Itron, Inc.
Q3 2012 Earnings Call Transcript

Published: 1 Nov 2012

[Operator:]

Good day, everyone, and welcome to the Itron, Inc. Q3 2012 earnings conference call. Today's conference is being recorded. [Operator Instructions] For opening remarks, it is my pleasure to turn the conference over to Barbara Doyle. Please, go ahead.

[Barbara J. Doyle:]

Thank you, Nicole, and good morning to everyone on the call. Welcome to Itron's Third Quarter Fiscal 2012 Earnings Conference Call. Before I start, we would like to thank you for being flexible on our date change for the call, and please know our thoughts are with our customers, our employees, our analysts and investors and all our friends who are in the East Coast and have been impacted by the severe storm. So with me on the call today, we have LeRoy Nosbaum, Itron's President and Chief Executive Officer; Steve Helmbrecht, Senior Vice President and Chief Financial Officer; and Philip Mezey, President and Chief Operating Officer of our Energy segment. We issued a press release earlier today announcing our results. The press release includes replay information about today's call. We have prepared slides to accompany our remarks, and these slides are available through the webcast and through our corporate website under the Investor Relations tab. Our earnings release and financial presentation include non-GAAP financial information that we believe enhances the overall understanding of our current and future performance. We have included reconciliations of differences between GAAP and non-GAAP financial measures in our earnings release and financial presentation. I'd also like to cover our Safe Harbor Statement. 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 of factors discussed in today's call, today's earnings release and the comments made after the call and in the Risk Factors section on our Form 10-K, Form 10-Q and other reports and filings with the Securities and Exchange Commission. We do not take -- undertake any duty to update any forward-looking statements. Now please, let me introduce Steve Helmbrecht, Itron's CFO.

[Steven M. Helmbrecht:]

Thank you, Barbara and good morning. I will cover our Q3 financial results and updated guidance before turning the call over to Philip. A summary of our Q3 financial metrics starts on Slide 4. Third quarter revenue was $504 million, a decrease of 18% compared to Q3 of last year, or 12% at constant currency. The primary drivers of the revenue decline were the wrapping up of several OpenWay projects, flat base business revenue and currency headwinds due to a stronger dollar. Bookings in the quarter were $459 million, 4% over Q3 2011, and included a $79 million booking for Southern California Gas. Gross margin of 34.1% was up more than 5 percentage points compared to last year, with lower warranty expense, benefits from operating efficiencies related to our restructuring, global purchasing savings and reduced costs in our Coney [ph] factory. Non-GAAP operating margin of 10.8% was up 100 basis points from last year, reflecting the improved gross margin in the quarter, partially offset by higher R&D, sales and marketing expenses. Adjusted EBITDA margin was up 150 basis points over last year to 13.5%, on adjusted EBITDA of $68 million. GAAP diluted earnings per share were $0.89 for the quarter, compared with a loss of $12.70 a year ago, which was driven primarily by $540 million impairment to goodwill. Non-GAAP earnings per share, which exclude the impact of the goodwill impairment, restructuring charges, acquisition-related expenses, and amortization of intangible assets and debt fees, was $0.97 per share compared with $0.92 a year ago. Slide 5 summarizes the year-over-year bridge for non-GAAP EPS. I'll use this slide to point out 4 things

[Philip C. Mezey:]

