Industrial Internet of Things (IIoT) markets with the acquisition of Silver Spring Networks, Inc.
In 2018, we strengthened our 1 Table of Contents ability to deliver a broader set of solutions and to increase the pace of growth and innovation in the utility, smart city, and broader IIoT markets with the acquisition of Silver Spring Networks, Inc.
The revenues from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other products on behalf of our end customers.
Revenue from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other third-parties' products on behalf of our end customers.
Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas, electricity, and water meters for a variety of global markets and adhering to regulations and standards within those markets, as well as our heat and allocation products; communicating meters that are not a part of an Itron end-to-end solution, such as Smart Spec meters; and the implementation and installation of non-communicating devices.
Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas, electricity, and water meters for a variety of global markets and adhering to regulations and standards within those markets, as well as our heat and allocation products; communicating meters that are not a part of an Itron end-to-end solution and designed to meet market requirements; and the implementation and installation of said hardware products.
Our IIoT platform allows all these utility and smart city applications to be run and managed on a single, multi-purpose network.
Our IIoT platform allows utility and smart city applications to be run and managed on a flexible multi-purpose network.
Outcomes – This segment primarily includes our value-added, enhanced software and services in which we manage, organize, analyze, and interpret raw, anonymized and aggregated data to improve decision making, maximize operational profitability, drive resource efficiency, improve grid analytics, and deliver results for consumers, utilities, and smart cities.
Outcomes – This segment primarily includes our value-added, enhanced software and services, artificial intelligence, and machine learning in which we enable grid edge intelligence and manage, organize, analyze, and interpret raw, anonymized data to improve decision making, maximize operational profitability, enhance resource efficiency, improve grid analytics, and deliver results for consumers, utilities, and smart cities.
Backlog is not a complete measure of our future revenues as we also receive significant book-and-ship orders, as well as frame contracts. Bookings and backlog may fluctuate significantly due to the timing of large project awards. In addition, annual or multi-year contracts are subject to rescheduling due to the long-term nature of the contracts.
Backlog is not a complete measure of our future revenues as we also receive book-and-ship orders and frame contracts. Bookings and backlog vary from period to period primarily due to the timing of large project awards. In addition, annual or multi-year contracts are subject to rescheduling due to the long-term nature of the contracts.
Refer to Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8: Financial Statements and Supplementary Data for specific segment results. Our Business The way the world manages energy and water will be one of the defining actions of this century.
Refer to Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8: Financial Statements and Supplementary Data for specific segment results. Our Business The way the world manages energy and water will impact the future.
Before that role, he was Vice President & General Manager, Variable Refrigerant Flow Systems and Ductless from 2014 to 2017, and Director, Channel Strategy and Marketing from 2010 to 2014 at JCI. Prior to his time at JCI, Mr.
From 2018 to 2020, Mr. Patrick was Vice President & General Manager, Residential Products at Johnson Controls International (JCI). Before that role, he was Vice President & General Manager, Variable Refrigerant Flow Systems and Ductless from 2014 to 2017, and Director, Channel Strategy and Marketing from 2010 to 2014 at JCI. Prior to his time at JCI, Mr.
We support a worldwide network of connected devices, and we will continue to develop more applications, new opportunities, and value-added outcomes for our customers in the future. The following is a discussion of our solutions, markets, and operating segments.
We support a worldwide network of connected devices and sensors, and we are focused on developing more applications, new opportunities, and value-added outcomes for our customers in the future. The following is a discussion of our solutions, markets, and operating segments.
Ware has more than 25 years of experience as a senior legal advisor and business executive. He joined Itron in March 2021 as Associate General Counsel and Chief Compliance Officer. In March 2022, he was promoted to Vice President, Legal and Corporate Secretary. In this role, he is responsible for Itron's corporate governance, business legal solutions, and risk management.
Ware has more than 25 years of experience as a senior legal advisor and business executive. He joined Itron in March 2021 as Associate General Counsel and Chief Compliance Officer. In March 2022, he was promoted to Vice President, Legal and Corporate Secretary and then to Senior Vice President in March 2023.
Name Age Position Thomas L. Deitrich 56 President and Chief Executive Officer Joan S. Hooper 65 Senior Vice President and Chief Financial Officer Michel C. Cadieux 65 Senior Vice President, Human Resources Justin K. Patrick 50 Senior Vice President, Device Solutions John F. Marcolini 50 Senior Vice President, Networked Solutions Donald L. Reeves 55 Senior Vice President, Outcomes Christopher E.
Name Age Position Thomas L. Deitrich 57 President and Chief Executive Officer Joan S. Hooper 66 Senior Vice President and Chief Financial Officer Laurie A. Hahn 56 Senior Vice President, Human Resources Justin K. Patrick 51 Senior Vice President, Device Solutions John F. Marcolini 51 Senior Vice President, Networked Solutions Donald L. Reeves 56 Senior Vice President, Outcomes Christopher E.
To address these challenges, utilities and cities are looking to leverage innovations across a networked platform, such as edge (or distributed) intelligence to build and maintain critical infrastructure that can: • efficiently and effectively operate energy and water systems that are safe, reliable, and resilient • reduce the risk and impact of natural disasters • think for itself, repair itself, and anticipate problems before they occur • deliver enhanced, more personalized services at lower cost • accommodate next-generation services through shared infrastructure between utilities and cities/municipalities • provide actionable insights for asset management Our Operating Segments We operate under the Itron brand worldwide and manage and report under three operating segments: Device Solutions, Networked Solutions, and Outcomes.
To address these challenges, utilities and cities are interested in technological innovations across a networked platform, utilizing grid edge intelligence as a key enabler to build and maintain critical infrastructure that can: • efficiently and effectively operate energy and water systems that are safe, reliable, and resilient • reduce the risk and impact of natural disasters • independently identify if repairs or maintenance are needed, and identify potential problems before they occur • deliver enhanced, more customized services • accommodate next-generation services through shared infrastructure between utilities and cities/municipalities • provide actionable insights for asset management Our Operating Segments We operate under the Itron brand worldwide and manage and report under three operating segments: Device Solutions, Networked Solutions, and Outcomes.
Efficiently managing resources within energy, water, and cities is a top priority globally, as increasing populations and resource consumption along with extreme weather events continue to stress an aging infrastructure.
Efficiently managing resources within energy, water, and cities is a global priority, as increasing populations and resource consumption, along with extreme weather events, increase the stress on aging infrastructure.
Prior to CHC, she held several executive finance positions at Dell, Inc. from 2003 to 2010, including Vice President and Chief Financial Officer for its Global Public and Americas business units, Vice President of Corporate Finance and Chief Accounting Officer. Michel C. Cadieux is Senior Vice President, Human Resources and has been so since joining Itron in February 2014.
Prior to CHC, she held several executive finance positions at Dell, Inc. from 2003 to 2010, including Vice President and Chief Financial Officer for its Global Public and Americas business units, Vice President of Corporate Finance and Chief Accounting Officer. Laurie A. Hahn is Senior Vice President, Human Resources. Ms.
A direct sales force is utilized for our larger customers, with which we have long-established relationships. This direct sales force is focused on solution selling, solving problems and business challenges, and delivering valuable outcomes to our utility and smart city customers.
This direct sales force is focused on solution selling, solving problems and business challenges, and delivering valuable outcomes to our utility and smart city customers.
In 2017, we completed our acquisition of Comverge, which e nabled us to offer integrated cloud-based demand response, energy efficiency, and customer engagement solutions.
In 2007, we expanded our presence in global meter manufacturing and systems with the acquisition of Actaris Metering Systems SA. In 2017, we completed our acquisition of Comverge, which e nabled us to offer integrated cloud-based demand response, energy efficiency, and customer engagement solutions.
Reeves is Senior Vice President, Outcomes, where he is responsible for Itron's software and services offerings, delivery teams, managed services operations, and customer support. Mr. Reeves was appointed to this role in September 2019. Mr. Reeves joined Itron in January 2018 as part of Itron's acquisition of SSNI, and, from 2016 to 2018, he was SSNI's Chief Technology Officer.
Reeves is Senior Vice President, Outcomes, where he is responsible for Itron's software and services offerings, delivery teams, managed services operations, and customer support. Mr. Reeves was appointed to this role in September 2019. Mr.
The platform involves an ever-growing, diverse ecosystem of partners and third-party developers who can create and deploy specific point solutions creating greater value for our customers.
The platform involves an ever-growing, diverse ecosystem of partners and third-party developers who can create and deploy specific point solutions creating greater value for our customers. 5 Table of Contents Refer to Item 1A: Risk Factors for a discussion of the competitive pressures we face.
The following is a description of each of the three segments: Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing that do not have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products not part of a complete end-to-end solution.
The following is a description of each of the three segments: Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing. These products generally do not have communications capability or may be designed for use with non-Itron systems.
The objectives and goals of a strategic alliance can include one or more of the following: technology exchange, research and development, joint sales and marketing, or access to new geographic markets.
Strategic Alliances We pursue strategic alliances with other companies in areas where collaboration can produce product advancement and acceleration of entry into new markets. The objectives and goals of a strategic alliance can include one or more of the following: technology exchange, research and development, joint sales and marketing, or access to new geographic markets.
The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR), advanced metering infrastructure (AMI), distributed energy resource management (DERMs), smart grid and distribution automation, smart street lighting, and an ever-growing set of smart city applications such as traffic management, smart parking, air quality monitoring, electric vehicle charging, customer engagement, digital signage, acoustic (e.g., gunshot) detection, and leak detection and mitigation for both gas and water systems.
The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR); advanced metering infrastructure (AMI) for electricity, water and gas; distributed energy resource management (DERMs); smart grid and distribution automation; smart street lighting; and leak detection and applications for both gas and water systems.
Outcomes supports high-value use cases such as data management, grid operations, distributed intelligence, operations management, gas distribution and safety, water operations management, revenue assurance, DERMs, energy forecasting, consumer engagement, smart payment, and fleet energy resource management. Utilities leverage these outcomes to capitalize on the power of networks and devices, empower their workforce, maximize their operations and enhance the customer experience.
Outcomes supports high-value use cases, such as data management, grid operations, distributed intelligence, AMI operations, gas distribution and safety, water operations management, revenue assurance, DERMs, energy forecasting, consumer engagement, smart payment, and fleet energy resource management.
We are an equal opportunity employer, and we promote a culture of inclusion and diversity. We monitor our progress through various programs and policies. We offer wages and a range of company-paid benefits we believe are competitive with other companies in our industry and in the markets we serve.
We offer wages and a range of company-paid benefits we believe are competitive with other companies in our industry and in the markets we serve.
(SSNI). 1 Table of Contents Looking forward, we will continue to innovate and support open standards and maintain a device and transport agnostic platform that enables our customers to meet their needs either directly or via our ecosystem of partners.
As we move forward, we will continue to innovate and support open standards and interoperability with a flexible technology platform that enables our customers to meet their needs directly or via our ecosystem of partners.
Itron helps our customers adapt to a rapidly changing world and to address a number of macro trends, including: • Infrastructure – such as aging utility infrastructure, grid security, safety, asset monitoring and management, and incorporating the proliferation of distributed energy resources, such as electric vehicles, renewable energy and storage, into the grid • Environmental – such as extreme weather, resource scarcity, and demand for sustainability and decarbonization • S ocial – such as enhanced customer experience, critical need consumers, privacy, urbanization, population increase, and the management of "big data" and incorporating IIoT technology into their existing operations Our solutions include smart networks, software, services, devices, sensors, and data analytics upon a platform that allows our customers to not only address the changing macro trends listed above but also to address pressing industry challenges to better manage and control assets, intelligently benchmark, secure revenue, lower operational costs, improve customer service, develop new business models and revenue streams, improve safety, and enable efficient management of valuable resources.
Itron helps our customers adapt to a rapidly changing world and to address a number of macro trends, including: • Infrastructure – such as aging utility infrastructure, grid security, safety, asset monitoring and management, and incorporating the proliferation of distributed energy resources, such as electric vehicles, renewable energy, and storage, into the grid, • Environmental – such as extreme weather, resource scarcity, and demand for sustainability and decarbonization, • S ocial – such as enhanced customer experience, critical-need consumers, privacy, urbanization, population increase, and the management of "big data" and incorporating IIoT technology into their existing operations.
Patrick is Senior Vice President, Device Solutions, where he is responsible for Itron's strategy to become a leading global provider of measurement, safety, and operational devices for utilities and cities. Mr. Patrick joined Itron in January 2020. From 2018 to 2020, Mr. Patrick was Vice President & General Manager, Residential Products at Johnson Controls International (JCI).
Hahn is a member of the Chancellor's Counsel at the University of Texas, which advocates for higher education and health care. Justin K. Patrick is Senior Vice President, Device Solutions, where he is responsible for Itron's strategy to become a leading global provider of measurement, safety, and operational devices for utilities and cities. Mr. Patrick joined Itron in January 2020.
At transaction close on February 28, 2022, $55.7 million of this backlog was transferred to Dresser. For more information on the transaction refer to Part II, Item 8: Financial Statements and Supplementary Data, Note 18: Sale of Businesses. Sales and Distribution We use a combination of direct and indirect sales channels to access our customers.
For more information on the transaction refer to Part II, Item 8: Financial Statements and Supplementary Data, Note 18: Sale of Businesses. Sales and Distribution We use a combination of direct and indirect sales channels to serve our customers. A direct sales force is utilized for larger utility customers, with which we have long-established relationships.
