Q3 2019 Earnings Call
Third quarter 2019 earnings conference call, we issued a press release earlier today announcing our results. The press release includes replay information about today's call.
A presentation to accompany our remarks on this call is also available through the webcast and on our corporate web site under the Investor Relations path.
On today's call, we have Tom feature Itrons, President and Chief Executive Officer in terms of Cooper, Senior Vice President and Chief Financial Officer.
Following our prepared remarks, we will open the call to take questions using process. The operator described.
Before I turn the call over to Tom. Please let remind you of our non-GAAP financial presentation, and our Safe Harbor statement.
Our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance reconciliations of differences between GAAP and non-GAAP financial measures are available in our earnings release and on our Investor Relations website.
We will be making statements. During this call that are forward. Looking these statements are based on current expectations and assumptions that are subject to risks and uncertainties actual results could differ materially from these expectations because the factors discussed in todays earnings release and the comments made during this conference call and the risk factor section.
One of our Form 10-K , and other reports and filings with the Securities and Exchange Commission.
We do not undertake any duty to update any forward looking statements.
Now please turn to page four in the presentation and I'll turn the call over to our CEO Tom Dietrich.
Thank you Ken good afternoon, and thank you for joining us here.
Order performance was solid.
In summary, our key financial results include revenue of $624 million adjusted EBITDA of $74 million non-GAAP earnings per share of one dollar and four cents and free cash flow of $32 million.
These results were primarily driven by continued strong demand in our network solutions segment.
I would now like to provide some insight on our bookings performance for the quarter.
Our total backlog at the end of the quarter was on par with the prior year at $3.1 billion and our 12 month backlog remained at $1.4 billion, our bookings within the quarter were $609 million and we remain on track to achieve a full year book to bill ratio of approximately one to one.
In the third quarter, we announced the signing of the significant contract with Excel energy. This agreement increasing new level as strategic collaboration with excel to deploy industry, leading smart technology across their territories.
This project will give their customers more insight into energy consumption, while enhancing grid reliability and operational responsiveness or excel.
This contract is a clear demonstration of key elements of our strategy.
The network deployment will be based on our Gen X technology combined with our Riva distributed intelligence enabled devices, which are enhanced with outcomes oriented applications, giving the utility the ability to deploy multiple applications for years to come.
Examples of applications that will be available on the Itron App store include the ability to generate and communicate real time consumer energy consumption information.
Monitor the energy efficiency of individual appliances inside the home.
Or discern electrical locations of clusters of electric vehicles or other operational issues, such as high impedance or affect all to improve grid effectiveness.
Excel energy is a perfect example of how our focus on increased customer success drives growth in our business.
As we expand our footprint of connected devices, we strive to be a thought leader and to create new innovations to support utilities in cities today and into the future.
A few weeks ago, we hosted over 1300 customers partners and suppliers at our industry, leading Itron utility week on Marco Island, Florida. The theme of the event with the power of community, which expands our view of resourcefulness and our opportunities to aid individual consumers global communities.
Of utilities in cities.
At the conference we released our latest research on industry disaster preparedness. This is a serious and timely topic has many communities in the United States than around the globe struggled to recover from natural and human caused disasters, including Hurricanes Harvey Burma Maria.
Florence and Dorian as well as catastrophic wildfires in the western part of the United States.
The severity and frequency of disasters is not easing the research shows that since 1970, the annual number of disaster worldwide has more than quadrupled to approximately 400 per year.
Leveraging the technology, we offer today, we can in collaboration with our community of customers and partners address real problems by providing solutions and applications that allows them to achieve their desired outcomes by enabling our customers to monitor and manage the communities they serve more environmentally sound.
Thirdly, inefficiently, we are expanding resourcefulness and thus our value.
At the end of Itron utility week, we were energized and excited about the possibilities that our partnership with utilities in cities can bring to the communities, we serve today and into the future.
Ill now hand off to Jones to discuss the full threeq results.
Thank you Tom we were pleased with our performance in the third quarter.
Summary of consolidated GAAP results is shown on slide six and non-GAAP results are shown on slide seven.
