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What changed in ITRON, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ITRON, INC.'s 2023 and 2024 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 2024 report.

+292 added−292 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-26)

Top changes in ITRON, INC.'s 2024 10-K

292 paragraphs added · 292 removed · 232 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeItron 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.
Biggest changeItron 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 complexity, 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 societal demand for greater sustainability and decarbonization of energy and power • S ocial – such as enhanced customer experience, critical-need consumers, privacy, urbanization, population increase, and the management of data and incorporating IIoT technology into their existing operations Our solutions include smart networks, software, services, devices, sensors, and data analytics operating upon a technology platform that allows our customers to address the changing macro trends listed above, as well as the 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.
At Itron, we are committed to creating a more resourceful world—one where energy, water, and city resources are managed safely, securely, and reliably, to help improve day-to-day life and promote the well-being of people around the world.
At Itron, we are committed to creating a more resourceful world—one where energy, water, and city resources are managed more safely, securely, and reliably, to help improve day-to-day life and promote the well-being of people around the world.
We also differentiate ourselves with an intelligent IIoT platform that is solution, device, and transport agnostic—a platform that can be backwards compatible, able to run a multitude of applications and solutions, is highly secure, fully integrated into our portfolio, highly interoperable, captures relays, and leverages high-resolution data for near real-time decision making.
We also differentiate ourselves with an intelligent IIoT platform that is solution, device, and transport agnostic—a platform that can be backwards compatible, able to run a multitude of applications and solutions, is highly secure, is fully integrated into our portfolio, is highly interoperable, captures relays, and leverages high-resolution data for near real-time decision making.
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 platform involves an ever-growing, 5 Table of Contents diverse ecosystem of partners and third-party developers who can create and deploy specific point solutions creating greater value for our customers. Refer to Item 1A: Risk Factors for a discussion of the competitive pressures we face.
Partners In connection with delivering solutions and systems to our customers, we frequently partner with third-party vendors to provide hardware, software, or services, e.g., meter installation and communication network equipment and infrastructure.
Partners In connection with delivering solutions and systems to our customers, we frequently partner with third-party partners to provide hardware, software, or services, e.g., meter installation and communication network equipment and infrastructure.
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.
For smaller utilities and most municipalities, we often 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.
We enter into typical contracts in the ordinary course of business, which can include purchase orders for specific quantities based on market prices, as well as open-ended agreements that provide for estimated quantities over an extended shipment period, typically up to one year at an established unit cost.
We enter into standard contracts in the ordinary course of business, which can include purchase orders for specific quantities based on market prices, as well as open-ended agreements that provide for estimated quantities over an extended shipment period, typically up to one year at an established unit cost.
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.
Research and Development Our research and development is focused on both expanding 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.
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.
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 causing providers to rethink how they operate and service their cities.
Although we have multiple sources of supply for many of our material requirements, certain components and raw materials are supplied by limited or sole-source vendors, and our ability to perform certain contracts depends on the availability of these materials. Refer to Item 1A: Risk Factors for further discussion related to manufacturing and supply risks.
Although we have multiple sources of supply for many of our material requirements, certain components and raw materials are supplied by limited or sole-source vendors, and our ability to procure under certain contracts depends on the availability of these materials. Refer to Item 1A: Risk Factors for further discussion related to manufacturing and supply risks.
He has more than 20 years of product management, business development, and customer delivery experience with deep technical knowledge of networking, radio frequency technologies, and IIoT. Mr. Marcolini has also spent many years working with utility customers to deliver and implement complex product deployments. Donald L.
He has more than 20 years of product management, business development, and customer delivery experience with deep technical knowledge of networking, radio frequency technologies, and IIoT. Mr. Marcolini has also spent many years working with utility customers to deliver and implement complex product deployments. 7 Table of Contents Donald L.
Our manufacturing facilities are located throughout the world, an overview of which is presented in Item 2: Properties. While we manufacture and assemble a portion of our products, we outsource the manufacturing of many products and sub-assemblies to various manufacturing partners and strive to create an efficient and cost-effective structure.
Our manufacturing facilities are located throughout the world, an overview of which is presented in Item 2: Properties. While we manufacture and assemble a portion of our products, we outsource the manufacturing of some products and sub-assemblies to various manufacturing partners and strive to create an efficient, resilient, and cost-effective structure.
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.
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 25, 2025.
Manufacturing Our products require a wide variety of components and materials, which are subject to price and supply fluctuations.
Manufacturing Our products require a wide variety of components and materials, which are subject to price, tax/tariff, and supply fluctuations.
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.
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); grid edge devices; distribution automation communications; smart street lighting; smart city sensors and applications; and leak detection and applications for both gas and water systems.
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.
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 will vary based on actual currency rates at the time of shipment, availability of critical supply components, and adjusted customer project timing.
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.
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 grid edge intelligence, energy and water management, smart city applications, Industrial Internet of Things (IIoT) and critical infrastructure and related services.
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.
Our primary competitors include LM Ericsson Telephone Company, Landis+Gyr, Advanced Energy Industries, 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.
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.
No single customer represented more than 10% of total revenues for the years ended December 31, 2024, 2023, and 2022. Our 10 largest customers in each of the years ended December 31, 2024, 2023, and 2022, accounted for approximately 33%, 36%, and 32% of total revenues.
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.
We invested approximately $215 million, $209 million, and $185 million in research and development in 2024, 2023, and 2022, which represented 9% of total revenues for 2024 and 10% of total revenues for 2023 and 2022. Refer to Item 1A: Risk Factors for further discussion related to costs of developing competitive products and services.
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.
Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard electricity, gas, 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 may be sold as part of an Itron end-to-end solution and designed to meet market requirements; and the implementation and installation of communicating and non-communicating devices.
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.
Name Age Position Thomas L. Deitrich 58 President and Chief Executive Officer Joan S. Hooper 67 Senior Vice President and Chief Financial Officer Laurie A. Hahn 57 Senior Vice President, Human Resources Justin K. Patrick 52 Senior Vice President, Device Solutions John F. Marcolini 52 Senior Vice President, Networked Solutions Donald L. Reeves 57 Senior Vice President, Outcomes Christopher E.
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.
In 2018, we strengthened our ability to deliver a broader set of solutions and increased our pace of growth and innovation in the utility, smart city, and broader IIoT markets with the acquisition of Silver Spring Networks, Inc.
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.
Ware 56 Senior Vice President, General Counsel and Corporate Secretary David M. Wright 55 Vice President, Corporate Controller and Chief Accounting Officer 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.
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.
Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, network design services, and associated head-end management and application software designed and sold as a complete solution for acquiring and transporting robust application-specific data.
We invent new ways for cities and utilities to work together so they can use data captured by our intelligent endpoints, sensors, and systems to cost-effectively leverage their infrastructure to deliver multiple services and applications on a reliable, intelligent platform capable of serving all their customers.
We facilitate new ways for cities and utilities to work together so they can use data captured by intelligent endpoints, sensors, and systems to cost-effectively leverage their infrastructure to deliver multiple services and applications on a reliable, intelligent platform.
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.
Human Capital As of December 31, 2024, we had 5,788 people in our workforce, including 5,040 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.
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.
Christopher E. Ware is Senior Vice President, General Counsel and Corporate Secretary. Mr. 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.
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.
For utilities and cities, we build innovative systems, improve operating efficiencies, expand resiliency, enhance safety, 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.
The 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.
The portfolio includes hardware products used for: • measurement, control, or sensing of electricity, gas, water, and other infrastructure assets • 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 2 Table of Contents • 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.
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 foster this culture through a variety of voluntary programs available to our employees. 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.
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.
A direct sales force is utilized for larger utility 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.
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.
Efficiently managing resources within energy, water, and cities is a global priority, as increasing populations and resource consumption, along with extreme weather events, grid complexity from distributed energy resources, and energy requirements driven by data centers and growth in Artificial Intelligence (AI), increase the stress on aging infrastructure.
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 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 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.
From 2005 to 2016, Mr. Reeves held several managed services and engineering positions at SSNI. Prior to joining SSNI, 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.
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.
The following is a discussion of our solutions, markets, and operating segments. 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 Protecting our world's energy and water is essential.
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 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 can have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products that may be part of a complete end-to-end solution.
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.
In 2017, we completed our acquisition of Comverge, which e nabled us to offer integrated cloud-based demand response, energy efficiency, and customer 1 Table of Contents engagement solutions.
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.
Through acquisitions, organic growth, and our focus on innovation, Itron is a leading provider of technology to support better decision making, visibility, and control at the grid edge. By digitizing and automating infrastructure, Itron helps utilities and cities operate more efficiently, increase grid resilience and reliability, integrate distributed energy resources, and provide responsible energy and water management.
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.
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. We support a worldwide network of connected devices and sensors, and we will continue to develop more applications, new opportunities, and value-added outcomes for our customers in the future.
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).