Thank you, Steve, and hello, to everyone in the call. I will provide an update on Itron Cellular Solutions, our takeaways for Metering Europe, which was held in Amsterdam in October, and progress on key opportunities around the world, then LeRoy will provide some closing comments. While the integration of SmartSynch into Itron has progressed extremely well, as Steve has commented, we have had a revenue delay of roughly $30 million compared with our initial 2012 forecast. The revenue has not been lost, it is merely moved to 2013. We have had some impacts to 2012 relating to an announcement from AT&T that they will end support of 2G in the year 2016. As a result, some sales will shift into 2013, when we have our 3G Cellular Solution field ready. Again, this revenue was moved into 2013 with development of the solution well underway. While we've had a delay, the good news is that we will realize higher overall revenue from Itron Cellular Solutions in 2013 than we had expected. Based primarily on scope increases at Consumers Energy, resulting from leveraging OpenWay, our Meter Data Management Solution and our Gas end points. Another great win was the Los Angeles Department of Water and Power for Phase 1 of their Smart Metering project. Key to this win was the ability to mix Cellular and mesh technology. The strength of our SmartSynch acquisition, coupled with a true IP-based solution powered by Cisco, is at the center of our increased win rates with OpenWay, and will only increase around the world. Mesh plus IP places Itron at the forefront in the Smart grid space. Now, let's talk about Metering Europe, where we had a large Itron presence. Metering Europe combines the largest European Smart Grid event with a home automation show that attracts up to 9,000 people. A number of European utilities presented their plans for deployments at the show, which validated the focus on large European rollouts. Customers confirmed their plans to proceed, but clearly, face some funding and practical challenges that continue to influence the timing of mass deployments. The show also highlighted the growing global competition for Metering, as well as the increasingly visible role of chip vendors and other components suppliers. Itron has a long-term technology roadmap that aggressively incorporates rapidly evolving products from some of the largest chip vendors moving into the machine-to-machine space. Far from commoditizing the metering space, we see differentiation through innovation, and partnering with the leaders in this space, as computing power, storage capacity, power management and digital signal processing continue to increase exponentially. Now let me provide an update on some Energy contract wins in key opportunities we are tracking. We are very excited about 2 North American deals, the largest gas metering and gas regulation order ever awarded in North America from SoCal Gas, that increases our business with this customer to $110 million. And win at the neighboring Los Angeles Department of Water and Power for $15 million. Both of these highly competitive deals further highlight Itron's ability to continue to increase market share and lead the North American Electric and Gas markets. These wins in North America, along with Duke, Duquesne Light, pilots and trials at FirstEnergy and National Grid, coupled with several other opportunities strongly developing, help to reload our revenue pipeline for the second half of 2013. The North American Gas market has grown nicely from 2011 to 2012, and will continue growing in 2013. We have several Gas contracts in the pipeline that will provide increased Gas revenue visibility in North America for 2013. Moving on to Europe, the Middle East and Africa, we have been selected to provide a major Smart Metering system for Citipower, the utility of Johannesburg, South Africa. The project is initially targeting up to 250,000 smart electric meters, meter data collection and meter data management, and has the potential for expansion for up to 750,000 meters. Citipower will be a critical reference for the 5 million point electric meter market in South Africa, a market where we already sell large quantities of prepayment meters. We will discuss more about this project upon completion of contract negotiations. In Europe, ERDF reconfirmed during the quarter its intent to issue a large tender next year for 7 million meters. We will also -- we also anticipate that Iberdrola will issue its next tender for up to 1 million meters. We will have a qualified meter for this next tender. On the Gas front, we continue to sell gas and gas prepayment meters across the region including Azerbaijan, Kazakhstan and Turkey. We also announced a new best in class, ultrasonic gas meter that will position us well as these markets move to more advanced technology, again, Itron driving strong innovation and partnering, in this case, with Panasonic. In Asia Pacific, we continue to progress on the opportunities in the region. We have a newly approved electric meter in Hong Kong, with a strong focus on getting meters certified in Japan and Australia. There are major opportunities for metering, communications and systems in each of these markets including the highly visible opportunities at China Light and Power and Tokyo Electric Power. At TEPCO, requirements documents for meters have been issued, with communications requirements following shortly. Vendor selection will be early next year and delivery in late 2013 at initial units. Finally in Latin America, we are strongly pursuing opportunities in Brazil. As we discussed on the last call, the Brazilian regulator has approved the so-called opt-to-in program. Customers may request smart meters, rather than a mandatory roll out to some portion of the 65 million electric meters in Brazil. As a result, we see the Brazilian market building gradually in 2013 across 4 segments that Itron participates in

[LeRoy D. Nosbaum:]

