You are currently on hold for the Itron, Inc. Q1 2022 earnings conference call. At this time we're assembling today's audience and plan to be underway shortly. Thank you for your patience and please remain on the line. Good day, everyone, and welcome to the Itron, Inc. Q1 2022 earnings conference call. Today's call is being recorded. For opening remarks, I'd like to turn the call over to Mr. Ken Gianella. Please go ahead, sir. Thank you, operator. Good morning and welcome to Itron's Q1 2022 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 website under the Investor Relations tab. On the call today, we have Tom Deitrich, Itron's President and Chief Executive Officer, and Joan Hooper, Senior Vice President and Chief Financial Officer. Following our prepared remarks, we will open the call to take questions using the process the operator described. Before I turn the call over to Tom, please let me remind you of our non-GAAP financial presentation and our safe harbour 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. Reconciliation 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 that were presented in today's earnings release and the comments made during this conference call and in the Risk Factors section of our Form 10-K and other reports and filings with the Securities and Exchange Commission. All company comments, estimates or forward-looking statements are made in a good faith attempt to provide appropriate insight to our current and future operating and financial environment. Materials discussed today, May 2, 2022, may materially change, and we do not undertake any duty to update any of our forward-looking statements. Now please turn to page 4 in the presentation, and I'll turn the call over to our CEO, Tom Deitrich. Thank you, Ken. Good morning, and thank you for joining us. You will hear Q1 details from Joan coming up shortly, but I would like to provide a brief overview of the quarter. Revenue was $475 million. Adjusted EBITDA was $19 million. Non-GAAP earnings per share was $0.11, and free cash flow was $2 million. Turning to slide 5, our Q1 bookings were $417 million, with an approximate book-to-bill ratio of 0.9. While some quarter-to-quarter lumpiness in bookings is expected, we are still targeting at least a 1-to-1 book-to-bill ratio for the year. Total backlog remains near record levels at approximately $3.9 billion, excluding approximately $60 million of backlog associated with the sale of our non-communicating mechanical C&I gas business that we completed in the Q1. Our 12-month backlog continues to grow steadily and is now up to a new record of approximately $1.6 billion, primarily driven by our Networked Solutions and Outcomes segments. Turning to slide 6, I will now provide some operational insights on the Q1. As I mentioned previously, we closed the sale of our non-communicating mechanical C&I business on February 28. This is another proof point of the execution of our strategy as we steadily progress our business up the pyramid towards higher valued networked and outcome-centric solutions and optimize our manufacturing footprint to an asset-light model. Market demand for Itron solutions continues to be very healthy as utilities look to address aging infrastructure and future-proof themselves by preparing for the proliferation of electric vehicles, increasing visibility and control of the grid for distributed generation and renewables, and enhancing grid security, resiliency, and reliability. Itron continues to be a leader in helping our customers through this dynamic environment, as is evident with our distributed intelligence-enabled endpoints, which have grown cumulatively to over 4.2 million units, running millions of applications in the field. The distributed intelligence endpoints, combined with our suite of Grid Edge Optimizer solutions, provide advanced grid management capabilities that will address significant customer needs, but also are important growth vectors for our Outcomes business. We are extremely pleased with the current market demand for our solutions, and we remain steadfast in our strategy. However, as we stated in our last earnings call, we anticipate that semiconductor supply constraints and inflationary pressures will continue to impact our operations well into 2022. In the Q1, we estimate the supply constraints limited our revenue by over $100 million, with the vast majority of that impacting our Networked Solutions segment. As discussed in prior quarters, we have experienced no cancellations or loss of customers. We are actively addressing the temporal challenges of a supply-limited inflationary environment. We continue to drive efforts to overcome supply chain shortages and improve factory utilization. We are also working multiple initiatives to mitigate inflationary pressures with ongoing price cost actions, combined with a disciplined approach to discretionary spending. I am proud of our team's efforts to overcome these operational headwinds that have had significant impact on our current period financials. I will now hand off to Joan to cover our Q1 results in more detail. Thank you, Tom. As discussed on our last earnings call, our Q1 