The table below provides the breakdown of our employees by region and self-identified gender: As of December 31, 2024 Region Male Female Other Total Number of Employees Percentage of Total Employees Americas 1,822 835 — 2,657 53 % Europe, Middle East and Africa 848 487 3 1,338 27 % Asia Pacific & Other 791 252 2 1,045 20 % Total (1) 3,461 1,574 5 5,040 (1) These numbers do not include contingent workers (748 as of December 31, 2024).
These forecasts represent our estimates of future demand for our products based upon historical trends and analysis from our sales and product management functions, as adjusted for overall market conditions.
Our 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 forecasts. The forecasts represent our estimates of future demand for our products based upon historical trends and analysis from our sales and product management functions, as adjusted for overall market conditions.
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.
This approach allows us to reduce the costs related to our manufacturing overhead and inventory, provides geographic diversity, and allows us to 4 Table of Contents adjust more quickly to changing customer demand.
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 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 enable grid edge intelligence and manage, organize, analyze, and interpret raw, anonymized data using artificial intelligence, machine learning, statistical modeling, and other analytics.
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.
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. He also held roles in the U.S. Attorney's Office, Department of Justice, and several private law firms. David M.
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.
Incorporated in 1977 with an initial 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.
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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.
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Itron provides an integrated, intelligent portfolio of endpoints (such as sensors, switches, and meters) that collect data, control devices, and take action in the field. Our communication networks harvest that data and deliver it where it's needed; and software and services turn that data into insights for analysis and action.
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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.
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With Itron, our customers achieve more efficient operations, ensure system resilience, better engage consumers, keep pace with demand, and enhance profitability. We have nearly 50 years of experience supporting utilities and cities in the management of their data and critical infrastructure needs.
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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.
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Balancing supply with growing and changing demand, aging infrastructure, increasing consumer expectations, physical security, cybersecurity of assets, extreme weather, sustainability, and resource efficiency are all challenging our customers' ability to transition to a cleaner energy and water economy - while continuing to deliver safe, reliable, and affordable service.
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Our IIoT platform allows utility and smart city applications to be run and managed on a flexible multi-purpose network.
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We use de-identified data to enhance our solutions, services, and products. By analyzing aggregated, anonymized data, we gain valuable insights that drive innovation and improve customer experiences while protecting the privacy and confidentiality of customers and consumers.
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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.
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Industry Drivers Utilities and municipalities are experiencing rapid change related to demand, 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.
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(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.
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Networked Solutions includes products and software for the implementation, installation, and management of communicating devices and data networks.
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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.
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This allows us to help utilities improve decision making, maximize operational profitability, engage consumers, enhance resource efficiency, improve grid resiliency and reliability, and 3 Table of Contents deliver value for utilities and smart cities.
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(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.
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Total Bookings Total Backlog 12-Month Backlog In millions December 31, 2024 $ 2,698 $ 4,734 $ 1,767 December 31, 2023 2,155 4,511 2,032 December 31, 2022 2,505 4,523 2,052 Sales and Distribution We use a combination of direct and indirect sales channels to serve our customers.
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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.
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In March 2022, he was promoted to Vice President, Legal and Corporate Secretary and then to Senior Vice President in March 2023. He is responsible for Itron's corporate governance, business legal solutions, compliance and litigation and intellectual property development and protection. Before joining Itron, Mr.
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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.
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Wright is Vice President, Corporate Controller and Chief Accounting Officer. He was appointed as Chief Accounting Officer in September 2024, and he is responsible for the company's global accounting. Mr. Wright rejoined the Company in September 2018 and has served as Vice President and Corporate Controller beginning in May 2019.
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He also held roles in the U.S. Attorney's Office, Department of Justice, and several private law firms. 8 Table of Contents
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He began his career in Deloitte's external audit practice, from 1997 to 2008. He originally joined Itron in October 2008 as Assistant Controller for Technical Accounting followed by roles of increasing responsibility.
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He served as VP - Accounting, Tax, and External Reporting at Red Lion Hotels Corporation from December 2015 to February 2018 and was interim CFO from April 2016 to April 2017. Mr. Wright is a Certified Public Accountant licensed in the State of Washington. 8 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
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.
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.
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, governmental and regulatory decisions, weather conditions, climate disruption, and fluctuating interest rates.
In a number of countries outside the U.S., our employees are covered by collective bargaining agreements. As the result of various corporate or operational actions, which our management has undertaken or may be made in the future, we could encounter labor disruptions. These disruptions may be subject to local media coverage, which could damage our reputation.
In a number of countries outside the U.S., our employees are covered by collective bargaining agreements. As the result of various social, corporate, or operational actions, which our management has undertaken or may be made in the future, we could encounter labor disruptions. These disruptions may be subject to local media coverage, which could damage our reputation.
The hedge counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the convertible notes (and are likely to do so during any observation period related to a conversion of convertible notes or following any repurchase of convertible notes by us in connection with any fundamental change repurchase date or otherwise).
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2021 Notes and/or the 2024 Notes (and are likely to do so during any observation period related to a conversion of convertible notes or following any repurchase of convertible notes by us in connection with any fundamental change repurchase date or otherwise).
These competitors may sell products and services at lower prices in order to gain or grow market share, be able to respond more quickly to new or emerging technologies and changes in customer requirements and may have made or make strategic acquisitions or establish cooperative relationships among themselves or with third parties that enhance their ability to address the needs of our prospective customers.
These competitors may sell products and services at lower prices in order to gain or grow market share, be able to respond more quickly to new or emerging technologies including AI and changes in customer requirements and may have made or make strategic acquisitions or establish cooperative relationships among themselves or with third parties that enhance their ability to address the needs of our prospective customers.
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.
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 14 Table of Contents 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 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 specifications for such meters may require interchangeability, which could lead to further commoditization of the meter, which could unfavorably 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.
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.
If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products. 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.
Other risks related to our international operations include lack of availability of qualified third-party financing, generally longer receivable collection periods than those commonly practiced in the United States, trade restrictions, changes in tariffs, labor disruptions, difficulties in staffing and managing international operations, difficulties in imposing and enforcing operational and financial controls at international locations, potential insolvency of international distributors, preference for local vendors, burdens of complying with different permitting standards and a wide variety of foreign laws, and obstacles to the repatriation of earnings and cash.
Other risks related to our international operations include lack of availability of qualified third-party financing, generally longer receivable collection periods than those commonly practiced in the United States, trade restrictions, changes in tariffs, sanctions, labor disruptions, difficulties in staffing and managing international operations, difficulties in imposing and enforcing operational and financial controls at international locations, potential insolvency of international distributors, 15 Table of Contents preference for local vendors, burdens of complying with different permitting standards and a wide variety of foreign laws, and obstacles to the repatriation of earnings and cash.
The convertible note hedge transactions are generally to reduce the potential dilution upon any conversion of convertible notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be.
The convertible note hedge transactions are generally designed to reduce the potential dilution upon any conversion of the 2021 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be.
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.
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 and capped call transactions may affect the value our common stock.
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.
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.
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.
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, tariffs, natural disasters, epidemics or pandemics, political instability, wars, including the conflicts in Ukraine and Israel, are beyond our control and could unfavorably affect our business and financial condition.
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.
Certain Itron interest rate derivatives and a portion of Itron indebtedness bear interest at variable interest rates, primarily now based on SOFR, which is 19 Table of Contents 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.
This could result in increased borrowing costs for the Company if we utilize the credit facility. At December 31, 2023, there were no outstanding loan balances under the credit facility. 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.
This could result in increased borrowing costs for the Company if we utilize the credit facility. At December 31, 2024, there were no outstanding loan balances under the 2018 credit facility. 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.
Since we do not control the production of these raw materials and component parts, there may be delays caused by an interruption in the production or transportation of these materials for reasons that are beyond our control. World commodity markets, inflation, tariffs, or embargoes may also affect the availability or prices of raw materials or component parts.
Since we do not control the production of these raw materials and component parts, there may be delays caused by an interruption in the production or transportation of these materials for reasons that are beyond our control. World commodity markets, inflation, sanctions, tariffs, trade policies, and embargoes may also affect the availability or prices of raw materials or component parts.
If government regulations regarding the smart grid and smart metering are delayed, revised to permit lower or different investment levels in metering infrastructure, or terminated altogether, this could have a material adverse effect on our results of operation, cash flow, and financial condition. We must continually shift and adapt our products and services mix, which requires substantial judgment and investment.
If government regulations regarding the smart grid and smart metering are delayed, revised to permit lower or different investment levels in metering infrastructure, or terminated altogether, this could have a material adverse effect on our results of operations, cash flows, and financial condition. We must continually shift and adapt our products and services mix, which requires substantial judgment and investment.
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.
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, financial condition, and results of operations.
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.
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.
If we are required to seek licenses under patents or other intellectual property rights of others, we may not be able to acquire these licenses at acceptable terms, if at all.
If we are required to seek licenses under patents 17 Table of Contents or other intellectual property rights of others, we may not be able to acquire these licenses at acceptable terms, if at all.