Revenue of 624 million increased 5% versus last year driven by growth in the network solutions segment.
Q3, gross margin was 31.5% 160 basis points lower than last year, primarily due to higher warranty costs and variable compensation, partially offset by benefits from restructuring.
The gross margin percentage was higher than we expected in Q3, and some higher margin products shifted into the quarter from Q4.
Moving to earnings per share GAAP net income was 17 million or 42 cents per diluted share compared with net income of 20 million or 50 cents per share in the prior year.
Regarding non-GAAP metrics non-GAAP operating income were 66 million.
Adjusted EBITDA was 74 million or 11.9% of revenue.
non-GAAP net income for the quarter was 41 million or a dollar for per diluted share compared with 45 million or $1.13 per share in 2018.
Turning to the third quarter year over year revenue bridge on slide eight.
Total company revenue grew 5% or 7% on a constant currency basis.
In constant currency, all three segments achieved some revenue growth.
Our overall growth was driven by the strong demand in our network solutions segment.
To give more color on the revenue for each of the segments device solutions revenue decreased 3% as reported but increased 1% in constant currency.
This reflects lower electric smartstack demand in EMEA offset by increased water shipments globally.
Network solutions revenue increased 11% as reported and 12% in constant currency as we continued to grow our footprint of connected devices, particularly in North America.
Outcomes revenue was down one percentage reported but increased 1% in constant currency continued strength in North America managed services offset a decline in prepaid shipments in EMEA.
Moving to the non-GAAP year over year EPS bridge on slide nine.
Our Q3, non-GAAP EPS was a dollar for per diluted share compared with a $1.13 cents in the prior year.
Net operating performance had a negative 11 cents impact versus the prior year.
This was primarily due to higher variable compensation and warranty costs, partially offset by the fall through from higher revenue and benefits from restructuring.
Lower interest expense added three cents per share and a lower effective tax rate added one cents per share versus 2018.
Lastly, foreign exchange changes resulted in EPS reduction of two cents versus last year.
Each quarter, we review our full year estimate of profitability by jurisdiction to derive an estimated annual effective tax rate.
Based on our current projections, we are estimating a full year non-GAAP tax rate of approximately 27%.
This is lower than our original estimate of 31%.
Therefore, we trued up the year to date tax rate in Q3, which yielded an 18% effective tax rate for the quarter.
The revised full year tax estimate of 27% will increase our estimated 2019 non-GAAP earnings per share by approximately 18 cents per share.
Turning to slides 10 through 12, I will now discuss the Q3 results by business segment compared with the prior year.
Tonight solutions revenue was $213 million with gross margin of 19% and operating margin of 13%.
We continued to see a decline in smartstack electric meter deployments, particularly in France, and the UK, but this was offset by growth in global water shipments.
The gross and operating margins are down year on year due to unfavorable product mix and higher warranty costs.
Improving device solutions profitability by optimizing the product and country portfolio is a key focus area for us.
Network solutions revenue was 356 million with gross margin of 38%.
We're pleased with this segment's revenue performance with a second consecutive quarter of double digit growth.
Gross margin decreased 350 basis points year on year on a tough compare due to the unusually favorable product mix last year, as well or higher warranty costs.
Operating margin was 30% 270 basis points below last year due to the fall through of lower gross margin.
Outcomes revenue was $55 million with gross margin of 37% gross margin increased 470 basis points year over year as we continue to optimize this segment to achieve scale efficiencies.
The operating margin was 20% significantly higher than last year, driven by the margin improvement and lower expenses.
We're very pleased with the year over year profitability improvement in our outcome segment, but need more topline growth to achieve scale.
Turning to slide 13 free cash flow was 32 million in the third quarter 5 million lower than last year, primarily due to the timing of both working capital and capital expenditures.
Cash and equivalents at the end of the third quarter were 141 million.
Total debt declined to 970 million after we paid down 28 million in the quarter 20 million of which was ahead of schedule.
This reduced our net leverage ratio to 3.1 times.