results continued to be significantly impacted by supply chain shortages and cost pressures. Please turn to slide 7 for a summary of consolidated GAAP results. Q1 revenue of $475 million declined 9% versus last year or 6% in constant currency. The year-over-year decrease was due to supply shortages, which limited our ability to meet customer demand. Gross margin for the quarter was 28.4%, 380 basis points lower than last year due to higher component costs and manufacturing inefficiencies driven by the supply constraints. GAAP net income of approximately $1 million or $0.02 per diluted share compared with $13 million or $0.30 per diluted share in the prior year. Regarding non-GAAP metrics on Slide 8, non-GAAP operating income was $9 million. Adjusted EBITDA was $19 million. Non-GAAP net income for the quarter was $5 million or $0.11 per diluted share. Looking at revenue by business segment on Slide 9, Device Solutions revenue was $140 million, a $24 million or 14% year-over-year decline on a constant currency basis. The decrease was due to component shortages impacting our ability to meet customer demand, as well as exiting certain product lines, including the recently completed sale of our non-communicating mechanical C&I gas business. Networked Solutions revenue was $279 million, an $8 million or 3% decrease year-over-year in constant currency. The decline is attributable to component shortages, partially offset by a ramp in new deployments. Revenue in the Outcomes segment was $57 million, a $1 million or 1% decrease in constant currency versus last year. The decline was due to lower product and software license sales, particularly prepaid services in EMEA. While the decrease was disappointing, our core U.S. market continues to be strong, driven by growth in Networks as a Service. Lastly, foreign currency changes resulted in $12 million lower revenue versus the prior year. Moving to the non-GAAP year-over-year EPS bridge on slide 10, our Q1 non-GAAP EPS was $0.11 per diluted share, down $0.41 from the prior year. Net operating performance had a negative $0.51 per share impact due to lower gross profit driven by the component shortages and higher input costs. Lower interest expense resulted in a $0.13 increase year over year. A higher tax rate had a negative $0.02 impact. Lastly, changes in foreign currency and share count resulted in a $0.01 per share decrease year-over-year. Turning to slides 11-13, I'll discuss the Q1 results by business segment compared with the prior year. Device Solutions revenue was $140 million, with gross margin of 16% and operating margin of 8%. Gross margin declined 310 basis points due to manufacturing inefficiencies related to component shortages and inflationary cost pressures. Operating margin decreased 430 basis points due to the fall through of the lower gross profit. Networked Solutions revenue was $279 million with gross margin of 33%. Gross margin declined 630 basis points from the prior year, primarily due to inflationary cost pressures and manufacturing inefficiencies related to component constraints. Operating margin of 22% decreased 560 basis points due to the fall through of lower gross profit. This was partially offset by lower operating expenses. Outcomes revenue was $57 million with gross margin of 39%, an increase of 120 basis points year-over-year. The increase was due to improved operational efficiencies within the segment. Outcomes operating margin was 15%, 310 basis points lower than last year due to higher R&D investment. Turning to slide 14, I'll cover liquidity and debt. Free cash flow was $2 million in the Q1 compared with $39 million in the same period last year. The decrease was primarily due to higher variable compensation payments made this year. Cash and equivalents at the end of the Q1 were $204 million, up over $40 million sequentially, driven by proceeds from the sale of our mechanical C&I gas business. Total debt remained flat at $460 million, and net debt was $256 million. Net leverage was 3.1 times at the end of Q1. In summary, while demand for our solutions remains high, the supply challenges and inflationary cost pressures are continuing to affect our financial results. We remain optimistic about our strategy and longer term financial model. We will continue to monitor the macro environment and manage the areas that are within our control, including disciplined discretionary spending and pricing actions to help mitigate the impact of the headwinds. Now I'll turn the call back to Tom. Thank you, Joan. As Joan mentioned, while we continue to anticipate these conditions persisting, at least in the near term, we are constructive on the future due to the collaborative relationships we enjoy with our customers. As providers of essential energy, water, and city services, Itron's customers form the foundation of modern society. With our customers around the globe, the work we do at Itron shapes the world by helping our customers gain insights and control over the use of essential resources. We take pride in serving utilities and cities around the globe and look forward to advancing our vision of creating a more resourceful world. In that