Thank you, Philip, and Steve, for good reviews of the quarter. I'm going to say a few additional words about the quarter just ended. Say a little about the rest of the year. Also talk about 2013, and I'll close with some comments about our CEO search. Slide 16 gives you the highlights. Frankly, the third quarter was a mix of good news and some frustrating news. On the good news side in our Energy business, we announced great orders for gas meters from Southern California Gas, the order at LADWP Philip talked about, and our selection at Citipower. At Consumers, implementation has moved to the right bit, but size of the order has increased, proving that our SmartSynch acquisition had the value we thought it would. In Water, sales continue to grow, up 5% in constant currency Q3-to-Q3. Margins are up as well, some reduced warranty expense, but also good work in the factories and a move to higher technology with an increase of 33% in smart water meters and communication modules on a Q3-to-Q3 basis. Around the world, we are winning contracts like Melbourne and retail water utilities in Victoria, Australia, for an advanced water metering solution. In Turkey, an equipment and consulting contract to help Kajeli water reduce non-revenue water. And most recently, here in the U.S., we have been selected and are in contract negotiations at the city of San Diego for an AMI Solution. The Water team is doing an excellent job. As Steve talked about, we continue to find goodness across the company, from factory rationalization, from scrubbing operational costs in R&D, sales, marketing and G&A, and we are still doing the work necessary to put us in good position for contracts here in the U.S. and around the world, like the contract we announced for 745,000 gas meters at Turkey's largest gas utility. As well, I would be remiss if I didn't talk about the 5 Smart Meter projects at CenterPoint, Southern California Edison, San Diego Gas & Electric, DTE Energy and BC Hydro. CenterPoint recently announced the successful completion of their project, on time, underbudget, exceeding their business case. They are delighted. At Edison and San Diego, the projects are moving from implementation to standard work, at both, great successes. At BC Hydro, our first large implementation with Cisco, OpenWay is working to plan. This is another project that is a great success. And finally at DTE, we have reached a milestone of 800,000 Itron electric and gas end points installed as part of their 3 million-meter AMI project. Delivering automation that helps DTE derive significant distribution and consumer benefits. Equally important, we begin to move OpenWay technology around the world, which you will hear more about in the future. As I said, we also had some frustrating news or headwinds impacting Q4 in 2013. In Europe, while base business is holding up, Smart is not firming up as quickly as we would like. In the U.S., we have seen projects moving to the right, and we have preliminary indications that year-end money will not be as plentiful as it has been in past years. I would characterize the market as cautious, the same thing you have been reading in the headlines for the last number of weeks. So if Q4 is slowing, what do we think about 2013? I said in our last release that I view 2013 as a mirror image of 2012. I do not change that view. In the U.S., Q4 will be slow and I don't see a big improvement in the first half of next year. In the second half of 2013, the picture gets better in my view, with Smart certainty in Europe, better activity in Asia Pacific, Smart in the U.S. beginning to grow with contracts we have already signed and will sign in the next few months. So again 2013 looks to me like it is the potential to be flat with 2012, but '13 will have a lower first half and a growing second half, which sets the stage for 2014 and beyond. Frankly, overall, I'm optimistic about '13, particularly, after attending Itron Utility Week in San Antonio, starting 10 days ago. We hosted 800 customers and 50 partners for a week of presentations, discussions and knowledge exchange. Our customers were engaged, they were looking at new products, there are opportunities coming and Itron is well positioned. Let me close with a few words on our CEO search. Frankly, it goes well. We are down to a small handful of very qualified candidates that the Board continues to vet. Given our progress, I would anticipate the potential to announce a new CEO before the end of the year. Let's open up with questions.

[Barbara J. Doyle:]

[Operator Instructions] Thank you, Nicole. Please, go ahead.

[Operator:]

[Operator Instructions] Our first question will come from Zach Larkin with Stephens.

[Chris Godby:]

This is Chris Godby, in for Zach. Can you give us an update on -- just a little bit more color on TEPCO and where the process is at there?

[Philip C. Mezey:]

Absolutely. So as I said in my remarks, the metering requirements have been issued, communications are due out here very shortly. Those will be followed by an RFP, with the intent that selections will occur for providers in the first quarter, first half of next year, with the intent that pilots begin by the end of 2013.

[Operator:]

Our next question comes from Amir Rozwadowski with Barclays.

[Amir Rozwadowski:]

Talking about just sort of the impact of the U.S. business over the next couple of quarters, I mean, it does seem like you are expecting the back half of next year to be pretty -- a pickup, in terms of activity. If we look at sort of your base business backlog, I think it's the first time we've seen year-over-year growth over the last couple of quarters. What gives you confidence in sort of that ability to sort of drive that return to growth in the back half of the year? Unless, I'm mistaken about how you're characterizing it.

[LeRoy D. Nosbaum:]

No, you're characterizing it exactly as I would. Revenue will grow beginning in the back half of next year. So here are the things that are beginning to line up

[Operator:]

John Quealy with Canaccord Genuity has our next question.

