ITRI - Earnings call transcript Q1 2021

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Operator

Good day, everyone, and welcome to the Itron Incorporated Q1 2021 Earnings Conference. Today’s call is being recorded.

For opening remarks, I would like to turn the call over to Ken Gianella. Please go ahead.

Ken Gianella

Thank you, Operator. to Quarter welcome call. earnings and morning, Itron’s XXXX first conference Good issued today earlier press our We release announcing a results. The about press today’s information call. release includes replay is webcast A available Relations website tab. to accompany remarks Investor this presentation our under the through on and call, the our corporate on also

On today, Financial Chief Officer. Tom we Deitrich, Chief President and and the Officer; Vice and President call Executive Joan have Itron’s Hooper, Senior

the call the Following to questions our will prepared process remarks, using operator open described. we the take

call the you financial and turn Before Tom, remind our to statement. I let me over of please Harbor our presentation non-GAAP Safe

release measures presentation understanding that of earnings available release earnings are GAAP Reconciliations our non-GAAP overall we and current financial between future performance. in Relations our Our information and on website. financial our of and the financial believe Investor non-GAAP enhances differences include and

Actual call with We are risks expectations assumptions will that that are Commission. on from presented of today’s forward-looking. These uncertainties. XX-K this could Risk during Securities earnings making during the to current made statements are based in comments and and call, Exchange conference these expectations, section that and results be in reports filings other of subject and because differ materially this our Factors factors statements and and release, Form and were the the

our to financial we of forward-looking not X, attempt in good-faith may impact regarding and addition, on In XXXX, operating any a our COVID-XX the provide current do are to due to the of May COVID-XX current duty the made forward-looking of company estimates any materially future appropriate environment. statements. fluid Materials today, pandemic, nature or insight statements, to and discussed and undertake change, update

call X and in Deitrich. turn over the please the presentation, Now, our CEO, to Tom turn to I’ll Page

Tom Deitrich

thank a joining and productive quarter a first to for We you, lot and you morning, there's us. had Good cover. Ken. Thank

get started. let's So

EBITDA performance, $XX but million. revenue $X.XX, You free summarize was Non-GAAP earnings per quarter share first was shortly, our Adjusted was million. was will hear $XX details $XXX and to flow from million. cash Joan

reflect still delevering and pandemic, results progress. our by constructive strategically and recent that offering flexibility the to accelerated and these ongoing business operational equity highlighted This added overall our on in and is efforts the convertible from strategic operationally effects the bond execute are While both we our future.

a American we have me collections Beginning we see as on with gated let have markets the Now, customers, with European and expected. environment pandemic. provide our cancellations, contract to consistent brief operating seen it continue the be and North Both customer today. continued and update few our somewhat past the quarters, not as by

that than second While and should QX revenue weighted XXXX. to half expect continue outlook beyond the a revenue was of lighter the is continue improve we year anticipated, to towards

to on of includes in well. as factory in of In little as component recent Prior our Recently, operational actions challenges yield continue and track Our see news to there improvement. we fixed a efforts our reflected mitigation inventory level. on component at been us are the production, a are served of supply chain transportation the and about talk benefits beginning we results. lot constraints has or in in components lower to and both from key the cost the reduce at the QX, inventory our impact our This had levels efforts supply buffer end consumption QX.

we half anticipate supply do Moving face we into resins and QX will certain specifically for and of the metals. XXXX, that forward second hotspots semiconductors,

we'll they as to appear, will situation continue over next We constraints actively mitigate and the the closely efforts few quarters. monitor our

is that had finally another bookings key increasing Outcomes of to reflective components of both product our low-value, Solutions increase alternative turning and in order And we normal low-margin for We lead platform. Distributed backlog, lines are of partnering and their with coverage Riva targeting strong sources, beyond innovation our customers Intelligence visibility driving the discontinuation. the and for times, bookings plus very to our quarter needs

increase We operations. solutions continue insight to that value see into and robust activity from efficiency our deploy to customers their applications and looking higher

Our we continue position. our new and to increased industry record a be to level, with backlog pleased