We recently announced that we restructured our bank debt agreements, resulting in increased strategic flexibility improved terms and lower financing costs.
We remain focused on delevering and reducing our net debt to EBITDA ratio to approximately two times by the end of 2020 .
In summary, we were pleased with our Q3 financial performance revenue was in line with our expectation while gross margin was higher than we expected.
As we mentioned on our last call. We continue to expect Q4 revenue to be lower than Q3 due to projects delivered ahead of schedule in the first half of this year.
For the full year, we are maintaining our previous 2019 revenue guidance.
The updated tax rate assumption increases the previous non-GAAP EPS guidance range by approximately 18 cents.
Now I'll turn the call back to Tom.
Thank you John .
As John mentioned, we are focused on maintaining our momentum into Q4 and beyond.
As a reflect on the progress we've made in my first 90 days by and mindful of our near term operational commitments and we'll continue to empower our team to accelerate value creation for all stakeholders.
Im encouraged by the enthusiastic reception from our customers and the alignment of their needs and our strategy.
This alignment creates opportunities to drive value growth in networked applications and business outcomes.
We still have much to do and the determination to drive it.
Thank you for joining our call operator, please open the line for some questions.
Thank you very much if you'd like to ask a question on today's call. Please press star one and your telephone keypad surely CJ using speakerphone. Please pick up your handset before pressing the course money today.
Once again, please press star one at this time.
And we'll hear first from chip Moore with Canaccord Genuity. Please go ahead.
Good evening, Hey, Hey, folks.
Congrats on excel.
Tom wondering maybe if you can expand a little bit on.
On the pipeline of those larger strategic opportunities you're seeing how those discussions are going particularly on the rate case side. If some of these outcomes.
Our being factored into these rate cases.
Great. Thank you chip.
What I would say is that strong pipeline of activities in North America, we definitely see a large interest on the part of the customers for.
Something more than your base am I case, a lot of interest in how they can engage more with their consumers a lot of interest in.
Resiliency and reliability increases and how they might be able to use those same assets too.
To do the same that with some of the key decision criteria. We believe that was underlying that the win at excel.
And many other customer discussions that are ongoing now center around those same central themes. When it comes to the regulatory side of things, we definitely see favorable movements on the part of the of regulators too.
Make it easier for our utility customers to invest in these types of scenarios so things like.
Allowing software as a service to be capitalized and built into the rate cases is is definitely moving.
It is done on a state by state basis. So it takes a while four to roll through each one of the states, but it is happening and we definitely see favorable tailwinds for for our business and we think for that.
Rebuild resiliency and robustness in the web in the.
A grid itself as a result.
That's great and John I think in terms of the margin outperformance on the quarter I think you called out maybe some movement from Q4 to Q3 can you expand on that and if you talked about sort of approaching 32% exiting the year. So any any puts and takes there in terms of those dynamics.
Yes, as I did mentioned, we had some higher margin products that we would have expected in Q4 that ended up booking in Q3 overall for the quarter that was worth about a point of gross margin. So think about a point shifting from Q4 to Q3.
Okay, great and so.
Safe to assume we.
Maybe down a little bit sequentially is that the right way to think about it.
Well, yes, again relative to our original guidance.
We knew Q4 was going to be a down revenue quarter had originally thought 32% was about the right exit rate, but we definitely had a shift of not revenue as much but gross margin mix into the quarter. So about a point is the is the size of the of the shift.
Got it got that Thats, great Thats helpful. I'll I'll, let others up on your thanks. Thanks.
Well take our next question from Pavel much else with Raymond James and Associates. Please go ahead.
Hello caller. Your line is open you may be needed.
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We'll next caller and.
No response was that your next caller Ben Kallo with R.W. Baird. Please go ahead. Please.
Hey, Good evening, you guys haven't here.
Yes, we had really country events.
Great.
I'll just awarded walk through Bob and Tom.
Guidance, please just through the quarter.
How much was just housekeeping here how much was from the tax impact lower tax rate and then it looks like.
You will you raising the guidance by 18 cents because of the tax would you buy backs it looks like.