At December 31, 2023, there were no outstanding loan balances under the credit facility. The adoption of Secured Overnight Financing Rate (SOFR) may adversely affect our borrowing costs.
At December 31, 2024, there were no outstanding loan balances under the 2018 credit facility. The recent adoption of Secured Overnight Financing Rate (SOFR) may adversely affect our borrowing costs.
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.
Certain of our customer projects have in the past experienced, and may in the future experience, delays in deliveries, with revenues originally forecasted in prior periods shifting to future periods. We face competition, which may result in a loss of market share or price erosion of our products and services.
In connection with the issuance of the convertible notes, we entered into convertible note hedge transactions with certain financial institutions, which we refer to as "hedge counterparties". We also entered into warrant transactions with the hedge counterparties pursuant to which we sold warrants for the purchase of our common stock.
In connection with the issuance in 2021 of the 0.00% Convertible Senior Notes due 2026 (the 2021 Notes), we entered into convertible note hedge transactions with certain financial institutions, which we refer to as "hedge counterparties". We also entered into warrant transactions with the hedge counterparties pursuant to which we sold warrants for the purchase of our common stock.
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.
In addition, there is potential for increased costs on materials to comply with global regulations and other regional requirements. Inflation in our raw materials and component costs, freight charges, sanctions, tariffs, and labor costs may increase above historical levels due to, among other things, the continuing impacts of an uncertain economic environment.
In addition, we recognize contingent liabilities for additional product-failure related costs. These warranty and related product-failure allowances may be inadequate due to product defects and unanticipated component failures, as well as higher than anticipated material, labor, and other costs we may incur to replace projected product failures.
These warranty and related product-failure allowances may be inadequate due to product defects and unanticipated component failures, as well as higher than anticipated material, labor, and other costs we may incur to replace projected product failures.
We have made, and expect to continue to make, substantial investments in technology development. However, we may experience unforeseen problems in the development or performance of our technologies or products, which can prevent us from meeting our research and development schedules.
We may not have the necessary capital, or access to capital at acceptable terms, to make these investments. We have made, and expect to continue to make, substantial investments in technology development. However, we may experience unforeseen problems in the development or performance of our technologies or products, which can prevent us from meeting our research and development schedules.
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.
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.
Our market is characterized by increasing complexity driven by evolving technology, increased regulatory pressures, and the emergence of new competitive products, all of which impact the way our products and services are designed, developed, marketed, and delivered. The shift in, and increasing complexity of, our products and services mix involves judgment and entails risks.
Our market is characterized by increasing complexity driven by evolving technology including AI, emerging laws and regulation, and the introduction of new competitive products, all of which impact the way our products and services are designed, developed, marketed, and delivered. The shift in, and increasing complexity of, our products and services mix involves judgment and entails risks.
In addition, our inability to meet customer performance, safety, and service expectations may damage our reputation and could consequently limit our ability to retain existing customers and attract new customers, which would adversely affect our ability to generate revenue and unfavorably impact our operating results.
In addition, our inability to meet customer performance, safety, and service expectations may damage our reputation and could consequently limit our ability to retain existing customers and attract new customers, which would adversely affect our ability to generate revenue and unfavorably impact our operating results. 11 Table of Contents Product defects could disrupt our operations and result in harm to our reputation and financial position.
Ransomware and cyber extortion attacks, including those perpetrated by organized crime, nation-state, and nation-state-supported actors, are becoming increasingly prevalent and severe and could lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds. Any unauthorized access to our systems could result in misappropriation of the data or disruption of operations.
Ransomware and cyber extortion attacks, including those perpetrated by organized crime, nation-state, and nation-state-supported actors, are becoming increasingly prevalent and severe and could lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds. Increased use of AI in products and in the workplace could lead to risks and challenges.
If one or more of the depository institutions in which we maintain significant cash balances were to fail, our ability to access these funds might be temporarily or permanently limited, and we could face material liquidity problems and financial losses. The lenders of our 2018 credit facility include several participating financial institutions.
We are exposed to counterparty default risks with our financial institutions and insurance providers. If one or more of the depository institutions in which we maintain significant cash balances were to fail, our ability to access these funds might be temporarily or permanently limited, and we could face material liquidity problems and financial losses.
In December 2022, the Council of the European Union adopted OECD Pillar 2 for implementation by European Union member states by December 31, 2023. Legislation is in various stages of adoption, from formal legislative proposals to passage into law, in most countries where Itron has significant operations, and is expected to take effect for calendar year 2024.
In December 2022, the Council of the European Union adopted OECD Pillar 2 for implementation by European Union member states by December 31, 2023. The resulting legislation in most countries where Itron has significant operations is taking effect for calendar year 2024.
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.
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.
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.
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) that lead to extended downtime for the supplier or that lead to Itron intellectual property theft, rogue insiders impacting the quality or integrity of the products, cost increases, or other similar problems.
The costs for complying with these and similar laws may be significant and could require significant management time and focus. 21 Table of Contents Any violation of these or similar laws, intentional or unintentional, could result in fines and/or criminal penalties and have a material adverse effect on our business, financial condition, or results of operations.
Any violation of these or similar laws, intentional or unintentional, could result in fines and/or criminal penalties and have a material adverse effect on our business, financial condition, or results of operations.
Additionally, the disruptions could delay our ability to meet customer orders and could adversely affect our results of operations. Any labor disruptions could also have an impact on our other employees.
Additionally, the disruptions could delay our ability to meet customer orders and 16 Table of Contents could adversely affect our results of operations. Any labor disruptions could also have an impact on our other employees. Employee morale and productivity could suffer, and we may lose valued employees whom we wish to retain.
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.
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.
There can be no assurance we will realize the expected benefits from these strategic alliances. If successful, these relationships may be mutually beneficial and result in shared growth. However, alliances carry an element of risk because, in most cases, we must both compete and collaborate with the same company from one market to the next.
If successful, these relationships may be mutually beneficial and result in shared growth. However, alliances carry an element of risk because, in most cases, we must both compete and collaborate with the same company from one market to the next. Should our strategic partnerships fail to perform, we could experience delays in research and development or experience other operational difficulties.
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.
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.
As public awareness of data security events and privacy violations by other companies increases, actual or perceived concerns about our privacy and data security compliance measures may damage our reputation, whether such concerns are valid or invalid.
Depending on the jurisdiction, security incidents could trigger notice requirements to impacted individuals and regulatory investigations leading to penalties and increased reputational harm. As public awareness of data security events and privacy violations by other companies increases, actual or perceived concerns about our privacy and data security compliance measures may damage our reputation, whether such concerns are valid or invalid.
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.
Therefore, the adaptation to new technologies or standards or the development and launch of new products or services could result in lower revenue, lower margins, and/or higher costs, which could unfavorably impact our financial performance. 9 Table of Contents 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.
The future enactment of more restrictive laws, rules or regulations and future enforcement actions or investigations could have materially adverse impacts, such as increased costs and restrictions on our businesses.
The future enactment of more restrictive laws, rules or regulations and future enforcement actions or investigations could have materially adverse impacts, such as increased costs and restrictions on our businesses. 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.
Employee morale and productivity could suffer, and we may lose valued employees whom we wish to retain. 16 Table of Contents We may not realize the expected benefits from strategic alliances, which could adversely affect our operations. We have several strategic alliances with large, complex organizations and other companies with which we work to offer complementary products and services.
We may not realize the expected benefits from strategic alliances, which could adversely affect our operations. We have several strategic alliances with large, complex organizations and other companies with which we work to offer complementary products and services. There can be no assurance we will realize the expected benefits from these strategic alliances.
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.
A change in these principles or guidance, or in their interpretations, may have a material 12 Table of Contents effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported results.
Failing to comply with privacy, data protection, and cybersecurity laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or other adverse consequences.
Failing to comply with privacy, data protection, and cybersecurity laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or other adverse consequences. 18 Table of Contents The occurrence of security incidents 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.
Bribery Act imposes significant oversight obligations on us and could impact our operations outside the United Kingdom.
Bribery Act imposes significant oversight obligations on us and could impact our operations outside the United Kingdom. The costs for complying with these and similar laws may be significant and could require significant management time and focus.
Certain customer arrangements within our backlog may include previously committed pricing, and we may or may not be able to fully recover increased costs through pricing actions with these customers. Our operations may be adversely impacted if key vendors, strategic partners, and other third parties fail to perform.
Any impacts resulting from tariffs and retaliatory actions by other countries could be substantial. Certain customer arrangements within our backlog may include previously committed pricing, and we may or may not be able to fully recover increased costs through pricing actions with these customers.
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.
In recent years, our ability to obtain adequate supply of semiconductor components has impacted our ability to service customer demand in a timely manner. Temporary imbalance in supply and demand may create business uncertainties that include costs and availability.
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.
AI technology is rapidly evolving and can present additional risks and challenges. 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.
If any of our products contain a defect, a compatibility or interoperability issue, or other types of errors, we may have to devote significant time and resources to identify and correct the issue. We provide product warranties for varying lengths of time and establish allowances in anticipation of warranty expenses.