Turning to and Slide It current approximately $X.X of $XXX backlog over XX-month is by to million. X, record XX-month quarter sequentially $X.X note billion. of at million, a that $X.X of our X.XXX, book-to-bill billion, a for ratio achieved driven total improved the backlog first bookings a $XXX approximately approximately backlog approximately we by important providing billion,

we substantial to While this highlight, quarters. XXXX, we few XX-month million achieved Outcomes had are I starting the are There is the backlog still pre-pandemic by that like view few our a over with recent approximately improvement segment. less entering would the encouraged bookings than $XXX past

point Exelon to are Exelon the extending outcomes applications long-term By deliver to continue in our We optimize pleased operations, our advanced agreement a of multi-application announce metering prioritizing The security their that partnership extension benefits, privacy agreement our operating proof Exelon this distribution enables this multi-year, with to clear companies. the the is customers industry-leading in to are receiving. of flexibility, collaboration, technical portfolios and strategic city value automation, their smart of proven of a and across customers. for while SaaS extension and infrastructure,

partnership highlight Gen-X invest platform TNMP on Intelligence company our Texas-New I is continues Power multi-application to booking in TNMP. network. to with Distributed Mexico Riva Another recent the would our most like or our capable

and points platform TNMP are success that We provides partner in for our Itron, long-term our a also value with applications add and investment operational but to for not investment customers. technology to offerings for deliver These to resilience just only years to our yields have technology with proof come. are that increased the latest few flexibility future-proof pleased TNMP's to opportunity to the

multi-year we Intelligence network, a multi-application to our multi-purpose footprint This Combined quarter, can that value a our strategy advanced we renewal have our to our delivering to expand demonstrates we a expand our over network. platform segment. SaaS cumulatively, once long-term on our X.X our to Distributed customers deployed grown Outcomes of capable with a multi-application with endpoints of million partner install

positive quarter, to made as is why XXXX in are strategy it execute of we With the just our first efforts we these our value discuss past and hand that While me continue to off few results. that, remain that Joan create a will beyond. progress our to examples let this we've quarter

Joan Hooper

Thank you, Tom.

in As our strategy Tom to mentioned, we continued during line execute first with quarter. the

$XXX we offering due convertible Let me by equity X% to the in of We both notes convertible XXXX million and coupon at saying, begin early were successfully complete pleased in issued March. a bond rate.

the $XXX million. gross the $XXX through Additionally, offering, totaled with million, issuance common proceeds X.X approximately transaction follow-on over from a raised million we of shares. equity Combined

our strategy. our goal sheet. our us primary strategic accelerate and we strengthen to delevering long-term given turn to Our has to continue as balance was This execute in flexibility

the our for to results. to overall, of still a are headwinds, summary please Slide financial in quarter the Turning begin, consolidated but made we we To GAAP X facing first turn results, first progress quarter.

quarter million income than higher by was product the compared in First the income favorable due share in basis decreased of XXX net solution delay for year-over-year last XX% constant to million of year very GAAP with The was COVID-XX. share, mix. and $X.XX points of revenue prior diluted $X.XX year. to quarter XX.X% due per $X net per to customer $XXX primarily or the $XX a last Gross million or projects, currency. XX% decline be impacted diluted versus or margin was continued or which year

or per $XX quarter metrics $X.XX non-GAAP on $XX non-GAAP was was for income Non-GAAP X.X% million Slide X, Adjusted million. diluted revenue. operating of $XX was the Regarding or EBITDA income million share. net

$XXX $X a $XX Looking at higher revenue decline shipments Device XXXX, Latin business by prior and as was $XX America completed on the maintenance the timing or constant professional Revenue delays $XXX from software million, services. million $XX X% and segment higher was constant million, last which in COVID-related year. was increase in to XX% of or year-over-year as XX% Outcomes Networked or year-over-year of certain was The on new the a projects. XXXX. QX million basis. Slide decrease higher in constant-currency transaction, impact reduced the due X, to driven segment the Solutions due in COVID-related the by The volumes in and revenue a license volumes wind million well impacting deployments The currency. a delays France as down, start continued Solutions increase in of was we decline million, decrease impacting Linky currency in year, of revenue was sales,

Lastly, the foreign higher currency revenue million $XX changes resulted prior versus in year.