The table below provides the breakdown of our employees by region and self-identified gender: As of December 31, 2022 Region Male Female Total Number of Employees Percentage of Total Employees Americas 1,728 721 2,449 51 % Europe, Middle East and Africa 942 512 1,454 30 % Asia Pacific & Other 728 191 919 19 % Total (1) 3,398 1,424 4,822 (1) These numbers do not include contingent workers (655 as of December 31, 2022).
The table below provides the breakdown of our employees by region and self-identified gender: As of December 31, 2023 Region Male Female Not Disclosed Total Number of Employees Percentage of Total Employees Americas 1,822 824 — 2,646 52 % Europe, Middle East and Africa 899 502 3 1,404 28 % Asia Pacific & Other 768 261 2 1,031 20 % Total (1) 3,489 1,587 5 5,081 (1) These numbers do not include contingent workers (778 as of December 31, 2023).
Our ability to perform on our contractual obligations with our customers is dependent on these partners meeting their obligations to us.
Our ability to perform on our contractual obligations with our customers is dependent on these partners meeting their obligations to us. Refer to Item 1A: Risk Factors for further discussion related to third-party vendors and strategic partners.
Year Ended Total Bookings Total Backlog 12-Month Backlog In millions December 31, 2022 $ 2,505 $ 4,619 $ 2,052 December 31, 2021 2,755 4,017 1,539 December 31, 2020 2,213 3,259 1,204 Our total backlog, as of December 31, 2021, included $64.7 million of backlog related to the sale of certain Gas product lines from our Device Solutions manufacturing and business operations in Europe and North America to Dresser Utility Solutions (Dresser).
(c) Our total backlog, as of December 31, 2021, included $64.7 million of backlog related to the sale of certain Gas product lines from our Device Solutions manufacturing and business operations in Europe and North America to Dresser Utility Solutions (Dresser). At transaction close on February 28, 2022, $55.7 million of this backlog was transferred to Dresser.
The information posted on or accessible through our website is not part of or incorporated by reference into this Annual Report. General Itron is a leader in enabling utilities and cities to safely, securely and reliably deliver critical infrastructure solutions to communities around the world.
The information posted on or accessible through our website is not part of or incorporated by reference into this Annual Report. General Itron is a global leader in energy and water management, smart city applications, Industrial Internet of Things (IIoT) and intelligent infrastructure and related services.
Prior to joining Itron, Mr. Ware served as Executive Director and General Manager at Johnson Controls International (JCI) from 2018 to 2021. Before that position, Mr. Ware occupied numerous senior legal roles within JCI from 2011 to 2018. He also held roles in the U.S. Attorney's Office, the Department of Justice, and several private law firms. 8 Table of Contents
He is responsible for Itron's corporate governance, business legal solutions, compliance and litigation and intellectual property development and protection. Before joining Itron, Mr. Ware served as Executive Director and General Manager - Parts at Johnson Controls International (JCI) from 2018 to 2021. Before that position, Mr. Ware occupied numerous senior legal roles within JCI from 2011 to 2018.
From 2005 to 2016, Mr. Reeves held several managed services and engineering positions at SSNI. Prior to joining SSNI, Mr.
Reeves joined Itron in January 2018 as part of Itron's acquisition of SSNI, and, from 2016 to 2018, he was SSNI's Chief 7 Table of Contents Technology Officer. From 2005 to 2016, Mr. Reeves held several managed services and engineering positions at SSNI. Prior to joining SSNI, Mr.
Refer to Item 1A: Risk Factors for further discussion related to costs of developing competitive products and services. Human Capital As of December 31, 2022, we had 5,477 people in our workforce, including 4,822 permanent employees. We have not experienced significant employee work stoppages and our employee relations are deemed to be good.
Human Capital As of December 31, 2023, we had 5,859 people in our workforce, including 5,081 permanent employees. We have not experienced significant employee work stoppages and our employee relations are deemed to be good. We are an equal opportunity employer, and we promote a culture of inclusion and diversity. We monitor our progress through various programs and policies.
Incorporated in 1977 with a focus on meter reading services and technology, we entered the electricity meter manufacturing business with the acquisition of Schlumberger Electricity Metering in 2004. In 2007, we expanded our presence in global meter manufacturing and systems with the acquisition of Actaris Metering Systems SA.
We have over 40 years of experience supporting utilities and cities in the management of their data and critical infrastructure needs, and we have continuously innovated to move the industry forward. Incorporated in 1977 with a focus on meter reading services and technology, we entered the electricity meter manufacturing business with the acquisition of Schlumberger Electricity Metering in 2004.
Refer to Item 1A: Risk Factors for further discussion related to third-party vendors and strategic partners. 4 Table of Contents Research and Development Our research and development is focused on both improving existing technology and developing innovative new technology for critical infrastructure in electricity, natural gas, water, heat, smart city, and DERMs verticals.
Research and Development Our research and development is focused on both improving existing technology and developing innovative new technology for critical infrastructure in electricity, natural gas, water, heat, smart city, and DERMs verticals. This includes endpoints, sensing and control devices, data collection software, communication technologies, data warehousing, software applications, and the IIoT.
Our comprehensive offerings control, measure, monitor, and provide data analytics and services that enable utilities and municipalities to manage their critical resources responsibly and efficiently. We have over 40 years of experience supporting utilities and municipalities in the management of their data and critical infrastructure needs and we have delivered continuous innovation to help drive the industry forward.
Itron's proven platform enables smart networks, software, services, devices, and sensors to help our customers better manage their energy, water, and smart city operations. Our comprehensive offerings control, measure, monitor, and provide data analytics and services that enable utilities and municipalities to manage their critical resources responsibly and efficiently.
This includes endpoints, sensing and control devices, data collection software, communication technologies, data warehousing, software applications, and the IIoT. We invested approximately $185 million, $197 million, and $194 million in research and development in 2022, 2021 and 2020, which represented 10% of total revenues for 2022 and 2021 and 9% of total revenues for 2020.
We invested approximately $209 million, $185 million, and $197 million in research and development in 2023, 2022 and 2021, which represented 10% of total revenues for 2023, 2022, and 2021. Refer to Item 1A: Risk Factors for further discussion related to costs of developing competitive products and services.
Removed
Our proven platform enables smart networks, software, services, devices and sensors to help our customers better manage their operations in the energy, water, and smart city spaces. We are among the leading technology and services companies offering end-to-end device solutions, networked solutions, and outcomes-based products and services to the utility and municipal sectors.
Added
For utilities and cities, we build innovative systems, create new efficiencies, connect communities, encourage conservation and increase resourcefulness by helping our customers make the most of the energy and water they manage. By safeguarding invaluable natural resources, we seek to improve the quality of life for people around the world.
Removed
We also offer managed services, Software-as-a-Service (SaaS), Network-as-a-Service (NaaS), technical support services, licensed hardware technology, and consulting services. Industry Drivers Utility and municipalities are undergoing an evolution in affordability, reliability and sustainability impacting how they operate critical infrastructure, manage scarce resources, address impacts of climate disruption, and interact with their customers.
Added
Through these acquisitions, organic growth, and our focus on innovation, Itron is leading the way to better decision making at the grid edge. By delivering more intelligence throughout the system, Itron helps utilities and cities operate more efficiently and with unparalleled flexibility, increase grid resilience and reliability, integrate renewables, and provide responsible energy and water management for the future.
Removed
Itron provides its customers with solution-based offerings to safely, securely, and reliably optimize their critical infrastructure to improve the efficiency of their services and to better understand their customers and peers with near real-time knowledge of their resource usage.
Added
Our solutions include smart networks, software, services, devices, sensors, and data analytics upon a platform that allows our customers to not only address the changing macro trends listed above but also to address pressing industry challenges to better manage and control assets, intelligently benchmark, secure revenue, lower operational costs, improve customer service, develop new business models and revenue streams, improve safety, and enable efficient, sustainable management of valuable resources.
Removed
An added benefit of our solutions is that a utility or municipality can empower its customers 2 Table of Contents to understand and have control over their resource usage, allowing for better management and conservation of valuable resources.
Added
Utilities leverage these outcomes to unlock the capabilities of their networks and devices, improve the productivity of their workforce, increase the reliability of their operations, manage and optimize the proliferation of distributed energy resources (DERs), address grid complexity, and enhance the customer experience.
Removed
We are a global leader in the IIoT category; an industry leader in communication modules deployed; a leading industry innovator; a leader of energy and water end-to-end solutions; and a global leader in endpoints under managed services. We continue to serve our established customer relationships and expand upon our track record of delivering reliable, accurate, and long-lived products and services.
Added
Total Bookings (a) Total Backlog 12-Month Backlog In millions December 31, 2023 $ 2,155 $ 4,511 $ 2,032 September 30, 2023 (b) 413 4,241 2,022 June 30, 2023 (b) 475 4,397 2,008 March 31, 2023 (b) 428 4,462 1,897 December 31, 2022 (b) 2,505 4,523 2,052 December 31, 2021 (b) (c) 2,755 3,921 1,539 (a) Total bookings reflect a year to date value for December periods, and a quarter to date value for September, June, and March periods.
Removed
Refer to Item 1A: Risk Factors for a discussion of the competitive pressures we face. Strategic Alliances We pursue strategic alliances with other companies in areas where collaboration can produce product advancement and acceleration of entry into new markets.
Added
(b) The ending total backlog balances for September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and December 31, 2021 have been adjusted from previously reported amounts.
Removed
From 2008 to 2012, Mr. Cadieux was Senior Vice President of Human Resources and Security at Freescale Semiconductor, Inc. (Freescale). Mr. Cadieux has more than 30 years leading HR organizations in global technology and manufacturing companies including Betz Laboratories, the Hudson Bay Company, ING Bank of Canada, Advanced Micro Devices/ATI, and Freescale. Justin K.
Added
During the fourth quarter of 2023, we determined that $96 million related to a portion of one customer contract had been improperly included within our backlog balance since the third quarter of 2020. This adjustment did not impact amounts reported for 12-month backlog in 2023, 2022, or 2021, as the related revenue was not expected within that time frame.
Added
Hahn has more than 30 years of experience as a senior human resource professional. Ms. Hahn was promoted to this role in April 2023. In this role, Ms. Hahn is responsible for Itron's HR operations, in-business HR, talent acquisition, compensation and benefits, inclusion and diversity, learning and development, and health, safety, and environment functions. Ms.
Added
Hahn joined Itron in February 2016 and has served in several in-business HR positions. Prior to joining Itron, Ms. Hahn held multiple global HR leadership positions with Motorola and Freescale Semiconductor. Ms. Hahn holds a BA in English and a Masters in Instructional Design, both from The University of Texas. Ms.
Added
He also held roles in the U.S. Attorney's Office, Department of Justice, and several private law firms. 8 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

66 edited+26 added−37 removed129 unchanged
Biggest changeWe rely on information technology systems that may fail to operate effectively, require upgrades and replacements, or experience breaches. Our industry requires the continued operation of sophisticated information technology systems and network infrastructures, which may be subject to disruptions arising from events that are beyond our control.
Biggest changeOur industry requires the continued operation of sophisticated information technology systems and network infrastructures, which may be subject to disruptions arising from events that are beyond our control. We are dependent on information technology systems, including, but not limited to, networks, applications, and outsourced services. We continually enhance and implement new systems and processes throughout our global operations.
Asset impairment could result in significant changes that would adversely impact our future operating results. We have significant inventory, intangible assets, long-lived assets, and goodwill that are susceptible to valuation adjustments as a result of changes in various factors or conditions, which could impact our results of operations and financial condition.
Asset impairment could result in significant changes that would adversely impact our future operating results. We have inventory, intangible assets, long-lived assets, and goodwill that are susceptible to valuation adjustments as a result of changes in various factors or conditions, which could impact our results of operations and financial condition.
This indebtedness could have important consequences to us, including: • increasing our vulnerability to general economic and industry conditions • requiring a substantial portion of our cash flow used in operations to be dedicated to the payment of principal and interest, therefore reducing our liquidity and our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities • requiring us to meet specified financial ratios, a failure of which may result in restrictions on us and our subsidiaries to take certain actions or result in the declaration of an event of default, which, if not cured or waived, could require acceleration of required payments against such indebtedness and result in cross defaults under our other indebtedness • exposing us to the risk of increased market interest rates, and corresponding increased interest expense, as unhedged borrowings under the 2018 credit facility as amended (2018 credit facility) would be at variable rates of interest • limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes Our 2018 credit facility places restrictions on our ability, and the ability of many of our subsidiaries, dependent on meeting specified financial ratios, to, among other things: • incur more debt • pay dividends, make distributions, and repurchase capital stock • make certain investments • create liens • execute transactions with affiliates • execute sale lease-back transactions • merge or consolidate • transfer or sell assets Our ability to make scheduled payments on and/or to refinance our indebtedness depends on, and is subject to, our financial and operating performance, which is influenced in part by general economic, financial, competitive, legislative, regulatory, counterparty business, and other risks that are beyond our control, including the availability of financing in the U.S. banking system and capital markets.