Our products are complex and may contain defects or experience failures due to any number of issues in design, materials, deployment, and/or use. If any of our products contain a defect, a compatibility or interoperability issue, or other types of errors, we may have to devote significant time and resources to identify and correct the issue.
Currently, we have not identified any significant decrease in long-term customer demand for our products and services.
We may or may not be able to fully recover these increased costs through pricing actions with our customers. Currently, we have not identified any significant decrease in long-term customer demand for our products and services.
Certain of our products, subassemblies, and system components, including most of our circuit boards, are procured from limited or sole sources.
Our operations may be adversely impacted if key vendors, strategic partners, and other third parties fail to perform. Certain of our products, subassemblies, and system components, including most of our circuit boards, are procured from limited or sole sources.
We have implemented multiple restructuring projects to improve our cost structure, and we may engage in similar restructuring activities in the future.
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 sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, India, and Indonesia.
We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, India, and Indonesia. 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.
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.
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.
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.
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 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.
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. Legal and Regulatory Risks Changes in tax laws, valuation allowances, and unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.
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.
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.
Any of these activities could adversely affect the value of our common stock. Future sales of our stock in the public market, or the issuance of stock upon conversion of the convertible notes, could cause our stock price to decline.
In addition, applicable law, regulatory authorities, and the agreements governing our other indebtedness may restrict our ability to repurchase the convertible notes or pay any cash amounts due upon conversion. Future sales of our stock in the public market, or the issuance of stock upon conversion of the convertible notes, could cause our stock price to decline.
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.
Efforts continue with suppliers to improve supply resiliency, including the approval of alternate sources. 10 Table of Contents Additionally, inflation in our raw materials and component costs, freight charges, sanctions, tariffs, and labor costs may increase above historical levels due to, among other things, the continuing impacts of an uncertain economic environment.
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Therefore, the adaptation to new technologies or standards or the development and launch of new products or services could result in lower revenue, lower margins, and/or higher costs, which could unfavorably impact our financial performance.
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Item 1A: Risk Factors The risks described below could materially and adversely affect our business, results of operations, cash flows, and financial condition. These risk factors do not identify all risks that we face; we could also be affected by other risks that are not presently known to us or that we currently consider to be immaterial.
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We are impacted by the availability and prices of raw materials and component parts used in the manufacturing process of our products.
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These factors should be carefully reviewed in conjunction with Part II, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations. Many factors affect more than one category, and the factors are not in order of significance or probability of occurrence because they have been grouped by categories.
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Product defects could disrupt our operations and result in harm to our reputation and financial position. Our products are complex and may contain defects or experience failures due to any number of issues in design, materials, deployment, and/or use.
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We provide product warranties for varying lengths of time and establish allowances in anticipation of warranty expenses. In addition, we recognize contingent liabilities for additional product-failure related costs.
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Should our strategic partnerships fail to perform, we could experience delays in research and development or experience other operational difficulties. We are exposed to counterparty default risks with our financial institutions and insurance providers.
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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. As of December 31, 2024, our total outstanding indebtedness was $1.3 billion as described under Liquidity and Capital Resources.
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The occurrence of security incidents 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. Depending on the jurisdiction, security incidents could trigger notice requirements to impacted individuals and regulatory investigations leading to penalties and increased reputational harm.
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In connection with the issuance in 2024 of the 1.375% Convertible Senior Notes due 2030 (the 2024 Notes), we entered into capped call transactions with certain financial institutions, which we refer to as the option counterparties and, together with the hedge counterparties, the counterparties.
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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.
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The capped call transactions are generally designed to reduce the potential dilution to our common stock upon any conversion of the 2024 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.
Removed
During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due.
Added
Any of these activities could adversely affect the value of our common stock. We may not have the ability to raise the funds necessary to settle conversions of the convertible notes or to repurchase the convertible notes upon a fundamental change.
Removed
Beginning January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years, dependent upon the geography in which the expenditures are incurred.
Added
Noteholders may require us to repurchase their convertible notes following a fundamental change (as defined in the indenture for such convertible notes) at a cash repurchase price generally equal to the principal amount of the convertible notes to be repurchased, plus accrued and unpaid special and additional interest, if any.
Removed
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.
Added
However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of convertible notes surrendered therefor or convertible notes being converted.
Removed
In August 2022, the Inflation Reduction Act was signed into law, which made a number of changes to the Internal Revenue Code, including adding a 1% excise tax on stock buybacks by publicly traded corporations and a 15% minimum tax on adjusted financial statement income of certain large companies.
Added
The counterparties of the capped call transactions relating to the 2024 Notes and the hedge and warrant transactions relating to our 2021 Notes are financial institutions or affiliates of financial institutions, and we will be subject to the risk that one or more of such counterparties may default under the transactions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeExecutive management reports on the status of the ISSC to the Board on a regular basis. At each Board meeting, a summary is provided covering the periodic assessment of Itron's Information Security Program. Semiannually, a summary is provided to the Board about Itron's internal response preparedness and assessments of risks.
Biggest changeThe Board provides oversight for cybersecurity within the Company and includes one director with cybersecurity expertise. Executive management reports on the status of the ISSC to the Board on a regular basis. At each Board meeting, a summary is provided covering the periodic assessment of Itron's Information Security Program.
Our security program uses a "defense in depth" philosophy, meaning that multiple controls must be breached for an attack to be successful. We maintain a series of both protective and detective controls to ensure any breakdown or bypass of protection mechanisms is detected and escalated for response.
Our security program uses a "defense in depth" philosophy, meaning that multiple controls must be breached for an attack to be successful. We maintain a series of both protective and detective controls to enable breakdown or bypass of protection mechanisms to be detected and escalated for response.
The ISSC consists of senior executives, including our CEO and CFO. The ISSC meets quarterly to discuss strategy and general updates and is advised by company personnel with expertise and experience in cybersecurity risk management.
The ISSC consists of senior executives, including our CEO and CFO. The ISSC meets quarterly to discuss strategy and general updates and is advised by company personnel with expertise and experience in cybersecurity risk management. We have a risk management process utilizing a Governance, Risk, and Compliance system.
We perform logging and monitoring across systems, directed to a centralized, secure logging system operated by the Information Security team. Significant events are assessed on a case-by-case basis for their potential impact and whether they could potentially become material. We hold certifications to meet the requirements of our customers and regulators, such as ISO 27001, IEC62443, and others.
We perform logging and monitoring across systems, directed to a centralized, secure logging system operated by the Information Security team. Significant events are assessed systematically on a case-by-case basis for their potential impact and whether they could potentially become material.
At each Board meeting, information regarding the current maturity level of the program, as measured against the National Institutes of Standards and Technology Cybersecurity Framework, is presented. Due to the nature of our business, a material security incident could have a significant impact on both our brand reputation and our ability to deliver services to our clients.
Due to the nature of our business, a material security incident could have a significant impact on both our brand reputation and our ability to deliver services to our clients.
In the event of a significant cybersecurity or data privacy incident, the ISSC members are notified and updated on the status of the incident by an Incident Response Team. We have a risk management process utilizing a Governance, Risk, and Compliance system.
In the event of a significant cybersecurity or data privacy incident, the ISSC members are notified and updated on the status of the incident by an Incident Response Team (IRT). The IRT utilizes a process to evaluate the potential materiality of an incident. This process guides the IRT to provide information to executive leadership for materiality determination.
In addition, Itron maintains SOC 1 and/or SOC 2 attestations for the majority of our customer-facing managed services businesses. We maintain a cybersecurity incident policy, which provides guidelines for engaging our Board of Directors (the Board) in material cybersecurity incidents and events, including potential ransomware payments.
We maintain a cybersecurity incident policy, which provides guidelines for informing our Board of Directors (the Board) of material cybersecurity incidents and events, including potential ransomware payments. We also hold insurance with the intent to cover cybersecurity incidents.
Removed
During the period of this report, we have experienced no material cybersecurity incidents, nor any resulting materially adverse effects. 22 Table of Contents
Added
To address risk related to third-party service providers, we have multiple processes in place to safeguard company and customer information. Upon obtaining a new vendor, we complete a risk assessment that is reviewed at least every three years. We maintain a Supplier Code of Conduct that outlines vendor expectations in areas including network security, data protection, and security breach notifications.
Added
In the case where a contract with a vendor relates to our service to customers, the contractual terms for certain cybersecurity parameters are passed down to the vendor. We hold certifications to meet the requirements of 22 Table of Contents our customers and regulators, such as ISO 27001, IEC62443, and others.
Added
In addition, Itron maintains SOC 1 and SOC 2 attestations for the majority of our customer-facing managed services businesses. Through third-party incident response experts, we conduct incident response tabletop exercises each year with both the technical teams and ISSC designed to improve our systems and processes, and we have included our Board in a similar exercise.
Added
Semiannually, the Director of Information Security presents to the Board about the status of Itron's overall security program, internal response preparedness, and assessments of risks. At each Board meeting, information regarding the current maturity level of the program, as measured against the National Institutes of Standards and Technology Cybersecurity Framework, is presented.