our The per drivers per QX non-GAAP QX of bridge prior the the $X.XX share change down diluted $X.XX performance, year. of negative which versus was non-GAAP EPS had year-over-year XXXX. to operating were, net a Slide the on Moving from year-over-year X, $X.XX impact EPS share,

partially mitigated was prior we in $X.XX spending, coupled and year-over-year lower volumes the better saw a versus continued year, with mix, this performance. tight operational While product yielded by improvement when

a income count per of benefits finally, in resulted year-over-year. higher currency in $X.XX QX reduction However, this year. in due miscellaneous share a interest share and a Lower non-GAAP tax mix offset And EPS was and XXXX the the by more year-over-year rate in $X.XX other higher increase of discrete to jurisdiction year-over-year. versus and by tax income resulted prior EPS A expense decrease $X.XX in by decreased a expense. changes than more foreign in

year-over-year the Solutions margin to related year-over-year, million, by was investments points solutions XX%, due the business XX%. last revenue product due to operating XXX partially the and partially margin year Operating through increased margin mix, Solutions continued COVID-XX. higher as the mix I'll margin points margin to $XXX increased revenue QX higher offset of than favorable offset software well of mix, and due investment XX% to continued basis XXX XXX with Turning product through due with basis year-over-year points license basis improved results XX%. gross of gross to including margin gross operating by increased expenses. inefficiencies margin by product margin favorable XX Gross was one-time Device gross XX%. of development. to development. $XX of margin was due points increased fall XXX as revenue operating higher gross year-over-year XX% basis million XXX Outcomes margin reduced and points COVID-XX. in of increased Gross higher Operating margin, Gross in sales. margin lower basis related to XX, XXX margin million, was points and reduced gross product with with Slides Operating $XXX discuss Networked the segment to prior-year. compared with inefficiencies basis higher margin

Turning and to Slide XX, debt. cover I'll liquidity

million. and just As Free $XX the Cash down I bond $XXX A million, of in strengthen the portion and at net of $XXX flow accelerate million pay debt gross the were quarter, quarter mentioned, quarter. a term convertible our sheet. offering the turn, was us significant in debt decrease million and loan Total paying to The cash a raise first first first which at using down end was in of first and our an decreased equivalents of debt to equity the from end in equity reflects the transaction. we proceeds completed enabled balance the net the debt $XXX quarter.

XX, the cash this impact to the $XXX The quarter end, at end non-GAAP million As of previous lowers to end of convertible and offerings debt total quarter. X.X equity and and positive pro $XXX year had net of a our gross which EPS premium, call million the was debt notes, senior million, million. On down note from the and a previously at forma X.X guidance. full new existing we the convertible $XXX leverage last of million. equivalents QX, times times repaid basis, $XXX Net of senior $XXX Subsequent to included the X% X% with March total the totaled notes notes.

these I restated view So, to provide wanted a reflecting transactions.

This markets midpoint we of XXXX share, Turning impact This of range interest to $XX our per previous assumed call, guidance guidance non-GAAP the outstanding $X.XX. the at guidance QX on capital expense diluted transactions. the by approximately increasing expense. is average in provided approximately to are, and a of EPS non-GAAP revised drivers of to $X.XX increases range average Slide midpoint. transaction of approximately $X.XX two XX.X million. markets The interest diluted The weighted $XX $X.XX level reducing the $X.XX outstanding, capital our non-GAAP The million approximately EPS to in share shares million, XX, per to million $X.XX and the $X.XX XX shares approximately restated share. factors a XXXX only million per resulting full-year or restated non-GAAP a $XX with of by

positive Overall, our it balance call greater is We quarter update we'll As active for an August. strategic strengthened business practice, our XXXX on giving was flexibility. typical outlook very provide the our and our early a second in on sheet, us quarter Company.

on cost We're second controls well projects. to the beyond. making positions maintain and strong coupled flow. These for record free with cash Company transformation of continued progress results, backlog, and delivered our disciplined We the XXXX half our

turn the Tom. will I call Now, to back

Tom Deitrich

are you, our Joan. flexibility, strengthened sheet we our great business forward. in With drive Thank a increased strategic position balance to and

With and and of we sustainability, even our past stronger our resiliency, more communities. activities innovation, this serve are focused customers on the quarter, to better and

we As navigate we progress, you are us please the open line efforts, strides joining Thank about making on and for near-term for the some strategic optimistic the Operator, and and with great future. headwinds, pleased our we're our remain cautiously operational questions. today.