Yes, there was a bigger beat this quarter.
And so I'm just trying to put all those pieces together.
EPS guidance.
Yes. Good good good question Ben in just in General we don't typically try to to update guidance every quarter, but I think it's a good question in a fair question given the size and beat so if you step back and look at how much we beat let me just keep with consensus for the moment. It was about a 38 cents be about half of that or 19 cents was due to that.
The tax true up so the remainder was operational if you take that one point of gross margin comment that I made earlier that says more than half of the remaining 19 cents was kind of a Poland and doesn't flow through the remainder I would expect to kind of flow through so you're correct. The 318 would have just been for the tax.
Improvement and on top of that would be kind of the residuals 78 cents, let's say.
Got it and then the up.
Maybe to told purchases we look look ahead.
Think about I think drew your EBITDA modules Roe around 12% for the quarter, whereas we as we look forward to use some of the bigger projects with better I would assume better margin mix.
We use it kind of a mid teen EBITDA margin Bank group out there is.
How we should think about it.
Going it's 24 is there more of a 21 type of timeframe, where the put and takes there. Thank you Yeah. Let me let me take a stab at this if you go back to the what we did on Investor day, and we and we showed kind of 2021 estimates we were in the EBITDA range of 13% to 15%. So I would say nothing has changed from from those Asus.
And so given that that's 21, it's not it's not a scenario I would pay for 2020 right. Now obviously, we'll give guidance in February but I would think about that 13% to 15% in the 2021 timeframe Theres also a slide in Investor day that said, we'll what else is there to do and it kind of gave US an indicator of how far we in various initiatives whether it.
The supply chain optimization manufacturing footprint Opex leverage revenue mix kind of natural mix of the business. So we certainly think theres an opportunity to go above the mid teens, but at this point the 13% to 15% in 21 is is what I would incur on.
Great and then maybe one more Tom you talked about.
Domestic opportunities we pulled in from your competitors about uses some international Paul Big projects out there could you just update us there already maybe across the deferred the different end markets internationally.
On the opportunities. Thank you.
Happy to do so so what I hit the Americas in the earlier answer with wood chips I'll skip that one.
And focus this response more along the EMEA and APAC in EMEA I.
I would say that no we see a fair amount of interest specifically in smart city types of applications. Our terms bid turns business in EMEA held up quite okay in Q3.
That was Jones comment on on water, specifically offset some of the the declines that we saw in the bigger projects the smart spec side of things.
We do see our ongoing activity in the in the UK, we do see ongoing activity in Germany, starting to add to happen over the next couple of quarters, France's is definitely coming towards the end of.
They are rollout across.
The entire country on the electricity side of things.
That's how I would characterize the European side of things it it tends to be.
A bit more of the turns oriented business for us and that held up okay through wed for Q3.
For a APAC I would say a good mix of of the traditional utility side of things.
Da types of of applications.
And smart city types of applications as well.
Look to be quite okay. We are in terms of opportunities to look at we tend to be a bit more selective in terms of countries that we will pursue those opportunities on and that strategy will will continue forward from how we have operated the business in the past.
Great. Thank guys see was that.
Steven.
And we'll take our next question from Noah Kaye with Oppenheimer and company. Please go ahead.
Thanks, very much for taking the questions maybe just one more crack on the housekeeping sided understanding the fourth quarter.
Thoughts there I mean, you didn't change your full year revenue guidance. So if you come in at the midpoint of the revenue range and you get that 31% gross margin.
And utensils before year at a 27% tax rate sounds like I mean, EBITDA margins up to be 9% or sub that.
The fourth quarter or else, you're going to with operationally be the.
Well, maybe even high end of your guidance here.
Am I thinking about the right that EBITDA should be in as a 9% or lower range or the new but higher than that and I think more importantly can you help us understand if theres any kind of.
One time were elevated expenses in the fourth quarter or I would call out there that would maybe be stripped out to imply a higher EBITDA run rate going forward.
Yes, no idle, 9% sounds a little low I would go back to the comments I just made in response to Ben's question, which is.