[John Quealy:]

LeRoy, I guess this one is for you. So when you think about Smart coming on in Europe, whenever that hits the factory, '14, '15, whatever, can you characterize how you feel you are from a cost or automation perspective versus North America? I think at the end of the day, we're all looking for profitability from Europe to be up when Smart hits, but I know you're not going to be around for this. But are you in place now to be fully automated? If you could give us an expectation there, once we start tooling for Europe.

[LeRoy D. Nosbaum:]

Yes, John, I'd say in general, we're building capabilities in a couple of places. Go to Hungary, for sure where we're doing some great things in terms of factory automation and factory readiness and in Chesnay in France, similarly, where we are working on both of those. So I would tell you, I'd just like to get the damn thing started. I'm not worried about making money once we do. I think we're set up and our factory guys are sort of sitting on go and ready to be honest about it. So I think we'll be fine. As we've talked before, we're not going to see price levels in Europe that we do in the U.S. But the volume should make up for that. And so I like our margin picture, if you will, as we think toward full limitation levels in Europe.

[Operator:]

Our next question comes from Ben Kallo with Robert W. Baird.

[Benjamin J. Kallo:]

LeRoy, you talked about the size of Consumers getting larger. Have you guys been able to win any of the Metering business there? And then Steve, on the cost front, can you just update us there? How much left of cost reduction do you guys have?

[LeRoy D. Nosbaum:]

Certainly, our position, the initial Consumer's contract was focused on GE meters. And as you can imagine as a part of this negotiation, we are putting forward Itron meters. We did not mention them as a part of the increase in scope because they do not increase the overall revenue of the project, but give us an opportunity to improve margin on the project. So, yes, it is something that we are very focused on.

[Steven M. Helmbrecht:]

And, this is Steve. Just 2 answers related to your question. One, just in terms of restructuring itself, we are about $10 million left in restructuring cost to recognize overall. In terms of the benefits coming from that, work that's being done, we feel we are on track for the benefits we expect in 2013, which in the past we've talked about the $30 million level or so next year.

[Operator:]

Vishal Shah with Deutsche Bank has our next question.

[Vishal Shah:]

I wanted to understand your margin profile or expectations for fourth quarter? You said 30% to 33%. Would margins in Water be down as well or are you talking mostly weakness in the Energy segment? And then in 2013, how do you think about the outlook for the 3 segments, Electric, Water and Gas? You said flattish revenues, do we expect similar trends in all the 3 segments or 1 that does better than others?

[LeRoy D. Nosbaum:]

As I think about margins in Q4, I don't see a lot of change in Water. It's going to be about where it has been. The softness is in Electricity, and quite frankly, it's mostly the U.S., where we reached a point where volumes are down enough that absorption in Oconee, in particular is being impacted. So that's the issue in Q4. As I look to '13, I think overall, you're going to see business in Water continue to be what it has been. It grew at 5% year-on-year. This year, it's going to continue to do that. It's just -- it's the great gift that keeps on giving. In Gas, we have done some really good stuff around the world getting Gas contracts. I expect that to continue. So I think Gas continues to be a nice contributor. We have Electricity then, softness in the front end. As I've said, in the back end, it starts to grow as some of these nice Smart contracts that we are signing move forward.

[Operator:]

We'll go next to Ben Schuman with Pacific Crest Securities.

[Benjamin Schuman:]

Did the decision by AT&T to cut the 2G support concern you guys or your customers, given that now they need to worry about some day 3G support being cut off? I thought I remember, wasn't that the key factor in Itron's advocacy of private networks prior to the Smart Grid or SmartSynch acquisition?

[Philip C. Mezey:]

Yes, Ben, it's a great question. The carriers are well aware of this concern and on a going forward basis, are negotiating directing with customers in order to stipulate a support window, that's consistent with their expectations. So for 3G, and moving forward, the carriers are very aggressively working on -- dealing with that concern about the support window. So we don't see that as a significant obstacle moving forward.

[Operator:]

The next question comes from Sanjay Shrestha with Lazard.

[Sanjay Shrestha:]

First question to you, LeRoy, but one question is, so in terms of this shortlist of candidates to take over the CEO role, are they -- can you help us understand sort of on the background that they bring to the table, internal versus external? And what's been the communication with those guys is like, maybe some of the key things they see as like the low hanging fruit that's really getting the operational efficiency better for the company?