Operator

take from and [Operator Please our go first Instructions] And Kaye Noah Oppenheimer. from ahead. question go we'll ahead

Noah Kaye

maybe could chain. Tom, questions. the with taking supply you're Appreciate everyone. morning, the we start Good Thanks.

kind some and can well-known around you've inventory. some I terms performance? us not of give look that the just operational you incremental the as remarks fact whether plan consumed prepared or for poses of out mitigate the to the in year, and you the balance facing comments a sense the really might guess, industry, that headwinds buffer Your this over any headwind in meaningful of then how offset and of you

Tom Deitrich

on Noah. we factor consume of a inventory, were levels Supply constraints we QX, at you, the low really in quarter. our In you and were inventory commented Thank prepared end remarks, the did few can a things. not our see relatively and chain buffer

suppliers supply around next in products, expect quarters. some The do what Coming and I think on of to we had forecasts metals. to for are it that handle plastics be efforts resins what The tight certain our flexibility customers we day some chain do are going areas the couple it, make Looking the to with is see extremely to side semiconductor under several maybe move tight. day. we the working need, we of do These of term anticipate longer extended to give multi-sourcing with overall. We've specific we the years work visibility ahead, then I team specific to for us PO so situation I sure dedicated out the and give hotspots time fluid. about how their hotspots coverage can equation, the be to way for last a that do suppliers. see to over we've into

out the of to to is, timelines. last recipe path the their that's So, they’ll play recovery for your question take next of that the and couple wellness that Maybe types different with of that would individual quarters. part will I talked over I own add about, commodities paths there's different those all different

for be this fluid next a couple quarters. the situation, So, I think, will pretty of

Noah Kaye

there the term to think, the maybe know, bomb? compare now? and went versus mean, then some parts there it you of I a But components, a also you bit different different XXXX, those were in through what situation if I can inventory costs could So, then moment some little you then were were obviously near contrast production Yes. compare on elevated but for production. inefficiencies, right, and you impacts

Tom Deitrich

as chain different. some sure. that we midst so We've was. to primarily situation in Yes, In through that how last with the But has clearly were couple This different that where chain always of to success. chain, the that they manage being being I the really transformations, supply one is and pretty we've these a big through very play work struggled different was think last the been capability out done a the slightly and of constraints we of supply decades place of MLCCs, limitations over years. you biggest XXXX, bit situation. supply capacitors, prepared in organized set exists different. my key of the in It in is couple work career hotspot supply was of Every got over and in to

manage to a in we very companies position that So stand it. different today through

Noah Kaye

that you And That's of Thank with primarily still matter it the of more time some for COVID-related just to taking that us? one guess this I approvals, characterize still in, sort an commenting delays you. some it about is a get is deployments, could customers to of timing I and could really at Is then sneak problem yes? point, or or perfect. new on regulatory the logistics actual if the

Tom Deitrich

lingering The Yes. bit different what a a In dynamics are Europe, we the really little partial or by see lockdowns, is region. of lockdowns, existing some bit.

to full pace primary projects is really is the So back getting dynamic existing play there, to deployment out. it

a second and referenced, customer during catch tell a or year. now, business, the by and in transition our starts year period. those of networks to can us the the expect which this were in position space, delays decisions through A of things back really that of regulatory of that In lot We that some last in were play up quarter behind that and be better that that dynamics is you those pace the to the two. our American expect the North we've you some we're would balance lot playing half out of done primarily of that bookings the backlog XXXX and is as in

in our second projects the of of to had we reasonable year the newer but of to projects out where half So, in ramp. we And play gotten would more pace, to that that's where a have XXXX, lull that some again, are a decisions back back expect poised the lot existing in

Noah Kaye

much. you Thank so color. perfect That's

Operator

Company. Cowen next go question ahead. And we’ll from on to move from our Please Osborne Jeff &

Jeff Osborne

Yes. morning. Good

mix the this quarter? Is being of wondering, Tom, related you that my can margin couple gross you so if Joan of or drivers I on to was questions a it the high end. Just touch on referenced.