This indebtedness could have important consequences to us, including: • increasing our vulnerability to general economic and industry conditions • requiring a substantial portion of our cash flow used in operations to be dedicated to the payment of principal and interest, therefore reducing our liquidity and our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities • requiring us to meet specified financial ratios, a failure of which may result in restrictions on us and our subsidiaries to take certain actions or result in the declaration of an event of default, which, if not cured or waived, could require acceleration of required payments against such indebtedness and result in cross defaults under our other indebtedness • exposing us to the risk of increased market interest rates, and corresponding increased interest expense, as unhedged borrowings under the 2018 credit facility would be at variable rates of interest • limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes Our 2018 credit facility places restrictions on our ability, and the ability of many of our subsidiaries, dependent on meeting specified financial ratios, to, among other things: • incur more debt • pay dividends, make distributions, and repurchase capital stock • make certain investments • create liens • execute transactions with affiliates • execute sale lease-back transactions • merge or consolidate • transfer or sell assets Our ability to make scheduled payments on and/or to refinance our indebtedness depends on, and is subject to, our financial and operating performance, which is influenced in part by general economic, financial, competitive, legislative, regulatory, counterparty business, and other risks that are beyond our control, including the availability of financing in the U.S. banking system and capital markets.
In addition to the risk of unanticipated warranty or recall expenses, our customer contracts may contain provisions that could cause us to incur penalties, be liable for damages including liquidated damages, or incur other expenses if we experience difficulties with respect to the functionality, deployment, operation, or availability of our products and services.
In addition to the risk of unanticipated warranty or recall expenses, our customer contracts may contain provisions that could cause us to incur penalties, be liable for damages including liquidated damages, or incur other expenses if we experience difficulties with respect to the functionality, deployment, operation, security, or availability of our products and services.
Product and service development will require continued investment to maintain our competitive position, and the periods in which we incur significant research and development costs may drive variability in our results of operations. We may not have the necessary capital, or access to capital at acceptable terms, to make these investments.
Product and service development may require continued investment to maintain our competitive position, and the periods in which we incur significant research and development costs may drive variability in our results of operations. We may not have the necessary capital, or access to capital at acceptable terms, to make these investments.
Failure to adequately address these issues could result in the diversion of resources and adversely impact our ability to manage our business. In addition, acquisitions and investments in third parties may involve the assumption of obligations, significant write-offs, or other charges associated with the acquisition or investment.
Failure to adequately address these issues could result in the diversion of resources and adversely impact our ability to manage our business. In addition, acquisitions and investments in third parties may involve the assumption of obligations and liabilities, significant write-offs, or other charges associated with the acquisition or investment.
Many of the legislative and regulatory initiatives encourage utilities to develop a smart grid infrastructure, and some of these initiatives provide for government subsidies, grants, or other incentives to utilities and other participants in their industry to promote transition to smart grid technologies.
Many legislative and regulatory initiatives encourage utilities to develop a smart grid infrastructure, and some of these initiatives provide for government subsidies, grants, or other incentives to utilities and other participants in their industry to promote transition to smart grid technologies.
If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products. 17 Table of Contents If we are unable to protect our information technology infrastructure and network against data corruption, cyber-based attacks or network security incidents caused by unauthorized access, we could be exposed to an increased risk of customer liability and reputational damage.
If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products. 17 Table of Contents If we were unable to protect our information technology infrastructure and network against data corruption, cyber-based attacks or network security incidents caused by unauthorized access, we could be exposed to an increased risk of customer liability and reputational damage.
There can be no assurance that an acquired business will perform as expected, accomplish our strategic objectives, or generate significant revenues, profits, or cash flows. Any divestiture could result in disruption to other parts of our business, potential loss of employees or customers, exposure to unanticipated liabilities, or result in ongoing obligations and liabilities following any such divestiture.
There can be no assurance that an acquired business may perform as expected, accomplish our strategic objectives, or generate significant revenues, profits, or cash flows. Any divestiture could result in disruption to other parts of our business, potential loss of employees or customers, exposure to unanticipated liabilities, or result in ongoing obligations and liabilities following any such divestiture.
Should we fail to compete successfully with current or future competitors or to adequately manage pricing pressure, we could experience material adverse effects on our business, financial condition, results of operations, and cash flows. If we cannot continue to invest in developing competitive products and services, we will not be able to compete effectively.
Should we fail to compete successfully with current or future competitors or to adequately manage pricing pressure, we could experience material adverse effects on our business, financial condition, results of operations, and cash flows. If we cannot continue to invest in developing competitive products and services, we may not be able to compete effectively.
Acquisitions, investments, and divestitures involve numerous risks such as the diversion of senior management's attention; unsuccessful integration of the acquired or disintegration of the divested entity's personnel, operations, technologies, and products; unidentified or identified but non-indemnified pre-closing liabilities that we may be responsible for; incurrence of significant expenses to meet an acquiree's customer contractual commitments; lack of market acceptance of new services and technologies; difficulties in operating businesses in international legal jurisdictions; or transaction-related or other litigation, and other liabilities.
Acquisitions, investments, and divestitures involve numerous risks such as the diversion of senior management's attention; unsuccessful integration of the acquired or disintegration of the divested entity's personnel, operations, technologies, and products; unidentified or identified but non-indemnified pre-closing liabilities that we may be responsible for; incurrence of significant expenses to meet an acquiree's customer contractual commitments; lack of market acceptance of new services and technologies; undiscovered cybersecurity breaches; difficulties in operating businesses in international legal jurisdictions; or transaction-related or other litigation, and other liabilities.
The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, or a breach in security of these systems due to computer viruses, hacking, acts of terrorism, and other causes could materially and adversely affect our business, financial condition, and results of operations by harming our ability to accurately forecast sales demand, manage our supply chain and production facilities, achieve accuracy in the conversion of electronic data and records, and report 18 Table of Contents financial and management information on a timely and accurate basis.
The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, or a breach in security of these systems due to computer viruses, hacking, acts of terrorism, and other causes could materially and adversely affect our business, financial condition, and results of operations by harming our ability to accurately forecast sales demand, manage our supply chain and production facilities, achieve accuracy in the conversion of electronic data and records, and report financial and management information on a timely and accurate basis.
Our future success will depend, in part, on our ability to continue to develop, design and manufacture competitive products and services, enhance and sustain our existing products and services, keep pace with technological advances and changing customer requirements, gain international market acceptance, and manage other factors in the markets in which we sell our products and services.
Our future success could depend, in part, on our ability to continue to develop, design and manufacture competitive products and services, enhance and sustain our existing products and services, keep pace with technological advances and changing customer requirements, gain international market acceptance, and manage other factors in the markets in which we sell our products and services.
Furthermore, an important part of our growth strategy has been, and will likely continue to be, the acquisition of complementary businesses, and we expect these systems and controls to become increasingly complex to the extent that we integrate acquisitions and our business grows. Likewise, the complexity of our transactions, systems, and controls may become more difficult to manage.
Furthermore, an important part of our growth strategy has been, and may continue to be, the acquisition of complementary businesses, and we expect these systems and controls to become increasingly complex to the extent that we integrate acquisitions and our business grows. Likewise, the complexity of our transactions, systems, and controls may become more difficult to manage.
If we issue additional shares of common stock in the future, such issuances would have a dilutive effect on the economic interest of our common stock. Our strategy includes acquisitions, divestitures, and investments, which we may not be able to execute or integrate successfully.
If we issue additional shares of common stock in the future, such issuances would have a dilutive effect on the economic interest of our common stock. Our strategy may lead to acquisitions, divestitures, and investments, which we may not be able to execute or integrate successfully.
Purchases of our products may be deferred as a result of many factors, including economic downturns, slowdowns in new residential and commercial construction, customers' access to capital upon acceptable terms, the timing and availability of government subsidies or other incentives, utility specific financial circumstances, mergers and acquisitions, regulatory decisions, weather conditions and climate disruption, and fluctuating interest rates.
Purchases of our products may be deferred as a result of many factors, including economic downturns, slowdowns in new residential and commercial construction, customers' access to capital, the timing and availability of government subsidies or other incentives, utility specific financial circumstances, mergers and acquisitions, regulatory decisions, weather conditions, climate disruption, and fluctuating interest rates.
For example, in connection with a divestiture, we may enter into transition services agreements or other strategic relationships, including long-term commercial arrangements, sales arrangements, or agree to provide certain indemnities to the purchaser in any such transaction, which may result in additional expense and may adversely affect our financial condition and results of operations.
For example, in connection with a divestiture, we may enter into transition services agreements or other strategic relationships, including long- 14 Table of Contents term commercial arrangements, sales arrangements, or agree to provide certain indemnities to the purchaser in any such transaction, which may result in additional expense and may adversely affect our financial condition and results of operations.
Delays in the availability of or shortages in raw materials and component parts used in the manufacture of our products, as well as freight, labor, and other ancillary cost increases, could unfavorably impact our revenues and results of operations.
Delays in the availability of or shortages in raw materials and component parts used in the manufacture of our products, as well as freight, labor, regulatory compliance, and other ancillary cost increases, could unfavorably impact our revenues and results of operations.
Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan. The determination of pension plan expense, benefit obligation, and future contributions depends heavily on market factors such as the discount rate and the actual return on plan assets.
Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan. 19 Table of Contents The determination of pension plan expense, benefit obligation, and future contributions depends heavily on market factors such as the discount rate and the actual return on plan assets.
We are subject to international business uncertainties, obstacles to the repatriation of earnings, and foreign currency fluctuations. A portion of our revenues is derived from operations conducted outside the United States.
We are subject to international business uncertainties, obstacles to the repatriation of earnings, and foreign currency fluctuations. A portion of our revenue is derived from operations conducted outside the United States.
We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, to refinance our debt, or to fund our other liquidity needs on commercially reasonable terms or at all.
We cannot be certain that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, to refinance our debt, or to fund our other liquidity needs on commercially reasonable terms or at all.
Certain of our interest rate derivatives and a portion of our indebtedness bear interest at variable interest rates, primarily based on LIBOR, which is subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences.
Certain Itron interest rate derivatives and a portion of Itron indebtedness bear interest at variable interest rates, primarily now based on SOFR, which is subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences.
In addition, as our products and services become more 12 Table of Contents technologically complex, it could become especially difficult to recruit or retain personnel with unique in-demand skills and knowledge, whom we would expect to become recruiting targets for our competitors and for other companies relying on similar talent.
In addition, as our products and services become more technologically complex, it could become especially difficult to recruit or retain personnel with unique in-demand skills and knowledge, whom we would expect to become recruiting targets for our competitors and for other companies relying on similar talent.
Further, foreign regulations or restrictions, e.g., opposition from unions or works councils, could delay, limit, or disallow significant operating decisions made by our management, including decisions to exit certain businesses, close certain manufacturing 15 Table of Contents locations, or other restructuring actions.
Further, foreign regulations or restrictions, e.g., opposition from unions or works councils, could delay, limit, or disallow significant operating decisions made by our management, including decisions to exit certain businesses, close certain manufacturing locations, or other restructuring actions.
In addition, due to the systemic internal control features within ERP systems, we may experience difficulties that could affect our internal control over financial reporting. Financial and Market Risks Our variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
In addition, due to the systemic internal control features within ERP systems, we may experience difficulties that could affect our internal control over financial reporting. Financial and Market Risks Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to fluctuate.
To the extent we incur additional indebtedness or other obligations, the risks described above and others described herein may increase. The convertible note hedge and warrant transactions may affect the value our common stock.
To the extent we incur additional indebtedness or other obligations, the risks described above and others described herein may increase. 13 Table of Contents The convertible note hedge and warrant transactions may affect the value our common stock.
There are multiple sources for these raw materials and components, but we sometimes 9 Table of Contents rely on single suppliers for certain of these materials.
There are multiple sources for these raw materials and components, but we sometimes rely on single suppliers for certain of these materials.
In pursuing our business strategy, we may conduct discussions, evaluate companies, and enter into agreements regarding possible acquisitions, divestitures, or equity investments. We have completed acquisitions and may make investments in the future, both within and outside of the United States. We may also, if appropriate opportunities present themselves, make divestitures.
In pursuing our business strategy, we may conduct discussions, evaluate companies, and enter into agreements regarding possible acquisitions, divestitures, or equity investments. We have completed acquisitions and may make investments in the future, both within and outside of the United States. We may also execute divestitures.
We cannot be certain that we will not experience operational difficulties with these sources, including reductions in the availability of production capacity, errors in complying with product specifications, insufficient quality control, failures to meet production deadlines, increases in manufacturing costs, vendors' access to capital, and increased lead times.
We could experience operational difficulties with these sources, including reductions in the availability of production capacity, errors in complying with product specifications, insufficient quality control, failures to meet production deadlines, increases in manufacturing costs, vendors' access to capital, and increased lead times.
If we receive shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards, and if we are not able to obtain replacement products in a timely manner, we risk revenue losses from the inability to sell those products, increased administrative and shipping costs, and lower profitability.
If we receive shipments of products that fail to comply with our technical specifications, which have been compromised in some manner (specifically integrated circuit chips), or that fail to conform to our quality control standards, and if we are not able to obtain replacement products in a timely manner, we risk revenue losses from the inability to sell those products, increased administrative and shipping costs, and lower profitability.
In addition, our products and services may experience price erosion if low-cost providers expand their presence in our markets, improve their quality, or form alliances or cooperative relationships with our competitors, or if our products and services become commoditized. For example, some utilities may purchase meters separately from the communication devices.
In addition, our products and services may experience price erosion if low-cost providers expand their presence in our markets, improve their quality, or form alliances or cooperative relationships with our competitors, or if our products and services become commoditized. For example, some utilities may purchase meters separately from the technology and components that enable network connectivity.
We may incur additional warranty expenses in the future with respect to new or established products, which could materially and adversely affect our operations and financial position. Business interruptions could adversely affect our business.