spirit, I'm excited to announce that we will be publishing our 2021 ESG report in a few weeks. We are proud of the ESG progress we made in 2021 and look forward to sharing the details of those efforts, along with the release of our new greenhouse gas reduction targets. This, combined with insights on how Itron solutions help our customers reduce their carbon footprint, is another positive step in our ESG journey. We are committed to helping make the most of energy and water resources that we have today and creating a better tomorrow for our customers, partners, employees, and the communities we serve. Creating a more resourceful world is more than a purpose statement. It is embedded in Itron's DNA. Thank you for joining today. Operator, please open the line for some questions. Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. Our first question comes from Tommy Moll with Stephens. Good morning, and thanks for taking my questions. Morning, Tommy. Good morning, Tom. I wanted to start on the full year outlook. I don't think I missed it in the slides or release or comments regarding an update to your 2022 guidance, so I figured we just address it head on here. Can you give us any insight there on the full year or just provide any context around why we don't have an update to that here in the slides today? Yeah, Tommy, I can take that. Historically, we only give guidance in February for the full year, and then we update it in the midyear in August. We've historically never given interim guidance. Okay. I guess then just in terms of the operating environment, compared to when we talked a quarter ago, and you hit some of these topics with inflationary cost pressures and supply chain constraints. Can you just speak qualitatively, to what you see today versus maybe what you saw a quarter ago? I can jump in on that 1, Tommy. When we did our guidance in February, as Joan referenced, at the time, we anticipated that supply constraints would certainly be with us in the H1 of the year. Indeed, that's exactly what we are seeing. The revenue, as was referenced in the prepared remarks, is gated currently by semiconductor availability. During the quarter, we saw lead times on semis increase by just a couple of days, but certainly not a rapid increase like we saw over the prior quarters. It's up a few days during the last quarter, but not significantly, but nor has it started to reduce just yet. There's still a fair amount of instability working its way through the supply chain. Certainly with things like China lockdowns, it has the ability to create some instability, and indeed, that's kind of what's going on as we look forward. If we look deeper into our supply chain, what we see is if we dive all the way to the CMs, we see more days of inventory on hand at the component level than we've had historically, and certainly more than we had during the past year. Those days of inventory are definitely creeping up, which is good. We're also heavily constrained on just a few parts. More inventory, but it's not a full square set to be able to build something, and we've got to free up those last golden screws, if you will, for lack of a better term, to really release it. That's what we'll really work through, and we would monitor, and that'll gauge the pace of recovery. On the inflation side, the second part of your question, what I would say is, certainly inflation is up and our pricing actions, while gaining speed and velocity, yeah, haven't fully caught up just yet. It takes a little bit of time for those things to roll fully through the backlog and work through the pricing actions that we have underway. We're encouraged by the outlook in terms of where that can go in terms of offsetting inflationary pressures in the quarters ahead. Thank you. I appreciate it, and I'll turn it back. Our next question comes from Noah Kaye with Oppenheimer & Co. Good morning. Thanks for taking the questions. Maybe to start, curious about how to think about the net impacts of Ukraine-Russia on your operations, particularly in EMEA. You know, can imagine maybe some inflationary cost pressures just 'cause energy prices are going up, right? But at the same time, that may create some opportunities, you know, given the dependence of some of those European countries on Russian gas to continue to get smarter in terms of how they consume energy. Can you talk a little bit about what you've seen so far, and how the operations and the opportunities are trending? Good morning, Noah. Tom here. I can take that one. Start from the perspective of direct revenue in Russia, Ukraine, Belarus. It's really quite small. The top line impact from a revenue perspective in those countries is de minimis and not particularly important to talk about. In terms of supply impact, we also have a very low direct supply from anywhere in that area. Certainly there's a lot of raw materials, metals, gases that are produced in those countries that are T3 and T4 into our supply chain, and that's something to watch. It certainly hasn't created any challenges in terms of supply to this point, but it is an item to monitor for us and the rest of the industry. When it comes to what