Joan Hooper

mean, jump and I then Tom in. can start I can Yes.

different segments across each really segment. for three was say drivers and would it I all So,

devices, So, due mentioned, of deployments in the existing Tom in those case are Europe, in in some and continuing Europe, we to margin of some as had some just lockdowns deployment. lower projects partial delays actually

they delayed, those second the to expect shipments within as the Devices we half bit a So, and of year. little though mix come in higher, was the

So the some the tends of was which that to increase one-time Devices will cases software Outcomes, In revenue, lower probably license a margin. bit. there

that QX, And mentioned. to just the Tom that lumpiness it of were of that scale So, the a Networks, starts business. delay sold the function just and in really case tends of of be there as given the solutions some in new is as well products

Jeff Osborne

Got And following up you new of decisions just new not of a bodies? XXXX regulatory induced Noah's from you quoting RFPs? maybe or from it. the XXXX's level that's accelerating just then as on is catch or of lack leftover seeing from the can question, delays, it activity actually characterize sort Is that well that but up straggler are

Tom Deitrich

quotes on strong additional there automation, probably where some the now and on catch-up strong this that you very also a saw be in network Much and The the are technology, get and across reliability, and or I add environment requests is in mix. rolling but their last to of indeed and all about, eager quotes, a on of looking are activity. so was flexibility in terms meetings more These capability. base is quarter, see ground, see very the There they're very capability they in quote desire of that to type as before, information that very what important. to starting this support is safety, robust. customer through a we to ahead is part get to of prevalent today. we've Distributed you of see investments activity keenly are What strong, case versus customer a Resiliency Intelligence, that already use pervasive quote notion our some the that lot they see new of curve customers deployed of now distribution, say the a would Customers network is in solutions, arrangement, more bookings lot very business. additional quarter learn you areas types types pressures of and the monitoring of put new multi-use in software-as-a-service to willingness

Jeff Osborne

to congratulations wonderful great That's award. see. the excellence hear, on It's and to

Tom Deitrich

Jeff. Great. Thank you,

Operator

go Please we'll Molchanov Pavel question And Raymond ahead ahead. James. take go and from from our next

Pavel Molchanov

perspective, I disruptions you the future? calamity a Thanks question. is, that for revenue the taking how your in about that the from talk obviously in India to contributor exposure with asking a revenue any of and near of cannot Can the much may context COVID help come about there.

Tom Deitrich

Good morning, Pavel.

It's from small. Our revenue the in position perspective. revenue with a overall India really is relatively immaterial results

So, everyone go support make there. is It's out the larger many one devastating certainly employees keep country the sure have the to We safe to do working our centers and as that of under. design our we team situation we're hard and hearts possible. as

human from an is not we're from something revenue of particularly view. point it a perspective, So, about that a obviously but concerned relevant perspective, employee

Pavel Molchanov

proceeds recent follow in I'll and equity been your looking rich capabilities bolster? what balance Okay. of would you broadly, about from verticals cash more kind opportunities, sheet you asking as M&A what the to it's a by up long given think or be When as is time. raise, your debt

Joan Hooper

I analytics. would would particular in consistent it's software comments we in the when that look which space, opportunities with in prior made, Outcomes we is to were a we've position, say Yes,

cases, us what we that give can our use would at. to So help sell we more be would that our applications looking can increase be anything customers,

space. Outcomes the in primarily So,

Pavel Molchanov

Understood. Thanks very much.

Operator

move ahead. our to from Please Tommy Stephens. from next And Moll we’ll question go

Tommy Moll

thanks and morning, for my questions. taking Good

Tom Deitrich

Good morning.

Tommy Moll

Wanted to talk about the progression. margin

And all investments in the through. it segments, did was gross and out but then to areas. operating two up. some line, of So, then Networked in it the all both the terms those improved on Outcomes you've flowed on And I across out, think Devices, so you looks margins, with still call incremental Solutions, margins laid through consistent were operating flow framework three of like

there revenue through to you cycle could kind just your growth? us the medium-term and priorities operating for is also you continue then what are of refresh on a as to on near there was term Thank drive basis, So, I or right framework investment expenses what if how about you curious think

Joan Hooper

can Yes, in and start Tom then can I elaborate.

target targeting to a given perspective, It's expectation our that, R&D of from So, of to it and revenue. X% somewhere if higher in in is we spending an in you quarter X% our a revenue general, at close lower time little OpEx. XX% looking bit chart have what was right. website and relative pretty XX%, around than And of been to we're anticipated. we're devices at revenue. we've model we're look But the target, is that this Within OpEx that's on be lower a the increase we about looking actually the in terms standpoint, from on over Outcomes, and Networks little

from a investment, So, of standpoint correct. you're

Some investing bottom gross both consciously we to Outcomes and applications. for margin of because line come didn't future are Networks through the the in fall-through