Added
As of the date of this report, we do not believe any risks from cybersecurity incidents have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Added
There can be no guarantee that the actions and controls we and our third-party service providers have implemented and are implementing will be sufficient to protect our systems, information or other property. For a description of the risks from cybersecurity threats that may materially affect us, see our risk factors under Part 1. Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeThe following table lists our major manufacturing facilities by region and location as of December 31, 2024: Region Location Square Footage North America Oconee, SC (O) 325,840 Europe, Middle East, and Africa Macon, France (O) Massy, France (L) Oldenburg, Germany (L) Asti, Italy (O) 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 As of the end of 2024, the manufacturing facilities in Chasseneuil, France and Waseca, Minnesota have ceased production operations and are being closed.
In addition to our manufacturing facilities, we have numerous sales offices, research and development facilities, and distribution centers, which are located throughout the world.
We believe our properties are generally in good condition, well maintained and are suitable and adequate to carry on our business at capacity for the foreseeable future. In addition to our manufacturing facilities, we have numerous sales offices, research and development facilities, and distribution centers, which are located throughout the world. 23 Table of Contents
Removed
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

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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.
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. 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.
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
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.
Previous site owners used various chlorinated solvents and potential contaminants at the site. In 2013, Itron entered into a voluntary cleanup contract with the South Carolina Department of Health and Environmental Control (DHEC). Itron completed that process in 2019.
In 2007-2008, Itron acquired an industrial site located at 1310 Emerald Road, Greenwood, South Carolina. Previous site owners used various chlorinated solvents and potential contaminants at the site. In 2013, Itron entered into a voluntary cleanup contract with the South Carolina Department of Health and Environmental Control (DHEC). Itron completed that process in 2019.
Removed
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.
Added
The remediation plan proposal was approved by the Italian Authorities Higher Institute of Health (ISS) in September 2024. Itron recognized an additional $0.6 million in costs during the fourth quarter of 2024 related to the increase in forecasted provision required by the approved plan. Schlumberger, pursuant to the indemnification agreement, reimburses Itron for all remediation costs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur 2023 peer group includes the following publicly traded companies: LM Ericsson Telephone Company, Landis+Gyr, Mueller Water Products, and Xylem, Inc.
Biggest changeOur 2024 peer group includes the following publicly traded companies: LM Ericsson Telephone Company, Landis+Gyr, Advanced Energy Industries, and Xylem, Inc. Our 2023 peer group includes the following publicly traded companies: LM Ericsson Telephone Company, Landis+Gyr, Mueller Water Products, and Xylem, Inc.
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 above presentation assumes $100 invested on December 31, 2019 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.
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.
Issuer Repurchase of Equity Securities Period Total Number of Shares Purchased (1)(3) 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, 2024 through October 31, 2024 — $ — — $ 100,000 November 1, 2024 through November 30, 2024 — — — 100,000 December 1, 2024 through December 31, 2024 — — — 100,000 Total — — (1) Effective September 19, 2024, Itron's Board of Directors authorized a 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, 2023, and the NASDAQ Composite Index. * $100 invested on December 31, 2018, 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, 2024, and the NASDAQ Composite Index. * $100 invested on December 31, 2019, in stock or index, including reinvestment of dividends.
(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.
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.
Added
In 2024, we added Advanced Energy Industries as a peer and removed Mueller Water Products to better reflect our business, 50% of which is focused on electricity.
Added
(2) Excludes commissions. (3) Shares purchased may include shares transferred to us by certain employees who vested in restricted stock units and used shares to pay all, or a portion of, the related taxes. Holders At February 18, 2025, there were 140 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

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

105 edited+18 added−34 removed95 unchanged
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.
Biggest changeTOTAL COMPANY RECONCILIATIONS Year Ended December 31, In thousands, except per share data 2024 2023 NON-GAAP OPERATING EXPENSES GAAP operating expenses $ 575,207 $ 585,041 Amortization of intangible assets (17,828) (18,918) Restructuring (2,679) (43,989) Loss on sale of business (597) (667) Strategic initiative — 5 Acquisition and integration (723) (144) Non-GAAP operating expenses $ 553,380 $ 521,328 NON-GAAP OPERATING INCOME GAAP operating income $ 264,110 $ 128,867 Amortization of intangible assets 17,828 18,918 Restructuring 2,679 43,989 Loss on sale of business 597 667 Strategic initiative — (5) Acquisition and integration 723 144 Non-GAAP operating income $ 285,937 $ 192,580 NON-GAAP NET INCOME & DILUTED EPS GAAP net income attributable to Itron, Inc. $ 239,105 $ 96,923 Amortization of intangible assets 17,828 18,918 Amortization of debt placement fees 5,314 3,489 Restructuring 2,679 43,989 Loss on sale of business 597 667 Strategic initiative — (5) Acquisition and integration 723 144 Income tax effect of non-GAAP adjustments (1) (6,446) (10,339) Non-GAAP net income attributable to Itron, Inc. $ 259,800 $ 153,786 Non-GAAP diluted EPS $ 5.62 $ 3.36 Non-GAAP weighted average common shares outstanding - Diluted 46,187 45,836 45 Table of Contents TOTAL COMPANY RECONCILIATIONS Year Ended December 31, In thousands 2024 2023 ADJUSTED EBITDA GAAP net income attributable to Itron, Inc. $ 239,105 $ 96,923 Interest income (34,577) (9,314) Interest expense 15,379 8,349 Income tax provision 43,407 29,068 Depreciation and amortization 56,277 55,763 Restructuring 2,679 43,989 Loss on sale of business 597 667 Strategic initiative — (5) Acquisition and integration 723 144 Adjusted EBITDA $ 323,590 $ 225,584 FREE CASH FLOW Net cash provided by operating activities $ 238,175 $ 124,971 Acquisitions of property, plant, and equipment (30,562) (26,884) Free Cash Flow $ 207,613 $ 98,087 (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.
However, that date may be advanced to December 14, 2025 if Itron does not settle or extend a sufficient portion of outstanding convertible notes, as detailed in the seventh amendment. On March 12, 2021, we closed the sale of $460 million in convertible notes in a private placement to qualified institutional buyers.
However, that date may be advanced to December 14, 2025 if Itron does not settle or extend a sufficient portion of the outstanding 2021 convertible notes, as detailed in the seventh amendment. On March 12, 2021, we closed the sale of $460 million in convertible notes (the 2021 Notes) in a private placement to qualified institutional buyers.
Accordingly, there is no provision for U.S. deferred taxes on this cash. If this cash were repatriated to fund U.S. operations, additional withholding tax costs may be incurred. Tax is only one of many factors that we consider in the management of global cash.
Accordingly, there is no provision for U.S. deferred taxes on this cash. If this cash were repatriated to fund U.S. operations, additional withholding tax costs may be incurred. Tax is only one of the many factors that we consider in the management of global cash.
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.
While the one-time sale of the platform and endpoints are primarily delivered via our Networked Solutions segment, our enhanced solutions, on-going monitoring, maintenance, software, analytics, and distributed intelligent applications are predominantly recognized in our Outcomes segment. We anticipate the opportunity to increase our penetration of Outcomes applications, software, and managed applications will increase as our endpoints under management increases.
While the one-time sale of the platform and endpoints is primarily delivered via our Networked Solutions segment, our enhanced solutions, on-going monitoring, maintenance, software, analytics, and distributed intelligent applications are predominantly recognized in our Outcomes segment. We anticipate the opportunity to increase our penetration of Outcomes applications, software, and managed applications will increase as our endpoints under management increases.
Contingencies Refer to Item 8: Financial Statements and Supplementary Data, Note 12: Commitments and Contingencies. Critical Accounting Estimates and Policies Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.
Contingencies Refer to Item 8: Financial Statements and Supplementary Data, Note 12: Commitments and Contingencies. Critical Accounting Estimates Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.
The "endpoint under management" metric only accounts for the specific, unique endpoint itself, though that endpoint may have multiple applications, services, outcomes, and higher margin recurring offerings associated with it. This metric does not reflect the multi-application value that can be derived from the individual endpoint itself.
The endpoints under management metric only accounts for the specific, unique endpoint itself, though that endpoint may have multiple applications, services, outcomes, and higher margin recurring offerings associated with it. This metric does not reflect the multi-application value that can be derived from the individual endpoint itself.
For a description of our letters of credit and performance bonds, and the amounts available for additional borrowings or letters of credit under our lines of credit, including the revolver that is part of our credit facility, refer to Item 8: Financial Statements and Supplementary Data, Note 12: Commitments and Contingencies.
For a description of our letters of credit and performance bonds, and the amounts available for additional borrowings or letters of credit under our lines of credit, including the revolver that is part of our 2018 credit facility, refer to Item 8: Financial Statements and Supplementary Data, Note 12: Commitments and Contingencies.