would be the macro trends and the broader impacts for it certainly has the opportunity to create some pressure macroeconomically in Europe, which it could potentially slow down Europe. Again, that's something to watch in the quarters ahead. From a more positive perspective, though, it clearly will accelerate energy transition for a lot of the Western European countries that would need to work through exactly how they secure energy independence from that kind of situation. The more renewables and the different sources of energy that need to be put onto the grid and systems absolutely accrues very nicely to our technologies. Customers will look for the ways to get visibility into the performance of their operations through that, understand exactly how to balance supply and demand, and that's where we can play. Those customer conversations are active now. Yeah. I mean, functionally, right, you know, whether or not we increase renewables in the share of mix or how your transitions, you know, the first order of priority is just to be smarter about everything, and that's, you know, where your solutions come in. I was a bit curious to hear about the Outcomes, a little bit lower product sales, at least year over year in EMEA. Do you think that starts to turn around a little bit in the quarters ahead? Do you see more of an Outcomes benefit coming from the European market once it sort of finds its footing? I do. Very optimistic about what Outcomes can do, globally, but certainly within Europe, that the ability to truly analyze and understand, get visibility into the operations, is an important part of what utilities need to do, and that's exactly where we can play. The work during this past quarter was really much more about some legacy solutions, specifically, prepay operations, which were lower based on some of the energy costs and other macroeconomic things impacting. That's a legacy solution that the growth areas for us, the types of visibility and monitoring that you're talking about, that continues to grow nicely for us, and we're eagerly anticipating the ability to continue to scale that in the quarters ahead. Yeah. Just to add 1 more in, and then I'll hop back. You know, you've mentioned a couple of times in prepared remarks and Q&A, you know, some pricing actions. We just love a little bit more detail there. Are you getting incremental pricing on, you know, what's in the backlog at this point? You know, or is it more that you started to take more aggressive pricing on some, you know, some business that got booked in Q4 and that starts to benefit later on? Or is this all sort of in the open market, book and ship business, if you want to call it that? I think there's 3 different components there, and the answer to your question is all of the above. Certainly in terms of new terms-based business, those are being priced in at a level that's more reflective of current cost structure in the marketplace for materials. Future contracts are being written in such a way that there's a bit more pricing flexibility or shorter-term pricing horizons in their indexing and things of that sort. In terms of the backlog itself, that is obviously a very active discussion and 1 that is an area we continue to push on. We've made some progress, and we're continuing to work on that. I don't want to lead you to believe that we've repriced all of the backlog. We're continuing to work on it, and some we have, and we'll work very hard to increase the percentage that we have. Great. I'll leave it there. Thank you. Thank you. Our next question will come from Pavel Molchanov with Raymond James. Thanks for taking the question. Also a question about Europe, although not specifically about the war. There are more and more countries in Europe, like Italy, that were in the initial wave of smart meter rollout, you know, going back before 2010 in many cases, and they're now looking at essentially a replacement cycle. What are you seeing along those lines, and how is Itron positioned to get these replacement opportunities in places where smart meter penetration is already very high? In terms of, I'll call it Gen-2 types of work, those discussions are really just beginning in some countries and not really on the horizon in others. It tends to be a little bit of a mixed bag in terms of looking across the major Western European economies. Some are still in the first-gen rollout type of things. In all cases, there is a more active discussion, even on a first-gen kind of solution about how to get better value out of it, whether it's the data itself or how to increase the visibility on the distribution side and really control the grid a little bit better with finer grain control than what we've seen in the past. I would say we're not wholly dependent on waiting for those Gen 2 waves to come along. We would continue to play pretty selectively if it's a component-based business for us. If it's more of a network solutions kind of deal, it would be a bit more holistically. We'll continue to work with the customers on the distribution side, on the smart city activities, to be able to automate some of the streetlight kinds of things that across major