[LeRoy D. Nosbaum:]

Sanjay, for whatever reason, we had a hard time hearing you. But I think I caught it all. First of all, the fundamental background of the candidate is pretty consistent across-the-board. They are people who understand the utility industries in which we participate. They all have global backgrounds of one form or another. And they have all run reasonably sized businesses and are successful in their own right. So I mean, these are not people who will be unfamiliar with the current business circumstance and the current markets in which we participate. I think as a new CEO comes to Itron, there'll be a couple of things that they will focus on, I don't know that I'd call any of it low hanging fruit. I'm not sure we have any low hanging fruit. I mean, clearly, as we look towards the future we have to continue to work on reducing our cost structure, that sort of normal activity. And as I look at it, we certainly have done a lot of good work in factory rationalization. I think that's a question in an area that we continue to focus in. Are we making product in the right place and at the right volumes? So I know that they'll look at that. They're going to look at R&D and sales and marketing and G&A expenses and say, "They're pretty high, why? And can you make some adjustment there?" And as we've talked before, we're doing some really good work here in terms of the new ERP system that will help us restructure our cost basis in a bunch of G&A areas, and get some added help there. On the sales and marketing front, frankly, I think we're about where we ought to be and I doubt that the new fellow would see that as any different. And lastly, as we look at R&D, the number is big. Are we as rational and as efficient and effective as we should be? I'm sure we're not. The question is how do you get there during a time when you're doing development projects all over the world for Smart Metering opportunities like TEPCO, like ERDF, like Iberdrola. And while we can say that meters are ready for places like ERDF and Iberdrola, that doesn't mean there's no engineering work to be done, for there is a huge amount of system integration work that has to be done with other vendors and with system integrators here. So it's easy to say, as you look at the numbers that the R&D number is too high. Doing something about that in the current environment is really quite difficult. So those are the things I think they'll look at. My best guess.

[Sanjay Shrestha:]

Got it, that's fair. One follow-up, if I may. So one of the issue that keeps coming back up as it relates to you guys is sort of you being more hardware centric and network is controlled by somebody else therefore, over time, it becomes potentially challenging, especially on the Electric side of your business to sustain and grow margins. I know Philip you went through some of these points on your prepared remarks. But how do you guys sort of think about that and can you help address that question? So that kind of keeps coming back up as to your reason why we think our margins are going to grow and here is what we're doing, and maybe even give us some color as to some of the recent wins with Cisco and National Grid, as well as FirstEnergy, as to what might margin profile look like in those contracts as they ramp up versus some of the prior OpenWay contracts that you guys had?

[LeRoy D. Nosbaum:]

Sanjay, I'm actually going to let Philip talk to that. He's much more eloquent than I.

[Philip C. Mezey:]

Sanjay, first, in referring to the hardware, as you know, we always felt that integration of measurement and communications and doing a good job of that is something that not only preserves but enhances gross margins. So we see opportunities in the hardware itself, but Citipower, as an example, as we look at the city of Johannesburg, and I mentioned it includes the Meter Data collection, as well as Meter Data Management, I mentioned that as well. A consumer is a scope expansion, so you see that the consistent approach here is to not only provide measurement and communications equipment but to capture the data that comes out of the systems, and we are very focused on delivering analytics. And with analytics come the ability to create recurring revenue streams with our customers, in which we will be able to provide ongoing services and providing insight from all the data that is coming through their systems. So by capturing more of the value, we have the opportunity to really -- to continue to build on with recurring services and continue to enhance the overall gross margin of the offering.

[LeRoy D. Nosbaum:]

Yes, Sanjay. I'm going to make an add to that. Two, maybe. One, we talked this morning about LADWP, where we have been selected. I think it's interesting to note that one of the prime movers at LADWP was the fact that we combined both our mesh technology and our cell technology and in fact, one of executives there said, "Brilliant move. That's why we are choosing you." And so, I acknowledge, we ship a hell of a bunch of hardware every day, and it generates a huge amount of cash. And so, for our detractors who say that is going to be commoditized, it's fundamentally been commoditized for 100 years, and we've been making good money at it. We have used that money to grow our company in other areas, systems, software, integration services. So I'm happy to have it because it's paying the bills.