We may incur additional warranty 11 Table of Contents expenses in the future with respect to new or established products, which could materially and adversely affect our operations and financial position. Business interruptions could adversely affect our business, financial condition, and results of operations.
Unauthorized access, remnant data exposure, computer viruses, denial of service attacks, accidents, employee error or malfeasance, intentional misconduct by computer "hackers", and other disruptions can occur. This can lead to gaps in infrastructure, hardware and software vulnerabilities, and security controls.
Unauthorized access, remnant data exposure, computer viruses, DDoS attacks, accidents, employee error or malfeasance, intentional misconduct by computer hackers, and other disruptions may occur. This could lead to gaps in infrastructure, hardware and software vulnerabilities, and security controls.
While we rely on partners to adhere to our supplier code of conduct, material violations of the supplier code of conduct could occur. We have been and will continue to be affected by the ongoing COVID-19 pandemic, and such effects will continue to have an adverse effect on our business operations, results of operations, cash flows, and financial condition.
While we rely on partners to adhere to our supplier code of conduct, material violations of the supplier code of conduct could occur. We have been and could continue to be affected by ongoing global economic impacts, and such impacts could continue to have an adverse effect on our business operations, results of operations, cash flows, and financial condition.
The exposed or unprotected data can (i) interfere with the delivery of services to our customers, (ii) impede our customers' ability to do business, or (iii) compromise the security of systems and data, which exposes information to unauthorized third parties. Like many companies, we are the target of cyber-attacks of varying degrees of severity.
The exposed or unprotected data could be compromised and (i) interfere with the delivery of services to our customers, (ii) impede our customers' ability to do business, or (iii) expose information to unauthorized third parties. Like many companies, we are the target of cyber-attacks of varying degrees of severity.
Any damage to, or failure of, these systems could result in interruptions in the services we provide to our utility customers. As we continue to add capacity to our existing and future data centers, we may move or transfer data.
We offer managed services and software utilizing several data center facilities located worldwide. Any damage to, or failure of, these systems could result in interruptions in the services we provide to our utility customers. As we continue to add capacity to our existing and future data centers, we may move or transfer data.
We remain subject to the risk that our employees, third party partners, or agents will engage in business practices that are prohibited by our policies and violate such laws and regulations.
We remain subject to the risk that our employees, third party partners, or agents could engage in business practices that are prohibited by our policies and violate such laws and regulations. Item 1B: Unresolved Staff Comments None.
New products often require certifications or regulatory approvals before the products can be used, and we cannot be certain our new products will be approved in a timely manner, or at all.
New products often require certifications or regulatory approvals before the products can be used, and we cannot be certain our new products will be approved in a timely manner, or at all. Finally, we may not achieve market acceptance of our new products and services.
Item 1A: Risk Factors Business and Industry Risks We are dependent on the utility industry, which has lengthy and unpredictable sales cycles and has experienced volatility in capital spending, each of which has and could cause our operating results to fluctuate significantly. We derive the majority of our revenues from sales of products and services to utilities.
Item 1A: Risk Factors Business and Industry Risks Our primary customers are within the utility industry, which has exhibited lengthy sales cycles and irregular capital spending patterns, each of which could cause our operating results to fluctuate significantly. We derive the majority of our revenues from sales of products and services to utilities.
Finally, we may not achieve market acceptance of our new products and services. 11 Table of Contents If we are unable to maintain a high level of customer satisfaction, demand for our products and services could suffer. We believe our success depends on our ability to understand and address our customers' requirements and concerns.
If we are unable to maintain a high level of customer satisfaction, demand for our products and services could suffer. We believe our success depends on our ability to understand and address our customers' requirements and concerns.
Although Congress has considered legislation that would defer, modify, or repeal the capitalization and amortization requirement, as of year-end no such deferral has been passed. The income tax provision has been prepared according to currently enacted tax legislation.
Although Congress has considered legislation that would defer, modify, or repeal the capitalization and amortization requirement, as of year-end no such deferral has been passed. The income tax provision has been prepared according to currently enacted tax legislation, including the effect of guidance issued in December 2023 that provided clarity regarding research providers and recipients.
Recently, inflation in our raw materials and component costs, freight charges, and labor costs have increased above historical levels, due to, among other things, the continuing impacts of the pandemic and the uncertain economic environment.
In addition, there is potential for increased costs on materials to comply with global regulations and other regional requirements. Recently, inflation in our raw materials and component costs, freight charges, and labor costs have increased above historical levels, due to, among other things, the continuing impacts of the pandemic and the uncertain economic environment.
The specifications for such meters may require interchangeability, which could lead to further commoditization of the meter, thus driving prices lower and reducing margins. Pricing pressure is also driven by other events outside our control, to include movement away from manually read meters, government programs, and new construction.
The specifications for such meters may require interchangeability, which could lead to further commoditization of the meter, which could negatively impact prices and margins. Other events outside our control may also drive pressure on prices, including movement away from manually read meters, government programs, and new construction.
The 2018 credit facility was amended in the fourth quarter of 2022 to replace LIBOR with Term Secured Overnight Financing Rate (SOFR) plus a credit spread of 10 basis points.
In line with requirements following the discontinuation of LIBOR as a reference rate, the 2018 credit facility was amended in the fourth quarter of 2022 to replace LIBOR with SOFR plus a credit spread of 10 basis points.
Some of our present and potential future competitors have, or may have, substantially greater financial, marketing, technical, or manufacturing resources and, in some cases, have greater name recognition, customer relationships, and experience.
We face competitive pressures from a variety of companies in each of the markets we serve. Some of our present and potential future competitors have, or may have, substantially greater financial, marketing, technical, or manufacturing resources and, in some cases, have greater name recognition, customer relationships, and experience.
We are impacted by the availability and prices of raw materials and component parts used in the manufacturing process of our products. Raw materials include purchased castings made of metal or alloys (such as brass, which uses copper as its main component, aluminum, stainless steel and cast iron), plastic resins, glass, and other electronic components, such as microprocessors and semiconductors.
Raw materials include purchased castings made of metal or alloys (such as brass, which uses copper as its main component, aluminum, stainless steel and cast iron), plastic resins, glass, and other electronic components, such as 9 Table of Contents microprocessors and semiconductors.
For investments in entities that are not wholly 14 Table of Contents owned by Itron, such as joint ventures, a loss of control as defined by GAAP could result in a significant change in accounting treatment and a change in the carrying value of the entity.
Impairment of an investment, goodwill, or an intangible asset may result if these risks were to materialize. For investments in entities that are not wholly owned by Itron, such as joint ventures, a loss of control as defined by GAAP could result in a significant change in accounting treatment and a change in the carrying value of the entity.
Any unauthorized access to data could result in misappropriation of the data or disruption of operations. In addition, hardware, operating system software, software libraries, and applications that we procure from third parties may contain defects in design or manufacturing that could interfere with the operation of the systems.
In addition, hardware, operating system software, software libraries, and applications that we procure from third parties may contain defects in design or manufacturing that could interfere with the operation of the systems or include security vulnerabilities that may be exploited by attackers to compromise our systems and data.
We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves may be established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances.
These reserves may be established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances.
Even if refinancing indebtedness were available, any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations. 13 Table of Contents Moreover, in the event of a default under any of our indebtedness, the holders of the defaulted debt could elect to declare all the funds borrowed to be due and payable, together with accrued and unpaid interest, which in turn could result in cross defaults under our other indebtedness.
Moreover, in the event of a default under any of our indebtedness, the holders of the defaulted debt could elect to declare all the funds borrowed to be due and payable, together with accrued and unpaid interest, which in turn could result in cross defaults under our other indebtedness.
Our worldwide operations could be subject to hurricanes, tornadoes, earthquakes, floods, fires, extreme weather conditions, medical epidemics or pandemics, geopolitical instability, or other natural or man-made disasters or business interruptions. The occurrence of any of these business disruptions could seriously harm our business, financial condition, and results of operations.
Our worldwide operations could be subject to hurricanes, tornadoes, earthquakes, floods, fires, extreme weather conditions, medical epidemics or pandemics, geopolitical instability, cybersecurity attacks, including ransomware, business email compromise, and distributed denial of service (DDoS), or other natural or man-made disasters or business interruptions.
Additionally, our manufacturers may experience disruptions in their manufacturing operations due to equipment breakdowns, labor strikes or shortages, natural disasters and pandemics, component or material shortages, cost increases, or other similar problems. Further, to minimize their inventory risk, our manufacturers may not order components from third-party suppliers with adequate lead time, thereby impacting our ability to meet our demand forecast.
Additionally, our manufacturers may experience disruptions in their manufacturing operations due to equipment breakdowns, labor strikes or shortages, natural disasters and pandemics, component or material shortages, cybersecurity events (such as ransomware), cost increases, or other similar problems.
We have pension benefit obligations, which could have a material impact on our earnings, liabilities, and shareholders' equity and could have significant adverse impacts in future periods. We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, Indonesia, India, and Italy.
We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, India, and Indonesia.
We are subject to the new 1% excise tax beginning January 1, 2023, but the amount will vary depending upon various factors. The 15% minimum tax only applies to corporations with average book income in excess of $1 billion, so is not currently applicable.
The new 1% excise tax applies to share repurchase that occurred after December 31, 2022. The 15% minimum tax only applies to corporations with average book income in excess of $1 billion, so is not currently applicable.
The Organization for Economic Cooperation and Development (OECD) guidance under the Base Erosion and Profit Shifting (BEPS) initiative aims to minimize perceived tax abuses and modernize global tax policy. The Anti-Tax Avoidance Directives (ATAD), issued by the Council of the European Union (EU), provide further recommendations for legislative changes under these tax policies.
The Organization for Economic Cooperation and Development (OECD) guidance under the Base Erosion and Profit Shifting (BEPS) initiative aims to minimize perceived tax abuses and modernize global tax policy, including the implementation of a global minimum effective tax rate of 15%.
We may not achieve the anticipated savings and benefits from current or any future restructuring projects and such activities could cause us to incur additional charges in our efforts to improve profitability. We have implemented multiple restructuring projects to improve our cost structure, and we may engage in similar restructuring activities in the future.
We have implemented multiple restructuring projects to improve our cost structure, and we may engage in similar restructuring activities in the future.
A change in these principles or guidance, or in their interpretations, may have a material effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported results.
A change in these principles or guidance, or in their interpretations, may have a material effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported results. 12 Table of Contents Risks Related to Our Corporate Structure and Organization Our indebtedness could restrict our operational flexibility and prevent us from raising additional capital or meeting our obligations under our debt instruments.
We estimate pension plan expense, benefit obligation, and future contributions to these plans using assumptions with respect to these and other items.
We estimate pension plan expense, benefit obligation, and future contributions to these plans using assumptions with respect to these and other items. Changes to those assumptions could have a significant effect on future contributions, as well as on our annual pension costs and/or result in a significant change to shareholders' equity.
There can be no assurance that these factors will not have a material adverse effect on our future international sales and, consequently, on our business, financial condition, and results of operations.
There can be no assurance that these factors will not have a material adverse effect on our future international sales and, consequently, on our business, financial condition, and results of operations. 15 Table of Contents We may not achieve the anticipated savings and benefits from current or any future restructuring projects and such activities could cause us to incur additional charges in our efforts to improve profitability.
We are subject to income tax in the United States and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain.
Legal and Regulatory Risks Changes in tax laws, valuation allowances, and unanticipated tax liabilities could adversely affect our effective income tax rate and profitability. We are subject to income tax in the United States and numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes.
Although such cyber-attacks have not had a material adverse effect on our operating results, there can be no assurance of a similar result in future security incidents. Security incidents that occur could expose us to an increased risk of lawsuits, loss of existing or potential customers, harm to our reputation, and increases in our security costs.
We have not incurred any material cyber-attacks or incidents, nor have we had any material adverse effects on our operating results or financial condition. However, there can be no assurance of a similar result in future security incidents.
Depending on the jurisdiction, security incidents could trigger notice requirements to impacted individuals and regulatory investigations leading to penalties and increased reputational harm. Any such operational disruption and/or misappropriation of information could result in lost sales, unfavorable publicity, product recalls, or business delays and could have a material adverse effect on our business.
Any such operational disruption and/or misappropriation of information could result in lost sales, unfavorable publicity, product recalls, or business delays and could have a material adverse effect on our business. 18 Table of Contents We rely on information technology systems that may fail to operate effectively, require upgrades and replacements, or experience breaches.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Even if refinancing indebtedness were available, any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations.
Our 2018 credit facility allows us to draw on a $500.0 million revolving line of credit.
As of December 31, 2023, our total outstanding indebtedness was $460.0 million as described under Liquidity and Capital Resources. Our current credit facility, originally entered on January 5, 2018 (as amended, the 2018 credit facility) allows us to draw on a $500.0 million revolving line of credit.
We face competition, which may result in a loss of market share or price erosion of our products and services. We face competitive pressures from a variety of companies in each of the markets we serve.
Certain of our customer projects have experienced delays in deliveries, with revenues originally forecasted in prior periods shifting to future periods. 10 Table of Contents We face competition, which may result in a loss of market share or price erosion of our products and services.
The Company is monitoring developments and additional details as they are released to determine the impacts these new components will have on our business. A significant number of our products are affected by the availability and regulation of radio spectrum and could be affected by interference with the radio spectrum that we use.