Additionally, the items that we exclude in our calculation of adjusted EBITDA may differ from the items that our peer companies exclude when they report their results. We compensate for these limitations by providing a reconciliation of this measure to GAAP net income (loss).
Additionally, the items that we exclude in our calculation of adjusted EBITDA may differ from the items that our peer companies exclude when they report their results. We compensate for these limitations by providing a reconciliation of this measure to GAAP net income.
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.
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.
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.
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 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 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.
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.
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.
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.
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, 2024.
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.
For euro denominated defined benefit pension plans, which represent 80% 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 2023 and 2022 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 2024 and 2023 and should be read in conjunction with Item 8: Financial Statements and Supplementary Data.
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.
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 following their one-time installation of an endpoint.
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.
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. 27 Table of Contents We have three measures of segment performance: revenues, gross profit (margin), and operating income (margin). Intersegment revenues are minimal.
Certain of our revenue arrangements include an extended or customer-specific warranty provision that covers all or a portion of a customer's replacement or repair costs beyond the standard warranty period. Whether or not the extended warranty is separately priced in the arrangement, a portion of the arrangement's total consideration is allocated to this extended warranty deliverable.
Certain of our revenue arrangements include an extended or customer-specific warranty provision that covers all or a portion of a customer's replacement or repair costs beyond the standard warranty period. Whether or not the extended warranty is 39 Table of Contents separately priced in the arrangement, a portion of the arrangement's total consideration is allocated to this extended warranty deliverable.
We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors such as existing backlog, expected future orders, supplier contracts, and expectations of competitive, business and economic environments.
We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors such as existing backlog, expected future 41 Table of Contents orders, supplier contracts, and expectations of competitive, business and economic environments.
Additionally, this metric excludes those endpoints that are non-communicating, non-Itron system hardware component sales or licensed applications that Itron does not manage the unit or the data from that unit directly.
Additionally, this metric excludes those endpoints that are non-communicating, non-Itron system hardware component sales or licensed applications for which Itron does not manage the unit or the data from that unit directly.
Our restructuring costs and any resulting accruals involve significant estimates using the best information available at the time the estimates are made. Our estimates involve a number of risks and uncertainties, some of which are beyond our control, including real estate market conditions and local labor and employment laws, rules, and regulations.
Our restructuring costs and any resulting accruals involve significant estimates using the best information available at the time the estimates are made. Our estimates involve a number of risks and 40 Table of Contents uncertainties, some of which are beyond our control, including real estate market conditions and local labor and employment laws, rules, and regulations.
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.
Accordingly, the amount of taxes that we would need to accrue and pay to repatriate foreign cash could vary significantly. Other Liquidity Considerations In certain of our consolidated international subsidiaries, we have joint venture partners who are minority shareholders.
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.
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 $28.5 million in cash payments remaining as of December 31, 2024 with cash outflows expected through 2027.
We consider these financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS.
We consider these financial measures to be useful metrics for management and investors 43 Table of Contents for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS.
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.
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.
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.
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 its behalf.
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.
For comparisons of fiscal years 2023 and 2022, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2023 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 26, 2024, and incorporated herein by reference.
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.
The purchase orders may include durations longer than one year, but these long-term agreements generally 37 Table of Contents 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, 2024. Other long-term liabilities consist of warranty obligations, estimated pension benefit payments, and other obligations.
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.
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 $5.1 million in 2024 and an increase of $1.9 million in 2023. Our foreign currency exposure relates to non-U.S. dollar denominated balances in our international subsidiary operations.
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.
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); grid edge devices; distribution automation communications; smart street lighting; smart city sensors and applications; and leak detection and applications for both gas and water systems.
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.
As of December 31, 2024, there was $46.1 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.
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.
At December 31, 2024, $3.6 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.
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.
Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard electricity, gas, 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 may be sold as part of an Itron end-to-end solution and designed to meet market requirements; and the implementation and installation of communicating and non-communicating devices.
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.
Networked Solutions – This segment primarily includes a combination of communicating devices (e.g., smart meters, modules, endpoints, and sensors), network infrastructure, network design services, and associated head-end management and application software designed and sold as a complete solution for acquiring and transporting robust application-specific data.
As of December 31, 2023, we expect cash payments of approximately $60 million for variable compensation during the first quarter of 2024. General Liquidity Overview We expect to grow through a combination of internal new research and development, licensing technology from and to others, distribution agreements, partnering arrangements, and acquisitions of technology or other companies.
As of December 31, 2024, we expect to make cash payments of approximately $64 million for variable compensation during the first quarter of 2025. 38 Table of Contents General Liquidity Overview We expect to grow through a combination of internal new research and development, licensing technology from and to others, distribution agreements, partnering arrangements, and acquisitions of technology or other companies.
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.
For further description of our borrowings, refer to Item 8: Financial Statements and Supplementary Data, Note 6: Debt. 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.
Management uses adjusted EBITDA as a performance measure for executive compensation. A limitation to using adjusted EBITDA is that it does not represent the total increase or decrease in the cash balance for the period and the measure includes some non-cash items and excludes other non-cash items.
A limitation to using adjusted EBITDA is that it does not represent the total increase or decrease in the cash balance for the period and the measure includes some non-cash items and excludes other non-cash items.
See the cash flow discussion of operating and investing activities above. Liquidity and Capital Resources Our principal sources of liquidity are cash flows from operations, borrowings, and the sale of our common stock. Cash flows may fluctuate and are sensitive to many factors including changes in working capital and the timing and magnitude of capital expenditures and payments of debt.
Liquidity and Capital Resources Our principal sources of liquidity are cash flows from operations, borrowings, and the sale of our common stock. Cash flows may fluctuate and are sensitive to many factors including changes in working capital and the timing and magnitude of capital expenditures and payments of debt.
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.
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.
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).
For further details regarding our restructuring activities, refer to Item 8: Financial Statements and Supplementary Data, Note 13: Restructuring. Stock Repurchase Programs Effective September 19, 2024, Itron's Board of Directors authorized a repurchase up to $100 million of our common stock over an 18-month period (the 2024 Stock Repurchase Program).
On October 29, 2021, our Board of Directors approved a restructuring plan (the 2021 Projects), which in conjunction with the announcement of the sale of certain Gas product lines from our Device Solutions manufacturing and business operations in Europe and North America to Dresser, (refer to Item 8: Financial Statements and Supplementary Data, Note 18: Sale of Businesses), includes activities to drive reductions in certain locations and functional support areas.
Restructuring On October 29, 2021, our Board of Directors approved a restructuring plan (the 2021 Projects), which in conjunction with the announcement of the sale of certain Gas product lines from our Device Solutions manufacturing and business operations in Europe and North America to Dresser Utility Solutions, includes activities to drive reductions in certain locations and functional support areas.
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.
In thousands Next 12 months Beyond the next 12 months Warranty obligations $ 14,302 $ 7,839 Estimated pension benefit payments 4,606 59,537 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.
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.
Non-GAAP net income and non-GAAP diluted EPS – We define non-GAAP net income as net income attributable to Itron, Inc. excluding the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of business, strategic initiative expenses, acquisition and integration related expenses, and the tax effect of excluding these expenses.
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.
We calculate free cash flows, using amounts from our Consolidated Statements of Cash Flows, as follows: Year Ended December 31, In thousands 2024 2023 Cash provided by operating activities $ 238,175 $ 124,971 Acquisitions of property, plant, and equipment (30,562) (26,884) Free cash flow $ 207,613 $ 98,087 Free cash flow increased due to higher operating cash flow, partially offset by higher spending for property, plant, and equipment.
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).
These pro jects were substantially complete at the end of 2024, with an estimated $12.8 million in cash payments remaining as of December 31, 2024 with cash outflows expected through 2027. On February 23, 2023, our Board of Directors approved a restructuring plan (the 2023 Projects).
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.
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.
We define non-GAAP diluted EPS as non-GAAP net income divided by diluted weighted-average shares outstanding during the period calculated on a GAAP basis and then reduced to reflect the anti-dilutive impact of the convertible note hedge transactions entered into in connection with the 0% convertible notes due 2026 issued in March 2021.
We 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 any anti-dilutive impact of the convertible notes hedge transactions.
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.
At December 31, 2024, 36 Table of Contents $254.0 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.
Our executive compensation plans exclude non-cash charges related to amortization of intangibles and certain discrete cash and non-cash charges, such as restructuring, loss on sale of businesses, strategic initiative expenses, software project impairment, Russian currency translation write-off, goodwill impairment, or acquisition and integration related expenses.
Our executive compensation plans exclude non-cash charges related to amortization of intangibles and certain discrete cash and non-cash charges, such as restructuring, loss on sale of business, strategic initiative expenses, or acquisition and integration related expenses.
Refer to Item 8: Financial Statements and Supplementary Data Note 5: Goodwill and Note 13: Restructuring for more details.
Refer to Item 8: Financial Statements and Supplementary Data, Note 4: Intangible Assets and Liabilities and Note 13: Restructuring for more details.
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.
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.