[Operator:]

Our next question comes from Ahmar Zaman with Piper Jaffray

[Shawn E. Lockman:]

This is Shawn, on for Ahmar. I know we've talked a little bit about sort of the trajectory of revenue for next year, but I wanted to talk a little bit about margins. One, how might they look through the year? And also, have we really kind of reached a gross margin level that we should look for going forward? And if not, what kind of levels might we see in terms of upside to our current margin levels?

[LeRoy D. Nosbaum:]

Shawn, I'll take that. And first of all, we're talking about next year. So this is color, it's not guidance. I think, if you look at the first half of next year, you have to look at the back half of this year and say, "Margins are going to be very similar." And if you look at the North American side of our business, we're not going to see great margin improvement in North America until we see volume improvement. I mean, it is what it is, what it is. And so, we're just there. If you look at -- our outside of the U.S. business, I think you see margins about where they have been. Maybe in Water, we're going to eke out some more improvement. Those guys are working hard on it. We've got some Gas volumes business, so we probably have some slight margin improvement in Gas outside the United States. On the Electricity side, I think it's sort of flat, to give you an overall picture of it. Now as we move into the back half of '13, as we see some volumes build again in the U.S., I think our margin profile there begins to get back to what I would like it to see. And along the way, as we have talked, we continue to finish up our factory rationalization, which is going to help us, so that is upward pressure, not down. And so, I think that gives you a sort of a disaggregated view of what '13 looks like.

[Operator:]

Your next question comes from Michael Gaugler with Brean Capital.

[Michael E. Gaugler:]

I'd like to discuss the opportunities that you're seeing in Brazil, which seems to be a real area of focus for Itron. On the Electric side in particular, the government recently forced rates substantially lower on the utilities there. Given that margins for the Electric use will be under pressure, how confident are you that the funds will be there for the country to show significant growth for your products?

[Philip C. Mezey:]

So there are opportunities across the portfolio, as I mentioned, in 4 different categories. And the margins and pricing pressures will be down in basic electric metering in the Brazilian market. But the market faces some significant challenges

[Operator:]

Our next question comes from Patrick Jobin with Crédit Suisse.

[Patrick Jobin:]

Just wanted to dive in again to kind of next year's outlook. You've really focused a lot on the revenue side. Just, want to make sure I understand kind of the R&D and sales organization outlook, as you start thinking about 2013 planning.

[LeRoy D. Nosbaum:]

Patrick, if we think about the sales and marketing organization, we have spent some dollars this year building the organization in Latin America. We spent some dollars building organization in Asia Pacific. I don't know that we see a great deal of increase beyond what we have done already. Although, some of the business we are chasing, particularly in Japan, is causing us to spend some money both in sales and marketing and in R&D. That prize is worth the expenditure, and we're working hard at it. As I think about R&D in general, we're going to work hard to hold down the levels we have now. And I'm hopeful we will be successful at that as we move through next year. But we still have a lot of work to do, whether it's Japan, or whether it's some other things in South -- Asia Pacific, or whether it's work for Latin America and certainly, opportunities in Europe.

[Operator:]

And we'll take our next question from Craig Irwin from Wedbush.

[Craig E. Irwin:]

So most of my questions have been asked. But one thing I wanted to ask maybe, that you might be able to respond to is, when I meet with many of the utility executives that are involved in these very large AMI projects that had been done in North America, they're all clearly excited about the returns that they're seeing off the projects, about the benefits that they're seeing off the projects. But very little has actually been disclosed out there, given that Eric Lightner and his team at DOE are still working on the final reports, quantifying the benefits for customers and for the utilities. Can you share with us what you're seeing in putting together those reports with your customers? And what you think about the potential of these reports to maybe, bring some of these utilities that have been on the fence, the roughly 50 million meters out there that are still not automated in the U.S.? And have those show up in rate cases for Itron to target for '13, '14 and beyond?

[LeRoy D. Nosbaum:]

That's an interesting question to answer, because I think there's a couple of dynamics at work

[Operator:]

There appears to be no further questions at this time, so I'll turn the call back over to our speakers for any additional or closing remarks.

[Barbara J. Doyle:]

I think we've covered everything today. So Nicole, if you could please just remind people of the replay information, and then we'll conclude our call.

[Operator:]

Ladies and gentlemen, there will be an audio replay of today's conference available this afternoon. You can access the audio replay by dialing 1 [phone] or 1 [phone], with a passcode of 4476581 or go to the company's website, www.itron.com. Thank you all for joining. You may now disconnect.