Good day, everyone, and welcome to the Itron Inc. Q3 2015 Earnings Conference Call. Today's call is being recorded. For opening remarks, I'd like to turn the call over to Barbara Doyle. Please go ahead.

Thank you very much and welcome to Itron's third quarter 2015 earnings conference call. We issued a press release earlier today announcing our results. The press release includes replay information for today's call. We have also prepared presentation slides to accompany our remarks on this call. The presentation is available through the webcast and through our corporate website under the Investor Relations tab. On the call today, we have Philip Mezey, Itron's President and Chief Executive Officer; and Mark Schmitz, Itron's Executive Vice President and Chief Financial Officer. Following our prepared remarks, we will open up the call to take questions using the process that the operator described. Before I turn the call over to Philip, please let me 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 of factors discussed in today's earnings release and the comments made during this conference call and in the Risk Factor section 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 on the presentation and I'll turn the call over to our CEO, Philip Mezey. Philip C. Mezey - President, Chief Executive Officer & Director: Thank you, Barbara. Good afternoon, everyone and thank you for joining us…

At this time, we'll take a question from with Tyler Frank with Robert Baird. Please go ahead. Tyler Charles Frank - Robert W. Baird & Co., Inc. (Private Wealth Management): Hi, guys thanks for taking the question. Can you talk about, what you're seeing in the overall market, you know, obviously people are going to look to the book-to-bill ratio this quarter and the declining backlog but do you expect that to tick up over the next few quarter based on different tender offers that you're seeing in the market currently? Philip C. Mezey - President, Chief Executive Officer & Director: Yes, Tyler we do. I mean as Mark mentioned that backlog – those bookings are lumpy, we fully expect that the fourth quarter will be a strong bookings quarter for us. There is a tremendous amount of market activity. In North America great deal of tender activity as well as in Europe, we're into this period here where we have visibility in 2016 in France, in Italy, the Netherlands, and an increasing level of activity in the UK and other markets. So it's a combination of both bookings activity that we'll see over the next several quarters and forward revenue visibility for deals that we do not see in our backlog because they are book-to-bill. Tyler Charles Frank - Robert W. Baird & Co., Inc. (Private Wealth Management): Great, thanks. And then in terms of the restructuring, do you see further opportunity in different segments of the business and whether that involves restructuring or just more of an internal focus on efficiencies, is there more opportunity to expand margins through either efficiencies or restructuring? Philip C. Mezey - President, Chief Executive Officer & Director: Yes. I mean we are looking at that continuously. We went through an analysis process of product by geography, by customer, across our Electricity, Gas, and Water businesses and as you know, this restructuring plan is really aimed at the findings that we got there. The plan that Tom Deitrich has undertaken, the study that he has undertaken looking at our comprehensive sourcing strategy as well as our R&D process will look for continued opportunities for us to increase efficiency and improve our overall performance. Tyler Charles Frank - Robert W. Baird & Co., Inc. (Private Wealth Management): Great. Thanks guys.

At this time we will take a question from John Quealy with Canaccord Genuity.

Hey, good afternoon everyone. Can you hear me? Philip C. Mezey - President, Chief Executive Officer & Director: Yes, John, thanks.

Hey, Philip. So a couple of questions. So for Water, if you add back FX, you're basically in line at 15% margins. Electricity has been working nicely. I understand the cadence on Gen 1 and Gen 2 gas, in terms of getting those gas margins up. Can you just give us a little bit of a look into – is this a first half 2016 or back half 2016, when the Gas margins rebound a little bit? Philip C. Mezey - President, Chief Executive Officer & Director: Yeah, we see some steady progress there. It's both, as you pointed out, these meters being certified with the better TMC, but also as we start shipping GrDF and some of these other European contracts that we expect volume improvement. William Mark Schmitz - Chief Financial Officer & Executive Vice President: Q4? Philip C. Mezey - President, Chief Executive Officer & Director: Yes. With continued improvement actually beginning in Q4 of this year. William Mark Schmitz - Chief Financial Officer & Executive Vice President: I'll just add to that, John, to say that you'll see -- we do feel pretty confident that we'll see some accretion in gross margin in Gas in quarter four and then an important second generation product gets launched in quarter one of next year. So you should look to see some improvement – I'm not saying great, not huge strides, but steady strides in Gas margins.