European cities is another area that's been really active in the last couple of quarters, and we would anticipate it's likely to continue to be in the quarters ahead. Okay. Let me also ask about M&A. You know, we've talked about this last year, you know, shortly after your analyst meeting. What is the current kind of latest on the pipeline of acquisition opportunities and your thinking about, you know, moving forward with any of those? We continue to monitor the landscape pretty nicely. Our interest areas are completely similar and unchanged to what I probably have commented on in the past. Scalable technologies really on the outcome side of things is the area that we would look for. We'll balance, of course, you know, where the real scalable technology is and the areas that we would want to grow in based on where valuations in the marketplace for software-based assets look to be. Obviously, we'll be thoughtful about when to do those things based on what the macroeconomic environment will look like and where the market is likely to go. An open and ongoing discussion that we will continue to monitor. The areas of focus are unchanged from comments in the past. Appreciate it. Thank you. As a reminder, if you'd like to ask a question, you may signal by pressing star 1 at this time. We'll hear next from Ben Kallo with Baird. Hey, good morning, everyone. Thanks for taking my question. You know, Tom, I think in your prepared remarks, you talked about, you know, the backlog and customers, there's no cancellations. Could you talk about, you know, ongoing discussions with customers when they see your backlog and the constraints and, you know, if that comes up in those discussions, if they, you know, that becomes a thing for your competitors, they may not face some of the same things or maybe they do, you know, having a competitive advantage. Then I'll have a follow-up 1. Sure. Customer discussions relative to the backlog in place today and the supply constraints, I would characterize them as appropriate in terms of tone and tenor. People are frustrated because they want to carry on with their projects, and we're frustrated too. We're aligned on what the problem is. No 1 is throwing up their hands and walking away. We continue to work with that and work with customers on scheduling and how that rollout would really work and making sure that as hardware becomes available, the ability to install it quickly and ramp it into a commercial environment is there. I would say that there's clearly pressure in that area that we're placing, but also customers are eager to get projects going. No change in their commitment to do projects or material changes in how they're planning to spend their capital or things like that. From a longer-term perspective, I have not seen anyone use any customer conversation really using near-term supply constraints as some kind of reason to hold back on discussions for the future or other activities. In fact, it's almost the opposite kind of effect. All of the trends that were in place pre-pandemic have kind of accelerated where customers are looking to automate business processes and improve resiliency and reliability. The recent war in Ukraine and Russia has heightened cybersecurity considerations where customers are eager to do a better job with protecting their assets and their data, which plays nicely into the portfolio of products that we have. I don't think it has changed things. I haven't seen any even hints or ideas about moving to competitors, some of the supply constraints that we're grappling with are quite common in the marketplace. Great. Just on the cadence, you know, of sales and with Outcomes as the focus, how maybe if you could parse out, you know, the Outcomes business that's in backlog. You know, I think you have to have networks out there before you have Outcomes sales. Could you talk to us about, you know, how we should think about that cadence moving forward and just the timing of it as well? Thank you. Sure. The ability for customers to put a new network, if you will, and use case into their territory are those projects tend to run, you know, 2-5 years, depending on the size of the territory. Once that network is built, adding incremental applications to it, being able to monetize the data from an outcomes perspective, looking at it from an Itron lens, tends to happen, but it will lag the network deployment by, let's say 12-18 months. As new networks go in, there's one-time services that go along with that to get it set up and installed and implemented, and then recurring revenue starts to come on the back of that. New use cases would be 12-18 months after that. That's kind of what the general flow and cadence would look like. As we're constrained a bit in terms of network deployments at the moment, it definitely has a knock-on effect in terms of the timing. That said, the sales activity to be able to sell in those incremental opportunities is something that customers aren't shying away from in the current environment and really like the pace of those kind of discussions. The speed at which customers have deployed applications to endpoints, I referenced it in some of