So talk we're maybe, in. what you investing about Tom, want to

Tom Deitrich

a sure seamless downloadable A transparency of lot a network for got, say, that out a that applications investments new to making the area. application space. notion really the That’s that well of cases done as you've hover is that sure it and development to equivalency unquestionable, cover, around able security. where those the our use can want tend as space, multipurpose types new In network. way, network we ensuring (indiscernible) I'll come be Outcomes, it's In of all the other service Sure. or investments in is We that endpoints, key cases. to broaden across use making is in

for as us things customers good are measures, our engagement we It Outcomes. with. for applications. is sure and lot the efficiency a side a side solutions types as of part referenced or is that investing struggle they grid elevated help to our we've consumer some quote way of where a got part available just with activity ago. the for moment of Networks of Making well customers, on that we're of both the interest so These So,

Joan Hooper

Yes.

thing spend. would we're dollar R&D actual note, The down other year-over-year actually in I

And up because see is revenue you so, in that slightly the of percentage a revenue so Networks. was down particularly what much, go

Tommy Moll

a revenue either outlooks able quantitatively us whether half? I the second you, half, all for refresh changed you correctly, nudges business, the time would on a has thinking on hear that level till to to helpful, if any helpful. down should full even just the today to ago, stay about And Got want you quarter give be That's anything next And you up it. versus the it. Thank or you're that we gave very it's last highlight call if tuned segment but maybe would Thanks. then outlook, from get first both.

Joan Hooper

the only is, made I'd than in comments the continued expected, reiterate remarks Yes. little a we thing prepared given I lower guess the bit COVID-related the was of some some delays. revenue that we

go what you the than call, if second much be the half to So, case. That on still stronger back said we the last we first. to expected the is

the is extent catching of year. second to revenue the occurred So, delays QX, there that the that in will, in think about that up, half you if

half back-end might anticipated of a more will be loaded than the back months ago. of we couple So anything, even have the year if

Tommy Moll

That’s helpful.

Joan Hooper

change real of No expectations from terms segment in -

Tommy Moll

it a update back. Thank Yes. great. a in for tuned you, Okay, quarter. we'll turn and full stay I'll

Operator

Baird. to And go next ahead. we’ll go ahead Kallo and Ben from question from our Please move on

Ben Kallo

set around having congrats the for took question, flow understand Thanks picture have being right for guess kind guys. I Joan. question. morning just Day, - the just taking that - so that view at I opportunity the in and have on guess, I of Tom, free right you visibility the weeds the guess, good set on doing my had that laid have weighted, the tightness $X just you one that I opportunity I of away people that you number, the all and and backdrop Maybe, bigger kind with is, Thank it your time, And from question Hey, then now? of second you. the question maybe bigger my and Analyst component and I out raising cash Analyst want the do us discussion that. how to half on money Day and you maybe and you see

Joan Hooper

Yes.

target model they happened that XXXX right, back is there, that XXXX, including to has and target So flow, changed. our cash if to are Day, not the what still for Investor of targets. XXXX the not given say either. level Obviously, in the shifted XXXX would we Those go the I laid back out get to to free I going have

that shifted good right, more and spending. job, done particularly and flow started. those much and but We've about targets collections definitely the the we cash the So pandemic expense our feel our feel I CapEx since really remain We think, has good. a being generation both free great managing disciplined to in

good manage really about cash. ability our feel we So to

have We We'll another then provide in Investor of Day early out here. to position a October. will the some in visibility more to be

think one. on I tuned stay So, that

terms of and QX. best that bookings those project on second assumed starts that obviously visibility, second really half. the QX the begin half we've We've visibility kinds starts the our In of got and will that's timing and got things, point for up in back noted the at we've this

Ben Kallo

I If could one more squeeze in …

Tom Deitrich

Yes. I - would only add yes.

comment one would Just I in. other add that

excitement results. growth to exactly the lights, that we things things tends cities that in see you customer distributed smart showing through. like like in things be the playing like back expected If the intelligence, to what's where Day, that's to and distribution, growth indeed refer and areas the Analyst That's through where automation, street prior with is