Okay, great. In terms of the restructuring and severance. Maybe, Mark, to you, what do we look for at the year end in terms of one time charges, just from a model perspective. I know we've got two or three different sets of numbers flying around here about what's restructuring in the near term versus potentially long term. Can you just summarize for us, Mark, what we should expect in the Q4 period and then again what the target is for 2016 and 2017? William Mark Schmitz - Chief Financial Officer & Executive Vice President: No, I can't really talk to that unless you're asking about cash. You're not asking about cash flow, you're asking about charges, right?

Yeah, that's right, this is the charge side. William Mark Schmitz - Chief Financial Officer & Executive Vice President: Yeah. No, it wouldn't be appropriate to talk right now about what we foresee in terms of further restructuring charges. Right now there aren't any that we can speak to, but as Philip said a minute ago we're continuing to seek operational efficiencies, improvements in manufacturing supply chain. Any of those things could at some point result in a further restructuring action, but none that we can speak of at this time.

Okay great, and then just two final ones. Maybe more for Philip on this marketing side. So we've seen some initial rate cases been filed in the summertime about smart, whether it's meter endpoints or DA or DR. Talk about the competitive positioning here. The market has changed substantially since the last round of bigger RFPs four, five years ago. So can you talk about how the competitive landscape is shifting? And that leads to my second question, off the heels of Elster there is another large meter manufacturer that we understand is in the process of being sold, would you even consider biding on those types of assets? Thanks. Philip C. Mezey - President, Chief Executive Officer & Director: So to the competitive landscape, what we're seeing is a further push to a standards-based network, to being able to leverage the assets that are put out in the field for extended business cases, and that may be across electricity or electricity and gas but also increasingly an awareness that the same network may be shareable with a city. And so this broad capability of the network offering is becoming increasingly important in an area where, as you've heard in our comments, we feel we have particularly strong position, so we're very pleased with our competitive position in those opportunities. In terms of considering market consolidation, actually the numbers that were published in the Howard Scott report for North America for last quarter show us increasing market share across electricity, gas and water. We're pleased with our competitive performance there and really see the strongest opportunity for us in driving up the value chain and really adding more value through a software and services offering rather than necessarily being a market consolidator.

All right, thanks guys.

At this time we'll move to Patrick Jobin with Credit Suisse.

Hi, this is (27:30) on for Patrick Jobin. Looking at 2016 can you talk if you're looking at growth and that you have given the backlog is that roughly around $1.2 billion right now, and as a follow-up when do you see the RFP activity picking up so that you see more backlog additions for 2016 or 2017? William Mark Schmitz - Chief Financial Officer & Executive Vice President: I'll take the first response then I think Philip will also want to fill in a couple of blanks. On 2016 we are optimistic. The deal flow is pretty substantial. And I would say that at this point I'll bear in mind we're still working on budgetary activity for 2016. But I think I can say with some confidence our outlook for 2016 is to see a somewhat higher rate of revenue growth than we've seen in 2015. Now when will you – your question was when will we see bookings pick up? And actually we just talked about that a few minutes ago and I'll just repeat that quarter four looks good from a bookings standpoint. It will almost definitely be substantially stronger than quarter three. I think I've said in my remarks that we saw well it above a one-to-one ratio and that is true. Philip C. Mezey - President, Chief Executive Officer & Director: And yeah to the last part about when will it be RFP activity sufficient to drive bookings. There is plenty of RFP activity to accelerate bookings and again these large bookings numbers are fairly lumpy based upon regulatory and customer approvals. But in terms of the question of does market activity support growth in 2016, the answer is absolutely yes.

Thanks. And just living on the EBITDA guidance for high teens by mid 2017, which market or business segments do you think would drive that growth from today? And when and how should we think about the software and managed services, business contributing to your margin structure. William Mark Schmitz - Chief Financial Officer & Executive Vice President: Actually, we see all three segments contributing to the increase in EBITDA performance as we move towards that mid-teens target overall. Probably the most significant driver however would be the Electricity segment, and I say that because just in raw numbers it is the largest weighted, the more heavily weighted of the three segments. It also has the largest absolute increase as we look forward, and remember that I think we stressed several times, we've said we're looking for high single-digit numbers in that segment and Philip always mentions that that's the floor not the ceiling. So, think of Electricity as being the biggest driver, but we are expecting improvements in each of the three segments. In software and services? Philip C. Mezey - President, Chief Executive Officer & Director: Yeah, to the last part about software and services we expect the software and services number to be accretive to the existing margins of the Electricity, Gas and Water business. So, as that develops it contributes to where we fall on that mid-teen scale that is and accretive to it.