the prepared remarks, but we've got 4 million-plus DI-capable endpoints in the field, and they're running millions of applications commercially, and that number continues to go up. It's exciting to see it scaling with new visibility for the customers and the speed at which they have ideas on new applications and new things they want to do is really a different way for the utilities to think, and it's really exciting to be a part of. Thank you very much. Our next question comes from Connor Lynagh with Morgan Stanley. Yeah, thanks. Wanted to start on Device Solutions. Obviously, at least sequentially speaking, a nice improvement in margins there. Just wondering your thoughts around the sustainability of that, how we should think about the profitability of that business as you move towards your longer-term operating model goals there. You want me to speak to that, Tom? Yeah. Go ahead, Jo. Yeah. You start, and maybe I'll tag on. Yeah. From a standpoint of longer-term margin targets, they remain unchanged from what we discussed back in October, I guess it was, kind of the 23%-24% or so gross margin. 1 of the big key levers to do that is to really make sure we're optimizing the portfolio that we have and shedding some product lines that we just don't think make sense. That includes, for us, the sale of the business to Dresser that was completed at the end of February. Yes, they did have a good improvement from Q4. Q4 was a little bit abnormally low, so you know, this quarter at 15.6%, we would expect that to continue to grow. Certainly the constraints have an impact. To the extent we have supply constraints and we can't meet demand, there's inefficiencies in the factories and things of that sort. As well as Tom mentioned, our pricing actions haven't quite caught up to some of the inflation. I would expect the device margins to continue to improve over time. Again, long-term targets have not changed. On Outcomes, certainly I think you alluded in response to another question to R&D being higher, or maybe that's in the prepared remarks. Anyway, I guess the question is, if I look back at 2020 and 2021, there was a pretty consistent escalating cadence in margins through the year. Is that something systemic to the business? Is that how we should think about this year? Or was that just sort of, you know, 2 data points in an otherwise volatile trend? Yeah, I would say Outcomes margins are going to be lumpier than the other segments for 2 reasons. 1 is you've got one-time software sales that, given the small scale of the business, can really create some lumpiness from quarter- to- quarter, and then the overall scale of the business. It is still kind of subscale, and so all you need is 1 or 2 software sales in 1 quarter and not in the other quarter, and you're going to get some lumpiness. I don't think there's a natural rhythm I could point you to that says it always starts low in Q1 and grows every quarter. It's just going to be a little bit lumpy until it's a bigger business. All right, fair enough. Thank you. As a reminder, if you'd like to ask a question, you may signal by pressing star 1 at this time. Our next question will come from Chip Moore with EF Hutton. Morning. Thanks for taking the question. You gave us some nice updates on EMEA. Maybe you could dive a bit deeper on what you're seeing in the domestic market, right? It looks like distribution CapEx projections, at least from the major IOUs, is very healthy over the next couple of years. Whether it's RFP activity or other things you're tracking. Sure. The US market, which is our largest market, is extremely healthy from a pipeline point of view, as well as backlog, as we commented earlier. Looking at it from a pipeline point of view, a lot of interest in second generation or 2.5 generation AMI kinds of deals are active. A lot of interest in distribution automation, a lot of interest in analytics, things like detecting rooftop solar or EVs or batteries behind the meter to try to understand and gain visibility into a much more distributed and diffuse grid. Those are areas that are very active in the US market. Networks as a Service where you have utilities that are teaming up to use a common asset to be able to further their activities between electricity and water or gas and water or vice versa, any combination, depending on how people are really thinking about it. Those are the areas that we've seen a lot of activity. Add-on capability for streetlights once a network is deployed to do streetlight automation and be able to use that same canopy network is another area that we've seen a lot of traction over the last couple of quarters in terms of customer dialogue and are really what we're thinking about as we talk about what a book-to-bill ratio would look like. We have not seen any, I'll say, real impact or contemplation of infrastructure spending in the current activities. Everyone knows that's out there. As those rules are written, there's opportunities to see how that flows through. No one's slowing down and waiting while the rules are really being drafted for that activity. I think there's more opportunity for our technologies as that money starts