Based upon preliminary calculations for calendar year 2024, the Company anticipates it will meet the safe harbors in most jurisdictions, and any remaining top-up tax should be immaterial. A significant number of our products are affected by the availability and regulation of radio spectrum and could be affected by interference with the radio spectrum that we use.
Removed
We have experienced disruptions to our business from the ongoing COVID-19 pandemic, and the full impact of the COVID-19 pandemic on all aspects of our business and geographic markets is highly uncertain and cannot be predicted with confidence. This includes how it may impact our customers, employees, vendors, strategic partners, managed services, and manufacturing operations.
Added
We are impacted by the availability and prices of raw materials and component parts used in the manufacturing process of our products.
Removed
The COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption, which may materially and adversely affect our business operations, cash flows, and financial condition. The impact of the pandemic on third parties on which we rely, such as our suppliers, contract manufacturers, distributors, and strategic partners, cannot be fully known or controlled by us.
Added
Further, to minimize their inventory risk, our manufacturers may not order components from third-party suppliers with adequate lead time, thereby impacting our ability to meet our demand forecast.
Removed
As a result, we have and will likely continue to experience difficulties sourcing components, sub-assemblies, outsourced finished goods, and other products and services. In particular, our ability to obtain adequate supply of semiconductor components has impacted our ability to service recovering customer demand.
Added
Adverse economic or market conditions, and perceptions or expectations about current or future conditions, such as inflation, rising interest rates, fluctuations in foreign currency exchange rates, recessions, economic sanctions, natural disasters, epidemics or pandemics, political instability, wars, including the conflicts in Ukraine and Israel, are beyond our control and could negatively affect our business and financial condition.
Removed
While we believe the current imbalance in supply and demand is temporal, the timeline to recovery is uncertain. Efforts are ongoing with suppliers to increase supply, including the approval of alternate sources. The impact of the COVID-19 pandemic on our customers and demand for our products is also uncertain.
Added
These economic conditions and global events have caused, and may in the future cause, disruptions and volatility in global financial markets, create disruption in customer demand and global supply chains, increase delinquency rates and write offs of customer accounting receivable and other unforeseen consequences.
Removed
Due to resulting financial constraints, illness within their organizations, quarantine and travel restrictions placed upon our customers' employees, as well as individual actions our customers may take in response to the spread of COVID-19, our customers may have difficulty in making timely payments to us or may have an inability or unwillingness to purchase our products and services.
Added
While recently improving from 2022 levels, our ability to obtain adequate supply of semiconductor components has impacted our ability to service customer demand in a timely manner. The temporary imbalance in supply and demand creates business uncertainties that include costs and availability. Efforts continue with suppliers to improve supply resiliency, including the approval of alternate sources.
Removed
Also, certain of our projects require regulatory approvals, and our customers may experience delays in regulatory approvals. Any of these effects may materially and adversely affect us. We continue to take measures, both voluntary and as a result of government directives and guidance, to mitigate the effects of the COVID-19 pandemic on us and others.
Added
Recently, inflation in our raw materials and component costs, freight charges, and labor costs have increased above historical levels, due to, among other things, the continuing impacts of the uncertain economic environment. We may or may not be able to fully recover these increased costs through pricing actions with our customers.
Removed
These measures have included, among others, restrictions on our employees' access to our physical work locations and the purchase of personal protective equipment. Additionally, we may implement the 10 Table of Contents temporary closure or reduction in operations of certain of our facilities, either voluntarily or through imposed lockdowns, which is disruptive to our operations.
Added
Currently, we have not identified any significant decrease in long-term customer demand for our products and services.

… 49 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+1 added−0 removed2 unchanged
Biggest changeThe following table lists our major manufacturing facilities by region and location as of December 31, 2022: Region Location Square Footage North America Oconee, SC (O) Waseca, MN (L) 325,840 110,000 Europe, Middle East, and Africa Chasseneuil, France (O) Macon, France (O) Massy, France (L) Oldenburg, Germany (L) Asti, Italy (O) 160,027 203,513 64,357 90,212 55,834 Asia/Pacific Bekasi, Indonesia (O) 113,222 (O) - Manufacturing facility is owned (L) - Manufacturing facility is leased Our principal properties are in good condition, and we believe our current facilities are sufficient to support our operations.
Biggest changeThe following table lists our major manufacturing facilities by region and location as of December 31, 2023: Region Location Square Footage North America Oconee, SC (O) Waseca, MN (1) (L) 325,840 110,000 Europe, Middle East, and Africa Chasseneuil, France (1) (O) Macon, France (O) Massy, France (L) Oldenburg, Germany (L) Asti, Italy (O) 160,027 203,513 64,357 90,212 55,834 Asia/Pacific Bekasi, Indonesia (O) 113,222 (1) The closures of the Waseca, Minnesota and Chasseneuil, France facilities are included in the 2023 Restructuring Plan, which is expected to be substantially complete by early 2025.
Added
For further details regarding our restructuring activities, refer to Part II, Item 8: Financial Statements and Supplementary Data, Note 13: Restructuring. (O) - Manufacturing facility is owned (L) - Manufacturing facility is leased Our principal properties are in good condition, and we believe our current facilities are sufficient to support our operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+1 added−0 removed5 unchanged
Biggest changeIn December 2022, Itron was presented with a remediation plan, which addressed the water contamination issues, with an estimated cost of $1.9 million. Schlumberger will fully reimburse Itron. The proposal will be submitted to the Italian Authorities in the first quarter of 2023. In 2007-2008, Itron acquired an industrial site located at 1310 Emerald Road, Greenwood, South Carolina.
Biggest changeIn December 2022, Itron was presented with a remediation plan, which addressed the water contamination issues, with an estimated cost of $1.9 million. The proposal has not been approved by the Italian Authorities as of February 26, 2024.
Given that the contamination arose from activities prior to Itron's ownership of the property and past remediation efforts, Itron has disputed its responsibility for any alleged contamination and suggested alternative proposals. Itron will continue to seek a reasonable resolution with DHEC and the other PRPs.
Given that the contamination arose from activities prior to Itron's ownership of the property and past remediation efforts, Itron has disputed its responsibility for any alleged contamination and suggested alternative proposals. Itron will continue to seek a reasonable resolution with DHEC and the other PRPs. 23 Table of Contents
Added
Due to increased remediation work and costs associated with the required cleanup activities, Itron recognized an additional $0.9 million in costs during the fourth quarter of 2023. Schlumberger, pursuant to the indemnification agreement, will fully reimburse Itron. In 2007-2008, Itron acquired an industrial site located at 1310 Emerald Road, Greenwood, South Carolina.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed2 unchanged
Biggest changeWe intend to retain future earnings for the development of our business and do not anticipate paying cash dividends in the foreseeable future.
Biggest change(2) Excludes commissions. Holders At February 22, 2024, there were 147 holders of record of our common stock. Dividends Since the inception of the Company, we have not declared or paid cash dividends. We intend to retain future earnings for the development of our business and do not anticipate paying cash dividends in the foreseeable future.
The above presentation assumes $100 invested on December 31, 2017 in the common stock of Itron, Inc., the peer groups, and the NASDAQ Composite Index, with all dividends reinvested. With respect to companies in the peer groups, the returns of each such corporation have been weighted to reflect relative stock market capitalization at the beginning of each annual period plotted.
The above presentation assumes $100 invested on December 31, 2018 in the common stock of Itron, Inc., the peer groups, and the NASDAQ Composite Index, with all dividends reinvested. With respect to companies in the peer groups, the returns of each such corporation have been weighted to reflect relative stock market capitalization at the beginning of each annual period plotted.
The historical stock prices shown above for our common stock are not necessarily indicative of future price performance. 24 Table of Contents Each year, we reassess our peer group to identify global companies that are either direct competitors or have similar industry and business operating characteristics.
The historical stock prices shown above for our common stock are not necessarily indicative of future price performance. 25 Table of Contents Each year, we reassess our peer group to identify global companies that are either direct competitors or have similar industry and business operating characteristics.
Issuer Repurchase of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs In thousands October 1, 2022 through October 31, 2022 — $ — — $ 75,000 November 1, 2022 through November 30, 2022 — — — 75,000 December 1, 2022 through December 31, 2022 — — — 75,000 Total — — (1) Effective November 1, 2021, Itron's Board of Directors authorized a new share repurchase program of up to $100 million of Itron's common stock over an 18-month period.
Issuer Repurchase of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs In thousands October 1, 2023 through October 31, 2023 — $ — — $ 100,000 November 1, 2023 through November 30, 2023 — — — 100,000 December 1, 2023 through December 31, 2023 — — — 100,000 Total — — (1) Effective May 11, 2023, Itron's Board of Directors authorized a share repurchase program of up to $100 million of Itron's common stock over an 18-month period.
Performance Graph The following graph compares the five-year cumulative total return to shareholders on our common stock with the five-year cumulative total return of our peer group of companies used for the year ended December 31, 2022, peer group of companies used for the year ended December 31, 2021, and the NASDAQ Composite Index. * $100 invested on December 31, 2017, in stock or index, including reinvestment of dividends.
Performance Graph The following graph compares the five-year cumulative total return to shareholders on our common stock with the five-year cumulative total return of our peer group of companies used for the year ended December 31, 2023, and the NASDAQ Composite Index. * $100 invested on December 31, 2018, in stock or index, including reinvestment of dividends.
Our 2022 peer group includes the following publicly traded companies: LM Ericsson Telephone Company, Landis+Gyr, Mueller Water Products, and Xylem, Inc. (formerly Sensus). Our 2021 peer group includes the following publicly trade companies: Badger Meter, Inc., Landis+Gyr, Mueller Water Products, and Xylem, Inc. (formerly Sensus).
Our 2023 peer group includes the following publicly traded companies: LM Ericsson Telephone Company, Landis+Gyr, Mueller Water Products, and Xylem, Inc.
Removed
Repurchases are made in the open market or in privately negotiated transactions and in accordance with applicable securities laws. (2) Excludes commissions. Holders At February 22, 2023, there were 152 holders of record of our common stock. Dividends Since the inception of the Company, we have not declared or paid cash dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

107 edited+17 added−38 removed110 unchanged
Biggest changeTOTAL COMPANY RECONCILIATIONS Year Ended December 31, In thousands, except per share data 2022 2021 NON-GAAP OPERATING EXPENSES GAAP operating expenses $ 529,628 $ 652,468 Amortization of intangible assets (25,717) (35,801) Restructuring 13,625 (54,623) Loss on sale of businesses (3,505) (64,289) Strategic initiative (675) — Software project impairment (8,719) — Russian currency translation write-off (1,885) — Goodwill impairment (38,480) — Acquisition and integration (506) (151) Non-GAAP operating expenses $ 463,766 $ 497,604 NON-GAAP OPERATING INCOME GAAP operating loss $ (7,439) $ (79,299) Amortization of intangible assets 25,717 35,801 Restructuring (13,625) 54,623 Loss on sale of businesses 3,505 64,289 Strategic initiative 675 — Software project impairment 8,719 — Russian currency translation write-off 1,885 — Goodwill impairment 38,480 — Acquisition and integration 506 151 Non-GAAP operating income $ 58,423 $ 75,565 NON-GAAP NET INCOME & DILUTED EPS GAAP net loss attributable to Itron, Inc. $ (9,732) $ (81,255) Amortization of intangible assets 25,717 35,801 Amortization of debt placement fees 3,323 18,078 Debt extinguishment — 11,681 Restructuring (13,625) 54,623 Loss on sale of businesses 3,505 64,289 Strategic initiative 675 — Software project impairment 8,719 — Russian currency translation write-off 1,885 — Goodwill impairment 38,480 — Acquisition and integration 506 151 Income tax effect of non-GAAP adjustments (1) (8,466) (25,265) Non-GAAP net income attributable to Itron, Inc. $ 50,987 $ 78,103 Non-GAAP diluted EPS $ 1.13 $ 1.75 Non-GAAP weighted average common shares outstanding - Diluted 45,305 44,617 45 Table of Contents TOTAL COMPANY RECONCILIATIONS Year Ended December 31, In thousands 2022 2021 ADJUSTED EBITDA GAAP net loss attributable to Itron, Inc. $ (9,732) $ (81,255) Interest income (2,633) (1,557) Interest expense 6,724 28,638 Income tax benefit (6,196) (45,512) Debt extinguishment — 11,681 Depreciation and amortization 66,763 84,153 Restructuring (13,625) 54,623 Loss on sale of businesses 3,505 64,289 Strategic initiative 675 — Software project impairment 8,719 — Russian currency translation write-off 1,885 — Goodwill impairment 38,480 — Acquisition and integration 506 151 Adjusted EBITDA $ 95,071 $ 115,211 FREE CASH FLOW Net cash provided by operating activities $ 24,500 $ 154,794 Acquisitions of property, plant, and equipment (19,747) (34,682) Free Cash Flow $ 4,753 $ 120,112 (1) The income tax effect of non-GAAP adjustments is calculated using the statutory tax rates for the relevant jurisdictions if no valuation allowance exists.