If you take the previous guidance at 18 cents on both ends of the range strictly due to the tax and then add another kind of seven to eight cents.
And for sort of operational flow through from Q3, and then recall our discussions last quarter of Q4 revenues definitely going to be lower than Q3, I think you get to a set of numbers that that I think is going to be a little higher than what you just described.
Yeah. So I guess my my read on this though is that operationally you're executing.
Better than at least we the street has expected and.
Well done there and so on excel.
I guess.
This was the first instance at least our knowledge of of getting real kind of revenue synergies out of the merger with silver spring.
To put a finer point on an earlier question, how broad is the opportunity to sell.
The meters into into the existing Gen X network that you have how should we think about that is kind of revenue synergy potential going forward.
Good question I can take that one Noah.
We earlier this year, we launched two new products one was.
And Itron based electricity meters that was enabled on that the Genex network that is indeed.
Something that can be deployed on ongoing.
With ongoing customers and some of that is starting to ramp now and into next year. We also have a module, which is on the battery operated sites I think more water and gas where again, it's the itron hurt if you will that traditional battery operated device that also.
Plugs into a Genex network, that's starting to to ramp as we get into the back half of this year and into next year. Those are targeted towards our ongoing business on the genex side of things Excel really was a brand new pieces of gear, which is what is enabling them distributed.
Intelligence that notion of downloadable applications.
Which started out on that traditional Itron Riva side, which also comes through now in.
That's a feature on the Genex part of the network as well as the technologies really start to converge and there is a bit of a blurring there at all becomes one.
Basic network overlay so those products on the traditional side as well as the converged product portfolio for 2020 and beyond is what makes up an enormous opportunity for us to to get revenue synergies out of the acquisition that we had done.
Very good new one last follow up question on the excelled award.
Since deployments cover several states.
And last check some of those are still pending regulatory approval by the state to use sees I would assume that you haven't books.
Awards, yet that have not been given regulatory approval. So can you maybe just help us think about.
Is there a significant chunk of this award.
Thats still has to be added to backlog.
And if so is that a seem to be this year.
Or is it potentially a tailwind for 2020 bookings thanks.
So to your prior question you are correct, unless we have regulatory backlog.
We do not putting in our bookings number and so I would say certainly there was a piece of excel that was in the bookings number for this quarter, but not the majority of the correct and it will probably be 2020 I would assume.
Will depend on when the individual states and territories files. So you ought to think that in the quarterly bookings its little less than a third of the total.
Deal value was was in our book to Bill ratio calculation for for what you see now meeting in backlog at the end of Q3, the rest of it is yet to come.
And it will depend on when they do their individual filings at the state level as to when it would roll through but it is yet to come in terms of some of the other territories.
Great. Thanks very much.
Well take our next question from Joseph Osha with JMP Securities. Please go ahead.
Hi, there.
Got one actually is one of the have financial questions and then one sort of more key question on the on the financial side Jones.
I think referred you say on debt to EBITDA at 2% by the end of 2020.
I know you've been talking about less than two by 2021, but am I hearing maybe the this de levering process is going a little faster than than expected.
Yes, So we had investor day, we actually said under two and 21, so I think it probably stay basically the same thing we'll get to about two by the end of 2020 I would say it is going a little faster. So weve prepaid almost at least two of the quarters. This year, maybe even three so were prepaying as we have the cash flow in and so we're a little bit ahead.
Our schedule.
Okay, and all that van and I'm actually looking at to slide from from your deck here from the the analyst meeting the you talked about free cash it 6% to 8% of a revenue problem, you're quite right now and still real quickly some operating leverage coming into 2020, So again kind of seems to me.
The like you know Anwar sought to be thinking that 68% free cash flow yield number that free cash flow as a percentage revenue number maybe that debt to realistically shows up in 2020.
Well again I don't have any updated numbers from from Investor day. So that was the best estimates we had at the time will give 2020 guidance in February it somewhat dependent on on a getting through the cash outflows associated with restructuring. That's why we put the 21 numbers out there because they'll still be a sizable amount of cash in 2020.