So, thesis timelines can XXXX in but the around, remains strongly intact. we out laid shift that

Ben Kallo

to from I smart a that, I you just to get - And benefit probably we question but - how in can happening? and not bit, have was that? should Itron stimulus, same you what but quite infrastructure just I we that but think I about get tailwind can how there’s a you talk talk know just when that - about that. one as think grid benefit probably it over-minimize it about it, XXXX, from a more, remember the it's same how you degree, the from you just about

Tom Deitrich

So the spending point we're any first is, counting current guidance. infrastructure the our in would on in - I make not change

of interest pleased it's in across - today invest the the the and say discussions strong comments heightened we energy to we legislative reasons the intended requisite isn't see in that what definitely for on So, systems. water US. to level branch That my said, to outlook in based We're executive with and provided. follow us

forum and GridWise way and we're it could target ROI discussions, it when money. investment We’re that that I is It certainly is from spent, resiliency, think an what's about do talks which doing good money or ways that benefit, reliability, in That business be said, for those electricity best that. societal a be the our on off some well sustainability could part the of still happen. industry should Alliance, a that - grid will has to money. provides a good to I tailwind it think

and think major yet the be exactly a things the work. these I to there’s how on had for scope discussion funding would

it out, part we'll we'll let with along the industry. the but be have to So, play of of discussion, rest the

Ben Kallo

very Great. guys much. you Thank

Operator

next on from we'll question JPMorgan. to from our And ahead. Paul move Coster Please go

Paul Coster

thanks taking questions. Yes, for my

start I execution margin was So, on good pretty the we of fixed a segment? the get you that of Device in from margins, face just you're we gross reset the deployment constraints costs. a the normal And even in front, job on the thinking your improving environment, seem perspective. doing through in higher margins, you addressing I'm an expect and execute once you the wondering, to doing notwithstanding a headwinds of context be work in to are more the to particular

Joan Hooper

Yes.

than margins, a function our be of lumpy. the So, as solution expected gross were and little that segments, of product we higher really and each can a in mentioned really mix this quarter,

products. lower to be Device mentioned, tended As I the delayed, were shipments that margin

up So this see don't as were the quarter. margins I strong in Devices picked think as they they're the you'll year, as half of second

back which to we indicate we to margins, we expected what about get the XXXX, margins we level the talked continue roughly XX% programs. of on is then some of we did call Company. you overall to would on If that about for - do back there, And expect our execute when pre-COVID said to restructuring as grow last them we to the go from

margin and beginning, that $XX three last plan has in just of annual is about really plan quarters that with million line. of savings, we being it XXXX Our the announced September

So is of implemented, primarily in get most Devices. to direct we 'XX, by into the and benefit a time margin, that that's

each for targets is segment. there So

the when get target you segments. we see Day, investor each again, If it's you the will on And our of into would to margins margins with certainly able than XXXX, be we expect we'll website, be our to go than targets. about remain talk timelines our 'XX. 'XX for that. higher margins the But the higher 'XX associated and be on Those Investor deck, more our to

Paul Coster

to of Itron? pandemic, more of expect T&E Got start should to let you. And normalized that level. something as the and Is of expenses we kind to a other come companies return then number through kind they OpEx,

Joan Hooper

in you overall Well, 'XX about again, talked is we if to call, to about biggest And of 'XX, the our as going actually OpEx last XX% headwind, target the variable compensation. revenue. in XX% is will, from

financial didn't that pay bonus targets given hit. a we weren't original XXXX, our So, in

creates really T&E year, it yet I to last to for a we'll obviously it this hasn't tightly. to the At headwind. continue Yes, of T&E that picked really continue and wouldn't as up half most March April. and the until stopped bigger expect It well. up So, monitor think closely. it part we'll monitor point, the I second pick and

Paul Coster

Okay. Very much. so good. Thanks

Operator

And instructions]. go our Morgan Please on ahead Stanley. question go we'll move to Lynagh Connor from [Operator from and ahead. next

Connor Lynagh

through just Yes. to wanted margin on this Thank of topic, we the just of so sort I trend year sort stay think through the can here. you.