Biggest changeTOTAL COMPANY RECONCILIATIONS Year Ended December 31, In thousands, except per share data 2023 2022 NON-GAAP OPERATING EXPENSES GAAP operating expenses $ 585,041 $ 529,628 Amortization of intangible assets (18,918) (25,717) Restructuring (43,989) 13,625 Loss on sale of businesses (667) (3,505) Strategic initiative 5 (675) Software project impairment — (8,719) Russian currency translation write-off — (1,885) Goodwill impairment — (38,480) Acquisition and integration (144) (506) Non-GAAP operating expenses $ 521,328 $ 463,766 NON-GAAP OPERATING INCOME GAAP operating income (loss) $ 128,867 $ (7,439) Amortization of intangible assets 18,918 25,717 Restructuring 43,989 (13,625) Loss on sale of businesses 667 3,505 Strategic initiative (5) 675 Software project impairment — 8,719 Russian currency translation write-off — 1,885 Goodwill impairment — 38,480 Acquisition and integration 144 506 Non-GAAP operating income $ 192,580 $ 58,423 NON-GAAP NET INCOME & DILUTED EPS GAAP net income (loss) attributable to Itron, Inc. $ 96,923 $ (9,732) Amortization of intangible assets 18,918 25,717 Amortization of debt placement fees 3,489 3,323 Restructuring 43,989 (13,625) Loss on sale of businesses 667 3,505 Strategic initiative (5) 675 Software project impairment — 8,719 Russian currency translation write-off — 1,885 Goodwill impairment — 38,480 Acquisition and integration 144 506 Income tax effect of non-GAAP adjustments (1) (10,339) (8,466) Non-GAAP net income attributable to Itron, Inc. $ 153,786 $ 50,987 Non-GAAP diluted EPS $ 3.36 $ 1.13 Non-GAAP weighted average common shares outstanding - Diluted 45,836 45,305 45 Table of Contents TOTAL COMPANY RECONCILIATIONS Year Ended December 31, In thousands 2023 2022 ADJUSTED EBITDA GAAP net income (loss) attributable to Itron, Inc. $ 96,923 $ (9,732) Interest income (9,314) (2,633) Interest expense 8,349 6,724 Income tax (benefit) provision 29,068 (6,196) Depreciation and amortization 55,763 66,763 Restructuring 43,989 (13,625) Loss on sale of businesses 667 3,505 Strategic initiative (5) 675 Software project impairment — 8,719 Russian currency translation write-off — 1,885 Goodwill impairment — 38,480 Acquisition and integration 144 506 Adjusted EBITDA $ 225,584 $ 95,071 FREE CASH FLOW Net cash provided by operating activities $ 124,971 $ 24,500 Acquisitions of property, plant, and equipment (26,884) (19,747) Free Cash Flow $ 98,087 $ 4,753 (1) The income tax effect of non-GAAP adjustments is calculated using the statutory tax rates for the relevant jurisdictions if no valuation allowance exists.
Management believes using the endpoints under management metric enhances insight to the strategic and operational direction of our Networked Solutions and Outcomes segments to serve clients for years after their one-time installation of an endpoint.
Management believes using the endpoints under management metric enhances insight of the strategic and operational direction of our Networked Solutions and Outcomes segments to serve clients for years after their one-time installation of an endpoint.
Our contracts may be modified to add, remove, or change existing performance obligations or change contract price. The accounting for modifications to our contracts involves assessing whether the products or services added to an existing contract are distinct and whether the pricing is at the standalone selling price.
Our contracts may be modified to add, remove, or change existing performance obligations or change the contract price. The accounting for modifications to our contracts involves assessing whether the products or services added to an existing contract are distinct and whether the pricing is at the standalone selling price.
Changes in our actual tax rate are subject to several factors, including fluctuations in operating results, new or revised tax legislation and accounting pronouncements, changes in the level of business in domestic and foreign jurisdictions, research and development tax credits, state income taxes, adjustments to valuation allowances, settlement of tax audits, and uncertain tax positions, among other items.
Changes in our actual tax rate are subject to several factors, including fluctuations in operating results, new or revised tax legislation and accounting pronouncements, changes in the level of business in domestic and foreign jurisdictions, research and development tax credits, state income taxes, adjustments to valuation allowances, settlement of tax audits, and uncertain tax positions, among other items.
Recently, inflation in our raw materials and component costs, freight charges, and labor costs have increased above historical levels, due to, among other things, the continuing impacts of the pandemic and uncertain economic environment. We may or may not be able to fully recover these increased costs through pricing actions with our customers.
Recently, inflation in our raw materials and component costs, freight charges, and labor costs have increased above historical levels due to, among other things, the continuing impacts of the uncertain economic environment. We may or may not be able to fully recover these increased costs through pricing actions with our customers.
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.
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.
Defined Benefit Pension Plans We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, Indonesia, India, and Italy. We recognize a liability for the projected benefit obligation in excess of plan assets or an asset for plan assets in excess of the projected benefit obligation.
Defined Benefit Pension Plans We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, India, and Indonesia. We recognize a liability for the projected benefit obligation in excess of plan assets or an asset for plan assets in excess of the projected benefit obligation.
The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.
The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income (loss) as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity.
We expect the analysis will enhance a reader's understanding of our financial condition, cash flows, and other changes in financial condition and results of operations. Overview We are a technology and service company, and we are a leader in the Industrial Internet of Things (IIoT).
We expect the analysis will enhance a reader's understanding of our financial condition, cash flows, and other changes in financial condition and results of operations. Overview We are a technology, solutions, and service company, and we are a leader in the Industrial Internet of Things (IIoT).
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 attributable to Itron, Inc. and 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.
The purchase orders may include durations longer than one year, but these long-term agreements generally contain termination clauses that could require payment if the commitments were canceled, and as such the total above is considered short-term as of December 31, 2022. Other long-term liabilities consist of warranty obligations, estimated pension benefit payments, and other obligations.
The purchase orders may include durations longer than one year, but these long-term agreements generally contain termination clauses that could require payment if the commitments were canceled, and as such the total above is considered short-term as of December 31, 2023. Other long-term liabilities consist of warranty obligations, estimated pension benefit payments, and other obligations.
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, debt extinguishment, restructuring, loss on sale of businesses, strategic initiative expenses, software project impairment, Russian currency translation write-off, goodwill impairment, acquisition and integration, and the tax effect of excluding these expenses.
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 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.
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).
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 transaction entered into in connection with the 0% Convertible Notes due 2026 issued in March 2021.
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.
Our tax rate for the year ended December 31, 2022 differed from the U.S. federal statutory tax rate of 21% due to losses in jurisdictions for which no benefit is recognized because of valuation allowances on deferred tax assets, the level of profit or losses in domestic and international jurisdictions, stock-based compensation, and uncertain tax positions.
Our tax rate for the year ended December 31, 2023 differed from the U.S. federal statutory tax rate of 21% due to losses in jurisdictions for which no benefit is recognized because of valuation allowances on deferred tax assets, the level of profit or losses in domestic and international jurisdictions, stock-based compensation, and uncertain tax positions.
Refer to Item 8: Financial Statements and Supplementary Data, Note 1: Summary of Significant Accounting Policies for further disclosures regarding accounting policies and new accounting pronouncements. Revenue Recognition Many of our revenue arrangements involve multiple performance obligations, consisting of hardware, software, and professional services such as implementation, project management, installation, and consulting services.
Refer to Item 8: Financial Statements and Supplementary Data, Note 1: Summary of Significant Accounting Policies for further disclosures regarding accounting policies and new accounting pronouncements. Revenue Recognition Many of our revenue arrangements involve multiple performance obligations, consisting of hardware, software, and professional services such as implementation, project management, installation, consulting services, cloud services, and SaaS.
Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions includes products and software for the implementation, installation, and management of communicating devices and data networks.
Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, and associated head-end management and application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions includes products and software for the implementation, installation, and management of communicating devices and data networks.
There are some limitations related to the use of non-GAAP operating expenses and non-GAAP operating income versus operating expenses and operating income calculated in accordance with GAAP.
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.
At times, these NICs are communicating modules that 30 Table of Contents were sold separately from an Itron product directly to our customers or to third party manufacturers for use in endpoints such as electric, water, and gas meters; streetlights and other types of IIoT sensors and actuators; sensors and other capabilities that the end customer would like Itron to connect and manage on their behalf.
At times, these NICs are communicating modules that were sold separately from an Itron product directly to our customers or to third party manufacturers for use in endpoints such as electric, water, and gas meters; streetlights and other types of IIoT sensors and actuators; sensors and other capabilities that the end customer would like Itron to connect and manage on their behalf.
Estimated pension benefit payments include amounts to be paid from our assets for unfunded plans and reflect expected future service. The following table summarizes our known obligations to make future payments pursuant to certain contracts as of December 31, 2022.
Estimated pension benefit payments include amounts to be paid from our assets for unfunded plans and reflect expected future service. The following table summarizes our known obligations to make future payments pursuant to certain contracts as of December 31, 2023.
For contract termination costs, we recognize a liability upon the later of when we terminate a contract in accordance with the contract terms or when we cease using the rights conveyed by the contract. Asset impairments associated with a restructuring project are determined at the asset group level.
For contract termination costs, we recognize a liability upon the later of when we terminate a contract in accordance with the contract terms or when we cease using the rights conveyed by the contract, whichever occurs later. Asset impairments associated with a restructuring project are determined at the asset group level.
For euro denominated defined benefit pension plans, which represent 85% of our projected benefit obligation, we use discount rates with consideration of the duration of each of the plans, using a hypothetical yield curve developed from euro-denominated AA-rated corporate bond issues.
For euro denominated defined benefit pension plans, which represent 84% of our projected benefit obligation, we use discount rates with consideration of the duration of each of the plans, using a hypothetical yield curve developed from euro-denominated AA-rated corporate bond issues.
Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis compares the change in the consolidated financial statements for fiscal years 2022 and 2021 and should be read in conjunction with Item 8: Financial Statements and Supplementary Data.
Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis compares the change in the consolidated financial statements for fiscal years 2023 and 2022 and should be read in conjunction with Item 8: Financial Statements and Supplementary Data.
Stock Offering On March 12, 2021, we closed the sale of 4,472,222 shares of our common stock in a public offering, resulting in net proceeds to us of $389.4 million, after deducting underwriters' discounts of the offering, and we closed the sale of the Convertible Notes 36 Table of Contents in a private placement to qualified institutional buyers, resulting in net proceeds to us of $448.5 million after deducting initial purchasers' discounts of the offering.
Stock Offering On March 12, 2021, we closed the sale of 4,472,222 shares of our common stock in a public offering, resulting in net proceeds to us of $389.4 million, after deducting underwriters' discounts of the offering, and we closed the sale of the convertible notes in a private placement to qualified institutional buyers, resulting in net proceeds to us of $448.5 million after deducting initial purchasers' discounts of the offering.
We evaluate, among other factors, the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of the ultimate loss. Loss contingencies that we determine to be 42 Table of Contents reasonably possible, but not probable, are disclosed but not recognized.
We evaluate, among other factors, the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of the ultimate loss. Loss contingencies that we determine to be reasonably possible, but not probable, are disclosed but not recognized.
Our liquidity could be affected by the stability of the electricity, gas, and water utility industries, competitive pressures, our dependence on certain key vendors and components, changes in estimated liabilities for product warranties and/or litigation, duration of the COVID-19 pandemic and resulting supply constraints, future business combinations, capital market fluctuations, international risks, and other factors described under Part I, Item 1A: Risk Factors, as well as Item 7A: Quantitative and Qualitative Disclosures About Market Risk.
Our liquidity could be affected by the stability of the electricity, gas, and water utility industries, competitive pressures, our dependence on certain key vendors and components, changes in estimated liabilities for product warranties and/or litigation, supply constraints, future business combinations, capital market fluctuations, international risks, and other factors described under Part I, Item 1A: Risk Factors, as well as Item 7A: Quantitative and Qualitative Disclosures About Market Risk.
Certain operating expenses are allocated to the operating segments based upon internally established allocation methodologies. Interest income, interest expense, other income (expense), the income tax provision (benefit), and certain corporate operating expenses are neither allocated to the segments nor included in the measures of segment performance.
Certain operating expenses are allocated to the operating segments based upon internally established 27 Table of Contents allocation methodologies. Interest income, interest expense, other income (expense), the income tax provision (benefit), and certain corporate operating expenses are neither allocated to the segments nor included in the measures of segment performance.
Other variables impacting our estimate of costs to complete 39 Table of Contents include length of time to complete, changes in wages, subcontractor performance, supplier information, and business volume assumptions. Changes in underlying assumptions and estimates may adversely or favorably affect financial performance.
Other variables impacting our estimate of costs to complete include length of time to complete, changes in wages, subcontractor performance, supplier information, and business volume assumptions. Changes in underlying assumptions and estimates may adversely or favorably affect financial performance.
At December 31, 2022, $9.1 million of our consolidated cash balance was held in our joint venture entities. As a result, the minority shareholders of these entities have rights to their proportional share of this cash balance, and there may be limitations on our ability to repatriate cash to the United States from these entities.
At December 31, 2023, $8.9 million of our consolidated cash balance was held in our joint venture entities. As a result, the minority shareholders of these entities have rights to their proportional share of this cash balance, and there may be limitations on our ability to repatriate cash to the United States from these entities.
A change of 100 basis points in the discount rate would change our projected benefit obligation by approximately $9.0 million. The financial and actuarial assumptions used at December 31, 2022 may differ materially from actual results due to changing market and economic conditions and other factors.
A change of 100 basis points in the discount rate would change our projected benefit obligation by approximately $10.0 million. The financial and actuarial assumptions used at December 31, 2023 may differ materially from actual results due to changing market and economic conditions and other factors.
For comparisons of fiscal years 2021 and 2020, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2021 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 28, 2022, and incorporated herein by reference.