In some probably in 21, so six to eight I think is the best number for now and we'll update as we get closer.
Okay. Thank you and then completely shifting gears.
Looking at what's happening out here.
As well as in Florida and resilience.
Tom seems seems like one of the areas, where there's potential for a lot of deployments are these line sensors.
I'm wondering if you can comment on on how that's going and how it fits in two years you product strategy.
Good question, we definitely see a lot of interest.
In four lines sensors are full tilt sensors and that that applies to a certain extent equally well on west coast or write coast, if you're worried about.
Wildfires are you worried about hurricanes both of those technologies have have real application to help you see deeper into the grid itself as to what's going on so.
We see interest on the part of our customers for outage messages almost like a laugh gas type of message or line sensors are pulled sensors.
For transformer mapping types of applications. So you can see which houses are connected to which transformers. So if you did have to turn out the lights, you know who's lights are going out.
In type of a scenario as well as an overall the.
In automation kind of application to help with.
Outage management.
And insight into that the grid itself. So a fruitful area for US we had some some good technology that we think we can really applied to help our customers quite a bit with an area were indeed bullish.
Just quickly as a follow up there.
Would you ever and best in one of the hardware solutions or would you rather just what.
Yeah. The tilt in the center guard as pointed out and just be the the company plugging them into your radio canopy and that's it from me sorry for all the questions.
No worries good good question I would say it depends very much on the.
The volumes that are associated with these things there's parts of those solutions that I talked about earlier that we do ourselves and some that we rely on our partners to be able to do in provider a seamless solution to the customers. So I think it's a it's a mixed bag and that would be a continued part of our strategy is leveraged the best.
Acknowledging to provide the most cost effective and reliable solution.
Thank you.
Thank you.
Well take our next question from Robert Mccarthy with Stephens incorporated. Please go ahead.
Good afternoon.
Can you hear me.
Yeah again hit we can't hear Europe , Okay, great I'm. So I guess the first question on the on the financial side is and you may have spoken to this and yes, I do apologize one number sort out but.
You did recently mentioned that you refinance your credit agreements lower cost of extend to kind of through Charles 24.
What is your updated expectation for interest expense for modeling purposes for this year next.
Yes, we have not actually provided that it's pretty immaterial in Q4, when we give the 2020 guidance in February and to February will give you the assumptions around interest.
And on that call.
That is kept very immaterial for.
All right.
And then maybe just couple of broader questions then I guess.
You know obviously.
What's going on in California on top of mind from a headline perspective, but.
Are we going to see anything over the next year or so in terms of a change and political well or change in.
And rate cases of the methodology change in anywhere that that would seem to suggest that this will incentivize more grid hardening in grid automation investment or do you expect even some kind of federal intervention given the crisis, we're saying.
Great question, I Theres, certainly as a fair amount of politics that still wrapped up in all of this.
The discussions that we have with with our customers is increasingly turning towards what are the technical solutions that are available and we're hopeful that.
Translates through the entire chain into the regulators and into the politics itself.
I definitely see a fair amount of interest in these technologies I see movement on a state by state level at the regulator side of things to invest in the in great hardening.
There is very very state dependent so some locations are much more willing to.
To invest ahead of the curve than our others and you actually see that when a disaster hits, how quickly individual utilities and locations can recover from.
From those types of events. It it is very dependent on the amount of preparation and investment because they had done upfront. So I'm, hoping that everyone takes notice to that and thats only a catalyst for continuing to improve the level of service that we provide to the consumer.
I guess finally could you just amplifier comments around the progress on on that on some of the restructuring actions and footprint and facility reduction actions and how you feel about it you should do you feel like there's more to do.
Qualitatively or otherwise, how you're thinking about that.
Yes, I'd be happy to do that so if you go back we have now talked about at 2016 plan for a couple of years now with that was primarily.
Focused on a us restructuring to manufacturing footprint about 40 million of savings. We are essentially done with that there might be gifted tiny bit of cash outflow still coming in 2020, but the savings are essentially already done and so we'll stop talking about that one the second big piece was the silver spring synergies, which we announced that 50 million.