An impairment may be recognized for assets that are to be abandoned, are to be sold for less than net book value, or are held for sale in which the estimated proceeds are less than the net book value less costs to sell.
Asset impairments associated with a restructuring project are determined at the asset group level. An impairment may be recognized for assets that are to be abandoned, are to be sold for less than net book value, or are held for sale in which the estimated proceeds are less than the net book value less costs to sell.
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.
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 business, strategic initiative expenses, and acquisition and integration related expenses.
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.
Our tax rate for the year ended December 31, 2024 differed from the U.S. federal statutory tax rate of 21% due to changes in valuation allowances, the level of profit or losses in domestic and international jurisdictions, stock-based compensation, tax credits, settlement of tax audits, and uncertain tax positions.
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.
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.
Indefinite-lived intangible assets are tested for impairment annually, when events or 41 Table of Contents changes in circumstances indicate the asset may be impaired, or when their useful lives are determined to be no longer indefinite.
Finite-lived intangible assets are tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value may not be recoverable. Indefinite-lived intangible assets are tested for impairment annually, when events or changes in circumstances indicate the asset may be impaired, or when their useful lives are determined to be no longer indefinite.
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.
Our cash income tax payments were as follows: Year Ended December 31, In thousands 2024 2023 U.S. federal taxes paid $ 42,224 $ 28,440 State income taxes paid 9,250 17,519 Foreign and local income taxes paid 28,698 8,591 Total income taxes paid $ 80,172 $ 54,550 Based on current projections, we expect to pay, net of refunds, approximately $67 million in U.S. federal and state taxes and $14 million in foreign and local income taxes in 2025.
For the year ended December 31, 2023, we paid out $16.5 million related to all our restructuring projects. As of December 31, 2023, $72.4 million was accrued for these restructuring projects, of which $21.0 million is expected to be paid within the subsequent 12 months.
For the year ended December 31, 2024, we paid out $32.0 million related to all our restructuring projects. As of December 31, 2024, $41.3 million was accrued for these restructuring projects, of which $24.3 million is expected to be paid within the next 12 months.
The warranty allowances may fluctuate due to changes in estimates for material, labor, and other costs we may incur to repair or replace projected product failures, and we may incur additional warranty and related expenses in the future with respect to new or established products, which could adversely affect our financial position and results of operations. 40 Table of Contents Restructuring We recognize a liability for costs associated with an exit or disposal activity under a restructuring project at its fair value in the period in which the liability is incurred.
The warranty allowances may fluctuate due to changes in estimates for material, labor, and other costs we may incur to repair or replace projected product failures, and we may incur additional warranty and related expenses in the future with respect to new or established products, which could adversely affect our financial position and results of operations.
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.
This increase was primarily due to increased earnings and working capital conversion, partially offset by higher restructuring and variable compensation payments in 2024. Investing activities Net cash used in investing activities in 2024 was $63.4 million, compared with net cash used in investing activities in 2023 of $23.3 million.
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.
Adjusted EBITDA – We define adjusted EBITDA as net income (a) minus interest income, (b) plus interest expense, depreciation and amortization, restructuring, loss on sale of business, strategic initiative expenses, acquisition and integration related expenses, and (c) excluding income tax provision or benefit. Management uses adjusted EBITDA as a performance measure for executive compensation.
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, 43 Table of Contents software project impairment, Russian currency translation write-off, goodwill impairment, and acquisition and integration related expenses.
We define non-GAAP operating income as operating income excluding the expenses related to the amortization of intangible assets, restructuring, loss on sale of business, strategic initiative expenses, and acquisition and integration related expenses.
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.
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 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 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 can have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products that may be part of a complete end-to-end solution.
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.
A summary of our endpoints under management is as follows: Year Ended December 31, Units in thousands 2024 2023 2022 Endpoints under management 102,339 98,046 93,941 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 2024 2023 Total Company Revenues $ 2,440,837 $ 2,173,633 $ (24) $ 267,228 $ 267,204 Gross profit 839,317 713,908 819 124,590 125,409 Revenues Revenues increased $267.2 million in 2024 compared with 2023.
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.
Financial Condition Cash Flow Information Year Ended December 31, In thousands 2024 2023 2022 Net cash provided by operating activities $ 238,175 $ 124,971 $ 24,500 Net cash provided by (used in) investing activities (63,412) (23,308) 40,516 Net cash provided by (used in) financing activities 579,573 (3,508) (18,737) Effect of exchange rates on cash and cash equivalents (5,148) 1,887 (6,851) Increase in cash and cash equivalents $ 749,188 $ 100,042 $ 39,428 Cash and cash equivalents at December 31, 2024 was $1.05 billion compared with $302.0 million at December 31, 2023.
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.
Contingencies A loss contingency is recognized if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. 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.
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%.
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, depending on the duration of the plans, were between 3.00% and 3.50%.
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.
The revolver also contains a $300 million standby letter of credit sub-facility and a $50 million swingline sub-facility. At December 31, 2024, no amount was outstanding under the 2018 credit facility, and $46.0 million was utilized by outstanding standby letters of credit, resulting in $454.0 million available for borrowing.
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.
If the employee must provide future service, such benefits are recognized ratably over the future service period. 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.
For phantom stock units, fair value is the market close price of our common stock at the end of each reporting period. For stock options, the fair value was estimated at the date of grant using the Black-Scholes option-pricing model, which included assumptions for the expected volatility, risk-free interest rate, expected term and dividend yield.
For stock options, the fair value was estimated at the date of grant using the Black-Scholes option-pricing model, which included assumptions for the expected volatility, risk-free interest rate, expected term and dividend yield. 42 Table of Contents In valuing our restricted stock units with a market condition and stock options, significant judgment is required in determining the expected volatility of our common stock and the expected life that individuals will hold their stock options prior to exercising.
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).
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.
The following tables and discussion highlight significant changes in trends or components of each operating segment: Year Ended December 31, In thousands 2023 % Change 2022 Segment revenues Device Solutions $ 455,726 4% $ 438,710 Networked Solutions 1,450,291 30% 1,119,268 Outcomes 267,616 13% 237,586 Total revenues $ 2,173,633 21% $ 1,795,564 Year Ended December 31, 2023 2022 In thousands Gross Profit Gross Margin Gross Profit Gross Margin Segment gross profit and margin Device Solutions $ 105,917 23.2% $ 61,778 14.1% Networked Solutions 499,725 34.5% 361,975 32.3% Outcomes 108,266 40.5% 98,436 41.4% Total gross profit and margin $ 713,908 32.8% $ 522,189 29.1% Year Ended December 31, In thousands 2023 % Change 2022 Segment operating expenses Device Solutions $ 40,227 15% $ 35,075 Networked Solutions 130,804 15% 113,707 Outcomes 57,920 11% 52,189 Corporate unallocated 356,090 8% 328,657 Total operating expenses $ 585,041 10% $ 529,628 Year Ended December 31, 2023 2022 In thousands Operating Income (Loss) Operating Margin Operating Income (Loss) Operating Margin Segment operating income (loss) and operating margin Device Solutions $ 65,690 14.4% $ 26,703 6.1% Networked Solutions 368,921 25.4% 248,268 22.2% Outcomes 50,346 18.8% 46,247 19.5% Corporate unallocated (356,090) NM (328,657) NM Total operating income (loss) and operating margin $ 128,867 5.9% $ (7,439) (0.4)% 33 Table of Contents Device Solutions The effects of changes in foreign currency exchange rates and the constant currency changes in certain Device Solutions segment financial results were as follows: Effect of Changes in Foreign Currency Exchange Rates Constant Currency Change Total Change Year Ended December 31, In thousands 2023 2022 Device Solutions Segment Revenues $ 455,726 $ 438,710 $ 3,845 $ 13,171 $ 17,016 Gross profit 105,917 61,778 565 43,574 44,139 Operating expenses 40,227 35,075 155 4,997 5,152 Revenues Revenues increased by $17.0 million in 2023, or 4%, compared with 2022.
The following tables and discussion highlight significant changes in trends or components of each operating segment: Year Ended December 31, In thousands 2024 % Change 2023 Segment revenues Device Solutions $ 476,577 5% $ 455,726 Networked Solutions 1,650,075 14% 1,450,291 Outcomes 314,185 17% 267,616 Total revenues $ 2,440,837 12% $ 2,173,633 Year Ended December 31, 2024 2023 In thousands Gross Profit Gross Margin Gross Profit Gross Margin Segment gross profit and margin Device Solutions $ 123,464 25.9% $ 105,917 23.2% Networked Solutions 597,780 36.2% 499,725 34.5% Outcomes 118,073 37.6% 108,266 40.5% Total gross profit and margin $ 839,317 34.4% $ 713,908 32.8% Year Ended December 31, In thousands 2024 % Change 2023 Segment operating expenses Device Solutions $ 29,942 (26)% $ 40,227 Networked Solutions 141,118 8% 130,804 Outcomes 66,343 15% 57,920 Corporate unallocated 337,804 (5)% 356,090 Total operating expenses $ 575,207 (2)% $ 585,041 Year Ended December 31, 2024 2023 In thousands Operating Income Operating Margin Operating Income Operating Margin Segment operating income and operating margin Device Solutions $ 93,522 19.6% $ 65,690 14.4% Networked Solutions 456,662 27.7% 368,921 25.4% Outcomes 51,730 16.5% 50,346 18.8% Corporate unallocated (337,804) NM (356,090) NM Total operating income and operating margin $ 264,110 10.8% $ 128,867 5.9% 33 Table of Contents Device Solutions The effects of changes in foreign currency exchange rates and the constant currency changes in certain Device Solutions segment financial results were as follows: Effect of Changes in Foreign Currency Exchange Rates Constant Currency Change Total Change Year Ended December 31, In thousands 2024 2023 Device Solutions Segment Revenues $ 476,577 $ 455,726 $ 578 $ 20,273 $ 20,851 Gross profit 123,464 105,917 (74) 17,621 17,547 Operating expenses 29,942 40,227 1 (10,286) (10,285) Revenues Revenues increased by $20.9 million in 2024, or 5%, compared with 2023.