For comparisons of fiscal years 2022 and 2021, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2022 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 27, 2023, and incorporated herein by reference.
Effect of exchange rates on cash and cash equivalents The effect of exchange rates on the cash balances of currencies held in foreign denominations resulted in a decrease of $6.9 million in 2022 and a decrease of $1.6 million in 2021. Our foreign currency exposure relates to non-U.S. dollar denominated balances in our international subsidiary operations.
Effect of exchange rates on cash and cash equivalents The effect of exchange rates on the cash balances of currencies held in foreign denominations resulted in an increase of $1.9 million in 2023 and a decrease of $6.9 million in 2022. Our foreign currency exposure relates to non-U.S. dollar denominated balances in our international subsidiary operations.
Of the total estimated charge, approximately 95% will result in cash expenditures, and the remainder to non-cash impairment charges. The majority of the expense will be recognized during the first quarter of 2023. Once the 2023 Projects are substantially completed, Itron estimates $14-17 million in annualized savings.
Of the total estimated charge, approximately 95% will result in cash expenditures, and the remainder to non-cash impairment charges. The majority of the expenses were recognized during the first quarter of 2023. Once the 2023 Projects are substantially completed, Itron estimates $14-17 million in annualized savings.
Employee termination benefits considered post-employment benefits are accrued when the obligation is probable and estimable, such as benefits stipulated by human resource policies and practices or statutory requirements. If the employee must provide future service greater than 60 days, such benefits are recognized ratably over the future service period.
Employee termination benefits considered post-employment benefits are accrued when the obligation is probable and estimable, such as benefits stipulated by human resource policies and practices or statutory requirements. If the employee must provide future service, such benefits are recognized ratably over the future service period.
Adjusted EBITDA – We define adjusted EBITDA as net income (loss) (a) minus interest income, (b) plus interest expense, debt extinguishment, 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, and (c) excluding income tax benefit.
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.
Accordingly, the amount of taxes that we would need to accrue and pay to repatriate foreign cash could vary significantly. Other Liquidity Considerations In several of our consolidated international subsidiaries, we have joint venture partners who are minority shareholders.
Accordingly, the amount of taxes that we would need to accrue and pay to repatriate foreign cash could vary significantly. 38 Table of Contents Other Liquidity Considerations In certain of our consolidated international subsidiaries, we have joint venture partners who are minority shareholders.
Borrowings Our 2018 credit facility, as amended, provides a multicurrency revolving line of credit (the revolver) with a principal amount of up to $500 million. The revolver also contains a $300 million standby letter of credit sub-facility and a $50 million swingline sub-facility.
The 2018 credit facility provides a multicurrency revolving line of credit (the revolver) with a principal amount of up to $500 million. The revolver also contains a $300 million standby letter of credit sub-facility and a $50 million swingline sub-facility.
The 2023 Projects include activities that continue the Company's efforts to optimize its global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects are to be substantially complete by early 2025. Itron estimates pre-tax restructuring charges of $40-45 million.
The 2023 Projects include activities that continue the Company's efforts to optimize its global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects are to be substantially complete by early 2025. Itron expects pre-tax restructuring charges of $51.7 million.
These bonds are assigned different weights to adjust their relative influence on the yield curve, and the highest and lowest yielding 10% of bonds are excluded within each maturity group. The discount rate used was 3.75%. The weighted average discount rate used to measure the projected benefit obligation for all of the plans at December 31, 2022 was 4.14%.
These bonds are assigned different weights to adjust their relative influence on the yield curve, and the highest and lowest yielding 10% of bonds are excluded within each maturity group. The discount rate used was 3.25%. The weighted average discount rate used to measure the projected benefit obligation for all of the plans at December 31, 2023 was 3.74%.
The revenues from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other products on behalf of our end customers. 26 Table of Contents We have three measures of segment performance: revenues, gross profit (margin), and operating income (margin). Intersegment revenues are minimal.
Revenue from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other third-parties' products on behalf of our end customers. We have three measures of segment performance: revenues, gross profit (margin), and operating income (margin). Intersegment revenues are minimal.
Purchase orders and other purchase obligations can include open-ended agreements that provide for estimated quantities over an extended delivery period. At December 31, 2022, purchase orders and other purchase obligations were $728.2 million, which includes capital expenditures of $10.1 million.
Purchase orders and other purchase obligations can include open-ended agreements that provide for estimated quantities over an extended delivery period. At December 31, 2023, purchase orders and other purchase obligations were $561.9 million, which includes capital expenditures of $10.1 million.
This increase was primarily related to net cash proceeds received from the sale of certain Gas product lines from our Device Solutions manufacturing and business operations in Europe and North America to Dresser for $55.9 million, along with $14.9 million less purchases of property, plant, and equipment in 2022.
This movement was primarily related to net cash proceeds received from the sale of certain Gas product lines from our Device Solutions manufacturing and business operations in Europe and North America to Dresser for $55.9 million in 2022, along with $7.1 million increased purchases of property, plant, and equipment in 2023.
Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas, electricity, and water meters for a variety of global markets and adhering to regulations and standards within those markets, as well as our heat and allocation products; communicating meters that are not a part of an Itron end-to-end solution, such as Smart Spec meters; and the implementation and installation of non-communicating devices.
Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas, electricity, and water meters for a variety of global markets and adhering to regulations and standards within those markets, as well as our heat and allocation products; communicating meters that are not a part of an Itron end-to-end solution and designed to meet market requirements; and the implementation and installation of said hardware products.
As of December 31, 2022, there was $41.8 million of cash and short-term investments held by certain foreign subsidiaries in which we are permanently reinvested for tax purposes. As a result of recent changes in U.S. tax legislation, any repatriation in 38 Table of Contents the future would not result in U.S. federal income tax.
As of December 31, 2023, there was $59.6 million of cash and short-term investments held by certain foreign subsidiaries in which we are permanently reinvested for tax purposes. As a result of recent changes in U.S. tax legislation, any repatriation in the future would not result in U.S. federal income tax.
Our IIoT platform allows all these utility and smart city applications to be run and managed on a single, multi-purpose network.
Our IIoT platform allows utility and smart city applications to be run and managed on a flexible multi-purpose network.
Outcomes – This segment primarily includes our value-added, enhanced software and services in which we manage, organize, analyze, and interpret raw, anonymized and aggregated data to improve decision making, maximize operational profitability, drive resource efficiency, improve grid analytics, and deliver results for consumers, utilities, and smart cities.
Outcomes – This segment primarily includes our value-added, enhanced software and services, artificial intelligence, and machine learning in which we enable grid edge intelligence and manage, organize, analyze, and interpret raw, anonymized data to improve decision making, maximize operational profitability, enhance resource efficiency, improve grid analytics, and deliver results for consumers, utilities, and smart cities.
Our offerings typically, but not exclusively, provide an Itron product or Itron certified partner product to our clients that has the capability of one-way communication or two-way communication of data that may include remote product configuration and upgradability. Examples of these offerings include our Temetra, OpenWay®, OpenWay® Riva and Gen X.
Our offerings typically, but not exclusively, provide an Itron product or Itron certified partner product to our clients that has the capability of one-way communication or two-way communication of data that may include remote product configuration and upgradability.
For further details regarding our restructuring activities, refer to Item 8: Financial Statements and Supplementary Data, Note 13: Restructuring. 37 Table of Contents Stock Repurchase Program Effective November 1, 2021, Itron's Board of Directors authorized a share repurchase program of up to $100 million of our common stock over an 18-month period (the 2021 Stock Repurchase Program).
For further details regarding our restructuring activities, refer to Item 8: Financial Statements and Supplementary Data, Note 13: Restructuring. Stock Repurchase Authorization Effective May 11, 2023, Itron's Board of Directors authorized a share repurchase up to $100 million of our common stock over an 18-month period (the 2023 Stock Repurchase Program).
At December 31, 2022, $244.0 million was available for additional standby letters of credit under the letter of credit sub-facility, and no amounts were outstanding under the swingline sub-facility.
At December 31, 2023, $240.9 million was available for additional standby letters of credit under the letter of credit sub-facility, and no amounts were outstanding under the swingline sub-facility.
Financial Condition Cash Flow Information Year Ended December 31, In thousands 2022 2021 2020 Cash provided by operating activities $ 24,500 $ 154,794 $ 109,514 Cash provided by (used in) investing activities 40,516 (34,884) (41,036) Cash used in financing activities (18,737) (152,887) (11,576) Less: Cash classified within assets held for sale — (9,750) — Effect of exchange rates on cash and cash equivalents (6,851) (1,627) 127 Increase (decrease) in cash and cash equivalents $ 39,428 $ (44,354) $ 57,029 Cash, cash equivalents, and restricted cash at December 31, 2022 was $202.0 million compared with $162.6 million at December 31, 2021.
Financial Condition Cash Flow Information Year Ended December 31, In thousands 2023 2022 2021 Cash provided by operating activities $ 124,971 $ 24,500 $ 154,794 Cash provided by (used in) investing activities (23,308) 40,516 (34,884) Cash used in financing activities (3,508) (18,737) (152,887) Less: Cash classified within assets held for sale — — (9,750) Effect of exchange rates on cash and cash equivalents 1,887 (6,851) (1,627) Increase (decrease) in cash and cash equivalents $ 100,042 $ 39,428 $ (44,354) Cash and cash equivalents at December 31, 2023 was $302.0 million compared with $202.0 million at December 31, 2022.
Amounts due under operating lease liabilities for the next 12 months are $18.2 million and beyond the next 12 months are $47.4 million. We regularly enter into standard purchase orders in the ordinary course of business that may obligate us to purchase materials and other items but may not yet qualify for recognition in our Consolidated Balance Sheets.
Amounts due under operating lease liabilities during 2024 are $16.6 million and are $34.9 million for 2025 and beyond. We regularly enter into standard purchase orders in the ordinary course of business that may obligate us to purchase materials and other items but may not yet qualify for recognition in our Consolidated Balance Sheets.
At December 31, 2022, no amount was outstanding under the 2018 credit facility, and $56.0 million was utilized by outstanding standby letters of credit, resulting in $444.0 million available for borrowing or standby letters of credit under the revolver.
At December 31, 2023, no amount was outstanding under the 2018 credit facility, and $59.1 million was utilized by outstanding standby letters of credit, resulting in $440.9 million available for borrowing or standby letters of credit under the revolver.
This metric primarily includes Itron or third-party endpoints deployed within the electricity, water, and gas utility industries, as well as within cities and municipalities around the globe. Endpoints under management also include smart communication modules and network interface cards (NICs) within Itron's platforms.
Examples of these offerings include our Temetra, OpenWay®, OpenWay® Riva and Gen X. 30 Table of Contents This metric primarily includes Itron or third-party endpoints deployed within the electricity, water, and gas utility industries, as well as within cities and municipalities around the globe. Endpoints under management also include smart communication modules and network interface cards (NICs) within Itron's platforms.
Our cash income tax payments were as follows: Year Ended December 31, In thousands 2022 2021 U.S. federal taxes paid $ 1,128 $ — State income taxes paid 3,658 817 Foreign and local income taxes paid 7,129 6,256 Total income taxes paid $ 11,915 $ 7,073 Based on current projections, we expect to pay, net of refunds, approximately $27 million in U.S. federal and state taxes and $11 million in foreign and local income taxes in 2023.
Our cash income tax payments were as follows: Year Ended December 31, In thousands 2023 2022 U.S. federal taxes paid $ 28,440 $ 1,128 State income taxes paid 17,519 3,658 Foreign and local income taxes paid 8,591 7,129 Total income taxes paid $ 54,550 $ 11,915 Based on current projections, we expect to pay, net of refunds, approximately $41 million in U.S. federal and state taxes and $25 million in foreign and local income taxes in 2024.
In thousands Next 12 months Beyond the next 12 months Warranty obligations $ 18,203 $ 7,495 Estimated pension benefit payments 3,805 57,839 The period of cash settlement for long-term unrecognized tax benefits, which include accrued interest and penalties, cannot be reasonably estimated with the respective taxing authorities.
In thousands Next 12 months Beyond the next 12 months Warranty obligations $ 14,663 $ 7,501 Estimated pension benefit payments 4,088 63,887 The period of cash settlement for long-term unrecognized tax benefits, which include accrued interest and penalties, cannot be reasonably estimated with the respective taxing authorities.
We measure and recognize compensation expense for all awards based on estimated fair values. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award.
Prior to December 31, 2020, stock options were also granted as part of the stock-based compensation awards. We measure and recognize compensation expense for all awards based on estimated fair values. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award.
Income Tax Provision Our income tax benefit was $6.2 million and $45.5 million for the years ended December 31, 2022 and 2021.
Income Tax Provision Our income tax expense/(benefit) was $29.1 million and $(6.2) million for the years ended December 31, 2023 and 2022.
We calculate free cash flows, using amounts from our Consolidated Statements of Cash Flows, as follows: Year Ended December 31, In thousands 2022 2021 Cash provided by operating activities $ 24,500 $ 154,794 Acquisitions of property, plant, and equipment (19,747) (34,682) Free cash flow $ 4,753 $ 120,112 Free cash flow decreased due to lower operating cash flow, partially offset by lower spending for property, plant, and equipment.
We calculate free cash flows, using amounts from our Consolidated Statements of Cash Flows, as follows: Year Ended December 31, In thousands 2023 2022 Cash provided by operating activities $ 124,971 $ 24,500 Acquisitions of property, plant, and equipment (26,884) (19,747) Free cash flow $ 98,087 $ 4,753 Free cash flow increased due to higher operating cash flow, partially offset by higher spending for property, plant, and equipment.