We will be essentially done with that this year, which is well ahead of schedule. So we had 25 million done through last year will be minimum 45 of the 50 done through the end of 2020 sales, maybe a little bit spill over into next year, but essentially done the remaining plan as a 2018 restructuring plan. This is.
Really around.
Restructuring some of the footprint in Europe and that one is really just in the beginning stages. It takes a lot longer to get through the normal approval process and so we probably will have about 60% of the savings realized by the end of this year and the remainder will take over the course of both 20 and 21 to.
We achieved so in total there's there's quite a bit a year over year improvement from restructuring my estimate for the full year is about 45 million.
80% of which is already in the numbers through Q3. So if you think about how that works it's much more front end loaded.
Of the amounts that we expect for the year that roughly 45 million, it's maybe 45% Cogs, 55% Opex. So that gives you a little bit of color.
Perfect. Thanks very much.
Okay last question from develop mall channels with Raymond James and Associates. Please go ahead.
Thanks for taking the question another one for you on me.
On the wildfire crisis, one of the dimensions of this that we've seen is how a relatively small event.
And have a cascading effect on the grid affecting millions and millions of people, which of course shows kind of the advantages of a more distributed structure I'm curious what I Tron solution.
From the standpoint of decentralizing.
And creating a more distributed grid in places like California.
Right. Good good question.
So that the technologies that we would bring to bear.
I would certainly be around ability to understand what is where on year grid.
So a monitoring kind of environment.
We definitely have capabilities.
For distribution automation to to do switching in cases of of an outage to reroute power or to monitor assets that are inside of their understanding our local storage. So batteries for for example or understanding.
The a case of of solar on top of a roof somewhere to be able to monitor and manage that association we have.
Distributed intelligence. So you could do that at the consumer level or you can do it at the micro grid level and understand how the energy is flowing through the.
The system itself and I think the last one that's worth mentioning is that is sort of a D.R. demand response energy efficiency kind of program, where you can again.
We do some loads switching or at least help out with understanding load switching to best optimize that.
The use of of energy in that the grid itself. So all those things combined are different tools that belong in the toolbox to manage that type of.
Complexity in the grid and also best match supply and demand so that you've got to have better utilization of your generation assets as well. So all of those are techniques that we would have that are extremely interesting too to customers that are faced with those challenges.
Okay. That's helpful.
I also want to go back to an announcement you made it back on September 24.
About a global reseller agreement, but Terra go in terms of Street lights.
Fields like we have not heard many smart street lighting announcements.
Whether from itron or or anybody else for that matter.
Over the past 12 to 18 months and I and I'm curious if.
You know, you're you're seeing any acceleration or any additional opportunities in that kind of fly solved.
Of the value chain.
We also a good question, we we have a number of UBS I'll say smaller deals that are in the books.
Today and that they continue to go forward, we see increase in our business in the Street light segment, albeit small today, but in terms of of total size, but it's growing about 20% year over here so good growth.
That we see plenty of interest out there for Rob.
Increase deals themselves that we would look at and that the interesting part about this is it's also global in nature.
So interest in North America.
Certainly in Europe that.
Scandinavia's is interesting to take a look at and various countries in Asia as well so good growth for us that we would have in general those deal sizes tend to be a little bit smaller than than some of the really big ones that we talk about in in this this call and I think Thats, probably why you would notice less.
Talk about it on our side not because it is an interesting is just smaller in nature.
From from some of the am ideals that take headlines in these calls.
Understood all right appreciate it.
Thank you and that can that concludes today's question and answer session I'd like to turn the call back over to Tom Deitrich for any additional or closing remarks.
Thank you all for joining the call as we started out we think we had a solid quarter. We're pleased with progress very focused on maintaining the momentum that we've seen through the the beginning the year through fourth quarter and into 2020, we look forward to updating you after.
Our fourth quarter on the full year results. Thank you all.
Good.
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For eight seven.
Well go to the company's website www dot Itron dot com.
This concludes todays conference call. Thank you for your participation you may now disconnect your phone lines.