to flow into practice. Yeah, that's very helpful, Tom. Thanks. Maybe 1 just much longer term, but, you know, a ton of investment in hydrogen. Just curious your thoughts, sort of long-term evolution of gas markets and any opportunity that could present. Sure. The idea around introduction of small amounts of hydrogen into gas systems, that's an area that is, I think, more opportunistic in the European market than in the US, although there's plenty of discussion on it. Where customers are really starting to think about it, I think is in Europe. The next generation of products that we have in the market today and the ones after that come equipped to be able to handle a certain amount of hydrogen mixed in there if that's what customers would choose to do. We try to get the product line ready to be able to operate it. Those trends are indeed counterbalanced in some ways where some jurisdictions are thinking about restrictions on gas in new buildings and new construction. That's why we obviously make sure we're ready from the electricity side as more and more things become electrified as well. We'll play both sides of that 1 and be prepared depending on what a customer wants to do within their territory. Got it. Okay. Thanks. Our next question comes from Michael McGinn with Wells Fargo. Hey, good morning, everybody. Morning. A lot's been talked about on the pricing front. I just wanted to get a sense of the cost front in terms of accounting. Is this a LIFO where you're realizing the higher cost immediately, or is there some sort of FIFO delay? Can you just walk us through the cost equation in terms of price cost? Yeah, I don't know that there's any big FIFO delay. I mean, basically our inventory is kind of flattish for the last few quarters. To the extent that there's input cost inflation, which there is, it's really reflected in the margins you're seeing. Okay, great. In terms of capital allocation, just going back to that, I think the quarterly share repurchase was maybe the largest since 2014. Just any sense of, you know, how that's reflective of your confidence in the business building sequentially into the back half of this year? Maybe, is that the playbook kind of in today's environment where private market software deals haven't been necessarily reflective of what's happening in the public market valuations? Well, from a stock buyback perspective, as you know, our board authorized $100 million over the next 18 months, effective in November 2021. We did complete to date $25 million of that, and we'll continue to look for the right opportunities from a capital allocation standpoint to deploy capital, whether it's through stock buybacks or as you mentioned, M&A, things of that nature. We obviously are also planning on building some of the working capital as we hopefully get on the other side of the supply constraints. We would expect the inventory to increase so that we can really fulfill the customer demand. I would say all things are kind of on the table, and we currently have authorized an incremental $75 million of stock buybacks. Any other questions? That concludes today's question and answers. I'm sorry. Mr. McGinn, your line is open. Very good. Thank you. Yeah. I'm all set. Thank you very much. Thank you. We did have 1 additional question from Martin Malloy with Johnson Rice. Good morning. Good morning. I was intrigued by your press release during the quarter about the project with Emerson, and I was wondering if you could just maybe talk more about that use of your meters in conjunction with the thermostats, et cetera, in houses, and if you see a widespread use for your equipment in conjunction with other like Emerson thermostats. Sure. Happy to do so. We have a demand response program and capability that we deploy with our electric utility partners and have for quite some time. We continue to increase the number of different types of devices that we can work with and control. Different types of smart thermostats, for example, so that there's a host of them out there during this past quarter. We work to make sure that the Emerson thermostat is enabled and pre-integrated to make it kind of a seamless experience from a customer standpoint. We definitely see interest in demand response programs from a lot of different customers. The consumer on the other side really oftentimes has a particular thermostat they want to work with. We will enable as many as we can to cast that net wider. What we're really after is being able to control larger and larger amounts of load shedding and load control for the utility to help them do supply and demand. We were pleased to have that agreement in place with Emerson and look forward to scaling it in the marketplace. Great. Thank you. That was my only question. That concludes today's question and answer session. I'd like to turn the conference back to Tom Deitrich for closing remarks. Thank you, operator, and thanks everyone for joining. We truly appreciate your time. We look forward to updating you again in the quarters ahead. Thanks for joining everyone. 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 3063181, or go to the company's website www.itron.com.