That's helpful and finally a question on tax rate. How should we think about it for Q4 and next year? William Mark Schmitz - Chief Financial Officer & Executive Vice President: Okay. First of all, if we had not had the valuation allowance in our Brazilian deferred tax assets, quarter three would have been mid-20s, and we expect to see quarter four in that same mid-20s category. I can't give you guidance on 2016 yet. I mean, I'll only say in February we will provide that guidance on tax rate as we typically do, but we are looking at methods to reduce this in my view unnecessary volatility that we've had in our effective tax rate.

Thanks for taking my question. William Mark Schmitz - Chief Financial Officer & Executive Vice President: You are welcome.

Thank you.

And Noah Kaye with Oppenheimer & Company has the next question. Noah Kaye - Oppenheimer & Co., Inc.: Thanks, so just a quick question to start off with, updates to previous guidance for the year, you had given revenue and earnings guidance, just yet didn't see it in this last release, so can you just comment on that please? William Mark Schmitz - Chief Financial Officer & Executive Vice President: No, we are not updating guidance for the year, for 2015. And I'll just make a couple of comments on that to say with regard to quarter four we are optimistic. You know, bear in mind the quarter three would have been $0.54 per share if we hadn't had the impairment of our deferred tax assets in Brazil. We are carrying good momentum into quarter four. It's normally our strongest quarter. The Electricity continues to improve. We are expecting sequential improvements both in Electricity and in Gas. Tax rate will be lower and we have discretionary expense controls that are on and getting more strict. So I might just add that there was between $10 million and $15 million of revenue slippage from quarter three into quarter four, that gives us a little bit of a tailwind too, so we're optimistic. Noah Kaye - Oppenheimer & Co., Inc.: Okay, terrific. Thanks for the color. Second question, the introduction of the new solar gateway, you basically bringing Riva to solar monitoring, it gives you even more touch points and connectivity points into the home as well as expanded offering with third party solar ownership providers. Just kind off to pivot off of that, how is Riva expanding the range of let's call it addressable devices in the field and machine-to-machine networking for you. And what else beside solar and smart cities…

. At this time we'll move to Andrew Hughes with Bank of America Merrill Lynch.

Great, thanks guys and congrats on really good OpEx control in the quarter. Following on that can you just talk a little bit about how much that contributes to your confidence in the fourth quarter bottom line guidance remaining unchanged at this point? William Mark Schmitz - Chief Financial Officer & Executive Vice President: Yeah, I can comment. We're pretty pleased with the stringent expense controls in place. We've probably saved – well I know we've saved about $4 million in combination between travel entertainment and restrictions on hiring. As we move forward, I mean the travel entertainment alone I think is going to generate $1 million a month for the remainder of the year in savings. We've got a number of other expense controls that are being put in place that might reduce OpEx by a further $2 million. We're looking at everything. I mean, it's – of course we're in late innings here for 2015, but that's not too late and we're turning over every rock to try to reduce operations expense.

That's great. And Philip, you'd spoken earlier on the call about seeking some margin improvement in the services business. Can you just give us a flavor of what exactly you're looking at and targeting there to continue to improve margins there? Philip C. Mezey - President, Chief Executive Officer & Director: Sure. For those of you who've followed us for some time, there have been at one time or another project charges in which we could have done a better job at designing project effort estimates and properly executing projects. The focus that I am expecting from Bruce Douglas and this dedicated services line is in raising our internal awareness and level of execution in our service delivery business. In a business that historically has been very focused on the hardware that is provided out in the field, we have many opportunities to tighten up how it is that we deliver these increasingly complex solutions to our customers. So with Bruce and Tom, and Mark, I would say, all of these areas, we're focusing on properly bidding, capturing, describing and executing these services deals in order to improve our overall margin outcome and improve the predictability of the service delivery business. And we have some very promising opportunities there.

That's great. Then one last one for Mark. I think you mentioned there is $12 million left on the repurchase authorization, can you just remind us up until when that is valid, up until when the repurchase period might end? William Mark Schmitz - Chief Financial Officer & Executive Vice President: Actually there is $25 million remaining under that $50 million authorization, and extends up to February of 2016.

Great. Thanks, guys. William Mark Schmitz - Chief Financial Officer & Executive Vice President: You are welcome.