some of the year maybe offsets first things mix the the have laid the revenues. be some sort the final thing of of big in coming as like up G&A you be might pretty So, that from in a guess factors is I half back guess quarter. seems And It you've three there so then should out, I reopen. ramp of your

margins maybe how in operating just impact strokes, recommend for think gross you So margins about first, as we accounting that then but broad well? OpEx would

Joan Hooper

per I of impact again, capital se than the don't transactions. versus have updated guidance EPS talked February, markets other any in Well, what we the about

February, you from loaded if and what at EBITDA we back back-end back-end an half perspective. said second revenue even loaded look for more go in we said be and will So,

So, that changed. range. really that of Nothing hasn't really changed. We've talked about OpEx in has the XX% XX% none - to

would say view there point. So, this to our change the year of I no is at

Connor Lynagh

we effects just in seems that mix to to out likely first positive, high quarter skewed than in the point a Or you generally impact first a offset put Maybe being of should think on is about the for that sort The more growth called to finer it the then. that gross the of Okay. revenue see quarter margins degrade? here? near a term

Joan Hooper

know be say, view would Well, there'll high. not but I I there'll would as a how that know long I representative. a I don't don't that high, be

That’s you if to So, to the the margins I levels. back we expected in earlier, comment said go the for year we XXXX just made XX%. February, gross roughly be

were So much higher QX. it we that in than -

as the So, in expect dip down to and to the we're the expecting bit. I a comes, come half mix quarter margins second the would that second little

Connor Lynagh

one Okay. Understood. Maybe one last here. just

help understand the quarter So, I you us appreciate can - first a - bit was lower. you

recovery right I'm how back end backlog where sort I still underlying I that recovery. And is lower not, Networked complement bit, expectation And in to particular versus it's presumably is much trying in understand seem would basically certainly big maybe you already a the that in a what that so big that but on should low come? ramp to you're were or digit mid-single half the working to at mean, your business how just in just growth, versus of Solutions, to projects now market? imply of truly is, to needs of pace

Joan Hooper

would of in lot The new of backlog. project it I and say issue starts. is, most is it's a Well,

As they haven't year. have that second started new we in it is yet. we start the The talked just does the half of business expectation about,

all current in So, our expectation, backlog. is of virtually it's that but

Connor Lynagh

Appreciate context. the Okay. Thank you.

Operator

go Hammond ahead. our go Pearce from question from ahead And we'll and last take Simmons Energy. Please

Pearce Hammond

question. how device solutions in-house an thanks would reducing here business are on progressing manufacturing Thank you into things update my for us updates model? Any Can for move taking you. Good morning, appreciated. be and and on asset-light

Tom Deitrich

Our programs remain firmly on track.

a We owned we relatively most went will includes The moves Joan facility say, earlier, manufacturing seen. that recent, of asset-light have an that Devices-oriented model would there. between the exit the at of that's frame. now I number XXXX you to time big play The made in America is of in moment. Latin Europe restructuring as have It of exit the through call plan referenced and kind still in XXXX it process let's another certainly

make feel a very and we that it about what So, takes have announced, while transition. to good we That's the progress.

journey our continue needs about continues be our about footprint in or we operating those based manufacturing internal talked to the use model active best of toward meet and Analyst to how asset-light are we mix customer to towards Day. it external an move our model understanding we So, and and product that adjust we on while on moves, can that

Pearce Hammond

Excellent. you. Thank

Operator

call go call. And that, over to CEO, that our our session question-and-answer like conclude with for turn I Please does would today's to Tom the now ahead. back Deitrich.

Tom Deitrich

Thank you very much.

interest today, We're weeks we of Day XXXX to Earth track excited and of ESG to Monday, look that excited in progress and of ago, forward the goods call know well. very the we're customers today. even deliver off be As our the that with everyone our to about Thank for I making sign let types you with couple on on we're joining about June. ESG our services we're providing. progress much more XXth - for of our Everyone, Report on sharing everyone. sustainability, We wanted just a the and

Operator

of be will today's an audio this there And conference available replay afternoon.

the company's can to replay by that you You X-XXX-XXX-XXXX with access of XXXXXXX, www.itron.com. conclude passcode audio go or X-XXX-XXX-XXXX, today's dialing does that, or the for And call. at with your participation. website Thank the

now disconnect. may You

Itron (ITRI) 4 May 212021 Q1 Earnings call transcript