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.
Other Income (Expense) The following table shows the components of other income (expense): Year Ended December 31, In thousands 2024 % Change 2023 Interest income $ 34,577 271% $ 9,314 Amortization of prepaid debt fees (5,489) 50% (3,664) Other interest expense (9,890) 111% (4,685) Interest expense (15,379) 84% (8,349) Other income (expense), net 1,223 NM (2,446) Total other income (expense) $ 20,421 NM $ (1,481) Total other income (expense) for the year ended December 31, 2024 was net income of $20.4 million compared with net expense of $1.5 million in 2023.
Total Company GAAP and Non-GAAP Highlights and Endpoints Under Management: Year Ended December 31, In thousands, except margin and per share data 2023 % Change 2022 GAAP Revenues Product revenues $ 1,863,489 24% $ 1,500,243 Service revenues 310,144 5% 295,321 Total revenues 2,173,633 21% 1,795,564 Gross profit 713,908 37% 522,189 Operating expenses 585,041 10% 529,628 Operating income (loss) 128,867 NM (7,439) Other income (expense) (1,481) 82% (8,304) Income tax benefit (provision) (29,068) NM 6,196 Net income (loss) attributable to Itron, Inc. 96,923 NM (9,732) Non-GAAP (1) Non-GAAP operating expenses $ 521,328 12% $ 463,766 Non-GAAP operating income 192,580 230% 58,423 Non-GAAP net income attributable to Itron, Inc. 153,786 202% 50,987 Adjusted EBITDA 225,584 137% 95,071 GAAP Margins and EPS Gross margin Product gross margin 30.7 % 26.5 % Service gross margin 46.0 % 42.1 % Total gross margin 32.8 % 29.1 % Operating margin 5.9 % (0.4) % Net income (loss) per common share - Basic $ 2.13 $ (0.22) Net income (loss) per common share - Diluted $ 2.11 $ (0.22) Non-GAAP EPS (1) Non-GAAP diluted EPS $ 3.36 $ 1.13 (1) These measures exclude certain expenses that we do not believe are indicative of our core operating results.
Refer to Item 8: Financial Statements and Supplementary Data, Note 4: Intangible Assets and Liabilities, Note 5: Goodwill, and Note 18: Business Combination for further details. 29 Table of Contents Total Company GAAP and Non-GAAP Highlights and Endpoints Under Management: Year Ended December 31, In thousands, except margin and per share data 2024 % Change 2023 GAAP Revenues Product revenues $ 2,131,379 14% $ 1,863,489 Service revenues 309,458 —% 310,144 Total revenues 2,440,837 12% 2,173,633 Gross profit 839,317 18% 713,908 Operating expenses 575,207 (2)% 585,041 Operating income 264,110 105% 128,867 Other income (expense) 20,421 NM (1,481) Income tax provision (43,407) 49% (29,068) Net income attributable to Itron, Inc. 239,105 147% 96,923 Non-GAAP (1) Non-GAAP operating expenses $ 553,380 6% $ 521,328 Non-GAAP operating income 285,937 48% 192,580 Non-GAAP net income attributable to Itron, Inc. 259,800 69% 153,786 Adjusted EBITDA 323,590 43% 225,584 GAAP Margins and EPS Gross margin Product gross margin 32.9 % 30.7 % Service gross margin 44.6 % 46.0 % Total gross margin 34.4 % 32.8 % Operating margin 10.8 % 5.9 % Net income per common share - Basic $ 5.27 $ 2.13 Net income per common share - Diluted $ 5.18 $ 2.11 Non-GAAP EPS (1) Non-GAAP diluted EPS $ 5.62 $ 3.36 (1) These measures exclude certain expenses that we do not believe are indicative of our core operating results.
We reevaluate the estimated loss through the completion of the performance obligation and adjust the estimated loss for changes in facts and circumstances. 39 Table of Contents Many of our contracts with customers include variable consideration, which can include liquidated damage provisions, rebates and volume and early payment discounts, or software licenses sold where the amount of consideration is dependent on the number of endpoints deployed.
Many of our contracts with customers include variable consideration, which can include liquidated damage provisions, rebates and volume and early payment discounts, or software licenses sold where the amount of consideration is dependent on the number of endpoints deployed. We estimate variable consideration using the expected value method, taking into consideration contract terms, historical customer behavior, and historical sales.
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 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. Amounts due under operating lease liabilities during 2025 are $15.9 million and are $27.6 million for 2026 and beyond.
The increase was primarily driven by higher research and development and marketing costs. 34 Table of Contents Outcomes The effects of changes in foreign currency exchange rates and the constant currency changes in certain Outcomes segment financial results were as follows: Effect of Changes in Foreign Currency Exchange Rates Constant Currency Change Total Change Year Ended December 31, In thousands 2023 2022 Outcomes Segment Revenues $ 267,616 $ 237,586 $ (219) $ 30,249 $ 30,030 Gross profit 108,266 98,436 119 9,711 9,830 Operating expenses 57,920 52,189 23 5,708 5,731 Revenues Revenues increased $30.0 million, or 13%, in 2023 compared with 2022.
The increase was primarily related to higher product development costs. 34 Table of Contents Outcomes The effects of changes in foreign currency exchange rates and the constant currency changes in certain Outcomes segment financial results were as follows: Effect of Changes in Foreign Currency Exchange Rates Constant Currency Change Total Change Year Ended December 31, In thousands 2024 2023 Outcomes Segment Revenues $ 314,185 $ 267,616 $ 523 $ 46,046 $ 46,569 Gross profit 118,073 108,266 860 8,947 9,807 Operating expenses 66,343 57,920 3 8,420 8,423 Revenues Revenues increased $46.6 million, or 17%, in 2024 compared with 2023.
The $100.0 million increase in cash and cash equivalents in the 2023 period was primarily the result of increase in cash flows from operating activities in 2023, slightly offset by an increase in cash paid for acquisition of property, plant, and equipment. 35 Table of Contents Operating activities Cash provided by operating activities in 2023 was $100.5 million higher than in 2022.
The $749.2 million increase in cash and cash equivalents in the 2024 period was primarily the net proceeds provided by the 2024 convertible notes issuance and net cash provided by operating activities as a result of higher earnings, partially offset by cash used in investing activities for the acquisition of Elpis Squared and a slight increase in cash paid for acquisition of property, plant, and equipment. 35 Table of Contents Operating activities Cash provided by operating activities in 2024 was $113.2 million higher than in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed5 unchanged
Biggest changeAs 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 .
Biggest changeAs of December 31, 2024, a total of 35 contracts were offsetting our exposures from the euro, pound sterling, Indonesian rupiah, Canadian dollar, Australian dollar, and various other currencies, with notional amounts ranging from $104,000 to $32.3 million . In future periods, we may use additional derivative contracts to protect against foreign currency exchange rate risks. 46 Table of Contents
We are also exposed to foreign exchange risk when we enter into non-functional currency transactions, both intercompany and third party. At each period-end, non-functional currency monetary assets and liabilities are revalued with the change recognized within other income (expense) in our Consolidated Statements of Operations.
We are exposed to foreign exchange risk when we enter into non-functional currency transactions, both intercompany and third party. At each period-end, non-functional currency monetary assets and liabilities are revalued with the change recognized within other income (expense) in our Consolidated Statements of Operations.
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.
Accordingly, we do not use derivative contracts for trading or speculative purposes. Interest Rate Risk We may be exposed to interest rate risk through variable rate debt instruments, namely the multicurrency revolving line of credit. At December 31, 2024, we had no outstanding variable rate debt.
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.
Revenues denominated in functional currencies other than the U.S. dollar were 22% of total revenues for the year ended December 31, 2024, compared with 24% for the year ended December 31, 2023 and 30% for the year ended December 31, 2022.
Removed
In future periods, we may use additional derivative contracts to protect against foreign currency exchange rate risks. 47 Table of Contents

Other ITRI 10-K year-over-year comparisons