At this time we'll move to Jeffrey Osborne with Cowen & Co. Jeffrey Osborne - Cowen & Co. LLC: Great. Just two questions. One, you might have already addressed these, but the Q4 bookings strength, Philip, is that coming from framework deals like Duke and others that you've already been awarded or are these actually new – kind of new, new contracts? It's always been a bit unclear to me what the true backlog is given you have several things in your back pocket that you've been technically awarded but just don't have a firm delivery date on. Philip C. Mezey - President, Chief Executive Officer & Director: Yes. I mean it's both, Jeff, but the frame deals are only book and ship within the quarter, so the thing that would build the backlog well above 1 to 1 would be the booking of a large contract or multiple large contracts. Jeffrey Osborne - Cowen & Co. LLC: Got it. And just the second question I had is just with the RFP activity accelerating here over the past couple of months and the outlook pretty positive, what are you seeing in terms of the pricing environment both with your partnership with Cisco but also with the expectations of the utility customers themselves, given that there had been a bit of a lull in the market? Is pricing down substantially versus the past cycle or consistent with your expectations, just how do we think about that and especially in relationship to expanding the EBITDA margins of the business on the electric side? Philip C. Mezey - President, Chief Executive Officer & Director: So, as we talk about that, right, we're sort of gravitating towards a discussion mainly about North America, in which pricing expectations are consistent with what we have seen.…

At this time we'll take a question from Andrew Weisel with Macquarie Capital. Andrew M. Weisel - Macquarie Capital (USA), Inc.: Thank you very much. First a quick one, when you updated the guidance three months ago for 2015, had you already anticipated the $0.11 drag that you pointed out in the release today or is that incremental? William Mark Schmitz - Chief Financial Officer & Executive Vice President: No, we had not anticipated the specific $0.11 impact of the Brazilian valuation allowance, no. Andrew M. Weisel - Macquarie Capital (USA), Inc.: Okay. Next question is, is there any update on the warranty issue that you talked about last quarter, you talked about the insurance claim being filed and you didn't expect any potential insurance recovery by the end of 2015, any update there on your expectations either for likelihood or timing? William Mark Schmitz - Chief Financial Officer & Executive Vice President: Yeah I can comment on it. First of all with regard to the charge itself we did make a slight adjustment in the warranty reserve for the water communication module item it was $1.5 million increase and these things happen from time to time, I mean it will go up a little bit it will go down little bit but those estimates gets refined, labor costs, recycling costs, things like that do cause that to move a little bit. With regard to the insurance claim, what I can say is that we've been in contract with our insurance carrier, it's a well known carrier that we've been in business with for years. They are, the carrier is in the process of completing it's due diligence on the claim. And as we mentioned a while ago we are on schedule in terms of product replacements so with about…

At this time, we'll take question from Sven Eenmaa with Stifel. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Yeah, thanks for taking my question. I wanted to ask about the 12-month backlog around $727 million here. I assume some of the GrDF and ERDF expected shipments for the tail end of the next year are in that number. What are your expectations for these businesses or these shipments? Are they expected to be margin accretive to the current margin levels where you are currently or do you see them just the volume and somewhat the earnings driver? Philip C. Mezey - President, Chief Executive Officer & Director: So to the question of our GrDF-ERDF present in the 12-month backlog the answer is a small portion of them is. As you recall we were awarded a very significant contract with GrDF and booked only about a third of that overall contract with ERDF. We were awarded a significant portion of the first tranche of the three million meters. The next round of the so called G3 linking meters will go out to bid in the first half of 2016 and we have qualified product and we'll bid on that tender when it is available. To the question of is – are those volumes overall accretive, we derive as you point out, volume and efficiency and overall benefit from them and we'll through the life of those projects continue to improve the margin profile for both of those offerings.

Ladies and gentlemen we have no further questions at this time. Philip C. Mezey - President, Chief Executive Officer & Director: So in closing Q3 was strong operational progress improvement over Q2 and we see a growing momentum in the businesses as we've discussed heading into the fourth quarter and into 2016 and look forward to updating you on our progress on the next call. Thank you all very much.

Thanks operator we'll conclude now.

You're welcome. And ladies and gentlemen, this does conclude today's conference call. There will be an audio replay of today's conference available this afternoon. You can access the audio replay by dialing 1-888-203-1112 or 1-719-457-0820 with the passcode of 9516999 or go to the company's website www.itron.com.