If we estimate that the completion of a performance obligation will result in a loss, then the loss is recognized in the period in which the loss becomes evident. We reevaluate the estimated loss through the completion of the performance obligation and adjust the estimated loss for changes in facts and circumstances.
If we estimate that the completion of a performance obligation will result in a loss, then the loss is recognized in the period in which the loss becomes evident.
These projects are scheduled to be substantially complete by the end of 2023, with an estimated $8 million in cash payments remaining as of December 31, 2022 with cash outflows expected through 2024.
These projects were substantially complete by the end of 2023, with an estimated $2 million in cash payments remaining as of December 31, 2023 and with cash outflows expected through 2025.
Operating Segment Results For a description of our operating segments, refer to Part I, Item 1: Business, Our Operating Segments included in this Annual Report on Form 10-K and the above Overview section.
For additional discussion related to income taxes, refer to Item 8: Financial Statements and Supplementary Data, Note 11: Income Taxes. 32 Table of Contents Operating Segment Results For a description of our operating segments, refer to Part I, Item 1: Business, Our Operating Segments included in this Annual Report on Form 10-K and the Overview section above.
Refer to Item 8: Financial Statements and Supplementary Data, Note 7: Derivative Financial Instruments for further details of the Convertible Note Hedge Transactions and Warrant Transactions.
Refer to Item 8: Financial Statements and Supplementary Data , Note 2: Earnings Per Share and Note 14: Shareholders' Equity for further details of the convertible note hedge transactions and warrant transactions.
The product and operating definitions of the three segments are as follows: Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing that do not have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products not part of a complete end-to-end solution.
The product and operating definitions of the three segments are as follows: Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing. These products generally do not have communications capability or may be designed for use with non-Itron systems.
The decreases were partially offset by $38.5 million in goodwill impairment, recognized in 2022. Refer to Item 8: Financial Statements and Supplementary Data, Note 5: Goodwill , Note 13: Restructuring, and Note 18: Sale of Businesses for more details.
Refer to Item 8: Financial Statements and Supplementary Data, Note 5: Goodwill , Note 13: Restructuring, and Note 18: Sale of Businesses for more details.
A major disruption in the global economy and supply chain could have a material adverse effect on our business, prospects, financial condition, results of operations, and cash flows. The extent and duration of the military action, sanctions, and resulting market and/or supply disruptions are impossible to predict, but could be substantial .
A major disruption in the global economy and supply chain could have a material adverse effect on our business, prospects, financial condition, results of operations, and cash flows.
Some of our contracts with customers contain clauses for liquidated damages related to the timing of delivery or milestone accomplishments, which could become material in an event of failure to meet the contractual deadlines.
We estimate variable consideration using the expected value method, taking into consideration contract terms, historical customer behavior, and historical sales. Some of our contracts with customers contain clauses for liquidated damages related to the timing of delivery or milestone accomplishments, which could become material in the event of failure to meet the contractual deadlines.
The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR), advanced metering infrastructure (AMI), distributed energy resource management (DERMs), smart grid and distribution automation, smart street lighting, and an ever-growing set of smart city applications such as traffic management, smart parking, air quality monitoring, electric vehicle charging, customer engagement, digital signage, acoustic (e.g., gunshot) detection, and leak detection and mitigation for both gas and water systems.
The Industrial Internet of Things (IIoT) solutions supported by this segment include automated meter reading (AMR); advanced metering infrastructure (AMI) for electricity, water and gas; distributed energy resource management (DERMs); smart grid and distribution automation; smart street lighting; and leak detection and applications for both gas and water systems.
Outcomes supports high-value use cases such as data management, grid operations, distributed intelligence, operations management, gas distribution and safety, water operations management, revenue assurance, DERMs, energy forecasting, consumer engagement, smart payment, and fleet energy resource management. Utilities leverage these outcomes to capitalize on the power of networks and devices, empower their workforce, maximize their operations and enhance the customer experience.
Outcomes supports high-value use cases, such as data management, grid operations, distributed intelligence, AMI operations, gas distribution and safety, water operations management, revenue assurance, DERMs, energy forecasting, consumer engagement, smart payment, and fleet energy resource management.
The increase was primarily due to the ramp of new and existing customer deployments, partially offset by global component shortages that limited our ability to fulfill our customer demand. Higher product revenue of $27.6 million was partially offset by lower maintenance service revenue of $1.0 million. Gross Margin Gross margin was 32.3% in 2022 compared with 34.7% in 2021.
The increase was primarily due to the ramp of new and existing customer deployments and improving component supply enabling our ability to fulfill more customer demand. This includes higher product revenue of $329.4 million and higher service revenue of $1.6 million. Gross Margin Gross margin was 34.5% in 2023 compared with 32.3% in 2022.
This amendment modifies provisions to allow for the addback for debt covenant calculations of non-recurring cash expenses related to restructuring charges to be incurred during the quarter ended March 31, 2023.
This amendment modified debt covenant provisions to allow for the addback of non-recurring cash expenses related to restructuring charges incurred during the quarter ended March 31, 2023. On October 13, 2023, we entered into a seventh amendment to extend the maturity date to October 18, 2026.
Changes in these factors and related estimates could materially affect our financial position and results of operations. Legal costs to defend against contingent liabilities are recognized as incurred.
Changes in these factors and related estimates could materially affect our financial position and results of operations.
A summary of our endpoints under management is as follows: Year Ended December 31, Units in thousands 2022 2021 2020 Endpoints under management 93,941 82,354 74,184 Results of Operations Revenues and Gross Margin The actual results of and effects of changes in foreign currency exchange rates on revenues and gross profit were as follows: Effect of Changes in Foreign Currency Exchange Rates Constant Currency Change Total Change Year Ended December 31, In thousands 2022 2021 Total Company Revenues $ 1,795,564 $ 1,981,572 $ (70,849) $ (115,159) $ (186,008) Gross profit 522,189 573,169 (15,348) (35,632) (50,980) Revenues Revenues decreased $186.0 million in 2022 compared with 2021.
A summary of our endpoints under management is as follows: Year Ended December 31, Units in thousands 2023 2022 2021 Endpoints under management 98,046 93,941 82,354 Results of Operations Revenues and Gross Margin The actual results of and effects of changes in foreign currency exchange rates on revenues and gross profit were as follows: Effect of Changes in Foreign Currency Exchange Rates Constant Currency Change Total Change Year Ended December 31, In thousands 2023 2022 Total Company Revenues $ 2,173,633 $ 1,795,564 $ 1,793 $ 376,276 $ 378,069 Gross profit 713,908 522,189 502 191,217 191,719 Revenues Revenues increased $378.1 million in 2023 compared with 2022.
These projects are expected to be substantially complete by the end of 2024, with an estimated $34 million in cash payments remaining as of December 31, 2022 with cash outflows expected through 2025. For the year ended December 31, 2022, we paid out a net $25.8 million related to all our restructuring projects.
These pro jects are expected to be substantially complete by the end of 2024, with an estimated $25 million in cash payments remaining as of December 31, 2023 and with cash outflows expected through 2025. On February 23, 2023, our Board of Directors approved a restructuring plan (the 2023 Projects).
This decrease was primarily due to an increase in working capital (current assets less current liabilities) compared to 2021 and higher variable compensation payouts, partially offset by increased earnings in 2022. Investing activities Cash provided by investing activities during 2022 was $75.4 million higher than in 2021.
This increase was primarily due to increased earnings and lower variable compensation payments in 2023, partially offset by changes in working capital (current assets less current liabilities) compared with 2022. Investing activities Net cash used in investing activities in 2023 was $23.3 million, compared with net cash provided by investing activities in 2022 of $40.5 million.
Amounts borrowed under the revolver may be repaid and reborrowed until the revolver's maturity on October 18, 2024, at which time all outstanding loans together with all accrued and unpaid interest must be repaid. On March 12, 2021, we closed the sale of $460 million in Convertible Notes in a private placement to qualified institutional buyers.
Amounts borrowed under the revolver may be repaid and reborrowed until the revolver's maturity on October 18, 2026, at which time all outstanding loans together with all accrued and unpaid interest must be repaid.
The 2023 Projects include activities that continue the Company's efforts to optimize its global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects are to be substantially complete by early 2025. Itron estimates pre-tax restructuring charges of $40-45 million.
The 2023 Projects include activities that continue Itron's efforts to optimize its global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects are expected to be substantially complete by early 2025, with an estimated $48 million in cash payments remaining as of December 31, 2023 and with cash outflows expected through 2027.
As of December 31, 2022, we are authorized to repurchase up to an additional $75 million before May 1, 2023. Other contractual obligations and commitments Operating lease obligations are disclosed in Item 8: Financial Statements and Supplementary Data, Note 19: Leases and do not include common area maintenance charges, real estate taxes, and insurance charges for which we are obligated.
There have been no repurchases under the 2023 Stock Repurchase Program through February 26, 2024. 37 Table of Contents Other contractual obligations and commitments Operating lease obligations are disclosed in Item 8: Financial Statements and Supplementary Data, Note 19: Leases and do not include common area maintenance charges, real estate taxes, and insurance charges for which we are obligated.
Other Income (Expense) The following table shows the components of other income (expense): Year Ended December 31, In thousands 2022 % Change 2021 Interest income $ 2,633 69% $ 1,557 Amortization of prepaid debt fees (3,499) (81)% (18,253) Other interest expense (3,225) (69)% (10,385) Interest expense (6,724) (77)% (28,638) Other income (expense), net (4,213) (76)% (17,430) Total other income (expense) $ (8,304) (81)% $ (44,511) Total other income (expense) for the year ended December 31, 2022 was a net expense of $8.3 million compared with $44.5 million in 2021.
Other Income (Expense) The following table shows the components of other income (expense): Year Ended December 31, In thousands 2023 % Change 2022 Interest income $ 9,314 254% $ 2,633 Amortization of prepaid debt fees (3,664) 5% (3,499) Other interest expense (4,685) 45% (3,225) Interest expense (8,349) 24% (6,724) Other income (expense), net (2,446) (42)% (4,213) Total other income (expense) $ (1,481) (82)% $ (8,304) Total other income (expense) for the year ended December 31, 2023 was a net expense of $1.5 million compared with $8.3 million in 2022, with the net decrease primarily driven by a $6.7 million increase in interest income.
Stock-Based Compensation We grant various stock-based compensation awards to our officers, employees, and Board of Directors with service, performance, and market vesting conditions, including restricted stock units, phantom stock units, and unrestricted stock units (awards). Prior to December 31, 2020, stock options were also granted as part of the stock-based compensation awards.
Legal costs to defend against contingent liabilities are recognized as incurred. 42 Table of Contents Stock-Based Compensation We grant various stock-based compensation awards to our officers, employees, and Board of Directors with service, performance, and market vesting conditions, including restricted stock units, phantom stock units, and unrestricted stock units (awards).
At this time, we have not identified any significant decrease in long-term customer demand for our products and services. However, certain of our customer projects have experienced delay in deliveries, with revenue originally forecasted in prior periods shifting to future periods.
Currently, we have not identified any significant decrease in long-term customer demand for our products and services. Certain of our customer projects have experienced delays in deliveries, with revenues originally forecasted in prior periods shifting to future periods. For more information on risks associated with global economic challenges, please see our risk in Part I, Item 1A: Risk Factors.

… 82 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed6 unchanged
Biggest changeBased on a sensitivity analysis as of December 31, 2022, we estimate that, if foreign currency exchange rates average 10 percentage points higher in 2023 for these financial instruments, our financial results in 2023 would not be materially impacted. In future periods, we may use additional derivative contracts to protect against foreign currency exchange rate risks. 47 Table of Contents
Biggest changeIn future periods, we may use additional derivative contracts to protect against foreign currency exchange rate risks. 47 Table of Contents
Revenues denominated in functional currencies other than the U.S. dollar were 30% of total revenues for the year ended December 31, 2022, compared with 38% for the year ended December 31, 2021 and 37% for the year ended December 31, 2020.
Revenues denominated in functional currencies other than the U.S. dollar were 24% of total revenues for the year ended December 31, 2023, compared with 30% for the year ended December 31, 2022 and 38% for the year ended December 31, 2021.
As of December 31, 2022, a total of 36 contracts were offsetting our exposures from the euro, pound sterling, 46 Table of Contents Indonesian rupiah, Canadian dollar, Australian dollar, and various other currencies, with notional amounts ranging from $117,000 to $57.9 million.
As of December 31, 2023, a total of 42 contracts were offsetting our exposures from the euro, pound sterling, 46 Table of Contents Indonesian rupiah, Canadian dollar, Australian dollar, and various other currencies, with notional amounts ranging from $117,000 to $23.4 million .
Accordingly, we do not use derivative contracts for trading or speculative purposes. Interest Rate Risk We may be exposed to interest rate risk through our variable rate debt instruments. On August 12, 2021, the U.S. dollar term loan under the credit facility was fully paid. At December 31, 2022, we had no outstanding variable rate debt.
Accordingly, we do not use derivative contracts for trading or speculative purposes. Interest Rate Risk We may be exposed to interest rate risk through our variable rate debt instruments, namely the multicurrency revolving line of credit. At December 31, 2023, we had no outstanding variable rate debt.

Other ITRI 10-K year-over-year comparisons